UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                             FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange 
    Act of 1934 for the fiscal year ended October 31, 1995
    [Fee Required]
                                 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934 [No Fee Required] 

For the transition period from _____________ to _____________

                   Commission File Number:  0-14961

                         LUXTEC CORPORATION
          (Exact name of registrant as specified in its charter)

		              Massachusetts 						                    04-2741310
      (State or other jurisdiction of				            (I.R.S. Employer
       incorporation or organization)				           Identification No.)

          326 Clark Street, Worcester, Massachusetts      01606 
           (Address of principal executive offices)     (Zip code)

          Registrant's telephone number, including area code:
                              (508) 856-9454

         Securities registered pursuant to Section 12(b) of the Act:
                        American Stock Exchange
                  Common Stock, $.01 par value per share
                            (Title of class)

         Securities registered pursuant to Section 12(g) of the Act:
                                 None


Indicate by checkmark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

 Yes    X      No  ___

Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this 
Form 10-K or any amendment to this Form 10-K.  [ X ]

The aggregate market value of the voting Common Stock held by non-affiliates 
of the registrant was approximately $5,134,623 based on the closing price of 
such stock on December 29, 1995, as reported by the American Stock Exchange 
($3.50 per share).

As of December 29, 1995, 2,443,898 shares of Common stock, $.01 par value, 
were issued and outstanding.

	   Documents Incorporated by Reference	     						Form 10-K Reference
Proxy Statement for the next Annual Meeting						          Part III


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PART I
The statements contained in this Annual Report on Form 10-K which are not 
historical facts may contain forward-looking statements that involve risks 
and uncertainties, including, but not limited to, product demand and market 
acceptance risks, the effect of economic conditions, the impact of 
competitive products and pricing, product development, commercialization and 
technological difficulties, capacity and supply constraints or difficulties, 
the results of financing efforts and other risks detailed in the Corporation's
Securities and Exchange Commission filings.

ITEM 1. BUSINESS

The Corporation

Luxtec Corporation, a Massachusetts Corporation (the "Corporation" or 
"Luxtec"), was organized in November 1981, and is engaged in the design, 
manufacture, marketing and distribution of fiber optic headlight and video 
camera systems, light sources, cables, retractors, surgical telescopes and 
other custom made surgical equipment for the medical and dental industries, 
as well as motion tolerant blood pressure monitors.  Through its subsidiary, 
Fiber Imaging Technologies, Inc., the Corporation also manufactures small
diameter specialty endoscopes for industrial and medical markets.

On October 23, 1995, Luxtec CD Acquisition Co., Inc., a Massachusetts 
corporation and the Corporation's wholly-owned subsidiary ("Acquirer"), 
acquired all of the assets and liabilities of CardioDyne, Inc. 
("CardioDyne"), a Delaware corporation, in exchange for 1,000,000 shares of 
common stock, par value $0.01 per share of the Corporation and certain 
additional consideration pursuant to a statutory merger of CardioDyne and 
Acquirer.

The Corporation has developed a proprietary, totally programmable, fiber 
optic drawing system designed to manufacture optical glass to a predetermined
diameter as well as to control the actual size of the fiber bundles.  The 
fibers are utilized in fiber optic cables which are incorporated with the 
Corporation's Surgical Headlight Systems and the Video Camera Systems as well
as in an array of fiber optic transilluminators utilized with the 
Corporation's surgical instruments.  The Corporation also markets replacement
fiber optic cables and light sources for use with other manufacturers' 
products, including various endoscopic systems used in minimally invasive 
surgical procedures.

The Corporation's newly acquired subsidiary, CardioDyne Inc., is also engaged
in the design and development of proprietary, 
motion tolerant, non-invasive blood pressure ("BP") monitors for use on 
moving and exercising patients.  The products are designed for use in the 
categories of exercise stress testing, emergency transport, obstetrics, and 
other applications where frequent, accurate blood pressure data is vital, yet
where existing blood pressure monitors typically fail to work because of 
patient motion.  The Corporation's two existing products, currently named the
Kinetorr and Kinetorr PC, have been approved for sale in the United States
by the Food and Drug Administration (the "FDA").

The Corporation maintains its principal executive offices and facilities at 
326 Clark Street, Worcester, Massachusetts 01606, and its telephone number is
(508) 856-9454.

Background and Technology
Fiber Optics
Fiber optics allow for the transmission, element by element, of a light or 
image from one place to another through a flexible conduit.  Fiber optic 
technology permits the drawing of high quality optical glass rods and tubes 
into flexible fibers, each coated with a "jacket" (a film of an organic 
silicon), that protects the fibers from abrasion.  This provides for an 
improved ability to bend and transmit light and images to and from 
inaccessible places.




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The technology used by Luxtec to provide illumination directly to the 
surgical site is facilitated by fiber optic cables piping light into an 
adjustable headlight composed of a series of lenses and mirrors mounted on a 
headband.  These lenses then focus the light directly on the surgical site 
when worn by the surgeon.  This provides a lightweight, low temperature 
illumination source to enhance visualization for microsurgical and deep 
cavity illumination.  State of the art microsurgery often involves working
on anatomical structures smaller than one millimeter in diameter.  To work
on such small structure, the surgeon often needs high quality, portable 
magnification devices.  The new Luxtec telescopes are designed to offer 
high quality magnification with coincident illumination.

Blood Pressure Monitoring
An important symptom of patients with life threatening conditions such as 
shock, internal bleeding or heart failure, is usually a drop in blood 
pressure.  Thus, blood pressure is measured often on most patients, and is a 
key vital sign in medicine.

The most common method of measuring blood pressure is by placing an inflated 
cuff around the arm in order to occlude arterial blood flow.  Blood pressure 
is determined by slowly deflating the cuff and listening with a stethoscope 
for Korotkoff sounds (arterial blood flow vibrations) that begin at systolic 
BP and cease at diastolic BP.  These measurements can be taken manually, or 
by using various automated and semi-automated instruments or systems.  Small 
vibrations in the cuff pressure, called oscillometric pulses, are measured by 
most automatic blood pressure monitors and are used to derive systolic and
diastolic blood pressure measurements.

For resting patients whose blood pressure must be sampled periodically, 
automatic intermittent non-invasive blood pressure monitors are widely used. 
Current measuring techniques are very sensitive to any motion of the patient 
during the time that the actual reading is being taken.  Most intermittent, 
non-invasive BP monitors work poorly or do not work at all on patients who 
are moving or being transported when the measurement is being taken.  Motion 
interferes with the ability to detect critical sounds and, therefore, it is
very difficult to measure the blood pressure of patients who are shivering,
exercising, or being transported.

For patients whose blood pressure must be known more frequently, direct blood 
pressure measurement is routinely used.  In direct measurement, a fluid 
filled catheter is introduced into an artery and connected to a pressure 
transducer.  This form of direct, invasive BP monitoring is expensive and
painful to the patient, requires frequent attention by a nurse or physician, 
and poses risks of infection and blood clots.  Although several continuous 
non-invasive blood pressure monitors have been designed and introduced to
the market, none has received wide clinical use to date.  The Corporation
believes this stems from questions regarding the accuracy, stability, and 
motion tolerance of such monitors.

Products

Headlight Systems  The Corporation has designed and manufactured a line of 
fiber optic headlight systems that assist surgeons by illuminating the area 
of the surgical procedure.  Designed to provide maximum performance and 
comfort, the Corporation's headlight systems are lightweight and provide the 
surgeon with near coaxial view.  The Corporation's patented headlight systems
provide a virtually unobstructed view of the area of surgical procedure.

Light Sources  A fiber optic light source with solid state electronics 
permits the precise regulation of electric current in order to control 
illumination levels of Xenon and Halogen lamps and, thereby, eliminates 
fluctuations or "flickering" in the light provided.  The lamps illuminate the
end surface of the fiber optic cable through which the light is transmitted 
in a rigid or flexible mode without heat.  The Corporation manufactures a 
product line of high quality, solid state Xenon and Halogen fiber optic
light sources.  The Corporations's light sources offer a wide range 
of light intensities in order to serve the varying requirements in 
illuminating surgical and diagnostic procedures.  The Corporation's light 
sources are designed and manufactured to comply with U.L. 544 medical safety 
standards and are listed domestically with ETL Laboratories. Internationally, 
the Corporation works to achieve compliance with as many international 
standards as necessary to compete effectively on a worldwide basis
(including the CE mark that has been attained on the present product line).



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The Corporation's model numbers 9175 and 9300 Xenon light sources produce 
high intensity light that is the equivalent of daylight in color.  The white 
light produced by these light sources is used in instances where more intense
illumination is required, e.g., for endoscopic television surgery or for 
use with the Corporation's Videolux television camera products.

Fiber Optic Cables  The Corporation designs and manufactures a complete range 
of fiber optic cables and holds patents on certain fiber optic cable 
assemblies.  See "Patents and Proprietary Information."  The Corporation has 
a range of fiber bundle diameters from 1.0 mm to 6.5 mm and also allows a 
surgeon to choose from various angulations (180 degree, 90 degree and 45 
degree) in order to optimize the use of surgical instruments.  The 
Corporation employs a proprietary technology that enables the fiber optic 
interface to withstand significantly higher temperatures and that permits
the use of higher output light sources.  

All of the Corporation's fiber optic cables are adaptable to competitors' 
light sources.  The Corporation's Component Cable System allows the end-user 
to adapt the end fitting of each cable to their own needs.  The Component 
Cable System is designed to provide the flexibility of universal cables by 
incorporating a patented process to permanently attach select end fittings to 
the cable and, thereby, customize the cable according to the user's needs, 
either at the point of manufacturing or at the customer's site.  This allows
the customer to reduce the inventory of replacement cables and facilitates
a rapid turnaround when a cable needs to be replaced in the operating room, 
clinic, or surgi - center.

Fiber Optic Headlight and Video Camera Systems  The Corporation manufactures 
and markets a series of video products that are currently being used in the 
United States and approximately 26 countries around the world.  The 
Corporation's Videolux Headlight Camera Systems are designed to televise most 
surgical procedures.  The system is a very small, lightweight, solid state 
television camera mounted at the front of a headband, manufactured by the 
Corporation, and integrated with fiber optic illumination.

The Corporation's Videolux System can transmit the surgeon's eye view of the 
procedure live to a television monitor for teaching purposes or to be 
recorded for later use.  The Videolux Cameras are available in the NTSC 
(National Television System Committee) and PAL (Phase Alternation by Line) 
formats as well as in all voltages required worldwide.

Surgical Telescopes  The Corporation manufactures and markets a proprietary 
line of surgical telescopes.  The custom fit telescopes provide the surgeon 
with increased magnification ranging from 2.5X to 6X.  During the fourth 
quarter of fiscal year 1993, the Corporation introduced illumination to the 
surgical telescope, utilizing fiber optic delivery of light into the line of 
sight and thus providing the first surgical telescope with coaxial 
illumination. These products are part of the current product offering of the
Corporation.

Blood Pressure Monitors  The Corporation is developing a proprietary 
electronic signal acquisition and signal processing technology that separates 
"motion noise" from systolic and diastolic blood pressure signals.  The 
Corporation plans to use this technology to develop non-invasive blood 
pressure monitoring products that are motion tolerant.

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Patents and Proprietary Information

The medical device industry traditionally has placed considerable importance 
on obtaining and maintaining patents and trade secret protection for 
significant new technologies, products and processes.  The Corporation 
maintains a policy of seeking patent protection in connection with certain 
elements of its technology when it believes that such protection will benefit 
the Corporation.  The Corporation owns the following U.S. Patents (date of 
issuance shown in parentheses):

* Patent No. 4516190 for Surgical Headlight (May 7, 1985)
* Patent No. 4534617 for Fiber Optic Cable (August 13, 1985)
* Patent No. 4616257 for Headlight Camera System (October 7, 1986)
* Patent No. 4653848 for 45 degree and 90 degree Fiber Optic Cables 
  (March 31, 1987)
* Patent No. 4797736 for Videolux Television Fiber Optic Headlight Camera 
  System (January 10, 1989)
* Patent No. 5003605 for an electronically augmented stethoscope with timing 
  sound (March 26,1991)
* Patent No. 5042930 for Optical System allowing coincident viewing, 
  illuminating and photography (August 27, 1991)
* Patent No. 5078469 for Optical System allowing coincident viewing, 
  illuminating and photography (January 7, 1992)
* Patent No. 5220453 for telescopic spectacles with coaxial illumination 
  (June 15, 1993)
* Patent No. 5295052 for a light source assembly (March 15 1994)
* Patent No. D345368 for surgical telescopes (March 22, 1994)
* Patent No. 5307432 for crimped light source termination (April 26, 1994)
* Patent No. 5331357 for an illumination assembly (July 19, 1994)
* Patent No. D349123 for spectacles having integral illumination (July 26, 1994)
* Patent No. D350760 for an eyeglass frame temple (September 20, 1994)
* Patent No. 5392781 for blood pressure monitoring in noisy environments 
  (February 28, 1995)

In addition, the Corporation has entered into an exclusive license agreement 
with InterMED Corporation for the rights to Patent No. 5222949 ("In-Vivo 
Hardenable Catheter")  for developing a line of catheters incorporating fiber 
optics to  facilitate several potential specialized applications.

The Corporation is the owner of three federal trademark registrations:  
(i) LUXTEC, registration number 1453098, registered August 18, 1987; 
(ii) LUXTEC (and design), registration number 1476726, registered 
February 16, 1988; and (iii) LUXTEC (stylized), registration number 1758176, 
registered March 16, 1993.

In general, the Corporation relies on its development and manufacturing 
efforts and skills of its personnel rather than patent protection to 
establish and maintain its industry position.  The Corporation treats its 
design and technical data as confidential and relies on nondisclosure 
agreements, trade secrets laws and non-competition agreements to protect its 
proprietary position.  There can be no assurance that these measures will 
adequately protect the Corporation's proprietary technologies.
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Marketing and Sales

Fiber Optics
The Corporation's customers for its fiber optic and illumination products are 
acute care hospitals, clinics, surgi - centers, and surgeons.  An estimated 
33,000 surgeons use the Corporation's products, on a worldwide basis.  The 
Corporation's products provide illumination and magnification used during the 
surgical procedure.

The Corporation distributes its fiber optic and illumination products through 
regional specialty surgical distributors, supported by Luxtec field 
specialists as well as a customer support team located in the Worcester 
facility.  Internationally, Luxtec distributes through a network of local 
distributors.  The Corporation currently has distributors in 27 countries.

The Corporation competes on the basis of price, product quality and 
reliability. The Corporation believes that its large base of satisfied users 
is also a key marketing advantage and that the combination of satisfied 
customers and quality products positions the corporation as one of the 
premium vendors in the marketplace.  The Corporation believes that it 
provides a higher standard of post sales support when compared to the 
competition and that the combination of service and a three year warranty 
stands as a significant market differentiation.

The Corporation's marketing strategy is to provide training and support for 
the distributor channel, to enhance end user awareness and demand by 
participating as an exhibitor at major medical meetings, and to insure that
the Corporation provides high quality and performance of its products.

Blood Pressure Monitoring
The Corporation believes that the initial target market segments for its 
products will be for use in exercise stress testing, emergency transport, 
obstetrics and for post-operative patients.

Exercise Stress Testing

The exercise stress test is a common non-invasive test for evaluating heart 
function in known or suspected coronary artery disease.  There are an 
estimated 5 million exercise stress tests done annually at approximately 
20,000 exercise stress test labs in the U.S.  Most stress test labs now 
measure blood pressure on their patients manually.  Blood pressure must be 
measured accurately and often (recommended by many experts to be at least 
once per minute) during the test.  A decline in systolic BP during exercise
may reflect the presence of advanced coronary artery disease, and is a
criterion for immediate termination of the stress test.  This important 
indicator must be detected immediately to reduce patient risk.  Yet 
measuring blood pressure, either manually or automatically, is difficult 
since the patient is moving and the treadmill creates interfering background 
noise.

The Kinetorr incorporates a sensor and companion processing software that 
significantly reduces the interference from motion and noise in the blood 
pressure signal.  The Corporation believes this results in a reliable blood 
pressure measurement during an exercise stress test.  The Kinetorr has 
undergone clinical trials at Beth Israel Hospital, and has been tested by 
physicians and clinicians at several other hospitals, including Deaconess 
Hospital, and the University of Massachusetts Medical Center.
 
Emergency Transport

The Corporation estimates that the emergency transport (ambulance) market for 
the Kinetorr is potentially large.  There are approximately 42,000 emergency 
transport vehicles in the U.S., of which the Corporation estimates that 
30,000 are potential candidates for products based on the Kinetorr technology.

The Corporation estimates that emergency victims of accidents, heart attacks, 
strokes, and other medical emergencies account for almost 10 million 
transports in the U.S.  The Corporation further estimates that an additional 
2 million medical patients are transferred between hospitals annually in 
emergency transport vehicles.  These patients are often unstable or at risk 
of medical hazard, hence their vital signs (blood pressure, heart rate, 
respiration, and oxygen saturation) are measured frequently.  Currently,
blood pressure is measured manually on most transport patients and the
measurement is difficult to do even by a skilled EMT because of the noise 
and vibration in the vehicle.  Preliminary tests indicate that the Kinetorr 
accurately measures blood pressure during transports, even with a shivering 
patient and even in the presence of vibration and noise.

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Obstetrics

Blood pressure is an important parameter to monitor during labor and delivery 
due to the possibility of dangerously high blood pressures, hemorrhage and 
shock, as well as other potential complications.  Frequent, accurate blood 
pressure information is important to manage these patients.  However, women 
in labor frequently shiver, particularly those receiving epidural anesthesia. 
The Corporation believes that shivering causes commonly used oscillometric 
blood pressure monitors to become inaccurate or to cease working.  To 
accurately measure blood pressure on shivering patients, the alternatives
are invasive blood pressure measurement, which is expensive and risky, or 
frequent manual monitoring.  The Corporation believes that the Kinetorr 
potentially provides a better alternative, as it accurately measures and 
records blood pressure on moving or shivering labor patients, without the 
cost and risk of invasive monitoring or the constant attention of manual 
monitoring.

Post-Operative

Many recovery room patients experience post anesthesia tremors.  These 
patients are monitored for various vital signs, including blood pressure.  
The Corporation believes that current commercial models can become inaccurate 
or fail to work in this application due to patient tremor and that a motion 
tolerant monitor therefore may be well received in this market.

Competition

Fiber Optics
The Corporation competes with national and international companies engaged in 
the manufacture of headlight systems, including B.F. Wehmer and Designs for 
Vision, and in fiber optic medical instruments with Pilling Weck Company, the 
Stryker Company and Richard Wolf & Company as well as other smaller 
diversified companies.  In the replacement cable market, the Corporation 
competes with both original equipment manufacturers as well as others engaged 
in activities similar to that of the Corporation.  The Corporation is not 
aware of any specific seasonal variation factors that directly effect net
sales levels.

The Corporation's management believes that direct competition in the light 
source market comes from several established companies having considerably 
larger and greater financial and human resources, including Designs for 
Vision, Olympus, B.F. Wehmer, Karl Storz Company, and Richard Wolf & Company.  

Blood Pressure Monitoring
The Corporation has identified two companies, Suntek and Colin Medical, that 
are currently supplying exercise blood pressure monitors in the U.S.  The 
companies sell directly under their own name, and Colin produces an OEM 
version of its monitor that is sold by Quinton.  Critical care blood pressure 
monitors are sold by numerous companies, including Critikon, Datascope, 
Colin, Hewlett Packard, Spacelabs and others.  The Corporation believes that 
the Kinetorr's performance, features and capabilities will allow it to
compete effectively against these products.  Nonetheless, the Corporation
expects that many of its current and future competitors will have financial, 
technical, marketing, sales, manufacturing, distribution and other resources 
substantially greater than those of the Corporation.  There can be no 
assurance that the Corporation will be able to compete successfully in its 
intended markets.

Government Regulation

The Corporation's products are subject to government regulation in the United 
States and other countries.  In order to test clinically, produce and market 
products for human diagnostic or therapeutic use, the Corporation must comply 
with mandatory procedures and safety standards established by the United 
States Food and Drug Administration ("FDA") and comparable state and foreign 
regulatory agencies.  Typically, products must meet regulatory standards as 
safe and effective for their intended use prior to being marketed for human
applications.  The clearance process is expensive and time consuming, and
no assurance can be given that any agency will grant clearance for the sale 
of the Corporation's products or that the length of time the process will 
require will not be extensive.  The Corporation believes that its facility is 
in compliance with the Federal Food and Drug Administration requirements for 
Good Manufacturing Practice.

Major Customers

For the year ended October 31, 1995, one customer, Specialty Surgical 
Instrumentation, Inc., accounted for 15% of  the Corporation's net revenues.
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Research and Development

The Corporation incurred approximately $615,000 of product development expenses
in fiscal year 1995, $437,000 in fiscal 1994, and $270,000 in fiscal 1993.  
The Corporation expects that the increased level of investment in product 
development will result in a series of product introductions during fiscal 
1996.

Manufacturing and Suppliers

The Corporation purchases components and materials from more than 300 
vendors.  The Corporation believes it can purchase substantially all of its 
product requirements from other competing vendors under similar terms.  The 
Corporation has no long-term contract with any supplier.

Backlog

At October 31, 1995, the Corporation's backlog was $850,000, compared to 
$181,154 at October 31, 1994.  The Corporation generally ships products 
within three weeks of the receipt of an order from a customer.  The 
Corporation does not believe that its backlog accurately predicts the amount 
of quarterly or annual revenues.

Employees

As of October 31, 1995, the Corporation had 53 full time employees, of whom 
five are executives, three are engaged in supervisory capacities, 27 are in 
manufacturing and the remainder are involved in engineering, research and 
development, marketing and administration.  None of the Corporation's 
employees is covered by a collective bargaining agreement.  The Corporation 
believes its employee relations are good.  

Executive Officers

For information with respect to the Executive Officers of the Corporation, 
see the section entitled "Election of Directors"  appearing in the 
Corporation's Proxy Statement in connection with its next Annual Meeting of 
Shareholders or special meeting in lieu thereof, which section is 
incorporated herein by reference.

ITEM 2.  PROPERTIES

The Corporation occupies approximately 22,000 square feet at 326 Clark 
Street, Worcester, Massachusetts under a lease that expires in September 
1996.  The Corporation believes that this space is adequate to meet its 
current requirements and that alternative space would be available at 
comparable prices should the lease not be extended after its expiration.

ITEM 3.  LEGAL PROCEEDINGS

The Corporation is the defendant in a suit brought by Republic Lens 
Corporation ("Republic") of New Jersey.  The suit, filed on September 29, 
1995, in United States District Court, District of New Jersey alleges that 
the Corporation breached a contract with Republic in which the Corporation 
was obliged to use Republic as its sole supplier of products to be used in 
the development and sale of a product that would result from a patent 
assigned to the Corporation by Republic.  Republic seeks damages of 
$2,000,000 together with attorneys' fees and rescission of the contract.  The
Corporation believes that the suit is without merit as the Corporation has 
not used the patent designated in the suit and the contract.  The Chief 
Executive Officers of the two corporations have verbally agreed to a settlement 
of the suit in which the Corporation will return the rights to the patent to 
Republic in return for a release from liability from Republic.

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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The following matters were submitted to a vote of security holders, whether 
through solicitation of proxies or otherwise, during the fourth quarter of 
the Corporation's fiscal year ended October 31, 1995.

(a) Annual Meeting of Stockholders was held on October 20, 1995.

(b) Two Class II directors of the Corporation were elected: 	
  		                   FOR        	 	WITHHELD
		James W. Hobbs       1,168,350			     10,150
		Lynn K. Friedel      1,167,990			     10,510

The Board of Directors is composed of Mr. Hobbs and Ms. Friedel as well as 
Mr. James Berardo, Mr. Paul Epstein, Mr. Patrick Phillipps, 
Dr. Thomas VanderSalm and Mr. Louis Wallace.

(c) Other matters voted upon at the meeting:

A proposal to approve an amendment of the Company's Articles of Organization 
to increase the number of shares authorized for issuance by the Company in 
connection with the Agreement of Merger and Plan of Reorganization dated as 
of June 28, 1995 (the "Merger Agreement") by and among the Company, 
CardioDyne, Inc. ("CardioDyne"), and Luxtec CD Acquisition Co. Inc. 
("Acquirer"), a newly formed, wholly-owned subsidiary of the Company.  
Pursuant to the Merger Agreement, CardioDyne will be merged with and into A
hares of common stock of the Company (with such number subject to reduction 
to account for statutory dissenter's rights of appraisal).  In addition, the 
former CardioDyne Stockholders may be entitled to a payment depending upon 
the market price of the Company's common stock and will be entitled to 
earn-out payments based upon the future sale of certain products under 
development, if such products are developed.  Each of the foregoing payments, 
if made, shall be payable fifty percent (50%) in cash and fifty percent (50%)
in common stock of the Company.

     FOR        AGAINST   ABSTAIN    NO-VOTE
		   850,707			 21,272			 3,179			   303,342	

A proposal to approve the issuance of up to one million (1,000,000) shares 
of common stock of the Company (with such number subject to reduction to 
account for statutory dissenter's rights of appraisal) in connection with the 
Merger Agreement. 
		
					FOR			     AGAINST		 ABSTAIN		 NO-VOTE
					857,376		  8,517		 	 9,265			  303,342

A proposal to ratify the amendment of the Company's 1992 Stock Option Plan 
to increase the number of shares authorized for issuance under the Plan and 
to limit the number of options that may be granted to any one individual 
under the Plan in any fiscal year.
	
					FOR			     AGAINST		 ABSTAIN		 NO-VOTE
					838,687		  24,617			 11,854			 303,342

A proposal to approve the Company's 1995 Stock Option Plan For Non-Employee
Directors.
 
     FOR	   		  AGAINST		 ABSTAIN		 NO-VOTE
     834,327		  39,333			 7,814	 		 297,026

A proposal to approve an amendment of the Company's Articles of
Organization with respect to the limitation of liability of directors and
indemnification of directors and officers of the Company.

     FOR          AGAINST   ABSTAIN   NO-VOTE
     1,144,703    16,827    10,654    6,316

A proposal to ratify the appointment of Arthur Andersen LLP as independent
public accountants of the Company.

     FOR          AGAINST   ABSTAIN   NO-VOTE
     1,169,376    5,810     3,314     0

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ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

  The Corporation's Common Stock is traded on the American Stock Exchange
(AMEX) under the AMEX symbol "LXU.EC."  The Corporation's Common Stock has
been listed on the American Stock Exchange since April 20, 1994. From 
September, 1986 until April, 1994 the Corporation's Common Stock was traded 
in the over-the-counter market on the National Association of Securities 
Dealers, Inc. Automated Quotations System (NASDAQ) under the NASDAQ symbol 
"LUXT."  The following table sets forth (i) the high and low closing bid
prices for the Corporation's Common Stock as reported by NASDAQ for the 
periods indicated below until April 19, 1994, and (ii) the high and low
closing sale prices of the Corporation's Common Stock on the AMEX during the 
periods indicated below commencing on April 20, 1994.

	
 Common Stock                                   High      Low     
Fiscal Year Ended 10/31/94     First Quarter $   2.25    $1.50  
                               Second Quarter    2.13     1.50  
                               Third Quarter	   10.13     2.13  
                               Fourth Quarter    7.75     3.75          

Fiscal Year Ended 10/31/95     First Quarter     5.38     3.50
                               Second Quarter    4.00     2.50  
                               Third Quarter     7.25     2.88  
                               Fourth Quarter	   5.75     4.00

On December 29, 1995, the closing sale price of the Corporation's Common 
Stock on the American Stock Exchange was $3.50.  

As of December 30, 1995, there were approximately 800 holders of record of 
the Corporation's Common Stock.  The Corporation estimates that there are 
approximately 1,632 beneficial holders of the Corporation's Common Stock.

The Corporation has not paid any cash dividends since its inception and the
Board of Directors does not contemplate doing so in the near future.   The
Board of Directors currently intends to retain any future earnings for use
in the Corporation's business.

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ITEM 6.  SELECTED FINANCIAL DATA

  The selected consolidated operating data presented below
for the years ended October 31, 1991, 1992, 1993, 1994, and 1995 and the 
consolidated balance sheet data at October 31, 1991, 1992, 1993, 1994, and
1995 are derived from and qualified by reference to the Corporation's 
consolidated financial statements that have been audited by Arthur Andersen 
LLP, the Corporation's independent public accountants.  The information set
forth below should be read in conjunction with the financial statements
and notes thereto appearing elsewhere herein.  This data reflects the
Corporation's one-for-ten Common Stock reverse split effected April 10, 1992
for all periods presented.

Operating Data:                   (In thousands, except for per share data)
                                            Years Ended October 31,

                                    1991     1992     1993    1994    1995

Sales..........................    $5,474   $6,040   $6,734  $8,139  $7,755

Net Earnings (Loss)............       368      407      153     164  (6,127)

Net Earnings (Loss) Per Share..       .26      .29      .11     .11   (4.20)


Balance Sheet Data:                               (In thousands)
                                             Years Ended October 31,
  
                                     1991     1992     1993    1994    1995

Working Capital................     $  743   $1,056   $1,210  $1,410  $ (599)

Total Assets...................      2,259    2,763    3,431   4,072   4,122

Long-term debt and capital 
lease obligations, less current
portions.......................         28       67       -       -       -

Stockholders' equity...........      1,397    1,804     1,957   2,163    198

Page 11
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

  This analysis of the Corporation's financial condition, capital resources
and results of operations should be read in conjunction with the 
accompanying financial statements, including notes thereto.

Results of Operations

The following table sets forth certain consolidated financial data as a 
percentage of revenue for the fiscal years ended October 31, 1993, 1994 
and 1995.

                                                 1993  1994  1995  
Sales                                            100%  100%  100%  
Cost of Goods Sold                                57    55    61  
Selling and Marketing                             20    22    24  
Research and development                           4     5     8  
General and administrative                        16    15    18  
Charge for purchased research and development      -     -   (67)  
Other income/(expense)                             -     -    (1)  
Income (loss) before provision for income taxes    3     3   (79)  
Provision for income taxes                         -     1     -  
Net income (loss)                                  3     2   (79)   

Fiscal 1995 Compared with Fiscal 1994  

Sales:  Sales were down 5% to $7,755,377 in fiscal 1995 compared to 
$8,138,903 in fiscal 1994.  The reasons for the decrease included delays
in the completion of two new product lines.  Luxtec was essentially
out of the Halogen light source business during the second half of fiscal 
year 1995, as regulatory delays kept the Corporation from shipping orders that 
were received during the fourth quarter.  The new versions of the illuminated 
and standard telescopes also were not completed until the end of the fourth 
quarter, resulting in a buildup of unshipped orders.  Luxtec ended the year 
with a record backlog of over $850,000.

The Corporation expects sales to increase during fiscal 1996 primarily as a 
result of the introduction of the CardioDyne product line of blood pressure 
monitors and the completion of the new product development introductions 
begun during fiscal 1995.

Cost of Goods Sold:  Cost of goods sold was $4,732,500 or 61% of net sales 
for fiscal 1995 compared with $4,432,219 or 54% of net sales for fiscal 1994. 
The Corporation charged to operations the cost of some inventory items 
that had become redundant as a result of the changes to new product lines.  
The Corporation also increased accruals related to future warranty claims due 
to the introduction of new product lines.

Gross Profit:  Gross Profit was $3,022,876 or 39% of net sales for fiscal 
1995 compared with $3,706,684 or 46% of net sales for fiscal 1994.  The 
effect of the above mentioned inventory adjustments and accrual increases were 
also accompanied by continued price competition and an increase in the sales 
mix of lower margin OEM sales.  The Corporation does not expect a 
continuation of the deterioration in gross profit as a percent of net sales, 
since much of the effect for fiscal 1995 was the result of one time events.

Selling and Marketing Expenses:  Selling and marketing expenses of $1,825,897 
for fiscal 1995 compared to $1,793,137 for fiscal 1994, an increase of $32,760 
or 2%.  During fiscal 1995, Luxtec essentially maintained employment levels 
at their previous year levels, while introducing several new programs in 
conjunction with the Corporation's distributors to offset increased 
competition.  Management expects sales and marketing expenses to increase 
during fiscal 1996, primarily to launch the new CardioDyne product line into 
the market.

Page 12
<PAGE>
Research and Development:   Research and development expenses were $614,937 
in fiscal 1995 compared to $437,064 in fiscal 1994, an increase of $177,873 
or 41%.  The increase in expenses in this category were directly related to 
the introduction of two major product line upgrades during fiscal 1995.  The 
next generation of standard and illuminated telescopes as well as a newly 
designed line of halogen lightsources were introduced in late fiscal 1995.  
Other significant product changes are expected to be introduced during fiscal 
1996, including the rollout of the CadioDyne product line of motion tolerant 
blood pressure monitors.  Management expects that research expenditures will 
continue to increase as a result of the Corporation's product development 
plans.

General and Administrative:  General and administrative expenses were 
$1,377,974 in fiscal 1995 compared to $1,261,356 in fiscal 1994, representing 
an increase of $116,618 or 9%.  During fiscal 1995, Luxtec continued to 
upgrade its investor relations programs, as well as working with an 
investment banking firm in activities that ultimately resulted in the 
Corporation's acquisition of the new technology represented by CardioDyne's 
product lines.

Interest:  Interest expense was $97,741 for fiscal 1994 compared with 
$31,860 in fiscal 1994.  Higher credit line balances and increased interest 
rates accounted for the increase.

Fiscal 1994 Compared with Fiscal 1993

Sales:  Sales increased to $8,138,903 in fiscal 1994 compared to $6,734,477 
in fiscal 1993, an increase of 21%.  The reasons for the increase in sales 
included:  (1) the startup of a new subsidiary - Fiber Imaging Technologies 
during the second quarter of fiscal 1994,  (2) a new product introduction at 
the end of fiscal 1993 - Illuminated Surgical Telescopes, (3)  continuing 
increases of unit sales of the Xenon Headlight Systems, primarily resulting 
from increased marketing and selling expenditures, and (4) the expansion 
of geographic distributor coverage of Luxtec's products.

Cost of Goods Sold:  Cost of goods sold was $4,432,219 or 54% of net sales 
for fiscal 1994 compared with $3,832,848 or 57% of net sales for fiscal 1993.  
The Luxtec cost reduction program was successful in lowering costs during 
fiscal 1994, primarily through the negotiation of better vendor terms, and, 
to a lesser extent, the design of lower cost products.

Gross Profit:  Gross Profit was $3,706,684 or 46% of net sales for fiscal 
1994 compared with $2,901,629 or 43% of net sales for fiscal 1993.  During 
the year Luxtec experienced price competition in most of its markets, 
resulting in lower average selling prices per product than in fiscal 1993.  
However, a combination of product cost reduction and favorable product mix 
resulted in improved margins as a percentage of net sales.

Selling and Marketing Expenses:  Selling and Marketing expenses of $1,793,137 
for fiscal 1994 compared to $1,370,479 for fiscal 1993 increased by  
$422,658 or 31%.  During fiscal 1994, Luxtec added two new regional managers, 
including one in the Midwest and one in Europe, to develop distribution in 
their respective areas.  The Corporation continued to attend trade shows and 
improve sales and marketing programs.

Research and Development:  Research and development expenses were $437,064 in 
fiscal 1994 compared to $270,445 in fiscal 1993, an increasing of $166,619 or 
62%.  Luxtec's research and development staff has hired new personnel in a 
number of important technical areas.

General and Administrative:  General and administrative expenses were 
$1,261,356 in fiscal 1994 compared to $1,064,634 in fiscal 1993, 
representing an increase of $196,722 or 18%.  During fiscal 1994, Luxtec 
initiated a series of new investor relations programs, as well as contracting 
an investment banking firm  to assist the corporation in transactions 
relating to the acquisition of new technologies.

Interest:  Interest expense was $31,860 for fiscal 1994 compared with 
$30,722 in fiscal 1993.  Higher credit line balances and increased interest 
rates accounted for the increase.

Page 13
<PAGE>
Liquidity and Capital Resources

At October 31, 1995, the Corporation had negative working capital of 
approximately $ 599,000 compared to positive working capital of $1,410,000 at 
October 31, 1994.  This situation primarily resulted from the completion of 
the acquisition of CardioDyne Inc., including substantial closing costs 
payable to the investment banker, legal counsel and others, as well as a 
decision to charge to operations the cost of certain redundant inventory that
occurred as the Corporation moved from older product lines to the results of 
the new product development  effort.  The Corporation entered into a new 
credit facility with the Bank of Boston during October, 1995, that increased 
the revolving credit line from $1,500,000 to $2,500,000 and added additional 
credit availability of $750,000 to be used to purchase fixed assets during the 
next two years.  Subsequent to the year end (during December, 1995), the 
Corporation received $1,000,000 from a private investment firm in return 
for a note payable at 8% per year and the issuance of warrants to 
purchase 450,000 shares ofLuxtec common stock at $3.00 per share.  Subject to 
Board and shareholder approval, the note payable for $1,000,000 will be 
converted into preferred stock with an 8% dividend rate.

The principal source of short-term borrowings during the year was an 
unsecured $1,500,000 revolving credit agreement that was increased to 
$2,500,000 during October, 1995.  At October 31, 1995, the credit line 
borrowings balance was approximately $1,730,000.  Borrowings ranged from a 
high of $1,730,000 to a low of $605,557 during the year.  The average 
borrowing during the year was $1,128,696 and the weighted average interest 
rate was 8.6%.  The interest rate at the end of the fiscal year was 9.0%.

The Corporation anticipates that its current cash requirements will be 
satisfied by cash flow from existing operations and the continuation of the 
current credit arrangements with the Bank of Boston.

Page 14
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



LUXTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS


                          Index

                                         												   Page No.
Report of Independent Public Accountants				              	16

Consolidated Balance Sheets as of
October 31, 1994 and October 31, 1995 	                				17

Consolidated Statements of Operations
for the Years Ended October 31, 1993, 1994 and 1995 		     18

Consolidated Statements of Stockholders'
Equity for the Years Ended 
October 31, 1993, 1994 and 1995	                           19

Consolidated Statements of Cash Flows 
for the Years Ended October 31, 1993, 1994 and 1995 	     	20

Notes to Consolidated Financial Statements				             21


Page 15
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Luxtec Corporation:

We have audited the accompanying consolidated balance sheets of Luxtec 
Corporation and subsidiaries as of October 31, 1994 and 1995, and the 
related consolidated statements of operations, stockholders' equity and cash 
flows for each of the three years in the period ended October 31, 1995.  
These consolidated financial statements are the responsibility of the 
Company's management.  Our responsibility is to express an opinion on these 
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Luxtec 
Corporation and subsidiaries as of October 31, 1994 and 1995, and the results
of their operations and their cash flows for each of the three years in the 
period ended October 31, 1995, in conformity with generally accepted 
accounting principles.


                         											S/Arthur Andersen LLP
                         											Arthur Andersen LLP



Boston, Massachusetts
December 12, 1995 (except with respect
  to the matter discussed in Note 13 as to
  which the date is December 18, 1995)

Page 16
<PAGE>
LUXTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS                        October 31,
                                               1994             1995  
ASSETS    
CURRENT ASSETS:    
Cash                                        $10,329           $11,721  
Accounts receivable, 
less reserves of $53,000 in 1994 
and $66,000 in 1995                        1,668,009        1,534,267    
Inventories                                1,519,648        1,696,001
Prepaid expenses and other assets            120,571           82,738
TOTAL CURRENT ASSETS                       3,318,557        3,324,727

PROPERTY AND EQUIPMENT, AT COST            1,784,928        1,910,189
ACCUMULATED DEPRECIATION AND
AMORTIZATION                              (1,280,105)      (1,409,960)
PROPERTY AND EQUIPMENT - NET                 504,823          500,229
OTHER ASSETS, net of accumulated
amortization of $34,000 and $47,000
at October 31, 1994 and 1995,
respectively                                  248,463          297,087
TOTAL ASSETS                               $4,071,843       $4,122,043
      
LIABILITIES AND STOCKHOLDERS' EQUITY
     
CURRENT LIABILITIES:    
Revolving line of credit                     $607,158       $1,730,308  
Accounts payable                              929,651        1,553,869  
Accrued expenses                              371,610          639,969  
TOTAL CURRENT LIABILITIES                   1,908,419        3,924,146
      
COMMITMENTS (Note 8)
     
STOCKHOLDERS' EQUITY:    
Common stock - $.01 par value -      
Authorized: 10,000,000 shares
Issued and outstanding - 1,421,200 
shares in 1994 and 2,436,541 shares 
in 1995                                        14,212            24,365  
Additional paid-in capital                  2,990,316         7,141,576  
Accumulated deficit                          (841,104)       (6,968,044)  
TOTAL STOCKHOLDERS' EQUITY                  2,163,424           197,897
      
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY                                     $4,071,843        $4,122,043
      
The accompanying notes are an integral part of these consolidated financial 
statements. 
Page 17
<PAGE> 
LUXTEC CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS    
                                           For the Years Ended October 31,   
                                           1993        1994        1995
NET REVENUES                             $6,734,477  $8,138,903  $7,755,376
COST OF GOODS SOLD                        3,832,848   4,432,219   4,732,500  
GROSS PROFIT                              2,901,629   3,706,684   3,022,876

OPERATING EXPENSES:
  Selling and marketing                   1,370,479   1,793,137   1,825,897
  Research and development                  270,445     437,064     614,937
  General and administrative              1,064,634   1,261,356   1,377,974    
  Charge for purchased research
    and development (Note 3)                   -           -      5,230,950 
TOTAL OPERATING EXPENSES                  2,705,558   3,491,557   9,049,758
INCOME (LOSS) FROM OPERATIONS               196,071     215,127  (6,026,882)

OTHER INCOME (EXPENSE):
  Interest expense                          (30,722)    (31,860)    (97,741) 
  Other income (expense)                      2,004      (2,679)     (2,317)
TOTAL OTHER INCOME (EXPENSE)                (28,718)    (34,539)   (100,058)
INCOME (LOSS) BEFORE PROVISION FOR
    INCOME TAXES                            167,353     180,588  (6,126,940)

PROVISION FOR INCOME TAXES                   14,555      16,266        -  
NET INCOME (LOSS)                         $ 152,798    $164,322 $(6,126,940)

NET INCOME (LOSS) PER SHARE                   $0.11       $0.11     $(4.20)

WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING      1,401,532   1,487,823   1,457,897

The accompanying notes are an integral part of these consolidated financial 
statements.

Page 18
<PAGE>
LUXTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                          Common Stock   Additional
                         $.01 par value    Paid-in    Accumulated
                       Shares    Amount    Capital      Deficit      Total

Balance, 
 October 31, 1992    1,401,200   $14,012  $2,948,016  $(1,158,224) $1,803,804

Net Income                -         -           -         152,798     152,798

Balance,
  October 31, 1993   1,401,200    14,012   2,948,016   (1,005,426)  1,956,602

Net Income                -         -           -         164,322     164,322 

Issuance of common
  stock for patent
  rights                20,000       200       42,300        -         42,500

Balance,
  October 31, 1994   1,421,200    14,212    2,990,316    (841,104)  2,163,424

Net loss                  -         -            -     (6,126,940) (6,126,940) 

Issuance of common
  stock in 
  connection with
  merger with
  CardioDyne, Inc.  1,000,000     10,000    4,115,000        -      4,125,000

Issuance of common
  stock under 
  employee stock
  purchase plan        15,341        153       36,260        -         36,413

Balance,
  October 31, 1995  2,436,541    $24,365   $7,141,576  $(6,968,044)  $197,897 

The accompanying notes are an integral part of these consolidated financial
statements.

Page 19
<PAGE>
LUXTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW

                                        For the Years Ended October 31,
                                        1993          1994         1995
CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME (LOSS)                     $152,798     $164,322   $(6,126,940)
  ADJUSTMENTS TO RECONCILE NET INCOME
    (LOSS) TO NET CASH USED FOR 
    OPERATING ACTIVITIES - 
Charge for purchased research
    and development                         -            -        5,230,950
Depreciation and amortization            205,173       173,284      176,916
Provision for uncollectible accounts
    receivable                            10,230        27,500       12,500
Changes in current assets and
    liabilities - 
      Accounts receivable               (284,297)     (465,406)     121,242
      Inventories                       (605,297)     (144,704)    (176,353)   
      Prepaid expenses and other
         current assets                   (1,877)      (55,209)      37,833
      Accounts payable                   361,742         3,200      624,218
      Accrued expenses                    73,388        93,524     (255,437)
NET CASH USED FOR OPERATING ACTIVITIES   (88,140)     (203,489)    (355,071)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment      (95,164)     (100,455)    (125,261)
Increase in other assets                 (41,378)      (36,968)     (95,685)
Cash paid in connection with
  CardioDyne, Inc. acquisition, net
  of cash acquired                          -             -        (582,154)
NET CASH USED FOR INVESTING ACTIVITIES  (136,542)     (137,423)    (803,100)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on revolving line
  of credit                              168,554       401,287    1,123,150
Payments on long-term debt               (70,000)      (52,500)        -
Payments under capital lease
  obligations                            (19,228)      (11,213)        -
Issuance of common stock under
  employee stock purchase plan              -             -          36,413

NET CASH PROVIDED BY FINANCING 
  ACTIVITIES                              79,326        337,574   1,159,563

NET INCREASE (DECREASE) IN CASH         (145,356)        (3,338)      1,392
CASH, BEGINNING OF PERIOD                159,023         13,667      10,329
CASH, END OF PERIOD                      $13,667        $10,329     $11,721 

SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
  In connection with the merger with
  CardioDyne, Inc. (Note 3), the
  following noncash transactions
  occurred - 
     Fair value of assets acquired          -               -    $5,235,073
     Issuance of common stock               -               -    (4,125,000)
     Liabilities assumed                    -               -      (523,796)
     Cash acquired                          -               -        (4,123)
  Cash paid for acquisition, net of
  cash acquired                          $  -            $  -      $582,154

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
  Cash paid for - 
     Interest                           $ 30,727        $ 31,868    $95,205
     Income taxes                       $ 16,014        $ 14,536    $  -

The accompanying notes are an integral part of these consolidated financial
statements.

Page 20
<PAGE>


LUXTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL SATEMENTS 
October 31, 1995

(1) Nature of the Business

Luxtec Corporation (the Company) designs, manufactures and markets fiber-optic
headlights and headlight television camera systems (for audio/video recordings
of surgical procedures), light sources, cables, retractors, loupes, surgical
telescopes, and other custom-made surgical specialty instruments utilizing
fiber-optic technoloy for the mediacal and dental industries.

During 1995, as disclosed in Note 3, the Company acquired the stock of
CardioDyne, Inc., a development-stage enterprise. The Company expects that
the proceeds from a private placement completed in December, 1995, along with
bank financing, will be sufficient to meet its financing needs for 
fiscal 1996.

(2) Summary of Significant Accounting Policies

(a) Principles of Consolidation and Foreign Currency Remeasurement

The accompanying consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries: Luxtec Fiber Optics B.V.,
Fiber Imaging Technologies, Inc., CardioDyne Inc., and Cathec, Inc. All
intercompany accounts and transactions have been eliminated in consolidation.

The accounts and transactions of Luxtec Fiber Optics B.V. are remeasured into
U.S. dollars using applicable historical, current and weighted-average
exchange rates. All exchange gains and losses from remeasurement of assets
and liablities are currently recognized in operations income. The gains and
losses recognized due to foreign currency exchange were insignificant in
1993, 1994 and 1995. Luxtec Fiber Optics B.V. was dissolved during 
fiscal 1995.

(b) Inventories

Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method and includes materials, labor
and manufacturing overhead.

(c) Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
calculated using the straight line method over the estimated useful lives of
the assets.

Leasehold improvements are amortized using the straight-line method over the
shorter of the lease term or estimated useful life of the asset.

(d) Other Assets

Other assets consist principally of patent costs, which are amortized using
the straight-line method over five years.

(e) Revenue Recognition

Revenue is recognized when goods are shipped, at which time all conditions of
sale have been met.

(f) Research and Development Costs

Research and development costs are charged to operations as incurred. 

Page 21
<PAGE>

LUXTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995

(Continued)

(2) Summary of Significant Accounting Policies (Continued)

(g)  Earnings per Share

Earnings per share of common stock are based on the weighted average number
of common shares outstanding and common equivalent shares from dilutive 
stock options outstanding.

(h)  Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.  
Actual results could differ from those estimates.

(3)  Merger with CardioDyne, Inc.

On October 23, 1995, the Company consummated a merger agreement (the Merger) 
with CardioDyne, Inc., a development-stage company engaged in the development
of products that monitor blood pressure.  In connection with the Merger, the 
Company issued 1,000,000 shares of Luxtec common stock with a fair value of 
$4.125 per share.  This transaction was accounted for as a purchase, and 
accordingly, the operations of CardioDyne, Inc. since October 23, 1995 are 
included in the accompanying consolidated financial statements.

In addition to receiving shares of Luxtec common stock, shareholders of 
CardioDyne, Inc. at the effective date of the Merger are entitled to certain 
earnout payments based on the performance of products and agreements 
incorporating technology in development by CardioDyne, Inc., as 
defined.  For a period of 17 years following the effective date of the 
Merger, former CardioDyne, Inc. shareholders are entitled to receive, in 
proportion to their former ownership percentages, 5% and 25% of revenues, if
any, from product and license agreements, respectively, which incorporate 
technology in development by CardioDyne, Inc., at the time of acquisition.
Such earnout payments shall become payable 90 days after the end of the 
Company's fiscal year.  Earnout payments shall be paid 50% in cash and 50% in 
Luxtec common stock and will be accounted for as additional purchase price 
when due.

The aggregate purchase price of $5,235,073 (which consisted of $4,125,000 of
stock, $523,796 of assumed liabilities and $582,154 of direct acquisition
costs) was allocated based on the fair value of the tangible and intangible 
assets acquired as follows:

Current assets                          $    4,123  
Purchased research and development       5,230,950       
Total                                   $5,235,073   

The portion of the purchase price, totaling $5,230,950, allocated to research
and development projects that were not yet technologically feasible and did 
not have future alternative use was charged to operations as of the 
acquisition date, net of any tax considerations.  To bring these projects 
to technological feasibility, high-risk developmental and testing issues need 
to be resolved which requires substantial additional development effort, the 
success of which is uncertain at the date of acquistion.

Page 22
<PAGE>

LUXTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995

(Continued)

(3)  Merger With CardioDyne, Inc. (Continued)

The results of operations related to CardioDyne, Inc. have been included 
with those of the Company since October 23, 1995.  Unaudited pro forma 
operating results for the Company, assuming the acquisition had been made 
as of November 1, 1994, are as follows:

                                     For the years ended October 31,   
                                          1994            1995  
Revenue                                $8,138,903      $7,755,376  
Net Loss                                 (142,033)     (6,424,783)  
Net loss per common share and 
common equivalent share                    (.06)          (2.64)   

(4)  Inventories

Inventories consist of the following at October 31, 1994 and 1995:      
				      			
                                          1994     	      1995  
Raw material                           $  877,410      $  978,477  
Work in process                            96,097         203,833  
Finished goods                            546,141         513,691
                                       $1,519,648      $1,696,001       

(5)  Property and Equipment   

Property and equipment and their respective useful lives are as follows 
at October 31, 1994, and 1995:   

                             Estimated
                             Useful Lives           1994           1995       
Machinery and equipment      3-10 years         $1,155,078     $1,251,305  
Molds and tooling               5 years            144,293        159,893
Furniture and fixtures         10 years            300,316        306,409
Leasehold improvements       Life of lease         185,241        192,582
                                                $1,784,928     $1,910,189


(6)  Accrued Expenses

Accrued expenses consist of the following at October 31, 1994, and 1995:
   	     
                                                    1994           1995
Accrued payroll and related expenses              $101,100       $  80,246
Other accrued expenses                             270,510         559,723
                                                  $371,610       $ 639,969

Page 23 			
<PAGE>

LUXTEC CORPORATION AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995

(Continued)

(7)  Revolving Credit Line

The Company has a $2,500,000 revolving line-of-credit agreement with a bank.
Borrowings bear interest at the bank's prime rate (8.75% at October 31, 1995)
plus .25%.  Unused portions of the revolving line of credit accrue a fee at 
an annual rate of .25%.  Borrowings are secured by substantially all assets 
of the Company.  The agreement contains covenants, including the maintenance 
of certain financial ratios, as defined.  The line of credit expires on 
March 31, 1997.

The Company has a $750,000 equipment facility agreement with a bank.  
Borrowings are based on the purchase price of new equipment and conditions 
determined by the bank.  Borrowings bear interest at the bank's base rate 
plus .5%.  Borrowings under this facility are secured by substantially all 
assets of the Company.  As of October 31, 1995, there are no borrowings 
outstanding under the equipment facility.  The equipment facility agreement 
expires on March 31, 1997.

(8)  Commitments

The Company has noncancelable operating lease commitments that consist 
principally of rentals of facilities and machinery.  Its manufacturing 
and office facilities are leased under a two-year operating lease expiring 
on September 30, 1996.

The future minimum lease payments under operating leases over their 
remaining terms are as follows:

                            Fiscal
                             Year        Amount     

                             1996        180,000
                             1997         46,000
                             1998         43,000
                             1999         17,000  
          Total minimum lease payments  $286,000   

Rent expense charged to operations for operating leases was $132,000 in 1993,
$138,000 in 1994 and $162,000 in 1995.

(9)  Stock Plans

The Company maintains a stock option plan (the 1992 Stock Plan) that provides
for the grant of incentive stock options, nonqualified stock options, stock 
awards and direct sales of stock.  Under the Plan, incentive stock options 
may be granted at an exercise price not less than the fair market value of 
the Company's common stock on the date of the grant.  Nonqualified options 
may be granted by the Board of Directors at its discretion.  The difference,
if any, between the exercise price and the fair value of the underlying
common stock at the measurement date is charged to expense over the vesting
period of such options with a corresponding credit to additional paid-in
capital.  The 1992 Stock Plan also provides that the options are exercisable
at varying dates, as determined by the Compensation Committee of the Board
of Directors (the Compensation Committee) and have terms not to exceed 
10 years.

The Company's Board of Directors adopted an amendment to the Company's 
1992 Stock Plan.  The amendment to the 1992 Stock Plan (i) increased 
from 100,000 to 300,000 the number of shares authorized for issuance under 
the Plan and (ii) limits to 100,000 the maximum number of shares of common 
stock with respect to which options may be granted to any employee 
in any calendar year.

Page 24
<PAGE>

LUXTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995

(Continued)

(9)  Stock Plans (Continued)

On December 8, 1994, the Company adopted a stock option plan for nonemployee
directors (the 1995 Director Plan).  The 1995 Director Plan provides that an
aggregate of up to 200,000 nonqualified options may be granted to nonemployee
directors, as determined by the Compensation Committee.  Under the terms of 
the 1995 Director Plan, options are granted at not less than the fair market
value of the Company's common stock on the date of the grant.  The 1995 
Director Plan also provides that the options are exercisable at varying
dates, as determined by the Compensation Committee, and have terms not to
exceed 10 years.

The following schedule summarizes the stock option activity for the three 
years ended October 31, 1995:

                                 Number of Shares     Option Price 
                                                        per Share

Outstanding at October 31, 1992                         $   -       
Granted                               65,000              1.25  
Outstanding at October 31, 1993       65,000              1.25
Granted                               55,000              1.63
Outstanding at October 31, 1994      120,000           1.25 - 1.63
Granted                              196,000           4.13 - 4.75
Canceled                               6,000              1.25
Outstanding at October 31, 1995      310,000          $1.25 - $4.75
Exercisable at October 31, 1995      134,000          $1.25 - $4.75

As of October 31, 1995, 500,000 shares of common stock have been reserved 
for issuance under the Company's stock option plans.

On April 21, 1994, the Board of Directors approved the 1993 Employee Stock
Purchase Plan (the 1993 Plan) whereby the Company has reserved and may
issue up to an aggregate of 25,000 shares of common stock in semiannual
offerings.  Stock is sold at 85% of fair market value, as defined.  Shares
subscribed to and issued under the Plan were 15,341 in 1995.

(10)  Income Taxes

As of October 31, 1995, the Company had available net operating loss 
carryforwards of approximately $2,516,000, research and development credit 
carryforwards of approximately $91,000, and general business credit 
carryforwards of approximately $25,000 to reduce future federal income taxes,
if any.  These carryforwards expire through 2010 and are subject to review 
and possible adjustment by the Internal Revenue Service.  The Tax Reform Act 
of 1986 limits a Corporation's ability to utilize certain net operating loss
carryforwards in the event of a cumulative change in ownership in excess of
50%, as defined.

In February 1992, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income 
Taxes."  The Company has adopted the provisions of SFAS No. 109 by 
retroactively restating all periods presented in the accompanying 
consolidated financial statements.  There was no effect on net loss or 
financial position of adopting the provisions of SFAS No. 109 for any 
period presented.


Page 25
<PAGE>


LUXTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995

(Continued)

(10)  Income Taxes (Continued)

The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income 
taxes due to the following:

                                     For the Years Ended October 31,   
                                     1993         1994          1995   
Computed at statutory rate           34.0%        34.0%         34.0%  
State income tax, 
    net of federal benefit            6.0          6.0           6.0  
Tax benefit from net 
    operating loss carryforwards    (31.3)       (31.0)        (40.0)
Effective tax rate                    8.7%         9.0%           - %


The components of the net deferred tax amount recognized in the accompanying
consolidated balance sheets are set forth below:

                               				  1993         1994           1995       
Deferred tax assets                $440,000     $346,000     $1,141,000
Deferred tax liabilities            (44,000)     (62,000)          -
Valuation allowance                (396,000)    (284,000)    (1,141,000)
                                   $   -        $   -        $     -


The appropriate tax effect of each type of temporary difference and 
carryforward before allocation of the valuation allowance is summarized as 
follows: 					

                                   	  1993          1994         1995

Net operating losses                $324,000      $230,000   $1,006,000
Other temporary differences          (44,000)      (62,000)      19,000  
Research and development credits      91,000        91,000       91,000
General business credits              25,000        25,000       25,000
                                    $396,000      $284,000   $1,141,000

Due to the uncertainty surrounding the timing of realizing the benefits of 
its favorable tax attributes in future income tax returns, the Company has
placed a valuation allowance against its otherwise recognizable deferred
tax assets.  For the years ended October 31, 1993 and1994, the decrease
in the valuation allowance was $53,000 and $112,000, respectively.  For
the year ended October 31, 1995, the increase in the valuation allowance was
$857,000.

Page 26
<PAGE>

LUXTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1995

(Continued)

(11)  Business Segment and Export Sales

The Company operates in one business segment -- the manufacture, sale and 
distribution of a wide range of medical products using fiber-optics.

The Company operates from one location in the United States.  Sales for 
this operation totaled the following:

               For the Years Ended October 31,   
                  1993     1994      1995
Geographic Area               
  Domestic         85%      84%       84%
  Europe           10       11        10
  All others        5        5         6   
                  100%     100%      100%


(12)  Significant Customers  

One customer, the president of which is a 
member of the Company's Board of Directors, accounted for 15% of total net 
sales in fiscal 1993, 1994 and 1995.

(13)  Subsequent Event

On December 18, 1995, the Company issued Senior Subordinated Notes 
(the Notes) to an investor for $1,000,000 in cash.  Interest accrues on 
the Notes at the rate of 8% per annum and is payable annually in arrears.
Principal on the Notes is due January 1, 2001.  In connection with the 
financing, the Company issued a detachable stock warrant to an investor.
The warrant entitles the holder to purchase 450,000 shares of common stock 
at an exercise price of $3, adjusted for certain dilutive events, as defined.

Page 27
<PAGE>

LUXTEC CORPORATION
October 31, 1995

ITEM 9.  CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL  
       	 DISCLOSURE

							None.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

For information with respect to the Directors and Executive Officers of 
the Corporation, see the section entitled "Election of Directors" appearing 
in the Corporation's Proxy Statement in connection with its next Annual 
Meeting of Shareholders or special meeting in lieu thereof, which section is
incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

See the section entitled "Executive Compensation" appearing in the 
Corporation's Proxy Statement in connection with its next Annual Meeting of 
Shareholders or special meeting in lieu thereof, which section is 
incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See the section entitled "Election of Directors" appearing in the 
Corporation's Proxy Statement in connection with its next Annual Meeting of 
Shareholders or special meeting in lieu thereof, which section is 
incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Louis C. Wallace is currently, and has been since 1989, a member of the 
Board of Directors of the Corporation.  Mr. Wallace is the founder and 
President of Specialty Surgical Instrumentation, Inc. (SSI), a surgical 
distributor in ten (10) southeastern states.  SSI is the largest single 
customer of the Corporation, representing approximately 15% of net sales 
during fiscal 1995.  SSI and Luxtec operate at arms length with a contract 
substantially the same as the other domestic distributors of the Corporation's
products.  The Corporation expects that SSI will represent approximately 
the same percentage of net sales during fiscal 1996 as occurred during 
fiscal 1995.

Page 28
<PAGE>

LUXTEC CORPORATION
October 31, 1995



PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
          REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

     1. Consolidated Financial Statements

     Report of Independent Public Accountants

     Consolidated Balance Sheets as of
     October 31, 1994 and October 31, 1995.

     Consolidated Statements of Earnings
     for the years ended October 31, 1993,
     October 31, 1994 and October 31, 1995.

     Consolidated Statements of Stockholders'
     Equity for the years ended October 31, 1993,
     October 31, 1994 and October 31, 1995.

     Consolidated Statements of Cash Flows
     for the years ended October 31, 1993,
     October 31, 1994 and October 31, 1995.

     Notes to Consolidated Financial Statements

  2. Financial Statement Schedules

No schedules are submitted because they are not applicable, not required 
or because the information is included elsewhere herein.

Page 29
<PAGE>

LUXTEC CORPORATION
October 31, 1995

3. Exhibits

Exhibit    Description                      											         Designation
2A		     Merger Agreement						                              						2A****
3A		     Articles of Organization											                       3A*
3B		Amendment dated March 30, 1982 to Articles of Organization				 3B*
3C		Amendment dated August 9, 1984 to Articles of Organization				 3C*
3D		Amendment dated April 10, 1992 to Articles of Organization				 3D**
3E		Amendment dated October 20, 1995 to Articles of Organization			3E****
3F		Amendment dated October 20, 1995 to Articles of Organization			3F****
3G		     By-Laws														                                     3G*
4		      Specimen of Stock Certificate									                   	4*
10L		    Lease for the premises in Worcester, MA								          10L*****
10N		    Employment Agreement with	James Hobbs							             10N**
10O		    Luxtec Corporation 1992 Stock Plan									              10O**
10P		    Luxtec Corporation 1995 Stock Option Plan 
             for Non-Employee Directors		                         10P****
10Q		    Bank Agreement												                               10Q
21		     Luxtec Subsidiaries												                          21
23		     Consent of Auditors												                          23

*Previously filed as exhibits to the Corporation's Registration Statement 
on Form S-18 SEC File No. 33-5514B declared effective on July 7, 1986.

**Previously filed as exhibit to the Corporation's Report on Form 10-K 
for fiscal year ended October 31, 1993.

***Previously filed as exhibits to the Corporation's Report on Form 10-Q 
for quarter ended July 31, 1994.

****Previously filed as exhibits to the Corporation's Proxy Statement	
dated October 20, 1995.

*****Previously filed as exhibit to the Corporation's Report on Form 10-K 
for fiscal year ended October 31, 1994.

Page 30
<PAGE>

LUXTEC CORPORATION
October 31, 1995

3. Exhibits (Continued)

(b)  Reports on Form 8-K:

Announcement of definitive Agreement of Merger and Plan of Reorganization 
with CardioDyne, Inc. dated June 28, 1995.

Announcement of closing of merger with CardioDyne, Inc. dated 
October 23, 1995.

(c)  Exhibits.

The Corporation hereby files as exhibits to this Form 10-K those 
exhibits listed in Item 14 (a)(3), above, as being filed herewith.

(d)  Financial Statement Schedules.

None.

Page 31
<PAGE>

LUXTEC CORPORATION
October 31, 1995

SIGNATURES

Pursuant to the requirements of Section 13 or 15(D) of the 
Securities Exchange Act of 1934, the Corporation has duly caused this 
report to be signed on its behalf by the undersigned, thereunto duly 
authorized, in the Town of Worcester, Commonwealth of Massachusetts, 
on the 29th day of January 1996.

													LUXTEC CORPORATION


													by S/James W. Hobbs				             
													James W. Hobbs, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed by the following persons in the capacities and on 
the dates indicated:


Signature			               		Title		                    					Date

S/James W. Hobbs			          President, Chief           			January 29, 1996
James W. Hobbs         		    Executive Officer, Director


S/Samuel M. Stein         			Chief Financial Officer,    	 	January 29, 1996	
Samuel M. Stein          	 		Treasurer, Assistant Clerk


S/James Berardo	          			Director	                  				January 29, 1996		
James Berardo			


S/Paul Epstein		           		Director	                  				January 29, 1996
Paul Epstein


S/Lynn K. Friedel	         		Director	                  				January 29, 1996		
Lynn K. Friedel	


S/Patrick G. Phillipps	    		Director	                  				January 29, 1996		
Patrick G. Phillipps


S/Thomas J. Vander Salm	    	Director	                 				January 29, 1996		
Thomas J. Vander Salm


S/Louis C. Wallace	      	  	Director	                 				January 29, 1996		
Louis C. Wallace

Page 32
<PAGE>

Exhibits furnished pursuant to requirements
of FORM  10K
                                            			
3. Exhibits


Exhibit    Description                      											         Designation
2A	     	Merger Agreement						                             						 2A****	
3A	     	Articles of Organization											                       3A*
3B		Amendment dated March 30, 1982 to Articles of Organization				 3B*
3C		Amendment dated August 9, 1984 to Articles of Organization				 3C*
3D		Amendment dated April 10, 1992 to Articles of Organization				 3D**
3E		Amendment dated October 20, 1995 to Articles of Organization			3E****
3F		Amendment dated October 20, 1995 to Articles of Organization			3F****
3G	     	By-Laws														                                     3G*
4		      Specimen of Stock Certificate										                   4*
10L		    Lease for the premises in Worcester, MA								          10L*****
10N		    Employment Agreement with	James Hobbs							             10N**
10O		    Luxtec Corporation 1992 Stock Plan									              10O**
10P		    Luxtec Corporation 1995 Stock Option Plan 
                for Non-Employee Directors		                      10P****
10Q		    Bank Agreement												                               10Q
21		     Luxtec Subsidiaries												                          21
23		     Consent of Auditors												                          23

*Previously filed as exhibits to the Corporation's Registration Statement 
on Form S-18 SEC File No. 33-5514B	declared effective on July 7, 1986.

**Previously filed as exhibit to the Corporation's Report on Form 10-K 
for fiscal year ended October 31, 1993.

***Previously filed as exhibits to the Corporation's Report on Form 10-Q 
for quarter ended July 31, 1994.

****Previously filed as exhibits to the Corporation's Proxy Statement	dated 
October 20, 1995.

*****Previously filed as exhibit to the Corporation's Report on Form 10-K 
for fiscal year ended October 31, 1994.

Page 33
<PAGE>

EXHIBIT 21

Luxtec Corporation Subsidiaries


1.	Cathtec, Inc., a Massachusetts Corporation.

2.	Fiber Imaging Technologies, Inc., a Massachusetts Corporation.

3. CardioDyne, Incorporated, a Massachusetts Corporation.

Page 34
<PAGE>

                            EXHIBIT 23
            CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
of our reports in this Form 10-K, into the Company's previously filed
Registration Statement on Form S-8 (File No. 33-83510).


                                       S/ARTHUR ANDERSEN LLP
                                       ARTHUR ANDERSEN

Boston, Massachusetts
January 29, 1996

Page 35
<PAGE>

UNLIMITED GUARANTY


	THIS UNLIMITED GUARANTY, dated as of October 24, 1995 by CARDIODYNE, INC. 
f/k/a LUXTEC CD ACQUISITION CO., INC., a Massachusetts corporation, successor
by merger to CARDIODYNE, INC., a Delaware corporation (the "Guarantor"), is 
in favor of THE FIRST NATIONAL BANK OF BOSTON, a national banking association
with its head office at 100 Federal Street, Boston, Massachusetts 02110, and 
its foreign branches (the "Lender").  In consideration of the Lender's giving
time, credit or banking facilities or accommodations to LUXTEC CORPORATION
and its successors (the "Customer"), the Guarantor agrees as follows:

	1.	GUARANTY OF PAYMENT AND PERFORMANCE.  The Guarantor hereby guarantees to 
the Lender the full and punctual payment when due (whether at maturity, by 
acceleration or otherwise), and the performance, of all liabilities, 
agreements and other obligations of the Customer to the Lender, whether 
direct or indirect, absolute or contingent, due or to become due, secured or 
unsecured, now existing or hereafter arising or acquired (whether by way of 
discount, letter of credit, lease, loan, overdraft or otherwise) (the 
"Obligations"). This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of the Obligations 
and not of their collectibility only and is in no way conditioned upon any 
requirement that the Lender first attempt to collect any of the Obligations 
from the Customer or resort to any security or other means of obtaining their 
payment or upon a default by the Customer in the payment or performance of 
any of the Obligations. The obligations of the Guarantor hereunder shall 
become immediately due and payable to the Lender, upon demand by the Lender, 
without notice of any nature, which is expressly, waived by the Guarantor.
Payments by the Guarantor hereunder may be required by the Lender on any 
number of occasions.

	2.	GUARANTOR'S AGREEMENT TO PAY.  The Guarantor further agrees, as the 
principal obligor and not as a guarantor only, to pay to the Lender, on 
demand, all costs and expenses (including court costs and legal expenses) 
incurred or expended by the Lender in connection with the Obligations, this 
Guaranty and the enforcement thereof, together with interest on amounts 
recoverable under this Guaranty from the time such amounts become due until 
payment, at the rate per annum equal to the rate of interest announced by
the Lender from time to time at its head office as its Base Rate, plus 4.00%:
provided that if such interest exceeds the maximum amount permitted to be
paid under apllicable law, them such interest shall b e reduced to such 
maximum permitted amount.

	3.	UNLIMITED GUARANTY.  THE LIABILITY OF THE GUARANTOR HEREUNDER SHALL BE 
UNLIMITED.

<PAGE>

 	4.	WAIVERS BY GUARANTOR; LENDER'S FREEDOM TO ACT.  The Guarantor agrees 
that the Obligations will be paid and performed strictly in accordance with 
their respective terms regardless of any law, regulation or order now or 
hereafter in effect in any jurisdiction affecting any of such terms or the 
rights of the Lender with respect thereto.  The Guarantor waives presentment,
demand, protest, notice of acceptance, notice of Obligations incurred and all 
other notices of any kind, all defenses which may be avail



	5.	UNENFORCEABILITY OF OBLIGATIONS AGAINST CUSTOMER.  If for any reason the 
Customer has no legal existence or is under no legal obligation to discharge 
any of the Obligations, or if any of the Obligations have become 
irrecoverable from the Customer by operation of law or for any other reason, 
this Guaranty shall nevertheless be binding on the Guarantor to the same 
extent as if the Guarantor at all times had been the principal obligor on all
such Obligations.  In the event that acceleration of the time for

	6.	SUBROGATION; SUBORDINATION.  Until the payment and performance in full of
all Obligations and any and all obligations of the Customer to any affiliate 
of the Lender, the  Guarantor shall not exercise any rights against the 
Customer arising as a result of payment by the Guarantor hereunder, by way of 
subrogation or otherwise, and will not prove any claim in competition with 
the Lender or its affiliates in respect of any payment hereunder in 
bankruptcy or insolvency proceedings of any nature; the Guaranto

	7.	SECURITY; SET-OFF.  The Guarantor grants to the Lender, as security for 
the full and punctual payment and performance of the Guarantor's obligations 
hereunder, a continuing lien on and security interest in all securities or 
other property belonging to the Guarantor now or hereafter held by the Lender
and in all deposits (general or special, time or demand, provisional or 
final) and other sums credited by or due from the Lender to the Guarantor or 
subject to withdrawal by the Guarantor; and regardless of

	8.	FURTHER ASSURANCES.  The Guarantor agrees, upon demand after any change 
in the condition or affairs (financial or otherwise) of the Guarantor deemed 
by the Lender to be adverse and material, to secure the payment and 
performance of its obligations hereunder by delivering, assigning or 
transferring to the Lender or granting the Lender a security interest in 
additional collateral of a value and character satisfactory to the Lender, 
and authorizes the Lender to file any financing statement deemed by the Le

	9.	TERMINATION; REINSTATEMENT.  This Guaranty shall remain in full force and
effect until the Lender is given written notice of the Guarantor's intention 
to discontinue this Guaranty, notwithstanding any intermediate or temporary 
payment or settlement of the whole or any part of the Obligations.  No such 
notice shall be effective unless received and acknowledged by an officer of 
the Lender at its head office or at the branch of the Lender where this 
Guaranty is given.  No such notice shall affect any right
 of any affiliate hereunder including, without limitation, the rights set 
forth in Sections 4 and 6, with respect to Obligations incurred prior to the 
receipt of such notice or Obligations incurred pursuant to any contract or 
commitment in existence prior to such receipt, and all checks, drafts, notes,
instruments (negotiable or otherwise) and writings made by or for the account
of the Customer and drawn on the Lender or any of its agents purporting to be
dated on or before the date of receipt of such notic

	10.	SUCCESSORS AND ASSIGNS.  This Guaranty shall be binding upon the 
Guarantor, its successors and assigns, and shall inure to the benefit of and 
be enforceable by the Lender and its successors, transferees and assigns.  
Without limiting the generality of the foregoing sentence, the Lender may 
assign or otherwise transfer any agreement or any note held by it evidencing,
securing or otherwise executed in connection with the Obligations, or sell 
participations in any interest therein, to any other person or 

	11.	AMENDMENTS AND WAIVERS.  No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the Guarantor therefrom shall be 
effective unless the same shall be in writing and signed by the Lender.  No 
failure on the part of the Lender to exercise, and no delay in exercising, 
any right hereunder shall operate as a waiver thereof, nor shall any single 
or partial exercise of any right hereunder preclude any other or further 
exercise thereof or the exercise of any other right.

	12.	NOTICES.  All notices and other communications called for hereunder 
shall be made in writing and, unless otherwise  specifically provided herein,
shall be deemed to have been duly made or given when delivered by hand or 
mailed first class mail postage prepaid or, in the case of telegraphic or 
telexed notice, when transmitted, answer back received, addressed as follows:
if to the Guarantor, at the address set forth beneath its signature hereto, 
and if to the Lender, at 100 Federal Street, Boston, Massac

	13.	GOVERNING LAW; CONSENT TO JURISDICTION.  This Guaranty is intended to 
take effect as a sealed instrument and shall be governed by, and construed 
in accordance with, the laws of The Commonwealth of Massachusetts.  The 
Guarantor agrees that any suit for the enforcement of this Guaranty may be 
brought in the courts of The Commonwealth of Massachusetts or any Federal 
Court sitting therein and consents to the non-exclusive jurisdiction of such 
court and to service of process in any such suit being made upon
mail at the address specified in Section 12 hereof.  The Guarantor hereby 
waives any objection that it may now or hereafter have to the venue of any 
such suit or any such court or that such suit was brought in an inconvenient 
court.

	14.	MISCELLANEOUS. This Guaranty constitutes the entire agreement of the 
Guarantor with respect to the matters set forth herein.  The rights and 
remedies herein provided are cumulative and not exclusive of any remedies 
provided by law or any other agreement, and this Guaranty shall be in 
addition to any other guaranty of the Obligations.  The invalidity or 
unenforceability of any one or more sections of this Guaranty shall not 
affect the validity or enforceability of its remaining provisions.  Captions 
are for the ease of reference only and shall not affect the meaning of the 
relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined.

	IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed 
and delivered by its duly authorized officer as of the date appearing on page
one.


	CARDIODYNE, INC. f/k/a LUXTEC CD
	ACQUISITION CO., INC.


________________________              	By:_____________________________
Witness	                                  Its President

                                         	326 Clark Street
	                                         Worcester, Massachusetts  01606

<PAGE>
	CERTIFICATE

The undersigned certifies to The First National Bank of Boston that:

	1.	He is the Clerk of the Guarantor which executed the foregoing Guaranty 
and in that capacity has the authority to make this certificate on behalf of 
the Guarantor.

	2. The Guarantor is a corporation, validly organized or formed and existing 
in good standing and in the full enjoyment of its powers and franchises under 
the laws of the Commonwealth of Massachusetts.

	3.	The foregoing Guaranty has been duly executed and delivered on behalf of 
the Guarantor, such actions have been duly authorized by all necessary 
corporate or other action, and the execution, delivery and performance of the
Guaranty by the Guarantor will not contravene any existing law, rule or 
regulation, or any provision of its certificate of incorporation or bylaws or
other document or documents evidencing its establishment or governing the 
conduct of its affairs or any agreement to which it is a party

		IN WITNESS WHEREOF, the undersigned has made this certificate on behalf of 
the Guarantor this ____ day of October, 1995.

ATTEST:                                  CARDIODYNE, INC. f/k/a LUXTEC CD
                                        	ACQUISITION CO., INC.



_____________________________           	By:______________________________
	                                           Its Clerk
<PAGE>

	ASSIGNMENT OF LEASE


	THIS ASSIGNMENT AGREEMENT made as of this 24th day of October, 1995, is by 
and between LUXTEC CORPORATION, a Massachusetts corporation with its 
principal place of business at 326 Clark Street, Worcester, Massachusetts 
(the "Assignor") and THE FIRST NATIONAL BANK OF BOSTON, a national banking 
association with its head office at 100 Federal Street, Boston, Massachusetts
(the "Assignee").

	The Assignor and the Assignee agree as follows:

	ASSIGNMENT OF LEASE.  For value received and the consideration hereinafter 
set forth, and as collateral security for the debt hereinafter described, 
Assignor grants a security interest in, and also transfers and assigns to 
Assignee, Assignor's entire right, title and interest as lessee in a lease of
property located at 326 Clark Street, Worcester, Worcester County, 
Massachusetts, described in a lease dated _____________ by and between 
UNITRODE CORPORATION, as lessor (the "Lessor") and Assignor as lessee fo

	DEBT SECURED.  This Assignment is made to secure the following:
	
	the payment of amounts from time to time due pursuant to the terms of (i) a 
certain Revolving Credit Note dated of even date herewith made by the 
Assignor to the Assignee in the principal amount of Two Million Five Hundred 
Thousand and 00/100 Dollars ($2,500,000.00) (the "Note") and (ii) a certain 
Equipment Note dated of even date herewith made by the Assignor to the 
Assignee in the principal amount of Seven Hundred and Fifty Thousand and 
00/100 Dollars ($750,000.00) (together, the "Notes");

	the performance of all covenants and agreements contained in the Notes, a 
Loan and Security Agreement by and between the  Assignor and the Assignee 
dated of even date herewith (the "Agreement"), this Assignment, the 
Collateral Documents (as defined in the Agreement) and all other agreements, 
documents or instruments executed by or between the parties hereto dated of 
even date herewith (collectively, the "Loan Documents"); and

	all obligations of the Assignor to the Assignee whether now existing or 
hereafter arising, direct or indirect, absolute or contingent, due or not due.

<PAGE> 

	All of the foregoing are collectively referred to herein as the 
"Obligations".

	ASSIGNOR'S WARRANTIES.  Assignor warrants that:

	it is the lawful lessee of the Lease herein assigned insofar as it applies 
to the Premises and of all the leasehold rights which the Lease purports to 
create with full right to assign the same;

	the Lease is unencumbered, valid and in full force and effect in accordance 
with its terms; and

	it is not in default under any of the terms, conditions or covenants of the 
Lease.

	ASSIGNOR'S COVENANTS.  Assignor covenants and agrees:

	to observe and perform all obligations imposed on lessee under the Lease; 
not to do or permit to be done anything to impair the security thereof; and 
to indemnify Assignee from the consequences of any failure to do so;

	to pay all rent accruing under the Lease, or for the use and occupancy of 
the Premises, at the time when they shall become due;

	not to execute any other Assignment of lessee's interest in the Lease;

	not to alter, extend or modify the terms of the Lease or to request any 
consent or exercise any renewal, or option to extend required or permitted by
the terms of the Lease without the prior written consent of Assignee; and

	not to terminate, cancel, surrender or assign the Lease or to cause a 
termination or changing of the obligations of Assignor without the prior 
written consent of Assignee.

	TERMS AND CONDITIONS.

	Assignee's Option to Take Possession and Operate Premises.  In the event of 
Assignor's default in performance of the Obligations, without notice or 
regard to the adequacy of the security for the Obligations, personally or by 
its agents, with or without bringing any action or proceedings, Assignee 
shall have the option, all to the extent permitted by the terms of the Lease,
to take possession of the Premises, and to hold the same as lessee under the 
Lease; and, with or without taking physical possession of 

		(b) Indemnification of Assignee.  Assignee shall not be liable for any loss 
or liability sustained by Assignor resulting from Assignee's operations or 
use of the Premises or from any other act or omission in connection therewith
except for gross negligence or willful misconduct of Assignee.  At no time 
prior to exercise of the options in Section 5(a) hereof shall Assignee be 
obligated to perform or discharge any obligation or duty under the Lease, or 
under this Assignment, and Assignor agrees to indemnif

		(c) Evidence of Unpaid Indebtedness.  Upon payment in full of the 
Obligations, this Assignment shall become void and of no effect, but the 
affidavit or statement of Assignee or any agent, officer or attorney of 
Assignee showing any part of the Obligations remaining unpaid shall 
constitute conclusive evidence of the effectiveness and continuing force of 
this Assignment and any person may, and is hereby authorized to, rely thereon.

		(d) Releases by Assignee.  Assignee may take or release other security for 
payment of the Obligations and may further release any party primarily or 
secondarily liable, and may apply any other security held by Assignee to the 
satisfaction of the Obligations without prejudice to any rights under this 
Assignment.

		(e) Remedies of Assignee Not Exclusive.  Nothing contained in this 
Assignment nor any act done or omitted by Assignee pursuant to the terms of 
this Assignment shall be deemed a waiver by Assignee of any of the rights or 
remedies under the documents evidencing the Obligations and this Assignment 
is executed without prejudice to any rights or remedies possessed by Assignee
under the terms of any other instruments, whether referred to herein or 
otherwise.  The right of Assignee to collect  the Obligations an

	6.	DEFAULT.  Violation of any of the covenants, representations and 
provisions contained herein by the Assignor shall be deemed a default under 
the terms of any of the documents evidencing the Obligations.

	7.	EFFECT OF ASSIGNMENT.  The terms, provisions, representations and 
warranties herein contained shall be binding upon the Assignor and the 
respective heirs, administrators, executors, successors and assigns of the 
Assignor, as well as any subsequent owner of the Premises, and shall inure to
the Assignee, its successors and assigns.

	IN WITNESS WHEREOF, the parties hereto have executed this Assignment at 
Worcester, Massachusetts, as of the day and year first above written.
			                 	            		LUXTEC CORPORATION

				
                             						By:____________________________
 						                               Its President


                             						By:____________________________
						                                Its Treasurer


                             						THE FIRST NATIONAL BANK OF
						                             BOSTON


                             						By:____________________________
						                               Its Vice President

	The undersigned lessor under the Lease of the Premises described in Section 
1 hereof hereby assents to the Assignment of Lease by Assignor to Assignee.
	
					                              	UNITRODE CORPORATION
 

                              						By:_______________________________
						                                 Its


 
                  	 COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						          October 24, 1995

	Then personally appeared the above-named Samuel M. Stein, Treasurer of 
Luxtec Corporation, and acknowledged the foregoing instrument to be his free 
act and deed and the free act and deed of Luxtec Corporation, before me.


                            						        ____________________________
						                                    Notary Public
						                                    My Commission Expires:

                    	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						          October 24, 1995

	Then personally appeared the above-named G. Christopher Miller, Vice 
President of The First National Bank of Boston, and acknowledged the 
foregoing instrument to be his free act and deed and the free act and deed of
The First National Bank of Boston, before me.


						                                     __________________________
						                                     Notary Public
                             						        My Commission Expires


                  	[_____________________________]

__________, ss.						     October __, 1995

	Then personally appeared the above-named _________________, _______________
of Unitrode Corporation, and acknowledged the foregoing instrument to be 
his/her free act and deed and the free act and deed of Unitrode Corporation, 
before me.

						        __________________________
						        Notary Public
						        My Commission Expires:

<PAGE>

	ASSIGNMENT OF PATENTS


	THIS ASSIGNMENT OF PATENTS (the "Assignment") is made as of the 24th day of 
October, 1995 by CARDIODYNE, INC., a Massachusetts corporation, f/k/a LUXTEC 
CD ACQUISITION CO., INC., with its principal office at 326 Clark Street, 
Worcester, Massachusetts, successor by merger to CARDIODYNE, INC., a Delaware
corporation (the "Assignor") to THE FIRST NATIONAL BANK OF BOSTON, a national
bank with its head office at 100 Federal Street, Boston, Massachusetts (the 
"Lender").

	BACKGROUND.  Assignor has executed and delivered to the Lender a certain 
Unlimited Guaranty dated as of October 24, 1995 guarantying all obligations 
of LUXTEC CORPORATION to the Lender pursuant to a certain Loan and Security 
Agreement dated as of October 24, 1995 by and among the Assignor, the Lender 
and certain other parties (as amended from time to time, the "Loan 
Agreement").  In order to induce the Lender to execute and deliver the Loan 
Agreement, the Assignor has agreed to assign to the Lender certain

	NOW, THEREFORE, in consideration of the premises contained herein and other 
good and valuable consideration, the receipt and sufficiency of which are 
hereby acknowledged, the Assignor hereby agrees with the Lender as follows:

	 1.	To secure the complete and timely satisfaction of all Obligations (such 
term, as used herein, shall have the same meaning as provided in the Loan 
Agreement) of the Assignor to the Lender, the Assignor hereby assigns, 
pledges and grants to the Lender a continuing security interest in and to the
Assignor's right, title and interest in and to the patents and patent 
applications listed on Exhibit A attached hereto, including without 
limitation all proceeds thereof (such as, by way of example, license royal

	 2.	The Assignor covenants and warrants that:

		(a)	The Patents are subsisting and have not been adjudged invalid or 
unenforceable, in whole or in part;

		(b)	To the best of the Assignor's knowledge, each of the Patents is valid 
and enforceable and the Assignor has notified the Lender in writing of all 
prior art (including public uses and sales) of which it is aware;

 		(c)	The Assignor is the sole and exclusive owner of the entire and 
unencumbered right, title and interest in and to each of the Patents, free 
and clear of any liens, charges and encumbrances, including without 
limitation licenses, shop rights and covenants by the Assignor not to sue 
third persons; and

		(d)	The Assignor has the unqualified right to enter into this Assignment 
and perform its terms.

	 3.	The Assignor agrees that, until all of the Obligations shall have been 
satisfied in full, it will not enter into any agreement (for example, a  
license agreement) which is inconsistent with the Assignor's obligations 
under this Assignment, without the Lender's prior written consent, which 
consent shall not be unreasonably withheld.

	 4.	If, before the Obligations shall have been satisfied in full, the 
Assignor shall obtain rights to any new patentable inventions, or become 
entitled to the benefit of any patent application or patent for any reissue, 
division, continuation, renewal, extension or continuation-in-part of any 
Patent or any improvement on any Patent, the provisions of paragraph 1 shall 
automatically apply thereto and the Assignor shall give to the Lender prompt 
notice thereof in writing.

	 5.	The Assignor authorizes the Lender to modify this Assignment by amending
Exhibit A to include any future patents and patent applications which are 
Patents under paragraph 1 or paragraph 4 hereof.

	 6.	Unless and until there shall have occurred and be continuing an Event of
Default (as defined in the Loan Agreement), the Lender hereby grants to the 
Assignor the exclusive, worldwide non-transferable right and license to make,
have made, use and sell the inventions disclosed and claimed in the Patents 
for the Assignor's own benefit and account and for none other.  The Assignor 
agrees not to sell or assign its interest in, or grant any sublicense under, 
the license granted to the Assignor in this paragr

	 7.	If any Event of Default shall have occurred and be continuing, the 
Assignor's license under the Patents as set forth in paragraph 6 shall 
terminate forthwith, and the Lender shall have, in addition to all other 
rights and remedies given it by this Assignment, those allowed by law and the
rights and remedies of a secured party under the Uniform Commercial Code as 
enacted in any jurisdiction in which the Patents may be located and, without 
limiting the generality of the foregoing, the Lender may immediat

	 8.	At such time as the Assignor shall completely satisfy all of the 
Obligations, the Lender shall execute and deliver to the Assignor all deeds, 
assignments and other instruments as may be necessary or proper to re-vest in
the Assignor full title to the Patents, subject to any disposition thereof 
which may have been made by the Lender pursuant hereto.

	 9.	Any and all fees, costs and expenses, of whatever kind or nature, 
including reasonable attorneys' fees and legal expenses, incurred by the 
Lender in connection with the preparation of this Assignment and all other 
documents relating hereto and the consummation of this transaction, the 
filing or recording of any documents (including all taxes in connection 
therewith) in public offices, the payment or discharge of any taxes, counsel 
fees, maintenance fees, encumbrances or otherwise protecting, maintainin

	10.	If, in the Assignor's reasonable business judgment, any patent shall 
have significant value to the business of the Assignor, the Assignor shall 
have the duty, through counsel acceptable to the Lender, to prosecute 
diligently any application with respect to the Patents pending as of the date
of this Assignment or thereafter until the Obligations shall have been paid 
in full, to make application on unpatented but patentable inventions and to 
preserve and maintain all rights in the Patents.  Any expenses 

 	11.	The Lender shall have the right but shall in no way be obligated to 
bring suit in its own name to enforce the Patents or any license thereunder, 
in which event the Assignor shall at the request of the Lender do any and all
lawful acts and execute any and all proper documents required by the Lender 
in aid of such enforcement and the Assignor shall promptly, upon demand, 
reimburse and indemnify the Lender for all costs and expenses incurred by the
Lender in the exercise of its rights under this paragrap

	12.	No course of dealing between the Assignor and the Lender, nor any 
failure to exercise, nor any delay in exercising, on the part of the Lender, 
any right, power or privilege hereunder or under the Loan Agreement shall 
operate as a waiver thereof; nor shall any single or partial exercise of any 
right, power or privilege hereunder or thereunder preclude any other or 
further exercise thereof or the exercise of any other right, power or 
privilege.
	
 13.	All of the Lender's rights and remedies with respect to the Patents, 
whether established hereby, by the Loan Agreement, by any other agreements or
by law shall be cumulative and may be exercised singularly or concurrently.

	14.	The provisions of this Assignment are severable, and if any clause or 
provision shall be held invalid and unenforceable in whole or in part in any 
jurisdiction, then such invalidity or unenforceability shall affect only 
such clause or provision, or part thereof, in such jurisdiction, and shall 
not in any manner affect such clause or provision in any other jurisdiction, 
or any other clause or provision of this Assignment in any jurisdiction.

	15.	This Assignment is subject to modification only by a writing signed by 
the parties, except as provided in paragraph 5.

	16.	The benefits and burdens of this Assignment shall inure to the benefit 
of and be binding upon the respective successors and permitted assigns of the
parties.

	17.	The validity and interpretation of this Assignment and the rights and 
obligations of the parties shall be governed by the laws of The Commonwealth
of Massachusetts.

	IN WITNESS WHEREOF, the parties hereto have executed this Assignment as an 
instrument under seal as of the day and year first above written.


					 		CARDIODYNE, INC.
							

____________________________		By:___________________________
Witness					        Its Treasurer

 							THE FIRST NATIONAL BANK
							OF BOSTON


____________________________		By:__________________________
Witness						   Its Vice President




	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						          January __, 1996

	Then personally appeared the above-named Samuel M. Stein, Treasurer of 
Cardiodyne, Inc., and acknowledged the foregoing instrument to be his free 
act and deed and the free act and deed of Cardiodyne, Inc., before me.

						        __________________________
						        Notary Public
						        My Commission Expires:


	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						          January __, 1996

	Then personally appeared the above-named G. Christopher Miller, Vice 
President of The First National Bank of Boston, and acknowledged the 
foregoing instrument to be his free act and deed and the free act and deed 
of The First National Bank of Boston, before me.

						        __________________________
						        Notary Public
						        My Commission Expires:
	


	ASSIGNMENT OF PATENTS


	THIS ASSIGNMENT OF PATENTS (the "Assignment") is made as of the 24th day of 
October, 1995 by LUXTEC CORPORATION, a Massachusetts corporation having a 
principal business address at 326 Clark Street, Worcester, Massachusetts 
(the "Assignor") to THE FIRST NATIONAL BANK OF BOSTON, a national bank with 
its head office at 100 Federal Street, Boston, Massachusetts (the "Lender").

	BACKGROUND.  Assignor has executed and delivered to the Lender (a) a 
certain Revolving Credit Note dated of even date herewith in the principal 
amount of Two Million Five Hundred Thousand and 00/100 Dollars 
($2,500,000.00), and (b) a certain Equipment Note dated of even date 
herewith in the principal amount of Seven Hundred Fifty Thousand and 00/100 
Dollars ($750,000.00) (collectively, the "Notes") pursuant to a certain Loan 
and Security Agreement dated of even date herewith by and among Assignor, 
Lender a

	NOW, THEREFORE, in consideration of the premises contained herein and other 
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Assignor hereby agrees with the Lender as follows:

	 1.	To secure the complete and timely satisfaction of all Obligations (such
term, as used herein, shall have the same meaning as provided in the Loan 
Agreement) of the Assignor to the Lender, the Assignor hereby assigns, 
pledges and grants to the Lender a continuing security interest in and to the
Assignor's right, title and interest in and to the patents and patent 
applications listed on Exhibit A attached hereto, including without 
limitation all proceeds thereof (such as, by way of example, license royal

	 2.	The Assignor covenants and warrants that:

		(a)	The Patents are subsisting and have not been adjudged invalid or 
unenforceable, in whole or in part;

		(b)	To the best of the Assignor's knowledge, each of the Patents is valid 
and enforceable and the Assignor has notified the Lender in writing of all 
prior art (including public uses and sales) of which it is aware;

 		(c)	The Assignor is the sole and exclusive owner of the entire and 
unencumbered right, title and interest in and to each of the Patents, free 
and clear of any liens, charges and encumbrances, including without 
limitation licenses, shop rights and covenants by the Assignor not to sue 
third persons; and

		(d)	The Assignor has the unqualified right to enter into this Assignment 
and perform its terms.

	 3.	The Assignor agrees that, until all of the Obligations shall have been 
satisfied in full, it will not enter into any agreement (for example, a  
license agreement) which is inconsistent with the Assignor's obligations 
under this Assignment, without the Lender's prior written consent, which 
consent shall not be unreasonably withheld.

	 4.	If, before the Obligations shall have been satisfied in full, the 
Assignor shall obtain rights to any new patentable inventions, or become 
entitled to the benefit of any patent application or patent for any reissue, 
division, continuation, renewal, extension or continuation-in-part of any 
Patent or any improvement on any Patent, the provisions of paragraph 1 shall 
automatically apply thereto and the Assignor shall give to the Lender prompt 
notice thereof in writing.

	 5.	The Assignor authorizes the Lender to modify this Assignment by amending
Exhibit A to include any future patents and patent applications which are 
Patents under paragraph 1 or paragraph 4 hereof.

	 6.	Unless and until there shall have occurred and be continuing an Event of
Default (as defined in the Loan Agreement), the Lender hereby grants to the 
Assignor the exclusive, worldwide non-transferable right and license to make,
have made, use and sell the inventions disclosed and claimed in the Patents 
for the Assignor's own benefit and account and for none other.  The Assignor 
agrees not to sell or assign its interest in, or grant any sublicense under, 
the license granted to the Assignor in this paragr

	 7.	If any Event of Default shall have occurred and be continuing, the 
Assignor's license under the Patents as set forth in paragraph 6 shall 
terminate forthwith, and the Lender shall have, in addition to all other 
rights and remedies given it by this Assignment, those allowed by law and 
the rights and remedies of a secured party under the Uniform Commercial 
Code as enacted in any jurisdiction in which the Patents may be located and, 
without limiting the generality of the foregoing, the Lender may immediat

	 8.	At such time as the Assignor shall completely satisfy all of the 
Obligations, the Lender shall execute and deliver to the Assignor all deeds, 
assignments and other instruments as may be necessary or proper to re-vest 
in  the Assignor full title to the Patents, subject to any disposition 
thereof which may have been made by the Lender pursuant hereto.

	 9.	Any and all fees, costs and expenses, of whatever kind or nature, 
including reasonable attorneys' fees and legal expenses, incurred by the 
Lender in connection with the preparation of this Assignment and all other 
documents relating hereto and the consummation of this transaction, the 
filing or recording of any documents (including all taxes in connection 
therewith) in public offices, the payment or discharge of any taxes, 
counsel fees, maintenance fees, encumbrances or otherwise protecting, 
maintainin

	10.	If, in the Assignor's reasonable business judgment, any patent shall 
have significant value to the business of the Assignor, the Assignor shall 
have the duty, through counsel acceptable to the Lender, to prosecute 
diligently any application with respect to the Patents pending as of the 
date of this Assignment or thereafter until the Obligations shall have been 
paid in full, to make application on unpatented but patentable inventions 
and to preserve and maintain all rights in the Patents.  Any expenses 

 	11.	The Lender shall have the right but shall in no way be obligated to 
bring suit in its own name to enforce the Patents or any license thereunder, 
in which event the Assignor shall at the request of the Lender do any and 
all lawful acts and execute any and all proper documents required by the 
Lender in aid of such enforcement and the Assignor shall promptly, upon 
demand, reimburse and indemnify the Lender for all costs and expenses 
incurred by the Lender in the exercise of its rights under this paragrap

	12.	No course of dealing between the Assignor and the Lender, nor any 
failure to exercise, nor any delay in exercising, on the part of the Lender, 
any right, power or privilege hereunder or under the Loan Agreement shall 
operate as a waiver thereof; nor shall any single or partial exercise of any 
right, power or privilege hereunder or thereunder preclude any other or 
further exercise thereof or the exercise of any other right, power or 
privilege.

	13.	All of the Lender's rights and remedies with respect to the Patents, 
whether established hereby, by the Loan Agreement, by any other agreements 
or by law shall be cumulative and may be exercised singularly or concurrently.

	14.	The provisions of this Assignment are severable, and if any clause or 
provision shall be held invalid and unenforceable in whole or in part in any 
jurisdiction, then such invalidity or unenforceability shall affect only 
such clause or provision, or part thereof, in such jurisdiction, and shall 
not in any manner affect such clause or provision in any other jurisdiction, 
or any other clause or provision of this Assignment in any jurisdiction.

	15.	This Assignment is subject to modification only by a writing signed by 
the parties, except as provided in paragraph 5.

	16.	The benefits and burdens of this Assignment shall inure to the benefit 
of and be binding upon the respective successors and permitted assigns of 
the parties.

	17.	The validity and interpretation of this Assignment and the rights and 
obligations of the parties shall be governed by the laws of The Commonwealth 
of Massachusetts.

 	IN WITNESS WHEREOF, the parties hereto have executed this Assignment as 
an instrument under seal as of the day and year first above written.


					 		LUXTEC CORPORATION
							

____________________________		By:___________________________
Witness					        Its Treasurer

							THE FIRST NATIONAL BANK
							OF BOSTON


____________________________		By:__________________________
Witness						   Its Vice President




	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						        January ___, 1996

	Then personally appeared the above-named Samuel M. Stein, Treasurer of 
Luxtec Corporation, and acknowledged the foregoing instrument to be his free 
act and deed and the free act and deed of Luxtec Corporation, before me.

						        __________________________
						        Notary Public
						        My Commission Expires:


	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						        January ___, 1996

	Then personally appeared the above-named G. Christopher Miller, Vice 
President of The First National Bank of Boston, and acknowledged the 
foregoing instrument to be his free act and deed and the free act and 
deed of The First National Bank of Boston, before me.

						        __________________________
						        Notary Public
						        My Commission Expires:
	

	ASSIGNMENT OF TRADEMARKS


	THIS ASSIGNMENT OF TRADEMARKS (the "Assignment") is made as of the 24th 
day of October, 1995 by LUXTEC CORPORATION, a Massachusetts corporation 
having a principal business address at 326 Clark Street, Worcester, 
Massachusetts (the "Assignor") to THE FIRST NATIONAL BANK OF BOSTON, a 
national bank with its head office at 100 Federal Street, Boston, 
Massachusetts (the "Lender").

	BACKGROUND.  Assignor has executed and delivered to the Lender 
(a) a certain Revolving Credit Note dated of even date herewith in the 
principal amount of Two Million Five Hundred Thousand and 00/100 Dollars 
($2,500,000.00), and (b) a certain Equipment Note dated of even date 
herewith in the principal amount of Seven Hundred Fifty Thousand and 00/100 
Dollars ($750,000.00) (collectively, the "Notes") pursuant to a certain 
Loan and Security Agreement dated of even date herewith by and among the 
Assignor, the 

	NOW, THEREFORE, in consideration of the premises contained herein and 
other good and valuable consideration, the receipt and sufficiency of 
which are hereby acknowledged, the Assignor hereby agrees with the Lender 
as follows:

	 1.	To secure the complete and timely satisfaction of all Obligations 
(such term, as used herein, shall have the same meaning as provided in the 
Loan Agreement) of the Assignor to the Lender, the Assignor hereby assigns, 
pledges and grants to the Lender a continuing security interest in and to 
the Assignor's right, title and interest in and to the trademarks and 
trademark applications  listed in Exhibit A hereto, including without 
limitation all proceeds thereof (such as, by way of example, license royalti

	 2.	The Assignor covenants and warrants that:

		(a)	The Trademarks are subsisting and have not been adjudged invalid or 
unenforceable, in whole or in part;

		(b)	To the best of the Assignor's knowledge, each of the Trademarks is 
valid and enforceable and the Assignor has notified the Lender in writing 
of all prior art (including public uses and sales) of which it is aware;

 		(c)	The Assignor is the sole and exclusive owner of the entire and 
unencumbered right, title and interest in and to each of the Trademarks, 
free and clear of any liens, charges and encumbrances, including without 
limitation licenses, shop rights and covenants by the Assignor not to sue 
third persons; and

		(d)	The Assignor has the unqualified right to enter into this Assignment.

	 3.	The Assignor agrees that, until all of the Obligations shall have been 
satisfied in full, it will not enter into any agreement (for example, a  
license agreement) which is inconsistent with the Assignor's obligations 
under this Assignment, without the Lender's prior written consent, which 
consent shall not be unreasonably withheld.

	 4.	If, before the Obligations shall have been satisfied in full, the 
Assignor shall obtain rights to any new trademark, or become entitled to 
the benefit of any trademark or trademark applications  for any reissue, 
division, continuation, renewal, extension or continuation-in-part of any 
Trademark or any improvement on any Trademark, the provisions of paragraph 1 
shall automatically apply thereto and the Assignor shall give to the Lender 
prompt notice thereof in writing.

	 5.	The Assignor authorizes the Lender to modify this Assignment by 
amending Exhibit A to include any future trademarks and trademark 
applications which are Trademarks under paragraph 1 or paragraph 4 hereof.

	 6.	Unless and until there shall have occurred and be continuing an Event 
of Default (as defined in the Loan Agreement), the Lender hereby grants to 
the Assignor the exclusive, worldwide non-transferable right and license to 
make, have made, use and sell the inventions disclosed and claimed in the 
Trademarks for the Assignor's own benefit and account and for none other.  
The Assignor agrees not to sell or assign its interest in, or grant any 
sublicense under, the license granted to the Assignor in this par

	 7.	If any Event of Default shall have occurred and be continuing, the 
Assignor's license under the Trademarks as set forth in paragraph 6 shall 
terminate forthwith, and the Lender shall have, in addition to all other 
rights and remedies given it by this Assignment, those allowed by law and 
the rights and remedies of a secured party under the Uniform Commercial Code 
as enacted in any jurisdiction in which the Trademarks may be located and, 
without limiting the generality of the foregoing, the Lender may im

	 8.	At such time as the Assignor shall completely satisfy all of the 
Obligations, the Lender shall execute and deliver to the Assignor all 
deeds, assignments and other instruments as may be necessary or proper to 
re-vest in  the Assignor full title to the Trademarks, subject to any 
disposition thereof which may have been made by the Lender pursuant hereto.

	 9.	Any and all fees, costs and expenses, of whatever kind or nature, 
including reasonable attorneys' fees and legal expenses, incurred by the 
Lender in connection with the preparation of this Assignment and all other 
documents relating hereto and the consummation of this transaction, the 
filing or recording of any documents (including all taxes in connection 
therewith) in public offices, the payment or discharge of any taxes, 
counsel fees, maintenance fees, encumbrances or otherwise protecting, 
maintainin
arks, or in defending or prosecuting any actions or proceedings arising 
out of or related to the Trademarks, shall be borne and paid by the 
Assignor on demand by the Lender and until so paid shall be added to the 
principal amount of the Obligations and shall bear interest at the rate 
prescribed in the Loan Agreement.

	10.	If, in the Assignor's reasonable business judgment, any Trademark 
shall have significant value to the business of the Assignor, the Assignor 
shall have the duty, through counsel acceptable to the Lender, to prosecute 
diligently any application with respect to the Trademarks pending as of 
the date of this Assignment or thereafter until the Obligations shall have 
been paid in full, to make application on unpatented but patentable 
inventions and to preserve and maintain all rights in the Trademarks.  Any 
nection with such an application shall be borne by the Assignor.  The 
Assignor shall not abandon any right to file a patent application, or any 
pending patent application or patent without the consent of the Lender, 
which consent shall not be unreasonably withheld.

 	11.	The Lender shall have the right but shall in no way be obligated to 
bring suit in its own name to enforce the Trademarks or any license 
thereunder, in which event the Assignor shall at the request of the Lender 
do any and all lawful acts and execute any and all proper documents required 
by the Lender in aid of such enforcement and the Assignor shall promptly, 
upon demand, reimburse and indemnify the Lender for all costs and expenses 
incurred by the Lender in the exercise of its rights under this parag

	12.	No course of dealing between the Assignor and the Lender, nor any 
failure to exercise, nor any delay in exercising, on the part of the Lender, 
any right, power or privilege hereunder or under the Loan Agreement shall 
operate as a waiver thereof; nor shall any single or partial exercise of 
any right, power or privilege hereunder or thereunder preclude any other or 
further exercise thereof or the exercise of any other right, power or 
privilege.

	13.	All of the Lender's rights and remedies with respect to the Trademarks, 
whether established hereby, by the Loan Agreement, by any other agreements 
or by law shall be cumulative and may be exercised singularly or concurrently.

	14.	The provisions of this Assignment are severable, and if any clause or 
provision shall be held invalid and unenforceable in whole or in part in 
any jurisdiction, then such invalidity or unenforceability shall affect 
only such clause or provision, or part thereof, in such jurisdiction, and 
shall not in any manner affect such clause or provision in any other 
jurisdiction, or any other clause or provision of this Assignment in any 
jurisdiction.

	15.	This Assignment is subject to modification only by a writing signed 
by the parties, except as provided in paragraph 5.

	16.	The benefits and burdens of this Assignment shall inure to the benefit 
of and be binding upon the respective successors and permitted assigns of 
the parties.

	17.	The validity and interpretation of this Assignment and the rights and 
obligations of the parties shall be governed by the laws of The Commonwealth 
of Massachusetts.

 	IN WITNESS WHEREOF, the parties hereto have executed this Assignment 
as an instrument under seal as of the day and year first above written.


					 		LUXTEC CORPORATION


____________________________		By:___________________________
Witness					        Its Treasurer

							THE FIRST NATIONAL BANK
							OF BOSTON


____________________________		By:__________________________
Witness						   Its Vice President




	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						        January ___, 1996

	Then personally appeared the above-named Samuel M. Stein, Treasurer of 
Luxtec Corporation, and acknowledged the foregoing instrument to be his 
free act and deed and the free act and deed of Luxtec Corporation, before me.

						        __________________________
						        Notary Public
						        My Commission Expires:


	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						        January ___, 1996

	Then personally appeared the above-named G. Christopher Miller, 
Vice President of The First National Bank of Boston, and acknowledged 
the foregoing instrument to be his free act and deed and the free act 
and deed of The First National Bank of Boston, before me.

					        __________________________
						        Notary Public
						        My Commission Expires:

	


	UNLIMITED GUARANTY


	THIS UNLIMITED GUARANTY, dated as of October 24, 1995 by FIBER IMAGING 
TECHNOLOGIES, INC. (the "Guarantor"), is in favor of THE FIRST NATIONAL BANK 
OF BOSTON, a national banking association with its head office at 100 
Federal Street, Boston, Massachusetts 02110, and its foreign branches 
(the "Lender").  In consideration of the Lender's giving time, credit or 
banking facilities or accommodations to LUXTEC CORPORATION and its 
successors (the "Customer"), the Guarantor agrees as follows:

	1.	GUARANTY OF PAYMENT AND PERFORMANCE.  The Guarantor hereby guarantees 
to the Lender the full and punctual payment when due (whether at maturity, 
by acceleration or otherwise), and the performance, of all liabilities, 
agreements and other obligations of the Customer to the Lender, whether 
direct or indirect, absolute or contingent, due or to become due, secured 
or unsecured, now existing or hereafter arising or acquired (whether by way 
of discount, letter of credit, lease, loan, overdraft or otherwise) (
ull and punctual payment and performance of the Obligations and not of 
their collectibility only and is in no way conditioned upon any requirement 
that the Lender first attempt to collect any of the Obligations from the 
Customer or resort to any security or other means of obtaining their payment 
or upon a default by the Customer in the payment or performance of any of 
the Obligations. The obligations of the Guarantor hereunder shall become 
immediately due and payable to the Lender, upon demand by the Lender
antor hereunder may be required by the Lender on any number of occasions.

	2.	GUARANTOR'S AGREEMENT TO PAY.  The Guarantor further agrees, as the 
principal obligor and not as a guarantor only, to pay to the Lender, on 
demand, all costs and expenses (including court costs and legal expenses) 
incurred or expended by the Lender in connection with the Obligations, this 
Guaranty and the enforcement thereof, together with interest on amounts 
recoverable under this Guaranty from the time such amounts become due until 
payment, at the rate per annum equal to the rate of interest announced
f such interest exceeds the maximum amount permitted to be paid under 
applicable law, then such interest shall be reduced to such maximum 
permitted amount.

	3.	UNLIMITED GUARANTY.  THE LIABILITY OF THE GUARANTOR HEREUNDER SHALL 
BE UNLIMITED.

	4.	WAIVERS BY GUARANTOR; LENDER'S FREEDOM TO ACT.  The Guarantor agrees 
that the Obligations will be paid and performed strictly in accordance with 
their respective terms regardless of  any law, regulation or order now or 
hereafter in effect in any jurisdiction affecting any of such terms or the 
rights of the Lender with respect thereto.  The Guarantor waives presentment,
demand, protest, notice of acceptance, notice of Obligations incurred and 
all other notices of any kind, all defenses which may be avail
fect, any right to require the marshalling of assets of the Customer, and 
all suretyship defenses generally.  Without limiting the generality of the 
foregoing, the Guarantor agrees to the provisions of any instrument 
evidencing, securing or otherwise executed in connection with any Obligation 
and agrees that the obligations of the Guarantor hereunder shall not be 
released or discharged, in whole or in part, or otherwise affected by 
(i) the failure of the Lender to assert any claim or demand or to enforce an



	5.	UNENFORCEABILITY OF OBLIGATIONS AGAINST CUSTOMER.  If for any reason 
the Customer has no legal existence or is under no legal obligation to 
discharge any of the Obligations, or if any of the Obligations have become 
irrecoverable from the Customer by operation of law or for any other reason, 
this Guaranty shall nevertheless be binding on the Guarantor to the same 
extent as if the Guarantor at all times had been the principal obligor on 
all such Obligations.  In the event that acceleration of the time for

	6.	SUBROGATION; SUBORDINATION.  Until the payment and performance in full 
of all Obligations and any and all obligations of the Customer to any 
affiliate of the Lender, the Guarantor shall not exercise any rights against 
the Customer arising as a result of payment by the Guarantor hereunder, by 
way of subrogation or otherwise, and will not prove any claim in  
competition with the Lender or its affiliates in respect of any payment 
hereunder in bankruptcy or insolvency proceedings of any nature; the Guaranto

	7.	SECURITY; SET-OFF.  The Guarantor grants to the Lender, as security for 
the full and punctual payment and performance of the Guarantor's obligations 
hereunder, a continuing lien on and security interest in all securities or 
other property belonging to the Guarantor now or hereafter held by the Lender
and in all deposits (general or special, time or demand, provisional or 
final) and other sums credited by or due from the Lender to the Guarantor 
or subject to withdrawal by the Guarantor; and regardless of
llateral or other means of obtaining repayment of the Obligations, the 
Lender is hereby authorized at any time and from time to time, without 
notice to the Guarantor (any such notice being expressly waived by the 
Guarantor) and to the fullest extent permitted by law, to set off and apply 
such deposits and other sums against the obligations of the Guarantor under 
this Guaranty, whether or not the Lender shall have made any demand under 
this Guaranty and although such obligations may be contingent or unmature

	8.	FURTHER ASSURANCES.  The Guarantor agrees, upon demand after any change 
in the condition or affairs (financial or otherwise) of the Guarantor deemed 
by the Lender to be adverse and material, to secure the payment and 
performance of its obligations hereunder by delivering, assigning or 
transferring to the Lender or granting the Lender a security interest in 
additional collateral of a value and character satisfactory to the Lender, 
and authorizes the Lender to file any financing statement deemed by the Le
 
	9.	TERMINATION; REINSTATEMENT.  This Guaranty shall remain in full force 
and effect until the Lender is given written notice of the Guarantor's 
intention to discontinue this Guaranty, notwithstanding any intermediate or 
temporary payment or settlement of the whole or any part of the Obligations. 
No such notice shall be effective unless received and acknowledged by an 
officer of the Lender at its head office or at the branch of the Lender 
where this Guaranty is given.  No such notice shall affect any right

	10.	SUCCESSORS AND ASSIGNS.  This Guaranty shall be binding upon the 
Guarantor, its successors and assigns, and shall inure to the benefit of 
and be enforceable by the Lender and its successors, transferees and 
assigns.  Without limiting the generality of the foregoing sentence, the 
Lender may assign or otherwise transfer any agreement or any note held by 
it evidencing, securing or otherwise executed in connection with the 
Obligations, or sell participations in any interest therein, to any other 
person or 

	11.	AMENDMENTS AND WAIVERS.  No amendment or waiver of any provision of 
this Guaranty nor consent to any departure by the Guarantor therefrom shall 
be effective unless the same shall be in writing and signed by the Lender.  
No failure on the part of the Lender to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof, nor shall any single 
or partial exercise of any right hereunder preclude any other or further 
exercise thereof or the exercise of any other right.

	12.	NOTICES.  All notices and other communications called for hereunder 
shall be made in writing and, unless otherwise specifically provided herein, 
shall be deemed to have been duly made or given when delivered by hand or 
mailed first class mail postage prepaid or, in the case of telegraphic or 
telexed notice,  when transmitted, answer back received, addressed as 
follows: if to the Guarantor, at the address set forth beneath its signature 
hereto, and if to the Lender, at 100 Federal Street, Boston, Massac
ester Tower, 100 Front Street, Worcester, Massachusetts, 01608-1438, 
Attention: Senior Commercial Loan Officer or at such address as either party 
may designate in writing.

	13.	GOVERNING LAW; CONSENT TO JURISDICTION.  This Guaranty is intended to 
take effect as a sealed instrument and shall be governed by, and construed 
in accordance with, the laws of The Commonwealth of Massachusetts.  The 
Guarantor agrees that any suit for the enforcement of this Guaranty may be 
brought in the courts of The Commonwealth of Massachusetts or any Federal 
Court sitting therein and consents to the non-exclusive jurisdiction of such 
court and to service of process in any such suit being made upon
that it may now or hereafter have to the venue of any such suit or any such 
court or that such suit was brought in an inconvenient court.

	14.	MISCELLANEOUS. This Guaranty constitutes the entire agreement of the 
Guarantor with respect to the matters set forth herein.  The rights and 
remedies herein provided are cumulative and not exclusive of any remedies 
provided by law or any other agreement, and this Guaranty shall be in 
addition to any other guaranty of the Obligations.  The invalidity or 
unenforceability of any one or more sections of this Guaranty shall not 
affect the validity or enforceability of its remaining provisions.  Captions 
are
defined terms used in this Guaranty shall be equally applicable to the 
singular and plural forms of the terms defined.

	IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed 
and delivered by its duly authorized officer as of the date appearing on 
page one.


	FIBER IMAGING TECHNOLOGIES, INC.


________________________	By:_____________________________
Witness	   Its President

	326 Clark Street
	Worcester, Massachusetts  01606


	CERTIFICATE

The undersigned certifies to The First National Bank of Boston that:

	1.	He is the Clerk of the Guarantor which executed the foregoing Guaranty 
and in that capacity has the authority to make this certificate on behalf 
of the Guarantor.

	2. The Guarantor is a corporation, validly organized or formed and existing 
in good standing and in the full enjoyment of its powers and franchises under
the laws of the Commonwealth of Massachusetts.

	3.	The foregoing Guaranty has been duly executed and delivered on behalf of 
the Guarantor, such actions have been duly authorized by all necessary 
corporate or other action, and the execution, delivery and performance of 
the Guaranty by the Guarantor will not contravene any existing law, rule or 
regulation, or any provision of its certificate of incorporation or bylaws 
or other document or documents evidencing its establishment or governing the 
conduct of its affairs or any agreement to which it is a party
 bound.

		IN WITNESS WHEREOF, the undersigned has made this certificate on behalf 
of the Guarantor this ____ day of October, 1995.

ATTEST:	FIBER IMAGING TECHNOLOGIES, INC.



_____________________________	By:______________________________
	   Its Clerk

	EXHIBITS


Exhibit 1.01(A)	Borrowing Base Certificate

Exhibit 1.01(B)	Guarantor

Exhibit 1.01(C)	Guaranty

Exhibit 1.01(D)	Landlord's Consent and Waiver

Exhibit 1.01(E)	Lease Assignment

Exhibit 1.01(F)(1)	Assignment of Patents

Exhibit 1.01(F)(2)	Assignment of Trademarks

Exhibit 1.01(G)	Existing Liens

Exhibit 1.01(H)	Subordinated Indebtedness

Exhibit 2.04(A)	Equipment Note

Exhibit 2.04(B)	Revolving Credit Note

Exhibit 3.01(O)	Opinion of Bingham, Dana & Gould

Exhibit 5.01(A)	Subsidiaries

Exhibit 5.01(F)	Pending Litigation

Exhibit 5.01(N)	Existing Indebtedness

Exhibit 5.01(O)	Material Leases, Contract & Commitments

Exhibit 6.01(A)	Use of Loan Proceeds


	LANDLORD'S CONSENT AND WAIVER


	UNITRODE CORPORATION, a Maryland corporation with a place of business 
located at 7 Continental Boulevard, Merrimack, New Hampshire 03054 (the 
"Owner"), being (a) the owner of the premises located at 326 Clark Street, 
Worcester, Massachusetts by deed dated ________________________ and recorded 
in the Worcester District Registry of Deeds, Book ______, Page ______ (the 
"Premises"); and (b) the lessor of the Premises to LUXTEC CORPORATION, a 
Massachusetts corporation with its principal place of business at the
BLE CONSIDERATION RECEIVED, HEREBY REPRESENTS TO AND AGREES WITH both Lessee 
and THE FIRST NATIONAL BANK OF BOSTON, a national banking association with 
its head office at 100 Federal Street, Boston, Massachusetts (the "Lender"), 
as follows:

	1.	The Owner is the owner of the Premises and the lessor of the Premises to 
the Lessee;

	2.	The Lender has loaned, and may loan in the future, certain funds to Lessee, 
which loan is presently secured by, and which future loans will be secured 
by, all personal property of the Lessee, including, without limitation, any 
and all machinery and equipment, furniture and fixtures, all now owned or 
hereafter acquired by Lessee (the "Goods");

	3.	Certain of the Goods may be deemed to have been affixed to the Premises 
and in the future additional Goods may be so affixed;

	4.	The Goods which may be deemed to have been affixed to the Premises shall
remain personal property notwithstanding the manner in which the Goods are or
become affixed; title to the Goods shall at all times remain in the Lessee, 
its successors and assigns; and the Owner will claim no rights in nor any 
liens of any kind against the Goods, and any and all such rights and liens, 
if any (whether by lease or operation of law), are hereby expressly waived;

	5.	The Owner hereby grants and conveys to Lessee, its successors and 
assigns, any right, title and interest which might accrue to the Owner in the
Goods and agrees that Lessee, or its successors and assigns, may remove the 
Goods from the Premises upon termination of the Lease, or any time prior 
thereto, without the consent of the Owner, and access to the Premises for the
purpose of such removal, or for the purposes of sale on the Premises 
(including auction sale), is hereby granted by the Owner to the Lend

	6.	The signature below of the holder of a mortgage on the Premises indicates
such mortgagee's consent and waiver in accordance with the above, with 
respect to any and all interests of said mortgagee in the Goods, all for good
and valuable consideration received and in order to induce the Lender to make
any present or future loan to the Lessee.  The absence of such signature 
shall constitute a representation by the Owner that there are no mortgages or
any other encumbrances on the Premises.

	IN WITNESS WHEREOF, the parties hereto have executed this Landlord's Consent
and Waiver by their duly authorized officers, as an instrument under seal, as
of the 24th day of October, 1995.


[Mortgagee]					UNITRODE CORPORATION



By:_____________________________	By:____________________________
   Its						   Its President


							By:____________________________
							   Its Treasurer
Accepted in Reliance 			
Hereon	

THE FIRST NATIONAL BANK			LUXTEC CORPORATION
OF BOSTON						


By:_____________________________	By:____________________________
   Its Vice President			   Its President


							By:____________________________
							   Its Treasurer



 
	[_____________________________]

__________, ss.						     October __, 1995

	Then personally appeared the above-named _________________, _______________ 
 of Unitrode Corporation, and acknowledged the foregoing instrument to be
 his/her free act and deed and the free act and deed of Unitrode Corporation,
 before me.

						        __________________________
						        Notary Public
						        My Commission Expires:


	 COMMONWEALTH OF MASSACHUSETTS

________, ss.						          October __, 1995

	Then personally appeared the above-named _________________, of _____________
_______, and acknowledged the foregoing instrument to be the free act and 
deed of _________________________, before me.


						        ____________________________
						        Notary Public
						        My Commission Expires:


	COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						          October __, 1995

	Then personally appeared the above-named G. Christopher Miller, Vice 
President of The First National Bank of Boston, and acknowledged the 
foregoing instrument to be his free act and deed and the free act and deed of
 The First National Bank of Boston, before me.


						        __________________________
						        Notary Public
						        My Commission Expires


 
	 COMMONWEALTH OF MASSACHUSETTS

Worcester, ss.						          October __, 1995

	Then personally appeared the above-named Samuel M. Stein, Treasurer of 
Luxtec Corporation, respectively, and acknowledged the foregoing instrument 
to be his free act and deed and the free act and deed of Luxtec Corporation,
 before me.


						        ____________________________
						        Notary Public
						        My Commission Expires:

	REVOLVING CREDIT NOTE

$2,500,000.00		           October 24, 1995
				   Worcester, Massachusetts
			          
		
	FOR VALUE RECEIVED, LUXTEC CORPORATION, a Massachusetts corporation with its
 principal place of business at 326 Clark Street, Worcester, Massachusetts 
(the "Borrower"), promises to pay to THE FIRST NATIONAL BANK OF BOSTON (the 
"Lender"), or order, at the Lender's head office at 100 Federal Street, 
Boston, Massachusetts, the principal sum of TWO MILLION FIVE HUNDRED THOUSAND
 AND 00/100 DOLLARS ($2,500,000.00) or such lesser amounts as shall from time
 to time be outstanding, in lawful money of the United Sta
n the manner hereinafter provided. 

	The unpaid principal of this Revolving Credit Note from time to time 
outstanding shall bear interest, computed on the basis of the actual number 
of days elapsed over a year assumed to have 360 days, at a rate per annum 
equal to one-quarter of one percent (0.25%) per annum above the Lender's Base
 Rate of interest, established from time to time by the Lender (the "Base 
Rate"), such interest rate to be adjusted from time to time on the effective 
date of any change in the Base Rate announced by the Lender.  Th
ON as its Base Rate.  Interest shall be payable monthly in arrears beginning 
on November 30, 1995 and continuing thereafter on the last day of each 
succeeding month; provided, however, that all indebtedness evidenced by this 
Revolving Credit Note, if not sooner paid, shall in any event be due and 
payable on March 31, 1997 (the "Maturity Date"). 

	The Borrower may borrow, repay (without penalty), and reborrow the principal
 hereunder from time to time prior to the occurrence of an Event of Default 
(as hereinafter defined) or the Maturity Date, whichever occurs first.

	Each payment made hereunder shall be applied first to interest then due on 
the unpaid balance of principal and then to principal.  Overdue payments of 
principal (whether at stated maturity, by acceleration or otherwise) and, to 
the extent permitted by law, overdue interest, shall bear interest, 
compounded monthly and payable on demand in immediately available funds, at a
 rate per annum equal to four percent (4.00%) above the Base Rate, fully 
floating; provided that if such interest exceeds the maximum amou
ed amount.

	If a payment of principal or interest due hereunder is not made within ten 
(10) days of its due date, the Borrower will also  pay on demand in addition 
thereto a late charge equal to five percent (5.00%) of the amount of such 
payment.

	This Revolving Credit Note is issued pursuant to the provisions of a certain
 Loan and Security Agreement dated of even date herewith by and between the 
Borrower and the Lender, all of the terms and conditions of which are 
incorporated herein by reference, as the same may from time to time be 
amended (the "Agreement").  Neither this reference to the Agreement nor any 
provision thereof shall affect or impair the absolute and unconditional 
obligations of the Borrower to pay the principal of and interest on th
te an Event of Default hereunder. 

	The indebtedness evidenced by this Revolving Credit Note is secured as set 
forth in the Agreement. 

	Any deposits or other sums at any time credited by or due from the holder to
 the Borrower or any endorser or guarantor hereof and any securities or other
 property of the Borrower or any endorser or guarantor hereof at any time in 
the possession or custody of the holder may at all times be held and treated 
as collateral security for the payment of this Revolving Credit Note and any 
and all other liabilities (direct or indirect, absolute or contingent, sole, 
joint or several, secured or unsecured, due or to 
set-off such deposits or other sums against such liabilities at any time.

	The Borrower and each  guarantor, endorser or other person now or hereafter 
liable for the payment of any of the indebtedness evidenced by this Revolving
 Credit Note, severally agree, by making, guaranteeing or endorsing this 
Revolving Credit Note or by making any agreement to pay any of the 
indebtedness evidenced by this Revolving Credit Note, to waive presentment 
for payment, protest and demand, notice of protest, demand and or dishonor 
and nonpayment of this Revolving Credit Note, and consents, on one o
llateral securing this Revolving Credit Note or any part thereof at any time,
 (b) to the acceptance or release by the holder or holders hereof at any time
 of any additional collateral or security for or other guarantors of this 
Revolving Credit Note, (c) to the modification or amendment, at any time, and
 from time to time, of this Revolving Credit Note, the Agreement, or any 
instrument securing this Revolving Credit Note at the request of any person 
liable hereon, (d) to the granting by the holder hereof of
ents, covenants and conditions contained in this Revolving Credit Note, the 
Agreement,  or any other instrument securing this Revolving Credit Note, at 
the request of any person liable hereon, and (e) to any and all forbearances 
and  indulgences whatsoever.  Such consent shall not alter or diminish the 
liability of any person.

	The Borrower agrees to pay all reasonable expenses or costs, including 
attorneys' fees and costs of collection, which may be incurred by the holder 
hereof in connection with the enforcement of any obligations hereunder or 
representation with respect to bankruptcy or insolvency proceedings.

	IN WITNESS WHEREOF, the Borrower has executed this Revolving Credit Note by 
its duly authorized officer as an instrument under seal as of the day and 
year first written above.

			LUXTEC CORPORATION



__________________________	By:________________________________
Witness 		   Its President


	EQUIPMENT NOTE

$750,000.00                                      October 24, 1995
			 			           Worcester, Massachusetts

	FOR VALUE RECEIVED, LUXTEC CORPORATION, a Massachusetts corporation with its
 principal place of business at 326 Clark Street, Worcester, Massachusetts 
(the "Borrower"), promises to pay to THE FIRST NATIONAL BANK OF BOSTON (the 
"Lender"), or order,  at the Lender's head office at 100 Federal Street, 
Boston, Massachusetts, the principal sum of SEVEN HUNDRED AND FIFTY THOUSAND 
AND 00/100 ($750,000.00) DOLLARS or such lesser amounts as are advanced 
hereunder, in lawful money of the United States of America, wi

	The unpaid principal of this Equipment Note from time to time outstanding 
shall bear interest, computed on the basis of the actual number of days 
elapsed over a year assumed to have 360 days, at a rate per annum equal to 
one-half of one percent (0.50%)  above the Lender's Base Rate of interest, 
established from time to time by the Lender (the "Base Rate"), such interest 
rate to be adjusted from time to time on the effective date of any change in 
the Base Rate announced by the Lender.  The Base Rate shall b
e.

	For the period commencing on the date hereof through and including October 
23, 1997, the Borrower may request advances hereunder to be utilized for the 
purposes and upon the terms and conditions set forth in a certain Loan and 
Security Agreement by and between the Borrower and the Lender dated of even 
date herewith (the "Agreement").  Repaid principal hereunder may not be 
reborrowed.

	Interest shall be payable monthly in arrears beginning one (1) month from 
the last day of the month in which the first advance hereunder is made and 
continuing thereafter on the last day of each succeeding month that this 
Equipment Note shall remain outstanding.  At the end of each six (6) month 
period during the first two (2) years from the date of this Equipment Note, 
the outstanding principal balance as of such date will be amortized in 
monthly principal payments of such amounts as shall be determined b
this  Equipment Note.  Monthly payments of principal and interest shall 
continue until the entire indebtedness evidenced by this Equipment Note is 
fully paid, provided, however, that all indebtedness evidenced by this 
Equipment Note, if not sooner paid, shall in any event be due and payable 
five (5) years from the date of this Equipment Note.

	Overdue payments of principal (whether at stated maturity, by acceleration 
or otherwise), and, to the extent permitted by  law, overdue interest, shall 
bear interest, compounded monthly and payable on demand in immediately 
available funds, at a rate per annum equal to four percent (4.00%) above the 
Base Rate, fully floating; provided that if such interest exceed the maximum 
amount permitted to be paid under applicable law, then such interest shall be
 reduced to such maximum permitted amount.

	If a payment of principal or interest due hereunder is not made within ten 
(10) days of its due date, the Borrower will also pay on demand  in addition 
thereto a late charge equal to five percent (5.00%) of the amount of such 
payment. 

	This Equipment Note is issued pursuant to and is intended for the benefit of
 and is subject to the provisions of the Agreement, all of the terms and 
conditions of which are incorporated hereunder by reference as the same may 
from time to time be amended or extended.   An Event of Default under the 
Agreement shall also constitute an Event of Default hereunder. Neither this 
reference to the Agreement nor any provision thereof shall affect or impair 
the absolute and unconditional obligation of the Borrower to

	The indebtedness evidenced by this Equipment Note is secured as set forth in
 the Agreement.

	This Equipment Note may be prepaid before maturity in whole or in part 
without penalty or premium.

	Any deposits or other sums at any time credited by or due from the holder to
 the Borrower, any endorser or guarantor hereof and any securities or other 
property of the Borrower, any endorser or guarantor at any time in the 
possession of the holder may at all times be held and treated as collateral 
for the payment of this Equipment Note and any and all other liabilities 
(direct or indirect, absolute or contingent, sole, joint or several, secured 
or unsecured, due or to become due, now existing or hereafter 
ainst such liabilities at any time.

	The Borrower and each guarantor, endorser or other person now or hereafter 
liable for the payment of any of the indebtedness evidenced by this Equipment
 Note, severally agrees, by making, guaranteeing or endorsing this Equipment 
Note or by making any agreement to pay any of the indebtedness evidenced by 
this Equipment Note to waive presentment for payment, protest and demand, 
notice of protest, demand and of dishonor and nonpayment of this Equipment 
Note, and consents, on one or more occasions, without not
ent Note or any part thereof at any time, (b) to the acceptance or release by
 the holder or holders hereof at any time of any additional collateral or 
security for or other guarantors of this  Equipment Note, (c) to the 
modification or amendment, at any time and from time to time, of this 
Equipment Note, the Agreement or any instrument securing this Equipment Note 
at the request of any person liable hereon, (d) to the granting by the holder 
hereof of any extension of the time of this Equipment Note or for t
t or any other instrument securing this Equipment Note, at the request of any
 person liable hereon, and (e) to any and all forbearances and indulgences 
whatsoever.  Such consent shall not alter nor diminish the liability of any 
person.

	The Borrower agrees to pay all reasonable expenses or costs, including 
attorneys' fees and costs of collection, which may be incurred by the holder 
hereof in connection with the enforcement of any obligations hereunder or 
representation with respect to bankruptcy or insolvency proceedings.

	IN WITNESS WHEREOF, the Borrower has executed this Equipment Note by its 
duly authorized officer as an instrument under seal as of the day and year 
first written above.

	
			LUXTEC CORPORATION


_________________________	By:______________________________
Witness	  	   Its President 






	TABLE OF CONTENTS


ARTICLE 1.0  DEFINITIONS	 1

     1.01 Defined Terms	 1

ARTICLE 2.0  THE LOANS	 11

     2.01 Disbursement of the Loans	 11
     2.02 The Equipment Loan	 11
     2.03 The Revolving Credit Loan	 12
     2.04 The Notes	 12
     2.05 The Facility Fee	 12
     2.06 Interest Rates and Payments of Interest	 12
     2.07 Overadvance	 13
     2.08 Payment to the Lender	14

ARTICLE 3.0  CONDITIONS PRECEDENT	 14

     3.01 Documents Required for the Closing	 14
     3.02 Documents Required for Subsequent Disbursements	 15
     3.03 Certain Events	 16
     3.04 Legal Matters	 16

ARTICLE 4.0  COLLATERAL SECURITY	 16

     4.01 Composition of the Collateral	 16
     4.02 Rights in Property Held by the Lender	 17
     4.03 Rights in Property Held by the Borrower, the
          Guarantors or the Lender	 17
     4.04 Priority of Liens	 18
     4.05 UCC Financing Statements	 18
     4.06 Mortgagees', Landlords', and Warehousemen's
          Waivers	 19

ARTICLE 5.0  REPRESENTATIONS AND WARRANTIES	 19

     5.01 Original	 19
     5.02 Survival	 23

ARTICLE 6.0  COVENANTS OF THE BORROWER	 23

     6.01 Affirmative Covenants	 23
     6.02 Negative Covenants	 29

ARTICLE 7.0  DEFAULT	 32

     7.01 Events of Default	 32
     7.02 Acceleration	 34

 ARTICLE 8.0  THE LENDER'S RIGHTS AND REMEDIES	 34



     8.01 The Lender's Rights Upon Default	 34
     8.02 Account Debtors	 34
     8.03 Possession and Foreclosure of Collateral	 35
     8.04 Use of Intellectual Property	 35
     8.05 Notification of Default to Third Parties	 36
     8.06 Assembly of Collateral	 36
     8.07 Right of Set-Off	 36
     8.08 Exercise of Other Remedies	 36
     8.09 Cumulative Rights and Remedies	 36

ARTICLE 9.0  ATTORNEY-IN-FACT	 37

     9.01 Attorney-In-Fact	 37

ARTICLE 10.0  MISCELLANEOUS	 37

     10.01 Construction	 37
     10.02 Further Assurances	 37
     10.03 Enforcement and Waiver by the Lender	 37
     10.04 Expenses of the Lender	 38
     10.05 Notices	 38
     10.06 Waiver and Indemnification by the Borrower and the
           Guarantors	 39
     10.07 Participation	 39
     10.08 Waiver of Jury Trial	 39
     10.09 Applicable Law	 40
     10.10 Binding Effect, Assignment, and Entire Agreement	 40
     10.11 Severability	 40
     10.12 Counterparts	 40

	LOAN AND SECURITY AGREEMENT


THIS LOAN AND SECURITY AGREEMENT dated as of  October 24, 1995, is by and 
among LUXTEC CORPORATION, a Massachusetts corporation with its principal 
office at 326 Clark Street, Worcester, Massachusetts (the "Borrower"), FIBER 
IMAGING TECHNOLOGIES, INC., a Massachusetts corporation with its principal 
office at 326 Clark Street, Worcester, Massachusetts, CATHTEC INCORPORATED, a
 Massachusetts corporation with its principal office at 326 Clark Street, 
Worcester, Massachusetts, CARDIODYNE, INC., a Massachusetts co
r, Massachusetts, successor by merger to CARDIODYNE, INC., a Delaware 
corporation,  and THE FIRST NATIONAL BANK OF BOSTON, a national banking 
association with its head office at 100 Federal Street, Boston, 
Massachusetts (the "Lender").


				W I T N E S S E T H:

BACKGROUND.  The Borrower has requested the Lender to make available loans up
 to the sum of $2,500,000.00 on a revolving loan basis and the sum of 
$750,000.00 for the purchase of equipment, and the Lender is willing to do so
 upon the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises herein contained, and each 
intending to be legally bound hereby, the parties agree as follows:


0  DEFINITIONS

	Defined Terms.

	As used herein, the following terms shall have the following meanings:

	"Accounts," "Chattel Paper," "Contracts," "Documents," "Equipment," 
"Fixtures," "General Intangibles," "Goods," "Instruments," and "Inventory" 
shall have the same respective meanings as are given to those terms in the 
Uniform Commercial Code as presently adopted and in effect in the 
Commonwealth of Massachusetts.

	"Affiliate" means, as to any Person, each other Person that directly, or 
indirectly through one or more intermediaries, controls, or is controlled by,
 or under common control with, such Person.

	"Agreement" means this Loan and Security Agreement, as the same may from
 time to time be amended or supplemented.

 	"Borrowing Base" means, at any time, the amount computed on the Borrowing 
Base Certificate most recently delivered to, and accepted by, the Lender in 
accordance with this Agreement and equal to the lesser of:



	(A)	$2,500,000.00; or

	(B)	The aggregate of (1) eighty percent (80%) of Eligible Accounts of the 
Borrower and the Guarantors; plus (2) thirty percent (30%) of the book value 
of Inventory of the Borrower and the Guarantors as determined by the Lender 
in its reasonable business judgment; comprised of raw materials; plus (3) 
forty percent (40%) of the book value of Inventory of the Borrower and the 
Guarantors comprised of work in process and finished goods as determined by 
the Lender in its reasonable business judgment; plus (4) du
on value of Equipment of the Borrower and the Guarantors as determined by the
 Lender in its reasonable business judgment; plus (5) the amount available 
from time to time pursuant to the Overadvance; provided, however, that (x) 
the Lender may limit aggregate advances hereunder to a sum not to exceed 
$2,250,000.00 unless and until the Equity Injection is completed, and (y) the
 Lender may exclude from the Borrowing Base all or a proportionate part of 
any particular portion of the Inventory of the Borrower or a
e the Lender otherwise reasonably considers the collateral value thereof to 
the Lender to be impaired or its ability to realize such value to be insecure. 

	"Borrowing Base Certificate" means a fully completed certificate in the form
 of Exhibit 1.01(A) to this Agreement, certified by the chief financial 
officer of the Borrower to be correct and delivered to, and accepted by, the 
Lender pursuant to Section 3.01(Q) or Section 6.01(B)(7).

	"Business Day" means a day other than a Saturday, a Sunday, or a day on 
which commercial banks in Boston, Massachusetts are authorized to close.

	"Closing" has the meaning given to such term in Section 3.01.

	"Collateral" has the meaning given to such term in Section 4.01.

	"Collateral Documents" means the Lease Assignment(s) specified in Section 
3.01(C), the Landlord's Consent(s) and Waiver(s) specified in Section 
3.01(D), the Guarantees specified in Section 3.01(E), the Patent and 
Trademark Assignments specified in Section 3.01(F), UCC-1 Financing 
Statements specified in Section 3.01(G), and the documents, whether 
deliverable at or after the Closing, required under Article 4.0.

 	"Consolidated Current Assets" and "Consolidated Current Liabilities" mean, 
at any time, all assets or liabilities, respectively, that should, in 
accordance with GAAP, be classified as current assets or current liabilities,
 respectively, on a consolidated balance sheet of the Borrower and its 
Subsidiaries.

	"Consolidated Earnings" means, at any date as of which the amount thereof 
shall be determined, consolidated earnings of the Borrower and its 
Subsidiaries from continuing operations before income taxes for such period, 
excluding any nonrecurring or extraordinary items.

	"Consolidated Fixed Assets" means, at any time, all assets (other than 
Consolidated Current Assets) that should, in accordance with GAAP, be 
classified as assets on a consolidated balance sheet of the Borrower and its 
Subsidiaries.

	"Consolidated Liabilities" means all Indebtedness that, in accordance with 
GAAP, should be classified as liabilities on a consolidated balance sheet of 
the Borrower and its Subsidiaries.

	"Consolidated Losses" means, at any date as of which the amount thereof 
shall be determined, consolidated losses of the Borrower and its Subsidiaries
 for such period including, without limitation, income taxes, interest 
expense and any and all extraordinary items.

	"Consolidated Tangible Net Worth" means, at any time, Stockholders' Equity, 
less the sum of:

	Any surplus resulting from any write-up of assets subsequent to October 31, 
1994;
  
	Goodwill, including any amounts, however designated on a
consolidated balance sheet of the Borrower and its Subsidiaries, representing
 the excess of the purchase price paid for assets or stock acquired over the 
value assigned thereto on the books of the Borrower;
     
	Patents, trademarks, trade names, copyrights and licenses;

	Any amount at which shares of capital stock of the Borrower appear as an 
asset on the Borrower's balance sheet;
	
	Loans and advances to stockholders, directors, officers, or employees;
  
	Deferred expenses; and

	Any other amount in respect of an intangible that should be classified as an
 asset on a consolidated balance sheet of the Borrower and its Subsidiaries 
in accordance with GAAP.

 	"Cumulative Consolidated Losses" means, at any date as of which the amount 
thereof shall be determined, consolidated losses of the Borrower and its 
Subsidiaries for the immediately preceding two (2) fiscal quarters.

	"Debt Coverage Ratio" means that ratio having as its numerator the sum of 
(a) Consolidated Earnings before deduction of interest and income taxes, plus
 (b) consolidated depreciation and amortization expenses incurred by the 
Borrower and its Subsidiaries, less (c) income taxes paid by the Borrower and
 its Subsidiaries, less (d) capital expenditures made by the Borrower and its
 Subsidiaries, plus (e) payments due on account of operating leases of 
equipment; and having as its denominator the sum of (a) intere
ts due on account of operating leases of equipment.

	"Domestic Account" means an Account arising from the sale of goods to or 
services performed for an account debtor located within the United States of 
America or Canada;
	
	"Eligible Account" means, at any time, an Account that conforms and 
continues to conform to the following conditions:

	(A)	The Account arose from a bona fide outright sale of Goods by the 
Borrower or from services performed by the Borrower, and such Goods have been
 shipped to the appropriate account debtors or their designees (or the sale 
has otherwise been consummated), or the services have been performed for the 
appropriate account debtors;

	(B)	The Account is based upon an enforceable order or contract, written or 
oral, for Goods shipped or held or for services performed, and the same were 
shipped, held, or performed in accordance with such order or contract;

	(C)	The title of the Borrower to the Account and, except as to the account 
debtor, to any Goods is absolute and is not subject to any prior assignment, 
claim, lien, or security interest, except Permitted Liens;

	(D)	The amount shown on the books of the Borrower and on any invoice or 
statement delivered to the Lender is owing to the Borrower, less any partial 
payment that has been made thereon by anyone;

	(E)	The Account shall be eligible only to the extent that it is not subject 
to any claim of reduction, counterclaim, set-off, contras, recoupment, or any
 claim for credits, allowances, or adjustments by the account debtor because 
of returned, inferior, or damaged Goods or unsatisfactory services, or for 
any other reason, except for customary discounts, not to exceed two percent 
(2.0%) allowed for prompt payment;

 	(F)	The account debtor has not returned or refused to retain, or otherwise 
notified the Borrower of any dispute concerning, or claimed nonconformity of,
 any of the Goods or services from the sale of which the Account arose;

	(G)	The Account is (1) a Domestic Account and is due and payable not more 
than ninety (90) days from the date of the invoice therefor, or (2) a Foreign
 Account and is due and payable not more then sixty (60) days from the date 
of the invoice therefor;

	(H)	The Account is not (1) a Domestic Account of an account debtor which has
 outstanding, at any time,  twenty percent (20%) or more of its accounts on 
an aggregate basis for a period of ninety (90) days from the date of the 
invoice therefor, or (2) a Foreign Account of an account debtor which has 
outstanding, at any time, twenty percent (20%) or more of its accounts on an 
aggregate basis for a period of sixty (60) days from the date of the invoice 
therefor;

	(I)	The Borrower has not received any note, trade acceptance, draft, or 
other Instrument with respect to, or in payment of, the Account, nor any 
Chattel Paper with respect to the Goods giving rise to the Account, unless, 
if any such Instrument or Chattel Paper has been received, the Borrower 
immediately notifies the Lender and, at the latter's request, endorses or 
assigns and delivers the same to the Lender;

	(J)	The Borrower has not received any notice of the death of the account 
debtor or a partner thereof; nor of the dissolution, termination of 
existence, insolvency, business failure, appointment of a receiver for any 
part of the property of, assignment for the benefit of creditors by, or the 
filing of a petition in bankruptcy or the commencement of any proceeding 
under any bankruptcy or insolvency laws by or against, the account debtor.  
Upon the receipt by the Borrower of any such notice, it will immediate

	(K)	The account debtor is not a Subsidiary or other Affiliate of the 
Borrower; and

	(L)	The Lender has not deemed such Account ineligible because of uncertainty
 about the creditworthiness of the account debtor or because the Lender 
otherwise reasonably considers the collateral value thereof to the Lender to 
be impaired or its ability to realize such value to be insecure.

	In addition to the foregoing, Eligible Account shall mean any amount 
receivable by the Borrower under any insurance policy covering Goods which 
have, within the preceding forty-five (45) days, been damaged or destroyed by
 fire or other direct casualty loss, provided that a claim therefor has been 
made in compliance with such insurance policy, to the extent that such claim 
has not been in any way denied or contested by the insurer and provided  that
 such insurer, if such insurer were an account debtor of th

	In the event of any dispute, under the foregoing criteria, about whether an 
Account is or has ceased to be an Eligible Account, the decision of the 
Lender shall control.

	"Equipment Loan" has the meaning given to such term in Section 2.02.

	"Equipment Note" means the Equipment referred to in Section 2.04 hereof.

	"Equity Injection" means the injection of at least $1,000,000.00 as 
Stockholders' Equity on terms and subject to conditions acceptable to the 
Lender.

	"Event of Default" has the meaning provided in Section 7.01.

	"Financial Statements" means the consolidated balance sheets of the Borrower
 and its Subsidiaries as of October 31, 1993, and 1994, and consolidated 
statements of income, stockholders' equity, and changes in cash flow, and 
notes thereto, of the Borrower and its Subsidiaries for the years ended on 
such dates, certified by Arthur Andersen LLP to present fairly the 
consolidated financial position and results of operations of the Borrower and 
its Subsidiaries at such dates and for such periods in accordance wi

	"Foreign Account" means an Account arising from the sale of goods to or 
services performed for an account debtor located outside the United States of
 America or Canada and within such foreign countries as are acceptable to the
 Lender from time to time in the Lender's sole discretion.

	"GAAP" means generally accepted accounting principles applied
consistently as was done in the preparation of the Financial Statements, with
 such changes or modifications thereto as may be approved in writing by the 
Lender.

	"Guarantor" means each and any of the Persons listed on Exhibit 1.01(B).

	"Guaranty" means with respect to a Guarantor, a duly authorized and executed
 Guaranty in the form of Exhibit 1.01(C), attached hereto and made a part 
hereof.

	"Indebtedness" means, as to the Borrower or any Guarantor or Subsidiary, all
 items of indebtedness, obligation or liability whether matured or unmatured,
 liquidated or unliquidated, direct or contingent, joint or several, 
including, but without limitation:
     
 	(A)	All indebtedness guaranteed, directly or indirectly, in any manner, or 
endorsed (other than for collection or deposit in the ordinary course of 
business) or discounted with recourse;

	(B)	All indebtedness in effect guaranteed, directly or indirectly, through 
agreements, contingent or otherwise:  (1) to purchase such indebtedness; or 
(2) to purchase, sell, or lease (as lessee or lessor) property, products, 
materials, or supplies or to purchase or sell services, primarily for the 
purpose of enabling the debtor to make payment of such indebtedness or to 
insure the owner of the indebtedness against loss; or (3) to supply funds to,
 or in any other manner invest in, the debtor;

	(C)	All indebtedness secured by (or for which the holder of such 
indebtedness has a right, contingent or otherwise, to be secured by) 
any mortgage, deed of trust, pledge, lien, security interest, or other 
charge or encumbrance upon property owned or acquired subject thereto, 
whether or not the liabilities secured thereby have been assumed; and

	(D)	All indebtedness incurred as the lessee of goods or services under 
leases that, in accordance with GAAP, should not be reflected on the lessee's
 balance sheet.

	"Intellectual Property" means trademarks, service marks, trade names, trade 
styles, logos, goodwill, trade secrets, patents, and licenses acquired under 
any statutory, common law or registration process in any state or nation at 
any time, or under any agreement executed with any person or entity at any 
time.  The term "license" refers not only to rights granted by agreement from
 the owner of patents, trade marks, service marks and the like, but also to 
rights granted by a franchisor under a franchise or si

	"Landlord's Consent and Waiver" means with respect to each premises on which
 property of the Borrower is located, a duly authorized and executed Landlord
Consent and Waiver by and among the proper parties in the form of Exhibit 
1.01(D) attached hereto and made a part hereof. 

	"Laws" means all ordinances, statutes, rules, regulations, orders, 
injunctions, writs, or decrees of any government or political subdivision or 
agency thereof, or of any court or similar entity established by any thereof.

	"Lease" means the Lease by and between the Borrower and  Unitrode 
Corporation dated July 18, 1991, as extended, with respect to the property 
located at 326 Clark Street, Worcester, Massachusetts.

	"Lease Assignment" means a duly authorized and executed Assignment of Lease 
by and between the Borrower and the Lender  with respect to the Lease in the 
form of Exhibit 1.01(E) attached hereto and made a part hereof.

	"Loan Termination Date" shall have the meaning ascribed to such term in 
Section 2.03 of this Agreement.

	"Loans" means the Revolving Credit Loan and the Equipment Loan, collectively.

	"Notes" means the Revolving Credit Note and the Equipment Note, collectively.

	"Obligations" is intended to be used in its most comprehensive sense and 
means all the obligations of the Borrower and each Guarantor to the Lender of
 every kind and description, whether direct or indirect, absolute or 
contingent, primary or secondary, joint or several, due or to be come due, 
now existing or hereafter arising or acquired and whether by way of loan, 
discount, letter of credit, lease or otherwise, including without limitation,
 the following obligations:

	(A)	To pay the principal of, and interest on, the Notes in accordance with 
the terms thereof and to satisfy all other liabilities to the Lender, whether
 hereunder or otherwise, whether now existing or hereafter incurred, matured 
or unmatured, direct or contingent, joint or several, including any 
extensions, modifications, renewals thereof and substitutions therefor.

	(B)	To repay to the Lender all amounts advanced by the Lender hereunder or 
otherwise on behalf of the Borrower or any Guarantor, including, but without 
limitation, advances for principal or interest payments to prior secured 
parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or 
repairs to, or maintenance or storage of, any of the Collateral;

	(C)	To perform and observe all covenants, agreements and undertakings of the
 Borrower or any Guarantor pursuant to the terms and conditions of this 
Agreement, the Collateral Documents or any other agreement or instrument now 
or hereafter delivered to the Lender by the Borrower or any Guarantor; and

	(D)	To reimburse the Lender, on demand, for all of the Lender's expenses and
 costs, including without limitation the reasonable fees and expenses of its
 counsel, in connection with the preparation, administration, amendment, 
modification, or enforcement of this Agreement and the documents required 
hereunder, including, without limitation, any proceeding brought, or 
threatened, to enforce payment or performance of any of the obligations 
referred to in the foregoing Paragraphs (A), (B) and (C).

	"Overadvance" means the amount of $300,000.00 which shall be available to 
the Borrower for the period from the date hereof  until November 20, 1995 
subject to and in accordance with the provisions of Section 2.07 hereof;

	"Patent and Trademark Assignment" means with respect to each patent or 
trademark of the Borrower and each Guarantor a duly executed and authorized 
Assignment of Patent and/or a duly executed Assignment of Trademark by the 
proper parties in the form of Exhibit 1.01(F)(1) and Exhibit 1.01(F)(2), 
respectively, attached hereto.

	"Permitted Liens" means:

	(A)	Liens for taxes, assessments, or similar charges, incurred in the 
ordinary course of business, that are not yet due and payable;

	(B)	Pledges or deposits made in the ordinary course of business to secure 
payment of worker's compensation, or to participate in any fund in connection
 with worker's compensation, unemployment insurance, old-age pensions, or 
other social security programs;

	(C)	Liens of mechanics, materialmen, warehousemen, carriers, or other like 
liens, securing obligations incurred in the ordinary course of business that 
are not yet due and payable;

	(D)	Good faith pledges or deposits made in the ordinary course of business 
to secure performance of bids, tenders, contracts (other than for the 
repayment of borrowed money) or leases, not in excess of ten percent (10%) of
 the aggregate amount due thereunder, or to secure statutory obligations, or 
surety, appeal, indemnity, performance, or other similar bonds required in 
the ordinary course of business;

	(E)	Encumbrances consisting of zoning restrictions, easements, or other 
restrictions on the use of real property, none of which materially impairs 
the use of such property by the Borrower in the operation of its business, 
and none of which is violated in any material respect by existing or proposed
 structures or land use;

	(F)	Liens in favor of the Lender;

	(G)	Existing liens set forth or described on Exhibit 1.01(G), attached
 hereto and made a part hereof;

	(H)	Purchase money security interests granted to secure not more than one 
hundred percent (100%) of the purchase price of assets, the purchase of 
which does not violate this Agreement or any instrument required hereunder; 
and

	(I)	The following, if the validity or amount thereof is being contested in 
good faith by appropriate and lawful proceedings, so long as levy and 
execution thereon have been  stayed and continued to be stayed and they do 
not, in the aggregate, materially detract from the value of the property of 
the Borrower or any Subsidiary, or materially impair the use thereof in the 
operation of its business:

		(1)	Claims or liens for taxes, assessments, or charges due and payable and 
subject to interest or penalty;

		(2)	Claims, liens and encumbrances upon, and defects of title to, real or 
personal property, including any attachment of personal or real property or 
other legal process prior to adjudication of a dispute on the merits;

		(3)	Claims or liens of mechanics, materialmen, warehousemen, carriers, or 
other like liens; and

		(4)	Adverse judgments on appeal.

	"Person" means any individual, corporation, partnership, association, 
joint-stock company, trust, unincorporated organization, joint venture, 
court, or government or political subdivision or agency thereof.

	"Purchase Price" means the purchase price of the item or items of Purchased 
Equipment paid by the Borrower, net of any taxes, commissions, freight 
charges and other soft costs as determined by the Lender in its sole 
discretion.

	"Purchased Equipment" means the Equipment to be purchased by the Borrower 
with the proceeds of the Equipment Loan.

	"Records" means correspondence, memoranda, tapes, discs, papers, books and 
other documents, or transcribed information of any type, whether expressed in
 ordinary or machine readable language.

	"Revolving Credit Loan" has the meaning given to such term in Section 2.03.

	"Revolving Credit Note" means the Revolving Credit Note referred to in 
Section 2.04 hereof.

	"Stockholders' Equity" means, at any time the aggregate of Subordinated 
Indebtedness, plus the sum of the following accounts set forth on a 
consolidated balance sheet of the Borrower and its Subsidiaries prepared in 
accordance with GAAP:  (A) the par or stated value of all outstanding capital
 stock; (B) capital surplus; and (C) retained earnings.

	"Subordination Agreement" means a duly authorized and executed Subordination
 Agreement with respect to Subordinated Indebtedness in form and substance 
satisfactory to the Lender and the Borrower.

 	"Subordinated Indebtedness" means all Indebtedness incurred at any time by 
the Borrower or any Subsidiary, the repayment of which is subordinated to the
 Loan in form and manner satisfactory to the Lender.  All existing 
Subordinated Indebtedness is so specified in Exhibit 1.01(H).

	"Subsidiary" means any Affiliate that is directly, or indirectly through one
 or more intermediaries, controlled by the Borrower or not less than 50% of 
the voting capital stock of which is owned, directly or through one or more 
intermediaries, by the Borrower.

	Accounting.  Accounting terms used and not otherwise defined in this 
Agreement have the meanings determined by, and all calculations with respect 
to accounting or financial matters unless otherwise provided herein shall be 
computed in accordance with, GAAP.

0  THE LOANS

	Disbursement of the Loans.

	The Lender will credit the proceeds of the Revolving Credit Loan, as 
available pursuant to an initial Borrowing Base Certificate furnished by the 
Borrower dated no earlier than September 30, 1995 and periodic Borrowing Base
 Certificates furnished by the Borrower thereafter, to the Borrower's deposit
 account with the Lender.  The Lender will credit the proceeds of the 
Equipment Loan as from time to time disbursed in accordance with Section 2.02
 hereof.

	The Equipment Loan.

	Commencing with the date on which the Equity Injection is completed and 
continuing thereafter for a period ending two (2) years from the date of 
this Agreement, the Lender will make advances from time to time pursuant to 
the Equipment Loan of sums in amounts not exceeding $750,000.00 in the 
aggregate, such advances to be utilized in order to acquire Purchased 
Equipment; provided, however, that the amount of each such advance shall be 
limited, at the Borrower's election, to an amount equal to: (a) not more 
 amount equal to seventy percent (70%) of the appraised auction value of the 
Equipment of the Borrower, as determined by the Lender in its sole 
discretion, at the time of the proposed advance shall equal or exceed the 
aggregate of twenty-five percent (25%) of the outstanding undisbursed amount 
of the Equipment Loan plus the amount of the Purchase Price of the Purchased 
Equipment to be acquired; or (b) seventy-five (75%) of the Purchase Price of 
Purchased Equipment.  The Borrower will provide the Lender with
n its sole discretion, whether borrowings under  the Equipment Note may be 
utilized to acquire Purchased Equipment subject of the requested advance.

	The Revolving Credit Loan.

	Subject to the terms hereof, the Lender shall lend the Borrower from time to
 time until March 31, 1997 (the "Loan Termination Date"), such sums as the 
Borrower may request by reasonable notice to the Lender, received by the 
Lender, which shall not exceed, in the aggregate principal amount at any one 
time outstanding, $2,500,000.00.  The Borrower may borrow, repay without 
penalty or premium and reborrow hereunder, from the date of this Agreement 
until the Loan Termination Date, the full amount then due unde
the Revolving Credit Loan shall at no time exceed the amount of the then 
existing Borrowing Base, and if, at any time, an excess shall for any reason 
exist, the full amount of such excess, together with accrued and unpaid 
interest thereon as herein provided, shall be immediately due and payable in
 full.

	The Notes.

	At the time of the making of the Loans, the Borrower shall execute and 
deliver to the Lender the Equipment Note and the Revolving Credit Note in the
 forms attached hereto as Exhibit 2.04(A) and Exhibit 2.04(B) respectively.

	The Facility Fee.

	From and after the date hereof, until the Loan Termination Date, the 
Borrower shall pay a facility fee of one-quarter of one percent (0.25%) 
per annum on the average daily undisbursed amount of the Revolving Credit 
Loan during each quarterly period or portion thereof.  This facility fee 
shall be payable quarterly in arrears, on the last day of each January, 
April, July and October, commencing on January 31, 1996.

	Interest Rates and Payments of Interest.

	Interest on the principal balances of the Loans from time to time 
outstanding shall accrue at the respective rates (a "Note Rate") and in the 
manner set forth in the Notes.

	It is the intention of the parties hereto to conform strictly to applicable 
usury laws as in effect, from time to time, during the term of the Loans.  
Accordingly, if any transaction or transactions contemplated hereby would be 
usurious under applicable law (including the laws of the United States of 
America, or of any other jurisdiction whose laws may be applicable), then, 
in that event, notwithstanding anything to the contrary in this Agreement 
or any other agreement entered into in connection with this 
 (ii)  the aggregate of all interest under applicable law that is contracted 
for, charged, or received under this Agreement or under any of the other 
aforesaid agreements or otherwise in connection with this Agreement shall 
under no circumstances exceed the maximum amount of interest allowed by 
applicable law, and any excess shall be promptly credited to the Borrower by 
the Lender (or, if such consideration shall have been paid in full, such 
excess shall be promptly refunded to the Borrower by the Lender); 
ll be obligated to pay the amount of such interest to the extent that it is 
in excess of the maximum interest permitted by the applicable usury laws; 
and (iv) the effective rate of interest shall be ipso facto reduced to the 
Highest Lawful Rate hereinafter defined.  All sums paid, or agreed to be 
paid, to the Lender for the use, forbearance, and detention of the 
indebtedness of the Borrower to the Lender shall, to the extent permitted 
by applicable law, be amortized, pro rated, allocated, and spread through
the Highest Lawful Rate in effect at any particular time during the full 
term thereof.  The maximum lawful interest rate, if any, referred to in this
 Section 2.06(B) that may accrue pursuant to this Agreement is referred to 
herein as the "Highest Lawful Rate".  If at any time a Note Rate exceeds 
the Highest Lawful Rate, the rate of interest to accrue pursuant to this 
Agreement shall be limited, notwithstanding anything to the contrary in 
this Agreement, to the Highest Lawful Rate, but any subsequent reducti
the Highest Lawful Rate until the total amount of interest accrued pursuant 
to this Agreement equals the amount of interest that would have accrued if 
a varying rate per annum equal to the Rate had at all times been in effect.  
If the total amount of interest paid or accrued pursuant to this Agreement 
under the foregoing provisions is less than the total amount of interest 
that would have accrued if a varying rate per annum equal to the applicable 
Note Rate had at all times been in effect, then the Borrower
the Lender an amount equal to the difference between (a) the lesser of 
(i) the amount of interest that would have accrued if the Highest Lawful 
Rate had at all times been in effect, or 
(ii) the amount of interest that would have accrued if a varying rate per 
annum equal to the applicable Note Rate had at all times been in effect, 
and (b) the amount of interest accrued in accordance with the other 
provisions of this Agreement.

	Overadvance.

	The Borrower may borrow from the Lender during the period from the date 
hereof until November 20, 1995 an amount which shall not exceed, in the 
aggregate amount at any one time outstanding, $300,000.00 or such lesser 
amount as shall be specified by the Borrower, such sums to be included in 
the Borrowing Base.

 2.08 Payment to the Lender.

	The Lender shall send the Borrower statements of all amounts due with 
respect to the Loans, which statements shall be considered correct and 
presumptively binding on the Borrower unless the Borrower notifies the Lender
to the contrary within thirty (30) days of its receipt of any statement 
that it deems to be incorrect.  Alternatively, at its sole discretion, the 
Lender may charge against any deposit account of the Borrower all or any 
part of any amount due hereunder.


0  CONDITIONS PRECEDENT


	The obligation of the Lender to make the Loans is subject to the following 
conditions precedent:

	Documents Required for the Closing.

	The Borrower shall have duly authorized, executed and delivered or caused 
to be duly authorized, executed and delivered to the Lender, prior to the 
initial disbursement of either of the Loans (the "Closing"), the following:

	The Equipment Note in the form attached hereto as Exhibit 2.04(A);

	The Revolving Credit Note in the form attached hereto as Exhibit 2.04(B);

	The Lease Assignment;

	The Landlord's Consent and Waiver;

	A duly executed Guaranty of each of the Guarantors;

	The Patent and Trademark Assignments;

	The UCC financing statements and other instruments required by Article 4.0;

	The Financial Statements;

	A copy, certified as of the date of the Closing, of resolutions of the 
board of directors of the Borrower and each Guarantor, authorizing the 
execution, delivery, and performance of this Agreement, the Notes, the 
Collateral Documents, and each other document to be delivered pursuant hereto;

	A copy, certified as of the date of the Closing, of the bylaws of the 
Borrower and each Guarantor;

 	A certificate, dated the date of the Closing, of the corporate clerk or 
assistant clerk of the Borrower and each Guarantor as to the incumbency and 
signatures of the officers of the Borrower and each Guarantor, as 
applicable, signing this Agreement, the Notes, the Collateral Documents, 
and each other document to be delivered pursuant hereto;

	A copy, certified as of the most recent date practicable by the Secretary 
of the Commonwealth of Massachusetts, of the Articles of Organization of 
the Borrower and each Guarantor, and all amendments thereto, together with a 
certificate (dated the date of the Closing) of the corporate clerk or 
assistant clerk of the Borrower and each Guarantor to the effect that such 
Articles of Organization have not been further amended since the date of 
the aforesaid certification of the Secretary of the Commonwealth of M

	A certificate of good standing dated as of the most recent date 
practicable, issued by the Secretary of the Commonwealth of Massachusetts 
as to the legal existence, Articles of Organization and good legal standing 
of the Borrower and each Guarantor;

	Certificates, as of the most recent dates practicable, of the Secretary of 
the Commonwealth of Massachusetts and of the secretary of state of each 
state in which the Borrower and each Guarantor are qualified as a foreign 
corporation and, if applicable, of the department of revenue or taxation 
of each of the foregoing states, as to the good standing of the Borrower 
and each Guarantor;

	A written opinion of the law firm of Bingham, Dana & Gould, legal counsel 
for the Borrower and the Guarantors, dated the date of the Closing and 
addressed to the Lender, in form satisfactory to the Lender, and attached 
hereto as Exhibit 3.01(O);

	A duly executed Borrowing Base Certificate as of a date not earlier than 
September 30, 1995, acceptable to the Lender and certifying a Borrowing 
Base in an amount sufficient to support the initial disbursement of the 
Revolving Credit Loan; and

	Such other documents and the completion of such other matters as counsel 
to the Lender may deem necessary or appropriate.

	Documents Required for Subsequent Disbursements.

	At the time of, and as a condition to, any disbursement of any part of 
the Revolving Credit Loan or the Equipment Loan to be made by the Lender 
subsequent to the Closing, the Lender may require the Borrower and the 
Guarantors to deliver to the Lender a certificate, dated the date on which 
any such disbursement is to  be made, signed by the president or a vice 
president of the Borrower, and to the effect that:

	As of the date thereof, no Event of Default has occurred and is 
continuing, and no event has occurred and is continuing that, but for the 
giving of notice or passage of time or both, would be an Event of Default;

	No material adverse change has occurred in the business prospects, 
financial condition, or results of operations of the Borrower or any 
Subsidiary since the date of the Financial Statements; and

	Each of the representations and warranties contained in Section 5.01 is 
true and correct in all respects as if made on and as of the date of such 
disbursement.

	Certain Events.

	At the time of, and as a condition to, the Closing and each disbursement 
of any part of the Loans to be made by the Lender at or subsequent to the 
Closing:

	No Event of Default shall have occurred and be continuing, and no event 
shall have occurred and be continuing that, with the giving of notice or 
passage of time or both, would be an Event of Default; and

	All of the Collateral Documents shall have remained in full force and effect.

	Legal Matters.

	At the time of the Closing and each subsequent disbursement, all legal 
matters incidental thereto shall be satisfactory to Bowditch & Dewey, legal 
counsel to the Lender.


0  COLLATERAL SECURITY


	Composition of the Collateral.

	The property in which a security interest is granted pursuant to the 
provisions of Sections 4.02 and 4.03 hereof, the Lease Assignment and the 
Patent and Trademark Assignments are herein collectively called the 
"Collateral".  The Collateral, together with all other property of the 
Borrower and each of the Guarantors of any kind held by the Lender, shall 
stand as one general, continuing collateral security for all Obligations 
and may be retained by the Lender until all Obligations have been satisfied 
in ful

 	Rights in Property Held by the Lender.

	As security for the prompt satisfaction of all Obligations, the Borrower 
and each Guarantor hereby assign, transfer, and set over to the Lender all 
of their respective right, title, and interest in and to, and grant the 
Lender a lien on and a security interest in, all amounts that may be owing, 
from time to time, by the Lender to the Borrower or any Guarantor in any 
capacity, including, but without limitation, any balance or share belonging 
to the Borrower or any Guarantor, or any deposit or other account 
ff that the Lender has under Section 8.07 or otherwise.

	Rights in Property Held by the Borrower, the Guarantors or the Lender.

	As further security for the prompt satisfaction of all Obligations, the 
Borrower and each Guarantor hereby assign to the Lender all of their 
respective right, title and interest in and to, and grants the Lender a 
lien upon and a continuing security interest in, all of the following, 
wherever located, whether now owned or hereafter acquired, together with 
all replacements therefor and proceeds (including, but without limitation, 
insurance proceeds) and products thereof:

	All Inventory;

	All Accounts, Contracts, accounts receivable, contract rights, and Chattel 
Paper, regardless of whether or not they constitute proceeds of other 
Collateral;

	All General Intangibles, regardless of whether or not they constitute 
proceeds of other Collateral, including, without limitation, all the rights 
of the Borrower or any Guarantor (which the Lender may exercise or not as 
it in its sole discretion may determine) to acquire or obtain Goods and/or 
services with respect to the manufacture, processing, storage, sale, 
shipment, delivery or installation of any of the Inventory of the Borrower 
or any Guarantor or other Collateral;

	All products of and accessions to any of the Collateral;

	All liens, guaranties, securities, rights, remedies and privileges pertaining 
to any of the Collateral, including the right of stoppage in transit;

	All obligations owing to the Borrower or any Guarantor of every kind and 
nature, and all choses in action;

	All tax refunds of every kind and nature to which the Borrower or any 
Guarantor is now or hereafter may become entitled no matter however 
arising, including, without limitation, loss carry back refunds;
 
	All Intellectual Property, goodwill, trade secrets, computer programs,
customer lists, trade names, trademarks and patents;

	All Chattel Paper, Documents and Instruments (whether negotiable or 
non-negotiable, and regardless of their being attached to Chattel Paper);

	All Equipment, including without limitation machinery, furniture, motor 
vehicles, Fixtures and all other goods used in the conduct of the business 
of the Borrower or any Guarantor;
			
	All proceeds of Collateral of every kind and nature and in whatever form, 
including, without limitation, both cash and non-cash proceeds resulting or 
arising from the rendering of services by the Borrower or any Guarantor or 
the sale or other disposition by the Borrower or any Guarantor of the 
Inventory or other Collateral;
			
	All books, records, computer discs, electronic data and other information  
relating to the conduct of the business of the Borrower or any Guarantor 
including, without in any way limiting the generality of the foregoing, 
those relating to its Accounts;

	All deposit accounts maintained by the Borrower or any Guarantor with any 
bank, trust company, investment firm or fund, or any similar institution or 
organization; and

	All property of the Borrower or any Guarantor in the possession of the 
Lender.

	Priority of Liens.

	The foregoing liens shall be first and prior liens except for Permitted Liens.

	UCC Financing Statements.

	The Borrower and each Guarantor will:

	Execute such UCC financing statements (including amendments thereto and 
continuation statements thereof) in form satisfactory to the Lender as the 
Lender, from time to time, may specify;

	Pay, or reimburse the Lender for paying, all costs and taxes of filing or 
recording the same in such public offices as the Lender may designate; and

	Take such other steps as the Lender, from time to time, may direct, 
including the noting of the Lender's lien on the Collateral and on any 
certificates of title therefor, all to  perfect to the satisfaction of the 
Lender the Lender's interest in the Collateral.

	In addition to the foregoing, and not in limitation thereof:

	A carbon, photographic, or other reproduction of this Agreement shall be 
sufficient as a UCC financing statement and may be filed in any appropriate 
office in lieu thereof; and

	To the extent lawful, the Borrower and each Guarantor hereby appoint the 
Lender as its attorney-in-fact (without requiring the Lender to act as such) 
to execute any UCC financing statement in the name of the Borrower or any 
Guarantor, and to perform all other acts that the Lender deems appropriate to 
perfect and continue its security interest in, and to protect and preserve, 
the Collateral. 

	Mortgagees', Landlords', and Warehousemen's Waivers. 

	The Borrower and each Guarantor will, within twenty (20) days after any 
request of the Lender, cause any mortgagee of real estate owned by the 
Borrower or any Guarantor, any landlord of premises leased by the Borrower 
or any Guarantor, and any warehouseman or other bailee on whose premises 
any of the Collateral may be located to execute and deliver to the Lender 
instruments, in form and substance satisfactory to the Lender, by which 
such mortgagee, landlord or warehouseman or other bailee waives its rights


0  REPRESENTATIONS AND WARRANTIES


	Original.

	To induce the Lender to enter into this Agreement, the Borrower and each 
Guarantor individually and collectively represent and warrant to the Lender 
as follows:

	The Borrower and the Guarantors are corporations duly organized, validly 
existing, and in good standing under the Laws of the Commonwealth of 
Massachusetts; the Borrower and the Guarantors have no Subsidiaries other 
than the Subsidiaries named in Exhibit 5.01(A); each Subsidiary is a 
corporation duly organized, validly existing, and in good standing under 
the Laws of its state of incorporation, all as set forth in Exhibit 5.01(A); 
the Borrower, the Guarantors and the Subsidiaries have the lawful power to o
 as a foreign corporation in the jurisdictions wherein the nature of the 
business transacted by it or property owned by it makes such qualification 
necessary; the states in which the  Borrower and each Guarantor and 
Subsidiary are qualified to do business are set forth in Exhibit 5.01(A) or 
otherwise disclosed to the Lender in writing; the percentage of ownership 
of the Borrower and each Guarantor of the outstanding stock of each 
Subsidiary is as listed in Exhibit 5.01(A); the addresses of all places of 
bus
sed to the Lender in writing; no Borrower, Guarantor or Subsidiary has 
changed its name, been the surviving corporation in a merger, acquired any 
business, or changed its principal executive office within five (5) years 
and one (1) month prior to the date hereof except as set forth in 
Exhibit 5.01(A); and all of the authorized, issued, and outstanding shares 
of capital stock of each Subsidiary are owned by the Borrower or a Guarantor, 
except as set forth in Exhibit 5.01(A);

	No Borrower, Guarantor or Subsidiary is directly or indirectly controlled 
by, or acting on behalf of, any Person which is an "Investment Company", 
within the meaning of the Investment Company Act of 1940, as amended;

	No Borrower, Guarantor or Subsidiary is in default with respect to any of 
its existing Indebtedness, and the making and performance of this Agreement, 
the Notes, and the Collateral Documents will not (immediately or with the 
passage of time, the giving of notice, or both):

	Violate the Articles of Organization or by-laws of any Borrower, Guarantor 
or Subsidiary, or violate any Laws or result in a default under any 
contract, agreement, or instrument to which the Borrower or any Subsidiary 
is a party or by which Borrower, any Guarantor or Subsidiary or its property 
is bound; or

	Result in the creation or imposition of any security interest in, or lien 
or encumbrance upon, any of the assets of the Borrower, any Guarantor or 
Subsidiary except in favor of the Lender;

	The Borrower and each Guarantor, to the extent applicable to it, has the 
power and authority to enter into and perform this Agreement, the Notes, and 
the Collateral Documents, and to incur the obligations herein and therein 
provided for, and has taken all actions necessary to authorize the 
execution, delivery, and performance of this Agreement, the Notes, and the 
Collateral Documents;

	This Agreement, the Notes, and the Collateral Documents are, or when 
delivered will be, valid, binding, and enforceable in accordance with their 
respective terms subject to applicable bankruptcy, insolvency, 
reorganization or similar laws affecting the rights and remedies of 
creditors and secured parties;

	Except as disclosed in Exhibit 5.01(F) hereto, there is no pending order, 
notice, claim, litigation, proceeding, or  investigation against or 
affecting the Borrower, any Guarantor or Subsidiary, whether or not covered 
by insurance, that would in the aggregate involve the payment of $25,000.00 
or more or would otherwise materially or adversely affect the financial 
condition or business prospects of the Borrower, any Guarantor or Subsidiary 
if adversely determined;

	The Borrower and each Guarantor and Subsidiary have good and marketable 
title to all of their assets, none of which is subject to any security 
interest, encumbrance or lien, or claim of any third Person except for 
Permitted Liens;

	The Financial Statements, including any schedules and notes pertaining 
thereto, have been prepared in accordance with GAAP, and fully and fairly 
present the financial condition of the Borrower and its Subsidiaries at the 
dates thereof and the results of operations for the periods covered thereby, 
and there have been no material adverse changes in the consolidated financial
condition or business of the Borrower and its Subsidiaries from October 31, 
1994, to the date hereof;

	As of the date hereof, the Borrower, the Guarantors and the Subsidiaries 
have no material Indebtedness of any nature, including, but without 
limitation, liabilities for taxes and any interest or penalties relating 
thereto except to the extent reflected (in a footnote or otherwise) and 
reserved against in the consolidated balance sheet dated October 31, 1994 
included in the Financial Statements or as disclosed in, or permitted by, 
this Agreement; and neither the Borrower nor any Guarantor knows or has reaso
ion related to such Indebtedness as of the date of the Closing except as 
disclosed on Exhibit 5.01(F) or otherwise disclosed to the Lender in writing;

	Except as otherwise permitted herein, the Borrower and each Guarantor have 
filed all federal, state, and local tax returns and other reports required 
by any applicable Laws to have been filed prior to the date hereof, has 
paid or caused to be paid all taxes, assessments, and other governmental 
charges that are due and payable prior to the date hereof, and has made 
adequate provision for the payment of such taxes, assessments, or other 
charges accruing but not yet payable; neither the Borrower nor any Guara
with any taxes, assessments, or charges not provided for on their books;

	Except to the extent that the failure to comply would not materially 
interfere with the conduct of the business of the Borrower, any Guarantor 
or Subsidiary, the Borrower and each Guarantor and Subsidiary have each 
complied with all applicable Laws with respect to (1) any restrictions, 
specifications, or other requirements pertaining to products that it 
manufactures or sells or to the services it performs; (2) the conduct of 
its  business; and (3) the use, maintenance, and operation of the real and 
persona

	No representation or warranty by or with respect to the Borrower, any 
Guarantor or Subsidiary contained herein or in any certificate or other 
document furnished by the Borrower, any Guarantor or Subsidiary pursuant 
hereto contains any untrue statement of a material fact or omits to state 
a material fact necessary to make such representation or warranty not 
misleading in light of the circumstances under which it was made;

	Each consent, approval or authorization of, or filing, registration or 
qualification with, any Person required to be obtained or effected by the 
Borrower, any Guarantor or Subsidiary in connection with the execution and 
delivery of this Agreement, the Notes, and the Collateral Documents or the 
undertaking or performance of any obligation hereunder or thereunder has 
been duly obtained or effected;

	All existing Indebtedness of the Borrower, any Guarantor or Subsidiary:  
(1) for money borrowed, or (2) under any security agreement, mortgage or 
agreement covering the lease by the Borrower, any Guarantor or Subsidiary 
as lessee of real or personal property is described in Exhibit 5.01(N);

	Except as described in Exhibit 5.01(O), attached hereto, or otherwise 
disclosed to the Lender in writing, (a) no Borrower, Guarantor or Subsidiary 
has any material leases, contracts, or commitments of any kind (including, 
without limitation, employment agreements; collective bargaining agreements; 
powers of attorney; distribution arrangements; licenses, patents, 
trademarks, service marks  or  license agreements; contracts for future 
purchase or delivery of goods or rendering of services; bonuses, pension, 
he Borrower and the Guarantors, all parties to all such material leases, 
contracts, and other commitments to which the Borrower, any Guarantor or 
Subsidiary is a party have complied with the provisions of such leases, 
contracts, and other commitments; and (c) to the best of the Borrower's 
knowledge, no party is in default under any thereof and no event has 
occurred which, but for the giving of notice or the passage of time, or 
both, would constitute a default;

	Neither the Borrower nor any Guarantor has made any agreement or taken 
any action which may cause anyone to become entitled to a commission or 
finder's fee as a result of or in connection with the making of the Loans;

	The consolidated federal tax returns of the Borrower and the Guarantors 
for all years of operation, including the year ended October 31, 1994, have 
been filed with the Internal Revenue Service and have not been challenged;

 	Any Employee Pension Benefit Plans, as defined in the Employee Retirement 
Income Security Act of 1974, as amended ("ERISA"), of the Borrower and each 
Subsidiary meet, as of the date hereof, the minimum funding standards of 
29 U.S.C.A.  1082 (Section 302 of ERISA), and no Reportable Event or 
Prohibited Transaction, as defined in ERISA, has occurred with respect to 
any Employee Benefit Plans, as defined in ERISA, of the Borrower or any 
Guarantor or Subsidiary; and

	The liens and security interests created pursuant to Sections 4.02 and 4.03 
are in all cases first and prior liens except for Permitted Liens.


	Survival.

	All of the representations and warranties set forth in Section 5.01 shall 
survive until all Obligations are satisfied in full and there remain no 
outstanding commitments hereunder.


0  COVENANTS OF THE BORROWER

	Affirmative Covenants.

	The Borrower and each Guarantor do hereby individually and collectively 
covenant and agree with the Lender that, so long as any of the Obligations 
remain unsatisfied or any commitments hereunder remain outstanding, they 
will comply, or if appropriate cause the Subsidiaries to comply, at all 
times with the following affirmative covenants:

	The Borrower will use the proceeds of the Loans only for the purposes set 
forth in Exhibit 6.01(A), and will furnish the Lender such evidence as it 
may reasonably require with respect to such use;

	The Borrower and the Guarantors will furnish the Lender:

	As soon as available, but in any event within forty-five (45) days after 
the close of each quarterly accounting period in each fiscal year:  
(a) a consolidated statement of Stockholders' Equity and a consolidated 
statement of changes in cash flow of the Borrower and its Subsidiaries for 
such quarter; (b) consolidated income statements of the Borrower and its 
Subsidiaries for such quarter; and (c) consolidated balance sheets of the 
Borrower and its Subsidiaries as of the end of such quarter all in reasonabl
ancial officer to have been prepared in accordance with GAAP;

	As soon as available, but in any event within one hundred and twenty (120) 
days after the close of each fiscal year:  (a) a consolidated statement of 
Stockholders' Equity and a  consolidated statement of changes in cash flow 
of the Borrower and its Subsidiaries for such fiscal year; (b) consolidated 
and consolidating income statements of the Borrower and its Subsidiaries 
for such fiscal year; and (c) consolidated and consolidating balance sheets 
of the Borrower and its Subsidiaries as of the end of such fi
s and management letters; the consolidated statements and balance sheets to 
be audited by an independent certified public accountant selected by 
Borrower and acceptable to the Lender, and certified by such accountants to 
have been prepared in accordance with GAAP and to present fairly the 
consolidated financial position and results of operations of the Borrower 
and its Subsidiaries; in addition, the Borrower will obtain from such 
independent certified public accountants and deliver to the Lender, within 
one
amination necessary to their certification they have obtained no knowledge 
of any Event of Default by the Borrower, or disclosing all Events of Default 
of which they have obtained knowledge (it being understood and agreed by 
the Lender that in making their examination, such accountants shall not be 
required to go beyond the bounds of generally accepted auditing procedures 
for the purpose of certifying financial statements); the Lender shall have 
the right, from time to time to discuss the affairs of the Bor
 the Borrower to be represented at any such discussions;

	Contemporaneously with each quarterly and year-end financial report 
required by the foregoing paragraphs (1) and (2), a certificate of the 
president or principal financial officer of the Borrower stating that he 
has individually reviewed the provisions of this Agreement and that a 
review of the activities of the Borrower during such year or quarterly 
period, as the case may be, has been made by him or under his supervision, 
with a view to determining whether the Borrower has fulfilled all its 
obligations u

	Promptly after the sending or making available or filing of the same, 
copies of all reports, proxy statements, and financial statements that the 
Borrower sends or makes available to its stockholders and all registration 
statements and reports that the Borrower or any Guarantor files with the 
Securities and Exchange Commission or any successor Person;

	Within fifteen (15) days after the end of each calendar month, in such 
form and detail as shall be reasonably satisfactory to the Lender, an 
aging, as of the end of such month,  of (a) the then Eligible Accounts, 
(b) all other Accounts of the Borrower certified by the president or chief 
financial officer of the Borrower to be complete and correct;

	Within fifteen (15) days after the end of each calendar month, in such 
form and detail as shall be satisfactory to the Lender, a designation of 
Borrower's Inventory, showing the amount and cost of each item or group 
thereof;

	Within fifteen (15) days after the end of each calendar month (and at any 
additional time in the discretion of the Lender or if any material 
deterioration in the Borrowing Base would be disclosed thereby) a Borrowing 
Base Certificate as of the end of such month (or as of a date not more than 
three (3) days prior to the date of any such additional Borrowing Base 
Certificate).  Each Borrowing Base Certificate shall be effective only as 
accepted by the Lender (and with such revisions, if any, as the Lender ma
l upon a change in the Borrowing Base), such acceptance to be presumed 
after receipt of such Borrowing Base Certificate unless the Lender otherwise 
notifies the Borrower, whether thereafter, theretofore, or contemporaneously 
therewith; and

	Upon the Lender's request, from time to time, copies of any or all 
agreements, contracts, or commitments referred to in Section 5.01(O) hereof;

	The Borrower and each Guarantor will maintain their Inventory, Equipment, 
real estate, and other properties in good condition and repair (normal wear 
and tear excepted), and will pay and discharge or cause to be paid and 
discharged, when due, the cost of repairs to, or maintenance of, the same, 
and will pay or cause to be paid in a timely manner all rental or mortgage 
payments due on such real estate.  The Borrower and each Guarantor hereby 
agree that, in the event any of them fails to pay or cause to be p
d on demand be reimbursed therefor by the Borrower or the Guarantors;

	The Borrower, the Guarantors and the Subsidiaries will maintain, or cause 
to be maintained, public liability insurance (subject to a maximum of 
$5,000.00 in deductibles for each entity) and fire and extended coverage 
insurance on all assets that are of a character usually insured by 
corporations engaged in the same or similar businesses, all in form and 
amount sufficient to indemnify the Borrower or Subsidiary for 100% of the 
appraised value of any such asset lost or damaged (subject to any deductible 
cust
 insurance generally carried on comparable assets within the industry and 
with such insurers as may be satisfactory to the Lender.  The Borrower, the 
Guarantors  and the Subsidiaries will cause all such insurance policies to 
contain a standard loss payee clause and to be payable  to the Lender as its 
interest may appear, to deliver the policies of insurance to the Lender.  
The Borrower will furnish to the Lender such evidence of insurance as the 
Lender may require.  The Borrower hereby agrees that, in the e
e, the Lender, in its discretion, may do so and be reimbursed by the 
Borrower therefor.  The Borrower and each Guarantor or Subsidiary hereby 
assign to the Lender any returned or unearned premiums that may be due the 
Borrower or any Subsidiary upon cancellation by the insurer of any such 
policy for any reason whatsoever and direct any such insurer to pay the 
Lender any amounts so due; provided, however, that the Lender will pay to 
the Borrower or the appropriate Guarantor or Subsidiary any such returned or 
vent of Default hereunder.  The Lender is hereby appointed the 
attorney-in-fact of the Borrower and each Guarantor or Subsidiary (without 
requiring the Lender to act as such) to endorse any check which may be 
payable to the Borrower or any Guarantor or Subsidiary to collect any 
premiums or the proceeds of such insurance (other than proceeds of public 
liability insurance), and any amount so collected may be applied by the 
Lender toward satisfaction of any of the Obligations if an Event of Default 
has occurre
t shall remit such proceeds to the Borrower or such Guarantor or Subsidiary 
within ten (10) Business Days after the Lender's receipt of such proceeds, 
provided that immediately prior to any such remittance the Lender is 
provided with a Borrowing Base Certificate reflecting a current Borrowing 
Base not less than the amount of the Revolving Credit Loan then outstanding;

	The Borrower, the Guarantors and the Subsidiaries will each pay or cause 
to be paid when due, all taxes, assessments, and charges or levies imposed 
upon it or on any of its property or which it is required to withhold and
pay except where contested in good faith by appropriate proceedings with 
adequate reserves therefor having been set aside on its books; provided, 
however, that the Borrower and each Guarantor or Subsidiary shall pay or 
cause to be paid all such taxes, assessments, charges or levies forthw

	The Borrower and its Subsidiaries will maintain:

	Consolidated Tangible Net Worth (a) of at least $750,000.00 at all times 
during the period commencing on the date hereof through and including 
April 30, 1996; (b) of at least $1,000,000.00 at all times during the period 
commencing on May 1, 1996 through and including July 31, 1996; (c) of at 
least $1,250,000.00 at all times during the period commencing on August 1, 
1996 through and including January 1, 1997; and (d) at all times during each 
fiscal quarter ending after April 30, 1997,  an amount equal to or
0%) of Consolidated Earnings for the fiscal quarter tested;

	A ratio of Consolidated Liabilities to Consolidated Tangible Net Worth as 
of the following test dates of not more than:

			Test Date					Ratio

		  January 31, 1996		    	    2.0:1.0
		  April 30, 1996		    	    2.5:1.0
		  July 31, 1996		         3.0:1.0
		  October 31, 1996		         3.0:1.0
		  January 31, 1997		    	    3.0:1.0
		  April 30, 1997		         3.0:1.0
		  July 31, 1997		    	    3.0:1.0
		  October 31, 1997		    	    2.5:1.0
		   and thereafter

(a) Consolidated Losses as of the end of the following fiscal quarters of 
not more than:	
			Fiscal				   Consolidated
		 Quarter Ending		           Losses

		January 31, 1996			   $300,000.00
		April 30, 1996				   $350,000.00
		July 31, 1996	   			   $450,000.00
		October 31, 1996			   $200,000.00
		January 31, 1997			   $200,000.00
		April 30, 1997 				    $0.00
		 and thereafter		    

or (b) Cumulative Consolidated Losses, as of the end of the following fiscal 
quarters, of not more than:

		    Fiscal		       	   Consolidated
		Quarters Ending			      Losses

		April 30, 1996	   	  	 	   $600,000.00
		July 31, 1996	                  $700,000.00
		October 31, 1996		   	   $600,000.00
			
	A Debt Service Coverage Ratio of not less than 2.00:1.00 tested as of 
October 31, 1997 and the end of each fiscal quarter thereafter based upon 
the fiscal quarter tested and the three (3) fiscal quarters immediately 
preceding such fiscal quarter on a rolling four quarters basis;

	A Borrowing Base such that the amount of the Borrower's outstanding 
Revolving Credit Loan will not, at any time, exceed its Borrowing Base; and

 	The Borrower, the Guarantors and the Subsidiaries will each, when 
requested to do so, make available for inspection by duly authorized 
representatives of the Lender any of its books and records and will furnish 
the Lender any information regarding its business affairs and financial 
condition reasonably requested by the Lender within a reasonable time after 
written request therefor;

	The Borrower, the Guarantors  and the Subsidiaries will each take all 
necessary steps to preserve its corporate existence and franchises and 
comply with all present and future Laws applicable to it in the operation 
of its business, and all material agreements to which it is subject;

	The Borrower, the Guarantors  and the Subsidiaries will each collect its 
Accounts and sell its Inventory only in the ordinary course of business;

	The Borrower, the Guarantors and the Subsidiaries will each keep accurate 
and complete Records of its Accounts, Inventory, and Equipment consistent 
with sound business practices;

	The Borrower, the Guarantors and the Subsidiaries will each give immediate 
notice to the Lender of (1) any litigation or proceeding in which it is a 
party if an adverse decision therein would require it to pay more than 
$25,000.00, or deliver assets the value of which exceeds such sum (whether 
or not the claim is considered to be covered by insurance); and (2) the 
institution of any other suit or proceeding involving it that might 
materially and adversely affect its operations, financial condition, propert

	Within ten (10) days after the filing thereof, the Borrower and the 
Guarantors will furnish the Lender upon request with copies of federal 
income tax returns filed by the Borrower or any Guarantor;

	The Borrower, the Guarantors and the Subsidiaries will each (a) pay 
immediately, from the proceeds of the initial disbursement of the Revolving 
Credit Loan at the Closing, its outstanding Indebtedness to the Lender and 
cause all security therefor or in respect thereof to be assigned to the 
Lender, and (b) pay when due (or within applicable grace periods) all of 
its other Indebtedness due third Persons except when the amount thereof is 
being contested in good faith by appropriate proceedings and with adequa
 Subordinated Indebtedness except in strict compliance with all of the 
terms of subordination thereof theretofore approved in writing by the 
Lender.  If default be made by the Borrower or any Guarantor or Subsidiary 
in the payment of any principal (or installment thereof) of, or interest 
on, any such Indebtedness, the Lender shall have the right, in its 
discretion, to pay such interest or principal for the account of the 
Borrower  or such Guarantor or Subsidiary and be reimbursed by the Borrower 
or such Gua

	The Borrower, the Guarantors and its Subsidiaries will each notify the 
Lender immediately if it becomes aware of the occurrence of any Event of 
Default or of any fact, condition, or event that only with the giving of 
notice or passage of time or both, could become an Event of Default or if 
it becomes aware of any material adverse change in the business prospects, 
financial condition (including, without limitation, proceedings in 
bankruptcy, insolvency, reorganization, or the appointment of a receiver or 
tr
r, any Guarantor or any Subsidiary to observe any of their respective 
undertakings hereunder or under the Collateral Documents;

	The Borrower, the Guarantors and its Subsidiaries will each notify the 
Lender thirty (30) days in advance of any change in the location of any of 
its places of business or of the establishment of any new, or the 
discontinuance of any existing, place of business;

	The Borrower, the Guarantors  and the Subsidiaries will each (1) fund any of
 its Employee Pension Benefit Plans in accordance with no less than the 
minimum funding standards of 29 U.S.C.A.  1082 (Section 302 of ERISA); (2) 
furnish the Lender, promptly after the filing of the same, with copies of any
 reports or other statements filed with the United States Department of Labor
 or the Internal Revenue Service with respect to any such Plan; and (3) 
promptly advise the Lender of the occurrence of any Reportabl

	The Borrower and the Guarantors shall each maintain their primary operating 
accounts, to the extent in existence,  with the Lender until such time as the
 Loans are paid in full;

	The Borrower and the Guarantors shall each permit the Lender and its agents 
to conduct periodic audits and account debtor inquiries with respect to 
outstanding balances of Accounts  and field audits on any premises occupied 
by the Borrower or on which any Collateral is located and shall pay to the 
Lender its reasonable costs and expenses related to each such audit; and

	The Borrower shall cause the Equity Injection to be completed on or before 
six (6) months from the date of this Agreement. 

	Negative Covenants.

	The Borrower and the Guarantors do hereby individually and collectively 
covenant and agree with the Lender that, so long as any of the Obligations 
remain unsatisfied or any commitments hereunder remain outstanding, they will
 comply, or if appropriate  cause the Subsidiaries to comply, at all times 
with the following negative covenants, unless otherwise indicated herein or 
the Lender shall otherwise have agreed in writing:

	Neither the Borrower nor any Guarantor or Subsidiary will enter into any 
merger, consolidation, reorganization or recapitalization, or reclassify its 
capital stock nor will the Borrower nor any Guarantor or Subsidiary change 
its name without thirty days' prior written notice to the Lender;

	Neither the Borrower nor any Guarantor or Subsidiary will sell, transfer, 
lease, or otherwise dispose of all or (except in the ordinary course of 
business) any material part of its assets;

	Neither the Borrower nor any Guarantor or Subsidiary will sell, lease, 
transfer, assign, or otherwise dispose of any of the Collateral (excluding 
only Collateral which is obsolete and not used in the operation of their 
businesses) except in the ordinary course of business;

	Neither the Borrower nor any Guarantor or Subsidiary will sell or otherwise 
dispose of, or for any reason cease operating, any of its divisions, 
franchises, or lines of business;

	Neither the Borrower nor any Guarantor or Subsidiary will mortgage, pledge, 
grant, or permit to exist a security interest in, or a lien upon, any of its 
assets of any kind, now owned or hereafter acquired, except for Permitted 
Liens, liens of the Collateral Documents, and existing liens listed on 
Exhibit 1.01(G) to the extent shown on such Exhibit 1.01(G) to be permitted 
to exist after the Closing;

	Neither the Borrower nor any Guarantor or Subsidiary will become liable, 
directly or indirectly, as guarantor or otherwise for any obligation of any 
other Person, except for (i) the Guaranties, and (ii) the endorsement of 
commercial paper for deposit or collection in the ordinary course of business;

	Neither the Borrower nor any Guarantor or Subsidiary will incur, create, 
assume, or permit to exist any Indebtedness except:  (1) the Loans; (2) 
existing Indebtedness listed on Exhibit 1.01(G) to the extent shown on such 
Exhibit 1.01(G) to be permitted to exist after the Closing; (3) trade 
indebtedness incurred in the ordinary course of business (provided, however, 
that neither the Borrower nor any Subsidiary may acquire inventory other than
 for cash or on open account except as expressly approved in writi
 lease obligations permitted by Section 6.02(L); (6) Indebtedness secured by 
Permitted Liens; (7) Subordinated Indebtedness; (8) Indebtedness permitted 
pursuant to Section 6.01(E); (9) Indebtedness in respect of judgments or 
awards that have been in force for less than the applicable period for taking
 an appeal so  long as execution is not levied thereunder or in respect of 
which the Borrower or such Subsidiary shall at the time in good faith be 
prosecuting an appeal or proceedings for review and in respect
ss pursuant to warranties of products or services issued in the ordinary 
course of business of the Borrower or any Guarantor.

	Neither the Borrower nor any Guarantor or Subsidiary (other than a wholly 
owned Subsidiary of the Borrower) will declare or pay any dividends, or make 
any other payment or distribution on account of its capital stock nor make 
any assignment or transfer of Accounts, or, other than in the ordinary course
 of business, of Inventory;

	Neither the Borrower nor any Guarantor or Subsidiary will form any 
subsidiary, make any investment in (including any assignment of Inventory or 
other property), or make any loan in the nature of an investment to, any 
Person, which shall exceed the aggregate amount of $500,000.00, other than 
investments of the Borrower in the Subsidiaries listed on Exhibit 5.01(A);

	Neither the Borrower nor any Guarantor or Subsidiary will make any loan or 
advance to any officer, shareholder, director, or employee of the Borrower or
 any Guarantor or Subsidiary, except for business travel and similar 
temporary advances in the ordinary course of business;

	Excepting the Indebtedness evidenced by the Equipment Note, neither the 
Borrower nor any guarantor or Subsidiary shall have outstanding at any one 
time Indebtedness exceeding the aggregate amount of $150,000.00 in connection
 with the purchase or lease of Consolidated Fixed Assets; as used in this 
paragraph, the term "lease" means a lease that is not capitalized in a 
consolidated balance sheet of the Borrower and the Subsidiaries and should 
not be so capitalized under GAAP;

  Neither the Borrower nor any Guarantor or Subsidiary will purchase or 
otherwise invest in or hold securities, nonoperating real estate, or other 
nonoperating assets except:  (1) direct obligations of the United States of 
America, or of a bank with assets of not less than $20,000,000,000.00 or 
other investments approved in advance in writing by the Lender; (2) the 
present investment in any such assets held as of October 31, 1994 and 
reflected in the Financial Statements; and (3) operating assets that herea

	Excepting  the transactions entered into in connection with the Equity 
Injection or the matters disclosed in Exhibit 6.02(M) attached hereto, 
neither the Borrower nor any Guarantor or Subsidiary will redeem, purchase, 
or retire any of its capital stock or purchase or retire for any 
consideration, any warrant, right, or option pertaining thereto or other 
security convertible into any of the foregoing, or permit (i) with respect to
 the stock  of the Borrower, any redemption or retirement of the outstanding
to the stock of any Guarantor or  Subsidiary, any transfer, sale, redemption,
retirement other change in the ownership of the outstanding capital stock of 
any Guarantor or Subsidiary;
	
	Neither the Borrower nor any Guarantor or Subsidiary will prepay any 
Subordinated Indebtedness, Indebtedness for borrowed money except the 
Obligations, or Indebtedness secured by any of its assets (except the 
Obligations), or enter into or modify any agreement as a result of which the 
terms of payment of any of the foregoing Indebtedness are waived or modified;

	Neither the Borrower nor any Guarantor or Subsidiary will enter into any 
sale-leaseback transaction;

	Neither the Borrower nor any Guarantor or Subsidiary will acquire or agree 
to acquire any stock in, or all or substantially all of the assets of, any 
Person other than the Borrower and subject to the provisions of Section 6.02
(I) hereof;

	Neither the Borrower nor any Guarantor or Subsidiary will furnish the Lender
 any certificate or other document that will contain any untrue statement of 
material fact or that will omit to state a material fact necessary to make it
 not misleading in light of the circumstances under which it was furnished; 
and

	Neither the Borrower nor any Guarantor or Subsidiary will directly or 
indirectly apply any part of the proceeds of the Loans to the purchasing or 
carrying of any "margin stock" within the meaning of Regulation U of the 
Board of Governors of the Federal Reserve System, or any regulations, 
interpretations, or rulings thereunder.


0  DEFAULT

	Events of Default.

	The occurrence of any one or more of the following events shall constitute 
an Event of Default hereunder:

	The Borrower or any Guarantor shall fail to pay when due any of its 
Obligations to pay money to the Lender;

	The Borrower or any Guarantor or Subsidiary shall fail to observe or perform
 any of its Obligations other than payment of money to be observed or 
performed by it hereunder, under any of the Collateral Documents or otherwise,
 and such failure shall continue for fifteen (15) days after (1) notice of 
such failure from the Lender; or (2) the Lender is notified of such failure 
or should have been so notified pursuant to the provisions of Section 6.01(O),
 whichever is earlier;
 
	The Borrower or any Guarantor or Subsidiary shall fail to pay any 
Indebtedness exceeding the aggregate amount of $50,000.00 due any third 
Persons, and such failure shall continue beyond any applicable grace period, 
or the Borrower or any Subsidiary shall suffer to exist any other event of 
default under any agreement binding upon the Borrower or any Guarantor or 
Subsidiary;

	Any financial statement, representation, warranty, or certificate made or 
furnished by or with respect to the Borrower or any Guarantor or Subsidiary 
to the Lender in connection with this Agreement, or in any separate statement
 or document to be delivered to the Lender hereunder, shall be materially 
false, incorrect, or incomplete when made;

	The Borrower or any Guarantor or Subsidiary shall admit its inability to pay
 its debts as they mature or shall make an assignment for the benefit of 
itself or any of its creditors;

	Proceedings in bankruptcy, or for reorganization of the Borrower or any 
Guarantor or Subsidiary, or for the readjustment of any of their respective 
debts under the Bankruptcy Code, as amended, or any part thereof, or under 
any other Laws, whether state or federal, for the relief of debtors, now or 
hereafter existing, shall be commenced against or by the Borrower or any 
Guarantor or Subsidiary and, except with respect to any such proceedings 
instituted by the Borrower, any Guarantor or  Subsidiary, shall no

	A receiver or trustee shall be appointed for the Borrower or any Guarantor 
or Subsidiary or for any substantial part of their respective assets, or any 
proceedings shall be instituted for the dissolution or the full or partial 
liquidation of the Borrower or any Guarantor or Subsidiary, and except with 
respect to any such appointments requested or instituted by the Borrower, any
 Guarantor or Subsidiary, such receiver or trustee shall not be discharged 
within sixty (60) days of his appointment, and except wi
ings shall not be discharged within sixty (60) days of their commencement, or
 the Borrower or any Guarantor or Subsidiary shall discontinue business or 
materially change the nature of its business, or the Collateral becomes, in 
the reasonable judgment of the Lender, insufficient in value to satisfy the 
Obligations, or the Lender otherwise reasonably finds itself insecure as to 
the prompt and punctual payment and discharge of the Obligations;

	The Borrower or any Guarantor or Subsidiary shall suffer final judgments 
for payment of money aggregating in excess of $50,000.00 and shall not 
discharge the same within a period of thirty (30) days unless, pending 
further proceedings, execution  has not been commenced or, if commenced, has 
been effectively stayed;

	A judgment creditor of the Borrower or any Guarantor or Subsidiary shall 
obtain possession of any of the Collateral by any means, including (without 
implied limitation) levy, distraint, replevin, or self-help;

	Any obligee of Subordinated Indebtedness shall fail to comply with the 
subordination provisions of the instruments evidencing such Subordinated 
Indebtedness; or

	Any Guarantor shall fail to comply fully with the requirements of, or shall
 terminate or attempt to terminate, any Guaranty.

	Acceleration.

	At its option, and at any time upon the occurrence of any Event of Default,
  the Lender may, whether immediately or otherwise, declare all Obligations 
of the Borrower or any Guarantor to be immediately due and payable without 
further action of any kind without notice, demand or presentment.


0  THE LENDER'S RIGHTS AND REMEDIES

	The Lender's Rights Upon Default.

	Upon the occurrence of an Event of Default and at any time thereafter, the 
Lender, without presentment, demand, notice, protest or advertisement of any 
kind, will have the following rights:

	Account Debtors.

	Upon the occurrence of an Event of Default and at any time thereafter, the 
Lender may institute a lockbox for the collection of payments and/or notify 
account debtors, at the Borrower's expense, that the Collateral has been 
assigned to the Lender and that payments shall be made directly to the Lender.
  Upon request of the Lender, the Borrower will enter into an agreement 
establishing such a lockbox and/or notify such account debtors that their 
accounts must be paid to the Lender.  Upon the occurrence of an
remittances in trust for the Lender and deliver them in kind to the Lender.  
The Lender shall have full power to collect, compromise, endorse, sell or 
otherwise deal with the Collateral or proceeds thereof in its own name or in 
the name of the Borrower.

 	Possession and Foreclosure of Collateral.

	Upon the occurrence of an Event of Default and at any time thereafter, to 
the extent that the Borrower could legally do so, the Lender may enter onto, 
occupy and use any premises owned by the Borrower or in which the Borrower 
has any interest.  The Lender may take possession of all Collateral.  In the 
Lender's sole discretion, the Lender may operate and use the Borrower's 
equipment, complete work in process and sell inventory without being liable 
to the Borrower on account of any losses, damage or deprecia
 deems advisable.  The Lender may sell or lease Collateral alone or in 
conjunction with other property, real or personal, and allocate the sale 
proceeds or leases among the items of Collateral sold without the necessity 
of the Collateral being present at any such sale, or in view of prospective 
purchasers thereof.  If notice of sale is legally required, the Borrower 
agrees that ten (10) days' written notice shall be deemed reasonable.  Upon 
such sale, the Lender may become the purchaser of the whole or any 
e possession and pay for the Collateral so sold.  In case of any such failure,
 the said Collateral may be resold.  Any Collateral remaining unsold after 
being offered at public auction may be abandoned or disposed of for no 
consideration in such manner as the Lender deems appropriate.

	In any event, at any time and from time to time the Lender may abandon the 
Collateral or any part thereof.  The Borrower agrees immediately upon demand 
to take possession of any and all abandoned Collateral and to remove it from 
any location in the possession of or under the control of the Lender.

	Use of Intellectual Property.

	Upon the occurrence of an Event of Default and at any time thereafter, the 
Lender may use all or any part of the Borrower's Intellectual Property which 
the Borrower now has or may hereafter acquire.  The Lender may license such 
Intellectual Property to third parties, seek registration of such 
Intellectual Property in any state or nation or prosecute pending 
applications for patent, trademark, or service marks in the Borrower's name 
in any state or nation.

 	Notification of Default to Third Parties.

	Upon the occurrence of an Event of Default and at any time thereafter, the 
Lender may notify the Borrower's suppliers, account debtors and other third 
parties of the default and of any and all decisions made and actions taken by
the Lender with respect to this Agreement, the Obligations or the Collateral, 
without liability of any kind.

	Assembly of Collateral.

	Upon the occurrence of an Event of Default and at any time thereafter, the 
Lender may require the Borrower to assemble the Collateral in a single 
location at a place to be designated by the Lender and make the Collateral at
 all times secure and available to the Lender.

	Right of Set-Off.

	The Lender may, and is hereby authorized by the Borrower and the each 
Guarantor, at any time and from time to time, to the fullest extent permitted
 by applicable Laws, without advance notice to the Borrower or any Guarantor 
(any such notice being expressly waived by the Borrower and each Guarantor), 
set-off and apply any and all deposits (general or special, time or demand, 
provisional or final) at any time held and any other indebtedness at any time
 owing by the Lender to, or for the credit or the account
, now or hereafter existing, whether or not such Obligations have matured and
 irrespective of whether the Lender has exercised any other rights that it 
has or may have with respect to such Obligations, including without 
limitation any acceleration rights.  The Lender agrees promptly to notify the
 Borrower after any such set-off and application, provided that the failure 
to give such notice shall not affect the validity of such set-off and 
application.  The rights of the Lender under this Section 8.07 are in
 the Lender may have.

	Exercise of Other Remedies.

	Upon the occurrence of any Event of Default and at any time thereafter, the 
Lender may exercise the remedies of a Lender afforded by the Uniform 
Commercial Code and other applicable law or by the terms of any agreement 
between the Borrower, any or all of the Guarantors and the Lender.

	Cumulative Rights and Remedies.

	All rights and remedies of the Lender, whether provided for herein or in 
other agreements, instruments or documents or conferred by law, are 
cumulative and may be exercised alone or simultaneously.
 

0  ATTORNEY-IN-FACT

	Attorney-In-Fact.

	Upon the occurrence of an Event of Default and at all time thereafter, the 
Borrower hereby irrevocably appoints the Lender, or its designee, as the 
Borrower's true and lawful attorney-in-fact, with full power as follows:  (1)
 to endorse the name of the Borrower on any assignments, notes, checks, 
drafts, money orders, or other instruments of payment for Collateral; (2) to 
sign or endorse the name of the Borrower on any negotiable instrument, 
invoice, freight or express bill, bill of lading, storage or wareh
 adjust, settle and cancel, in the Borrower's name, insurance policies as 
required by Section 6.01(D) and to sign the Borrower's name on settlement 
checks or drafts; (4) in the Borrower's name, to do any act which this 
Agreement requires Borrower to do, and, (5) to give notice to the United 
States Post Office to effect changes of address so that mail addressed to the
 Borrower may be delivered directly to the Lender.  In exercising this power-
of-attorney, the Lender shall not be liable to the extent that it 


0  MISCELLANEOUS


 Construction.

	The provisions of this Agreement shall be in addition to those of any 
guaranty, pledge or security agreement, note, or other evidence of liability 
now or hereafter held by the Lender, all of which shall be construed as 
complementary to each other.  Nothing herein contained shall prevent the 
Lender from enforcing any or all other guaranty, pledge or security 
agreements, notes, or other evidences of liability in accordance with their 
respective terms.

 Further Assurances.

	From time to time, the Borrower and each Guarantor will execute and deliver 
to the Lender such additional documents and will provide such additional 
information as the Lender may reasonably require to carry out the terms of 
this Agreement and be informed of the status and affairs of the Borrower and 
each Guarantor.

 Enforcement and Waiver by the Lender.

	The Lender shall have the right at all times to enforce the provisions of 
this Agreement and the Collateral Documents in strict accordance with the 
terms hereof and thereof,  notwithstanding any conduct or custom on the part 
of the Lender in refraining from so doing at any time or times.  The failure 
of the Lender at any time or times to enforce its rights under such 
provisions, strictly in accordance with the same, shall not be construed as 
having created a custom in any way or manner contrary to specific
and remedies of the Lender are cumulative and concurrent and the exercise of 
one right or remedy shall not be deemed a waiver or release of any other 
right or remedy.

 Expenses of the Lender.

	The Borrower and each Guarantor will, on demand, reimburse the Lender for 
all expenses, including the reasonable fees and expenses of legal counsel for 
the Lender, incurred by the Lender in connection with the preparation, 
administration, amendment, modification, or enforcement of this Agreement and
 the Collateral Documents and the collection or attempted collection of any 
of the Obligations.

 Notices.

	Any notices or consents required or permitted by this Agreement shall be in 
writing and shall be deemed delivered if delivered in person or if sent by 
certified mail, postage prepaid, return receipt requested, facsimile or 
telegraph, as follows, unless such address is changed by written notice 
hereunder:

	If to the Borrower	Luxtec Corporation
		or any Guarantor:	326 Clark Street
						Worcester, MA  01606

			Attention:	President

		With a copy to:	Victor J. Paci, Esquire
						Bingham, Dana & Gould
						150 Federal Street
						Boston, MA  02110


	If to the Lender:	The First National Bank of Boston
						100 Federal Street
						Boston, MA  02110
						
			Attention:	Senior Commercial Loan Officer

		With a copy to:	The First National Bank of Boston
						100 Front Street
						Worcester Tower
						Worcester, MA  01608-1438

			Attention:	Senior Commercial Loan Officer

 			and to:		George W. Tetler, III, Esquire
						Bowditch & Dewey
						311 Main Street
						Worcester, MA  01608

 Waiver and Indemnification by the Borrower and the Guarantors.

	To the maximum extent permitted by applicable Laws, the Borrower and the 
Guarantors:

	Waive (1) protest of all commercial paper at any time held by the Lender on 
which the Borrower or any Guarantor is in any way liable; (2) except as the 
same may herein be specifically granted, notice of acceleration and of 
intention to accelerate; and (3) notice and opportunity to be heard, after 
acceleration in the manner provided in Section 7.02, before exercise by the 
Lender of the remedies of self-help, set-off, or of other summary procedures 
permitted by any applicable Laws or by any agreement with th
ther action taken by the Lender; and

	Indemnify the Lender and its officers, attorneys, agents, and employees from 
all claims for loss or damage related to this Agreement, the Loans, the 
Collateral Documents, the transactions contemplated thereby, the Lender's 
enforcement of its rights with respect thereto  or the relationship by and 
among the Lender, the Borrower and each Guarantor caused by any act or 
omission on the part of any of them except willful misconduct.

 Participation.

	Notwithstanding any other provision of this Agreement, the Borrower and each
 Guarantor understands that the Lender may at any time enter into 
participation agreements with one or more participating banks whereby the 
Lender will allocate certain percentages of its commitment to them.  The 
Borrower and each Guarantor acknowledge that, for the convenience of all 
parties, this Agreement is being entered into with the Lender only and that 
its obligations under this Agreement are undertaken for the benefit of, a
antor hereby grant to each such participating bank, to the extent of its 
participation in the Loans, the right to set off deposit accounts maintained 
by the Borrower and the each Guarantor with such bank.

 Waiver of Jury Trial.

	THE BORROWER, EACH GUARANTOR AND THE LENDER WAIVE THEIR RESPECTIVE RIGHTS TO
 A TRIAL BY JURY, WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDING, WHETHER 
CLAIM OR COUNTERCLAIM, BROUGHT OR INSTITUTED BY ANY PARTY TO THIS AGREEMENT 
OR ANY OF THEIR SUCCESSORS AND ASSIGNS, WHICH RELATES DIRECTLY OR INDIRECTLY 
TO  THIS AGREEMENT, THE LOANS, THE COLLATERAL DOCUMENTS OR THE RELATIONSHIP 
BY AND AMONG THE LENDER, THE BORROWER AND/OR THE ANY OR ALL OF THE GUARANTORS.

 Applicable Law.

This Agreement is entered into and performable in the Commonwealth of 
Massachusetts and shall be subject to and construed and enforced in 
accordance with the laws of the Commonwealth of Massachusetts.

 Binding Effect, Assignment, and Entire Agreement.

	This Agreement shall inure to the benefit of, and shall be binding upon, the
 respective successors and permitted assigns of the parties hereto.  Neither 
the Borrower nor any Guarantor has any right to assign any of its rights or 
obligations hereunder without the prior written consent of the Lender.  This 
Agreement, including the Exhibits hereto, all of which are hereby 
incorporated herein by reference, and the documents executed and delivered 
pursuant hereto, constitute the entire agreement between the par

 Severability.

	If any provision of this Agreement shall be held invalid under any 
applicable Laws, such invalidity shall not affect any other provision of this
 Agreement that can be given effect without the invalid provision, and, to 
this end, the provisions hereof are severable.

 Counterparts.

	This Agreement may be executed in any number of counterparts, each of which 
shall be deemed to be an original, but all of which together shall constitute
 but one and the same instrument.


	IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as 
a sealed instrument as of the day and year first above written.

						LUXTEC CORPORATION


ar first above written.

						LUXTEC CORPORATION


_______________________	    	By:_____________________________ Witness					   
Its President


 						FIBER IMAGING TECHNOLOGIES, INC.	


_______________________	    	By:_____________________________ Witness					   
Its President


						CATHTEC INCORPORATED


_______________________	    	By:_____________________________ Witness					   
Its President


						CARDIODYNE, INC., f/k/a LUXTEC CD
						ACQUISITION CO., INC.


_______________________		By:_____________________________		
						   Its President


						THE FIRST NATIONAL BANK OF BOSTON



________________________		By:_____________________________
Witness				        Its Vice President



 

	EXHIBIT 1.01(C)




	EXHIBIT 1.01(E)




	EXHIBIT 1.01(C) (con't.)




	EXHIBIT 1.01(C) (con't.)

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