**Exhibit 10.4****AMERICAN MEDICAL SYSTEMS, INC.**EMPLOYMENT AGREEMENT     THIS EMPLOYMENT AGREEMENT is made and entered into effective as of December 18, 2006, betweenAmerican Medical Systems, Inc., a Delaware corporation (the “Company”), and Mark A.Heggestad (the “Executive”).R E C I T A L S:     WHEREAS, the Company recognizes that the future growth, profitability and success of theCompany’s business will be substantially and materially enhanced by the employment of the Executiveby the Company; and     WHEREAS, the Company desires to employ the Executive and the Executive has indicated hiswillingness to provide his services to the Company, on the terms and conditions set forth herein;     NOW, THEREFORE, on the basis of the foregoing premises and in consideration of the mutualcovenants and agreements contained herein, the parties hereto agree as follows:     Section 1. Employment. The Company hereby agrees to employ the Executive and theExecutive hereby accepts employment with the Company, on the terms and subject to the conditionshereinafter set forth. The Executive shall serve as the Executive Vice President and ChiefFinancial Officer, in such capacity, shall report directly to the Company’s Chief Executive Officerand shall have such duties as are typically performed by the Chief Financial Officer of acorporation, together with such additional duties, commensurate with the Executive’s position asthe Chief Financial Officer of the Company, as may be assigned to the Executive from time to timeby the Company’s Chief Executive Officer. The principal location of the Executive’s employmentshall be at the Company’s principal executive office located in Minnetonka, Minnesota, although theExecutive understands and agrees that he may be required to travel from time to time for Companybusiness reasons.     Section 2. Term. Unless terminated pursuant to Section 6 hereof, the Executive’semployment hereunder shall commence on the date hereof and shall continue during the period endingon the second anniversary of the date hereof (the “Initial Term”). Thereafter, theExecutive’s employment term shall extend automatically for consecutive periods of one year unlesseither party shall provide notice of termination not less than sixty (60) days prior to ananniversary date of this Agreement. The Initial Term, together with any extension pursuant to thisSection 2, is referred to herein as the “Employment Term.” The Employment Term shallterminate upon any termination of the Executive’s employment pursuant to Section 6.     Section 3. Compensation. During the Employment Term, the Executive shall be entitledto the following compensation and benefits:     (a) Salary. As compensation for the performance of the Executive’s serviceshereunder, the Company shall pay to the Executive a base salary (the “Salary”) of $265,000per year with increases, if any, as may be approved by the Board of Directors or the CompensationCommittee of the Board. The Salary shall be payable in accordance with the customary payrollpractices of the Company as the same shall exist from time to time. In no event shall the Salarybe decreased during the Employment Term.     (b) Bonus. During the Employment Term, in addition to Salary, the Executive shall beeligible to participate in such bonus plans as may be adopted from time by the Board of Directorsfor other officers of the Company (the “Bonus”) for each such calendar year ending duringthe Employment Period; provided that, unless the Board of Directors or the Compensation Committeeof the Board determines otherwise, the Executive must be employed on the last day of such calendaryear in order to receive the Bonus attributable thereto. The Executive’s
 

 
entitlement to the Bonus for any particular calendar year shall be based on the attainment ofperformance objectives established by the Board of Directors or the Compensation Committee of theBoard in any such bonus plan.     (c) Benefits. Except as otherwise provided in this Agreement, in addition to theSalary and Bonus, if any, the Executive shall be entitled during the Employment Term to participatein health, insurance, retirement, disability, and other benefit programs provided to other officersof the Company on terms no less favorable than those available to the other officers of theCompany. The Executive shall also be entitled to the same number of vacation days, holidays, sickdays and other benefits as are generally allowed to other senior executives of the Company inaccordance with the Company’s policies in effect from time to time.     (d) Stock Option. The Executive shall be granted a Non-Qualified Stock Option (the“Option”) to acquire 175,000 shares of Common Stock of American Medical Systems Holding,Inc. (the “Parent Corporation”) under the Parent Corporation’s 2005 Stock Incentive Plan(the “2005 Plan”) at a price equal to Fair Market Value on the grant date, as defined insuch plan. All of the terms and conditions relating to the Option, including the vesting andexpiration dates, are set forth in the Stock Option Certificate attached hereto (the “StockOption Certificate”).     Section 4. Exclusivity. During the Employment Term, the Executive shall devote hisfull time to the business of the Company and its subsidiaries, shall faithfully serve the Companyand its subsidiaries, shall in all respects conform to and comply with the lawful and reasonabledirections and instructions given to him by the Chief Executive Officer or the Board of Directorsin accordance with the terms of this Agreement, shall use his best efforts to promote and serve theinterests of the Company and its subsidiaries and shall not engage in any other business activity,whether or not such activity shall be engaged in for pecuniary profit, except that the Executivemay (i) participate in the activities of professional trade organizations related to the businessof the Company and its subsidiaries, (ii) engage in personal investing activities and (iii) serveon the board of directors of not more than two (2) other companies whose businesses are not incompetition with the business interests of the Company, provided that the activities set forth inthese clauses (i), (ii) and (iii), either singly or in the aggregate, do not interfere in anymaterial respect with the services to be provided by the Executive hereunder.     Section 5. Reimbursement for Expenses. During the Employment Term, the Executive isauthorized to incur reasonable expenses in the discharge of the services to be performed hereunder,including expenses for travel, entertainment, lodging and similar items in accordance with theCompany’s expense reimbursement policy, as the same may be modified by the Company from time totime. The Company shall reimburse the Executive for all such proper expenses upon presentation bythe Executive of itemized accounts of such expenditures in accordance with the financial policy ofthe Company, as in effect from time to time.     Section 6. Termination and Default.     (a) Death. The Executive’s employment shall automatically terminate upon his deathand upon such event, the Executive’s estate shall be entitled to receive the amounts specified inSection 6(e) below.     (b) Disability. If the Executive is unable to perform the duties required of himunder this Agreement because of illness, incapacity, or physical or mental disability, theEmployment Term shall continue and the Company shall pay all compensation required to be paid tothe Executive hereunder, unless the Executive is disabled such that the Executive would be entitledto receive disability benefits under the Company’s long-term disability plan, or if no such planexists, the Executive is unable to perform the duties required of him under this Agreement for anaggregate of 180 days (whether or not consecutive) during any 12-month period during the term ofthis Agreement, in which event the Executive’s employment shall terminate.     (c) Cause. The Company may terminate the Executive’s employment at any time, with orwithout Cause. In the event of termination pursuant to this Section 6(c) for Cause (as definedbelow), the Company shall deliver to the Executive written notice setting forth the basis for suchtermination, which notice shall specifically set forth the nature of the Cause which is the reasonfor such termination. Termination of the Executive’s employment hereunder shall be effective upondelivery of such notice of termination. For purposes of this Agreement, “Cause”
 

 
shall mean: (i) the Executive’s failure (except where due to a disability contemplated bysubsection (b) hereof), neglect or refusal to perform his duties hereunder which failure, neglector refusal shall not have been corrected by the Executive within 30 days of receipt by theExecutive of written notice from the Company of such failure, neglect or refusal, which noticeshall specifically set forth the nature of said failure, neglect or refusal, (ii) any willful orintentional act of the Executive that has the effect of injuring the reputation or business of theCompany or its affiliates in any material respect; (iii) any continued or repeated absence from theCompany, unless such absence is (A) approved or excused by the Chief Executive Officer or (B) isthe result of the Executive’s illness, disability or incapacity (in which event the provisions ofSection 6(b) hereof shall control); (iv) use of illegal drugs by the Executive or repeateddrunkenness; (v) conviction of the Executive for the commission of a felony; or (vi) the commissionby the Executive of an act of fraud or embezzlement against the Company.     (d) Resignation. The Executive shall have the right to terminate his employment atany time by giving notice of his resignation.     (e) Payments. In the event that the Executive’s employment terminates for anyreason, the Company shall pay to the Executive all amounts and benefits accrued but unpaidhereunder through the date of termination in respect of Salary or unreimbursed expenses, includingaccrued and unused vacation. In addition, in the event the Executive’s employment is terminated bythe Company without Cause, whether during or upon expiration of the then current term of thisAgreement, in addition to the amounts specified in the foregoing sentence, (i) the Executive shallcontinue to receive the Salary (less any applicable withholding or similar taxes) at the rate ineffect hereunder on the date of such termination periodically, in accordance with the Company’sprevailing payroll practices, for a period of twelve (12) months following the date of suchtermination (the “Severance Term”) and (ii) to the extent permissible under the Company’shealth and welfare plans, the Executive shall continue to receive any health and welfare benefitsprovided to him as of the date of such termination in accordance with Section 3(c) hereof duringthe Severance Term, on the same basis and at the same cost as during the Employment Term. Further,in the event the Executive’s employment is terminated without Cause by reason of the Company havingnotified the Executive that this Agreement will not be extended pursuant to Section 2, theExecutive shall be entitled to receive a pro-rated amount of the Bonus in a lump sum based on theExecutive’s period of employment during the calendar year in which such termination occurs (lessany applicable withholding or similar taxes). Following the end of the Severance Term, theExecutive shall be entitled to elect health care continuation coverage permitted under Section 601through 608 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),as if his employment had then terminated. In the event the Executive accepts other employment orengages in his own business prior to the last date of the Severance Term, the Executive shallforthwith notify the Company and the Company shall be entitled to set off from amounts and benefitsdue the Executive under this Section 6(e) (other than in respect of the Bonus) the amounts paid toand benefits received by the Executive in respect of such other employment or business activity.Amounts owed by the Company in respect of the Salary, Bonus or reimbursement for expenses under theprovisions of Section 5 hereof shall, except as otherwise set forth in this Section 6(e), be paidpromptly upon any termination. The payments and benefits to be provided to the Executive as setforth in this Section 6(e) in the event the Executive’s employment is terminated by the Companywithout Cause: (i) shall be lieu of any and all benefits otherwise provided under any severancepay policy, plan or program maintained from time to time by the Company for its employees, and (ii)shall not be paid to the extent that Executive’s employment is terminated following a Change inControl under circumstances entitling the Executive to the benefits described in Section 6 (f).     (f) Change in Control Benefit. In the event that the Executive’s employment isterminated by the Company without Cause or by the Executive for Good Reason, as defined below,during the 12-month period immediately following a Change in Control, as defined in the 2005 Plan,whether during or upon expiration of the then current term of this Agreement: (i) the Companyshall pay to the Executive all amounts and benefits accrued but unpaid hereunder through the dateof termination in respect of Salary or unreimbursed expenses, including accrued and unused vacation(less any applicable withholding or similar taxes), (ii) all unvested shares that are subject tooutstanding options to purchase shares of common stock of Parent Corporation shall becomeimmediately vested and exercisable to the extent and on the terms set forth in the related stockoption agreement or certificate, (iii) the Company shall pay to Executive a lump sum payment equalto his annual Salary at the rate in effect hereunder on the date of such termination, plus histarget Bonus for the year in which the Change in Control occurs (less any applicable withholding orsimilar taxes), and (iv) to the extent permissible under the
 

 
Company’s health and welfare plans, the Executive shall continue to receive, at the Company’scost, any health and welfare benefits provided to him as of the date of such termination for the12-month period following his termination of employment. Following the end of the 12-month perioddescribed in clause (iv) of the preceding sentence, the Executive shall be entitled to elect healthcare continuation coverage permitted under Sections 601 through 608 of ERISA as if his employmentwith the Company then terminated.     (g) Gross-Up Payment. If the Executive becomes entitled to payments and benefitsfollowing a Change in Control under Section 6(f) or the vesting of stock options acceleratefollowing a Change in Control as provided in any stock option agreement or certificate, the Companywill cause its independent auditors promptly to review, at the Company’s sole expense, theapplicability of Code Section 4999 to any payment or distribution of any type by the Company to orfor the Executive’s benefit, whether paid or payable or distributed or distributable pursuant tothe terms of this Agreement, any stock option agreement or certificate or otherwise (the “TotalPayments”). If the auditor determines that the Total Payments result in an excise tax imposedby Code Section 4999 or any comparable state or local law, or any interest or penalties withrespect to such excise tax (such excise tax, together with any such interest and penalties, arecollectively referred to as the “Excise Tax”), the Company will make an additional cashpayment (a “Gross-Up Payment”) to the Executive within 10 days after such determinationequal to an amount such that after payment by the Executive of all taxes (including any interest orpenalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-UpPayment, the Executive would retain an amount of the Gross-Up Payment equal to the Excise Taximposed upon the Total Payments. For purposes of the foregoing determination, the Executive’s taxrate will be deemed to be the highest statutory marginal state and federal tax rate (on a combinedbasis) then in effect. If no determination by the Company’s auditors is made prior to the time theExecutive is required to file a tax return reflecting the Total Payments, the Executive will beentitled to receive from the Company a Gross-Up Payment calculated on the basis of the Excise Taxthe Executive reported in such tax return, within 10 days after the later of the date on which theExecutive files such tax return or the date on which the Executive provides a copy thereof to theCompany. In all events, if any tax authority determines that a greater Excise Tax should be imposedupon the Total Payments than is determined by the Company’s independent auditors or reflected inthe Executive’s tax return pursuant to this Section 6(g), the Executive will be entitled to receivefrom the Company the full Gross-Up Payment calculated on the basis of the amount of Excise Taxdetermined to be payable by such tax authority within 10 days after the Executive notifies theCompany of such determination. Notwithstanding the foregoing, in the event the Company reasonablydetermines that the Gross-Up Payment is subject to Section 409A of the Code, such payment will bemade in the same calendar year in which the Total Payments are made.     (h) For purposes of this Agreement, “Good Reason” shall mean, without the Executive’sprior written consent, (i) a substantial diminution in the Executive’s authority, duties orresponsibilities as in effect prior to the Change in Control, (ii) a reduction by the Company inthe Executive’s base Salary, or an adverse change in the form or timing of the payment thereof, asin effect immediately prior to the Change in Control or as thereafter increased, (iii) the failureby the Company to cover the Executive under employee benefit plans that, in the aggregate, providesubstantially similar benefits to the Executive and/or his family and dependents at a substantiallysimilar total cost to the Executive (e.g., premiums, deductibles, co-pays, out of pocket maximums,required contributions, taxes and the like) relative to the benefits and total costs under suchbenefit plans in which the Executive (and/or his family or dependents) was participating at anytime during the 90-day period immediately preceding the Change in Control, or (iv) the Company’srequiring the Executive to be based at any office or location that is more than fifty (50) milesfurther from the office or location thereof immediately preceding a Change in Control; provided,however, Good Reason shall not include any of the circumstances or events described herein unlessthe Executive has first provided written notice of such circumstance or event and the Company hasnot corrected such circumstance or event within thirty (30) days of receipt by the Company of suchwritten notice from the Executive.     (i) Survival of Operative Sections. Upon any termination of the Executive’semployment, the provisions of Sections 6(e), 6(f), 6(g) and 7 through 18 of this Agreement shallsurvive to the extent necessary to give effect to the provisions thereof.     (j) Code Section 409A. In the event the Company reasonably determines that anypayments due the Executive under this Agreement following his termination are subject to therequirements of Section 409A of the
 

 
Internal Revenue Code, the Company will suspend the payments for six months following theExecutive’s termination of employment if the Executive is a “specified employee” within the meaningof Code section 409A(a)(2)(B).     Section 7. Secrecy and Non-Competition.     (a) No Competing Employment. The Executive acknowledges that the agreements andcovenants contained in this Section 7 are essential to protect the value of the Company’s businessand assets and by his current employment with the Company and its subsidiaries, the Executive hasobtained and will obtain such knowledge, contacts, know-how, training and experience and there is asubstantial probability that such knowledge, know-how, contacts, training and experience could beused to the substantial advantage of a competitor of the Company and to the Company’s substantialdetriment. Therefore, the Executive agrees that for the period commencing on the date of thisAgreement and ending on the first anniversary of the termination of the Executive’s employmenthereunder (such period is hereinafter referred to as the “Restricted Period”) with respectto any State in which the Company is engaged in business during the Employment Term, the Executiveshall not participate or engage, directly or indirectly, for himself or on behalf of or inconjunction with any person, partnership, corporation or other entity, whether as an employee,agent, officer, director, partner or joint venturer, in any business activities if such activityconsists of any activity undertaken or expressly contemplated to be undertaken by the Company orany of its subsidiaries or by the Executive at any time during the last three (3) years of theEmployment Term. The foregoing restrictions contained in this Section 7(a) shall not prevent theExecutive from accepting employment with a large diversified organization with separate anddistinct divisions that do not compete, directly or indirectly, with the Company, so long as priorto accepting such employment the Company receives separate written assurances from the prospectiveemployer and from the Executive, satisfactory to the Company, to the effect that the Executive willnot render any services, directly or indirectly, to any division or business unit that competes,directly or indirectly, with the Company. During the Restricted Period, the Executive will informany new employer, prior to accepting employment, of the existence of this Agreement and providesuch employer with a copy of this Agreement.     (b) Nondisclosure of Confidential Information. The Executive, except in connectionwith his employment hereunder, shall not disclose to any person or entity or use, either during theEmployment Term or at any time thereafter, any information not in the public domain or generallyknown in the industry that the Company treats as confidential or proprietary, in any form, acquiredby the Executive while employed by the Company or any predecessor to the Company’s business or, ifacquired following the Employment Term, such information which, to the Executive’s knowledge, hasbeen acquired, directly or indirectly, from any person or entity owing a duty of confidentiality tothe Company or any of its subsidiaries or affiliates, relating to the Company, its subsidiaries oraffiliates, including but not limited to information regarding customers, vendors, suppliers, tradesecrets, training programs, manuals or materials, technical information, contracts, systems,procedures, mailing lists, know-how, trade names, improvements, price lists, financial or otherdata (including the revenues, costs or profits associated with any of the Company’s products orservices), business plans, code books, invoices and other financial statements, computer programs,software systems, databases, discs and printouts, plans (business, technical or otherwise),customer and industry lists, correspondence, internal reports, personnel files, sales andadvertising material, telephone numbers, names, addresses or any other compilation of information,written or unwritten, which is or was used in the business of the Company or any subsidiaries oraffiliates thereof. The Executive agrees and acknowledges that all of such information, in anyform, and copies and extracts thereof, are and shall remain the sole and exclusive property of theCompany, and upon termination of his employment with the Company, the Executive shall return to theCompany the originals and all copies of any such information provided to or acquired by theExecutive in connection with the performance of his duties for the Company, and shall return to theCompany all files, correspondence and/or other communications received, maintained and/ororiginated by the Executive during the course of his employment.     (c) No Interference. During the Restricted Period, the Executive shall not, whetherfor his own account or for the account of any other individual, partnership, firm, corporation orother business organization (other than the Company), directly or indirectly solicit, endeavor toentice away from the Company or its subsidiaries, or otherwise directly interfere with therelationship of the Company or its subsidiaries with any person who, to the knowledge of theExecutive, is employed by or otherwise engaged to perform services for the Company or itssubsidiaries (including, but not limited to, any independent sales representatives ororganizations) or who is, or
 

 
was within the then most recent twelve-month period, a customer or client of the Company, itspredecessors or any of its subsidiaries. The placement of any general classified or “help wanted”advertisements and/or general solicitations to the public at large shall not constitute a violationof this Section 7(c) unless the Executive’s name is contained in such advertisements orsolicitations.     (d) Inventions, etc. The Executive hereby sells, transfers and assigns to theCompany or to any person or entity designated by the Company all of the entire right, title andinterest of the Executive in and to all inventions, ideas, disclosures and improvements, whetherpatented or unpatented, and copyrightable material, made or conceived by the Executive, solely orjointly, during his employment by the Company which relate to methods, apparatus, designs,products, processes or devices, sold, leased, used or under consideration or development by theCompany, or which otherwise relate to or pertain to the business, functions or operations of theCompany or which arise from the efforts of the Executive during the course of his employment forthe Company. The Executive shall communicate promptly and disclose to the Company, in such form asthe Company requests, all information, details and data pertaining to the aforementionedinventions, ideas, disclosures and improvements; and the Executive shall execute and deliver to theCompany such formal transfers and assignments and such other papers and documents as may benecessary or required of the Executive to permit the Company or any person or entity designated bythe Company to file and prosecute the patent applications and, as to copyrightable material, toobtain copyright thereof. Any invention relating to the business of the Company and disclosed bythe Executive within one year following the termination of his employment with the Company shall bedeemed to fall within the provisions of this paragraph unless proved to have been first conceivedand made following such termination. The foregoing requirements of this Section 7(d) shall notapply to any invention for which no equipment, supplies, facility or trade secret information ofthe Company was used and which was developed entirely on the Executive’s own time, and (i) whichdoes not relate directly to the Company’s business or to the Company’s actual or demonstrablyanticipated research or development, or (ii) which does not result from any work the Executiveperformed for the Company.     Section 8. Injunctive Relief. Without intending to limit the remedies available tothe Company, the Executive acknowledges that in the event of a breach of any of the covenantscontained in Section 7 hereof may result in material irreparable injury to the Company or itssubsidiaries or affiliates for which there is no adequate remedy at law, that it will not bepossible to measure damages for such injuries precisely and that, in the event of such a breach orthreat thereof, the Company shall be entitled to obtain a temporary restraining order and/or apreliminary or permanent injunction, without the necessity of proving irreparable harm or injury asa result of such breach or threatened breach of Section 7 hereof, restraining the Executive fromengaging in activities prohibited by Section 7 hereof or such other relief as may be requiredspecifically to enforce any of the covenants in Section 7 hereof.     Section 9. Representations and Warranties of the Executive. The Executive representsand warrants to the Company as follows:     (a) This Agreement, upon execution and delivery by the Executive, will be duly executed anddelivered by the Executive and (assuming due execution and delivery hereof by the Company) will bethe valid and binding obligation of the Executive enforceable against the Executive in accordancewith its terms.     (b) Neither the execution and delivery of this Agreement, the consummation of thetransactions contemplated hereby nor the performance of this Agreement in accordance with its termsand conditions by the Executive (i) requires the approval or consent of any governmental body or ofany other person or (ii) conflicts with or results in any breach or violation of, or constitutes(or with notice or lapse of time or both would constitute) a default under, any agreement,instrument, judgment, decree, order, statute, rule, permit or governmental regulation applicable tothe Executive. Without limiting the generality of the foregoing, the Executive is not a party toany non-competition, non-solicitation, no hire or similar agreement that restricts in any way theExecutive’s ability to engage in any business or to solicit or hire the employees of any person.     The representations and warranties of the Executive contained in this Section 9 shall survivethe execution and delivery of this Agreement and the consummation of the transactions contemplatedhereby.
 

 
     Section 10. Representations and Warranties of the Company. The Company representsand warrants to the Executive as follows:     (a) This Agreement, upon execution and delivery by the Company, will be duly executed anddelivered by the Company and (assuming due execution and delivery hereof by the Executive) will bethe valid and binding obligation of the Company enforceable against the Company in accordance withits terms.     (b) Neither the execution and delivery of this Agreement, the consummation of thetransactions contemplated hereby nor the performance of this Agreement in accordance with its termsand conditions by the Company (i) requires the approval or consent of any governmental body or ofany other person or (ii) conflicts with or results in any breach or violation of, or constitutes(or with notice or lapse of time or both would constitute) a default under, any agreement,instrument, judgment, decree, order, statute, rule, permit or governmental regulation applicable tothe Company.     The representations and warranties of the Company contained in this Section 10 shall survivethe execution and delivery of this Agreement and the consummation of the transactions contemplatedhereby.     Section 11. Successors and Assigns; No Third-Party Beneficiaries. This Agreementshall inure to the benefit of, and be binding upon, the successors and assigns of each of theparties, including, but not limited to, the Executive’s heirs and the personal representatives ofthe Executive’s estate; provided, however, that neither party shall assign ordelegate any of the obligations created under this Agreement without the prior written consent ofthe other party. Notwithstanding the foregoing, the Company shall have the unrestricted right toassign this Agreement and to delegate all or any part of its obligations hereunder to any of itssubsidiaries or Affiliates, but in such event such assignee shall expressly assume all obligationsof the Company hereunder and the Company shall remain fully liable for the performance of all ofsuch obligations in the manner prescribed in this Agreement. Nothing in this Agreement shallconfer upon any person or entity not a party to this Agreement, or the legal representatives ofsuch person or entity, any rights or remedies of any nature or kind whatsoever under or by reasonof this Agreement.     Section 12. Waiver and Amendments. Any waiver, alteration, amendment or modificationof any of the terms of this Agreement shall be valid only if made in writing and signed by theparties hereto; provided, however, that any such waiver, alteration, amendment ormodification is consented to on the Company’s behalf by the Board of Directors. No waiver byeither of the parties hereto of their rights hereunder shall be deemed to constitute a waiver withrespect to any subsequent occurrences or transactions hereunder unless such waiver specificallystates that it is to be construed as a continuing waiver.     Section 13. Severability and Governing Law. The Executive acknowledges and agreesthat the covenants set forth in Section 7 hereof are reasonable and valid in geographical andtemporal scope and in all other respects. If any of such covenants or such other provisions ofthis Agreement are found to be invalid or unenforceable by a final determination of a court ofcompetent jurisdiction (a) the remaining terms and provisions hereof shall be unimpaired and (b)the invalid or unenforceable term or provision shall be deemed replaced by a term or provision thatis valid and enforceable and that comes closest to expressing the intention of the invalid orunenforceable term or provision. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF MINNESOTA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELYWITHIN SUCH STATE.     Section 14. Notices.     (a) All communications under this Agreement shall be in writing and shall be delivered byhand or mailed by overnight courier or by registered or certified mail, postage prepaid:(i) If to the Executive, at                                          or at such other address asthe Executive may have furnished the Company in writing, and
 

 
(ii) If to the Company, at 10700 Bren Road West, Minnetonka, Minnesota 55343,marked for the attention of the Chief Executive Officer, or at such other address asit may have furnished in writing to the Executive.     (b) Any notice so addressed shall be deemed to be given: if delivered by hand, on the dateof such delivery; if mailed by courier, on the first business day following the date of suchmailing; and if mailed by registered or certified mail, on the third business day after the date ofsuch mailing.     Section 15. Section Headings. The headings of the sections and subsections of thisAgreement are inserted for convenience only and shall not be deemed to constitute a part thereof,affect the meaning or interpretation of this Agreement or of any term or provision hereof.     Section 16. Entire Agreement. This Agreement, including the Stock OptionCertificate, constitutes the entire understanding and agreement of the parties hereto regarding theemployment of the Executive. This Agreement supersedes all prior negotiations, discussions,correspondence, communications, understandings and agreements between the parties relating to thesubject matter of this Agreement.     Section 17. Severability. In the event that any part or parts of this Agreementshall be held illegal or unenforceable by any court or administrative body of competentjurisdiction, such determination shall not effect the remaining provisions of this Agreement whichshall remain in full force and effect.     Section 18. Counterparts. This Agreement may be executed in one or morecounterparts, each of which shall be deemed an original and all of which together shall beconsidered one and the same agreement.     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first abovewritten.       AMERICAN MEDICAL SYSTEMS, INC.       By:         Martin J. Emerson  President and Chief Executive Officer       By:         Mark A. Heggestad  Executive Vice President, Chief Financial Officer