Document:

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                         AMERICAN MEDICAL SYSTEMS, INC.

                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT is made and entered into effective
as of April 23, 1999, between American Medical Systems, Inc., a Delaware
corporation (the "Company"), and Douglas W. Kohrs (the "Executive").

                                R E C I T A L S:

                  WHEREAS, the Company recognizes that the future growth,
profitability and success of the Company's business will be substantially and
materially enhanced by the employment of the Executive by the Company; and

                  WHEREAS, the Company desires to employ the Executive and the
Executive has indicated his willingness 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 mutual covenants and agreements contained herein, the
parties hereto agree as follows:

                  Section 1. Employment. The Company hereby agrees to employ the
Executive and the Executive hereby accepts employment with the Company, on the
terms and subject to the conditions hereinafter set forth. The Executive shall
serve as the President and Chief Executive Officer of the Company, and, in such
capacity, shall report directly to the Company's Board of Directors (the "Board
of Directors") and shall have such duties as are typically performed by the
chief executive officer of a corporation, together with such additional duties,
commensurate with the Executive's position as the Chief Executive Officer of the
Company, as may be assigned to the Executive from time to time by the Board of
Directors. The Executive shall also serve as a member of the Board of Directors
and shall have such duties, authority and responsibilities as shall be
consistent therewith. The principal location of the Executive's employment shall
be at the Company's principal executive office located in Minnetonka, Minnesota,
although the Executive understands and agrees that he may be required to travel
from time to time for Company business reasons.

                  Section 2. Term. Unless terminated pursuant to Section 6
hereof, the Executive's employment hereunder shall commence on the date hereof
and shall continue during the period ending on the second anniversary of the
date hereof (the "Initial Term"). Thereafter, the Executive's employment term
shall extend automatically for consecutive periods of one year unless either
party shall provide notice of termination not less than sixty

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(60) days prior to an anniversary date of this Agreement. The Initial Term,
together with any extension pursuant to this Section 2, is referred to herein as
the "Employment Term." The Employment Term shall terminate upon any termination
of the Executive's employment pursuant to Section 6.

                  Section 3. Compensation. During the Employment Term, the
Executive shall be entitled to the following compensation and benefits:

                  (a) Salary. As compensation for the performance of the
Executive's services hereunder, the Company shall pay to the Executive a base
salary (the "Salary") of $225,000 per annum with increases, if any, as may be
approved in writing by the Board of Directors. The Salary shall be payable in
accordance with the customary payroll practices of the Company as the same shall
exist from time to time. In no event shall the Salary be decreased during the
Employment Term.

                  (b) Bonus. During the Employment Term, in addition to Salary,
the Executive shall be eligible to receive an annual performance bonus (the
"Bonus") for each such calendar year ending during the Employment Period;
provided that, unless the Board of Directors determines otherwise, the Executive
must be employed on the last day of such calendar year 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 of performance
objectives established by the Board of Directors and communicated to the
Executive in writing at the beginning of each calendar year, provided that the
performance objectives for 1999 shall be annexed to this Agreement as Exhibit A
within 30 days after the effective date of this Agreement. If the Executive
achieves 100% of the stated performance objectives for any year, the Executive's
Bonus shall equal 40% of the Executive's Salary for such year. For each
percentage by which the Executive has exceeded 100% of the performance
objectives for any given year, the Executive shall receive an additional 1.5% of
the Executive's Salary for such year, provided that in no event shall the
Executive's total Bonus for any year exceed 70% of the Executive's Salary. The
Board of Directors shall determine the Executive's entitlement to the Bonus,
based on the achievement of the performance objectives for such year, as
determined by the Board of Directors and communicated to the Executive, in good
faith within sixty (60) days after the end of each such calendar year, which
shall be paid by the Company no later than ten days following such
determination.

                  (c) Benefits. Except as otherwise provided in this Agreement,
in addition to the Salary and Bonus, if any, the Executive shall be entitled
during the Employment Term to participate in health, insurance, pension,
retirement, disability, automobile and other benefit programs provided to the

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most senior executives of the Company on terms no less favorable than those
available to such senior executives of the Company. The Executive shall also be
entitled to the same number of vacation days, holidays, sick days and other
benefits as are generally allowed to other senior executives of the Company in
accordance with the Company's policies in effect from time to time, except that
the Executive shall be entitled to no less than four (4) weeks of vacation
during each calendar year.

                  (d) Stock Options. The Executive shall be granted, on the date
hereof, a stock option (the "Option") to acquire 150,000 shares of common stock,
$.01 par value per share, of the Company (the "Common Stock") at an exercise
price per share equal to five dollars ($5) (which the parties hereto agree is
the fair market value of a share of Common Stock on the date of the grant). All
of the terms and conditions relating to the Option are set forth in the Stock
Option Agreement executed by the Company and the Executive and attached hereto
as Exhibit B.

                  (e) Co-Investment. On the date hereof and continuing for a
period of ninety (90) days hereafter, the Executive shall be entitled to
purchase from Warburg, Pincus Equity Partners, L.P. ("WPEP") 250 shares of
series A non-convertible preferred stock of the Company (the "Series A Stock")
at a price per share equal to one thousand dollars ($1,000), and 50,000 shares
of series B convertible preferred stock of the Company (the "Series B Stock") at
a price per share equal to five dollars ($5), or such greater number of Series A
Stock and Series B Stock as the parties shall agree (the "Co-Investment"). As a
condition to the Executive's purchase of the Series A Stock and the Series B
Stock as provided in this Section 3(e), the Executive agrees to enter into an
agreement containing substantially the same stock transferability restrictions
as set forth in the Stockholders Agreement attached hereto as Exhibit C.

                  Section 4. Exclusivity. During the Employment Term, the
Executive shall devote his full time to the business of the Company and its
subsidiaries, shall faithfully serve the Company and its subsidiaries, shall in
all respects conform to and comply with the lawful and reasonable directions and
instructions given to him by the Board of Directors in accordance with the terms
of this Agreement, shall use his best efforts to promote and serve the interests
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 Executive may (i) participate in the activities of professional
trade organizations related to the business of the Company and its subsidiaries,
(ii) engage in personal investing activities and (iii) serve on the board of
directors of not more than two (2) other companies whose businesses are not in
competition with the business interests of the Company, provided that the
activities set forth in these clauses (i), (ii) and (iii), either singly or in
the aggregate, do not interfere in any

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material respect with the services to be provided by the Executive hereunder.

                  Section 5. Reimbursement for Expenses. During the Employment
Term, the Executive is authorized 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 the Company's
expense reimbursement policy, as the same may be modified by the Company from
time to time. The Company shall reimburse the Executive for all such proper
expenses upon presentation by the Executive of itemized accounts of such
expenditures in accordance with the financial policy of the Company, as in
effect from time to time.

                  Section 6.  Termination and Default.

                  (a) Death. The Executive's employment shall automatically
terminate upon his death and upon such event, the Executive's estate shall be
entitled to receive the amounts specified in Section 6(e) below.

                  (b) Disability. If the Executive is unable to perform the
duties required of him under this Agreement because of illness, incapacity, or
physical or mental disability, the Employment Term shall continue and the
Company shall pay all compensation required to be paid to the Executive
hereunder, unless the Executive is disabled such that the Executive would be
entitled to receive disability benefits under the Company's long-term disability
plan, or if no such plan exists, the Executive is unable to perform the duties
required of him under this Agreement for an aggregate of 180 days (whether or
not consecutive) during any 12-month period during the term of this Agreement,
in which event the Executive's employment shall terminate.

                  (c) Cause. The Company may terminate the Executive's
employment at any time, with or without Cause. In the event of termination
pursuant to this Section 6(c) for Cause (as defined below), the Company shall
deliver to the Executive written notice setting forth the basis for such
termination, which notice shall specifically set forth the nature of the Cause
which is the reason for such termination. Termination of the Executive's
employment hereunder shall be effective upon delivery 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 by subsection
(b) hereof), neglect or refusal to perform his duties hereunder which failure,
neglect or refusal shall not have been corrected by the Executive within 30 days
of receipt by the Executive of written notice from the Company of such failure,
neglect or refusal, which notice shall specifically set forth the nature of said
failure, neglect or refusal, (ii) any willful or intentional act of the
Executive that has the effect of injuring the reputation or business of the

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Company or its affiliates in any material respect; (iii) any continued or
repeated absence from the Company, unless such absence is (A) approved or
excused by the Board of Directors or (B) is the result of the Executive's
illness, disability or incapacity (in which event the provisions of Section 6(b)
hereof shall control); (iv) use of illegal drugs by the Executive or repeated
drunkenness; (v) conviction of the Executive for the commission of a felony; or
(vi) the commission by the Executive of an act of fraud or embezzlement against
the Company.

                  (d) Resignation. The Executive shall have the right to
terminate his employment at any time by giving notice of his resignation.

                  (e) Payments. In the event that the Executive's employment
terminates for any reason, the Company shall pay to the Executive all amounts
and benefits accrued but unpaid hereunder through the date of termination in
respect of Salary or unreimbursed expenses, including accrued and unused
vacation. In addition, in the event the Executive's employment is terminated by
the Company without Cause, whether during or upon expiration of the current term
of this Agreement, in addition to the amounts specified in the foregoing
sentence, (i) the Executive shall continue to receive the Salary (less any
applicable withholding or similar taxes) at the rate in effect hereunder on the
date of such termination periodically, in accordance with the Company's
prevailing payroll practices, for a period of twelve (12) months following the
date of such termination (the "Severance Term") and (ii) to the extent
permissible under the Company's health and welfare plans, the Executive shall
continue to receive any health and welfare benefits provided to him as of the
date of such termination in accordance with Section 3(c) hereof during the
Severance Term, on the same basis and at the same cost as during the Employment
Term. Following the end of the Severance Term, the Executive shall be entitled
to elect health care continuation coverage permitted under Section 601 through
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 or engages in his own business prior to the last date
of the Severance Term, the Executive shall forthwith notify the Company and the
Company shall be entitled to set off from amounts and benefits due the Executive
under this Section 6(e) (other than in respect of the Bonus) the amounts paid to
and 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 the provisions of Section 5 hereof shall,
except as otherwise set forth in this Section 6(e), be paid promptly upon any
termination. The payments and benefits to be provided to the Executive as set
forth in this Section 6(e) in the event the Executive's employment is terminated
by the Company without Cause: (i) shall be lieu of any and all benefits
otherwise provided under any severance pay policy, plan or program

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maintained from time to time by the Company for its employees, (ii) shall not be
paid to the extent that Executive's employment is terminated following a Change
in Control under circumstances entitling the Executive to the benefits described
in Section 6(f).

                  (f) Change of Control Benefit. In the event that the
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, as defined below, during the 12-month period
immediately following a Change of Control, as defined below, whether during or
upon expiration of the current term of this Agreement: (i) the Company shall pay
to the Executive all amounts and benefits accrued but unpaid hereunder through
the date of 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 to the Option shall become immediately
vested and exercisable as set forth in the Stock Option Agreement attached as
Exhibit B, (iii) the Company shall pay to Executive a lump sum payment equal to
his Salary at the rate in effect hereunder on the date of such termination, plus
his target Bonus in an amount equal to 40% of his Salary for the year in which
the Change of Control occurs (less any applicable withholding or similar taxes)
and (iv) to the extent permissible under the Company's health and welfare plans,
the Executive shall continue to receive, at the Company's cost, any health and
welfare benefits provided to him as of the date of such termination for the
12-month period following his termination of employment. Following the end of
the 12-month period described in clause (iv) of the preceding sentence, the
Executive shall be entitled to elect health care continuation coverage permitted
under Sections 601 through 608 of ERISA as if his employment with the Company
then terminated.

                  For purposes of this Agreement, "Change of Control" shall
mean:

                  (i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more (on a fully diluted basis) of either (A) the then outstanding shares of
common stock of the Company, taking into account as outstanding for this purpose
such common stock issuable upon the exercise of options or warrants, the
conversion of convertible stock or debt, and the exercise of any similar right
to acquire such common stock (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control:

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(x) any acquisition by the Company or any "affiliate" of the Company, within the
meaning of 17 C.F.R. ss. 230.405 (an "Affiliate"), (y) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Affiliate of the Company, (z) any acquisition by any corporation or
business entity pursuant to a transaction which complies with clauses (A), (B)
and (C) of subsection (ii) of this Section 6(f) (persons and entities described
in clauses (x), (y) and (z) being referred to herein as "Permitted Holders"); or

                  (ii) The consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, and (B) no Person (excluding any Permitted Holder) beneficially owns,
directly or indirectly, 50% or more (on a fully diluted basis) of, respectively,
the then outstanding shares of common stock of the corporation resulting from
such Business Combination, taking into account as outstanding for this purpose
such common stock issuable upon the exercise of options or warrants, the
conversion of convertible stock or debt, and the exercise of any similar right
to acquire such common stock, or the combined voting power of the then
outstanding voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination and (C) at least a majority
of the members of the board of directors of the corporation resulting from such
Business Combination were members of the incumbent Board of Directors of the
Company at the time of the execution of the initial agreement providing for such
Business Combination; or

                  (iii) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company; or

                  (iv) The sale of at least 80% of the assets of the Company to
an unrelated party, or completion of a transaction having a similar effect; or

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                  (v) The individuals who on the date of this Agreement
constitute the Board of Directors thereafter cease to constitute at least a
majority thereof; provided that any person becoming a member of the Board of
Directors subsequent to the date of this Agreement and whose election or
nomination was approved by a vote of at least two-thirds of the directors who
then comprised the Board of Directors immediately prior to such vote shall be
considered a member of the Board of Directors on the date of this Agreement.

                  For purposes of this Agreement, "Good Reason" shall mean,
without the Executive's prior written consent, (i) a substantial diminution in
the Executive's authority, duties or responsibilities as in effect prior to the
Change of Control, (ii) a reduction by the Company in the Executive's base
Salary as in effect immediately prior to the Change of Control or as thereafter
increased, (iii) the failure by the Company to cover the Executive under
employee benefit plans that, in the aggregate, provide substantially similar
benefits to the Executive and/or his family and dependents at a substantially
similar 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 such benefit plans in which the Executive (and/or
his family or dependents) was participating at any time during the 90-day period
immediately preceding the Change of Control, or (iv) the Company's requiring the
Executive to be based at any office or location that is more than fifty (50)
miles further 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 unless the Executive has first provided
written notice of such circumstance or event and the Company has not corrected
such circumstance or event within thirty (30) days of receipt by the Company of
such written notice from the Executive.

                  (g) Survival of Operative Sections. Upon any termination of
the Executive's employment, the provisions of Sections 6(e) 6(f) and 7 through
18 of this Agreement shall survive to the extent necessary to give effect to the
provisions thereof.

                  Section 7.  Secrecy and Non-Competition.

                  (a) No Competing Employment. The Executive acknowledges that
the agreements and covenants contained in this Section 7 are essential to
protect the value of the Company's business and assets and by his current
employment with the Company and its subsidiaries, the Executive has obtained and
will obtain such knowledge, contacts, know-how, training and experience and
there is a substantial probability that such knowledge, know-how, contacts,
training and experience could be used to the substantial advantage of a
competitor of the Company

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and to the Company's substantial detriment. Therefore, the Executive agrees that
for the period commencing on the date of this Agreement and ending on the first
anniversary of the termination of the Executive's employment hereunder (such
period is hereinafter referred to as the "Restricted Period") with respect to
any State in which the Company is engaged in business during the Employment
Term, the Executive shall not participate or engage, directly or indirectly, for
himself or on behalf of or in conjunction with any person, partnership,
corporation or other entity, whether as an employee, agent, officer, director,
shareholder, partner, joint venturer, investor or otherwise, in any business
activities if such activity consists of any activity undertaken or expressly
contemplated to be undertaken by the Company or any of its subsidiaries or by
the Executive at any time during the last three (3) years of the Employment
Term. The foregoing restrictions contained in this Section 7(a) shall not
prevent the Executive from accepting employment with a large diversified
organization with separate and distinct divisions that do not compete, directly
or indirectly, with the Company, so long as prior to accepting such employment
the Company receives separate written assurances from the prospective employer
and from the Executive, satisfactory to the Company, to the effect that the
Executive will not 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 inform any new employer, prior to
accepting employment, of the existence of this Agreement and provide such
employer with a copy of this Agreement.

                  (b) Nondisclosure of Confidential Information. The Executive,
except in connection with his employment hereunder, shall not disclose to any
person or entity or use, either during the Employment Term or at any time
thereafter, any information not in the public domain or generally known in the
industry that the Company treats as confidential or proprietary, in any form,
acquired by the Executive while employed by the Company or any predecessor to
the Company's business or, if acquired following the Employment Term, such
information which, to the Executive's knowledge, has been acquired, directly or
indirectly, from any person or entity owing a duty of confidentiality to the
Company or any of its subsidiaries or affiliates, relating to the Company, its
subsidiaries or affiliates, including but not limited to information regarding
customers, vendors, suppliers, trade secrets, training programs, manuals or
materials, technical information, contracts, systems, procedures, mailing lists,
know-how, trade names, improvements, price lists, financial or other data
(including the revenues, costs or profits associated with any of the Company's
products or services), 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 and advertising
material, telephone numbers, names, addresses or any

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other compilation of information, written or unwritten, which is or was used in
the business of the Company or any subsidiaries or affiliates thereof. The
Executive agrees and acknowledges that all of such information, in any form, and
copies and extracts thereof, are and shall remain the sole and exclusive
property of the Company, and upon termination of his employment with the
Company, the Executive shall return to the Company the originals and all copies
of any such information provided to or acquired by the Executive in connection
with the performance of his duties for the Company, and shall return to the
Company all files, correspondence and/or other communications received,
maintained and/or originated by the Executive during the course of his
employment.

                  (c) No Interference. During the Restricted Period, the
Executive shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), directly or indirectly solicit, endeavor to entice away from
the Company or its subsidiaries, or otherwise directly interfere with the
relationship of the Company or its subsidiaries with any person who, to the
knowledge of the Executive, is employed by or otherwise engaged to perform
services for the Company or its subsidiaries (including, but not limited to, any
independent sales representatives or organizations) or who is, or was within the
then most recent twelve-month period, a customer or client of the Company, its
predecessors 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 violation of this Section 7(c) unless the
Executive's name is contained in such advertisements or solicitations.

                  (d) Inventions, etc. The Executive hereby sells, transfers and
assigns to the Company or to any person or entity designated by the Company all
of the entire right, title and interest of the Executive in and to all
inventions, ideas, disclosures and improvements, whether patented or unpatented,
and copyrightable material, made or conceived by the Executive, solely or
jointly, 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 the Company, or which otherwise relate to or
pertain to the business, functions or operations of the Company or which arise
from the efforts of the Executive during the course of his employment for the
Company. The Executive shall communicate promptly and disclose to the Company,
in such form as the Company requests, all information, details and data
pertaining to the aforementioned inventions, ideas, disclosures and
improvements; and the Executive shall execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may be
necessary or required of the Executive to permit the Company or any person or
entity designated by the

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Company to file and prosecute the patent applications and, as to copyrightable
material, to obtain copyright thereof. Any invention relating to the business of
the Company and disclosed by the Executive within one year following the
termination of his employment with the Company shall be deemed to fall within
the provisions of this paragraph unless proved to have been first conceived and
made following such termination. The foregoing requirements of this Section 7(d)
shall not apply to any invention for which no equipment, supplies, facility or
trade secret information of the Company was used and which was developed
entirely on the Executive's own time, and (i) which does not relate directly to
the Company's business or to the Company's actual or demonstrably anticipated
research or development, or (ii) which does not result from any work the
Executive performed for the Company.

                  Section 8. Injunctive Relief. Without intending to limit the
remedies available to the Company, the Executive acknowledges that in the event
of a breach of any of the covenants contained in Section 7 hereof may result in
material irreparable injury to the Company or its subsidiaries or affiliates for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction, without the
necessity of proving irreparable harm or injury as a result of such breach or
threatened breach of Section 7 hereof, restraining the Executive from engaging
in activities prohibited by Section 7 hereof or such other relief as may be
required specifically to enforce any of the covenants in Section 7 hereof.

                  Section 9. Representations and Warranties of the Executive.
The Executive represents and warrants to the Company as follows:

                  (a) This Agreement, upon execution and delivery by the
Executive, will be duly executed and delivered by the Executive and (assuming
due execution and delivery hereof by the Company) will be the valid and binding
obligation of the Executive enforceable against the Executive in accordance with
its terms.

                  (b) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby nor the performance of this
Agreement in accordance with its terms and conditions by the Executive (i)
requires the approval or consent of any governmental body or of any 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 to the Executive. Without limiting the
generality of the foregoing, the Executive is not a

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party to any non-competition, non-solicitation, no hire or similar agreement
that restricts in any way the Executive'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 survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.

                  Section 10. Representations and Warranties of the Company. The
Company represents and warrants to the Executive as follows:

                  (a) This Agreement, upon execution and delivery by the
Company, will be duly executed and delivered by the Company and (assuming due
execution and delivery hereof by the Executive) will be the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.

                  (b) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby nor the performance of this
Agreement in accordance with its terms and conditions by the Company (i)
requires the approval or consent of any governmental body or of any 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 to the Company.

                  The representations and warranties of the Company contained in
this Section 10 shall survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.

                  Section 11. Successors and Assigns; No Third-Party
Beneficiaries. This Agreement shall inure to the benefit of, and be binding
upon, the successors and assigns of each of the parties, including, but not
limited to, the Executive's heirs and the personal representatives of the
Executive's estate; provided, however, that neither party shall assign or
delegate any of the obligations created under this Agreement without the prior
written consent of the other party. Notwithstanding the foregoing, the Company
shall have the unrestricted right to assign this Agreement and to delegate all
or any part of its obligations hereunder to any of its subsidiaries or
affiliates, but in such event such assignee shall expressly assume all
obligations of the Company hereunder and the Company shall remain fully liable
for the performance of all of such obligations in the manner prescribed in this
Agreement. Nothing in this Agreement shall confer upon any person or entity not
a party to this Agreement, or the legal representatives of such person or

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entity, any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.

                  Section 12. Waiver and Amendments. Any waiver, alteration,
amendment or modification of any of the terms of this Agreement shall be valid
only if made in writing and signed by the parties hereto; provided, however,
that any such waiver, alteration, amendment or modification is consented to on
the Company's behalf by the Board of Directors. No waiver by either of the
parties hereto of their rights hereunder shall be deemed to constitute a waiver
with respect to any subsequent occurrences or transactions hereunder unless such
waiver specifically states that it is to be construed as a continuing waiver.

                  Section 13. Severability and Governing Law. The Executive
acknowledges and agrees that the covenants set forth in Section 7 hereof are
reasonable and valid in geographical and temporal scope and in all other
respects. If any of such covenants or such other provisions of this Agreement
are found to be invalid or unenforceable by a final determination of a court of
competent 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 that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF MINNESOTA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED, HOWEVER, THE PROVISIONS OF THIS
AGREEMENT RELATING TO THE OPTION AND THE CO-INVESTMENT UNDER SECTIONS 3(D) AND
3(E) HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

                  Section 14.  Notices.

                  (a) All communications under this Agreement shall be in
writing and shall be delivered by hand or mailed by overnight courier or by
registered or certified mail, postage prepaid:

                  (i) If to the Executive, at 7432 Hyde Park Drive, Edina, MN
                  55439, or at such other address as the Executive may have
                  furnished the Company in writing, and

                  (ii) If to the Company, at 466 Lexington Avenue, New York, New
                  York 10017, marked for the attention of the Board of
                  Directors, or at such other address as it 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 date of such delivery; if

                                       13
<PAGE>   14

mailed by courier, on the first business day following the date of such mailing;
and if mailed by registered or certified mail, on the third business day after
the date of such mailing.

                  Section 15. Section Headings. The headings of the sections and
subsections of this Agreement 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
Exhibits hereto, constitutes the entire understanding and agreement of the
parties hereto regarding the employment of the Executive. This Agreement
supersedes all prior negotiations, discussions, correspondence, communications,
understandings and agreements between the parties relating to the subject matter
of this Agreement.

                  Section 17. Severability. In the event that any part or parts
of this Agreement shall be held illegal or unenforceable by any court or
administrative body of competent jurisdiction, such determination shall not
effect the remaining provisions of this Agreement which shall remain in full
force and effect.

                  Section 18. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together shall be considered one and the same agreement.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.

                                          AMERICAN MEDICAL SYSTEMS, INC.

                                          By:   /s/ Janet L. Dick
                                               --------------------------------
                                                Name:  Janet L. Dick
                                                Title:  VP Human Resources

                                          /s/ Douglas W. Kohrs
                                          -------------------------------------
                                                     Douglas W. Kohrs

                                       14<PAGE>   1
            AMENDMENT TO THE EMPLOYMENT AGREEMENT OF DOUGLAS W. KOHRS

                  Amendment to the Employment Agreement, dated as of this 17th
day of April 2000 between Douglas W. Kohrs and American Medical Systems, Inc., a
Delaware corporation (the "Company").

                                 R E C I T A L S

                  WHEREAS, Douglas W. Kohrs and the Company are parties to a
certain Employment Agreement of Douglas W. Kohrs, dated as of April 23, 1999
(the "Employment Agreement");

                  WHEREAS, the parties hereto have agreed to amend and restate
the Employment Agreement as set forth herein.

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:

                  A. EMPLOYMENT AGREEMENT AMENDMENTS

                  1. The parties agree that Section 1 of the Employment
Agreement is hereby amended, effective April 17, 2000, by replacing it with the
following:

                        "Section 1. Employment. The Company hereby agrees to
         employ the Executive and the Executive hereby accepts employment with
         the Company, on the terms and subject to the conditions hereinafter set
         forth. The Executive shall serve as the President and Chief Executive
         Officer of the Company and its holding company, American Medical
         Systems Holdings, Inc. ("AMSH"), and, in such capacity, shall report
         directly to AMSH's Board of Directors (the "Board of Directors") and
         shall have such duties as are typically performed by the chief
         executive officer of a corporation, together with such additional
         duties, commensurate with the Executive's position as the Chief
         Executive Officer of AMSH and the Company, as may be assigned to the
         Executive from time to time by the Board of Directors. The Executive
         shall also serve as a member of the Board of Directors and shall have
         such duties, authority and responsibilities as shall be consistent
         therewith. The principal location of the Executive's employment shall
         be at the Company's principal executive office located in Minnetonka,
         Minnesota, although the Executive understands and agrees that he may be
         required to travel from time to time for Company business reasons."

<PAGE>   2

                  B.  MISCELLANEOUS

                  1. Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.

                  2. Successors and Assigns. This agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.

                  3. Entire Agreement; Amendment and Waiver. This agreement and
the Employment Agreement constitute the entire understanding of the parties
hereto relating to the subject matter hereof and supersede all prior
understandings among such parties. This agreement may be amended, and the
observance of any term of this agreement may be waived, with (and only with) the
written consent of the parties hereto.

                  4. Severability. In the event that any part or parts of this
agreement shall be held illegal and unenforceable by any court or administrative
body of competent jurisdiction, such determination shall not effect the
remaining provisions of this agreement which shall remain in full force and
effect.

                  5. Counterparts. This agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

                  IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date first above written.

                                            AMERICAN MEDICAL SYSTEMS, INC.

                                            By:  /s/ Douglas W. Kohrs
                                                --------------------------------
                                                     Name:  Douglas W. Kohrs
                                                     Title:  President and CEO

                                            Douglas W. Kohrs

                                            /s/ Douglas W. Kohrs
                                                --------------------------------

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