THIS MANAGEMENT SERVICES AGREEMENT made as of the first day of April 1998.


BETWEEN:          PHOTOMATRIX, INC.
                  11065 Sorrento Valley Court
                  San Diego, CA  92121
                  (the "Company")

AND:              DR. JOHN FAESSEL
                  7685 Caminito Coramandel
                  La Jolla, California 92037 - USA
                  (the "Service Provider")

AGREEMENT:

1.       Definitions:

1.1 In this Agreement save where the context otherwise requires:

"Services"  means the  services to be  provided  by the Service  Provider to the
Company as specified in Article 4 of this Agreement.

2.       Appointment

2.1 The Company  hereby  agrees to engage the Service  Provider  and the Service
Provider agrees to provide the Company the Services commencing on the date first
written  above,  for a period not to exceed one year.  The  initial  term of the
Agreement  shall be for a period of thirty days,  and shall renew  automatically
thereafter  for a further  thirty  days over the life of the  Agreement,  unless
otherwise terminated by either party.

2.2 Either party may  terminate  this  Agreement on no less than 7 days' written
notice prior to the expiration of any 30-day period.

3.       Attention to the Business of the Company

3.1 During the continuance of this Agreement,  the Service Provider shall devote
such time and attention to the business of the Company as is required to fulfill
the terms of the engagement,  and as more  particularly  required by the Company
pursuant to clause 4.4 of this Agreement.

4.       Services

4.1 The Service Provider shall report to the President of the Company or to such
other person as the Company may designate in writing from time to time.

4.2 The Service Provider's primary  responsibilities shall be, within Europe and
the United States:

          a.        to  implement  a  public   relations   program   focused  on
                    broadening the Company's  institutional  shareholder base in
                    the United States;
          b.        provide  financial  public  relations   information  to  the
                    Company's shareholders and the general public;
          c.        disseminate  information on the Company and its business and
                    plans to the institutional  investment  community,  and more
                    particularly         institutionally-focused        brokers,
                    broker/dealers, and boutique investment firms;
          d.        advise the Company of  relevant  investment  and  commercial
                    information it becomes aware of, particularly as regards JAG
                    Notes and research/analyst reports; and,
          e.        provide such other  services as may be  consistent  with the
                    engagement  that the  Parties  may  agree  upon from time to
                    time.

4.3 In providing the Services,  the Service Provider shall follow the reasonable
direction of the Company in regards to:

          a.        the office out of which the Services are to be provided, and
                    general administrative arrangements;
          b.        the time to be spent providing the Services to the Company;
          c.        the manner in which the  Services  are to be provided to the
                    Company; and
          d.        a work plan  around the  providing  of the  Services  to the
                    Company.

4.4 The  Company  will  provide  any  direction  given to the  Service  Provider
regarding the Services,  in writing.  More  particularly,  however,  the Service
Provider shall focus its efforts around  disseminating  information which it has
gathered and which is otherwise available in the public domain.

5.       Compensation

5.1 The  Company  agrees  to pay the  Service  Provider  a  services  fee on the
fifteenth  day of each  month in the  amount  of USD 2,000  per  month.  If this
Agreement  is  renewed  or  otherwise  extended,  then the  services  fee may be
adjusted  by mutual  agreement  of the  parties  hereto,  any  adjustment  to be
predicated upon the Service Provider's performance.

5.2 The Company agrees to issue to the Service  Provider  options to purchase up
to 100,000 shares of the Company contemporaneously with the Agreement continuing
in effect on the following terms:



<PAGE>


         50,000 shares during the term of the Agreement at an exercise  price of
         USD $0.75 per share  for a term of three  (3)  years,  with an  initial
         one-twelfth  (1/12) of the options vesting in advance upon execution of
         this  Agreement,  and with a  further  one-twelfth  (1/12) of the total
         options  vesting  on the  first  day of each of the  succeeding  months
         during the term of this Agreement.

         50,000 shares during the term of the Agreement at an exercise  price of
         USD $0.75 per  share  for a term of three  (3) years  with all  options
         vesting as of May 31, 1998.

5.3` The Company may, in its  discretion and in order to further the purposes of
this Agreement, accelerate the vesting or the issuance of the options.

5.4 In the event  that  there is a  consolidation  in the share  capital  of the
Company, additional options will be issued to the Service Provider in accordance
with the original amount of options specified under this Agreement.  The Company
undertakes to register all options  granted to the Service  Provider  under this
and any successive  Agreements,  with the NASDAQ Stock Exchange,  the Securities
and Exchange Commission and any other relevant regulatory authorities.

5.5  The  Company  shall  reimburse  the  Service   Provider  for  any  expenses
pre-approved  in  writing,  incurred  in  rendering  the  Services.  The Service
Provider shall provide full details of all such  expenditures by way of itemized
expense reports with original receipts.

5.6 All fees due as  described  in  clauses  5.1 and 5.5 shall be  payable  upon
invoice for solong as the Agreement remains in effect.

6.       Confidential Information and Company Documents

6.1 The Service  Provider shall not, during the term of this  Agreement,  nor at
any time thereafter:

          a.        divulge or  communicate  to any  person,  company,  business
                    entity or other organization;
          b.        use for its own  purposes  or for any  purposes  other  than
                    those of the  Company;  through any failure to exercise  due
                    care and diligence, cause any unauthorized disclosure of any
                    trade secrete or  Confidential  Information  relating to the
                    Company and its clients.  These  restrictions shall cease to
                    apply  to any  Information  which  is or  becomes  generally
                    available to the public other than as a result of any act or
                    default on the part of the Service Provider.

6.2  "Confidential  Information"  shall include any information  relating to the
Company,  its  clients,  suppliers  and  their  terms of  business,  details  of
customers and their requirements, the price charged to and the terms of business
with customers,  marketing  plans and sales  forecasts,  financial  information,
results and  forecasts  (to the extent that these are not  included in published
audited accounts), details of employees and officers and of the remuneration and
benefits paid to them, information relating to research activities,  inventions,
secret processes, designs, formulae and product lines, any information which the
Service  Provider is told is  confidential  and any  information  which has been
given to the Company in confidence by customers, suppliers or other persons.


<PAGE>


6.3 Any  notes,  memoranda,  records,  lists  of  customers  and  suppliers  and
employees,  correspondence,  documents, computers and other disks and tape, data
listing, codes, designs and drawings and other documents and material whatsoever
(whether made or created by the Service  Provider or otherwise)  relating to the
business  of the  Company  (and any copies of the same) and which have come into
the possession of the Service Provider in relation to this Agreement:

          a.        shall be and remain the property of the Company; and
          b.        shall be surrendered by the Service  Provider to the Company
                    on demand.

6.4 Upon termination of this Agreement, the Service Provider shall deliver up to
the Company all Confidential  Information and any copies (however stored) and in
relation  thereto,  and any other property  belonging to the Company which is in
the Service Provider's possession.

7.       Representations and Warranties

7.1 The Company warrants that:

          a.        it is  incorporated  under the laws of California  and is in
                    good standing; and
          b.        all licenses, patents and intellectual property disclosed in
                    the  Company's  business  plan,  prospectus  and  regulatory
                    filings  are owned by, or  licensed to the Company and there
                    are no disputes relating thereto.

8.       Notices

8.1 Any notice required to be given under this Agreement may be given by sending
same by first-class  registered  post addressed to the registered  office of the
Company,  or addressed to the last known  address of the Service  Provider.  Any
notice given  pursuant to this clause  shall be deemed to have been  received 96
hours after the time of posting and service thereof shall be sufficiently proved
by providing that the notice was duly  dispatched  through the post in a prepaid
envelope addressed as aforesaid.

9.       Public Disclosures

9.1 In carrying out the Services, the Service Provider shall at all times ensure
that all  representations  and  information  provided  to third  parties  do not
violate the internal disclosure policies of the Company, and comply at all times
with the rules and regulations of applicable regulatory  authorities,  including
without limitation the NASDAQ Stock Exchange,  the U.S.  Securities and Exchange
Commission, and the California Department of Corporations.

10.      Indemnity

10.1 The Service  Provider  agrees to indemnify  and hold  harmless the Company,
against all losses,  claims and expenses  (including  reasonable legal expenses)
incurred by the Company as a result of the  negligence or willful  misconduct of
the Service Provider.

11.      Entire Understanding

11.1 This  Agreement  contains the entire  understanding  between the parties in
connection  with the  matters  herein  contained  and  supersedes  any  previous
agreements or undertakings relating thereto.

12.      No Waiver

12.1 No waiver delay time or other indulgence  granted by either party hereto to
the other in respect of any breach of this Agreement  shall in any way prejudice
or affect the rights or  remedies  of the  granting  party in  relation  to such
breach.

13.      Assignment

13.1 This  Agreement  may not be assigned by the  Service  Provider  without the
prior written consent of the company.

14.      Regulatory approvals

14.1 Any compensation  paid by the Company to the Service Provider is subject to
all regulatory requirements being met.

15.      Applicable Law

15.1 This  Agreement  shall be governed by and construed in accordance  with the
laws of the State of California.


AGREED AND ACCEPTED on behalf of
PHOTOMATRIX, INC.


_____________________________________       Date _________________________
Authorized Signatory


AGREED AND ACCEPTED by
DR. JOHN FAESSEL


____________________________________        Date _________________________