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                                                                   EXHIBIT 10.12


                     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
                          EMPLOYEE STOCK PURCHASE PLAN

1.       Purpose. The purpose of this Employee Stock Purchase Plan (the "Plan")
is to advance the interests of American Medical Systems Holdings, Inc. (the
"Company") and its stockholders by providing Employees (as defined below) of the
Company and its Designated Subsidiaries (as defined below) with an opportunity
to acquire an ownership interest in the Company through the purchase of Common
Stock (as defined below) of the Company on favorable terms through payroll
deductions. It is the intention of the Company that the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). Accordingly, provisions of the Plan shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of Section 423 of the Code.

2.       Definitions.

         (a)  "Board" means the Board of Directors of the Company.

         (b)  "Common Stock" means the voting common stock, par value $.01 per
         share, of the Company, or the number and kind of shares of stock or
         other securities into which such voting common stock may be changed in
         accordance with Section 13 of the Plan.

         (c)  "Committee" means the entity administering the Plan, as provided
         in Section 3 below.

         (d)  "Compensation" means all regular straight-time earnings and
         commissions that are included in regular compensation, excluding
         bonuses and any pay for overtime (except to the extent that the
         inclusion of any such item is specifically directed by the Committee),
         determined in a manner consistent with the requirements of Section 423
         of the Code.

         (e)  "Designated Subsidiary" means a Subsidiary that has been
         designated by the Board from time to time, in its sole discretion, as
         eligible to participate in the Plan.

         (f)  "Employee" means any person, including an officer, who is
         customarily employed by the Company or one of its Designated
         Subsidiaries for at least 20 hours per week and more than five (5)
         months in a calendar year.

         (g)  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended.

         (h)  "Fair Market Value" means, with respect to the Common Stock, as of
         any date (or, if no shares were traded or quoted on such date, as of
         the next preceding date on which there was such a trade or quote) (a)
         the closing sale price of the Common Stock if the Common Stock is
         listed, admitted to unlisted trading privileges or reported on any
         foreign or national securities exchange or on the Nasdaq National
         Market or an equivalent foreign market on which sale prices are
         reported; (b) if the Common Stock is not so listed, admitted to
         unlisted trading privileges or reported, the closing bid price as
         reported by the



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         Nasdaq SmallCap Market, OTC Bulletin Board or the National Quotation
         Bureau, Inc. or other comparable service; or (c) if the Common Stock is
         not so listed or reported, such price as the Committee determines in
         good faith in the exercise of its reasonable discretion, but in a
         manner acceptable under Section 423 of the Code.

         (i)  "Offering" means any of the offerings to Participants of options
         to purchase Common Stock under the Plan, each continuing for three
         months, except for the initial Offering which shall continue for the
         period set forth in Section 5 below.

         (j)  "Offering Date" means the first day of the Offering Period under
         the Plan, as described in Section 5 below.

         (k)  "Offering Period" means the time period commencing on the Offering
         Date and ending on the Termination Date.

         (l)  "Option Price" is defined in Section 8 below.

         (m)  "Participant" means an Eligible Employee who elects to participate
         in the Plan pursuant to Section 6 below.

         (n)  "Securities Act" means the Securities Act of 1933, as amended.

         (o)  "Subsidiary" means any subsidiary corporation of the Company
         within the meaning of Section 424(f) of the Code.

         (p)  "Termination Date" means the last day of the Offering Period under
         the Plan, as described in Section 5 below.

3.       Administration. The Plan will be administered by the Board or by a
committee of the Board. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, the Plan will be
administered by a committee of the Board consisting solely of not less than two
members of the Board who are "non-employee directors" within the meaning of Rule
16b-3 under the Exchange Act and, if the Board so determines in its sole
discretion, who are "outside directors" within the meaning of Section 162(m) of
the Code (the "Committee"). Members of the Committee shall be appointed from
time to time by the Board, shall serve at the pleasure of the Board, and may
resign at any time upon written notice to the Board. A majority of the members
of the Committee shall constitute a quorum. The Committee shall act by majority
approval of the members and shall keep minutes of its meetings. Action of the
Committee may be taken without a meeting if unanimous written consent is given.
Copies of minutes of the Committee's meetings and of its actions by written
consent shall be kept with the corporate records of the Company. In accordance
with and subject to the provisions of the Plan, the Committee shall have
authority to make, administer and interpret such rules and regulations as it
deems necessary to administer the Plan, and any determination, decision or
action in connection with construction, interpretation, administration or
application of the Plan shall be final, conclusive and binding upon all
Participants and any and all persons claiming under or through any Participant.
No member of the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any option granted under the Plan.



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4.       Eligibility.

         (a)  Any Employee who is employed by the Company or a Designated
         Subsidiary on the date that this Plan is approved by the Board and any
         Employee who becomes an employee after such date and has been employed
         by the Company or a Designated Subsidiary for at least one month prior
         to an Offering Date shall be eligible to participate in the Plan,
         beginning with the Offering commencing on such Offering Date, subject
         to the limitations imposed by Section 423(b) of the Code. With respect
         to a Designated Subsidiary that has been acquired by the Company, the
         period of employment of Employees of such Designated Subsidiary
         occurring prior to the time of such acquisition shall be included for
         purposes of determining whether an Employee has been employed for the
         requisite period of time under the Plan.

         (b)  Any provisions of the Plan to the contrary notwithstanding, no
         Employee shall be granted an option under the Plan if:

              (i)  immediately after the grant, such Employee (or any other
              person whose stock ownership would be attributed to such Employee
              pursuant to Section 424(d) of the Code) would own shares of Common
              Stock and/or hold outstanding options to purchase shares of Common
              Stock possessing five percent (5%) or more of the total combined
              voting power or value of all classes of shares of the Company or
              of any Subsidiary; or

              (ii) the amount of payroll deductions that the Employee has
              elected to have withheld under such option (pursuant to Section 7
              below) would permit the Employee to purchase shares of Common
              Stock under all "employee stock purchase plans" (within the
              meaning of Section 423 of the Code) of the Company and its
              Subsidiaries to accrue (i.e., become exercisable) at a rate that
              exceeds $25,000 of the Fair Market Value of such shares of Common
              Stock (determined at the time such option is granted) for each
              calendar year in which such option is outstanding at any time.

5.       Offerings. Options to purchase shares of Common Stock shall be offered
to Participants under the Plan through a continuous series of Offerings, each
continuing for three months, except for the initial Offering Period, and each of
which shall commence on January 1, April 1, July 1 and October 1 of each year,
as the case may be, except for the initial Offering Period (the "Offering
Date"), and shall terminate on March 31, June 30, September 30 and December 31
of each year, as the case may be (the "Termination Date"). The initial Offering
Period under the Plan shall continue for four months, commencing on September 1,
2000 and terminating on December 31, 2000. Offerings under the Plan shall
continue until either (a) the Committee decides, in its sole discretion, that no
further Offerings shall be made because the Common Stock remaining available
under the Plan is insufficient to make an Offering to all eligible Employees, or
(b) the Plan is terminated in accordance with Section 17 below.



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6.       Participation.

         (a)  An eligible Employee may become a Participant in the Plan by
         completing a subscription agreement authorizing payroll deductions on
         the form provided by the Company (the "Participation Form") and filing
         the Participation Form with the Company's Human Resources Department
         not less than 15 days before the Offering Date of the first Offering in
         which the Participant wishes to participate.

         (b)  Except as provided in Section 7(a) below, payroll deductions for a
         Participant shall begin with the first payroll following the applicable
         Offering Date, and shall continue until the termination date of the
         Plan, subject to earlier termination by the Participant as provided in
         Section 11 below or increases or decreases by the Participant in the
         amount of payroll deductions as provided in Section 7(c) below.

         (c)  A Participant may discontinue participation in the Plan at any
         time as provided in Section 11 below.

7.       Payroll Deductions.

         (a)  By completing and filing a Participation Form, a Participant shall
         elect to have payroll deductions made from the Participant's total
         Compensation (in whole percentages from one percent (1%) to a maximum
         of ten percent (10%) of the Participant's total Compensation) on each
         payday during the time he or she is a Participant in the Plan in such
         amount as he or she shall designate on the Participation Form.

         (b)  All payroll deductions authorized by a Participant shall be
         credited to an account established under the Plan for the Participant.
         The monies represented by such account shall be held as part of the
         Company's general assets, usable for any corporate purpose, and the
         Company shall not be obligated to segregate such monies. A Participant
         may not make any separate cash payment or contribution to such account.

         (c)  No increases or decreases of the amount of payroll deductions for
         a Participant may be made during an Offering. A Participant may
         increase or decrease the amount of payroll deductions under the Plan
         for subsequent Offerings by completing an amended Participation Form
         and filing it with the Company's Human Resources Department not less
         than 15 days prior to the Offering Date as of which such increase or
         decrease is to be effective.

8.       Grant of Option. On each Offering Date, each eligible Employee who is
then a Participant shall be granted (by operation of the Plan) an option to
purchase (at the Option Price) as many shares of Common Stock as the Participant
will be able to purchase with the payroll deductions credited to the
Participant's account during the Offering Period. Notwithstanding the foregoing,
in no event may the number of shares purchased by any Participant during an
Offering exceed 1,000 shares of Common Stock. The option price per share of such
shares (the "Option Price") shall be the lesser of (a) eighty-five percent (85%)
of the Fair Market Value of one share of Common Stock on the Offering Date, or
(b) eighty-five (85%) of the Fair Market Value of one



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share of Common Stock on the Termination Date.

9.       Exercise of Option.

         (a)  Unless a Participant gives written notice to the Company as
         provided in Section 9(d) below or withdraws from the Plan pursuant to
         Section 11 below, the Participant's option for the purchase of shares
         of Common Stock granted for an Offering will be exercised automatically
         at the Termination Date of such Offering for the purchase of the number
         of full shares of Common Stock that the accumulated payroll deductions
         in the Participant's account on such Termination Date will purchase at
         the applicable Option Price.

         (b)  A Participant may purchase one or more shares in connection with
         the automatic exercise of an option granted for any Offering. If the
         Committee elects to deliver a statement of account to Participants
         pursuant to Section 10(a)(i)(A) below, that portion of any balance
         remaining in a Participant's payroll deduction account at the close of
         business on the Termination Date of any Offering that is less than the
         purchase price of one full share will be deemed to have purchased such
         number of fractional shares of Common Stock as would then be
         purchasable at the applicable Option Price, with such fractional shares
         calculated to the third (3rd) decimal place. If the Committee elects to
         deliver stock certificates to Participants pursuant to Section
         10(a)(i)(B) below, that portion of any balance remaining in a
         Participant's payroll deduction account at the close of business on the
         Termination Date of any Offering that is less than the purchase price
         of one full share will be carried forward into the Participant's
         payroll deduction account for the following Offering; provided that in
         no event will the balance carried forward be equal to or greater than
         the purchase price of one share on the Termination Date of an Offering.

         (c)  No Participant (or any person claiming through such Participant)
         shall have any interest in any Common Stock subject to an option under
         the Plan until such option has been exercised, at which point such
         interest shall be limited to the interest of a purchaser of the Common
         Stock purchased upon such exercise pending the delivery or credit of
         such Common Stock in accordance with Section 10 below. During the
         Participant's lifetime, a Participant's option to purchase shares of
         Common Stock under the Plan is exercisable only by such Participant.

         (d)  By written notice to the Company prior to the Termination Date of
         any Offering, a Participant may elect, effective on such Termination
         Date, to:

              (i)  withdraw all of the accumulated payroll deductions in the
              Participant's account as of the Termination Date (which withdrawal
              may, but need not, also constitute a notice of termination and
              withdrawal pursuant to Section 11(a)); or

              (ii) exercise the Participant's option for a specified number of
              full shares not less than five that is less than the number of
              full shares of Common Stock that the accumulated payroll
              deductions in the Participant's account will purchase on the
              Termination Date of the Offering at the applicable Option Price,
              and withdraw the


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              balance in the Participant's payroll deduction account.

10.      Delivery.

         (a)  As promptly as practicable after the Termination Date of each
         Offering, the Company will deliver to each Participant, as appropriate,
         the following:

              (i)   At the election of the Committee, either issue (A) in
              certificated or uncertificated form to a third party the aggregate
              number of shares of Common Stock purchased in connection with an
              Offering (including an aggregate of all of the fractional shares
              deemed to have been purchased pursuant to Section 9(b) above)
              rounded to the nearest full share, which shares will be held by
              such third party for the benefit of the Participants in accordance
              with their respective interests, and to each Participant a
              statement summarizing the number of whole shares of Common Stock
              purchased and fractional shares deemed purchased upon exercise of
              the Participant's option granted for such Offering, or (B) a
              certificate representing the number of full shares of Common Stock
              purchased upon exercise of the Participant's option granted for
              such Offering, registered in the name of the Participant or, if
              the Participant so directs on the Participation Form, in the names
              of the Participant and his or her spouse.

              (ii)  If the Participant makes an election pursuant to Section
              9(d)(i) above for the Offering, a check in an amount equal to the
              total of the payroll deductions credited to the Participant's
              account.

              (iii) If Participant makes an election pursuant to Section
              9(d)(ii) above, a check in the amount of the balance of any
              payroll deductions credited to the Participant's account that were
              not used for the purchase of Common Stock.

              (iv)  If the balance in the Participant's payroll deduction
              account exceeds the dollar amount necessary to purchase the
              maximum amount of shares that may be purchased in an Offering, a
              check in an amount equal to the excess balance.

         (b)  If the Company delivers a statement of account as provided in
         Section 10(a)(i)(A) above, a Participant may at any time request that a
         certificate for the number of whole shares of Common Stock purchased by
         such Participant in an Offering or in any previous Offering (with
         respect to which such participant has not been issued a certificate) be
         issued and delivered to such Participant by making a written request to
         the Company. Such written request shall be made to the Company's Human
         Resources Department or, at the direction of the Company, to the
         transfer agent and registrar for the Company's Common Stock. In lieu of
         issuing certificates for fractional shares, Participants will receive a
         cash distribution representing any fractional shares, calculated in
         accordance with Section 11(a) below.

         (c)  If the Company delivers a statement of account as provided in
         Section 10(a)(i)(A) above, all full shares purchased and fractional
         shares deemed to have been purchased by a



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         Participant in an Offering and in any subsequent Offerings will
         accumulate for the benefit of the Participant until the Participant's
         withdrawal or termination pursuant to Section 11 below.

11.      Withdrawal; Termination of Employment.

         (a)  A Participant may terminate participation in the Plan and withdraw
         all, but not less than all, of the payroll deductions credited to the
         Participant's account under the Plan at any time prior to the
         Termination Date of an Offering, for such Offering, by giving written
         notice to the Company. Such notice shall state that the Participant
         wishes to terminate the Participant's involvement in the Plan, specify
         a termination date and request the withdrawal of all of the
         Participant's payroll deductions held under the Plan. All of the
         Participant's payroll deductions credited to the Participant's account
         will be paid to such Participant as soon as practicable after the
         termination date specified in the notice of termination and withdrawal
         (or, if no such date is specified, as soon as practical after receipt
         of notice of termination and withdrawal), and the Participant's option
         for such Offering will be automatically canceled, and no further
         payroll deductions for the purchase of shares of Common Stock will be
         made for such Offering or for any subsequent Offering, except in
         accordance with a new Participation Form filed pursuant to Section 6
         above. If the Committee elects to deliver a statement of account
         pursuant to Section 10(a)(i)(A) above, then on the withdrawal and
         termination of a Participant's participation in the Plan, the
         Participant will be entitled to receive, at the Participant's option,
         (i) cash equal to the Fair Market Value of all full shares of Common
         Stock and any fractional share deemed purchased pursuant to Section
         9(b) then held for the benefit of the Participant; or (ii) a
         certificate representing the number of full shares of Common Stock held
         for the benefit of the Participant plus cash in an amount equal to the
         Fair Market Value of any remaining fractional shares deemed to have
         been purchased. In any event, Fair Market Value will be determined as
         set forth in Section 11(d) below, and such certificate will be
         delivered and such amounts paid as soon thereafter as practicable.

         (b)  Upon termination of a Participant's employment for any reason,
         including retirement or death, the payroll deductions accumulated in
         the Participant's account will be returned to the Participant as soon
         as practicable after such termination or, in the case of death, to the
         person or persons entitled thereto under Section 14 below, and the
         Participant's option will be automatically canceled. If the Committee
         elects to deliver a statement of account pursuant to Section
         10(a)(i)(A), then upon the termination of a Participant's employment
         for any reason, including retirement or death, the Participant, or, in
         the case of death, the Participant's designated beneficiary (if allowed
         by the Committee) as determined in accordance with Section 14 or the
         executor or administrator of the Participant's estate will be entitled
         to receive, at their option, (i) cash equal to the Fair Market Value of
         all full shares of Common Stock and any fractional share deemed
         purchased pursuant to Section 9(b) then held for the benefit of the
         Participant; or (ii) a certificate representing the number of full
         shares of Common Stock held for the benefit of the Participant plus
         cash in an amount equal to the Fair Market Value of any remaining
         fractional share deemed to have been purchased. In any event, Fair
         Market Value will be determined as set forth in Section 11(d) below and
         such certificate will be delivered and


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         such amounts paid as soon thereafter as practicable. For purposes of
         the Plan, the termination date of employment shall be the Participant's
         last date of actual employment and shall not include any period during
         which such Participant receives any severance payments. A transfer of
         employment between the Company and a Designated Subsidiary or between
         one Designated Subsidiary and another Designated Subsidiary, or absence
         or leave approved by the Company, shall not be deemed a termination of
         employment under this Section 11(b).

         (c)  A Participant's termination and withdrawal pursuant to Section
         11(a) above will not have any effect upon the Participant's eligibility
         to participate in a subsequent Offering by completing and filing a new
         Participation Form pursuant to Section 6 above or in any similar plan
         that may hereafter be adopted by the Company.

         (d)  For purposes of this Section 11 only, "Fair Market Value" means
         the prevailing market price of the Common Stock on any national
         securities exchange (if the Common Stock is listed on any such
         exchange) or as reported by the Nasdaq National Market, the Nasdaq
         SmallCap System or the National Quotation Bureau, Inc. (or any
         comparable reporting service), as the case may be, (if transactions or
         bid and asked prices are reported in the over-the-counter market are so
         reported) on the first day on which shares of Common Stock are traded
         following the day on which the Company, or if the Company so
         designates, the Company's agent, receives notice from a Participant of
         an event specified in Section 11(a) or 11(b) above.

12.      Interest.  No interest shall accrue on a Participant's payroll
deductions under the Plan.

13.      Stock Subject to the Plan.

         (a)  The maximum number of shares of Common Stock that shall be
         reserved for sale under the Plan shall be 100,000 shares, subject to
         adjustment upon changes in capitalization of the Company as provided in
         Section 13(b) below. The shares to be sold to Participants under the
         Plan may be, at the election of the Company, either treasury shares or
         shares authorized but unissued. If the total number of shares of Common
         Stock that would otherwise be subject to options granted pursuant to
         Section 8 above on any Termination Date exceeds the number of shares
         then available under the Plan (after deduction of all shares for which
         options have been exercised or are then outstanding), the Company shall
         make a pro rata allocation of the shares of Common Stock remaining
         available for issuance in as uniform and equitable a manner as is
         practicable as determined in the Company's sole discretion. In such
         event, the Company shall give written notice of such reduction of the
         number of shares subject to the option to each Participant affected
         thereby and shall return any excess funds accumulated in each
         Participant's account as soon as practicable after the Termination Date
         of such Offering.

         (b)  In the event of any reorganization, merger, consolidation,
         recapitalization, liquidation, reclassification, stock dividend, stock
         split, combination of shares, rights offering, divestiture or
         extraordinary dividend (including a spin-off) or any other change in
         the corporate structure or shares of the Company, the Committee (or, if
         the Company is



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         not the surviving corporation in any such transaction, the board of
         directors of the surviving corporation) will make appropriate
         adjustment (which determination will be conclusive) as to the number
         and kind of securities or other property (including cash) available for
         issuance or payment under the Plan and, in order to prevent dilution or
         enlargement of the rights of Participants, the number and kind of
         securities or other property (including cash) subject to, and the
         exercise price of, outstanding options.

         (c)  In the event that Participants are deemed to have purchased
         fractional shares of Common Stock pursuant to Section 9(b) above, the
         aggregate of such fractional share interests at any given time will be
         applied to reduce the maximum number of shares of Common Stock
         remaining available for issuance under the Plan.

14.      Designation of Beneficiary.

         (a)  In the discretion of the Committee, a Participant may file written
         designation of a beneficiary who is to receive shares of Common Stock
         and/or cash, if any, from the Participant's account under the Plan in
         the event of such Participant's death at a time when cash or shares of
         Common Stock are held for the Participant's account.

         (b)  Such designation of beneficiary may be changed by the Participant
         at any time by written notice. In the event of the death of a
         Participant in the absence of a valid designation of a beneficiary who
         is living at the time of such Participant's death, the Company shall
         deliver such shares of Common Stock and/or cash to the executor or
         administrator of the estate of the Participant; or, if no such executor
         or administrator has been appointed (to the knowledge of the Company),
         the Company, in its discretion, may deliver such shares of Common Stock
         and/or cash to the spouse or to any one or more dependents or relatives
         of the Participant; or, if no spouse, dependent or relative is known to
         the Company, then to such other person as the Company may designate.

15.      Transferability. Neither payroll deductions credited to a Participant's
account nor any rights with regard to the exercise of an option or to receive
shares of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14 above) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 11(a) above.

16.      Amendment or Termination. The Plan may be amended by the Board from
time to time to the extent that the Board deems necessary or appropriate in
light of, and consistent with, Section 423 of the Code; provided, however, that
no such amendment shall be effective, without approval of the stockholders of
the Company, if stockholder approval of the amendment is then required pursuant
to Rule 16b-3 under the Exchange Act or any successor rule or Section 423 of the
Code. The Board also may terminate the Plan or the granting of options pursuant
to the Plan at any time; provided, however, that the Board shall not have the
right to modify, cancel, or amend any outstanding option granted pursuant to the
Plan before such termination unless each Participant consents in writing to such
modification, amendment or cancellation.



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17.      Notices. All notices or other communications by a Participant to the
Company in connection with the Plan shall be deemed to have been duly given when
received in the Company's Human Resources Department or in such other department
or by such other person as may be designated by the Company for the receipt of
such notices or other communications, in the form and at the location specified
by the Company.

18.      Term of Plan. The Plan shall be effective as of May 24, 2000, the date
the Plan was adopted by the Board. The Plan has been adopted by the Board
subject to stockholder approval within twelve months before or after the date
the Board adopted the Plan and subject to completion of the Company's initial
public offering of Common Stock. Prior to stockholder approval, shares of Common
Stock may be issued under the Plan subject to such approval. The Plan will
terminate at midnight on May 24, 2010, and may be terminated prior to such time
by Board action in accordance with Section 16.

19.      Conditions Upon Issuance Of Shares.

         (a)  Compliance. Shares shall not be issued with respect to an option
         unless the exercise of such option and the issuance and delivery of
         such shares pursuant thereto shall comply with all applicable
         provisions of law, domestic or foreign, including, without limitation,
         the Securities Act, the Exchange Act, the rules and regulations
         promulgated thereunder, and the requirements of any stock exchange or
         Nasdaq upon which the shares may then be listed, and shall be further
         subject to the approval of counsel for the Company with respect to such
         compliance. As a condition to the exercise of an option, if required by
         applicable securities laws, the Company may require the Participant for
         whose account the option is being exercised to represent and warrant at
         the time of such exercise that the shares are being purchased only for
         investment and without any present intention to sell or distribute such
         shares if, in the opinion of counsel for the Company, such a
         representation is required by any of the aforementioned applicable
         provisions of law.

         (b)  Share Transfers. Shares of Common Stock issued pursuant to options
         granted under the Plan may not be sold, assigned, transferred, pledged,
         encumbered or otherwise disposed of, whether voluntarily or
         involuntarily, directly or indirectly, by operation of law or
         otherwise, except pursuant to registration under the Securities Act and
         applicable state securities laws or pursuant to exemptions from such
         registrations. The Company may condition the sale, assignment,
         transfer, pledge, encumbrance or other disposition of such shares not
         issued pursuant to an effective and current registration statement
         under the Securities Act and all applicable state securities laws on
         the receipt from the party to whom the shares of Common Stock are to be
         so transferred of any representations or agreements requested by the
         Company in order to permit such transfer to be made pursuant to
         exemptions from registration under the Securities Act and applicable
         state securities laws.

         (c)  Legends. Unless a registration statement under the Securities Act
         and applicable state securities laws is in effect with respect to the
         issuance or transfer of shares of Common Stock under the Plan, each
         certificate representing any such shares shall be


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         endorsed with a legend in substantially the following form, unless
         counsel for the Company is of the opinion as to any such certificate
         that such legend is unnecessary:

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
STATE LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH
STATE LAWS, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION
OF THE COMPANY.

20.      Miscellaneous. The headings to Sections in the Plan have been included
for convenience of reference only. Except as otherwise expressly indicated, all
references to Sections in the Plan shall be to Sections of the Plan. The Plan
shall be interpreted and construed in accordance with the laws of the State of
Delaware.


                                       11
<PAGE>   12




                     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
                          EMPLOYEE STOCK PURCHASE PLAN

              PAYROLL DEDUCTION AUTHORIZATION FORM AND SUBSCRIPTION
                                    AGREEMENT

______       Original Application
______       Change in Payroll Deduction Amount

1.       I, _______________________________ hereby elect to participate in the
American Medical Systems Holdings, Inc. Employee Stock Purchase Plan (the
"Plan") and subscribe to purchase shares of the Company's Common Stock (the
"Shares") in accordance with this Agreement and the Plan.

2.       I hereby authorize payroll deductions, beginning ____________, 200_,
from each paycheck in the amount of __% of my compensation (may not exceed ten
percent (10%) of total compensation on each payday) in accordance with the Plan.

3.       I understand that said payroll deductions shall be accumulated for the
purchase of shares in accordance with the Plan, and that shares will be
purchased for me automatically at the end of each Offering Period under the Plan
unless I withdraw my accumulated payroll deductions, withdraw from the Plan, or
both, by giving written notice to the Company prior to the end of the offering
period, as provided in the Plan.

4.       Shares purchased for me under the Plan should be issued or held in an
account in the name(s) of:


        ____________________________________________
                         (name(s))


        ____________________________________________
                         (address)


        ____________________________________________



        ____________________________________________
                  (social security number)

5.       I understand that if I dispose of any Shares received by me pursuant to
the Plan within two years after the first day of the Offering Period during
which I purchased such Shares, I may be treated for federal income tax purposes
as having received ordinary income at the time of such disposition in an amount
equal to the excess of the fair market value of the Shares at the time such
Shares were delivered to me over the option price paid for the Shares. I hereby
agree to notify the Company in writing within 30 days after the date of any such
disposition. However, if I dispose of such shares at any time after the
expiration of the two-year holding period, I



<PAGE>   13

understand that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such income will
be taxed as ordinary income only to the extent of an amount equal to the lesser
of (a) the excess of the fair market value of the Shares at the time of such
disposition over the amount paid for the Shares under the option, or (b) the
excess of the fair market value of the Shares over the option price, measured as
if the option had been exercised on the first day of the offering period during
which I purchased such shares. The remainder of the gain, if any, recognized on
such disposition will be taxed at capital gains rates.

I have read the current prospectus for the American Medical Systems Holdings,
Inc. Employee Stock Purchase Plan.

Date:
     --------------------------          ---------------------------------------
                                           Signature of Employee


CERTIFICATION OF TAX IDENTIFICATION NUMBER


--------------------------------------------------------------------------------
Please indicate your Social Security or Tax Identification Number


I certify under penalties of perjury (1) that the number above is my correct
Social Security or Taxpayer Identification Number and (2) that I am not subject
to backup withholding either because I have not been notified by the IRS that I
am subject to backup withholding as a result of failure to report all interest
or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.

Date:
     --------------------------          ---------------------------------------
                                           Signature