Exhibit 10.3
SEPARATION AGREEMENT
This Separation Agreement (“Agreement”) and the Release, which is attached and
incorporated by reference as Exhibit A (the “Release”), are made by and between
Janet L. Dick, (“Employee”) and American Medical Systems, Inc., and its
respective parent and subsidiary corporations, affiliates, successors,
predecessors, shareholders, present or former officers, directors, agents,
employees, attorneys, whether in their individual or official capacities,
benefit plans and plan administrators, and insurers (collectively referred to as
“Employer” or “Company”).
The Employer and Employee (the “Parties”) wish to end their employment
relationship in an honorable, dignified and orderly fashion. Toward that end,
the parties have agreed to separate according to the following terms.
The Employer does not believe that it has any claims against the Employee, nor
do the Parties believe that the Employee has any claims against the Employer.
Nevertheless, the Parties have agreed upon the following separation terms, in
full resolution of any actual or potential claims arising out of the Employee’s
employment with and separation from Employer.
IN CONSIDERATION OF THIS ENTIRE SEPARATION AGREEMENT, THE PARTIES AGREE AS
FOLLOWS:
     1. Employment Transition and Termination. From the date hereof through
June 30, 2009 (the “Transition Period”), Employer will continue to employ
Employee as Senior Vice President, Human Resources. During the Transition
Period, Employee will perform her regular duties and responsibilities as Senior
Vice President, Human Resources, and will assist in transitioning her
responsibilities as requested by the Employer. The Employee agrees to work
cooperatively, and will satisfy the Employer’s performance expectations during
the Transition Period. During the Transition Period, Employee will continue to
receive from Employer her current salary and other benefits to which she is
currently entitled. Employee shall execute the Release within twenty-one
(21) days of receiving this Agreement. Employee’s employment will terminate on
June 30, 2009 (the “Termination Date”). Employee’s status as (a) an officer of
American Medical Systems Holdings, Inc., American Medical Systems, Inc. and any
of its direct and indirect subsidiaries, and (b) a member of the Employer’s
employee benefits committee will also terminate effective as of the Termination
Date. Employee shall execute the Release within twenty-one (21) days of
receiving this Agreement.
     2. Consideration. Upon execution of this Agreement and the Release, and
after the expiration of all statutory rescission periods without any rescission
of the Release, the Employer shall provide the Employee with the severance
payments and benefits set forth in this Section 2.

  (a)   Severance Pay. The Employer shall pay the Employee $176,250, which is
equal to nine months of her current annualized base salary in a lump sum with
the first regular payroll following the expiration of all rescission periods
after the Termination Date, subject to applicable withholding taxes. If the
Employee has not commenced full-time employment by March 31, 2010, the Employer
will pay the Employee additional severance in the form of salary continuation,
in the

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      monthly gross amount of $19,583.33 (the “Additional Severance Pay”),
subject to applicable taxes and withholding, for each month during the period
beginning April 1, 2010 and ending on June 30, 2010, during which the Employee
has not commenced full-time employment; provided the Additional Severance Pay
shall be reduced for each month by the amount fees, if any, the Employee is paid
for part-time employment or consulting services provided in such month. In order
to be eligible to receive Additional Severance Pay for any such month, the
Employee must submit written or e-mail confirmation within 10 days of the end of
each month, satisfactory to the Employer, stating that the Employee did not
commence employment and the amount of wages or fees, if any, that the Employee
is paid for part-time employment or consulting services in the prior month. The
amount of such Additional Severance Pay shall be pro rated for the month during
with Employee commences new employment.     (b)   2009 EVIP. The Employee will
participate in the Company’s 2009 Executive Variable Incentive Plan
(“2009JEVIP”) through the Termination Date and will be paid the bonus payable
under the 2009 EVIP for achieving revenue and net income objectives for the
second quarter of 2009 as if she were employed on the date such bonus is paid.
In addition, Employee will be paid 50% of the bonus payable under the 2009 EVIP
for achieving the 2009 cash flow objective as if she were employed on the date
such bonus is paid; such amount to be paid at the same time the Company pays the
bonus for achieving the 2009 cash flow objective to other participants in the
2009 EVIP. The Employee will not be eligible for a bonus under the 2009 EVIP for
any period after the Termination Date.     (c)   Benefit Continuation. The
Employer shall provide the Employee with information and election materials
regarding continuation coverage in accordance with applicable state and/or
federal law. If, after the Termination Date, the Employee elects continuation
coverage under the Employer’s group Medical and Dental plans in accordance with
applicable state and/or federal law and pays the full amount of the cost of
continuation coverage in a timely manner in accordance with applicable state
and/or federal law, then the Employer shall reimburse the Employee for a portion
of the Employee’s monthly cost of such continuation coverage for the period
ending on the earlier of (a) June 30, 2010, or (b) the date on which the
Employee first becomes eligible to participate in another group health plan
maintained by a future employer of Employee providing benefits to the Employee
and her eligible family members. The portion of the cost of continuation
coverage for which the Employer shall reimburse the Employee is the portion in
excess of that portion the Employee would have been responsible had the
Employee’s termination of employment not occurred. Employee will be reimbursed
on a monthly basis as soon as practicable after the date the Employer has
verified with the third party COBRA administrator that 100% of the prior month’s
COBRA premium has been paid by the Employee.     (d)   Outplacement and Career
Counseling Services. Employer shall make available to Employee outplacement and
career counseling services of up to $15,000 during the one year period after the
Termination Date.

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  (e)   Vacation/Floating Holidays/United Way Days. The Employer will pay the
Employee for the Employee’s accrued and unused vacation/floating holidays/United
Way days, as of the Termination Date.     (f)   Stock Options. The Employer and
the Employee acknowledge and agree that, as of the Termination Date, Employee
holds vested and unvested options to purchase shares of Common Stock of American
Medical Systems Holdings, Inc., as set forth in the stock option schedule
attached hereto (assuming Employee does not exercise any such vested options
prior to the Termination Date). All such vested options shall remain exercisable
until and expire at the close of business on March 31, 2010. All such unvested
options will be forfeited.     (g)   Laptop Computer and PDA. Employee shall be
permitted to keep the laptop computer and PDA provided to her by the Company
after the Company’s information technology group has removed all Company data,
files and images from such laptop and PDA.

     3. Compliance with Prior Agreements. The Employee acknowledges the
legitimate Employer interests which the Restrictions set forth in Section 6 of
the Change in Control Severance Agreement, dated April 2, 2007, between American
Medical Systems Holdings, Inc. and the Employee (the “CIC Agreement”) are
designed to protect. The Employee further agrees that the Restrictions set forth
in Section 6 of the CIC Agreement are reasonable in their scope and duration,
and are supported by adequate consideration, including but not limited to the
benefits contained in the CIC Agreement and this Agreement. The Employee agrees
that she will fully comply with those Restrictions in accordance with their
terms. The Employee further agrees that she will fully comply with any prior
agreements entered into with the Employer regarding assignment of inventions,
trade secrets or confidentiality. The Employee also agrees not to divulge or use
any trade secrets, confidential information, or other proprietary information of
the Employer which she obtained, or to which she had access during her
employment with the Employer.
     4. Release. In consideration of the compensation paid by and other
undertakings of Employer stated in this Agreement, the Employee will execute the
Release within twenty-one (21) days of receiving this Agreement and will
re-execute the Release on or after the Termination Date. The Employee
understands that she is not entitled to the compensation and benefits set forth
in Sections 2(a), (b), (c) and (d) unless she signs, and does not rescind, the
Release.
     5. Stipulation of No Charges. The Employee affirmatively represents that
she has not filed nor caused to be filed any charges, claims, complaints, or
actions against the Employer before any federal, state, or local administrative
agency, court, or other forum. The Employee further waives any right to any form
of recovery or compensation from any legal action filed or threatened to be
filed by him/her or on her behalf based on her employment with, or separation of
employment from, the Employer. This does not preclude the Employee from
eligibility for unemployment benefits, and does not preclude or obstruct the
Employee’s right to file a Charge with the Equal Employment Opportunity
Commission (“EEOC”).

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     6. Non-Disparagement. The Parties to this Agreement agree that they will
make no disparaging or defamatory comments regarding the other Party.
Furthermore, the Employee agrees not to assist or encourage in any way any
individual or group of individuals to bring or pursue a lawsuit, charge,
complaint, or grievance, or make any other demands against Employer.
     7. Non-Admissions. The Parties expressly deny any and all liability or
wrongdoing and agree that nothing in this Agreement or the Release shall be
deemed to represent any concession or admission of such liability or wrongdoing
or any waiver of any defense.
     8. Invalidity. In case any one or more of the provisions of this Agreement
or Release shall be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained in
this Agreement and Release will not in any way be affected or impaired thereby.
9. Return of All Property and Commitment to Cooperate in Transition. The
Employee shall return, on or before the Termination Date, and not retain in any
form or format, all Employer documents, data, and other property in the
Employee’s possession or control. The Employee will permanently delete from any
electronic media in the Employee’s possession, custody, or control or to which
employee has access, all documents or electronically stored images of the
Employer. The Employee also agrees that she will, prior to the Termination Date,
provide the Employer with a list of any documents that the Employee created or
is otherwise aware that are password-protected and the password(s) necessary to
access such documents. The Employee shall cooperate with the Employer and shall
use the Employee’s best efforts to ensure that both the Employer’s interests and
those of the Employee are mutually protected, and to be available, on a
reasonable basis, to answer questions that may arise to achieve a smooth
transition. The Employer’s obligations under this Agreement are contingent upon
the Employee returning all Employer documents, data, and other property and
cooperating with the Employer as set forth above.
     10. Withholding For Amounts Owed to Employer. Execution of this Separation
Agreement shall constitute the Employee’s authorization for the Employer to make
deductions from the Employee’s wage payments and/or severance payments, for the
Employee’s indebtedness to the Employer, or to repay the Employer for unaccrued
Paid Time Off already taken, employee purchases, wage or benefit overpayment, or
other Employer claims against the Employee.
     11. Voluntary and Knowing Action. The Employee acknowledges that she has
read and understands the terms of this Agreement and the Release, that she has
been advised by the Employer to consult with an attorney, that she has had a
sufficient opportunity to review this Agreement and the Release with her
attorney, and that she is voluntarily and knowingly entering into this Agreement
and the Release. The Employee agrees that no promise or inducement has been
offered except as set forth in this Agreement and Release, and that the Employee
is signing this Agreement without reliance upon any statement or representation
by the Employer or any representative or agent of the Employer. The Employee
understands that this Agreement and the attached Release will have a final and
binding effect and that by executing this Agreement, she may be giving up legal
rights.

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     12. Entire Agreement. Except for any continuing obligations under the
agreements set forth in Section 3 of this Agreement or any related Employer
policy, this is the entire Agreement between the Employer and the Employee
relating to the Employee’s termination from employment and, except as provided
in Section 3 of this Agreement, supersedes any prior oral or written
understanding between the parties.
     13. Invalidity and Severability. In case any one or more of the provisions
of this Agreement or Release shall be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained in this Agreement and Release will not in any way be
affected or impaired thereby.
     14. Governing Law. This Agreement will be construed and interpreted in
accordance with applicable federal laws and the laws of the State of Minnesota.
If either party brings a legal action pursuant to this Agreement and Release
including, but not limited to, an action to enforce its terms or to challenge
its validity, such legal action shall be properly filed in a court of competent
jurisdiction located in Hennepin County, Minnesota.

            Janet L. Dick
    June 8, 2009  /s/ Janet L. Dick                     AMERICAN MEDICAL
SYSTEMS, INC.
    June 9, 2009  By:   /s/ Anthony P. Bihl, III         Anthony P. Bihl, III   
    President and Chief Executive Officer     

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EXHIBIT A
RELEASE

1.   Definitions. I intend all words used in this Release to have their plain
meanings in ordinary English. Technical legal words are not needed to describe
what I mean. Specific terms I use in this Release have the following meanings:

  (a)   “I,” “me,” and “my” include both me, Janet L. Dick and anyone who has or
obtains any legal rights or claims through me.     (b)   “Company,” as used in
this Release, shall at all times mean American Medical Systems, Inc., and its
respective parent and/or subsidiary corporations, affiliates, successors,
predecessors, shareholders, present and/or former officers, directors, agents,
employees, and attorneys, whether in their individual or official capacities,
benefit plans and plan administrators, and insurers.     (c)   “My Claims” mean
any and all of the actual or potential claims of any kind whatsoever I have now
against the Company, regardless of whether I now know about those claims, that
are in any way related to my employment with or separation (termination of
employment) from the Company, including, but not limited to, claims for invasion
of privacy; breach of written or oral, express or implied, contract; fraud or
misrepresentation; the Age Discrimination in Employment Act of 1967, as amended,
(“ADEA”), the Older Workers Benefit Protection Act of 1990 (“OWBPA”), Title VII
of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities
Act (“ADA”), the Family Medical Leave Act (“FMLA”), the Employee Retirement
Income Security Act of 1974 (“ERISA”), as amended, Equal Pay Act (“EPA”), the
Worker Adjustment and Retraining Notification Act (“WARN”), the Minnesota Human
Rights Act, Minnesota Stat. § 3 63 A et seq., Minnesota Statutes § 181 et seq.,
and any other federal, state, or local statute, law, rule, regulation, ordinance
or order. This includes, but is not limited to, claims for violation of any
civil rights laws based on protected class status; claims for discrimination,
harassment, assault, battery, defamation, intentional or negligent infliction of
emotional distress, breach of the covenant of good faith and fair dealing,
promissory estoppel, negligence,violation of public policy, and all other claims
for unlawful employment practices, and all other common law or statutory claims.

2.   Agreement to Release My Claims. Except as stated in Paragraph 5, I agree to
release (give up) and waive all My Claims against the Company. In exchange for
my agreement to release My Claims, I am receiving satisfactory consideration
(compensation) from Company to which I am not otherwise entitled by law,
contract, or under any Company policy. The consideration I am receiving is a
full and fair payment for the release of all My Claims. The Company does not owe
me anything in addition to what I will be receiving.   3.   Older Workers
Benefit Protection Act. I understand and have been advised that the above
release of My Claims is subject to the terms of the Older Workers Benefit
Protection Act (“OWBPA”). The OWBPA provides that an individual cannot waive a

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    right or claim under the Age Discrimination in Employment Act (“ADEA”)
unless the waiver is knowing and voluntary. I agree that I am signing this
Release voluntarily, and with full knowledge of its consequences. I understand
that the Company is giving me at least twenty-one (21) days from the date I
received a copy of this Release to decide whether I want to sign it. I
acknowledge that I have been advised to use this time to consult with an
attorney about the effect of this Release. If I sign this Release before the end
of the twenty-one (21) day period it will be my personal, voluntary decision to
do so, and will be done with full knowledge of my legal rights. I agree that
material and/or immaterial changes to this Release will not restart the running
of this consideration period.   4.   Exclusions from Release. My Claims do not
include my rights, if any, to claim the following: Unemployment Insurance
benefits; claims for my vested post-termination benefits under any 401(k) or
similar retirement benefit plan; my COBRA rights; my rights to enforce the terms
of this Release; or my rights to assert claims that are based on events
occurring after this Release becomes effective. In addition:

  (a)   Nothing in this Release interferes with my right to file a charge with
the Equal Employment Opportunity Commission (“EEOC”), or participate in any
manner in an EEOC investigation or proceeding under Title VII, the ADA, the
ADEA, or the EPA. I, however, understand that I am waiving my right to recover
individual relief including, but not limited to, back pay, front pay,
reinstatement, attorneys’ fees, and/or punitive damages, in any administrative
or legal action whether brought by the EEOC, by me, or any other party.     (b)
  Nothing in this Release interferes with my right to challenge the knowing and
voluntary nature of this Release under the ADEA and/or OWBPA.     (c)   Nothing
in this Release limits any rights that I would otherwise have to be indemnified
by the Employer, in my capacity as an officer or employee of the Employer, under
the Employer’s Certificate of Incorporation, Bylaws, directors’ and officers’
insurance policy, Section 145 of the Delaware General Corporation Law or any
indemnification agreement between the Company and me.     (d)   I agree that the
Company reserves any and all defenses, which it has or might have against any
claims brought by me. This includes, but is not limited to, the Company’s right
to seek available costs and attorneys’ fees, and to have any monetary award
granted to me, if any, reduced by the amount of money that I received in
consideration for this Release.

4.   Right to Rescind and/or Revoke. I understand that I have the right to
rescind this Release only insofar as it extends to potential claims under the
Age Discrimination in Employment Act (“ADEA”) by written notice to the Company
within seven (7) calendar days following my signing this Release, and within
fifteen (15) calendar days as to waiver of claims under the Minnesota Human
Rights Act. Any such rescission must be

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    in writing and hand-delivered to the Company or, if sent by mail, postmarked
within the applicable time period, sent by certified mail, return receipt
requested, and addressed as follows:

  (a)   post-marked within the seven (7) or fifteen (15) day period;     (b)  
properly addressed to Anthony P. Bihl, III, President and Chief Executive
Officer, American Medical Systems, Inc., 10700 Bren Road West, Minnetonka, MN
55343-9679, and     (c)   sent by certified mail, return receipt requested.

    I understand that the payment I am receiving for settling and releasing My
Claims is contingent upon my agreement to be bound by the terms of this Release.
Accordingly, if I decide to revoke this Release, I understand that I am not
entitled to the payments offered in the attached Settlement Agreement.

6.   I Understand the Terms of this Release. I have had the opportunity to read
this Release carefully and understand all its terms. I have been advised of my
right to review this Release with my own attorney. In agreeing to sign this
Release, I have not relied on any statements or explanations made by the Company
or their attorneys. I understand and agree that this Release and the attached
Separation Agreement, and any agreement referenced in Section 3 of the
Separation Agreement, contain all the agreements between the Company and me. We
have no other written or oral agreements.

                Dated: 6-8-09  /s/ Janet L. Dick       Janet L. Dick           

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EXHIBIT A
RELEASE

1.   Definitions. I intend all words used in this Release to have their plain
meanings in ordinary English. Technical legal words are not needed to describe
what I mean. Specific terms I use in this Release have the following meanings:

  (a)   “I,” “me,” and “my” include both me, Janet L. Dick and anyone who has or
obtains any legal rights or claims through me.     (b)   “Company,” as used in
this Release, shall at all times mean American Medical Systems, Inc., and its
respective parent and/or subsidiary corporations, affiliates, successors,
predecessors, shareholders, present and/or former officers, directors, agents,
employees, and attorneys, whether in their individual or official capacities,
benefit plans and plan administrators, and insurers.     (c)   “My Claims” mean
any and all of the actual or potential claims of any kind whatsoever I have now
against the Company, regardless of whether I now know about those claims, that
are in any way related to my employment with or separation (termination of
employment) from the Company, including, but not limited to, claims for invasion
of privacy; breach of written or oral, express or implied, contract; fraud or
misrepresentation; the Age Discrimination in Employment Act of 1967, as amended,
(“ADEA”), the Older Workers Benefit Protection Act of 1990 (“OWBPA”), Title VII
of the Civil Rights Act of 1964 (“Title VII”), the Americans with Disabilities
Act (“ADA”), the Family Medical Leave Act (“FMLA”), the Employee Retirement
Income Security Act of 1974 (“ERISA”), as amended, Equal Pay Act (“EPA”), the
Worker Adjustment and Retraining Notification Act (“WARN”), the Minnesota Human
Rights Act, Minnesota Stat. § 3 63A et sec^, Minnesota Statutes § 181 et seg.,
and any other federal, state, or local statute, law, rule, regulation, ordinance
or order. This includes, but is not limited to, claims for violation of any
civil rights laws based on protected class status; claims for discrimination,
harassment, assault, battery, defamation, intentional or negligent infliction of
emotional distress, breach of the covenant of good faith and fair dealing,
promissory estoppel, negligence, violation of public policy, and all other
claims for unlawful employment practices, and all other common law or statutory
claims.

2.   Agreement to Release My Claims. Except as stated in Paragraph 5, I agree to
release (give up) and waive all My Claims against the Company. In exchange for
my agreement to release My Claims, I am receiving satisfactory consideration
(compensation) from Company to which I am not otherwise entitled by law,
contract, or under any Company policy. The consideration I am receiving is a
full and fair payment for the release of all My Claims. The Company does not owe
me anything in addition to what I will be receiving.

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3.   Older Workers Benefit Protection Act. I understand and have been advised
that the above release of My Claims is subject to the terms of the Older Workers
Benefit Protection Act (“OWBPA”). The OWBPA provides that an individual cannot
waive a right or claim under the Age Discrimination in Employment Act (“ADEA”)
unless the waiver is knowing and voluntary. I agree that I am signing this
Release voluntarily, and with full knowledge of its consequences. I understand
that the Company is giving me at least twenty-one (21) days from the date I
received a copy of this Release to decide whether I want to sign it. I
acknowledge that I have been advised to use this time to consult with an
attorney about the effect of this Release. If I sign this Release before the end
of the twenty-one (21) day period it will be my personal, voluntary decision to
do so, and will be done with full knowledge of my legal rights. I agree that
material and/or immaterial changes to this Release will not restart the running
of this consideration period.   4.   Exclusions from Release. My Claims do not
include my rights, if any, to claim the following: Unemployment Insurance
benefits; claims for my vested post-termination benefits under any 401(k) or
similar retirement benefit plan; my COBRA rights; my rights to enforce the terms
of this Release; or my rights to assert claims that are based on events
occurring after this Release becomes effective. In addition:

  (a)   Nothing in this Release interferes with my right to file a charge with
the Equal Employment Opportunity Commission (“EEOC”), or participate in any
manner in an EEOC investigation or proceeding under Title VII, the ADA, the
ADEA, or the EPA. I, however, understand that I am waiving my right to recover
individual relief including, but not limited to, back pay, front pay,
reinstatement, attorneys fees, and/or punitive damages, in any administrative or
legal action whether brought by the EEOC, by me, or any other party.     (b)  
Nothing in this Release interferes with my right to challenge the knowing and
voluntary nature of this Release under the ADEA and/or OWBPA.     (c)   Nothing
in this Release limits any rights that I would otherwise have to be indemnified
by the Employer, in my capacity as an officer or employee of the Employer, under
the Employer’s Certificate of Incorporation, Bylaws, directors’ and officers’
insurance policy, Section 145 of the Delaware General Corporation Law or any
indemnification agreement between the Company and me.     (d)   I agree that the
Company reserves any and all defenses, which it has or might have against any
claims brought by me. This includes, but is not limited to, the Company’s right
to seek available costs and attorneys’ fees, and to have any monetary award
granted to me, if any, reduced by the amount of money that I received in
consideration for this Release.

5.   Right to Rescind and/or Revoke. I understand that I have the right to
rescind this Release only insofar as it extends to potential claims under the
Age Discrimination in Employment Act (“ADEA”) by written notice to the Company
within seven (7) calendar days following my signing this Release, and within
fifteen

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    (15) calendar days as to waiver of claims under the Minnesota Human Rights
Act. Any such rescission must be in writing and hand-delivered to the Company
or, if sent by mail, postmarked within the applicable time period, sent by
certified mail, return receipt requested, and addressed as follows:

  (a)   post-marked within the seven (7) or fifteen (15) day period;     (b)  
properly addressed to Anthony P. Bihl, III, President and Chief Executive
Officer, American Medical Systems, Inc., 10700 Bren Road West, Minnetonka, MN
55343-9679, and     (c)   sent by certified mail, return receipt requested.

    I understand that the payment I am receiving for settling and releasing My
Claims is contingent upon my agreement to be bound by the terms of this Release.
Accordingly, if I decide to revoke this Release, I understand that I am not
entitled to the payments offered in the attached Settlement Agreement.       I
Understand the Terms of this Release. I have had the opportunity to read this
Release carefully and understand all its terms. I have been advised of my right
to review this Release with my own attorney. In agreeing to sign this Release, I
have not relied on any statements or explanations made by the Company or their
attorneys. I understand and agree that this Release and the attached Separation
Agreement, and any agreement referenced in Section 3 of the Separation
Agreement, contain all the agreements between the Company and me. We have no
other written or oral agreements.

                Dated: 6-30-09  /s/ Janet L. Dick       Janet L. Dick           

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