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                                                                   EXHIBIT 10.29


                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated effective as of
January 2, 1996, is between UROHEALTH SYSTEMS, INC., a Delaware corporation (the
"Company"), AND MICHAEL SCHULER, (the "Employee").

         A.      The Company desires to obtain the continued services of
Employee, on its own behalf and on behalf of all existing and future
"Affiliated Companies" (defined as any corporation or other business entity or
entities that directly or indirectly controls, is controlled by, or is under
common control with the Company), and Employee desires to continue in the
employment of the Company upon the following terms and conditions.

         B.      The Company has spent significant time, effort and money to
develop certain Proprietary Information (as defined below), which the Company
considers vital to its business and goodwill.

         C.      The Proprietary Information will necessarily be communicated
to or acquired by Employee in the course of his employment with the Company,
and the Company desires to obtain the continued services of Employee, only if,
in doing so, it can protect its Proprietary Information and goodwill.

ACCORDINGLY, THE PARTIES AGREE AS FOLLOWS:

         1.      Period of Employment

                 (a)      The Company hereby employs Employee to render
services to the Company in the position and with the duties and
responsibilities described in Section 2 for the period (the "Period of
Employment") beginning January 2, 1996 and ending on the earlier of (i)
december 31, 1996, as the same may be extended pursuant to Section l(b) below
(the "Term Date") and (ii) the date the Period of Employment is terminated in
accordance with Section 4.

                 (b)      Unless earlier terminated in accordance with Section
4, this Agreement shall automatically renew for an additional one-year term on
the first and second anniversaries of the date of this Agreement.

         2.      Position, Duties and Responsibilities

                 (a)      Employee hereby accepts employment with the Company
as Vice President of New Business Development of the Company, or other
positions as the Chief Executive Officer of the Company shall designate.
Employee shall devote his best efforts and his full time and attention to the
performance of the services customarily incident to such office and to such
other services as may be reasonably requested by the Chief Executive Officer of
the Company.





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                 (b)      Full-Time Employment.  Employee shall devote full
time to Employee's employment, and shall expend best efforts on behalf of the
Company Employee agrees that while employed by the company, Employee will not
engage in any other employment or business which could interfere with the
performance of Employee's duties to the Company, or compete with the Company in
any way.  Employee agrees to abide by all policies and decisions of the Company
during the term of this Agreement.

                 (c)      Competitive Plans.  Employee agrees not to take any
preliminary steps to set up or engage in any business enterprises that would
compete in any way with the Company during the term of this Agreement.  While
employed by the Company, Employee agrees to divulge to the Company any and all
competitive plans which Employee may have under consideration, whether or not
Employee intends to act upon them.  As used in the preceding sentence, the term
"competitive plans" shall include, but not be limited to, plans to set up,
establish or engage in a business enterprise in competition with the Company,
and plans to seek or accept employment from anyone in competition with the
Company.

                 (d)      Business Opportunities.  Employee agrees promptly and
fully to disclose to the Company, and not to divert to Employee's own use or
benefit, or the use or benefit of others, any business opportunities involving
any past, existing or prospective lines of business, suppliers, products or
other business activities of the Company, or any other business opportunities
that should otherwise be disclosed to the Company.

         3.      Compensation, Benefits and Expenses

                 (a)      Compensation.  In consideration of the services to be
rendered hereunder, including, without limitation, services to any Affiliated
Company, Employee shall be paid an annual salary of Two Hundred Twenty Five
Thousand Dollars ($225,000), payable in 24 equal installments at the times and
pursuant to the procedures regularly established, and as they may be amended,
by the Company during the term of this Agreement.

                 (b)      Bonus.  Employee shall also be eligible to receive,
in the discretion of the Board of Directors (the "Board"), a performance bonus
(or other special bonuses), in such amounts as determined by the Board based
upon the Board's evaluation of the performance of Employee, the Company's
operating results and such other criteria determined by the Board to be
relevant.

                 (c)      Benefits.  As he becomes eligible therefor, the
Company shall provide Employee with the right to participate in and to receive
benefits from all present and future life, accident, disability, medical, and
savings plans and all similar benefits made available generally to the
Company's other similarly situated employees.





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The amount and extent of benefits to which Employee is entitled shall be
governed by the specific benefit plan, as it may be amended from time to time.

         (d)     Vacation, Employee shall be entitled to three weeks of
vacation per year, exclusive of Company holidays.

         (e)     Expenses.  The Company shall reimburse Employee for reasonable
travel and other business expenses incurred by Employee in the performance of
his duties hereunder in accordance with the Company's general policies, as they
may be amended from time to time during the term of this Agreement.

         4.      Termination of Employment.

                 (a)      By Death.  The Period of Employment shall terminate
automatically upon the death of Employee.  The Company shall pay to Employee's
beneficiaries or estate, as appropriate, the compensation to which he is
entitled pursuant to Section 3(a) through the end of the month in which death
occurs.  Thereafter, the Company's obligations hereunder shall terminate.
Nothing in this section shall affect any entitlement of Employee's heirs to the
benefits under any life insurance plan.

                 (b)      By Disability.  If, in the sole opinion of the Board,
employee shall be prevented from properly performing his duties hereunder by
reason of any physical or mental incapacity for a period of more than 150 days
in the aggregate or 120 consecutive days in any twelve-month period, then, to
the extent permitted by law, the Period of Employment shall terminate on and
the compensation to which Employee is entitled pursuant to Section 3(a) shall
be paid up through the last day of the month in which the Board determines
Employee to be disabled hereunder, and thereafter the Company's obligations
hereunder shall terminate.  Nothing in this section shall affect Employee's
rights under any disability plan in which he is a participant.

                 (c)      By Company For Cause.  The Company may terminate,
without liability, the Period of Employment for Cause (as defined below) at any
time upon 15 days' advance written notice to Employee.  The Company shall pay
Employee the compensation to which he is entitled pursuant to Section 3(a)
through the end of the notice period and thereafter the Company's obligations
hereunder shall terminate.  Termination shall be for "Cause" if (i) Employee
has engaged in illegal or other wrongful conduct substantially detrimental to
the business or reputation of the Company or any Affiliated Company, or is
charged with or convicted of a felony; (ii) Employee refuses or fails to act in
accordance with any reasonable direction or order of the Board or his immediate
superiors; provided, that the Board or such superiors has given Employee
written notice of such refusal or failure and Employee fails to comply with
such direction or order within 15 days after the date of such notice; or (iii)
Employee has engaged in any fraud, embezzlement, misappropriation or similar
conduct against the Company.





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                 (d)      By Company Without Cause. The Company may terminate
the Period of Employment without Cause at any time upon 90 days' advance
written notice to Employee.  Upon such termination, and subject to Employee's
compliance with provisions of Section 6 hereof, the Company shall pay Employee
aggregate payments in an amount equal to the amount of compensation to which he
is entitled pursuant to Section 3(a) for the remainder of the Period of
Employment which shall for purposes of this subsection (d) include the renewals
contemplated by Section 1(b) above, and thereafter all obligations of the
Company hereunder shall terminate, In the event that the period of Employment
is terminated without Cause, the payments required under this Section 4(d)
shall be made in accordance with the then normal payroll practices of the
Company.

                 (e)      Termination Obligations.

                          (i)     Employee hereby acknowledges and agrees that
all personal property, including, without limitation, all books, manuals,
records, reports,  notes, contracts, lists, blueprints and other documents, or
materials, or copies thereof, Proprietary Information (as defined below),
furnished to or prepared by Employee in the course of or incident to his
employment, including, without limitation, records and any other materials
pertaining to Invention Ideas (as defined below), belong to the Company.

                          (ii)    Upon termination of the Period of Employment,
Employee shall be deemed to have resigned from all offices then held with the
Company or any Affiliated Company.

                          (iii)   The representations and warranties contained
herein and Employee's obligations under Sections 4(e) and 6 shall survive
termination of the Period of Employment and the expiration of this Agreement.

         5.      Change of Control.  Following a "Change of Control", Employee
shall be entitled to terminate his employment hereunder, with or without good
reason, upon 30 days' advance written notice to the Company given at any time
during the one-year period after the Change of Control.  In the event that
Employee terminates his employment pursuant to this Section 5 with Good Reason
(as defined below) after a Change of Control or if during such one-year period
Employee's employment is terminated by the Company without Cause, he shall be
entitled to receive payment upon such termination of an amount equal to the
greater of (i) one times the total salary and bonus compensation paid to
Employee by the Company pursuant to Section 3(a) and 3(b) for the twelve months
immediately preceding the Change of Control and (ii) the remaining amounts
payable by the Company pursuant to Section 3(a) through the Term Date; provided,
however, that if the severance payment under this Section 5, either alone or
together with other payments which Employee has the right to receive from the
Company, would not be deductible (in whole or in part) by the Company as a
result of such payment constituting a "parachute payment" (as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), the
severance payment provided under this Section 5 shall be reduced to the maximum
deductible amount under the Code.  For





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purposes of this Agreement, a Change of Control of the Company shall be deemed
to have occurred if (i) there shall be consummated (x) any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's Common Stock would be
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Company's Common Stock immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, (y) any reverse merger in
which the Company is the continuing or surviving corporation but in which
securities possessing more than 50% of the total combined power of the
Company's outstanding securities are transferred to a person or persons
different from those who hold such securities immediately prior to the merger,
or (z) any sale, lease, exchange or other transfer (in one transaction or
series of related transactions) of all, or substantially all, of the assets of
the Company, or (ii) the stockholders of the Company approve a plan or proposal
for the liquidation or dissolution of the Company, or (iii) any "person" (as
defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), shall become the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of 20% or more
of the Company's outstanding Common Stock (other than as a result of a stock
purchase or purchases made by such person directly from the Company), or (iv)
during any twelve-month period, individuals who at the beginning of such period
constitute the entire Board of Directors of the Company shall cease for any
reason to constitute a majority thereof unless the election, or the nomination
for election by the Company's stockholders, of each new director was approved
by a vote of at lease a majority of the directors then still in office who were
directors at the beginning of the period.  For purposes of this Section 5,
"Good Reason" shall exist if (i) the place of business at which Employee is
principally employed is relocated to a location more than 50 miles from such
location on the date of the Change of Control or (ii) there is an assignment to
Employee of any duties materially inconsistent with or which constitute a
material change in Employee's position, duties, responsibilities or status with
the Company or which assignment involves a substantial diminution in Employee's
level of responsibility, provided, that continuation of Employee's primary
responsibilities after a Change of Control without regard to Employee's level
of responsibility in a larger organization after a Change of Control shall not
constitute a diminution of Employee's level of responsibility.

         6.      Proprietary Information.

                 (a)      Defined.  "Proprietary Information" is all
information and any idea in whatever form, tangible or intangible, pertaining
in any manner to the business of the Company or any Affiliated Company, or to
its clients, consultants or business associates, unless: (i) the information is
or becomes publicly known through lawful means; (ii) the information was
rightfully in Employee's possession or part of his general knowledge prior to
his employment by the Company; or (iii) the information is disclosed to
Employee without confidential or proprietary restriction by a third party who
rightfully





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possesses the information (without confidential or proprietary restriction) and
did not learn of it, directly or indirectly, from the Company.

                 (b)      General Restrictions On Use.  Employee agrees to hold
all Proprietary Information in strict confidence and trust for the sole benefit
of the Company and not to, directly or indirectly, disclose, use, copy,
publish, summarize or remove from the Company's premises any Proprietary
Information (or remove from the premises any other property of the Company),
except (i) during the Period of Employment to the extent necessary to carry out
Employee's responsibilities under this Agreement, and (ii) after termination of
the Period of Employment as specifically authorized in writing by the Board.

                 (c)      Interference with Business; Competitive Activities.
Employee acknowledges that pursuit of the activities prohibited by this Section
6(c) would necessarily involve the use or disclosure of Proprietary Information
in breach of Section 6(b), but that proof of such breach would be extremely
difficult.  To prevent such disclosure, use and breach and in consideration of
employment under this Agreement, Employee agrees for a period of one year after
termination of the Period of Employment, he shall not for himself or herself or
any third party, directly or indirectly, (i) divert or attempt to divert from
the Company (or any Affiliated Company) any business of any kind in which it is
engaged, including, without limitation, the solicitation of or interference
with any of its suppliers or customers, (ii) employ, solicit for employment, or
recommend for employment any person employed by the Company, or any Affiliated
Company, during the period of such person's employment and for a period of one
year thereafter, or (iii) engage in any business activity that is competitive
with the Company, unless Employee can prove that action taken in contravention
of this Section 6(c)(iii) was done without the use of any Proprietary
Information; provided, that in no event shall Employee engage in such
competitive activities during the period which Employee continues to receive
payments pursuant to Section 4(d) above. For purposes of this Section 5(c),
"competitive activities" shall be business activities that are directly
competitive with an existing or presently planned business of the Company on
the date of termination, which activity constitutes or is anticipated to
constitute more than 15% of revenues of the Company.

                 (d)      Remedies.  Nothing in this Section 6 is intended to
limit any remedy of the Company under the California Uniform Trade Secrets Act
(California Civil Code Paragraph 3426), or otherwise available under law.

         7.      Assignment; Successors and Assigns.

                 Employee agrees that he will not assign, sell, transfer,
delegate or otherwise dispose of, whether voluntarily or involuntarily, or by
operation of law, any rights or obligations under this Agreement, nor shall
Employee's rights be subject to encumbrance or the claims of creditors.  Any
purported assignment, transfer or delegation shall be null and void.  Nothing
in this Agreement shall prevent the consolidation of the Company with, or its
merger into, any other corporation, or the sale by the Company of all





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or substantially all of its properties or assets, or the assignment by the
Company of this Agreement and the performance of its obligations hereunder to
any successor in interest or any Affiliated Company.  Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors and
permitted assigns, and shall not benefit any person or entity other than those
enumerated above.

         8.      Notices.  All notices or other communications required or
permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand or mailed, postage prepaid, by certified or
registered mail, return receipt requested, and addressed to the Company at:

                                  UroHealth Systems, Inc.
                                  3050 Redhill Avenue
                                  Costa Mesa, CA 92626
                                  Attn: Chief Executive Officer

                          or to Employee at:

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                                  -----------------------------------------
                                  -----------------------------------------

                 Notice of change of address shall be effective only when done
in accordance with this section.

         9.      Entire Agreement.  The terms of this Agreement are intended by
the parties to be the final expression of their agreement with respect to the
employment of Employee by the Company and may not be contradicted by evidence
or any prior or contemporaneous agreement.  The parties further intend that
this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
Judicial, administrative or other legal proceeding involving this Agreement.

         10.     Amendments; Waivers.  This Agreement may not be modified,
amended or terminated except by an instrument in writing, signed by Employee
and by a duly authorized representative of the Company other than Employee.  By
an instrument in writing similarly executed, either party may waive compliance
by the other party with any provision of this Agreement that such other party
was or is obligated to comply with or perform, provided, however, that such
waiver shall not operate as a waiver of, or estoppel with respect to, any other
or subsequent failure.  No failure to exercise and no delay in





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exercising any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy or power provided
herein or by law or in equity.

         11.     Severability; Enforcement.  If any provision of this
Agreement, or the application thereof to any person, place or circumstance,
shall be held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of this Agreement and such provisions as applied to
other persons, places and circumstances shall remain in full force and effect.

         12.     Governing Law.  The validity, Interpretation, enforceability
and performance of this Agreement shall be governed by and construed in
accordance with the law of the State of California.

         13.     Injunctive Relief. The parties agree that in the event of any
breach or threatened breach of any of the covenants in Section 6, the damage or
imminent damage to the value and the goodwill of the Company's business will be
irreparable and extremely difficult to estimate, making any remedy at law or in
damages inadequate.  Accordingly, the parties agree that the Company shall be
entitled to injunctive relief against Employee in the event of any breach or
threatened breach of any such provisions by Employee, in addition to any other
relief (including damages) available to the Company under this Agreement or
under law.

         The parties have duly executed this Agreement as of the date first
written above.

                                       /s/   MICHAEL SCHULER
                                  ------------------------------------
                                  Employee:    Michael Schuler


                                  UROHEALTH SYSTEMS, INC.



                                  By: /s/   CHARLES A. LAVERTY
                                     ---------------------------------
                                     Charles A. Laverty
                                     Chairman of the Board and
                                     Chief Executive Officer





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