<PAGE>

                                                              Exhibit 10.21


                            DISTRIBUTION AGREEMENT

        This DISTRIBUTION AGREEMENT (the "Agreement"), agreed to as of this 31st
                                         ---------
day of October, 1996 (the "Effective Date"), is entered into by and between
                           --------------
KERAVISION, INC., a Delaware corporation ("KeraVision"), having a principal
                                           ----------
place of business at 48630 Milmont Drive, Fremont, CA 94538-7353, and AM PESCHKE
GMBH, a German corporation ("AMP") having a principal place of business at
                             ---
Saldorferstrasse 5 90429 Nuremberg, Germany.

                                  BACKGROUND
                                  ----------

        WHEREAS, KeraVision and AMP have held discussions regarding distribution
of KeraVision myopia-related products in Germany, KeraVision and AMP intend to
enter into a Distribution Agreement based upon the principal terms set forth
below.

                                   AGREEMENT
                                   ---------

SECTION 1:  CERTAIN DEFINITIONS

        The following definitions shall apply to the terms used in this
Agreement:

        "Competitive Products" shall mean implantable devices, chemicals, or
         --------------------
drugs used for corneal reshaping.

        "Confidential Information" shall mean any information relating to or
         ------------------------
disclosed in the course of this Agreement, which is or should be reasonably
understood to be confidential or proprietary to the disclosing party, including,
but not limited to know-how, trade secrets, technical processes and formulas,
product designs, sales, cost and other unpublished financial information,
product and business plans, projections, and marketing data. "Confidential
Information" shall not include information which: (i) is known to the recipient
on the Effective Date directly or indirectly from a source other than one having
an obligation of confidentiality to the providing party; (ii) hereafter becomes
known (independently of disclosure by the providing party) to the recipient
directly or indirectly from a source other than one having an obligation of
confidentiality to the providing party; (iii) becomes publicly known or
otherwise ceases to be secret or confidential, except through a breach of this
Agreement by the recipient; or (iv) is or was independently developed by the
recipient without use of or reference to the providing party's confidential
information, as shown by evidence in the recipient's possession.

        "Intellectual Property Rights" shall mean and include all patents,
         ----------------------------
copyrights, trademarks, trade names and other proprietary rights or applications
therefor in any country which KeraVision may at any time own rights in, adopt,
use, or register with respect to the KeraVision Products or the business of
KeraVision.

[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -1-
<PAGE>

        "KeraVision Products" shall mean the myopia-related products developed
         -------------------
and owned by KeraVision prior to the Effective Date of this Agreement, including
related instrumentation, and as set forth in Exhibit A attached hereto.
                                             ---------

        "Net Revenue" shall mean gross receipts for distribution, including
         -----------
sale, licensing, or otherwise, by AMP, less: (i) discounts; (ii) applicable
taxes, and (iii) credits for returns, and shall not include any other source of
revenue or fees, including any fees for physician training.

        "Territory"  shall mean the geographic territory of [*].
         ---------

SECTION 2:  APPOINTMENT OF AMP

        2.1    Appointment. Subject to the terms and conditions of this
               -----------
Agreement, KeraVision appoints AMP as its non-exclusive (subject to the
Exclusivity Period, defined below), distributor and reseller for the KeraVision
Products in the Territory. KeraVision may select AMP to sell future KeraVision
Products related to other indications, including hyperopia and astigmatism,
contingent upon performance, future revenue forecasts and other factors as
determined by KeraVision.

        2.2    Exclusivity Period. KeraVision agrees that the appointment of AMP
               ------------------
shall be: (i) exclusive for a period extending from the Effective Date of this
Agreement and for [*] thereafter ("Exclusivity Period"); and (ii) co-exclusive
                                   ------------------
with KeraVision for a period of [*] extending from the termination of the
Exclusivity Period to the end of the Term of this Agreement ("Co-Exclusivity
                                                              --------------
Period"); provided, however, that this Agreement is not previously terminated
------    -----------------
pursuant to the termination provisions, as stated below.

        2.3    Reservation of Rights. KeraVision expressly reserves the ability
               ---------------------
to change or delete from the definition of KeraVision Products, and to change or
terminate the level or type of service or support that KeraVision makes
available to AMP.

SECTION 3:  PRICING; ACCEPTANCE

        3.1    Price of Products. KeraVision Products will be sold to AMP at a
               -----------------
discount from KeraVision's US dollar international list price, of: (i) [*]
during the Exclusivity Period; and (ii) [*] during the Co-Exclusivity Period.
KeraVision will not change its international list price more [*] during the Term
of this Agreement. AMP shall submit purchase orders in writing to KeraVision,
specifying the desired KeraVision Product, quantity, and proposed delivery date
and location.

        3.2    Acceptance. KeraVision will acknowledge its acceptance of each
               ----------
purchase order it receives from AMP by issuing an invoice for such ordered
KeraVision Products.

[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -2-
<PAGE>

        3.3    Payment Terms. Payments shall be due, in U.S. currency by check
               -------------
or wired transfer, by AMP within [*] from the invoice date. A late fee shall
apply to any unpaid invoice amount at an interest rate of the lower of: (i) [*]
or (ii) the highest interest rate permitted by law.

        3.4    Reports. Within ten (10) days after the end of each quarter, AMP
               -------
will provide to KeraVision a written report showing, for the time periods
KeraVision reasonably requests: (i) AMP's sales of the KeraVision Products by
dollar volume, both in the aggregate and segmented by product; (ii) forecasts of
AMP's anticipated orders for the KeraVision Products [*]; and (iv) AMP's current
inventory levels of the KeraVision Products, both in the aggregate and by
product. AMP shall retain all such reports and records, and contracts and
accounts relating to the distribution, promotion and sale of the KeraVision
Products, for at least three (3) years after termination of this Agreement, and
will permit examination thereof by authorized representatives of KeraVision at
all reasonable times.

        3.5    Preconditions to Closing. Prior to execution of this Agreement,
               ------------------------
AMP shall provide to KeraVision a copy [*] for AMP. In addition, AMP agrees to
continue to provide to KeraVision such information annually.

        3.6    Taxes, Tariffs, Fees. KeraVision's prices and fees do not include
               --------------------
any national, state or local sales, use, value-added or other taxes, customs,
duties, or similar tariffs or fees which KeraVision may be required to pay or
collect upon the delivery of the KeraVision Products or upon collection of the
prices and fees, or otherwise. Should any tax or levy be made, AMP agrees to pay
such tax or levy and indemnify KeraVision for any claim for such tax or levy
demanded. AMP agrees to provide KeraVision with appropriate resale certificate
numbers and other documentation satisfactory to the applicable taxing
authorities in the Territory to substantiate any claim of exemption from any
such taxes or fees.

        3.7    Terms of Sale. Unless otherwise specified by KeraVision, all
               -------------
prices for the KeraVision Products are F.O.B. KeraVision's United States
facility in Fremont, California. Title and risk of loss pass to AMP when
KeraVision Products leave KeraVision's manufacturing facility. AMP shall be
solely responsible for the payment of all freight and insurance and other costs,
expenses, fees, duties, imports and charges of whatsoever kind or nature arising
from the shipment, delivery and importation of the KeraVision Products into the
Territory. AMP warrants that it will comply in all respects with any
restrictions set forth in the export license for every KeraVision Product
purchased hereunder.


[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -3-
<PAGE>

SECTION 4:  AMP OBLIGATIONS

        4.1    General Obligations of AMP. AMP shall use its best efforts to
               --------------------------
vigorously promote and sell the KeraVision Products in the Territory during the
Term of this Agreement. AMP will employ on its own behalf an appropriate number
of specialized, trained and qualified sales personnel whose main function will
be the promotion and sale of the KeraVision Products in the Territory. AMP
agrees to purchase all of its requirements for KeraVision Products directly from
KeraVision. AMP has no authority to appoint an associate distributor or sub-
distributor of the KeraVision Products without written authorization of
KeraVision.

        4.2    Performance Minimums. AMP agrees that its total cumulative Net
               --------------------
Revenue for the KeraVision Products shall be as set forth in Exhibit A attached
hereto. Failure to meet such total cumulative Net Revenue minimums shall be
considered a material breach of this Agreement. Should KeraVision require a
product recall or product withdrawal of KeraVision Product, the performance
minimums will be adjusted to reflect the withdrawal of such KeraVision product
from the market.

        4.3    Noncompetition. During the term of the Agreement, AMP will not
               --------------
sell or distribute in the Territory any Competitive Products.

        4.4    Inventory.  AMP will store the KeraVision Products under secure
               ---------
conditions and at temperatures and other physical conditions as shall be
provided to AMP from time to time.  AMP will ship the KeraVision Products to
AMP's customers from its inventory of KeraVision Products on a first-in, first-
out basis [*].

        4.5    Compliance with Medical Device Laws. AMP will, at all times
               -----------------------------------
during the Term of this Agreement, strictly comply with all applicable laws of
the Territory governing the distribution, promotion, marketing, and sale of the
KeraVision Products in the Territory. AMP will comply with all necessary
government and regulatory requirements to import, market, and distribute the
KeraVision Products in the Territory, including without limitation, performing
all necessary actions to allow KeraVision to maintain the CE mark for the
KeraVision Products as outlined in the Medical Device Directive, including
meeting the requirements of the ISO 9001 and EN 46001 standards. These actions
include, but are not limited to, specific requirements for traceability,
vigilance and complaint handling, together with additional items as listed in
Exhibit B attached hereto. AMP agrees not to sell or distribute the KeraVision
Products in the Territory until such time as all product licenses and approvals
required by the laws and regulations of the Territory have been obtained. AMP
will obtain, and pay premiums and all costs associated with, product liability
insurance in an amount sufficient to satisfy local laws and commercial
practices. AMP shall comply promptly with any recalls for KeraVision Products
issued by KeraVision or by any applicable regulatory authorities.


[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -4-
<PAGE>

        4.6    Defective Products. AMP will alert KeraVision to any defects in
               ------------------
any of the KeraVision Products within thirty (30) days of delivery of such
KeraVision Products to AMP. AMP may return defective KeraVision Products to
KeraVision at KeraVision's cost if AMP receives a written return authorization
from KeraVision. If KeraVision agrees, upon inspection, that the KeraVision
Products are defective, or otherwise authorizes the destruction of defective
KeraVision Products, KeraVision will, at its sole option, provide replacement
KeraVision Products to AMP or refund the purchase price of the KeraVision
Products to AMP.

        4.7    Translations.  AMP shall be responsible, at its sole expense, for
               ------------
complete and accurate translations of all packaging, promotional, labeling, and
other materials provided by KeraVision used by AMP in the promotion, marketing,
or sale of the KeraVision Products from English into German, subject to
KeraVision's review and approval.  All translated materials will be subject to
review by KeraVision for accuracy and compliance.  AMP will be solely
responsible for assuring that the German translations comply in all material
respects with applicable laws and regulations of the Territory.

        4.8    Training. AMP will train, in cooperation with KeraVision pursuant
               --------
to Section 7 hereto, and maintain a sufficient number of capable technical and
sales personnel, as appropriate, having sufficient knowledge of the industry,
KeraVision Products, and products competitive with the KeraVision Products so as
to: (i) properly inform customers concerning the features, capabilities, and
appropriate usage of the KeraVision Products and, if necessary, explain in
detail to its customers the differences between the KeraVision Products and
competitive products; (ii) support the KeraVision Products in accordance with
any obligations under this Agreement; (iii) otherwise carry out the obligations
and responsibilities of AMP under this Agreement; and (iv) be conversant with
the technical language conventional to the KeraVision Products and similar
products in general. All surgeon training programs must be reviewed and approved
by KeraVision. Nothing herein will give rise to the creation of any labor
relation by and between KeraVision and AMP's employees.

        4.9    Performance Obligations. AMP understands, acknowledges, and
               -----------------------
agrees that the continued maintenance of an image of excellence and high level
of ethical marketing of the KeraVision Products is essential to the continued
success of both parties hereto. Accordingly, AMP agrees that it shall, at all
times: (i) conduct business in a manner that reflects favorably at all times on
the KeraVision Products and the good name, goodwill, and reputation of
KeraVision; (ii) avoid deceptive, misleading or unethical practices that are or
might be detrimental to KeraVision, the KeraVision Products, or the public,
including without limitation the making or offering of any payment to any
government official for the purpose of influencing any act or decision of such
official in furtherance of this Agreement; (iii) make no false or misleading
representations, either orally or in any written materials, with regard to

                                      -5-
<PAGE>

KeraVision or the KeraVision Products; (iv) not publish or employ, or cooperate
in the publication or employment of, any misleading or deceptive advertising
material with regard to KeraVision or the KeraVision Products; (v) make no
representations, warranties or guarantees to customers or to the trade with
respect to the specifications, indications, capabilities, or features of the
KeraVision Products that are inconsistent with the literature distributed by
KeraVision; and (vi) not enter into any contract or engage in any practice
detrimental to the interests of KeraVision in the KeraVision Products. Violation
of any of the provisions in this Section 4.9 shall constitute a material breach
of this Agreement.

SECTION 5:  KERAVISION OBLIGATIONS

        5.1    Availability of KeraVision Products. KeraVision reserves the
               -----------------------------------
right at any time to discontinue the manufacture, supply or sale of any of the
KeraVision Products, to make changes in materials or design, or to add
improvements to any of the KeraVision Products, all without incurring any
liability.

        5.2    Marketing Assistance. KeraVision shall provide to AMP camera-
               --------------------
ready artwork in the English-language text.

        5.3    Buy Back of KeraVision Products. Upon termination of this
               -------------------------------
Agreement, other than for breach by AMP, KeraVision is obligated to repurchase
any and all inventory of the KeraVision Products which are, in KeraVision's sole
determination, in undamaged and resalable condition. KeraVision will buy such
inventory from AMP, and AMP shall promptly sell to KeraVision, at AMP's actual
cost.

SECTION 6:  OWNERSHIP; INTELLECTUAL PROPERTY RIGHTS

        6.1    Ownership.  The KeraVision Intellectual Property Rights for the
               ---------
KeraVision Products, and all translations thereof, shall remain the sole
property and under the sole ownership of KeraVision.  AMP acknowledges and
agrees that KeraVision owns and retains all trademarks, trade names, logos,
designations, copyrights and other proprietary rights in or associated with the
KeraVision Products, and agrees that it will not at any time during or after the
Term of this Agreement to assert or claim any interest in or do anything that
may adversely affect the validity of any KeraVision trademark, patent, or other
intellectual property right belonging to or licensed to KeraVision, including,
without limitation, any act or assistance to any act which may infringe or lead
to the infringement of any of KeraVision's intellectual property rights.

        6.2    KeraVision Trademarks.  During the Term of this Agreement, AMP is
               ---------------------
authorized to use the KeraVision trademarks solely in connection with AMP's
advertisement, promotion, and sale of the KeraVision Products.  AMP's use of the
KeraVision trademarks will be in accordance at all times with KeraVision's
policies and guidelines then in effect and as provided to AMP by KeraVision from
time to time.  AMP agrees not to attach any additional trademarks, trade names,
logos or designations to any of the KeraVision Products, or packaging, labeling,
advertising, or marketing materials of any kind therefor without the express
written consent of KeraVision. AMP agrees not to use the KeraVision trademarks
in connection with any third party products. AMP agrees

                                      -6-
<PAGE>

that it will not at any time during or after the Term of this Agreement assert
or claim any interest in or do anything that may adversely affect the validity
of any KeraVision trademarks, or other Intellectual Property Rights belonging to
or licensed to KeraVision (including, without limitation, any act or assistance
to any act which may infringe or lead to the infringement of any of KeraVision's
Intellectual Property Rights.) AMP agrees that any description, publication,
advertising, promotional materials, exhibits, video or image of the KeraVision
Products must include the KeraVision logo and be identified as KeraVision
Products.

        6.3    Proprietary Notice. AMP will include on each of the KeraVision
               ------------------
Products that it distributes, markets, and/or sells, and on all container
therefor, all trademark, copyright, and other notices of proprietary rights
included by KeraVision or as directed by KeraVision on such KeraVision Products.
AMP agrees not to alter, erase, deface, or overprint any such notice on anything
provided by KeraVision.

        6.4    Assistance. AMP shall promptly notify KeraVision: (i) of any
               ----------
claims or objections that its use of any Intellectual Property Rights in
connection with the marketing or sale of the KeraVision Products may or will
infringe the names, or other proprietary rights of another person or entity;
(ii) of any and all infringements, imitations, illegal use, or misuse, by any
person or entity, of KeraVision's Intellectual Property Rights which come to its
attention. AMP agrees to assist KeraVision, at KeraVision's expense, in
protecting and enforcing throughout the Territory KeraVision's Intellectual
Property Rights.

SECTION 7:  TRAINING OBLIGATIONS

        KeraVision will train AMP's training and sales representatives during
training sessions, [*]. The location and terms of such training are to be
determined at KeraVision's sole discretion.

SECTION 8:  CONFIDENTIALITY

        Each party hereto agrees not to use any Confidential Information of the
other party for any purpose, other than to enforce its rights and perform its
obligations hereunder, or disclose any Confidential Information of the other
party to any third party for any purpose. Each party hereto shall use the same
degree of care, but no less than reasonable care, to avoid disclosure or use of
the Confidential Information of the other party as such party employs with
respect to its own Confidential Information of like importance.

SECTION 9:  REPRESENTATIONS AND WARRANTIES

        9.1    Representations and Warranties by KeraVision. KeraVision warrants
               --------------------------------------------
and represents that, for a period of [*] KeraVision Products that the KeraVision
Products will

[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -7-
<PAGE>

comply with the relevant specifications in effect at the time of  AMP's
acceptance of the KeraVision Products.

        9.2    Representations and Warranties by AMP. AMP warrants and
               -------------------------------------
represents that it has the authority to enter into this Agreement, and to
perform the services set forth in this Agreement.

        9.3    No Other Warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THE DISTRIBUTION AGREEMENT, AND THE FULLEST EXTENT PERMITTED BY LAW, KERAVISION
MAKES NO FURTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT
TO THE KERAVISION PRODUCTS AND DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-
INFRINGEMENT WITH RESPECT TO SUCH KERAVISION PRODUCTS.

SECTION 10:  INDEMNIFICATION

        10.1   Indemnification by KeraVision. KeraVision agrees to indemnify,
               -----------------------------
defend and hold AMP harmless from and against any and all liabilities,
obligations, losses, claims, damage, suit, proceeding, cost, charges or other
expenses (including but not limited to reasonable attorneys' fees and court
costs) which arise out of or result from the manufacture of KeraVision Products
by KeraVision; provided, however, that such indemnification shall not
               -----------------
apply to any liabilities, obligations, losses, claims, damage, cost or
charges which arise out of or result from any claim made by any person based
upon modifications to the KeraVision Product made by any entity other than
KeraVision.

        10.2   Indemnification by AMP.  AMP agrees to indemnify, defend and hold
               ----------------------
KeraVision and its successors, assigns, agents, officers, directors and
employees, harmless from and against any and all liabilities, obligations,
losses, claims, damage, suit, proceeding, cost, charges or other expenses of
every kind and character (including but not limited to reasonable attorneys'
fees and court costs) which arise out of or result from : (i) negligence or
wrongful acts of employees or contractors of AMP; or (ii) any breach or alleged
breach (other than a breach alleged by KeraVision) of any representation or
warranty by AMP; or (iii) the marketing, promotion, distribution, and sale of
the KeraVision Products.

        10.3   Conditions Precedent to Indemnification. The obligations of one
               ---------------------------------------
party to indemnify the other party will be conditioned upon the indemnified
party: (i) providing the indemnifying party with prompt notice of any such
claim; (ii) allows the indemnifying party sole control over the defense and
settlement of such claim; (iii) provides the indemnifying party with the
information and assistance necessary for such defense and settlement of such
claims; and (iv) does not enter into any settlement with respect to such claim.

                                      -8-
<PAGE>

        10.4   Infringement. In the event that KeraVision receives notification
               ------------
that the KeraVision Product may infringe any patent, copyright, trademark, or
trade secret of a third party, KeraVision's sole liability will be to either
modify the KeraVision Product, or obtain a license to such rights as may be
required to make the KeraVision Product non-infringing. If none of the foregoing
alternatives are available to KeraVision, KeraVision shall have the right to
request that AMP discontinue the alleged infringing activity and terminate this
Agreement. THIS SECTION SETS FORTH KERAVISION'S SOLE LIABILITY, AND AMP'S SOLE
REMEDY, FOR BREACH OF ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS BY KERAVISION
PRODUCTS.

        10.5   Limitation of Liability. THE PROVISIONS OF THIS ARTICLE 10 SET
               -----------------------
FORTH THE ENTIRE LIABILITY OF KERAVISION AND THE SOLE REMEDIES OF AMP WITH
RESPECT TO ANY CLAIMS ARISING OUT OF KERAVISION'S MANUFACTURE OF THE KERAVISION
PRODUCTS. IN NO EVENT SHALL KERAVISION BE LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR OTHER DAMAGES, INCLUDING COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY OR SERVICES, SUFFERED BY AMP OR ANY OF ITS CUSTOMERS ARISING OUT OF
OR RELATED TO THE DISTRIBUTION, PROMOTION, MARKETING, SALE OR USE OF THE
KERAVISION PRODUCTS IN THE TERRITORY.

SECTION 11:  TERM AND TERMINATION

        11.1   Term. The term of the Distribution Agreement will [*] (the
               ----
"Term"), unless previously terminated by one of the parties.
 ----

        11.2   Termination. Either party may terminate the Distribution
               -----------
Agreement in the event: (i) the other party breaches any material provision of
the Distribution Agreement and does not remedy such breach within thirty (30)
days following notice of such breach from the Terminating Party; (ii) mutual
agreement with the other party; or (iii) the other party enters bankruptcy
proceedings, becomes insolvent, or otherwise becomes generally unable to meet
its obligations under this Agreement. In addition, KeraVision may immediately
terminate the Agreement without notice, in the event that: (i) AMP sells a
majority of its outstanding shares of stock to any third party, (ii) AMP merges
with or into any third party in a transaction in which AMP is not the surviving
entity or in which AMP becomes a wholly or majority owned subsidiary of such
third party, (iii) AMP has a change of at least one-half of its directors, (iv)
AMP sells all or substantially all of its assets.


        11.3   Effect Of Termination.  Upon expiration or termination of the
               ---------------------
Distribution Agreement:  (i) subject to the provisions of Section 11.4 hereto,
all rights and obligations of the parties shall cease; (ii) AMP shall promptly
sell at its cost to KeraVision all


[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -9-
<PAGE>

KeraVision Products then in AMP's inventory; (iii) AMP shall promptly transfer
to KeraVision all copies of sales materials and Confidential Information in
written, recorded, or other tangible form then in AMP's possession, and all
other materials that were supplied to AMP by KeraVision during the Term of the
Distribution Agreement; and (iv) AMP shall use its best efforts to effect the
assignment, return, or other transfer of any and all licenses, registrations,
and the like relating to the KeraVision Products, to KeraVision, or to any third
party as directed by KeraVision.

        11.4   Survival. Upon expiration or termination of this Agreement, the
               --------
provisions of Sections 1, 3.3, 3.6, 5.3 (as stated), 6.1, 8, 9, 10, 11.3, 11.4,
and 12 shall survive and remain enforceable.

        11.5   [*] This assistance will include, among other things, transfer of
customer lists and all records and information related to sale of KeraVision in
the Territory.  In addition, AMP will work jointly with KeraVision to ensure
that there will be no conflicts between AMP and KeraVision in the marketplace at
and after the time of transition of such business from AMP to KeraVision. [*]

        11.6   No Damages for Termination. KERAVISION SHALL NOT BE LIABLE TO
               --------------------------
AMP, OR ANY OF AMP'S EMPLOYEES OR AGENTS, FOR DAMAGES OF ANY KIND, INCLUDING
DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, ON ACCOUNT OF
THE TERMINATION OR EXPIRATION OF THIS AGREEMENT IN ACCORDANCE WITH THIS ARTICLE
11. AMP WAIVES ANY RIGHTS IT MAY HAVE TO RECEIVE ANY COMPENSATION OR REPARATIONS
ON TERMINATION OR EXPIRATION OF THIS AGREEMENT UNDER THE LAW OF THE TERRITORY OR
OTHERWISE, OTHER THAN AS EXPRESSLY PROVIDED HEREIN. KeraVision shall not be
liable to AMP on account of termination or expiration of this Agreement for
reimbursement or damages for the loss of goodwill, prospective profits or
anticipated income, or on account of any expenditures, investments, leases or
commitments made by AMP or for any other reason whatsoever. AMP acknowledges
that it has no expectations and has received no assurances from KeraVision that
any investment by AMP in the distribution, promotion or sale of the KeraVision
Products will be recovered or recouped or that AMP will obtain any anticipated
amount of profits by virtue of this Agreement. THE PARTIES ACKNOWLEDGE THAT THIS
SECTION 11.6 HAS BEEN INCLUDED AS A MATERIAL INDUCEMENT FOR KERAVISION TO ENTER
INTO THIS AGREEMENT AND THAT KERAVISION WOULD NOT HAVE ENTERED INTO THIS
AGREEMENT BUT FOR THE LIMITATIONS OF LIABILITY AS SET FORTH HEREIN.



[*] = CONFIDENTIAL TREATMENT REQUESTED

                                      -10-
<PAGE>

SECTION 12:  MISCELLANEOUS

        12.1   Controlling Law; Language. Except with respect to Section 3.6
               -------------------------
(Retail Pricing), in which event this Agreement will be governed by the laws of
Germany), this Agreement and the performance of the parties thereunder shall be
construed in accordance with and governed by the laws of the State of
California, as applied to agreements between California residents to be
performed entirely within California. The English-language version of the
Distribution Agreement shall be the controlling version.

        12.2   Successors and Assigns. The Distribution Agreement and the rights
               ----------------------
and obligations arising thereunder shall be binding upon and inure to the
benefit of the parties and to their respective successors and assigns. AMP shall
not assign any of its rights or obligations under the Distribution Agreement
without the prior written consent of KeraVision. Any unauthorized assignment
shall be null and void.

        12.3   Confidentiality of Agreement. Each party agrees to keep the terms
               ----------------------------
of this Agreement confidential.

        12.4   Independent Contractors.  Performance by the parties under this
               -----------------------
Agreement shall be as independent contractors. Nothing contained herein or done
in pursuance of this Agreement shall constitute the parties entering upon a
joint venture orpartnership, or shall constitute either party the agent for the
other for any purpose or in any sense whatsoever.

        12.5   Counterparts.  This Agreement may be executed in one or more
               ------------
counterparts, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument

        12.6   Notices. All notices required to be sent by either party under
               -------
this Agreement shall be deemed given: (i) when sent by confirmed facsimile or
telecopy; (ii) one business day, after being sent by commercial overnight
courier with written verification of receipt; or (iii) when received after being
mailed postage prepaid by certified or registered mail, return receipt
requested, to the party to be notified, at the respective addresses set forth
below, or at such other address which may hereinafter be designated in writing:

        KeraVision:     48630 Milmont Drive
                        Fremont, CA 94538-7353
                        Attention: Thomas M. Loarie
                        Phone: (510) 353-3000
                        Fax: (510) 353-3030

                                      -11-
<PAGE>

        AMP:            Saldorferstrasse 5
                        90429 Nuremberg, Germany
                        Attention:  Rudolf G. Peschke
                        Phone:  011-49-911/ 26 46 00
                        Fax:  011-49-911/ 26 34 02


        12.7    Amendment. This Agreement may be amended or supplemented only by
                ---------
a writing that refers specifically to this Agreement and is signed by duly
authorized representatives of both parties.

        12.8    Waiver. Except as otherwise provided in this Agreement, any
                ------
failure of any of the parties to comply with any obligation, covenant, agreement
or condition herein may be waived by the party entitled to the benefit thereof
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure.

        12.9    Entire Agreement. This Agreement, and the Exhibits hereto, all
                ----------------
of which are incorporated by this reference, constitute the entire agreement and
understanding between the parties with respect to its and their subject matter
and may not be contradicted by evidence of any prior or contemporaneous oral or
written agreement.

        12.10    Severability and Counterparts. If any provision of this
                 -----------------------------
Agreement is found to be invalid or unenforceable by a court of competent
jurisdiction, such provision shall be severed from the remainder of this
Agreement, which will remain in full force and effect. This Agreement may be
signed in counterparts, which together constitute one instrument.

        12.11    Waiver of Termination Compensation.  Upon Termination of this
                 ----------------------------------
Agreement for any reason whatsoever, KeraVision shall not be liable for, and AMP
hereby waives, all right to compensation and all claims of any kind whether on
account of the loss by AMP of present or prospective profits, or anticipated
orders, or expenditures, investments, or commitments made in connection with
this Agreement, goodwill created, or on account of any other cause whatsoever.

                                      -12-
<PAGE>

        This Agreement is hereby agreed to and acknowledged by:

KERAVISION, INC.                                     AM PESCHKE

By:    /s/ P Sabaria                                 By:    /s/  R. G. Peschke
       -------------                                        ------------------

Name:   P. Sabaria                                   Name:   R. G. Peschke

Title:   Vice President - Europe                     Title:   General Manager

Date:   12/11/96                                     Date:   11/14/1996

                                      -13-
<PAGE>

                                   EXHIBIT A
                                   ---------

                   KERAVISION PRODUCTS; MINIMUM COMMITMENTS

I.       KeraVision Products
         -------------------

         KeraVision Ring or the Instrastomal Corneal Ring Segments (ICRS) for
         the treatment of myopia.

         KeraVision Manufactured Instruments (including but limited to)

         [*]

II.     Minimum Commitments
        -------------------

Cumulative Net Revenue Target         Year Ending
-----------------------------         -----------
       [*]




[*] = CONFIDENTIAL TREATMENT REQUESTED

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<PAGE>

                                   EXHIBIT B
                                   ---------
                        CE MARK COMPLIANCE REQUIREMENTS

1.     Maintain a system ensuring retention of product distribution records.
Distribution records shall ensure traceability of the product to the consignee
and ensure that KVI has access to all records after the contract expires, or at
any time during the term of the Agreement with reasonable access by KeraVision's
authorized third party.

2.     Notification of product complaints to the appropriate KeraVision
representative.  Notification of product complaints and vigilance reporting to
KeraVision within the appropriate timeframe to ensure KeraVision's timely
notification to the Competent Authority.

3.     Comply and assist with all recall and field advisory actions.

4.     Comply and assist with all keravision requirements in placing a purchase
order to KeraVision for KeraVision to be able to initiate a sales order
acknowledgment.

5.     Notification of contacts with regulatory agencies regarding KeraVision
products.

6.     KeraVision reserves the right to have a third party audit AMP to ensure
that AMP is maintaining compliance with the requirements for maintaining the CE
mark.

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