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                           LOAN MODIFICATION AGREEMENT

      This Loan Modification Agreement is entered into as of March 17, 1999, by
and between Laserscope ("Borrower") and Silicon Valley Bank ("Bank").

1.    DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may
be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among
other documents, an Amended and Restated Loan and Security Agreement, dated
November 27, 1996, as may be amended from time to time, (the "Loan Agreement").
The Loan Agreement provided for, among other things, a Committed Line in the
original principal amount of Five Million Dollars ($5,000,000). Defined terms
used but not otherwise defined herein shall have the same meanings as in the
Loan Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."

2.    DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement.`

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.    DESCRIPTION OF CHANGE IN TERMS.

      A.    Modification(s) to Loan Agreement.

            1.    The following terms as defined in Section 1.1 entitled
                  "Definitions" are hereby amended or incorporated into the Loan
                  Agreement to read as follows:

                  "Committed Line" means Four Million Five Hundred Thousand
                  Dollars ($4,500,000).

                  "Credit Extension" means each Advance, Letter of Credit, Term
                  Loan or any other extension of credit by Bank for Borrower's
                  benefit.


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                  "Revolving Facility" means the facility under which Borrower
                  may request Bank to issue cash advances or Letters of Credit
                  as specified in Section 2.1 herein.

                  "Term Loan" means Five Hundred Thousand Dollars ($500,000).

                  "Term Loan Advance" is defined in Section 2.1.4.

                  "Term Loan Maturity Date" means July 31, 2000.

                  "Term Loan Payment" is described in Section 2.1.4.

            2.    Sub-section (a) of Section 2.1 entitled "Revolving Facility"
                  is hereby amended in its entirety to read as follows:

                  (a)   Subject to and upon the terms and conditions of this
                        Agreement, Bank agrees to make Advances to Borrower in
                        an aggregate outstanding amount not to exceed (i) the
                        Committed Line or the Borrowing Base, whichever is less,
                        minus (ii) the face amount of all outstanding Letters of
                        Credit (including drawn but unreimbursed Letters of
                        Credit). Subject to the terms and conditions of this
                        Agreement, amounts borrowed pursuant to this Section 2.1
                        may be repaid and reborrowed at any time during the term
                        of this Agreement. For purposes of this Agreement,
                        "Borrowing Base" shall mean an amount equal to
                        seventy-five percent (75%) of Eligible Accounts.


            3.    The first sentence of sub-section (a) of Section 2.1.1
                  entitled "Letters of Credit" is hereby amended to read as
                  follows:

                  Subject to the terms and conditions of this Agreement, Bank
                  agrees to issue or cause to be issued letters of credit for
                  the account of Borrower (each a "Letter of Credit",
                  collectively, the "Letters of Credit") in an aggregate face
                  amount not to exceed the lesser of (i) the Committed Line
                  minus the sum of the then outstanding principal balance of the
                  Advances or (ii) the 


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                  Borrowing Base; provided that the face amount of outstanding
                  Letters of Credit (including drawn but unreimbursed Letters of
                  Credit) shall not exceed in any case Two Hundred Thousand
                  Dollars ($200,000).

            4.    Section 2.1.3 entitled "Foreign Exchange Contract; Foreign
                  Exchange Settlements" and Section 2.1.4 entitled "Credit Card
                  Sublimit" and any and all references thereto are hereby
                  deleted in their entirety.

            5.    A new Section 2.1.3 entitled "Term Loan" is hereby
                  incorporated into the Loan Agreement to read as follows:

                  2.1.3  Term Loan.

                  (a)   Subject to and upon the terms and conditions of this
                        Agreement, Bank will make a Term Loan available to
                        Borrower.

                  (b)   Interest accrues at a per annum rate equal to two
                        percentage points (2.00%) above the Prime Rate and shall
                        be payable monthly for each month from the date hereof
                        through the month ending July 31, 1999 ("Interest Only
                        End Date"). All Term Loan principal and accrued unpaid
                        interest outstanding on the Interest Only End Date will
                        be payable in twelve (12) equal monthly installments of
                        principal, plus all accrued interest, beginning on the
                        last day of each month following the Interest Only End
                        Date and ending on July 31, 2000 (the "Term Loan
                        Maturity Date"). Any Term Loan principal, once repaid,
                        my not be reborrowed. Notwithstanding the foregoing, in
                        the event Borrower can not maintain compliance with the
                        financial covenants set forth in Section(s) 6.8, 6.9,
                        6.10 and 6.11 of this Agreement, any and all outstanding
                        Term Loan principal and accrued unpaid interest will be
                        immediately amortized and payable in six (6) equal
                        monthly installments of principal plus all accrued
                        interest, beginning on the last day of the month in
                        which Borrower is in violation of the aforementioned
                        Sections.

            6.    Section 2.2 entitled "Overadvances" is hereby amended to read
                  as follows:


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                  If, at any time or for any reason, the amount of Obligations
                  owed by Borrower to Bank pursuant to Section 2.1, 2.1.1 and
                  2.1.2 of this Agreement is greater than the lesser of (i) the
                  Committed Revolving Line or (ii) the Borrowing Base, Borrower
                  shall immediately pay to Bank, in cash, the amount of such
                  excess.

            7.    Sub-section (b) of Section 2.3 entitled "Interest Rates,
                  Payments, and Calculations" is hereby amended to read as
                  follows:

                  (b) After an Event of Default, Obligations accrue interest at
                  5 percent above the rate effective immediately before the
                  Event of Default.

            8.    Section 6.9 entitled "Debt-Net Worth Ratio" is hereby amended
                  to read as follows:

                  Borrower shall maintain, as of the last day of each fiscal
                  quarter, a ratio of Total Liabilities less Subordinated Debt
                  to Tangible Net Worth plus Subordinated Debt of not more than
                  1.50 to 1.00.

            9.    Section 6.10 entitled "Tangible Net Worth" is hereby amended
                  to read as follows:

                  Borrower shall maintain, as of the last day of each fiscal
                  quarter, a Tangible Net Worth of not less than $13,000,000.

            10.   Section 6.11 entitled "Profitability" is hereby amended to
                  read, in its entirety, as follows:

                  Borrower shall maintain, on a quarterly basis, through the
                  fiscal year ending 1999, a minimum net income, plus
                  depreciation and amortization (as provided in the cash flow
                  statements contained in Borrower's Securities and Exchange
                  Commission filings) of $1.00. Beginning with the quarter
                  ending March 31, 2000, Borrower shall be profitable on a
                  quarterly basis in accordance with GAAP.

      B.    Waiver of Financial Covenants.

            Bank hereby waives Borrower's existing default under the Loan
            Agreement by virtue of Borrower's failure to comply with Section(s)
            6.9, 6.10 and 6.11 as of the quarter ended December 31, 1998. 


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            Bank's waiver of Borrower's compliance of this covenant shall apply
            only to the foregoing period. Accordingly, for the quarter ended
            March 31, 1999, Borrower shall be in compliance with these Sections
            as amended herein.

            Bank's agreement to waive the above-described default (1) in no way
            shall be deemed an agreement by the Bank to waive Borrower's
            compliance with the above-described covenants as of all other dates
            and (2) shall not limit or impair the Bank's right to demand strict
            performance of these covenants as of all other dates and (3) shall
            not limit or impair the Bank's right to demand strict performance of
            all other covenants as of any date.

4.    CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.    PAYMENT OF LOAN FEE. Borrower shall pay to Bank a fee in the amount of
Five Thousand Dollars ($5,000) for the Term Loan (the "Term Loan Fee") plus a
variance fee of Two Thousand Five Hundred Dollars ($2,500) (the "Variance Fee")
less a Revolving Facility credit in the amount of Two Thousand Dollars (the
"Revolving Credit Fee") (collectively, referred to herein as the "Loan Fee")
plus all out-of-pocket expenses.

6.    NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.

7.    CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, Bank
is relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.


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8.    COUNTERPARTS. This Loan Modification Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

9.    CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.


      This Loan Modification Agreement is executed as of the date first written
above.


BORROWER:                              BANK:

LASERSCOPE                             SILICON VALLEY BANK

By:     Dennis LaLumandiere            By:     Lois Fisher                      
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Name:   /s/ Dennis LaLumandiere        Name:   /s/Lois Fisher                   
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Title:  Vice President, Finance and    Title:  Senior Vice President            
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        Chief Financial Officer                Life Science Practice            
        -----------------------------          -------------------------------


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