Document:

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                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, made as of the 1st day of May, 1999, by and between
American Medical Systems, a Delaware Corporation, whose principal place of
business is located at 10700 Bren Road West, Minnetonka, Minnesota 55343,
hereinafter called "AMS", and Johann Neisz, residing at 9951 Egret Boulevard,
N.W., Minneapolis, Minnesota, hereinafter called "Employee", both of whom
understand as follows:

                                   WITNESSETH:

         WHEREAS, is it the desire of AMS to: (1) secure and retain the services
of Employee and to provide inducement for him/her to remain in such employment;
(2) to make possible full work productivity by assuring Employee's morale and
peace of mind with respect to future security; and (3) to provide a just means
for terminating Employee's services at such time as he/she may be unable fully
to discharge his/her duties or when AMS may desire to otherwise terminate
his/her/her employ, and;

         WHEREAS, it is the desire of AMS to provide certain benefits, establish
certain conditions of employment, set working conditions of Employee and protect
its confidential and proprietary business and technical information that has
been acquired and is being developed by the Company at substantial expense;

         WHEREAS, Employee desires to accept employment under this Agreement.

         For the reasons set forth above, and in consideration of the mutual
covenants herein contained, the parties hereto agree as follows:

SECTION 1: EMPLOYMENT

         AMS hereby agrees to the employment of the Employee as Vice President
of Research and Development, and Employee hereby accepts the employment of AMS,
subject to the general supervision and pursuant to the orders, advice, and
direction of AMS. Employee shall perform such other duties as are customarily
performed by one holding such position in other, same, or similar businesses or
enterprises as that engaged in by employer, and shall also additionally render
such other related services and duties as may be assigned to him/her from time
to time by AMS.

SECTION 2: BEST EFFORTS OF EMPLOYEE

         Employee agrees that he/she will at all times, faithfully,
industriously, and to the best of his/her ability, experience, and talents,
perform all of the duties that may be required of and from him/her pursuant to
the express and implicit terms hereof, to the reasonable satisfaction of AMS.
Such duties shall be performed at the principal place of business of AMS as
stated above, and at such other place or places as AMS shall in good faith
require or as the interest, needs, business, or opportunity of AMS shall
require.

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SECTION 3:  EMPLOYMENT AT-WILL

         Nothing in this Agreement is intended to establish any minimum period
of Employee's continuing employment, and such employment continues to be on an
"at-will" basis. Employee acknowledges that his or her employment with Company
is terminable at will at any time by either party.

SECTION 4:  SALARY

         AMS agrees to pay employee for his/her services rendered pursuant
hereto an annual base salary of $150,000, payable in installments at the same
time as other similar employees of AMS are paid. In addition, AMS agrees to
increase said base salary and/or other benefits of Employee in such amounts and
to such an extent as AMS may determine that it is desirable to do so on the
basis of a salary review of Employee made at the same time as similar
consideration is given other employees generally as determined by reference to
the personnel policies of AMS.

SECTION 5:  TERMINATION DUE TO DISCONTINUANCE OF BUSINESS

         Anything herein contained to the contrary notwithstanding, in the event
that AMS shall discontinue operating its business, or a major part thereof in
which the Employee is engaged, then this Agreement shall terminate as of the
last day of the month on which AMS ceases its operations or part thereof.

SECTION 6:  OTHER EMPLOYMENT

         Employee shall within normal working hours devote all of his/her time,
attention, knowledge and skills solely to the business and interest of AMS, and
AMS shall be entitled to all of the benefits, profits, or other issues arising
from or incident to all work, services, and advice of Employee during this time.
Employee shall not, during the term hereof, be interested directly or
indirectly, in any manner, as partner, officer, director, stockholder, advisor,
employee or in any other capacity in any Conflicting Organization as that term
is defined in SECTION 12 of this Agreement; provided, however, that nothing
herein contained shall be deemed to prevent or limit the right of Employee to
invest any of his/her surplus funds in the capital stock or other securities of
any corporation whose stock or securities are publicly owned or are regularly
traded on any public exchange, nor shall anything herein contained be deemed to
prevent Employee from investing or limit Employee's right to invest his/her
surplus funds in real estate.

SECTION 7:  RECOMMENDATIONS FOR IMPROVING OPERATIONS

         Employee shall make available to AMS all information of which Employee
shall have any knowledge and shall make all suggestions and recommendations that
will be of mutual benefit to AMS and himself/herself.

SECTION 8:  SEVERANCE PAY

         If Employee's employment is terminated by AMS for any reason other than
Cause, as defined below, death or disability (i) Employee shall continue to
receive his/her then base salary (less any applicable withholding or similar
taxes) at the rate in effect hereunder on the date of

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such termination periodically, in accordance with AMS's prevailing payroll
practices, for a period of six (6) months following the date of such termination
(the "Severance Term"); (ii) Employee shall be entitled to receive, in a lump
sum, any bonus Employee would have been eligible to receive for the year in
which termination occurs, pro-rated based on Employee's period of employment
during such year (less any applicable withholding or similar taxes) and (iii) to
the extent permissible under AMS's health and welfare plans, Employee shall
continue to receive any health and welfare benefits provided to him/her as of
the date of such termination during the Severance Term, on the same basis and at
the same cost as during employment. Following the end of the Severance Term,
Employee 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 Employee accepts other employment prior to the last date of the Severance
Term, Employee shall forthwith notify AMS and AMS shall be entitled to set off
from amounts and benefits due Employee under this Section 8 (other than in
respect of the bonus) the amounts paid to and benefits received by Employee in
respect of such other employment. The payments and benefits to be provided to
Employee as set forth in this Section 8 shall be lieu of any and all benefits
otherwise provided under any severance pay policy, plan or program maintained
from time to time by AMS for its employees. Notwithstanding the March 31, 1999
letter from AMS to Employee, severance payments under this Section 8 shall not
be payable if Employee's employment is terminated due to Employee's death.

         For purposes of this Agreement, "Cause" shall mean: (i) Employee's
failure, neglect or refusal to perform his duties hereunder which failure,
neglect or refusal shall not have been corrected by Employee within 30 days of
receipt by Employee of written notice from AMS 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 Employee that has the
effect of injuring the reputation or business of AMS or its affiliates in any
material respect; (iii) any continued or repeated absence from AMS, unless such
absence is (A) approved or excused by the Chief Executive Officer or (B) is the
result of Employee's illness, disability or incapacity; (iv) use of illegal
drugs by Employee or repeated drunkenness; (v) conviction of Employee for the
commission of a felony; or (vi) the commission by Employee of an act of fraud or
embezzlement against AMS.

SECTION 9:  CONFIDENTIAL INFORMATION

         A. Unless employee shall first secure AMS's written consent, Employee
shall not disclose or use directly or indirectly at any time either during or
subsequent to his/her employment by AMS, any information, or compilation of
information that the Employee learns or develops during the course of his/her
employment that derives independent economic value from not being generally
known, or readily ascertainable by proper means, by other persons who can obtain
economic value from its disclosure or use. Such information includes, but is not
limited to, trade secrets and may relate to such matters as research and
development, manufacturing processes, management systems, product designs,
customer lists, and sales and marketing plans and information.

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         B. Upon the request of AMS, Employee shall, in addition to agreeing to
be bound by the above provision, execute an "Invention and Confidential
Information Agreement" in such form as set out by AMS.

SECTION 10:  EMPLOYEE'S INABILITY TO CONTRACT FOR EMPLOYER

         Notwithstanding anything herein contained to the contrary, Employee
shall not have the right to make any contracts or commitments for or on the
behalf of AMS without first obtaining the written consent of AMS.

SECTION 11:  DOCUMENTS AND TANGIBLE ITEMS

         All documents and tangible items provided to the Employee by AMS or
created by the Employee for use in connection with his/her employment are the
property of AMS and shall be promptly returned to AMS on termination of
employment together with all copies, recordings, abstracts, notes or
reproductions or any kind made from or about the documents and tangible items or
the information they contain.

SECTION 12:  NONCOMPETITION

         Employee agrees that, for a period of one year after termination of
his/her employment with AMS in any manner, whether with or without cause,
Employee will not:

         A. If Employee has been or is employed by AMS in a sales capacity,
Employee will not render services, directly or indirectly, to any CONFLICTING
ORGANIZATION in connection with the sale, merchandising, education, or promotion
of or about CONFLICTING PRODUCTS to any customer of AMS upon whom Employee
called, or whose account Employee supervised on behalf of AMS, at any time
during the last two years of his/her employment with AMS.

         B. If Employee has been or is employed by AMS in a non-sales capacity,
Employee will not render services, directly or indirectly, to any CONFLICTING
ORGANIZATION, except that Employee may accept employment with a CONFLICTING
ORGANIZATION that is a large diversified organization with separate and distinct
divisions which would not be a CONFLICTING ORGANIZATION, provided AMS, prior to
Employee accepting such employment, shall receive separate written assurances
from such CONFLICTING ORGANIZATION and from Employee, that he/she will not
render services directly or indirectly to any division that would be a
CONFLICTING ORGANIZATION.

         C. Employee will not employ or attempt to employ (by soliciting or
assisting anyone else in the solicitation of) any of AMS's then employees on
behalf of any other entity, whether or not such entity is a CONFLICTING
ORGANIZATION.

         D. CONFLICTING PRODUCT means any product or process of any person or
organization other than AMS, in existence or under development, which resembles
or competes with a product or process upon which or with which the Employee
worked in either a Sales or Non-sales capacity during the last two years of
his/her employment by AMS, or about which Employee acquired confidential
information through his/her work with AMS.

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         E. CONFLICTING ORGANIZATION means any person or organization which is
engaged in, or about to become engaged in, research on or development,
production, marketing or selling of a CONFLICTING PRODUCT.

         F. Employee represents and warrants to AMS that he/she is not currently
subject to a non-competition, confidentiality or other such agreement with a
former employer which prohibits the Employee from working for AMS.

SECTION 13:  MODIFICATION OF AGREEMENT

         No waiver or modification of this Agreement or of any covenant,
condition or limitation herein contained shall be valid unless in writing and
duly executed by the party to be charged therewith. No evidence of any waiver or
modification shall be offered or received in evidence of any proceeding,
arbitration, or litigation between the parties hereto arising out of or
affecting this Agreement, or the rights or obligations of the parties hereunder,
unless such waiver or modification is in writing, duly executed as set forth
above. The parties further agree that the provisions of this section may not be
waived except as herein set forth.

SECTION 14:  SEVERABILITY

         If any provision, or any portion thereof, contained in this Agreement
is held to be unconstitutional, invalid, or unenforceable the remainder of this
Agreement, or portion thereof, shall be deemed severable, shall not be affected
and shall remain in full force and effect. To the extent that any provision of
this Agreement is unenforceable because it is overbroad, that provision shall be
limited to the extent required by applicable law and enforced as so limited.

SECTION 15:  ENTIRE AGREEMENT

         This Agreement, the offer of employment letter, dated March 29, 1999,
from AMS to Employee, the letter dated March 31, 1999, from AMS to Employee and
the Invention and Confidential Information Agreement, dated April 26, 1999,
between AMS and Employee, contain the complete agreement concerning the
employment arrangement between the parties and shall, as of the effective date
hereof, supersede all other agreements between the parties. The parties
stipulate that neither of them has made any representation, with respect to the
subject matter of this Agreement or any representation, including the execution
and delivery hereof except such representation as are specifically set forth
herein and each of the parties hereto acknowledges that he/she or it has relied
on its own judgment in entering into this Agreement. The parties hereto further
acknowledge that any payments or representations that my have heretofore been
made by either of them to the other are of no effect and that neither of them
has relied thereon in connection with his/her or its dealings with the other.

SECTION 16:  TRANSFERABILITY

         The right and obligations of AMS hereunder may be transferred to its
successors and assigns. Employee may not, however, transfer or assign his/her
rights or obligations in this Agreement.

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SECTION 17:  APPLICABLE LAW

         The validity, enforceability, construction and interpretation of this
Agreement shall be governed by the laws of the State of Minnesota.

SECTION 18:  No Adequate Remedy

         Employee understands that if Employee fails to fulfill the Employee's
obligations under this Agreement, the damages to AMS would be very difficult to
determine. Therefore, in addition to any other rights or remedies available to
AMS at law, in equity, or by statute, the Employee hereby consents to the
specific enforcement of this Agreement by AMS through an injunction or
restraining order issued by an appropriate court.

         IN WITNESS WHEREOF, American Medical Systems, Inc. has caused this
Agreement to be signed and executed in its behalf by its Vice President, Human
Resources, and the Employee has signed and executed this Agreement, both in
duplicate as of the day and year first written above.

/s/ Jan Dick                                    /s/ Johann Neisz
----------------------------------              --------------------------------
Jan Dick                                        Johann Neisz
Vice President of Human Resources

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                               EMPLOYMENT CONTRACT

THIS EMPLOYMENT CONTRACT (hereinafter: the "Agreement") has been entered into by
and between:

1.   AMERICAN MEDICAL SYSTEMS BENELUX B.V.B.A., whose registered office is in
     Zaventem, Belgium and whose place of business is in Zaventem, Belgium
     hereinafter to be called the "Company", for these presents lawfully
     represented by Ismael Nujurally;

and

2. JAN DANIEL RUYS, born on September 6, 1950 and residing at Kreuzbuchstrasse
88, CH-6045 Meggen, Switzerland, hereinafter to be called "Employee",

       WHEREAS the Company wishes to employ the Employee as Vice President,
International, for its International operations and Employee wishes to be
employed by the Company in such position and for such operations;

       WHEREAS in the context of implementing the foregoing the parties wish to
record in writing the terms and conditions of employment on which they have
agreed; and

       WHEREAS the Company is a subsidiary of American Medical Systems, Inc., a
corporation organized and existing under the laws of Minnesota, United States of
America, hereinafter to be called "AMS".

NOW THEREFORE, in consideration of the mutual promises and other good and
valuable consideration as forth herein, the parties hereto agree as follows:

ARTICLE 1 - COMMENCEMENT AND TERM OF EMPLOYMENT

1.1 As of July 22, 1999, the Employee shall be employed by the Company as a Vice
President, International.

1.2 This Agreement has been entered into for an indefinite period of time. Any
of the parties may terminate this Agreement by written notice observing a
minimum of two months' notice or such longer period as may be required by
applicable law, the term of notice to expire on the last day of a calendar
month. This Agreement shall in any event end on the first day of the month in
which Employee reaches Dutch statutory retirement age, without any prior notice
of termination being required.

ARTICLE 2 - DUTIES AND POWERS

2.1 The Employee's powers, duties and responsibilities as a Vice President of
the Company shall include the following: Responsible for the sales, distribution
and operations activities

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of the international business of American Medical Systems and if designated, of
affiliate businesses of the Company. Responsible for leadership activities as a
senior manager of the Company. The Employee shall devote his energy and skill
and furthermore make every effort to execute his powers, duties and
responsibilities to the best of his abilities.

2.2 As a Vice President, International, will be responsible for countries as
    follows: France, Spain, Germany, Belgium, Luxembourg, The Netherlands,
    United Kingdom, Ireland, Portugal, Australia, Argentina, Algeria, Austria,
    Czech Republic, Bahrain, Brasil, Chile, China, Colombia, Denmark, Dominican
    Republic, Ecuador, Egypt, Finland, Greece, Hong Kong, India, Iran, Iraq,
    Israel, Italy, Japan, Jordan, Kuwait, Lebanon, Mexico, Morocco, New Zealand,
    Norway, Oman, Pakistan, Panama, Poland, Portugal, Puerto Rico, Qatar,
    Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sweden,
    Switzerland, Taiwan, Thailand, Tunesia, Turkey, U.A.E., Uruguay, Venezuela,
    West Malaysia, Costa Rica, Croatia, Honduras, Slovenia. This list may be
    reduced or expanded in the future by the Company.

2.3 In the performance of his functions the Employee shall also observe and
    comply with the guidelines of AMS.

2.4 The Employee shall also perform any and all functions reasonably assigned to
    him by the Company, whether directly for the Company or on behalf of a
    company directly or indirectly affiliated with the Company. Such functions
    shall also be governed by the terms and conditions contained in this
    Agreement and shall not entitle the Employee to any further remuneration.

2.5 The Employee shall be based in The Netherlands and perform his functions
    from The Netherlands. If so required in the opinion of the Company, the
    Employee may be transferred to another location in or outside The
    Netherlands, such transfer to be arranged in mutual consultation between the
    Company and the Employee. If as a result of such transfer there is a need
    for the Employee and his family to relocate, after prior consent, reasonable
    costs of relocation will be reimbursed by the Company after submission of
    relevant invoices.

ARTICLE 3 - SALARY

3.1 The Employee shall receive a base salary of US $150,000 (one hundred and
    fifty thousand United States dollars) gross per annum (the "Base Salary"),
    to be paid in Dutch guilders in twelve equal monthly installments upon the
    last day of each calendar month according to a conversion rate established
    by the Company.

3.2 A holiday allowance of 8% is included in the aforementioned salary.

ARTICLE 4 - BONUS

4.1 Upon termination of the Company's financial year, the Employee shall receive
    a bonus to be calculated by the Company in accordance with the Management
    Incentive Plan established for that given year. The Schedule for 1999 is
    attached which will be applied on a

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prorated basis for 1999 performance from the date of hire. The Management
Incentive Plan is subject to change each year by the Company.

4.2 The Employee's bonus will be discounted pro rata for the portion of the
financial year during which the Employee did not actually work (hereinafter: the
"Discounted Period"). For the purpose of this Article the Discounted Period
shall consist of the periods of vacation and periods of incapacity to work on
account of illness or disablement, in so far as the aggregate of such periods
over the relevant financial year does not exceed three (3) months.

4.3 Payment of the bonus shall be made within one month after the date on which
the General Meeting of the Board of Directors of the Company was convened in
which the annual accounts for the preceding financial year were adopted, or
approved.

ARTICLE 5 - STOCK OPTIONS

       Conditioned on written approval from the Board of Directors of AMS the
Employee will be granted 40,000 options to purchase AMS Common Stock at an
exercise price of $5.00 per share (the "Options"). The Options will vest over a
period of four years from the date of this Agreement and in accordance with the
draft Option Agreement attached to this Agreement, and provided the Employee
shall still be employed by the Company on the date on which any of the Options
is anticipated to vest. The Employee's right to exercise any of the Options
shall terminate on the date of termination of this Agreement.

ARTICLE 6 - Transportation Allowance

6.1 For the purposes of discharging his duties of office Employee shall be
provided by the Company with a transportation allowance of $1,000 per month. The
Employee shall pay any taxes levied on this amount.

6.2 The Transportation Allowance shall be applied to expenses relating to the
use of a vehicle, however, the Employee will additionally be eligible for
reimbursement for business travel at a customary rate and for tolls.

ARTICLE 7 - PENSION

       Employee and his surviving relations shall have the benefit of a pension
plan in accordance with the Company's plan. As with other benefit programs, this
plan is subject to change.

ARTICLE 8 - OTHER INSURANCE

The Company shall provide insurance coverage either directly or through
reimbursement of Employee to provide benefit comparable in the aggregate to the
attached Schedule. Reimbursement shall begin as of August 1, 1999 of applicable
current policies, with

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comparable benefits in the aggregate being provided no later than August 31,
1999. These benefits are subject to change from year to year.

ARTICLE 9 - HOLIDAYS

The Employee shall be entitled to 25 working days of vacation on full pay, for
each full calendar year during which his employment under this Agreement
continues. Vacation shall be taken in consultation with the Company.

ARTICLE 10 - ILLNESS AND DISABLEMENT

10.1 In the event of Employee's incapacity to work on account of illness or
disablement the Company shall for a maximum period of twelve months continue to
pay his salary as specified in Article 3 of this Agreement, subject to deduction
of any benefits to be received by the Employee under the applicable social
security laws and/or benefits received under any other relevant insurance
policies taken out by the Company and/or compensation received and/or claimed by
the Employee from third parties on account of loss of earnings in connection
with such incapacity to work. If in the latter event the Employee requires some
time to enforce his claim, the Company shall pay the salary during that period
by way of advance payment. If the Company so desires, the Employee shall assign
to the Company his entitlement to such compensation up to the amount of the loss
of earnings for a consideration equal to any amounts received by him from the
Company as advance payment in that period.

10.2 During the period specified in 10.1 the Company shall continue to pay the
premiums referenced in Articles 7 and 8, and in accordance with the terms
thereof, in so far as said premiums are due and payable.

10.3 For the purposes of this Article and the Articles 4, 5 and 6 of this
Agreement, periods of incapacity to work following each other at intervals of
less than 32 days shall be regarded as one consecutive period of incapacity to
work.

ARTICLE 11 - SIDE ACTIVITIES

11.1 The Employee shall not perform any paid or unpaid side activities without
prior written approval of the Company and AMS This would include such activities
as consultation in the field of medical devices and any related products for
third parties. The Employee is permitted to continue in his role as Vice
President, Treasurer of the Crigler-Najjar Foundation,a non-profit organization
provided that it does not interfere in any material respect with the services to
be provided by the Employee.

11.2 For the duration of this Agreement the Employee shall not be permitted to
have or take in any way, whether directly or indirectly, an interest in
companies pursuing activities in competition with, or similar or related to the
activities of the Company and AMS and/or the companies affiliated with the
Company or AMS, or any interest in companies, other than

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AMS, who are suppliers and/or licensers and/or principals and/or buyers and/or
licensees of the Company and/or the companies affiliated with the Company.

11.3   Employee shall not accept any moneys or other remuneration from third
       parties in connection with his activities for the Company and AMS and/or
       the companies affiliated with the Company or AMS.

ARTICLE 12 - CONFIDENTIALITY AND NON-DISCLOSURE

12.1 For the duration of this Agreement as well as thereafter - irrespective of
the manner in which and the reasons for which the Agreement may be terminated -
the Employee shall treat as strictly confidential and not disclose to third
parties, whether directly or indirectly, in any form or manner whatsoever, any
information which comes to his knowledge regarding the business and interests of
the Company and AMS and/or the companies affiliated with the Company or AMS
and/or their customers and other business relations, all this in the broadest
sense, unless: (i) dissemination of such information has been explicitly
authorized by the Company and/or AMS, or (ii) is compulsory under applicable
law, or (iii) forms part of the public domain.

12.2 In the event that Employee is suspended and upon termination of his
employment hereunder - irrespective of the manner in which and the reasons for
which his employment may be terminated - Employee shall at the Company's or AMS'
first request to that effect surrender to the Company or, as the case may be,
AMS, all property of the Company or AMS in his possession as well as all
documents which in any way whatsoever relate to the Company, AMS and/or the
companies affiliated with the Company or AMS and/or their customers and other
business relations, all this in the broadest sense, as well as all copies of
such documents and property.

ARTICLE 13 - NON-COMPETITION

       For eighteen months following the termination of his Agreement -
irrespective of the manner in which and the reasons for which the Agreement has
been terminated - the Employee shall not without prior written approval of the
Company and AMS be permitted:

        a. To work for or be employed in any manner by, directly or indirectly,
           any CONFLICTING ORGANIZATION, in connection with the sale,
           merchandising, education or promotion of or about CONFLICTING
           PRODUCTS. Employee may work for or be employed by a CONFLICTING
           ORGANIZATION whose business is diversified, and which as to part of
           its business is not a CONFLICTING ORGANIZATION, provided AMS, prior
           to Employee accepting such employment, shall receive separate written
           assurance satisfactory to AMS from such CONFLICTING ORGANIZATION and
           from Employee, that he will not render services directly or
           indirectly in connection with any CONFLICTING PRODUCT.

           For the purposes of this Agreement, CONFLICTING PRODUCT means any
           product or process of any person or organization other than AMS, the
           Company

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           and/or any companies affiliated with AMS and/or the Company in
           existence or under development, which resembles or competes with a
           product or process whether existing or under pursuit upon which or
           with which the Employee worked in either a Sales or Non-sales
           capacity during the last two years of his employment by AMS, or about
           which Employee acquired confidential information through his work
           with AMS. Conflicting Products would generally be, but not limited to
           the field of urology, including products which treat dsyfunction in
           the area of the lower pelvic floor.

           CONFLICTING ORGANIZATION means any person or organization which is
           engaged in, or about to become engaged in, research on or
           development, production marketing or selling of a CONFLICTING
           PRODUCT.

       b. to maintain in any manner whatsoever, whether directly or indirectly,
       business contacts with persons or corporate bodies with whom during the
       two years preceding the termination of the Agreement, the Company and/or
       any companies affiliated with AMS and/or the Company has had any business
       contact;

       c. to induce present employees of the Company, AMS and/or companies
       affiliated with the Company or AMS, or persons who in the period of two
       years preceding the termination of the Employee's employment have been or
       were employed by the Company, AMS and/or companies affiliated with the
       Company, or AMS to terminate their employment and/or to hire such present
       or former employees.

ARTICLE 14 - REMEDY FOR BREACH OF CONTRACT

14.1 In the event that Employee commits any breach of Article 11, Article 12
and/or Article 13 he shall forfeit to the Company a penalty equal to one year's
Base Salary for each such breach and an additional penalty equal to 1/12th of
one year's Base Salary for each day that such breach should continue unremedied,
said penalty or penalties to be payable immediately without prior notice or
judicial intervention being required, entirely without prejudice to the
Company's right to demand full compensation for losses actually suffered by it
and/or to demand specific performance under the applicable laws.

14.2 Payment of the penalty or penalties referred to in 14.1 shall not release
Employee from his obligations specified in Articles 11, 12 and 13.

ARTICLE 15 - TERMINATION

a. Upon termination of this Agreement Employee shall be entitled to the payments
described in this Section 15.

(i) If this Agreement is terminated by the Company or by Employee, Employee
shall be entitled to receive his Base Salary through the date of termination and
any unreimbursed business expenses, payable promptly following the later of the
date of such termination and

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the date on which the appropriate documentation is provided. All benefits will
cease as of termination of this Agreement.

(ii) If this Agreement is terminated by the Company without Cause or by Employee
with Good Reason, subject to Employee's continued compliance with the covenants
set forth in Section 12 and 13, Employee shall receive a severance payment equal
to one year's Base Salary, from which amount the Company shall withhold any
applicable taxes, levies and social premiums.

(iii) If this Agreement is terminated by the Company without Cause or by
Employee with Good Reason and such termination occurs after the occurrence of a
Change of Control as defined below, Employee shall receive a severance payment
equal to two year's Base Salary in lieu of the amount described under (ii)
above, from which amount the Company shall withhold any applicable taxes, levies
and premiums.

         The amounts described in clause (ii) and (iii) above shall be paid in a
lump sum within 10 days of the date of termination, applying a discount rate
equal to the then current yield on three-year U.S. government securities.

         The amounts described under (ii) and (iii) above are in lieu of any
severance payments for which Employee may otherwise be eligible or to which
Employee may otherwise be entitled under any statutory requirements or
applicable case law, any severance policy of the Company or AMS or any of their
affiliated companies or under this Agreement. The Employee irrevocably waives
the right to claim payment of any severance payment other than either of the
amounts described under (ii) and (iii) above.

b. Definitions. For purposes of this section 15, the following terms shall have
the following meanings:

         (i) "CAUSE" shall mean:

         (A) Employee's willful and continued failure substantially to perform
his duties under this Agreement (other than as a result of total or partial
incapacity due to physical or mental illness or as a result of termination by
Employee for Good Reason) which failure continues for more than 30 days after
receipt by the Employee of written notice setting forth the facts and
circumstances identified by the Company as constituting adequate grounds for
termination under this clause (A),

         (B) any willful act or omission by Employee constituting dishonesty,
fraud or other malfeasance, and any act or omission by Employee constituting
immoral conduct, which in any such case is injurious to the financial condition
or business reputation of the Company or any of its affiliates,

         (C) Employee's indictment for a conviction under the laws of the United
States or any state thereof, The Netherlands or any other jurisdiction in which
the Company conducts business, or

         (D) Employee's breach of the provisions of Section 12 and 13.

<PAGE>   8

         (ii) Prior to a Change of Control, "GOOD REASON" shall mean:

         (A) Employee's removal from, or the Company's failure to reelect or
reappoint him to, his position as described in Section 2 (other than as a result
of a promotion). For purposes of this clause (A), a mere change of title shall
not constitute removal from, or non reelection to, such position, provided, that
Employee's new title is substantially equivalent to that set forth in Section 2
and his position is otherwise not adversely affected;

         (B) a material breach by the Company of any of its obligations under
the Agreement;

         (iii) Following a Change of Control, "GOOD REASON" shall mean

         (A) any of the events described under clause (ii) above;

         (B) a material diminution in Employee's title, position, duties or
responsibilities, (excluding a change or expansion of the list of countries
identified in 2.2) or the assignment to Employee of duties that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with the position specified above;

         (iv) "CHANGE OF CONTROL" shall mean:

         (I) Any "person" or "group" (as such terms are used in Sections 13(d)
and 14 (d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) other than AMS or any of its parent companies, subsidiaries or affiliated
companies, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act as in effect on the date hereof, except that a person shall be
deemed to be the "beneficial owner" of all shares that any such person has the
right to acquire pursuant to any agreement or arrangement or upon exercise of
conversion rights, warrants, options or otherwise, without regard to the sixty
day period referred to in such Rule), directly or indirectly, of securities
representing 50% or more of the combined voting power of the Company's then
outstanding securities, and (II) AMS or any of its parent companies,
subsidiaries or affiliates holds less than 50% of such combined voting power.

ARTICLE 16 - FINAL PROVISIONS

16.1 This Agreement shall be governed by and construed in accordance with the
laws of The Netherlands.

16.2 Any and all disputes which may arise from or in connection with this
Agreement shall be submitted to the competent courts in The Netherlands.

16.3 All income tax and social security contributions which the Company must by
law deduct from Employees' salaries and pay to the Receiver shall be so deducted
from and paid in respect of all amounts to be paid to Employee under this
Agreement, unless it follows from the nature of the payment that it can be made
tax-free.

<PAGE>   9

16.4 If at any time it is determined by the Dutch Inland Revenue and/or the
National Insurance Authority that any of the payments to be made to Employee
under Articles 5 and 6 are (in part) subject to the levy of income tax and/or
social security contributions, the compulsory deductions shall be made and
charged to the debit of Employee. As from such time the amounts of the relevant
future payments under Articles 5 and 6 shall be reduced to the amount after tax.

16.5 The foregoing constitutes the entire agreement between the parties and
supersedes all agreements and undertakings previously made and given by and
between Employee and the (bodies of the) Company and/or companies affiliated
with the Company. Amendments or additions to this Agreement shall be valid only
if recorded in a dated document signed by both parties.

IN WITNESS WHEREOF this Agreement was executed in three and signed by the
parties:

AMERICAN MEDICAL SYSTEMS BENELUX B.V.B.A.

By         : /s/ Douglas W. Kohrs
           ------------------------------------

Name       Douglas W. Kohrs

Title      President and CEO

Date       7/22/99
           ------------------------------------

J. DAAN RUYS

By         /s/ J. Daan Ruys
           ------------------------------------
Date       7/22/99
           ------------------------------------

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