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                           LOAN MODIFICATION AGREEMENT


        This Loan Modification Agreement is entered into as of November 25,
1998, 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:

                  "Maturity Date" means November 24, 1999.

            2.    Item "(a)" in the first paragraph under Section 6.3 entitled
                  "Financial Statements, Reports, 


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                  Certificates" is hereby no longer required by Bank.

            3.    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 $17,000,000.

            4.    Section 6.11 entitled "Profitability" is hereby amended to
                  read as follows:

                  Borrower shall have a maximum net loss of One Million Dollars
                  ($1,000,000) (net of amortization and depreciation) for the
                  fiscal quarter ending December 31, 1998. Beginning with the
                  fiscal quarter ending March 31, 1999 and each fiscal quarter
                  thereafter, Borrower shall maintain a minimum net income of
                  One Dollar ($1.00) (net of amortization and depreciation).
                  Profitability shall be calculated as follows: add depreciation
                  and amortization from 10Q cash flow statement to net income
                  (loss).

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
Twenty Thousand Dollars ($20,000) (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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