Document:

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                                                                    EXHIBIT 10.2

                              THE MEDICINES COMPANY

                        2000 EMPLOYEE STOCK PURCHASE PLAN

         The following constitute the provisions of the 2000 Employee Stock
Purchase Plan of The Medicines Company.

         1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.

         2. Definitions.

                  a. "BOARD" shall mean the Board of Directors of the Company.

                  b. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.

                  c. "COMMON STOCK" shall mean the Common Stock of the Company.

                  d. "COMPANY" shall mean The Medicines Company and any
Designated Subsidiary of the Company.

                  e. "COMPENSATION" means the amount of money reportable on an
Employee's Federal Income Tax Withholding Statement (Form W-2) before any
withholdings for health insurance or under a Section 401(k), 125, 129 or similar
plan, including without limitation, salary, wages, overtime, shift
differentials, bonuses and incentive compensation, but excluding third party
sick or disability pay, allowances and reimbursements for expenses such as
relocation allowances or travel expenses, whether specifically designated as
such or designated as signing bonuses, income or gains attributable to
restricted stock, stock options, stock appreciation rights or other similar
equity based compensation, imputed income for non cash items, such as life
insurance premiums, and similar items, whether or not specifically itemized on
the Form W-2.

                  f. "DESIGNATED SUBSIDIARY" shall mean any Subsidiary which has
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.

                  g. "EMPLOYEE" shall mean any individual who is an employee of
the Company for tax purposes whose customary employment with the Company is more
than five (5) months in any calendar year. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other bona fide leave of absence approved by the
Company. If a sick leave or other leave of absence exceeds 90 days and the
individual's right to reemployment is not guaranteed either by statute or by
contract, the individual's employment relationship with the Company shall be
deemed to have terminated on the 91st day of such leave.
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                  h. "ENROLLMENT DATE" shall mean the first day of each Offering
Period.

                  i. "EXERCISE DATE" shall mean the last Trading Day of each
Offering Period.

                  j. "FAIR MARKET VALUE" shall mean the value of the Common
Stock on any given date of determination, determined as follows:

                           (1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation The
Nasdaq National Market or The Nasdaq Small Cap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the date of such determination,
as reported in The Wall Street Journal or such other source as the Board deems
reliable; or

                           (2) If the Common Stock is regularly quoted on the
over-the-counter market, its Fair Market Value shall be the mean of the closing
bid and asked price for such stock as quoted on such market for the last market
trading day prior to the date of such determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable; or

                           (3) In the absence of an established market for the
Common Stock, the Fair Market Value of the Common Stock shall be determined in
good faith by the Board.

                  k. "OFFERING PERIODS" shall mean the periods of approximately
six (6) months during which payroll deductions will be made and held for the
purchase of Common Stock at the end of the Offering Period, commencing on the
first Trading Day on or after September 1 and March 1 of each year and
terminating on the last Trading Day in the periods ending six (6) months later;
provided, however, that the first Offering Period under the Plan shall commence
with the first Trading Day of the month first commencing after the date on which
the Common Stock is first traded on the Nasdaq National Market (such date
referred to as the "First Offering Commencement Date"); and provided further
that if the number of days between the date the Common Stock is first traded and
the First Offering Commencement Date is less than 15 days, then the first
Offering Period shall commence on the first Trading Day of the following month.
The duration and timing of Offering Periods may be changed pursuant to Section 4
of this Plan.

                  l. "PLAN" shall mean this Employee Stock Purchase Plan.

                  m. "PURCHASE PRICE" shall mean eighty-five percent (85%) of
the Fair Market Value of a share of Common Stock on the Enrollment Date on an
Offering Period or on the Exercise Date for such Offering Period, whichever is
lower.

                  n. "RESERVES" shall mean the number of shares of Common Stock
covered by each outstanding option under the Plan which has not yet been
exercised and the number of shares of Common Stock which have been authorized
for issuance under the Plan but not yet placed under option.

                  o. "SUBSIDIARY" shall mean a corporation, partnership, limited
liability company or similar entity, whether domestic or foreign, of which not
less than 50% of the voting

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interests are held by the Company or a Subsidiary, whether or not such entity
now exists or is hereafter organized or acquired by the Company or a Subsidiary.

                  p. "TRADING DAY" shall mean a day on which the established
stock exchange, the national market system or the over-the-counter market on
which the Common Stock is traded is open for trading.

         3. Eligibility.

                  a. Any Employee who shall be employed by the Company at least
seven (7) calendar days prior to a given Enrollment Date shall be eligible to
participate in the Offering Period commencing on such Enrollment Date.

                  b. Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its Subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the Fair Market Value of a share of Common Stock at the
time such option is granted) for each calendar year in which such option is
outstanding at any time. In the event that an Employee may not be granted an
option under the Plan because of the foregoing restrictions, the Employee shall
be granted an option to purchase the maximum number of shares that would not
violate the foregoing restrictions.

         4. Offering Periods and Purchase Periods. The Board shall have the
power to change the duration of Offering Periods (including the commencement
dates thereof) with respect to future offerings without stockholder approval if
such change is announced at least five (5) days prior to the scheduled beginning
of the Offering Period to be affected thereafter.

         5. Participation.

                  a. An eligible Employee may become a participant in the Plan
by completing a subscription agreement in the form of Exhibit A or such other
form as the Company may deem satisfactory and filing it with the Company's
payroll office or such other office as the Company may direct prior to the
Enrollment Date for the applicable Offering Period.

                  b. Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date for the applicable Offering Period
and shall end on the last payroll in such Offering Period, unless sooner
terminated by the participant as provided in Section 9 hereof.

         6. Payroll Deductions.

                  a. At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an

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amount not exceeding ten percent (10%) of the Compensation which he or she
receives on each pay day during the Offering Period.

                  b. All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.

                  c. A participant may discontinue his or her participation in
the Plan as provided in Section 9 hereof, or may increase or decrease the rate
of his or her payroll deductions to not more than ten percent (10%) or less than
zero percent (0%) not more than one (1) time during each Offering Period by
completing or filing with the Company a new subscription agreement authorizing
such change in payroll deduction rate. The Board may, in its discretion,
increase or decrease the number of participation rate changes that may be made
by a participant during any Offering Period. The change in rate shall be
effective with the first full payroll period following the fifth (5th) business
day after the Company's receipt of the new subscription agreement. A
participant's subscription agreement shall remain in effect for successive
Offering Periods unless terminated as provided in Section 9 hereof.

                  d. At the time the option is exercised, in whole or in part,
or at the time any of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.

         7. Grant of Option. On the Enrollment Date for each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase (at the applicable Purchase Price) up to a whole number of
shares of the Company's Common Stock (the "Option Shares") determined by
multiplying $2,083 by the number of full months in the Offering Period and
dividing the result by the Fair Market Value of a share of Common Stock on the
Enrollment Date (subject to any adjustment pursuant to Section 16), and provided
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 9 hereof. The
option shall expire on the last day of the Offering Period.

         8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 9 hereof, his or her option for the purchase of shares shall
be exercised automatically on the Exercise Date applicable to the particular
Offering Period, and a number of full shares not exceeding the number of shares
as to which such participant's option is exercisable on such Exercise Date shall
be purchased for such participant at the applicable Purchase Price with the
accumulated payroll deductions in his or her account. No fractional shares shall
be purchased. Any other monies left over in a participant's account after such
Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.

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         9. Withdrawal.

                  a. A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan; provided that no Employee may
withdraw his or her payroll deductions less than ten (10) Trading Days prior to
an Exercise Date. All of the participant's payroll deductions credited to his or
her account shall be paid to such participant promptly after receipt of notice
of withdrawal and such participant's option for the Offering Period shall be
automatically terminated upon receipt of such notice, and no further payroll
deductions from such participant for the purchase of shares shall be made for
such Offering Period. If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.

                  b. A participant's withdrawal from an Offering Period shall
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods.

         10. Termination of Employment. Upon a participant's ceasing to be an
Employee, for any reason, he or she shall be deemed to have elected to withdraw
from the Plan, such participant's option shall be automatically terminated and
the accumulated payroll deductions credited to such participant's account during
the Offering Period but not yet used to exercise his or her option shall be
returned to such participant or, in the case of his or her death, to the
executor or administrator of the Employee's estate or if no such executor or
administrator has been appointed to the knowledge of the Company, to such other
person(s) as the Company may, in its discretion, designate. If, prior to the
last day of the Offering Period, the Designated Subsidiary by which an Employee
is employed shall cease to be a Subsidiary of the Company, or if the Employee is
transferred to a Subsidiary of the Company that is not a Designated Subsidiary,
the Employee shall be deemed to have terminated employment for the purposes of
this Plan.

         11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.

         12. Stock.

                  a. Subject to adjustment upon changes in capitalization of the
Company as provided in Section 16 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 255,500 shares. If, on a given Exercise Date, the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.

                  b. The participant shall have no interest or voting right in
shares covered by his or her option until such option has been exercised.

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         13. Administration. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision and
determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.

         14. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will or the laws of descent and
distribution by the participant). Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds from an Offering Period in
accordance with Section 9 hereof.

         15. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.

         16. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.

                  a. Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the maximum number of shares of Common Stock
available for sale under the Plan, the Reserves, the maximum number of shares
each participant may purchase during each Offering Period (pursuant to Section
7), as well as the price per share and the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock. Such adjustment
shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.

                  b. Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall shorten any Offering
Period then in progress by setting a new Exercise Date (the "NEW EXERCISE
DATE"), and such Offering Period shall terminate on the New Exercise Date. The
New Exercise Date shall be before the date of the Company's proposed dissolution
or liquidation. The Board shall notify each participant in writing, at least ten
(10) days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 9 hereof.

                  c. Merger or Asset Sale. If the Company shall at any time
merge or consolidate with another corporation and the holders of the capital
stock of the Company

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immediately prior to such merger or consolidation continue to hold at least
sixty percent (60%) by voting power of the capital stock of the surviving
corporation ("Continuity of Control"), the holder of each option then
outstanding will thereafter be entitled to receive at the next Exercise Date
upon the exercise of such option for each share as to which such option shall be
exercised the securities or property which a holder of one share of Common Stock
was entitled to upon and at the time of such merger or consolidation, and the
Board shall take such steps in connection with such merger or consolidation as
the Board shall deem necessary to assure that the provisions of Section 16(a)
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the said securities or property as to which such holder of such option might
thereafter be entitled to receive thereunder.

         In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or which
involves a sale of all or substantially all of the assets of the Company (an
"Acquisition"), while unexercised options remain outstanding under the Plan, all
options outstanding as of the effective date of the Acquisition shall be deemed
assumed or substituted for and each holder of an outstanding option shall be
entitled, upon exercise of such option, to receive in lieu of shares of Common
Stock, shares of such stock or other securities as the holders of shares of
Common Stock received pursuant to the terms of the Acquisition. Notwithstanding
the foregoing, in the event that the acquiring or succeeding corporation (or an
affiliate thereof) does not agree to assume or substitute for the options, then
the Board shall shorten any Offering Period then in progress by setting a New
Exercise Date, and such Offering Period then in progress shall terminate on the
New Exercise Date. The New Exercise Date shall be before the effective date of
the Acquisition. The Board shall notify each participant in writing, at least
ten (10) days prior to the New Exercise Date, that the Exercise Date for the
participant's option has been changed to the New Exercise Date and that the
participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period
as provided in Section 9 hereof.

         17. Amendment or Termination.

                  a. The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 16
hereof, no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors if the Board
determines that the termination of the Plan is in the best interests of the
Company and its stockholders, and upon termination of the Plan all amounts in
the accounts of participating employees shall be promptly refunded. Except as
provided in Section 16 hereof, no amendment may make any change in any option
theretofore granted which adversely affects the rights of any participant
without the consent of the participant. To the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any other
applicable law, regulation or stock exchange rule), if applicable, the Company
shall obtain stockholder approval in such a manner and to such a degree as
required.

                  b. Without stockholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of

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changes in the amount withheld during an Offering Period, establish the exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars,
permit payroll withholding in excess of the amount designated by a participant
in order to adjust for delays or mistakes in the Company's processing of
properly completed withholding elections, establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that
amounts applied toward the purchase of Common Stock for each participant
properly correspond with amounts withheld from the participant's Compensation,
and establish such other limitations or procedures as the Board (or its
committee) determines in its sole discretion advisable which are consistent with
the Plan.

         18. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.

         19. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

                  As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.

         20. Governmental Regulations. The Company's obligation to sell and
deliver Common Stock under this Plan is subject to listing on an established
stock exchange or quotation on a national market system or an over-the-counter
market (to the extent the Common Stock is then so listed or quoted) and the
approval of all governmental authorities required in connection with the
authorization, issuance or sale of such stock.

         21. Governing Law. The Plan shall be governed by Massachusetts law
except to the extent that such law is preempted by federal law.

         22. Source of Shares. Shares may be issued upon exercise of an option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.

         23. Notification upon Sale of Shares. Each Employee agrees, by entering
the Plan, to promptly give the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the option pursuant to which such shares were purchased.

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         24. Effective Date. The Plan shall take effect upon the date of the
Company's initial public offering of its equity securities registered on Form
S-1 with the Securities and Exchange Commission, subject to approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 17 hereof.

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                                    EXHIBIT A

                              THE MEDICINES COMPANY

                        2000 EMPLOYEE STOCK PURCHASE PLAN

                             SUBSCRIPTION AGREEMENT

_______  Original Application                     Enrollment Date:  ____________
_______  Change in Payroll Deduction Rate (Complete only Section 2 and date and
sign).

         1. ______________________________ hereby elects to participate in the
The Medicines Company 2000 Employee Stock Purchase Plan (the "EMPLOYEE STOCK
PURCHASE PLAN") and subscribes to purchase shares of the Company's Common Stock
in accordance with this Subscription Agreement and the Employee Stock Purchase
Plan.

         2. I hereby authorize payroll deductions from each paycheck in the
amount of ____% of my Compensation on each payday (not to exceed ten percent
(10%)) during the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)

         3. I understand that said payroll deductions shall be accumulated for
the purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I understand
that if I do not withdraw from an Offering Period, any accumulated payroll
deductions will be used to automatically exercise my option.

         4. I have received a copy of the complete Employee Stock Purchase Plan.
I understand that my participation in the Employee Stock Purchase Plan is in all
respects subject to the terms of the Plan.

         5. I understand that if I dispose of any shares received by me pursuant
to the Plan within two years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal to
the excess of the fair market value of the shares at the time such shares were
purchased by me over the price which I paid for the shares. I HEREBY AGREE TO
NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY DISPOSITION
OF MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX
WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE COMMON
STOCK. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding obligation
including any withholding necessary to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of Common Stock
by me.
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         6. I hereby agree to be bound by the terms of the Employee Stock
Purchase Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.

NAME:  (Please Print) __________________________________________________________
                       (First)                  (Middle)                  (Last)

_________________________________          _____________________________________
Relationship
                                           _____________________________________
                                           Address

Employee's Social
Security Number:            ____________________________________________________

Employee's Address:         ____________________________________________________
                            ____________________________________________________
                            ____________________________________________________

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.

Dated:  _____________________________   ________________________________________
                                                   Signature of Employee
                                                      (Please print)

                                        ________________________________________
                                        Spouse's Signature (If beneficiary other
                                        than Spouse)
<PAGE>   12
                                    EXHIBIT B

                              THE MEDICINES COMPANY

                        2000 EMPLOYEE STOCK PURCHASE PLAN

                              NOTICE OF WITHDRAWAL

         The undersigned participant in the Offering Period of The Medicines
Company 2000 Employee Stock Purchase Plan which began on ________________, 2000
(the "ENROLLMENT DATE") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods.

                                                Name and Address of Participant:

                                                ________________________________

                                                ________________________________

                                                ________________________________

                                                Signature:

                                                ________________________________

                                               Date:____________________________<PAGE>   1

                                                                    EXHIBIT 4.1

                     AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

                          REGISTRATION RIGHTS AGREEMENT

                  REGISTRATION RIGHTS AGREEMENT, dated as of June __, 2000,
among the investors listed on Schedule I hereto (the "Investors") and American
Medical Systems Holdings, Inc., a Delaware corporation (the "Company").

                                 R E C I T A L S

                  WHEREAS, the Investors, pursuant to the terms of an exchange
agreement with the Company, dated as of April 17, 2000, exchanged their shares
of preferred stock of American Medical Systems, Inc. ("AMS") for the number of
shares of Series A Non-Voting Preferred Stock, par value $0.01 per share (the
"Series A Preferred Stock"), shares of Series B Convertible Voting Preferred
Stock, par value $0.01 per share ("Series B Preferred Stock"), shares of Series
C Convertible Non-Voting Preferred Stock, $0.01 par value per share ("Series C
Preferred Stock"), shares of Series D Convertible Voting Preferred Stock, $0.01
par value per share ("Series D Preferred Stock") and shares of Series E
Convertible Non-Voting Preferred Stock, $0.01 par value per share ("Series E
Preferred Stock" and, together with Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, the "Preferred
Stock"), all of the Company equal to the number of shares of such series of
preferred stock of AMS such Investor had held; and

                  WHEREAS, the shares of Series B Preferred Stock and Series D
Preferred Stock are convertible into shares of the Company's common stock, par
value $0.01 per share ("Voting Common Stock" and, together with any non-voting
common stock, par value $0.01 per share, of the Company, the "Common Stock");
and

                  WHEREAS, the Company has agreed, as a condition to the
Investors' consenting, as stockholders of the Company, to the amendment to the
Company's Certificate of Incorporation which amendment provides for the
mandatory conversion of Series A Preferred Stock into shares of Common Stock
simultaneously with the closing of the Company's Initial Public Offering (as
defined herein), to grant the Investors certain registration rights; and

                  WHEREAS, the Company and the Investors desire to define the
registration rights of the Investors on the terms and subject to the conditions
herein set forth.

                  NOW, THEREFORE, in consideration of the foregoing premises
and for other good and valuable consideration, the parties hereby agree as
follows:

<PAGE>   2

                  SECTION 1. DEFINITIONS

                  As used in this Agreement, the following terms have the
respective meaning set forth below:

                  Commission:  shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act;
                  Exchange Act:  shall mean the Securities Exchange Act of 1934,
 as amended;
                  Holder:  shall mean any holder of Registrable Securities;

                  Initial Public Offering:  shall mean the initial public
offering of shares of Common Stock pursuant to a registration under the
Securities Act;
                  Initiating Holder:  shall mean any Holder or Holders who in
 the aggregate are Holders of more than 50% of the then outstanding Registrable
 Securities;
                  Person:  shall mean an individual, partnership, joint-stock
 company, corporation, trust or unincorporated organization, and a government
 or agency or political subdivision thereof;

                  register, registered and registration: shall mean to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;

                  Registrable Securities: shall mean (A) shares of Common Stock
issuable upon conversion of the shares of Preferred Stock, (B) any additional
shares of Common Stock acquired by the Investors (other than shares acquired
upon the exercise of employee stock options) and (C) any stock of the Company
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of, the shares of Preferred Stock or Common Stock referred to
in clause (A) or (B);

                  Registration Expenses: shall mean all expenses incurred by the
Company in compliance with Sections 2(a), (b) and (c) hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, fees and expenses of one counsel for
all the Holders in an amount not to exceed $15,000, blue sky fees and expenses
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company);

                  Security, Securities:  shall have the meaning set forth in
Section 2(1) of the Securities Act;

                                      -2-
<PAGE>   3

                  Securities Act:  shall mean the Securities Act of 1933, as
 amended; and

                  Selling Expenses: shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of counsel for each of the Holders other than fees and
expenses of one counsel for all the Holders in an amount not to exceed $15,000.

                  SECTION  2.  REGISTRATION RIGHTS

                  (a)   Requested Registration.

                  (i)   Request for Registration. Following the Initial Public
          Offering, if the Company shall receive from an Initiating Holder, at
          any time, a written request that the Company effect any registration
          with respect to all or a part of the Registrable Securities, the
          Company will:

                  (1)   promptly give written notice of the proposed
          registration, qualification or compliance to all other Holders; and

                  (2)   as soon as practicable, use its diligent best efforts
          to effect such registration (including, without limitation, the
          execution of an undertaking to file post-effective amendments,
          appropriate qualification under applicable blue sky or other state
          securities laws and appropriate compliance with applicable regulations
          issued under the Securities Act) as may be so requested and as would
          permit or facilitate the sale and distribution of all or such portion
          of such Registrable Securities as are specified in such request,
          together with all or such portion of the Registrable Securities of any
          Holder or Holders joining in such request as are specified in a
          written request received by the Company within 10 business days after
          written notice from the Company is given under Section 2(a)(i)(1)
          above; provided that the Company shall not be obligated to effect, or
          take any action to effect, any such registration pursuant to this
          Section 2(a):

                             (x) In any particular jurisdiction in which the
                  Company would be required to execute a general consent to
                  service of process in effecting such registration,
                  qualification or compliance, unless the Company is already
                  subject to service in such jurisdiction and except as may be
                  required by the Securities Act or applicable rules or
                  regulations thereunder;

                             (y) After the Company has effected two (2) such
                  registrations pursuant to this Section 2(a) and such
                  registrations have been declared or ordered effective and
                  the sales of such Registrable Securities shall have closed;
                  or

                             (z) If the Registrable Securities requested by all
                  Holders to be registered pursuant to such request do not
                  have an anticipated aggregate public offering price (before
                  any underwriting discounts and commissions) of at least
                  $15,000,000.

                                       -3-

<PAGE>   4

The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 2(a)(ii) below, include other
securities of the Company which are held by Persons who, by virtue of agreements
with the Company, are entitled to include their securities in any such
registration ("Other Stockholders"). In the event any Holder requests a
registration pursuant to this Section 2(a) in connection with a distribution of
Registrable Securities to its partners, the registration shall provide for the
resale by such partners, if requested by such Holder.

The Company may, on not more than one occasion, delay the filing of any
registration statement requested under this Section 2(a) to a date not more than
90 days following the date of the Initiating Holder's request for registration
in the event that the Company has furnished the Holders with a certificate
executed by the Company's President or Chief Executive Officer stating that, in
the good faith judgment of the Board of Directors of the Company, such delay is
necessary in order not to (A) significantly adversely affect financing efforts
then underway at the Company or (B) disclose material non-public information.

                  (ii)  Underwriting. If the Initiating Holders intend to
          distribute the Registrable Securities covered by their request by
          means of an underwriting, they shall so advise the Company as a part
          of their request made pursuant to Section 2(a).

If Other Stockholders request such inclusion, the Holders shall offer to include
the securities of such Other Stockholders in the underwriting and may condition
such offer on their acceptance of the further applicable provisions of this
Section 2. The Holders whose shares are to be included in such registration and
the Company shall (together with all Other Stockholders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Initiating Holders and reasonably
acceptable to the Company. Notwithstanding any other provision of this Section
2(a), if the representative advises the Holders in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
securities of the Company held by Other Stockholders shall be excluded from such
registration to the extent so required by such limitation. If, after the
exclusion of such shares, further reductions are still required, the number of
shares included in the registration by each Holder shall be reduced on a pro
rata basis (based on the number of shares held by such Holder), by such minimum
number of shares as is necessary to comply with such request. No Registrable
Securities or any other securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If any Other Stockholder who has requested inclusion in such registration as
provided above disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the underwriter
and the Initiating Holders. The securities so withdrawn shall also be withdrawn
from registration. If the underwriter has not limited the number of Registrable
Securities or other securities to be underwritten, the Company and officers and
directors of the Company may include its or their securities for its or their
own account in such registration if the representative so agrees and if the
number of Registrable Securities and other securities which would otherwise have
been included in such registration and underwriting will not thereby be limited.

                                      -4-

<PAGE>   5

                  (b)   Company Registration.

                  (i)   If the Company shall determine to register any of its
          equity securities either for its own account or for the account of
          Other Stockholders, other than a registration relating to the Initial
          Public Offering, a registration relating solely to employee benefit
          plans or a registration relating solely to a Commission Rule 145
          transaction, or a registration on any registration form which does not
          permit secondary sales or does not include substantially the same
          information as would be required to be included in a registration
          statement covering the sale of Registrable Securities, the Company
          will:

                  (1)   promptly give to each of the Holders a written notice
          thereof (which shall include a list of the jurisdictions in which the
          Company intends to attempt to qualify such securities under the
          applicable blue sky or other state securities laws); and

                  (2)   include in such registration (and any related
          qualification under blue sky laws or other compliance), and in any
          underwriting involved therein, all the Registrable Securities
          specified in a written request or requests, made by the Holders within
          fifteen (15) days after receipt of the written notice from the Company
          described in clause (i) above, except as set forth in Section 2(b)(ii)
          below. Such written request may specify all or a part of the Holders'
          Registrable Securities. In the event any Holder requests inclusion in
          a registration pursuant to this Section 2(b) in connection with a
          distribution of Registrable Securities to its partners, the
          registration shall provide for the resale by such partners, if
          requested by such Holder.

                  (ii)  Underwriting.  If the registration of which the Company
          gives notice is for a registered public offering involving an
          underwriting, the Company shall so advise each of the Holders as a
          part of the written notice given pursuant to Section 2(b)(i)(1). In
          such event, the right of each of the Holders to registration pursuant
          to this Section 2(b) shall be conditioned upon such Holders'
          participation in such underwriting and the inclusion of such Holders'
          Registrable Securities in the underwriting to the extent provided
          herein. The Holders whose shares are to be included in such
          registration shall (together with the Company and the Other
          Stockholders distributing their securities through such underwriting)
          enter into an underwriting agreement in customary form with the
          representative of the underwriter or underwriters selected for
          underwriting by the Company. Notwithstanding any other provision of
          this Section 2(b), if the representative determines that marketing
          factors require a limitation on the number of shares to be
          underwritten, the representative may (subject to the allocation
          priority set forth below) limit the number of Registrable Securities
          to be included in the registration and underwriting to not less than
          twenty five percent (25%) of the shares included therein (based on the
          number of shares). The Company shall so advise all holders of
          securities requesting registration, and the number of shares of
          securities that are entitled to be included in the registration and
          underwriting shall be allocated in the following manner: The
          securities of the Company held by officers, directors and Other
          Stockholders of the Company (other than Registrable Securities and
          other than securities held by holders who by contractual right
          demanded such registration ("Demanding Holders")) shall be

                                      -5-

<PAGE>   6

          excluded from such registration and underwriting to the extent
          required by such limitation, and, if a limitation on the number of
          shares is still required, the number of shares that may be included in
          the registration and underwriting by each of the Holders and Demanding
          Holders shall be reduced, on a pro rata basis (based on the number of
          shares held by such Holder), by such minimum number of shares as is
          necessary to comply with such limitation. If any of the Holders or any
          officer, director or Other Stockholder disapproves of the terms of any
          such underwriting, he may elect to withdraw therefrom by written
          notice to the Company and the underwriter. Any Registrable Securities
          or other securities excluded or withdrawn from such underwriting shall
          be withdrawn from such registration.

                  (iii) Withdrawal. The Company may, in its sole discretion,
          withdraw any such registration and abandon the proposed offering in
          which any such Holder had requested to participate.

                  (c)   Form S-3. Following the Initial Public Offering, the
Company shall use its best efforts to qualify for registration on Form S-3 for
secondary sales. After the Company has qualified for the use of Form S-3, the
Holders shall have the right to request three (3) registrations on Form S-3
(such requests shall be in writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended method of disposition
of shares by such holders), subject only to the following:

                  (i)   The Company shall not be required to effect a
          registration pursuant to this Section 2(c) unless the Holder or
          Holders requesting registration propose to dispose of shares of
          Registrable Securities having an aggregate price to the public (before
          deduction of underwriting discounts and expenses of sale) of more than
          $5,000,000.

                  (ii)  The Company shall not be required to effect a
          registration pursuant to this Section 2(c) within 180 days of the
          effective date of the most recent registration pursuant to this
          Section 2 in which securities held by the requesting Holder could have
          been included for sale or distribution.

                  (iii) The Company shall not be obligated to effect any
          registration pursuant to this Section 2(c) in any particular
          jurisdiction in which the Company would be required to execute a
          general consent to service of process in effecting such registration,
          qualification or compliance, unless the Company is already subject to
          service in such jurisdiction and except as may be required by the
          Securities Act or applicable rules or regulations thereunder.

                  (iv)  The Company may, on not more than one occasion, delay
          the filing of any registration statement requested under this Section
          2(c) to a date not more than 90 days following the date of the
          Holder's request for registration in the event that the Company has
          furnished the Holders with a certificate executed by the Company's
          President or Chief Executive Officer stating that, in the good faith
          judgment of the Board of Directors of the Company, such delay is
          necessary in order not to (A) significantly adversely affect

                                      -6-

<PAGE>   7

          financing efforts then underway at the Company or (B) disclose
          material non-public information.

The Company shall give written notice to all Holders of the receipt of a request
for registration pursuant to this Section 2(c) and shall provide a reasonable
opportunity for other Holders to participate in the registration, provided that
if the registration is for an underwritten offering, the terms of Section
2(a)(ii) shall apply to all participants in such offering. Subject to the
foregoing, the Company will use its best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent
requested by the Holder or Holders thereof for purposes of disposition. In the
event any Holder requests a registration pursuant to this Section 2(c) in
connection with a distribution of Registrable Securities to its partners, the
registration shall provide for the resale by such partners, if requested by such
Holder.

                  (d)   Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 2 shall be borne by the Company, and all Selling
Expenses shall be borne by the Holders of the securities so registered pro rata
on the basis of the number of their shares so registered.

                  (e)   Registration Procedures. In the case of each
registration effected by the Company pursuant to this Section 2, the Company
will keep the Holders, as applicable, advised in writing as to the initiation of
each registration and as to the completion thereof. At its expense, the Company
will:

                  (i)   keep such registration effective for a period of one
          hundred twenty (120) days or until the Holders (or in the case of a
          distribution to the partners of such Holder, such partners), as
          applicable, have completed the distribution described in the
          registration statement relating thereto, whichever first occurs;
          provided, however, that (A) such 120-day period shall be
          extended for a period of time equal to the period during which
          the Holders or partners, as applicable, refrain from selling any
          securities included in such registration in accordance with provisions
          in Section 2(i) hereof; and (B) in the case of any registration of
          Registrable Securities on Form S-3 which are intended to be offered on
          a continuous or delayed basis, such 120-day period shall be extended
          until all such Registrable Securities are sold, provided that Rule
          415, or any successor rule under the Securities Act, permits an
          offering on a continuous or delayed basis, and provided further that
          applicable rules under the Securities Act governing the obligation to
          file a post-effective amendment permit, in lieu of filing a
          post-effective amendment which (y) includes any prospectus required by
          Section 10(a) of the Securities Act or (z) reflects facts or events
          representing a material or fundamental change in the information set
          forth in the registration statement, the incorporation by reference of
          information required to be included in (y) and (z) above to be
          contained in periodic reports filed pursuant to Section 12 or 15(d) of
          the Exchange Act in the registration statement;

                  (ii)  furnish such number of prospectuses and other documents
          incident thereto as each of the Holders, as applicable, from time to
          time may reasonably request;

                                      -7-

<PAGE>   8

                  (iii) notify each Holder of Registrable Securities covered
          by such registration at any time when a prospectus relating thereto is
          required to be delivered under the Securities Act of the happening of
          any event as a result of which the prospectus included in such
          registration statement, as then in effect, includes an untrue
          statement of a material fact or omits to state a material fact
          required to be stated therein or necessary to make the statements
          therein not misleading in the light of the circumstances then
          existing; and

                  (iv) if the Registrable Securities are being sold through
          underwriters, furnish on the date that such securities are delivered
          to the underwriters for sale, (1) an opinion, dated as of such date,
          of the counsel representing the Company for the purposes of such
          registration, in form and substance as is customarily given to
          underwriters in an underwritten public offering and reasonably
          satisfactory to a majority in interest of the Holders participating in
          such registration, addressed to the underwriters, if any, and to the
          Holders participating in such registration and (2) a letter, dated as
          of such date, from the independent certified public accountants of the
          Company, in form and substance as is customarily given by independent
          certified public accountants to underwriters in an underwritten public
          offering and reasonably satisfactory to a majority in interest of the
          Holders participating in such registration, addressed to the
          underwriters, if any, and if permitted by applicable accounting
          standards, to the Holders participating in such registration.

                  (f) Indemnification.

                  (i) The Company will indemnify each of the Holders, as
          applicable, each of its officers, directors and partners, and each
          person controlling each of the Holders, with respect to each
          registration which has been effected pursuant to this Section 2, and
          each underwriter, if any, and each person who controls any
          underwriter, against all claims, losses, damages and liabilities (or
          actions in respect thereof) arising out of or based on any untrue
          statement (or alleged untrue statement) of a material fact contained
          in any prospectus, offering circular or other document (including any
          related registration statement, notification or the like) incident to
          any such registration, qualification or compliance, or based on any
          omission (or alleged omission) to state therein a material fact
          required to be stated therein or necessary to make the statements
          therein not misleading, or any violation by the Company of the
          Securities Act or the Exchange Act or any rule or regulation
          thereunder applicable to the Company and relating to action or
          inaction required of the Company in connection with any such
          registration, qualification or compliance, and will reimburse each of
          the Holders, each of its officers, directors and partners, and each
          person controlling each of the Holders, each such underwriter and each
          person who controls any such underwriter, for any legal and any other
          expenses reasonably incurred in connection with investigating and
          defending any such claim, loss, damage, liability or action, provided
          that the Company will not be liable in any such case to the extent
          that any such claim, loss, damage, liability or expense arises out of
          or is based on any untrue statement or omission based upon written
          information furnished to the Company by the Holders or underwriter and
          stated to be specifically for use therein.

                                      -8-

<PAGE>   9

                  (ii) Each of the Holders will, if Registrable Securities
          held by it are included in the securities as to which such
          registration, qualification or compliance is being effected, indemnify
          the Company, each of its directors and officers and each underwriter,
          if any, of the Company's securities covered by such a registration
          statement, each person who controls the Company or such underwriter,
          each Other Stockholder and each of their officers, directors, and
          partners, and each person controlling such Other Stockholder against
          all claims, losses, damages and liabilities (or actions in respect
          thereof) arising out of or based on any untrue statement (or alleged
          untrue statement) of a material fact contained in any such
          registration statement, prospectus, offering circular or other
          document made by such Holder, or any omission (or alleged omission) to
          state therein a material fact required to be stated therein or
          necessary to make the statements by such Holder therein not
          misleading, and will reimburse the Company and such Other
          Stockholders, directors, officers, partners, persons, underwriters or
          control persons for any legal or any other expenses reasonably
          incurred in connection with investigating or defending any such claim,
          loss, damage, liability or action, in each case to the extent, but
          only to the extent, that such untrue statement (or alleged untrue
          statement) or omission (or alleged omission) is made in such
          registration statement, prospectus, offering circular or other
          document in reliance upon and in conformity with written information
          furnished to the Company by such Holder and stated to be specifically
          for use therein; provided, however, that the obligations of each of
          the Holders hereunder shall be limited to an amount equal to the net
          proceeds to such Holder of securities sold as contemplated herein.

                  (iii) Each party entitled to indemnification under this
          Section 2(f) (the "Indemnified Party") shall give notice to the party
          required to provide indemnification (the "Indemnifying Party")
          promptly after such Indemnified Party has actual knowledge of any
          claim as to which indemnity may be sought, and shall permit the
          Indemnifying Party to assume the defense of any such claim or any
          litigation resulting therefrom; provided that counsel for the
          Indemnifying Party, who shall conduct the defense of such claim or any
          litigation resulting therefrom, shall be approved by the Indemnified
          Party (whose approval shall not unreasonably be withheld) and the
          Indemnified Party may participate in such defense at such party's
          expense (unless the Indemnified Party shall have reasonably concluded
          that there may be a conflict of interest between the Indemnifying
          Party and the Indemnified Party in such action, in which case the fees
          and expenses of counsel shall be at the expense of the Indemnifying
          Party), and provided further that the failure of any Indemnified Party
          to give notice as provided herein shall not relieve the Indemnifying
          Party of its obligations under this Section 2 unless the Indemnifying
          Party is materially prejudiced thereby. No Indemnifying Party, in the
          defense of any such claim or litigation shall, except with the consent
          of each Indemnified Party, consent to entry of any judgment or enter
          into any settlement which does not include as an unconditional term
          thereof the giving by the claimant or plaintiff to such Indemnified
          Party of a release from all liability in respect to such claim or
          litigation. Each Indemnified Party shall furnish such information
          regarding itself or the claim in question as an Indemnifying Party may
          reasonably request in writing and as shall be reasonably required in
          connection with the defense of such claim and litigation resulting
          therefrom.

                                      -9-

<PAGE>   10

                  (iv)  If the indemnification provided for in this Section
          2(f) is held by a court of competent jurisdiction to be unavailable to
          an Indemnified Party with respect to any loss, liability, claim,
          damage or expense referred to herein, then the Indemnifying Party, in
          lieu of indemnifying such Indemnified Party hereunder, shall
          contribute to the amount paid or payable by such Indemnified Party as
          a result of such loss, liability, claim, damage or expense in such
          proportion as is appropriate to reflect the relative fault of the
          Indemnifying Party on the one hand and of the Indemnified Party on the
          other in connection with the statements or omissions which resulted in
          such loss, liability, claim, damage or expense, as well as any other
          relevant equitable considerations. The relative fault of the
          Indemnifying Party and of the Indemnified Party shall be determined by
          reference to, among other things, whether the untrue (or alleged
          untrue) statement of a material fact or the omission (or alleged
          omission) to state a material fact relates to information supplied by
          the Indemnifying Party or by the Indemnified Party and the parties'
          relative intent, knowledge, access to information and opportunity to
          correct or prevent such statement or omission.

                  (v)   Notwithstanding the foregoing, to the extent that the
          provisions on indemnification and contribution contained in the
          underwriting agreement entered into in connection with any
          underwritten public offering contemplated by this Agreement are in
          conflict with the foregoing provisions, the provisions in such
          underwriting agreement shall be controlling.

                  (vi)  The foregoing indemnity agreement of the Company and
          Holders is subject to the condition that, insofar as they relate to
          any loss, claim, liability or damage arising out of a statement made
          in or omitted from a preliminary prospectus but eliminated or remedied
          in the amended prospectus on file with the Commission at the time the
          registration statement in question becomes effective or the amended
          prospectus filed with the Commission pursuant to Commission Rule
          424(b) (the "Final Prospectus"), such indemnity or contribution
          agreement shall not inure to the benefit of any underwriter or Holder
          if a copy of the Final Prospectus was furnished to the underwriter and
          was not furnished to the person asserting the loss, liability, claim
          or damage at or prior to the time such action is required by the
          Securities Act.

                  (g)   Information by the Holders.

                  (i)   Each of the Holders holding securities included in any
          registration shall furnish to the Company such information regarding
          such Holder and the distribution proposed by such Holder as the
          Company may reasonably request in writing and as shall be reasonably
          required in connection with any registration, qualification or
          compliance referred to in this Section 2.

                  (ii)  In the event that, either immediately prior to or
          subsequent to the effectiveness of any registration statement, any
          Holder shall distribute Registrable Securities to its partners, such
          Holder shall so advise the Company and provide such information as
          shall be necessary to permit an amendment to such registration
          statement

                                      -10-

<PAGE>   11

          to provide information with respect to such partners, as selling
          securityholders. Promptly following receipt of such information, the
          Company shall file an appropriate amendment to such registration
          statement reflecting the information so provided. Any incremental
          expense to the Company resulting from such amendment shall be borne by
          such Holder.

                  (h)   Rule 144 Reporting.

                  With a view to making available the benefits of certain rules
and regulations of the Commission which may permit the sale of restricted
securities to the public without registration, the Company agrees to:

                  (i)   make and keep public information available as those
          terms are understood and defined in Rule 144 under the Securities Act
          ("Rule 144"), at all times from and after ninety (90) days following
          the effective date of the first registration under the Securities Act
          filed by the Company for an offering of its securities to the general
          public;

                  (ii)   use its best efforts to file with the Commission in a
          timely manner all reports and other documents required of the Company
          under the Securities Act and the Exchange Act at any time after it has
          become subject to such reporting requirements; and

                  (iii) so long as the Holder owns any Registrable Securities,
          furnish to the Holder upon request, a written statement by the Company
          as to its compliance with the reporting requirements of Rule 144 (at
          any time from and after ninety (90) days following the effective date
          of the first registration statement filed by the Company for an
          offering of its securities to the general public), and of the
          Securities Act and the Exchange Act (at any time after it has become
          subject to such reporting requirements), a copy of the most recent
          annual or quarterly report of the Company, and such other reports and
          documents so filed as the Holder may reasonably request in availing
          itself of any rule or regulation of the Commission allowing the Holder
          to sell any such securities without registration.

                  (i)   "Market Stand-off" Agreement. Each of the Holders
agrees, if requested by the Company and an underwriter of equity securities of
the Company, not to sell or otherwise transfer or dispose of any Registrable
Securities held by such Holder during the 180-day period following the effective
date of a registration statement of the Company filed under the Securities Act,
provided that:

                  (i)   such agreement only applies to the Initial Public
          Offering; and

                  (ii)  all officers and directors of the Company enter into
          similar agreements.

                  If requested by the underwriters, the Holders shall execute a
separate agreement to the foregoing effect. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said 180-day period. The provisions of this Section
2(i) shall be binding upon any transferee who acquires Registrable Securities.

                                      -11-

<PAGE>   12

                  (j)   The registration rights set forth in this Section 2 may
be assigned, in whole or in part, to any transferee of Registrable Securities
(who shall be bound by all obligations of this Agreement).

                  (k)   Termination. The registration rights set forth in this
Section 2 shall not be available to any Holder if, (i) in the opinion of counsel
to the Company, all of the Registrable Securities then owned by such Holder
could be sold in any 90-day period pursuant to Rule 144 (without giving effect
to the provisions of Rule 144(k)) or (ii) all of the Registrable Securities held
by such Holder have been sold in a registration pursuant to the Securities Act
or pursuant to Rule 144.

                  SECTION  3.  MISCELLANEOUS

                  (a)   Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.

                  (b)   Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.

                  (c)   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.

                  (d)   Notices.

                  (i)   All communications under this Agreement shall be in

          writing and shall be delivered by hand or facsimile or mailed by
          overnight courier or by registered or certified mail, postage prepaid:

                  (1)   if to the Company, to American Medical Systems Holdings,
          Inc., 10700 Bren Road West, Minnetonka, Minnesota 55343, Attention:
          Chief Executive Officer (facsimile: (952) 930-6777), or at such other
          address as it may have furnished in writing to the Holders;

                  (2)   if to the Holders, at the address or facsimile number
          listed on Schedule I hereto, or at such other address or facsimile
          number as may have been furnished the Company in writing.

                  (ii)  Any notice so addressed shall be deemed to be given: if
          delivered by hand or facsimile, 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.

                  (e)   Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, any consents, waivers
and modifications which may hereafter be executed may be reproduced by the
Holders by any photographic, photostatic,

                                      -12-

<PAGE>   13

microfilm, microcard, miniature photographic or other similar process and the
Holders may destroy any original document so reproduced. The parties hereto
agree and stipulate that any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by the Holders in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.

                  (f)   Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties.

                  (g)   Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto and supersedes all
prior understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of the Company and the Holders holding a majority of the then
outstanding Registrable Securities.

                  (h)   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
affect the remaining provisions of this Agreement which shall remain in full
force and effect.

                  (i)   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.

                       [THIS SPACE IS INTENTIONALLY BLANK]

                                      -13-

<PAGE>   14

                  IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first set forth above.

                                      AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

                                      By:
                                         -------------------------
                                        Name:
                                        Title:

WARBURG, PINCUS EQUITY PARTNERS, L.P.

By:  WARBURG, PINCUS & CO.,
General Partner

By:
    -------------------------------------------------
   Name:
   Title:

STANDBY FUND 1998

By:
     ------------------------------------------------
    Name:
    Title:

AMS INVESTORS

By:
     ------------------------------------------------
    Name:
    Title:

AMS INVESTORS II

By:
     ------------------------------------------------
    Name:
    Title:

SECOND CENTURY GROWTH DEFERRED COMPENSATION PLAN

By:  PIPER JAFFRAY INC.

By:
     ------------------------------------------------
    Name:
    Title:

                                      -14-

<PAGE>   15

VERTICAL FUND ASSOCIATES, L.P.

By:  VERTICAL GROUP, L.P.,
General Partner

By:
     ------------------------------------------------
    Name:
    Title:

UPPER LAKE GROWTH CAPITAL LLC

By:

By:
     ------------------------------------------------
    Name:
    Title:

CRANE ISLAND VENTURES LLC

By:

By:
     ------------------------------------------------
    Name:
    Title:

DOUGLAS W. KOHRS

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

                                      -15-

<PAGE>   16

                                   SCHEDULE I

                                    Investors

INVESTOR NAME AND ADDRESS

Warburg, Pincus Equity Partners, L.P.
466 Lexington Avenue
New York, NY 10017
Facsimile: (212) 878-9361
Attention: Elizabeth H. Weatherman

Vertical Fund Associates, L.P.
c/o The Vertical Group
18 Bank Street
Summit, New Jersey  07901
Facsimile: (908) 273-9434
Attention:  Richard Emmitt

Second Century Growth Deferred
   Compensation Plan
c/o Piper Jaffray Ventures
222 South Ninth Street
Minneapolis, Minnesota  55402
Facsimile: (612) 342-8514
Attention:  Buzz Benson

Standby Fund 1998
c/o Piper Jaffray Ventures
222 South Ninth Street
Minneapolis, Minnesota  55402
Facsimile: (612) 342-8514
Attention:  Buzz Benson

                                      -16-
<PAGE>   17

                                   SCHEDULE I
                                    (CONT'D)

AMS Investors
c/o Piper Jaffray Ventures
222 South Ninth Street
Minneapolis, Minnesota  55402
Facsimile: (612) 342-8514
Attention:  Buzz Benson

AMS Investors II
c/o Piper Jaffray Ventures
222 South Ninth Street
Minneapolis, Minnesota  55402
Facsimile: (612) 342-8514
Attention:  Buzz Benson

Douglas Kohrs
7432 Hyde Park Drive
Edina, Minnesota  55429
Facsimile:  (952) 930-6777

Upper Lake Growth Capital LLC
10400 Viking Drive, Suite 530
Eden Prairie, Minnesota  55344
Facsimile:  (612) 995-7499
Attention:  David Stassen

Crane Island Ventures LLC
10400 Viking Drive, Suite 530
Eden Prairie, Minnesota  55344
Facsimile:  (612) 995-7499
Attention:  David Stassen

                                      -17-

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