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EXHIBIT 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made and entered into effective as of
January 5, 2005 (the “Effective Date”), 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 Executive currently serves as the Chairman of the Board of Directors and Chief
Executive Officer of the Company and its parent corporation, American Medical Systems Holdings,
Inc. (the “Parent Corporation”).

     WHEREAS, the Company and the Executive have entered into an Employment Agreement, dated as of
April 23, 1999, as amended on April 17, 2000 and January 23, 2002 (as amended, the “Prior
Agreement”), pursuant to which the Company employs the Executive.

     WHEREAS, the Company and the Executive desire to amend and restate the Prior Agreement to
provide for the continued employment by the Company of the Executive as the Chairman of the Board
of Directors of the Company and the Parent Corporation effective as of the Effective Date, 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 continue to employ the Executive
on the terms and subject to the conditions hereinafter set forth. The Executive shall serve as the
Chairman of the Board of Directors of the Parent Corporation (the “Board” or “Board of
Directors”) and the Company, and, in such capacity, shall continue to be an officer of the
Parent Corporation and the Company and shall continue to report directly to the Board of Directors.
The Executive shall have such duties as are typically performed by the chairman of the board of a
public corporation, together with such additional duties, commensurate with the Executive’s
position as the Chairman of the Board and former Chief Executive Officer, 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, this Agreement
shall be effective as of the Effective Date and shall continue during the period ending on the
first anniversary of the Effective Date (the “Initial Term”). Thereafter, this Agreement
shall automatically be renewed for consecutive periods of one year unless either party shall
provide notice of termination not less than sixty (60) days prior to an anniversary the Effective
Date. The Initial Term, together with any renewal term 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 $330,000
per annum through February 14, 2005 and $100,000 per annum thereafter during the term of this
Agreement with increases, if any, as may be approved in writing by the Board of Directors or the
Compensation Committee of the Board. 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) Benefits. Except as otherwise provided in this Agreement, in addition to the
Salary, 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
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 five (5) weeks of vacation during each
calendar year.

     Section 4. Exclusivity. During the Employment Term, the Executive shall devote such
time to the business of the Company and its subsidiaries as is necessary to perform his duties
hereunder, 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, and shall use his best efforts to
promote and serve the interests of the Company and its subsidiaries. During the Employment Term,
the Executive shall not engage in any other

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business activity that interferes in any material respect with the services to be provided by
the Executive hereunder and shall not be employed by any other entity.

     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 Board 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

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that has the effect of injuring the reputation or business of the Company or its affiliates in
any material respect; (iii) use of illegal drugs by the Executive or repeated drunkenness; (iv)
conviction of the Executive for the commission of a felony; or (v) 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) 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 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 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

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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) the Company shall pay to Executive a lump sum
payment equal to (A) his total cash compensation for 2004, including base salary and bonus for
2004, whether paid in 2004 or 2005, if the Change in Control occurs on or before December 31, 2005
or (B) his Salary at the rate in effect hereunder on the date of such termination, if the Change in
Control occurs after December 31, 2005 (in either case, less any applicable withholding or similar
taxes) and (iii) 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 (iii) 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. In addition, in connection with or following a Change in Control, all unvested shares
that are subject to outstanding options to purchase shares of common stock of Parent shall become
vested and exercisable as provided in the agreement or certificate evidencing the applicable stock
option.

     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 Parent Corporation, 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 Parent Corporation Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Parent Corporation entitled to vote
generally in the election of directors (the “Outstanding Parent

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Corporation Voting  Securities”); provided, however, that for purposes of this subsection (i), the
following acquisitions shall not constitute a Change of Control: (x) any acquisition by the Parent
Corporation or any “affiliate” of the Parent Corporation, within the meaning of 17 C.F.R. § 230.405
(an “Affiliate”), (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Parent Corporation or any Affiliate of the Parent Corporation, (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 Parent Corporation (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 Parent Corporation Common Stock and Outstanding Parent Corporation 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 Parent
Corporation or all or substantially all of the Parent Corporation’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 Parent Corporation Common Stock
and Outstanding Parent Corporation 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 Parent Corporation at the time of the execution of the
initial agreement providing for such Business Combination; or

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

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

     (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 change in the Executive’s
reporting relationship such that he no longer reports to the Board of Directors, (iii) 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, (iv) 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 (v) 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) Gross-Up Payment. If the Executive becomes entitled to payments and benefits
following a Change in Control under Section 6(f) or the vesting of any stock options held by the
Executive accelerate following a Change in Control pursuant to any stock option agreement or
certificate, whether entered into on or after the date hereof, the Parent Corporation will cause
its independent auditors promptly to review, at the Company’s sole expense, the applicability of
Code Section 4999 to

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any payment or distribution of any type by the Company to or for
the Executive’s benefit, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement, any stock option agreement or otherwise (the “Total
Payments”). If the auditor determines that the Total Payments result in an excise tax imposed
by Code Section 4999 or any comparable state or local law, or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and penalties, are
collectively referred to as the “Excise Tax”), the Company will make an additional cash
payment (a “Gross-Up Payment”) to the Executive within 10 days after such determination
equal to an amount such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive would retain an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments. For purposes of the foregoing determination, the Executive’s tax
rate will be deemed to be the highest statutory marginal state and federal tax rate (on a combined
basis) then in effect. If no determination by the Company’s auditors is made prior to the time the
Executive is required to file a tax return reflecting the Total Payments, the Executive will be
entitled to receive from the Company a Gross-Up Payment calculated on the basis of the Excise Tax
the Executive reported in such tax return, within 10 days after the later of the date on which the
Executive files such tax return or the date on which the Executive provides a copy thereof to the
Company. In all events, if any tax authority determines that a greater Excise Tax should be imposed
upon the Total Payments than is determined by the Company’s independent auditors or reflected in
the Executive’s tax return pursuant to this Section 6(g), the Executive will be entitled to receive
from the Company the full Gross-Up Payment calculated on the basis of the amount of Excise Tax
determined to be payable by such tax authority within 10 days after the Executive notifies the
Company of such determination.

     (h) Survival of Operative Sections. Upon any termination of the Executive’s
employment, the provisions of Sections 6(e), 6(f), 6(g) 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

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permit the Company or any person or entity designated by
the 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

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governmental regulation applicable to
the Executive. Without limiting the generality of the foregoing, the Executive is not a
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. No Mitigation. The Executive will not be required to mitigate the amount
of any benefits the Company becomes obligated to provide to the Executive under Section 6(f) or
6(g) by seeking other employment or otherwise. The benefits to be provided to the Executive under
Section 6(f) or 6(g) may not be reduced, offset or subject to recovery by the Company by any
benefits the Executive may receive from other employment or otherwise.

     Section 12. No Setoff. The Company has no right to setoff benefits owed to the
Executive under Section 6(f) or 6(g) against amounts owed or claimed to be owed by the Executive to
the Company under this Agreement or otherwise.

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     Section 13. Disputes. If the Executive so elects, any dispute, controversy or claim
arising under Section 6(f) or 6(g)
will be settled exclusively by binding arbitration administered by the American Arbitration
Association in Minneapolis, Minnesota in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect; provided that the Executive may seek specific
performance of the Executive’s right to receive benefits during the pendency of any dispute or
controversy arising under Section 6(f) or 6(g). Judgment may be entered on the arbitrator’s award
in any court having jurisdiction. If any dispute, controversy or claim for damages arising under
Section 6(f) or 6(g) is settled by arbitration, the Company will pay, or if elected by the
Executive, reimburse, all fees, costs and expenses incurred by the Executive related to such
arbitration unless the arbitrators decide that the Executive’s claim was frivolous or advanced by
the Executive in bad faith. If the Executive does not elect arbitration for any dispute,
controversy or claim arising under Section 6(f) or 6(g) the Executive may pursue all available
legal remedies. The Company will pay, or if elected by the Executive, reimburse the Executive for,
all fees, costs and expenses incurred by the Executive in connection with any actual, threatened or
contemplated litigation relating to Section 6(f) or 6(g) to which the Executive is or reasonably
expects to become a party, whether or not initiated by the Executive, if the Executive is
successful in recovering any benefit under Section 6(f) or 6(g) as a result of such action. The
Company will not assert in any dispute or controversy with the Executive arising under Section 6(f)
or 6(g) the Executive’s failure to exhaust administrative remedies.

     Section 14. 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 entity, any rights or remedies of any nature or kind whatsoever under or by reason
of this Agreement.

13

 

     Section 15. 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 16. 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.

     Section 17. 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 7444 Shannon Drive, Edina, Minnesota 55439, or at such
other address as the 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 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 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 11. 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.

14

 

     Section 12. 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. The Prior Agreement is hereby amended and restated in its
entirety by this Agreement.

     Section 13. 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 14. 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. Facsimile execution and delivery of this Agreement shall be
legal, valid and binding execution and delivery for all purposes.

     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
	 
	 	 	 	 
	

	 	By:
	 	/s/ Douglas W. Kohrs
	

	 	 	 	 
	 	 	Douglas W. Kohrs

15<PAGE>

                                                                     EXHIBIT 4.1

                               BIOPURE CORPORATION

                                 AGENT'S WARRANT

Warrant No. AW-3                                        Dated: January 10, 2005

      Biopure Corporation, a Delaware corporation (the "COMPANY"), hereby
certifies that, for value received, C.E. Unterberg, Towbin, LLC or its
registered assigns (including permitted transferees, the "HOLDER"), is entitled
to purchase from the Company 500,000 shares (as adjusted from time to time as
provided in Section 9) of Common Stock (as defined below), together with the
associated preferred stock purchase rights under that certain Rights Agreement
(the "RIGHTS AGREEMENT") dated as of as of September 24, 1999 between the
Company and American Stock Transfer & Trust Company, as rights agent, to the
extent the Rights Agreement is in effect on the date of such purchase, at an
exercise price equal to $0.713 per share (as adjusted from time to time as
provided in Section 9, the "EXERCISE PRICE"), at any time and from time to time
from and after July 10, 2005 (the "INITIAL EXERCISE DATE") to and including
January 10, 2010 (the "EXPIRATION DATE"), and subject to the following terms and
conditions.

      1. Definitions. The capitalized terms used herein and not otherwise
defined shall have the meanings set forth below:

            "AFFILIATE" of any specified Person means any other person or entity
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"CONTROL" means the power to direct the management and policies of such Person
or firm, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise.

            "COMMISSION" means the United States Securities and Exchange
Commission.

            "COMMON STOCK" means the Class A common stock of the Company, $0.01
par value per share.

            "ELIGIBLE MARKET" means any of the New York Stock Exchange, the
American Stock Exchange or Nasdaq, and any successor markets thereto.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended

            "MARKET PRICE" shall mean (i) if the principal trading market for
such securities is an exchange, the average of the last reported sale prices per
share for the last ten previous Trading Days in which a sale was reported, as
officially reported on any consolidated tape, (ii) if clause (i) is not
applicable, the average of the closing bid price per share for the last ten
previous Trading Days as set forth by Nasdaq or (iii) if clauses (i) and (ii)
are not applicable, the average

                                      -1-
<PAGE>

of the closing bid price per share for the last ten previous Trading Days as set
forth in the National Quotation Bureau sheet listing for such securities.
Notwithstanding the foregoing, if there is no reported sales price or closing
bid price, as the case may be, on any of the ten Trading Days preceding the
event requiring a determination of Market Price hereunder, then the Market Price
shall be determined in good faith after reasonable investigation by resolution
of the Board of Directors of the Company.

            "NASDAQ" means the Nasdaq SmallCap Market or Nasdaq National Market,
and any successor markets thereto.

            "OTHER SECURITIES" refers to any capital stock (other than Common
Stock) and other securities of the Company or any other Person which the Holder
of this Warrant at any time shall be entitled to receive, or shall have
received, pursuant to the terms hereof upon the exercise of this Warrant, in
lieu of or in addition to Common Stock.

            "PERSON" means any court or other federal, state, local or other
governmental authority or other individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

            "REGISTRATION STATEMENT" means the Company's Registration Statement
on Form S-3 filed with the Commission on April 16, 2004, as such registration
statement is amended or supplemented.

            "TRADING DAY" means (a) any day on which the Common Stock is listed
or quoted and traded on any Eligible Market or (b) if the Common Stock is not
then quoted and traded on any Eligible Market, then a day on which trading
occurs on the Nasdaq National Market (or any successor thereto).

            "WARRANT SHARES" shall initially mean shares of Common Stock
(together with the associated preferred stock purchase rights under the Rights
Agreement to the extent the Rights Agreement is in effect on the applicable
date) and in addition may include Other Securities and Substituted Property (as
defined in Section 9(e)(x)) issued or issuable from time to time upon exercise
of this Warrant.

      2. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "WARRANT
REGISTER"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes.

      3. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto as Appendix A duly
completed and signed, to the Company at its address specified herein. Upon any
such registration and transfer, a new warrant in substantially the form of a
Warrant (any such new warrant, a "NEW WARRANT"), evidencing the portion of this
Warrant so transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring

                                      -2-
<PAGE>

Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations of
a holder of a Warrant.

      4. Exercise and Duration of Warrant.

            (a) This Warrant shall be exercisable, either in its entirety or for
a portion of the number of Warrant Shares, by the registered Holder at any time
and from time to time from and after the Initial Exercise Date to and including
the Expiration Date. At 5:00 P.M. New York City time on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void and
of no value, and the Holder hereof shall have no right to purchase any
additional Warrant Shares hereunder.

            (b) A Holder may exercise this Warrant by delivering to the Company,
in accordance with Section 13, this Warrant, together with (i) an exercise
notice, in the form attached hereto as Appendix B (the "EXERCISE NOTICE"),
appropriately completed and duly signed, and (ii) payment of the Exercise Price
for the number of Warrant Shares as to which this Warrant is being exercised (as
set forth in Section 4(c) below), and the date such items are received by the
Company is an "EXERCISE DATE." Execution and delivery of an Exercise Notice in
respect of less than all of the Warrant Shares issuable upon exercise of this
Warrant shall result in the cancellation of the original Warrant and issuance of
a New Warrant evidencing the right to purchase the remaining number of Warrant
Shares.

            (c) The Holder shall pay the Exercise Price in cash, by certified
bank check payable to the order of the Company or by wire transfer of
immediately available funds in accordance with the Company's instructions.

            (d) Except as otherwise provided for herein, this Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company by virtue of the ownership hereof.

      5. Delivery of Warrant Shares.

            (a) Upon exercise of this Warrant, the Company shall promptly, issue
or cause to be issued and deliver or cause to be delivered to the Holder, in
such name or names as the Holder may designate, a certificate for the Warrant
Shares issuable upon such exercise (the "CERTIFICATE") bearing no restrictive
legends. The Holder, or any Person so designated by the Holder to receive the
Warrant Shares, shall be deemed to have become holder of record of such Warrant
Shares as of the Exercise Date. Failure by the Company to deliver the
Certificate (or to instruct DTC to credit the Holder's balance account with DTC
for the Warrant Shares issuable upon such exercise) on or before the tenth day
following the Exercise Date (the "OUTSIDE DATE") shall entitle the Holder to an
amount in cash from the Company for each Trading Day following the Outside Date
until the delivery is effected equal to 1.0% of the product of (i) the Warrant
Shares issuable upon such exercise and (ii) the positive difference between the
Market Price on the Outside Date and the Exercise Price.

            (b) The Warrant and the Warrant Shares will be registered pursuant
to the Registration Statement, and the Company covenants and agrees to maintain
the effectiveness of

                                      -3-
<PAGE>

the Registration Statement until the earlier of (i) such time as the Warrant
Shares have been sold thereunder or (ii) one hundred and eighty (180) days
following the exercise in full of the Warrant or the expiration of any Warrant
Shares not previously exercised thereunder. Not withstanding the foregoing, in
the event that, prior to such time as all of the Warrant Shares have been sold
by the Holder, the Company ceases to be eligible under the Securities Act of
1933, as amended (the "ACT") or the rules and regulations promulgated
thereunder, to maintain a registration statement on Form S-3, or in the event
that the Warrant or the Warrant Shares cease to be eligible for inclusion in
such Registration Statement to the extent necessary to permit the Holder to
exercise the Warrant and sell the Warrant Shares without restriction under the
Act, the Company will promptly (and in any event within 10 days of the date that
the Warrant or any Warrant Shares cease to be so eligible), amend or file a new
registration statement under the Act on a form eligible for use by the Company
for the registration of such securities and use its best efforts to have such
registration statement declared effective by the Commission as soon as
practicable after such filing, which registration statement shall include such
information as may be required to permit the exercise of the Warrant and the
sale of the Warrant Shares without restriction under the Act. The Holder
acknowledges and agrees that the Warrant shall be exercisable pursuant to any
such registration statement only at such times as the registration statement is
effective or in accordance with any applicable exemption from the registration
requirements of the Act. During such time as the Warrant Shares are registered
pursuant to any registration statement under the Act, the Company further
covenants and agrees to make timely filings of all documents required by be
filed under the Act or the Exchange Act in order to ensure that the registration
statement, including the documents incorporated by reference therein, if any, do
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.

            (c) This Warrant is exercisable, either in its entirety or, from
time to time, for a portion of the number of Warrant Shares. Upon surrender of
this Warrant following one or more partial exercises, the Company shall issue or
cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares.

      6. Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issue, delivery or
registration of any certificates for Warrant Shares or Warrant in a name other
than that of the Holder and that the Holder will be required to pay any tax with
respect to cash received in lieu of fractional shares. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise hereof.

      7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company, at the sole expense of the Holder (such expenses, if any
imposed by the Company to be reasonable), shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in lieu of and in
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested by the Company.

                                      -4-
<PAGE>

      8. Reservation of Warrant Shares. The Company covenants that it will at
all times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from all taxes, liens, claims,
encumbrances with respect to the issuance of such Warrant Shares and will not be
subject to any pre-emptive rights or similar rights (taking into account the
adjustments and restrictions of Section 9 hereof). The Company covenants that
all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued, fully paid and nonassessable. The Company
will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any securities exchange
or automated quotation system upon which the Common Stock may be listed or
quoted, as the case may be; provided, however, that such actions shall only
require the Company's best efforts (or other specified standard) to the extent
specifically provided for in this Warrant.

      9. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 9.

            (a) Stock Dividends. If the Company, at any time while this Warrant
is outstanding, pays a dividend on its Common Stock payable in additional shares
of Common Stock or otherwise makes a distribution on any class of capital stock
that is payable in shares of Common Stock, then in each such case the Exercise
Price shall be multiplied by a fraction, (A) the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to the opening of
business on the day after the record date for the determination of stockholders
entitled to receive such dividend or distribution and (B) the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after the distribution date of such dividend or distribution. Any adjustment
made pursuant to this Section 9(a) shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution; provided, however, that if following such record date
the Company rescinds or modifies such dividend or distribution, the Exercise
Price shall be appropriately adjusted (as of the date that the Company
effectively rescinds or modifies such dividend or distribution) to take into
account the effect of such rescinded or modified dividend or distribution on the
Exercise Price pursuant to this Section 9(a).

            (b) Stock Splits. If the Company, at any time while this Warrant is
outstanding, (i) subdivides outstanding shares of Common Stock into a larger
number of shares, or (ii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction, (A) the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such event and (B) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment pursuant to this Section 9(b) shall
become effective immediately after the effective date of such subdivision or
combination.

            (c) Reclassifications. A reclassification of the Common Stock (other
than any such reclassification in connection with a merger or consolidation to
which Section 9(e) applies)

                                      -5-
<PAGE>

into shares of any other class of stock shall be deemed:

                  (i) a distribution by the Company to the holders of its Common
Stock of such shares of such other class of stock for the purposes and within
the meaning of this Section 9; and

                  (ii) if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock for the purposes
and within the meaning of Section 9(b).

            (d) Other Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) shares of any class of capital stock, (iii) rights or
warrants to subscribe for or purchase any shares of any class of capital stock
or (iv) any other asset, other than a distribution of Common Stock covered by
Section 9(a), (in each case, "DISTRIBUTED PROPERTY"), then in each such case the
Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution (and the
Exercise Price thereafter applicable) shall be adjusted (effective on and after
such record date) to equal the product of such Exercise Price multiplied by a
fraction, (A) the numerator of which shall be Market Price on such record date
less the then fair market value of the Distributed Property distributed in
respect of one outstanding share of Common Stock, which, if the Distributed
Property is other than cash or marketable securities, shall be as determined in
good faith by the Board of Directors of the Company whose determination shall be
described in a board resolution, and (B) the denominator of which shall be the
Market Price on such record date; provided, however, that if following the
record date for such distribution the Company rescinds or modifies such
distribution, the Exercise Price shall be appropriately adjusted (as of the date
that the Company effectively rescinds or modifies such distribution) to take
into account the effect of such rescinded or modified distribution on the
Exercise Price pursuant to this Section 9(d).

            (e) Fundamental Transactions. If, at any time following the Initial
Exercise Date, (i) the Company effects any merger or consolidation of the
Company with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions or
(iii) there shall occur any merger of another Person into the Company whereby
the Common Stock is cancelled, converted or reclassified into or exchanged for
other securities, cash or property (in any such case, a "FUNDAMENTAL
TRANSACTION"), then, as a condition to the consummation of such Fundamental
Transaction, the Company shall (or, in the case of any Fundamental Transaction
in which the Company is not the surviving entity, the Company shall take all
reasonable steps to cause such other Person to) execute and deliver to the
Holder of this Warrant a written instrument providing that:

                  (x) so long as this Warrant remains outstanding, upon the
exercise hereof at any time on or after the consummation of such Fundamental
Transaction and on such terms and subject to such conditions as shall be nearly
equivalent as may be practicable to the provisions set forth in this Warrant,
this Warrant shall be exercisable into, in lieu of Common Stock issuable upon
such exercise prior to such consummation, the securities or other property (the
"SUBSTITUTED PROPERTY") that would have been received in connection with such
Fundamental Transaction by a holder of the number of shares of Common Stock into
which this

                                      -6-
<PAGE>

Warrant was exercisable immediately prior to such Fundamental Transaction,
assuming such holder of Common Stock:

                        (A) is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be (a "CONSTITUENT PERSON"), or
an Affiliate of a Constituent Person; and

                        (B) failed to exercise such Holder's rights of election,
if any, as to the kind or amount of securities, cash and other property
receivable in connection with such Fundamental Transaction (provided, however,
that if the kind or amount of securities, cash or other property receivable in
connection with such Fundamental Transaction is not the same for each share of
Common Stock held immediately prior to such Fundamental Transaction by a Person
other than a Constituent Person or an Affiliate thereof and in respect of which
such rights of election shall not have been exercised (a "NON-ELECTING SHARE"),
then, for the purposes of this Section 9(e), the kind and amount of securities,
cash and other property receivable in connection with such Fundamental
Transaction by each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-Electing Shares); and

                  (y) the rights and obligations of the Company (or, in the
event of a transaction in which the Company is not the surviving Person, such
other Person) and the Holder in respect of Substituted Property shall be as
nearly equivalent as may be practicable to the rights and obligations of the
Company and Holder in respect of Common Stock hereunder.

            Such written instrument shall provide for adjustments which, for
events subsequent to the effective date of such written instrument, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 9. The above provisions of this Section 9(e) shall similarly apply to
successive Fundamental Transactions.

            (f) Adjustment of Warrant Shares. Simultaneously with any adjustment
to the Exercise Price pursuant to paragraphs (a) through (d) of this Section 9,
the number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price
payable for the Warrant Shares immediately prior to such adjustment.

            (g) Calculations. All calculations under this Section 9 shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable. The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common Stock.

            (h) Adjustments. Notwithstanding any provision of this Section 9, no
adjustment of the Exercise Price shall be required if such adjustment is less
than $0.01; provided, however, that any adjustments which by reason of this
Section 9(h) are not required to be made shall be carried forward and taken into
account for purposes of any subsequent adjustment required to be made hereunder.

                                      -7-
<PAGE>

            (i) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company will promptly deliver to the Holder a
certificate executed by the Company's Chief Financial Officer setting forth, in
reasonable detail, the event requiring such adjustment and the method by which
such adjustment was calculated, the adjusted Exercise Price and the adjusted
number or type of Warrant Shares or other securities issuable upon exercise of
this Warrant (as applicable). The Company will retain at its office copies of
all such certificates and cause the same to be available for inspection at said
office during normal business hours by the Holder or any prospective purchaser
of the Warrant designated by the Holder.

            (j) Notice of Corporate Events. If the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including, without limitation, any granting of
rights or warrants to subscribe for or purchase any capital stock of the Company
or any subsidiary of the Company, (ii) authorizes, approves, enters into any
agreement contemplating, or solicits stockholder approval for, any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to the
Holder a notice describing the material terms and conditions of such transaction
at least 15 calendar days prior to the applicable record or effective date on
which a Person would need to hold Common Stock in order to participate in or
vote with respect to such transaction, and the Company will take all steps
reasonably necessary in order to ensure that the Holder is given the practical
opportunity to exercise this Warrant prior to such time so as to participate in
or vote with respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the validity of the
corporate action required to be described in such notice.

      10. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable upon exercise of this Warrant, the Company shall make a cash payment
to the Holder equal to (a) such fraction multiplied by (b) the Market Price on
the Exercise Date of one full Warrant Share.

      11. Listing on Securities Exchanges. The Company has listed, and will use
its best efforts to maintain the listing of, the Warrant Shares on Nasdaq. In
furtherance and not in limitation of any other provision of this Warrant, if the
Company at any time shall list any Common Stock on any Eligible Market other
than Nasdaq, the Company will, at its expense, simultaneously list the Warrant
Shares (and use its best efforts to maintain such listing) on such Eligible
Market, upon official notice of issuance following the exercise of this Warrant;
and the Company will so list, register and use its best efforts to maintain such
listing on any Eligible Market any Other Securities, if and at the time that any
securities of like class or similar type shall be listed on such Eligible Market
by the Company.

      12. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

      13. Notices. Any and all notices or other communications or deliveries
hereunder

                                      -8-
<PAGE>

(including without limitation any Exercise Notice) shall be in writing and shall
be mailed by certified mail, return receipt requested, or by a nationally
recognized courier service or delivered (in person or by facsimile), against
receipt to the party to whom such notice or other communication is to be given.
Any notice or other communication given by means permitted by this Section 13
shall be deemed given at the time of receipt thereof. The address for such
notices or communications shall be as set forth below:

      If to the Company:   Biopure Corporation
                           11 Hurley Street
                           Cambridge, MA  02141

      If to the Holder:    C.E. Unterberg, Towbin
                           350 Madison Avenue
                           New York, NY  10017

Or such other address as is provided to such other party in accordance with this
Section 14.

      14. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new
warrant agent. Any Person into which any new warrant agent may be merged, any
Person resulting from any consolidation to which any new warrant agent shall be
a party or any Person to which any new warrant agent transfers substantially all
of its corporate trust or shareholders services business shall be a successor
warrant agent under this Warrant without any further act. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed (by first class mail, postage prepaid) to the Holder at the Holder's
last address as shown on the Warrant Register.

      15. Miscellaneous. (a) This Warrant may be assigned by the Holder. This
Warrant may not be assigned by the Company, except to a successor in the event
of a Fundamental Transaction. This Warrant shall be binding on and inure to the
benefit of the parties hereto and their respective successors and assigns.
Subject to the preceding sentence, nothing in this Warrant shall be construed to
give to any Person other than the Company and the Holder any legal or equitable
right, remedy or cause of action under this Warrant. This Warrant may be amended
only in writing signed by the Company and the Holder and their successors and
assigns.

            (b) The Company will not, by amendment of its governing documents or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value of
any Warrant Shares above the amount payable therefor upon exercise thereof, and
(ii) will take all such action as may be reasonably necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant, free from all
taxes, liens, claims and encumbrances and (iii) will not close its shareholder
books or records in any manner which interferes with the timely exercise of this
Warrant.

                                      -9-
<PAGE>

            (c) This Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and Federal courts sitting in
the City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding that it is not personally subject to the
jurisdiction of any such court or that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

            (d) Neither party shall be deemed in default of any provision of
this Warrant, to the extent that performance of its obligations or attempts to
cure a breach hereof are delayed or prevented by any event reasonably beyond the
control of such party, including, without limitation, war, hostilities, acts of
terrorism, revolution, riot, civil commotion, national emergency, strike,
lockout, unavailability of supplies, epidemic, fire, flood, earthquake, force of
nature, explosion, embargo, or any other Act of God, or any law, proclamation,
regulation, ordinance, or other act or order of any court, government or
governmental agency, provided that such party gives the other party written
notice thereof promptly upon discovery thereof and uses reasonable efforts to
cure or mitigate the delay or failure to perform.

            (e) The headings herein are for convenience only, do not constitute
a part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

            (f) In case any one or more of the provisions of this Warrant shall
be deemed invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
                             SIGNATURE PAGE FOLLOWS]

                                      -10-
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

                                       BIOPURE CORPORATION

                                       By: ___________________________________
                                           Name:
                                           Title:

<PAGE>

                                   APPENDIX A

                               FORM OF ASSIGNMENT

           (to be completed and signed only upon transfer of Warrant)

            FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________________ the right represented by
the within Warrant to purchase _____________ shares of Common Stock of Biopure
Corporation to which the within warrant relates and appoints _______________
attorney to transfer said right on the books of Biopure Corporation with
full power of substitution in the premises.

Dated:____________                   ___________________________________________
                                     (Signature must conform in all respects to
                                     name of Holder as specified on face of the
                                     Warrant)

                                     Address of Transferee:

                                     __________________________________

                                     __________________________________

                                     __________________________________

In the presence of:

___________________________

<PAGE>

                                   APPENDIX B

                             FORM OF EXERCISE NOTICE

(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)

To:   Biopure Corporation

The undersigned is the Holder of Warrant No. [     ] (the "Warrant") issued by
Biopure Corporation, a Delaware corporation (the "Company"). Capitalized terms
used herein and not otherwise defined have the respective meanings set forth in
the Warrant.

1.    The Warrant is currently exercisable to purchase a total of _________
      Warrant Shares.

2.    The undersigned Holder hereby exercises its right to purchase _________
      Warrant Shares pursuant to the Warrant.

3.    The Holder shall pay the sum of $________ to the Company in accordance
      with the terms of the Warrant.

4.    Pursuant to this exercise, the Company shall deliver to the Holder Warrant
      Shares in accordance with the terms of the Warrant

5.    Following this exercise, the Warrant shall be exercisable to purchase a
      total of __________ Warrant Shares.

Dated: ____________                 Name of Holder:

                                    (Print) _____________________________

                                    By: _________________________________

                                    Title: ______________________________

                                    (Signature must conform in all respects to
                                    name of Holder as specified on face of the
                                    Warrant)

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