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                                  SCHEDULE 14A
                                 (RULE 14A-101)

                    INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION
          PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                    EXCHANGE ACT OF 1934 (AMENDMENT NO.   )

Filed by the Registrant [ ]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

                                             
[ ]  Preliminary Proxy Statement                [ ]  Confidential, for Use of the Commission
                                                     Only (as permitted by Rule 14a-6(e)(2))
[X]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12


                                   Laserscope
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

     (1)  Title of each class of securities to which transaction applies:

     (2)  Aggregate number of securities to which transaction applies:

     (3)  Per unit price or other underlying value of transaction computed
          pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
          filing fee is calculated and state how it was determined):

     (4)  Proposed maximum aggregate value of transaction:

     (5)  Total fee paid:

[ ]  Fee paid previously with preliminary materials:

[ ]  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2) and identify the filing for which the offsetting fee was paid
     previously. Identify the previous filing by registration statement number,
     or the Form or Schedule and the date of its filing.

     (1)  Amount Previously Paid:

     (2)  Form, Schedule or Registration Statement No.:

     (3)  Filing Party:

     (4)  Date Filed:
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                               [LASERSCOPE LOGO]
                            ------------------------

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                            TO BE HELD JUNE 22, 2001
                            ------------------------

TO THE SHAREHOLDERS OF LASERSCOPE:

     Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Laserscope, a California corporation (the "Company"), will be held
at the Hilton Santa Clara at 4949 Great America Parkway, Santa Clara, California
95054 on Friday, June 22, 2001 at 9:00 a.m. local time, for the following
purposes:

          1. To elect the following directors to serve for the ensuing year and
     until their successors are elected: James R. Baumgardt, Ruediger
     Naumann-Etienne, Ph.D., Rodney Perkins, M.D., Robert J. Pressley, Ph.D. and
     Eric M. Reuter.

          2. To authorize an amendment to the Company's 1994 Stock Option Plan
     to increase the number of shares of Common Stock reserved for issuance
     thereunder by 200,000 shares;

          3. To authorize an amendment to the Company's 1999 Employee Stock
     Purchase Plan to increase the number of shares of Common Stock reserved for
     issuance thereunder by 150,000 shares;

          4. To authorize an amendment to the Company's 1999 Directors' Stock
     Option Plan to increase the number of shares of Common Stock reserved for
     issuance thereunder by 120,000 shares;

          5. To ratify the appointment of Ernst & Young LLP as the independent
     auditors for the Company for the fiscal year ending December 31, 2001; and

          6. To transact such other business as may properly come before the
     Annual Meeting or any adjournment or postponement thereof.

     The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

     Only shareholders of record at the close of business on April 23, 2001 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.

     All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. If you
decide to attend the Annual Meeting, you may vote in person even if you returned
a proxy card.

                                          BY ORDER OF THE BOARD OF DIRECTORS

                                          /s/ DENNIS LALUMANDIERE
                                          Dennis LaLumandiere
                                          Assistant Secretary

San Jose, California
April 27, 2001

YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU ARE URGED TO SIGN AND MAIL THE ENCLOSED PROXY IN THE RETURN ENVELOPE
PROMPTLY SO THAT YOUR SHARES MAY BE REPRESENTED AT THE ANNUAL MEETING.
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                               [LASERSCOPE LOGO]
                            ------------------------

                                PROXY STATEMENT
                    FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
                            ------------------------

                                  INTRODUCTION

GENERAL

     The enclosed Proxy is solicited on behalf of the Board of Directors of
Laserscope, a California corporation (the "Company"), for use at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held Friday, June 22, 2001,
at 9:00 a.m. local time, or at any adjournment or postponement thereof, for the
purposes set forth in this Proxy Statement and in the accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at the Hilton
Santa Clara at 4949 Great America Parkway, Santa Clara, California 95054. The
telephone number at that location is (408) 330-0001.

     These proxy solicitation materials were mailed on or about April 27, 2001
to all shareholders entitled to vote at the Annual Meeting.

REVOCABILITY OF PROXIES

     Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Dennis LaLumandiere, Inspector of Elections) a written notice of revocation or a
duly executed proxy bearing a later date or by attending the meeting and voting
in person.

VOTING AND SOLICITATION

     Every shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by such
shareholder, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder thinks fit, provided that votes cannot be
cast for more than the number of directors authorized by the Company's Bylaws.
However, no shareholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes. On all other
matters, each share has one vote.

     Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
The Inspector of Elections will also determine whether or not a quorum is
present. Except with respect to the election of directors and except in certain
other specific circumstances, the affirmative vote of a majority of shares
represented and voting with respect to a particular matter at a duly held
meeting at which a quorum is present (which shares voting affirmatively also
constitute a majority of the required quorum) is required under California law
for approval of proposals presented to shareholders. In general, California law
also provides that a quorum consists of a majority of the shares entitled to
vote, represented either in person or by proxy. The Inspector of Elections will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as not voting for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
Any proxy which is returned using the form of proxy enclosed and which is not
marked as to a particular item will be voted for the election of directors, for
the approval of the amendment to the Company's 1994 Stock Option Plan, for the
approval of the amendment to the 1999 Employee Stock Purchase Plan, for the
approval of the amendment to the 1999 Directors' Stock Option Plan, for
ratification of the appointment of the designated independent auditors and as
the proxy holders deem advisable on other matters that may properly come before
the Annual Meeting, as the case may be, with respect to the item not marked. If
a broker indicates on the enclosed proxy or its substitute that it does not have
discretionary authority as to certain shares to vote on a
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particular matter ("broker non-votes"), those shares will not be considered as
voting with respect to that matter. While there is no definitive specific
statutory or case law authority in California concerning the proper treatment of
abstentions and broker non-votes, the Company believes that the tabulation
procedures to be followed by the Inspector of Elections are consistent with the
general statutory requirements in California concerning voting of shares and
determination of a quorum.

     The cost of soliciting proxies will be borne by the Company. The Company
has retained the services of Skinner & Co., Inc. to aid in the solicitation of
proxies from brokers, bank nominees and other institutional owners. The Company
estimates that it will pay Skinner & Co. a fee not to exceed $7,500 for its
services, including its usual and proper out of pocket expenses. In addition,
the Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
materials to such beneficial owners. Proxies may be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or telegram.

RECORD DATE AND SHARE OWNERSHIP

     Only Company shareholders of record at the close of business on April 23,
2001 are entitled to notice of and to vote at the Annual Meeting. As of April
23, 2001, 15,883,937 shares of the Company's Common Stock were issued and
outstanding.

                                 PROPOSAL NO. 1

                             ELECTION OF DIRECTORS

NOMINEES

     The Company's Bylaws currently provide for five directors. At the Annual
Meeting, the Board of Directors has nominated five directors to be elected to
serve until the next Annual Meeting of Shareholders and until their successors
are elected and qualified at the meeting. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the Company's five nominees
named below, all of whom are presently directors of the Company. In the event
that any nominee of the Company is unable or declines to serve as a director at
the time of the Annual Meeting, the proxies will be voted for any nominee who
shall be designated by the present Board of Directors to fill the vacancy. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of as many of the
nominees listed below as possible and, in such event, the specific nominees for
whom the proxy holders will vote will be determined by the proxy holders.
Assuming a quorum is present, the nominees for director receiving the greatest
number of votes cast at the Annual Meeting will be elected, up to the number of
directors authorized by the Company's Bylaws. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Shareholders or until his or her successor has been elected and qualified.

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     The nominees' names, ages as of December 31, 2000 and certain information
about them are set forth below:



                                                                                DIRECTOR
          NAME OF NOMINEE            AGE          PRINCIPAL OCCUPATION           SINCE
          ---------------            ---          --------------------          --------
                                                                       
Robert J. Pressley, Ph.D. .........  68    Technology consultant                  1984
James R. Baumgardt.................  52    President, Guidant Foundation          2001
Ruediger Naumann-Etienne, Ph.D. ...  54    Business consultant and Chairman of    1999
                                           the Board of Directors and Chief
                                           Executive Officer of Quinton
                                           Instrument, Inc.
Rodney Perkins, M.D. ..............  64    Practicing otologic surgeon and        1984
                                           President of the California Ear
                                           Institute at Stanford
Eric M. Reuter.....................  39    President and Chief Executive          1999
                                           Officer of the Company


     Except as set forth below, each of the nominees has been engaged in the
principal occupation set forth next to his name above during the past five
years. There is no family relationship between any director or executive officer
of the Company.

     ROBERT J. PRESSLEY, PH.D. is a co-founder of the Company and has been a
Director since its founding. Dr. Pressley was appointed Chairman of the Board of
Directors in June 1998. Dr. Pressley co-founded Candescent Technologies
Corporation (formerly named Silicon Video Corporation), a developer of
electronic products, and served as its President and Chief Executive Officer
from January 1991 to January 1994. Dr. Pressley also founded XMR, Inc., a
manufacturer of eximer lasers and laser systems, and served as its Chief
Executive Officer from March 1979 until March 1990. Dr. Pressley has been a
self-employed technology consultant since January 1995.

     JAMES R. BAUMGARDT has been a Director of the Company since February 2001.
Mr. Baumgardt has been the President of the Guidant Foundation, a philanthropic
arm of Guidant Corporation since March 2000. From October 1996 to February 2000,
he was President of Guidant Sales Corporation, a subsidiary of Guidant
Corporation, a leading medical device manufacturer that specializes in minimally
invasive and cost-effective products and services for the treatment of
cardiovascular and vascular disease. From December 1994 to October 1996, Mr.
Baumgardt was Vice President of Corporate Resources for Guidant Corporation.

     RUEDIGER NAUMANN-ETIENNE, PH.D. has been a Director of the Company since
August 1999. Dr. Naumann is owner and managing director of Intertec Group, an
investment company acting as principal in turnaround situations and Chairman of
the Board and Chief Executive Officer Quinton Instrument, Inc., a Cardiac
equipment company. He is the former Chairman of the Board of OEC Medical
Systems, a leading fluoroscopic imaging company for minimally-invasive surgery.
Before joining OEC, Dr. Naumann was President of Diasonics. Prior to that, he
held management positions at Hambrecht & Quist and Texas Instruments.

     RODNEY PERKINS, M.D. is a co-founder of the Company and has been a Director
since its founding. Dr. Perkins also served as Chairman of the Board of
Directors from its founding until June 1995 and Chief Executive Officer from
February to May 1987, and from October 1991 to July 1992. He also served as the
President of the Company from October to December 1991. Dr. Perkins, a
specialist in otologic surgery, is President of the California Ear Institute at
Stanford and has been in private practice since 1968. He is a Clinical Professor
of Surgery at Stanford University School of Medicine, and is the founder and
President of Project HEAR, a non-profit medical institute for ear research and
education. Dr. Perkins is a founder of Collagen Corporation, a biomaterials
company. Dr. Perkins is also a founder and the Chairman of the Board of
Directors of ReSound Corporation, a hearing health care company.

     ERIC M. REUTER has been President, Chief Executive Officer and a Director
of the Company since June 1999. Mr. Reuter joined the Company as Vice President,
Research and Development in September 1996. Before joining Laserscope, from
February 1994 to August 1996, Mr. Reuter was employed at the

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Stanford Linear Accelerator Center at Stanford University (SLAC) as the Project
Engineer for the B-Factory High Energy Ring, an electron storage ring used for
high energy physics research. From February 1991 to January 1994, he served as a
Senior Staff Engineer and Program Manager in digital imaging at Siemens Medical
Systems -- Oncology Care Systems, a medical device company.

BOARD OF DIRECTORS MEETINGS AND COMMITTEES

     The Board of Directors of the Company held 10 meetings during the year
ended December 31, 2000. The Board of Directors has an Audit Committee and a
Human Resources Committee. It does not have a nominating committee or a
committee performing the functions of a nominating committee.

     The Audit Committee of the Board of Directors currently consists of Dr.
Naumann-Etienne, Dr. Pressley and Mr. Baumgardt. Each is an independent
director. The Audit Committee held six meetings during 2000. The Audit Committee
recommends engagement of the Company's independent auditors, and is primarily
responsible for approving the services performed by the Company's independent
accountants and for reviewing and evaluating the Company's accounting principles
and its system of internal accounting controls. The Audit Committee is governed
by a written charter approved by the Board of Directors. A copy of this charter
is included in Appendix A.

     The Human Resources Committee of the Board of Directors currently consists
of Drs. Naumann-Etienne and Pressley. The Human Resources Committee makes
recommendations to the Board of Directors regarding the Company's executive
compensation policy, and approves and makes recommendations to the Board of
Directors concerning the grant of stock options.

     No incumbent director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors that he was eligible to attend, except that Dr. Naumann-Etienne
attended six out of the ten and Dr. Perkins attended four out of the ten
meetings held by the Board of Directors during 2000.

COMPENSATION OF DIRECTORS

     Non-employee members of the Board of Directors receive a retainer of $2,000
per quarter and $500 per meeting of the Board of Directors attended. In
addition, non-employee members of the Board of Directors appointed prior to 1999
received options to purchase shares of the Company's Common Stock pursuant to
its 1995 Directors' Stock Option Plan (the "1995 Directors' Plan") and pursuant
to the 1999 Directors' Option Plan (the "1999 Directors' Plan"). Non-employee
members of the Board of Directors appointed in 1999 or later received options to
purchase shares of the Company's Common Stock pursuant to its 1999 Directors'
Plan.

     The 1995 Directors' Plan, which was approved by the Board of Directors in
November 1995 and by the Company's shareholders in August 1996, provided for the
grant of non-statutory stock options to non-employee directors of the Company at
an exercise price not less than the fair market value of the Company's Common
Stock on the date of grant. The 1995 Directors' Option Plan was replaced by the
1999 Directors' Plan when it was approved by the Company's shareholders in June
1999 . Under the 1995 Directors' Plan (until its termination with respect to
future grants in June 1999) persons who were non-employee directors as of
November 30, 1995, as well as persons who joined the Board of Directors since
that date through election by the shareholders of the Company or appointment by
the Board of Directors to fill a vacancy, have been granted an option to
purchase 45,000 shares of the Company's Common Stock. Options issued pursuant to
this plan vest and become exercisable over three years with respect to each
optionee who remains a director and expire five years after the date of grant.
Directors who are designated or nominated by shareholders who hold 10% or more
of the outstanding Company Common Stock were not eligible to receive options
under the 1995 Directors' Plan.

     The 1999 Directors' Option Plan which was approved by the Board of
Directors in February 1999 and by the Company's shareholders in June 1999,
provides for the grant of non-statutory stock options to non-employee directors
of the Company at an exercise price not less than the fair market value of the
Company's

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Common Stock on the date of grant. Under the 1999 Directors' Option Plan,
persons who were non-employee directors as of June 11, 1999 as well as persons
who joined the Board of Directors since that date through election by the
shareholders of the Company or appointment by the Board of Directors to fill a
vacancy, have been granted an option to purchase 60,000 shares of the Company's
Common Stock. Options issued pursuant to this plan vest and become exercisable
over three years with respect to each optionee who remains a director and expire
ten years after the date of grant. Directors who are designated or nominated by
shareholders who hold 10% or more of the outstanding Company Common Stock are
not eligible to receive options under the 1999 Directors' Option Plan.

     Directors who are employees of the Company do not receive any additional
compensation for their services as a Director of the Company.

RECOMMENDATION OF THE BOARD OF DIRECTORS

     THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR ALL OF THE NOMINEES LISTED
ABOVE.

                                 PROPOSAL NO. 2

                    AMENDMENT OF THE 1994 STOCK OPTION PLAN

     At the Annual Meeting, shareholders are being asked to approve an amendment
to the 1994 Stock Option Plan (the "1994 Option Plan") that would increase the
shares reserved for issuance thereunder by 200,000 shares.

GENERAL

     The Company's 1994 Option Plan provides for the grant of options to
employees and consultants of the Company. The 1994 Option Plan was adopted by
the Board of Directors in March 1994 and approved by the shareholders in June
1994. A total of 3,050,000 shares of Common Stock have been reserved for
issuance under the 1994 Option Plan. Subject to shareholder approval, this
amount would be increased to an aggregate of 3,250,000 shares. The aggregate
number of shares reserved for issuance under the 1994 Option Plan includes
options previously granted and exercised under the 1994 Option Plan. The
increase in shares reserved for issuance under the 1994 Option Plan has been
necessitated by the hiring of new employees and the grant of additional stock
options to current employees as previously granted options vest and become
exercisable. The increase will assist the Company in being able to continue its
policy of equity ownership by employees and consultants as an incentive to
contribute to the Company's success.

     Options granted under the 1994 Option Plan may be either "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or non-statutory stock options at the discretion of the
Board of Directors and as reflected in the terms of the written option
agreement. Only employees of the Company or its subsidiaries may be granted
"incentive stock options." The 1994 Option Plan is not a qualified deferred
compensation plan under Section 401(a) of the Code, and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).

     As of March 31, 2001, 746,214 shares had been issued upon exercise of
options granted under the 1994 Option Plan, options for 1,787,142 shares were
outstanding under the 1994 Option Plan and 516,644 shares remain available for
future grants. As of March 31, 2001 the fair market value of shares subject to
outstanding options was $1,846,756 based upon the closing price of the Common
Stock as reported on The Nasdaq National Market on such date.

     During the year ended December 31, 2000, (i) options to purchase 330,996
shares of Common Stock were granted under the 1994 Option Plan to the executive
officers as a group (5 persons as of December 31, 2000), and (ii) options to
purchase 261,070 shares of Common Stock were granted under the 1994 Option Plan
to all other employees.

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PURPOSE,

     The purposes of the 1994 Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.

ADMINISTRATION

     The 1994 Option Plan may be administered by the Board of Directors or by a
committee of the Board of Directors. The 1994 Option Plan is currently
administered by the Board of Directors and the Human Resources Committee of the
Board of Directors, except that with respect to executive officers (including
executive officers who are also directors), the 1994 Option Plan is administered
exclusively by the Human Resources Committee (comprised of Drs. Naumann-Etienne
and Pressley, the outside directors of the Company who are not eligible to
participate in the 1994 Option Plan). Members of the Board of Directors receive
no additional compensation for their services in connection with the
administration of the 1994 Option Plan. All questions of interpretation of the
1994 Option Plan are determined by the Board of Directors or its committee and
its decisions are final and binding upon all participants. All directors
currently hold office until the annual meeting of shareholders of the Company
following their election, or until their successors are duly elected and
qualified.

ELIGIBILITY

     The 1994 Option Plan provides that either incentive stock options or
non-statutory stock options may be granted to employees (including officers and
directors who are also employees) of the Company or any of its subsidiaries. In
addition, the 1994 Option Plan provides that non-statutory stock options may be
granted to consultants (not including directors who are not compensated for
their services or are paid only a director's fee by the Company) of the Company
or any of its subsidiaries. The Board of Directors or its committee selects the
optionees and determines the number of shares to be subject to each option. In
making such determination, there are taken into account the duties and
responsibilities of the optionee, the value of the optionee's services, the
optionee's present and potential contribution to the success of the Company and
other relevant factors.

     The 1994 Option Plan provides that the maximum number of shares of Common
Stock which may be granted under options to any one employee during any fiscal
year shall be 325,000, subject to adjustment as provided in the 1994 Option
Plan. This limitation is intended to preserve the Company's ability to deduct
for federal income tax purposes any compensation income relating to stock
options granted to certain executive officers under the 1994 Option Plan.
Without this limitation, federal tax legislation enacted in 1993 might not allow
the Company to deduct such compensation income.

     In addition to the foregoing limitation on discretion for certain grants,
there is also a limit on the aggregate market value of shares subject to all
incentive stock options that may be granted to an optionee during any calendar
year.

TERMS OF OPTIONS

     Each option is evidenced by a stock option agreement between the Company
and the optionee. Each option is subject to the following additional principal
terms and conditions:

          (a) Exercise of the Option. The Board of Directors or its committee
     determines when options may be exercised. In general, such options become
     exercisable ratably over four years with respect to employees and over two
     to four years with respect to consultants. An option is exercised by giving
     written notice of exercise to the Company specifying the number of full
     shares of Common Stock to be purchased and by tendering of payment of the
     purchase price. The purchase price of the shares purchased upon exercise of
     an option shall be paid in consideration of such form as is determined by
     the Board of Directors or its committee and specified in the option
     agreement, and such form of consideration may vary for each option.

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          (b) Exercise Price. The exercise price of each option granted under
     the 1994 Option Plan is determined by the Board of Directors or its
     committee and may not be less than 100% of the fair market value of the
     Common Stock on the date the option is granted; provided, however, that
     non-statutory stock options may be granted to persons other than the
     Company's Chief Executive Officer or its other four most highly compensated
     officers whose compensation is required to be reported to shareholders
     under the Securities Exchange Act of 1934, as amended, at exercise prices
     of not less than 50% of the fair market value on the date the option is
     granted. The fair market value per share is equal to the closing price on
     The Nasdaq National Market on the date of grant. In the case of an option
     granted to an optionee who owns more than 10% of the voting power of all
     classes of stock of the Company, its parent or subsidiaries, the exercise
     price must not be less than 110% of the fair market value on the date of
     the grant.

          (c) Termination of Employment. If an optionee's employment or
     consulting relationship terminates for any reason other than disability or
     death, options under the 1994 Option Plan may be exercised not later than
     30 days (or such other period of time not exceeding three months in the
     case of an incentive stock option as is determined by the Board of
     Directors or its committee, with such determination in the case of an
     incentive stock option being made at the time of grant) after such
     termination and may be exercised only to the extent the option was
     exercisable on the date of termination. In no event may an option be
     exercised by any person after the expiration of its term.

          (d) Disability. If an optionee is unable to continue his or her
     employment or consulting relationship with the Company as a result of his
     or her total and permanent disability, options may be exercised within six
     months (or such other period of time not exceeding twelve months as is
     determined by the Board of Directors or its committee with such
     determination in the case of an incentive stock option being made at the
     time of grant) of termination and may be exercised only to the extent the
     option was exercisable on the date of termination. In no event may an
     option be exercised by any person after the expiration of its term.

          (e) Death. Under the 1994 Option Plan, if an optionee should die while
     employed or retained by the Company, and such optionee has been
     continuously employed or retained by the Company since the date of grant of
     the option, the option may be exercised within six months after the date of
     death (or such other period of time, not exceeding 12 months, as is
     determined by the Board of Directors or its committee, with such
     determination in the case of an incentive stock option being made at the
     time of grant) by the optionee's estate or by a person who acquired the
     right to exercise the option by bequest or inheritance to the extent the
     optionee would have been entitled to exercise the option had the optionee
     continued living and remained employed or retained by the Company for six
     months (or such other period of time as is determined by the Board of
     Directors or its committee, with such determination in the case of an
     incentive stock option being made at the time of grant) after the date of
     death. If an optionee should die within three months (or such other period
     of time not exceeding three months as is determined by the Board of
     Directors or its committee, with such determination in the case of an
     incentive stock option being made at the time of grant) after the optionee
     has ceased to be continuously employed or retained by the Company, the
     option may be exercised within six months after the date of death by the
     optionee's estate or by a person who acquired the right to exercise the
     option by bequest or inheritance to the extent that the optionee was
     entitled to exercise the option at the date of termination. In no event may
     an option be exercised by any person after the expiration of its term.

          (f) Term of Options. The 1994 Option Plan provides that options
     granted under the 1994 Option Plan have the term provided in the option
     agreement. In general, these agreements provide for a term of five years.
     Incentive stock options granted to an optionee who, immediately before the
     grant of such option, owns more than 10% of the total combined voting power
     of all classes of stock of the Company, its parents or subsidiaries, may
     not in any case have a term of more than five years. No option may be
     exercised by any person after its expiration.

          (g) Option Not Transferable. An option is not transferable by the
     optionee other than by will or the laws of descent and distribution, and is
     exercisable only by the optionee during his or her lifetime and,

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     in the event of the optionee's death, by a person who acquires the right to
     exercise the option by bequest or inheritance or by reason of the
     optionee's death.

          (h) Acceleration of Options. In the event of a merger or consolidation
     in which the Company is not the surviving entity, or a proposed sale of all
     or substantially all of the assets of the Company, the Board of Directors
     is obligated to accomplish either a substitution or assumption of options
     or give 30 days' notice of the acceleration of the optionee's right to
     exercise his or her outstanding options as to some or all of the optioned
     stock at any time within 30 days of such notice. The exercisability of
     options held by the Company's executive officers may also be accelerated
     upon the occurrence of such events. See "Transactions with Management and
     Others."

          (i) Other Provisions. The option agreement may contain such other
     terms, provisions and conditions not inconsistent with the 1994 Option Plan
     as may be determined by the Board of Directors or its committee.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     In the event any change, such as a stock split or dividend, is made in the
Company's capitalization that results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, appropriate adjustment shall be made in the exercise price of each
outstanding option, the number of shares subject to each option, the annual
limitation on grants to employees, as well as the number of shares available for
issuance under the 1994 Option Plan. In the event of the proposed dissolution or
liquidation of the Company, each option will terminate unless otherwise provided
by the Board of Directors or its committee.

AMENDMENT AND TERMINATION

     The Board of Directors may amend the 1994 Option Plan at any time or from
time to time or may terminate it without approval of the shareholders; provided,
however, that shareholder approval is required for any amendment to the 1994
Option Plan that increases the number of shares that may be issued under the
1994 Option Plan, modifies the standards of eligibility, modifies the limitation
on grants to employees described in the 1994 Option Plan or results in other
changes which would require shareholder approval to qualify options granted
under the 1994 Option Plan as incentive stock options under Section 422 of the
Code, as performance-based compensation under Section 162(m) of the Code or, so
long as the Company has a class of equity securities registered under Section 12
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
materially increases the benefits to participants that may accrue under the 1994
Option Plan. However, no action by the Board of Directors or shareholders may
alter or impair any option previously granted under the 1994 Option Plan. The
1994 Option Plan shall terminate in April 2004, provided that any options then
outstanding under the 1994 Option Plan shall remain outstanding until they
expire by their terms.

FEDERAL INCOME TAX ASPECTS OF THE 1994 OPTION PLAN

     The following is a brief summary of the United States federal income tax
consequences of transactions under the 1994 Option Plan based on federal
securities and income tax laws in effect as of this date. This summary is not
intended to be exhaustive and does not discuss the tax consequences of a
participant's death or provisions of the income tax laws of any municipality,
state or other country in which an optionee may reside. This summary does not
purport to be complete. The Company advises all optionees to consult their own
tax advisors concerning tax implications of option grants and exercises, and the
disposition of shares acquired upon such exercise, under the 1994 Option Plan.

     Options granted under the 1994 Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or non-statutory stock options.

     If an option granted under the 1994 Option Plan is an incentive stock
option, under U.S. tax laws the optionee will recognize no income upon grant of
the incentive stock option and incur no tax liability upon its exercise,
although the exercise may give rise to alternative minimum tax. The Company will
not be allowed a

                                        8
   11

deduction for federal income tax purposes as a result of the exercise of an
incentive stock option regardless of the applicability of the alternative
minimum tax. Upon the sale or exchange of the shares at least two years after
grant of the option and one year after transfer of the shares to the optionee,
any gain will be treated as long-term capital gain under U.S. tax laws. If these
holding periods are not satisfied, the optionee will recognize ordinary income
equal to the difference between the exercise price and the lower of the fair
market value of the stock at the date of the option exercise or the sale price
of the stock. The Company will be entitled to a deduction in the same amount as
the ordinary income recognized by the optionee. Any gain recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized under U.S. tax laws as long-term capital gain if
the sale occurs more than one year after exercise of the option or as short-term
capital gain if the sale is made earlier. The tax rate on net capital gain (net
long-term capital gain minus short term capital loss) under current U.S. tax
laws is capped at 20% for shares held more than one year after the date of
exercise. Capital losses are allowed under U.S. tax laws in full against capital
gains plus $3,000 of other income.

     All other options which do not qualify as incentive stock options are
referred to as non-statutory stock options. An optionee will not recognize any
taxable income under U.S. tax laws at the time he or she is granted a
non-statutory stock option. However, upon its exercise, under U.S. tax laws the
optionee will recognize ordinary income for tax purposes measured by the excess
of the then fair market value of the shares over the exercise price. The income
recognized by an optionee who is also an employee of the Company will be subject
to tax withholding by the Company by payment in cash or out of the current
earnings paid to the optionee. The Company will be entitled to a deduction in
the same amount as the ordinary income recognized by tax optionee. Upon resale
of such shares by the optionee, any difference between the sales price and the
exercise price, to the extent not recognized as ordinary income as provided
above, will be treated under U.S. tax laws as capital gain or loss, and will
qualify for long-term capital gain or loss treatment if the shares have been
held for more than one year.

REQUIRED VOTE

     The affirmative vote of a majority of shares of Common Stock present in
person or by proxy at the Annual Meeting and entitled to vote is required to
approve the proposed amendment to the 1994 Option Plan.

RECOMMENDATION OF THE BOARD OF DIRECTORS

     THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE AMENDMENT OF THE 1994
STOCK OPTION PLAN.

                                 PROPOSAL NO. 3

               AMENDMENT OF THE 1999 EMPLOYEE STOCK PURCHASE PLAN

     At the Annual Meeting, shareholders are being asked to approve an amendment
to the 1999 Employee Stock Purchase Plan (the "1999 Purchase Plan") that would
increase the shares reserved for issuance thereunder by 150,000 shares of Common
Stock.

GENERAL

     The 1999 Purchase Plan was adopted by the Board of Directors in April 1999
and approved by the shareholders in June 1999. A total of 350,000 shares of
Common Stock have been previously reserved for issuance under the 1999 Purchase
Plan. As of March 31, 2001, 203,793 shares had been issued under the 1999
Purchase Plan and 146,207 shares remain available for future grants.

     The 1999 Purchase Plan is implemented by one twelve-month offering period
each year commencing on July 1 of each year, or at such other time or times as
may be determined by the Board of Directors. Each offering period consists of
two six-month purchase periods. The 1999 Purchase Plan is intended to qualify
under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
The 1999 Purchase Plan is further deemed to contain, and options granted
thereunder shall contain, and the shares issued upon exercise
                                        9
   12

thereof shall be subject to, any additional conditions and restrictions as may
be required by Rule 16b-3 of the Exchange Act to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to 1999 Purchase Plan
transactions.

PURPOSE

     The purpose of the 1999 Purchase Plan is to provide employees (including
officers and employee directors) of the Company with an opportunity to purchase
Common Stock of the Company through payroll deductions.

ADMINISTRATION

     The 1999 Purchase Plan is administered by the Board of Directors of the
Company or a committee appointed by the Board (the "Administrator"). All
questions of interpretation or application of the 1999 Purchase Plan are
determined by the Administrator.

ELIGIBILITY AND PARTICIPATION

     Employees (including officers and employee directors) who are employed for
at least 20 hours per week and more than five months in any calendar year and
who are employed by the Company as of the applicable Offering Date of each
offering period of the plan (the "Offering Date") are eligible to participate in
an offering under the 1999 Purchase Plan, subject to certain limitations imposed
by Section 423(b) of the Internal Revenue Code of 1986, as amended (the "Code")
and limitations on stock ownership as set forth in the 1999 Purchase Plan. No
employee shall be granted an option under the 1999 Purchase Plan if (i)
immediately after the grant such employee would own stock and/or hold
outstanding options to purchase stock possessing five percent (5%) or more of
the total voting power or value of all classes of stock of the Company or its
subsidiaries, or (ii) such option would permit such employee to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries to
accrue at a rate which exceeds $25,000 of fair market value of such stock for
each calendar year in which such option is outstanding at any time.

     Eligible employees become participants in the 1999 Purchase Plan by filing
with the Human Resources Department of the Company a subscription agreement
authorizing payroll deductions prior to the applicable Offering Date, unless a
later time for filing the subscription agreement has been set by the
Administrator. Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the last
day (the "Purchase Date") of each purchase period in an offering period to which
the subscription agreement is applicable, unless sooner terminated by the
participant.

GRANT AND EXERCISE OF OPTION

     At the beginning of an offering period, each participant is granted an
option to purchase up to that number of shares determined by dividing such
employee's payroll deductions accumulated prior to the end of a purchase period
and retained in the participant's account as of the end of the purchase period
by the lower of (i) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the applicable offering date or (ii)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the last day of the applicable purchase period; provided that in
no event shall a participant be permitted to purchase during each offering
period more than a number of shares determined by dividing $25,000 by the fair
market value of a share of the Company's Common Stock at the beginning of the
offering period, and provided further that such purchases shall be subject to
the limitations set forth below. The Company may make a pro rata reduction in
the number of shares subject to options if the total number of shares which
would otherwise be subject to options granted at the beginning of an offering
period exceeds the number of remaining available shares in the 1999 Purchase
Plan. Unless an employee withdraws his or her participation in the 1999 Purchase
Plan by giving written notice to the Company of his or her election to withdraw
all accumulated payroll deductions prior to the end of an offering period, the
employee's option for the purchase of shares will be exercised automatically at
the end of each purchase period, and the maximum

                                        10
   13

number of full shares subject to option which are purchasable with the
accumulated payroll deductions in his or her account will be purchased at the
applicable purchase price determined as provided below.

     During his or her lifetime, a participant's option to purchase shares under
the 1999 Purchase Plan is exercisable only by him or her. However, a participant
may file a written designation of a beneficiary who is (i) to receive any shares
and cash, if any, from the participant's account under the 1999 Purchase Plan in
the event of such participant's death subsequent to the end of an Offering
Period but prior to delivery to him or her of such shares and cash, and (ii) to
receive any cash from the participant's account under the 1999 Purchase Plan in
the event of such participant's death prior to a Purchase Date of the Offering
Period. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.

PURCHASE PRICE

     The purchase price per share at which shares are sold to participating
employees under the 1999 Purchase Plan is the lower of (i) 85% of the fair
market value per share of the Common Stock at the time the option is granted on
the applicable Offering Date, and (ii) 85% of the fair market value per share of
the Common Stock at the time the option is exercised on the applicable Purchase
Date. The fair market value of the Common Stock on a given date shall be
determined by the Board of Directors and will generally be based upon the last
reported sales price of the Common Stock on The Nasdaq National Market.

PAYROLL DEDUCTIONS

     The purchase price of the shares to be acquired under the 1999 Purchase
Plan is accumulated by payroll deductions during the offering period. The
deductions may not be less than 1% or more than 10% of a participant's aggregate
compensation during the offering period. A participant may discontinue his or
her participation in the 1999 Purchase Plan or, on one occasion only during a
purchase period, may increase or decrease his or her rate of payroll deductions.
Payroll deductions for a participant shall commence on the first payroll
following the applicable Offering Date and shall continue until his or her
participation is terminated as provided in the 1999 Purchase Plan.

TERMINATION OF EMPLOYMENT

     Termination of a participant's employment for any reason, including
retirement or death, or the failure of the participant to remain in the
continuous employ of the Company for at least 20 hours per week during the
applicable offering period, cancels his or her option and his or her
participation in the 1999 Purchase Plan immediately. In such event, the payroll
deductions credited to the participant's account will be returned to him or her
or, in the case of death, to the person or persons entitled thereto as provided
in the 1999 Purchase Plan.

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

     In the event any change is made in the Company's capitalization in the
middle of an offering period, such as a stock split, stock dividend, combination
or reclassification, that results in an increase or decrease in the number of
shares of Common Stock outstanding without receipt of consideration by the
Company, appropriate adjustment shall be made in the purchase price and in the
number of shares subject to options under the 1999 Purchase Plan, as well as the
number of shares available for issuance under the 1999 Purchase Plan.

     In the event of a proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Administrator. In the event of
a proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each option under the
1999 Purchase Plan shall be assumed be assumed or an equivalent substitute
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. In the event that the successor
corporation refuses to assume or substitute for outstanding options, each
Offering Period then in progress shall be shortened and a new
                                        11
   14

Purchase Date shall be set as of which date such Offering Period shall
terminate. The Administrator shall notify the optionees of the change in their
Purchase Date.

AMENDMENT AND TERMINATION OF THE PLAN

     The Board of Directors may at any time amend or terminate the 1999 Purchase
Plan without the approval of the shareholders, except that such termination
cannot affect options previously granted nor may an amendment make any change in
an option granted prior thereto which adversely affects the rights of any
participant unless prevailing accounting rules change in such a way that would
have an adverse effect on the Company if it did not terminate the 1999 Purchase
Plan or such Offering Period. No amendment may be made to the 1999 Purchase Plan
without approval of the shareholders of the Company to the extent required by
applicable law.

     The 1999 Purchase Plan shall expire in 2009 unless sooner terminated by the
Administrator.

TAX INFORMATION

     The 1999 Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to a participant
until the shares purchased under the Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be
subject to tax and the amount of the tax will depend upon how long the shares
have been held by the participant. If the shares are sold or otherwise disposed
of more than two years from the first day of the applicable Offering Date or
more than one year after the Purchase Date, the participant will recognize
ordinary income measured as the lesser of (a) the excess of the fair market
value of the shares at the time of such sale or disposition over the purchase
price, or (b) an amount equal to 15% of the fair market value of the shares as
of the first day of the offering period. Any additional gain will be treated as
long-term capital gain, taxed at a rate of 20% if the shares are held for more
than one year after the applicable Purchase Date. If the shares are sold or
otherwise disposed of before the expiration of these holding periods, the
participant will recognize ordinary income generally measured as the excess of
the fair market value of the shares on the date the shares are purchased over
the purchase price. Any additional gain or loss on such sale or disposition will
be long-term or short-term capital gain or loss, depending on the holding
period. The Company is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent of ordinary income
recognized by participants upon a sale or disposition of shares prior to the
expiration of the holding period(s) described above.

     The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased under
the 1999 Purchase Plan. Reference should be made to the applicable provisions of
the Code. In addition, the summary does not discuss the tax consequences of a
participant's death or the income tax laws of any state or foreign country in
which the participant may reside.

REQUIRED VOTE

     The affirmative vote of a majority of shares of Common Stock present in
person or by proxy at the Annual Meeting and entitled to vote is required to
approve the proposed amendment to the Employee Stock Purchase Plan.

RECOMMENDATION OF THE BOARD OF DIRECTORS

     THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 1999
EMPLOYEE STOCK PURCHASE PLAN.

                                        12
   15

                                 PROPOSAL NO. 4

                 AMENDMENT OF 1999 DIRECTORS' STOCK OPTION PLAN

     At the Annual Meeting, shareholders are being asked to approve an amendment
to the 1999 Directors' Stock Option Plan (the "1999 Directors' Plan") that would
increase the shares reserved for issuance thereunder by 120,000 shares.

GENERAL AND PURPOSE

     The 1999 Directors' Plan was adopted by the Board of Directors in February
1999 and approved by the shareholders in June 1999. A total of 420,000 shares of
Common Stock have been previously reserved for issuance under the 1999
Directors' Plan. Subject to shareholder approval, this amount would be increased
to an aggregate of 540,000 shares. As of March 31, 2001, options to purchase
300,000 shares of the Company's Common Stock had been granted under the 1999
Directors' Plan and 120,000 shares remain available for future grants.

     The 1999 Directors' Plan provides for the grant of non-statutory stock
options to non-employee directors of the Company. It is designed to work
automatically and not to require administration; however, to the extent
administration is necessary, it will be provided by the Board of Directors.

     The purpose of the 1999 Directors' Plan is to provide an incentive for
directors to continue to serve the Company as directors and to assist the
Company in recruiting highly qualified individuals when vacancies occur on the
Board of Directors.

GRANT AND EXERCISE OF OPTION

     The 1999 Directors' Plan provides that each person who becomes a
non-employee director after June 11, 1999 (the "effective date") shall be
automatically granted a "New Director Option" to purchase 60,000 shares of
Common Stock on the date on which such person first becomes a non-employee
director, whether through election by the shareholders of the Company or
appointment by the Board of Directors to fill a vacancy. In addition, each
non-employee director who was a non-employee director on the effective date of
the 1999 Directors Plan was automatically granted a "Continuing Director Option"
to purchase 60,000 shares of Common Stock on the effective date.

     The 1999 Directors' Plan provides for neither a maximum nor a minimum
number of shares subject to options that may be granted to any one non-employee
director, but does provide for the number of shares that may be included in any
grant and the method of making a grant. No option granted under the 1999
Directors' Plan is transferable by the optionee other than by will or the laws
of descent or distribution or pursuant to the terms of a qualified domestic
relations order (as defined by the Internal Revenue Code of 1986 (the "Code")),
and each option is exercisable, during the lifetime of the optionee, only by
such optionee.

     The 1999 Directors' Plan provides that each New Director Option and
Continuing Director Option granted thereunder becomes exercisable in
installments cumulatively as to 20,000 of the Shares subject to the New Director
Option or Continuing Director Option, as applicable, on January 1 of each of the
three years following the date of grant of such option, provided that if as of
the first January 1 following the date of grant of a New Director Option, the
optionee has not served as a director for at least six months, the New Director
Option shall not become exercisable until the next following January 1. The
options remain exercisable for up to ninety days following the optionee's
termination of service as a director of the Company, unless such termination is
a result of death or disability, in which case the options remain exercisable
for up to a twelve-month period (or such lesser period as is determined by the
Board).

EXERCISE PRICE AND TERM OF OPTIONS

     The exercise price of all stock options granted under the 1999 Directors'
Plan shall be equal to the fair market value of a share of the Company's Common
Stock on the date of grant of the option, which is defined

                                        13
   16

to be the closing sale price of the Company's Common Stock on The Nasdaq
National Market on the grant date. Options granted under the 1999 Directors'
Plan have a term of ten years.

MERGER OR SALE OF ASSETS

     In the event of the dissolution or liquidation of the Company, a sale of
all or substantially all of the assets of the Company, or the merger or
consolidation or other capital reorganization of the Company with or into
another corporation in which the Company is not the surviving corporation or any
other capital reorganization in which more than 50% of the shares of the Company
entitled to vote are exchanged, each outstanding option under the 1999
Directors' Plan shall be assumed or an equivalent option shall be substituted by
the successor corporation, unless the successor corporation does not agree to
assume the outstanding options or to substitute equivalent options, in which
case, the options shall terminate upon consummation of the transaction;
provided, however, that in the event of a change of control, each option granted
under the 1999 Directors' Plan shall become fully vested with respect to all
unvested shares immediately prior to the consummation of such change of control
transaction.

AMENDMENT AND TERMINATION

     The Board of Directors may at any time amend or terminate the 1999
Directors' Plan, except that such termination cannot affect options previously
granted without the agreement of any optionee so affected. No amendment may be
made to the 1999 Directors' Plan without approval of the shareholders of the
Company to the extent required by applicable law.

     If not terminated earlier, the 1999 Directors' Plan will expire in 2009.

U.S. FEDERAL INCOME TAX INFORMATION

     The following is a brief summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the 1999 Directors' Plan, does not purport to be complete, and
does not discuss the income tax laws of any municipality, state or foreign
country in which an optionee may reside. The Company advises all eligible
directors to consult their own tax advisors concerning tax implications of
option grants and exercises and the disposition of stock acquired upon such
exercises under the 1999 Directors' Plan.

     Options granted under the 1999 Directors' Plan are non-statutory stock
options. An optionee will not recognize any taxable income at the time he or she
is granted a non-statutory stock option. However upon its exercise, the optionee
will recognize ordinary income for tax purposes measured by the excess of the
then fair market value of the shares over the option price. Because the optionee
is a director of the Company, the date of taxation (and the date of measurement
of taxable ordinary income) may be deferred unless the optionee files an
election with the Internal Revenue Service under Section 83(b) of the Code. Upon
resale of such shares by the optionee, any difference between the sale price and
the exercise price, to the extent not recognized as ordinary income as provided
above will be treated as capital gain (or loss), and will be long-term capital
gain if the optionee has held the shares more than one year. For individual
taxpayers, the maximum U.S. federal income tax rate on long-term capital gains
under current tax rules is 20%, whereas the maximum rate on other income is
39.6%. Capital losses for individual taxpayers are allowed under U.S. tax laws
in full against capital gains plus $3,000 of other income. The Company will be
entitled to a tax deduction in the amount and at the time that the optionee
recognizes ordinary income with respect to shares acquired upon exercise of a
non-statutory stock option.

REQUIRED VOTE

     The affirmative vote of a majority of shares of Common Stock present in
person or by proxy at the Annual Meeting and entitled to vote is required to
approve the proposed amendment to the 1999 Directors' Plan.

                                        14
   17

RECOMMENDATION OF THE BOARD OF DIRECTORS

     THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 1999
DIRECTORS' STOCK OPTION PLAN.

                                 PROPOSAL NO. 5

              RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

     The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 2001, and recommends that the shareholders vote for
ratification of such appointment. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection. Ernst &
Young LLP has audited the financial statements of the Company since the
Company's inception. Representatives of Ernst & Young LLP are expected to be
present at the meeting and will have the opportunity to make a statement if they
desire to do so. They are also expected to be available to respond to
appropriate questions.

RECOMMENDATION OF THE BOARD OF DIRECTORS

     THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.

       COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 2001 as to (i) each person who is known by the
Company to own beneficially more than five percent of the Company's Common
Stock, (ii) each of the Company's directors, (iii) each of the executive
officers named in the Summary Compensation Table, and (iv) all directors and
executive officers as a group.



                                                      SHARES BENEFICIALLY OWNED(1)
                                                      ----------------------------
                                                      NUMBER(2)   PERCENT OF TOTAL
                                                      ---------   ----------------
                                                            
James R. Baumgardt..................................         --           *
Kevin Candio........................................    235,084         1.5%
Van A. Frazier......................................     66,908           *
Dennis LaLumandiere.................................    140,087           *
Robert L. Mathews...................................    152,282           *
Ruediger Naumann-Etienne, Ph.D. ....................    120,000           *
Rodney Perkins, M.D. ...............................    211,467         1.3%
Robert J. Pressley, Ph.D. ..........................    106,016           *
Eric M. Reuter......................................    267,197         1.7%
All directors and executive officers as a group
  (9 persons).......................................  1,297,041         7.7%


- ---------------
 *  Less than 1%.

(1) The persons named in this table have sole voting and investment power with
    respect to all shares of Common Stock shown as beneficially owned by them,
    subject to community property laws where applicable and the information
    contained in the other footnotes to this table. Unless otherwise indicated,
    the address of each individual named above is: c/o Laserscope, 3070 Orchard
    Drive, San Jose, California 95134-2011.

(2) Includes with respect to each named person and with respect to all directors
    and executive officers as a group the following shares subject to options
    exercisable within 60 days of March 31, 2001: Mr. Candio -- 172,936; Mr.
    Frazier -- 58,151; Mr. LaLumandiere -- 132,444; Mr. Mathews -- 89,282; Dr.
    Naumann-Etienne -- 20,000; Dr. Perkins -- 145,000; Dr. Pressley -- 85,000;
    Mr. Reuter -- 254,497.

                                        15
   18

     Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph shall not be incorporated by reference into any such
filings.

                    REPORT OF THE HUMAN RESOURCES COMMITTEE

EXECUTIVE COMPENSATION PHILOSOPHY

     The Company's executive officers are responsible for the achievement of the
Company's broad business goals and, accordingly, their compensation continues to
be determined by reference both to corporate performance and to their individual
performance. Of these two elements, the Human Resources Committee believes
corporate performance should have the most significant impact on executives'
compensation through cash bonuses and the value of stock options.

     The Company's executive compensation programs are based upon:

          1. Pay for Performance -- Rewarding individual executives for their
     individual performance as well as for the overall performance of the
     Company.

          2. Competitive Environment -- Attracting and retaining talented
     individuals requires the Company to maintain compensation levels and
     programs that are competitive in the relevant employment market.

          3. Shareholder Return -- Ultimately, management's responsibility is to
     generate a return for the Company's shareholders by growing both the size
     and the profitability of the Company. Executive compensation programs must
     align management's interests with those of the Company's shareholders.

COMPENSATION OF EXECUTIVE OFFICERS

     Laserscope's executive compensation consists of three parts: (i) salary,
(ii) annual cash bonuses and (iii) stock options. The Committee believes that
these three elements satisfy the compensation objectives stated above.

     Salaries are generally reviewed at the end of each year and adjusted after
taking into account factors such as individual performance, surveys of
remuneration in comparable positions in the relevant geographic area, level of
responsibility and relative salary levels within the Company.

     Cash bonus targets are established at the beginning of each year and are
based on corporate financial performance for the year and individual goals for
each executive.

     Stock options are a key element in aligning the interests of management and
shareholders, since they jointly share in stock value increases over time.
Multi-year vesting schedules are used to encourage a long-term commitment to the
Company by its executive officers. The level of stock options held by each
executive officer is reviewed at the end of each year and additional awards are
considered to optimize the level of incentives and rewards.

     Specific recommendations with respect to each of these three compensation
elements for the executive officers (except the President and Chief Executive
Officer) are made by the President and Chief Executive Officer, with the final
decisions being made by the Human Resources Committee and reviewed by the Board
of Directors (except that the Human Resources Committee has exclusive and final
authority with respect to the grant of stock options to executive officers of
the Company). In the case of the Chief Executive Officer, the Human Resources
Committee determines any actions to be taken and such actions are reviewed by
the Board of Directors, except that the Human Resources Committee has exclusive
and final authority with respect to the grant of stock options to Mr. Reuter.

                                        16
   19

COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

     Eric M. Reuter has served as the Company's President and Chief Executive
Officer since June, 1999. He was Vice President of Research and Development from
September 1996 to June 1999. Mr. Reuter's annual salary has been $225,000 since
June 11, 1999 and has not been increased since such date. The Compensation
Committee has continued the structure of Mr. Reuter's compensation to maintain a
long-term focus on the growth of Laserscope's business and stock price.
Consequently, the most significant element of Mr. Reuter's potential
compensation (stock options) is premised on substantial improvements in the
Company's operating performance. Mr. Reuter received no cash bonus in 2000. In
February 2000, Mr. Reuter was granted an option to purchase 100,000 shares of
Common Stock (vesting over four years) at an exercise price of $3.00. In October
2000, Mr. Reuter was granted an additional option to purchase 40,000 shares of
Common Stock (vesting over four years) at an exercise price of $1.75. Since
joining the Company through December 31, 2000, Mr. Reuter has been granted stock
options to purchase a total of 490,000 shares of Common Stock at exercise prices
of $1.28 to $4.63 with vesting periods of four years.

                                          HUMAN RESOURCES COMMITTEE
                                          Ruediger Naumann-Etienne, Ph.D.
                                          (Chairman)
                                          Robert J. Pressley, Ph.D.

                                        17
   20

         HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     There are currently no employee directors serving on the Human Resources
Committee of the Board of Directors. The following non-employee directors serve
on the Company's Human Resources Committee: Ruediger Naumann-Etienne, Ph.D. and
Robert J. Pressley, Ph.D.

     Dr. Pressley serves on no Board of Directors other than the Laserscope
Board of Directors. Dr. Naumann-Etienne currently serves as Chairman of the
Board of Directors of Quinton Instrument, Inc., a cardiac equipment company.

     Dr. Pressley purchased an aggregate of 16,667 shares of the Company's
Common Stock in September 1989 under the Company's 1984 Stock Purchase Plan at
an aggregate price of $74,997. Dr. Pressley purchased such shares through
promissory notes in favor of the Company bearing interest at the annual rate 9%
and secured by the shares purchased. During 1995, the principal and accrued
interest on these notes were refinanced and the notes now carry annual interest
rates of 5.79% and were due in November 1998. At December 31, 2000, Dr. Pressley
owed an aggregate of $9,206 under such notes. The largest amount of indebtedness
owed by him to the Company at any time during 2000 was $67,984.

     See "Proposal No. 1 -- Election of Directors -- Compensation of Directors"
for a discussion of certain information with respect to directors serving on the
Human Resources Committee.

                                        18
   21

                         REPORT OF THE AUDIT COMMITTEE

     The Audit Committee is composed of three independent directors and operates
under a written charter adopted by the Board of Directors (attached as Appendix
A). Each member of the Audit Committee is "independent" as defined in the
National Association of Securities Dealers rules. The Audit Committee oversees
the Company's financial reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial statements and the
reporting process including the systems of internal controls. In fulfilling its
oversight responsibilities, the Committee reviewed the audited financial
statements in the Annual Report with management including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgment, and the clarity of disclosures in the
financial statements.

     The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors' independence from management and the
Company including the matters in the written disclosures required by the
Independence Standards Board Standard No. 1, Independence Discussion with Audit
Committees, and considered the compatibility of non-audit services with the
auditors' independence.

     The Committee discussed with the Company's independent auditors the overall
scope and plans for their audit and the other matters required to be discussed
by Statement on Auditing Standards 61, Communication with Audit Committees. The
Committee meets with the independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Company's internal controls, and the overall quality of the Company's financial
reporting. The Committee held six meetings during 2000.

     In reliance on the review and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended December 31, 2000 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.

                                          AUDIT COMMITTEE
                                          Robert J. Pressley, Ph.D. (Chairman)
                                          Ruediger Naumann-Etienne, Ph.D.
                                          James R. Baumgardt

                                        19
   22

                                    AUDITORS

     Ernst & Young LLP, our auditors for the year ended December 31, 2000, also
will be our auditors for 2001 (pending ratification by our shareholders; see
"Proposal No. 5 -- Ratification of Appointment of Independent Auditors"). An
Ernst & Young LLP representative will attend the annual meeting, will have the
opportunity to make a statement if he or she desires, and will be available to
respond to appropriate questions.

AUDIT FEES

     The aggregate fees billed for professional services rendered by Ernst &
Young LLP for the audit of our annual financial statements for the fiscal year
ended December 31, 2000 and the reviews of the financial statements included in
our Forms 10-Q for that fiscal year were approximately $278,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

     Ernst & Young LLP provided no information technology services during the
fiscal year ended December 31, 2000.

ALL OTHER FEES

     The aggregate fees billed for services rendered by Ernst & Young LLP, other
than the services covered in "Audit Fees" and "Financial Information Systems
Design and Implementation Fees" above, for the fiscal year ended December 31,
2000 were approximately $70,000.

     The Audit Committee of the Board of Directors has considered whether the
provision of the non-audit services is compatible with maintaining the principal
accountant's independence.

                                        20
   23

                               PERFORMANCE GRAPH

     The following graph summarizes cumulative total shareholder return data
(assuming reinvestment of dividends) for the period since December 29, 1995. The
graph assumes that $100 was invested on December 29, 1995 (i) in the Common
Stock of Laserscope, (ii) in the CRSP Total Return Index for The Nasdaq National
Market (U.S. companies), and (iii) in the MG Medical Appliances/Equipment Index
(provided by Media General Financial Services, Inc.). The stock price
performance on the following graph is not necessarily indicative of future stock
price performance.

                           COMPARISON OF TOTAL RETURN

                              [PERFORMANCE GRAPH]



- --------------------------------------------------------------------------------------
                       12/29/95   12/31/96   12/31/97   12/31/98   12/31/99   12/29/00
- --------------------------------------------------------------------------------------
                                                            
 CRSP Nasdaq Index
  (U.S.)                 100        123        151        213        395        238
 Laserscope (LSCP)       100        323        232         90         50         56
 MG Medical
Appliances/Equipment
  Index                  100        105        129        162        163        235
- --------------------------------------------------------------------------------------


                                        21
   24

                       COMPENSATION OF EXECUTIVE OFFICERS
                           SUMMARY COMPENSATION TABLE

     The following table shows the compensation received by the Company's Chief
Executive Officer, the four other most highly compensated executive officers of
the Company for 2000 who were serving as executive officers at December 31,
2000, and the compensation received by each such individual for the Company's
two prior years.



                                                                          LONG-TERM
                                                                         COMPENSATION
                                                                            AWARDS
                                                                         ------------
                                                ANNUAL COMPENSATION      OPTION/SARS
                                              ------------------------     (SHARES)        ALL OTHER
     NAME AND PRINCIPAL POSITION       YEAR   SALARY(1)    BONUS(2)(3)      (4)(5)      COMPENSATION(6)
     ---------------------------       ----   ---------    -----------   ------------   ---------------
                                                                         
Eric M. Reuter.......................  2000   $225,000         --          140,000          $12,879
  President and Chief Executive
  Officer                              1999   $202,942(7)      --          200,000          $13,692
                                       1998   $161,462(8)      --           50,000          $13,344
Robert L. Mathews....................  2000   $171,185         --           30,000          $12,069
  Executive Vice President             1999   $ 68,000         --          125,000          $ 4,718
                                       1998         --         --               --               --
Kevin Candio.........................  2000   $193,116         --           95,000          $12,609
  Senior Vice President, Global Sales  1999   $170,466         --           50,000          $12,460
                                       1998   $165,000         --           35,000          $12,726
Van A. Frazier.......................  2000   $145,500         --           34,348          $10,991
  Vice President, Quality &            1999   $128,423(9)      --           80,000          $ 8,405
  Regulatory Affairs                   1998         --         --               --               --
Dennis LaLumandiere..................  2000   $165,000         --           31,648          $11,458
  Vice President, Finance,             1999   $162,823         --           50,000          $13,182
  Chief Financial Officer and          1998   $149,615         --           35,000          $15,844
  Assistant Secretary


- ---------------
(1) Includes amounts deferred under the Company's 401(k) plan.

(2) Includes bonuses earned in the indicated fiscal year and paid in the
    subsequent fiscal year. Excludes bonuses paid in the indicated fiscal year
    but earned in the preceding fiscal year.

(3) Executive officers are entitled to discretionary bonuses based on individual
    and corporate performance. These bonuses are determined by the Board of
    Directors based on the recommendation of the Human Resources Committee.

(4) The options listed with respect to 1998 long-term compensation awards
    exclude options granted upon the repricing of previously granted options.
    Options to purchase the following number of shares granted to the following
    persons in were repriced on December 11, 1998: Mr. Reuter -- 99,500; Mr.
    Candio -- 70,520; Mr. LaLumandiere -- 72,812. The repriced options retain
    the same term and vesting schedule as those options that were replaced.

(5) Options granted in 1998, 1999 and 2000 to new employees and officers of the
    Company have 5-year terms and generally become exercisable cumulatively at
    the rate of 12.5% of the total six months after the vesting commencement
    date (first date of employment for new employees and date of grant for
    officers), and 1/48 of the shares subject to the option in equal monthly
    installments thereafter. All options granted in 1998, 1999 and 2000 to
    existing employees also have 5-year terms but generally become exercisable
    cumulatively at the rate of 1/48 of the shares subject to the option in
    equal monthly installments following their respective grant date. Certain
    options granted to officers and employees during 1999 have modified vesting
    schedules under which the options vest cumulatively after certain
    performance and/or continuous status periods as employees have been
    achieved, but, in no case do options granted to officers of the Company vest
    prior to six months from the date of grant. All unvested options are subject
    to earlier termination in the event of the termination of the participant's
    relationship with the Company. All options were granted at market value on
    the date of grant. In the event that certain change in control events were
    to occur, the options would be assumed or equivalent options substituted by
    a successor corporation, unless the Board of Directors determined that the
    options should become immediately

                                        22
   25

    exercisable. The exercise price may be paid, subject to certain conditions,
    by delivery of already owned shares or with the proceeds from the sale of
    the option shares. In addition, the Management Continuity Agreements entered
    into between the Company and each of its executive officers may affect the
    vesting and manner of exercise of options granted by the Company to these
    individuals. See "Transactions with Management and Others."

(6) Consists of the Company's contributions to its 401(k) benefit plan and
    certain other employee benefits, including payment of disability and group
    term life insurance premiums and a car allowance.

(7) Includes $8,308 mortgage allowance paid to Mr. Reuter in connection with the
    relocation of his principal residence to the San Jose metropolitan area.

(8) Includes $12,000 mortgage allowance paid to Mr. Reuter in connection with
    the relocation of his principal residence to the San Jose metropolitan area.

(9) Includes $936 in taxable relocation costs paid to Mr. Frazier in connection
    with the relocation of his principal residence to the San Jose metropolitan
    area in January 1999.

                          STOCK OPTION GRANTS IN 2000

     The following table sets forth information for the named executive officers
with respect to grants of options to purchase Common Stock of the Company made
in 2000 and the value of all options held by such executive officers on December
31, 2000.



                                      INDIVIDUAL GRANTS
                                  -------------------------                               POTENTIAL REALIZABLE
                                                 % OF TOTAL                                 VALUE AT ASSUMED
                                   NUMBER OF      OPTIONS                                ANNUAL RATES OF STOCK
                                   SECURITIES    GRANTED TO                              PRICE APPRECIATION FOR
                                   UNDERLYING    EMPLOYEES    EXERCISE OR                    OPTION TERM(2)
                                  OPTIONS/SARS   IN FISCAL    BASE PRICE    EXPIRATION   ----------------------
              NAME                 GRANTED(1)       YEAR      (PER SHARE)      DATE         5%          10%
              ----                ------------   ----------   -----------   ----------   ---------   ----------
                                                                                   
Eric M. Reuter..................    100,000(3)      16.9%        $3.00        2/25/05     $82,900     $183,200
                                     40,000(5)       6.8%        $1.75       10/18/05     $19,300     $ 42,700
Robert L. Mathews...............     10,000(3)       1.7%        $3.00        2/25/05     $ 8,300     $ 18,300
                                     20,000(5)       3.4%        $1.75       10/18/05     $ 9,700     $ 21,400
Kevin Candio....................     75,000(3)      12.7%        $3.00        2/25/05     $62,200     $137,400
                                     20,000(5)       3.4%        $1.75       10/18/05     $ 9,700     $ 21,400
Van A. Frazier..................     10,000(3)       1.7%        $3.00        2/25/05     $ 8,300     $ 18,300
                                      4,348(4)       0.7%        $1.91        6/23/05     $ 2,300     $  5,100
                                     20,000(5)       3.4%        $1.75       10/18/05     $ 9,700     $ 21,400
Dennis LaLumandiere.............     11,648(4)       2.0%        $1.91        6/23/05     $ 6,100     $ 13,600
                                     20,000(5)       3.4%        $1.75       10/18/05     $ 9,700     $ 21,400


- ---------------
(1) For a description of the material terms of the options, see footnote 5 of
    the Summary Compensation Table.

(2) Gains are reported net of the option exercise price but before taxes
    associated with exercise. The assumed 5% and 10% rates of stock price
    appreciation are provided in accordance with rules of the Securities and
    Exchange Commission and do not represent our estimate or projection of the
    future price of our common stock. We do not endorse the accuracy of this
    model, or any other model, for valuing options. Actual gains, if any, on
    stock option exercises are dependent on the future performance of our common
    stock, overall market conditions, and the option holders' continued
    employment through the vesting period. The potential realizable value
    calculation assumes that the optionholder waits until the end of the option
    term to exercise the option. This table does not take into account any
    appreciation in the price of our common stock from the date of grant to the
    current date. Unless the market price of our common stock appreciates over
    the option terms, no value will be realized from the option grants made to
    the named officers.

(3) Options listed were granted on February 25, 2000.

(4) Options listed were granted on June 23, 2000.

(5) Options listed were granted on October 18, 2000.

                                        23
   26

                      AGGREGATED OPTION EXERCISES IN 2000
                           AND YEAR-END OPTION VALUES

     The following table sets forth information for the named executive officers
with respect to exercises in 2000 of options to purchase Common Stock of the
Company.



                                                            NUMBER OF          VALUE OF UNEXERCISED
                                                           UNEXERCISED        IN-THE-MONEY OPTIONS(1)
                                  SHARES               OPTIONS AT 12/31/00:        AT 12/31/00:
                                 ACQUIRED              --------------------   -----------------------
                                    ON       VALUE        (EXERCISABLE/            (EXERCISABLE/
             NAME                EXERCISE   REALIZED      UNEXERCISABLE)          UNEXERCISABLE)
             ----                --------   --------   --------------------   -----------------------
                                                                  
Eric M. Reuter.................      --          --      207,834/281,666               --/--
Robert L. Mathews..............   1,550      $1,200        56,158/97,292
Kevin Candio...................     520      $  400      138,249/133,751               --/--
Van A. Frazier.................      --          --        40,090/74,258               --/--
Dennis LaLumandiere............      --          --       115,825/85,823               --/--


- ---------------
(1) Based on the closing price of the Company's Common Stock as reported on The
    Nasdaq National Market on December 31, 2000 of $1.09 per share.

                    TRANSACTIONS WITH MANAGEMENT AND OTHERS

     In March 1994, the Company entered into Management Continuity Agreements
with each of its executive officers, which were amended in December 1994, April
1998 and April 2000. These agreements provide (1) for continued employment or
salary continuation at the Company or its successor for at least twelve (12)
months following any Change in Control of the Company (as defined below), at the
same salary and with the same benefit program as were in effect prior to such
Change in Control, (2) that such executives may, with thirty (30) days written
prior notice, resign but will be entitled to receive his or her current salary
and level of benefits for the remainder of the twelve (12) months following the
Change in Control if, in connection with such Change in Control the executive's
duties or responsibilities are materially reduced or executive is asked to
relocate to a facility or location more than 50 miles from the Company's current
location, (3) that all stock options exercisable for the Company's securities
held by such executives shall become immediately vested and shall be exercisable
in full in accordance with the provisions of the option agreement and plan
pursuant to which such option was granted, and (4) that upon the immediate
vesting of stock options, the optionee will have the right (subject to any
limitations imposed by Section 16 of the Securities Exchange Act of 1934 or
other applicable securities laws and only to the extent permitted by the terms
of the applicable option plan) to deliver a non-recourse promissory note
(secured only by the pledged shares for repayment), at the prime rate of
interest determined as of the date of the note, in payment of the exercise price
for the outstanding options. For purposes of the Management Continuity
Agreements, a Change in Control of the Company shall be deemed to have occurred
upon the happening of any of the following events: (1) any acquisition of twenty
percent (20%) or more of the Company's then outstanding voting securities
without the approval of the Board of Directors, (2) any merger or consolidation
in which the Company is not the surviving entity, (3) approval of a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets, or (4) a
change in the composition of the Board of Directors of the Company, as a result
of which fewer than a majority of the directors are incumbent directors.

                                        24
   27

     The Company has sold Common Stock to certain employees and directors and
accepted promissory notes secured by that stock as payment for certain of those
shares. These notes originally carried annual interest rates of 9.0% to 9.5%.
During 1995 the principal and accrued interest on these notes were refinanced
and the notes now carry annual interest rates of 5.79%.



                                                                              INDEBTEDNESS
                                                                             TO THE COMPANY
                                                     TOTAL                       AS OF
                                                    SHARES      AGGREGATE       12/31/00
                    PURCHASER                      PURCHASED      PRICE          (1)(2)
                    ---------                      ---------    ---------    --------------
                                                                    
Rodney Perkins, M.D. ............................   16,667       $75,001        $171,164
Robert J. Pressley, Ph.D. .......................   16,666       $74,997        $  9,206


- ---------------
(1) In the cases of Dr. Perkins, the amount shown was also the largest amount of
    indebtedness owed to the Company at any time during 2000. In the case of Dr.
    Pressley, the largest amount of indebtedness owed to the Company at any time
    during 2000 was $67,984.

(2) Payment in the form of promissory notes in the above transactions was
    approved in each case by a majority of the disinterested directors of the
    Company and such sales were made pursuant to the Company's 1984 Stock
    Purchase Plan, which was approved by the shareholders of the Company.

     During 2000 Dr. Pressley received $60,000 in compensation from the Company
for consulting services to the Company beyond his duties as Chairman of the
Board of Directors, such compensation was applied to the outstanding balance of
his indebtedness to the Company.

     Non-employee members of the Company's Board of Directors receive cash
compensation and options to purchase shares of Common Stock in connection with
their service on the Board.

     The Company has entered into indemnification agreements with each of its
directors and executive officers, which may require the Company, among other
things, to indemnify them against certain liabilities that may arise by reason
of their status or service as directors or officers, to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' and officers' liability insurance if
available on reasonable terms.

            SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and changes in
ownership of the Company's Common Stock. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on its review of the copies of
such reports received or written representations from certain Reporting Persons
that no other reports were required, the Company believes that during its fiscal
year ended December 31, 2000, all Reporting Persons complied with all applicable
filing requirements.

                 SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING

     Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 2002 Annual Meeting must be received at
our offices at 3070 Orchard Drive, San Jose, California 95134-2011, directed to
the attention of our Chief Financial Officer no later than December 28, 2001 in
order that they may be included in the proxy statement and form of proxy
relating to that meeting. Proposals must comply with Securities and Exchange
Commission regulations concerning the inclusion of shareholder proposals in our
proxy statement. Our bylaws include additional procedural requirements that
apply to shareholder proposals and nominations made at the annual meeting. Among
other requirements, notice of any proposals or nominations must be received at
our offices at least 60 days before each annual meeting.

                                        25
   28

                                 OTHER MATTERS

     The Board of Directors knows of no other matters to be submitted to the
Annual Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed form of Proxy to vote the shares
they represent as the Board of Directors may recommend.

                                          BY ORDER OF THE BOARD OF DIRECTORS

                                          /s/ DENNIS LALUMANDIERE
                                          Dennis LaLumandiere
                                          Assistant Secretary

Dated: April 27, 2001

                                        26
   29

                                                                      APPENDIX A

                  CHARTER OF THE AUDIT COMMITTEE OF LASERSCOPE

ORGANIZATION

     Laserscope will have a committee of the Board of Directors known as the
Audit Committee. The Audit Committee will be composed of directors who are
independent of the management of Laserscope and are free of any relationship
that, in the opinion of the Board of Directors, would interfere with their
exercise of independent judgment as a committee member.

STATEMENT OF POLICY

     The Audit Committee shall provide assistance to the Laserscope Board of
Directors in fulfilling their responsibility to the shareholders, potential
shareholders, and investment community relating to corporate accounting,
reporting practices of the company and the quality and integrity of the
financial reports of the corporation. In so doing, it is the responsibility of
the Audit Committee to maintain free and open means of communication between the
directors, the independent auditors and the financial management of the company.

RESPONSIBILITIES

     In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the Board of Directors and shareholders
that the corporate accounting and reporting practices of the company are in
accordance with all requirements and are of the highest quality.

     In carrying out these responsibilities, the Audit Committee will:

          Review and update the Committee's charter annually.

          Review and recommend to the Board of Directors the independent
     auditors to be selected to audit the financial statements of the company
     and its divisions and subsidiaries.

          Confirm and assure the independence of the independent auditors
     including a review of management consulting services and related fees
     provided by the independent auditors.

          Consider with management and the independent auditors the rationale of
     employing audit firms other than the principal independent auditors.

          Meet with the independent auditors and financial management of the
     corporation to review the scope of the proposed audit for the current year
     and the audit procedures to be utilized, and at the conclusion thereof
     review such audit, including any comments or recommendations of the
     independent auditors.

          Review with the independent auditors and the company's financial and
     accounting personnel, the adequacy and effectiveness of the accounting and
     financial controls of the company, and elicit any recommendations for the
     improvement of such internal control procedures or particular areas where
     new or more detailed controls or procedures are desirable.

          Review the financial statements contained in the Annual Report to
     Shareholders with management and the independent auditors to determine that
     the independent auditors are satisfied with the disclosure and content of
     the financial statements to be presented to the shareholders. Any changes
     in accounting principles should be reviewed.

          Review filings with the SEC and other published documents containing
     the company's financial statements and consider whether the information
     contained in these documents is consistent with the information contained
     in the financial statements.

          Provide sufficient opportunity for the independent auditors to meet
     with the members of the Audit Committee without members of management
     present. Among the items to be discussed in these meeting

                                       A-1
   30

     are the independent auditors' evaluation of the company's financial and
     accounting personnel and the cooperation that the independent auditors
     received during the course of the audit.

          Review the accounting and financial human resources and succession
     planning within the company.

          Submit the minutes of all meeting of the audit committee to, or
     discuss the matters discussed at each committee meeting with, the Board of
     Directors.

          Investigate any matter brought to its attention within the scope of
     its duties, with the power to retain outside counsel for this purpose if,
     in its judgment, that is appropriate.

          Review polices and procedures with respect to officers' expense
     accounts and perquisites, including their use of company assets, and
     consider the results of any review of these areas by the independent
     auditors.

          Review legal and regulatory matters that may have a material impact on
     the financial statements, related company compliance policies and programs
     and reports received from regulators.

          Prepare a letter for inclusion in the annual report that describes the
     Audit Committee's composition and responsibilities, and how they were
     discharged.

          Meet formally at least twice per year and via conference call at least
     four times per year.

          Periodically review the company's internal code of conduct.

          Develop a self assessment guide and periodically perform a self
     assessment.

          Review the company's status with the FDA on an annual basis.

          Periodically assess the company's risk management practices.

          Perform other projects on a rotating basis.

     The membership of the Audit Committee will consist of independent members
of the Board of Directors who will serve at the pleasure of the Board. Audit
Committee members and the Committee chair will be designated by the full Board
of Directors.

                                       A-2
   31

             PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
                                  OF LASERSCOPE
                       2001 ANNUAL MEETING OF SHAREHOLDERS

The undersigned shareholder of Laserscope, a California corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy
Statement, each dated April 27, 2001, and hereby appoints Eric M. Reuter and
Dennis LaLumandiere, or either of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the 2001 Annual Meeting of Shareholders of
Laserscope to be held on June 22, 2001 at 9:00 a.m., local time, at the Hilton
Santa Clara at 4949 Great America Parkway, Santa Clara, California 95054 and at
any adjournment or postponement thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the following matters, and, in their discretion, upon such other
matters that may properly come before the meeting and any adjournment(s)
thereof.


                                                              -----------
                                                              SEE REVERSE
                                                                  SIDE
                                                              -----------





                                      - 31 -
   32

     PLEASE MARK YOUR
[X]  VOTES AS IN THIS
     EXAMPLE




                               FOR ALL NOMINEES           WITHHOLD
                                LISTED TO THE            AUTHORITY
                                   RIGHT               TO VOTE FOR ALL
                                 (EXCEPT AS               NOMINEES
                                 INDICATED)          LISTED TO THE RIGHT
                             -------------------     -------------------
                                                                 
1. Election of                                                            NOMINEES:  James R. Baumgardt
   Directors                                                                         Ruediger Naumann-Etienne, Ph.D.
                                                                                     Rodney Perkins, M.D.
                                                                                     Robert J. Pressley, Ph.D.
                                                                                     Eric M. Reuter
                             -------------------     -------------------


If you wish to withhold authority to vote for
any Individual nominee, strike a line through
that nominee's Name in the list to the right.



                                                        FOR              AGAINST            ABSTAIN
                                                    -----------        -----------        -----------
                                                                                 
2. Proposal to approve an amendment to
   the Company's 1994 Stock Option Plan
   to increase the number of shares of
   Common Stock reserved for issuance
   thereunder by 200,000 shares.
                                                    -----------        -----------        -----------
                                                    -----------        -----------        -----------

3. Proposal to approve an amendment to
   the Company's 1999 Employee Stock
   Purchase Plan to increase the number
   of shares of Common Stock reserved
   for issuance thereunder by 150,000
   shares.
                                                    -----------        -----------        -----------
                                                    -----------        -----------        -----------

4. Proposal to approve an amendment to
   the Company's 1999 Directors' Stock
   Option Plan to increase the number of
   shares of Common Stock reserved for
   Issuance thereunder by 120,000
   shares.
                                                    -----------        -----------        -----------
                                                    -----------        -----------        -----------

5. Proposal to ratify the appointment of
   Ernst & Young LLP as the independent
   Auditors of the Company for the year
   ending December 31, 2001.
                                                    -----------        -----------        -----------
                                                    -----------        -----------        -----------


THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS; (2) FOR APPROVAL OF
THE AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION PLAN; (3) FOR APPROVAL OF THE
AMENDMENT TO THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN; (4) FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1999 DIRECTORS' STOCK OPTION PLAN;
AND (5) FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.

PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.

PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.

SIGNATURE(S)                                           DATE
            ------------------------------------------     ---------------------
NOTE:   This Proxy should be marked, dated, signed by the shareholder(s) exactly
        as his or her name appears hereon, and returned in the enclosed
        envelope. Persons signing in a capacity should so indicate. If shares
        are held by joint tenants or as community property, both should sign.