Document:

<PAGE>   1

                               TRANCHE A TERM NOTE

             $_________________                                           (DATE)

                  FOR VALUE RECEIVED, AMERICAN MEDICAL SYSTEMS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________, its successors and assigns (the "Lender"), at the
office of Bank of America, N. A., as Agent (the "Agent"), at 101 North Tryon
Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or
at such other place or places as the holder hereof may designate), at the times
set forth in the Credit Agreement dated as of March 24, 2000 among the Borrower,
the Guarantors, the Lenders and the Agent (as it may be as amended, modified,
restated or supplemented from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Maturity Date, in
Dollars and in immediately available funds, the principal amount of
________________________DOLLARS ($____________), and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.3(e)
of the Credit Agreement.

         Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section 3.1
of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note, and
all other indebtedness of the Borrower to the Lender shall become immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Borrower.

         In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.

         This Note and the Loans evidenced hereby may be transferred in whole or
in part only by registration of such transfer on the Register maintained by or
on behalf of the Borrower as provided in Section 11.3(c) of the Credit
Agreement.

         IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.

                                AMERICAN MEDICAL SYSTEMS, INC.

                                By:
                                   ---------------------
                                Name:
                                     -------------------
                                Title:
                                      ------------------<PAGE>   1

                               TRANCHE B TERM NOTE

                  $_________________                                      (DATE)

                  FOR VALUE RECEIVED, AMERICAN MEDICAL SYSTEMS, INC., a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of
__________________________, its successors and assigns (the "Lender"), at the
office of Bank of America, N. A., as Agent (the "Agent"), at 101 North Tryon
Street, Independence Center, NC1-001-15-04, Charlotte, North Carolina 28255 (or
at such other place or places as the holder hereof may designate), at the times
set forth in the Credit Agreement dated as of March 24, 2000 among the Borrower,
the Guarantors, the Lenders and the Agent (as it may be as amended, modified,
restated or supplemented from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Credit Agreement), but in no event later than the Maturity Date, in
Dollars and in immediately available funds, the principal amount of
________________________DOLLARS ($____________), and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with Section 2.3(e)
of the Credit Agreement.

         Upon the occurrence and during the continuance of an Event of Default,
the balance outstanding hereunder shall bear interest as provided in Section 3.1
of the Credit Agreement. Further, in the event the payment of all sums due
hereunder is accelerated under the terms of the Credit Agreement, this Note, and
all other indebtedness of the Borrower to the Lender shall become immediately
due and payable, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Borrower.

         In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees.

         This Note and the Loans evidenced hereby may be transferred in whole or
in part only by registration of such transfer on the Register maintained by or
on behalf of the Borrower as provided in Section 11.3(c) of the Credit
Agreement.

         IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its duly authorized officer as of the day and year first above
written.

                                AMERICAN MEDICAL SYSTEMS, INC.

                                By:
                                   ---------------------
                                Name:
                                     -------------------
                                Title:
                                      ------------------<PAGE>   1
                            PARENT JOINDER AGREEMENT

     THIS JOINDER AGREEMENT (the "Agreement"), dated as of April 17, 2000, is by
and between AMERICAN MEDICAL SYSTEMS, HOLDINGS, INC., a Delaware corporation,
(the "Parent"), and BANK OF AMERICA, N. A., in its capacity as Agent under that
certain Credit Agreement (as it may be amended, modified, restated or
supplemented from time to time, the "Credit Agreement"), dated as of March 24,
2000, by and among AMERICAN MEDICAL SYSTEMS, INC., a Delaware corporation (the
"Borrower"), the Guarantors, the Lenders and Bank of America, N. A., as Agent.
All of the defined terms in the Credit Agreement are incorporated herein by
reference.

     The Credit Parties are required by Section 5.2 of the Credit Agreement to
cause the Parent to become a "Guarantor" on or prior to the Initial Funding
Date.

     Accordingly, the Parent hereby agrees as follows with the Agent, for the
benefit of the Lenders:

     1.   The Parent hereby acknowledges, agrees and confirms that, by its
execution of this Agreement, the Parent will be deemed to be a party to the
Credit Agreement and the "Parent" and a "Guarantor" for all purposes of the
Credit Agreement, and shall have all of the obligations of the Parent and a
Guarantor thereunder as if it had executed the Credit Agreement. The Parent
hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions applicable to the Parent and the Guarantors
contained in the Credit Agreement. Without limiting the generality of the
foregoing terms of this paragraph 1, the Parent hereby jointly and severally
together with the other Guarantors, guarantees to each Lender and the Agent, as
provided in Section 4 of the Credit Agreement, the prompt payment and
performance of the Credit Party Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in
accordance with the terms thereof.

     2.   The Parent hereby acknowledges, agrees and confirms that it shall
execute the Security Agreement on or prior to the Initial Funding Date. The
Parent hereby represents and warrants to the Agent that:

          (i)    The Parent's chief executive office and chief place of business
     are (and for the prior four months have been) located at the locations set
     forth on Schedule 6.20(c) of the Credit Agreement and the Parent keeps its
     books and records at such locations.

          (ii)   The location of all Collateral owned by the Parent is as shown
     on Schedule 6.20(b) of the Credit Agreement.

          (iii)  The Parent's legal name is as shown in this Agreement and the
     Parent has not in the past four months changed its name, been party to a
     merger, consolidation or other change in structure or used any tradename
     except as set forth in Schedule 6(c) to the Security Agreement.

<PAGE>   2
          (iv)   The patents and trademarks listed on Schedule 6.17 of the
     Credit Agreement constitute all of the registrations and applications for
     the patents and trademarks owned by the Parent.

     3.   The Parent hereby acknowledges, agrees and confirms that it shall
execute the Pledge Agreement on or prior to the Initial Funding Date.

     4.   The address of the Parent for purposes of all notices and other
communications is 10700 Bren Road, Minnetonka, Minnesota 55343-9679, Attention
of Greg Melsen (Facsimile No. (612) 930-6167).

     5.   The Parent hereby waives acceptance by the Agent and the Lenders of
the guaranty by the Parent under Section 4 of the Credit Agreement upon the
execution of this Agreement by the Parent.

     6.   This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.

     7.   This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.

     IN WITNESS WHEREOF, the Parent has caused this Joinder Agreement to be duly
executed by its authorized officers, and the Agent, for the benefit of the
Lenders, has caused the same to be accepted by its authorized officer, as of the
day and year first above written.

                                 AMERICAN MEDICAL SYSTEMS,
                                 HOLDINGS, INC.

                                 By: /s/ Gregory J. Melsen
                                    ---------------------------------
                                 Name: Gregory J. Melsen
                                      -------------------------------
                                 Title: Vice President-Finance
                                        Treasurer and Chief Financial
                                        Officer
                                       ------------------------------

                                 Acknowledged and accepted:

                                 BANK OF AMERICA, N. A., as Agent

                                 By: /s/ John J. O'Neill
                                    ---------------------------------
                                 Name: John J. O'Neill
                                      -------------------------------
                                 Title: Managing Director
                                       ------------------------------

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