Exhibit 4.1

           -----------------------------------------------------------

                                  LUMENIS LTD.

                                       and

                    AMERICAN STOCK TRANSFER & TRUST COMPANY,

                                  Rights Agent

                             Bonus Rights Agreement

                           Dated as of April 11, 2002

           -----------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                   Page
<S>                                                                                                 <C>
Section 1.    Certain Definitions................................................................    4

Section 2     Appointment of Rights Agent........................................................    9

Section 3.    Issue of Right Certificates........................................................    9

Section 4.    Form of Right certificates.........................................................   11

Section 5.    Countersignature and Registration..................................................   12

Section 6.    Transfer, Split-up, Combination and Exchange of Rights Certificates;
              Mutilated,  Destroyed, Lost or Stolen Right Certificates...........................   12

Section 7.    Exercise of Rights; Purchase Price; Expiration Date of Rights......................   13

Section 8.    Cancellation and Destruction of Right Certificates.................................   15

Section 9.    Reservation and Availability of Ordinary Shares....................................   16

Section 10.   Ordinary Shares Record Date........................................................   17

Section 11.   Adjustment of Purchase Price, Number of Shares or Number of Rights.................   17

Section 12.   Certificate of Adjusted Purchase Price or Number of Shares.........................   28

Section 13.   Consolidation, Merger or Sale or Transfer of assets or Earning Power...............   28

Section 14.   Fractional Rights and Fractional Shares............................................   31

Section 15.   Rights of Action...................................................................   32

Section 16.   Agreement of Right Holders.........................................................   33

Section 17.   Right Certificate holder Not Deemed a Shareholder..................................   33
</TABLE>

                                      -2-
<PAGE>

<TABLE>
<S>                                                                                                 <C>
Section 18.   Concerning the Rights Agent........................................................   34

Section 19.   Merger or Consolidation or Change of Name of Rights Agent..........................   34

Section 20.   Duties of Rights Agent.............................................................   35

Section 21.   Change of Right Agent..............................................................   38

Section 22.   Issuance of New Right Certificates.................................................   39

Section 23.   Redemption and Exchange............................................................   39

Section 24.   Notice of Certain Events...........................................................   42

Section 25.   Notices............................................................................   43

Section 26.   Supplements and Amendments.........................................................   44

Section 27.   Successors.........................................................................   45

Section 28.   Benefits of this Agreement.........................................................   45

Section 29.   Severability.......................................................................   45

Section 30.   Governing Law......................................................................   45

Section 31.   Counterparts.......................................................................   46

Section 32.   Descriptive Headings...............................................................   46

Section 33.   Determination and Actions by the Board of Directors................................   46
</TABLE>


                                      -3-
<PAGE>

                             BONUS RIGHTS AGREEMENT

     Bonus  Rights  Agreement,   dated  as  of  April  11,  2002,  (the  "Rights
Agreement")  between Lumenis Ltd., an Israeli  corporation (the "Company"),  and
American Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").

     The Board of  Directors  of the  Company  (the  "Board of  Directors")  has
authorized  the  distribution  of one bonus right (a "Right") for each  Ordinary
Share (as defined in Section  1(h) hereof) of the Company  outstanding  on April
11, 2002 (the "Record  Date"),  and has authorized the issuance of one Right (as
such  number may be  hereinafter  adjusted  pursuant to the terms  hereof)  with
respect to each Ordinary Share that shall be issued (whether  originally  issued
or  delivered  from the  Company's  treasury)  between  the Record  Date and the
earliest of the Distribution  Date, the Redemption Date and the Final Expiration
Date (as such terms are  defined in  Sections  3 and 7 hereof)  and,  in certain
circumstances  provided in Section 22 hereof,  after the Distribution Date, each
Right initially representing the right to purchase one Ordinary Share.

     Accordingly,  in  consideration  of the premises and the mutual  agreements
herein set forth, the parties hereby agree as follows:

     Section 1. Certain Definitions.  For purposes of this Rights Agreement, the
following terms have the meanings indicated:

     (a)  "Acquiring  Person" shall mean any Person (as such term is hereinafter
defined) who or which,  together with all  Affiliates  and  Associates  (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter  defined) of 15% or more of the Ordinary  Shares of the
Company then outstanding but shall not include (i) the Company,  in pursuance to
Section 308 of the Companies Law (as defined  hereunder),  (ii) any wholly-owned
Subsidiary of the Company,  in pursuance to Section 309 of the Companies Law, or
otherwise,  (iii) any employee  benefit plan of the Company or of any subsidiary
or Affiliate of the Company,  (iv) any entity holding shares of share capital of
the Company for or pursuant to the terms of any such plan, (v) Coherent, Inc., a
Delaware corporation ("Coherent"),


                                      -4-
<PAGE>

so long as Coherent  shall not purchase or otherwise  become (as a result of the
actions of Coherent or its  Affiliates or Associates)  the  Beneficial  Owner of
more than 23% of the Ordinary Shares then  outstanding  or, if applicable,  such
greater  percentage as may be contemplated by Section 5.18 of the Asset Purchase
Agreement by and among the Company,  Energy  Systems  Holdings Inc. and Coherent
dated as of February 25,  2001,  (vi) any Person who,  along with such  Person's
Affiliates  and  Associates,  becomes an  Acquiring  Person  (as  defined in the
preceding  clauses of this  Section  1(a)) as a result of a Qualified  Offer (as
defined in Section 11(a)(ii) hereof),  (vii) any Person who becomes an Acquiring
Person (as defined in the  preceding  clauses of this Section 1(a)) by virtue of
acquiring  Ordinary Shares as a result of  participation by such Person and such
Person's  Affiliates and  Associates in any dividend  reinvestment  plan,  stock
option  plan  or  other  similar  plan  or  arrangement  of the  Company  or its
Subsidiaries or Affiliates;  provided that such Person,  including such Person's
Affiliates and Associates,  does not acquire thereafter any additional  Ordinary
Shares,  exclusive  of (x)  Ordinary  Shares  acquired  by such  Person and such
Person's Affiliates and Associates as a result of stock dividends, stock splits,
recapitalizations  or similar  transaction  in which the Company did not receive
any consideration for issuing the Ordinary Shares;  (y) Ordinary Shares acquired
by such  Person  and such  Person's  Affiliates  and  Associates  as a result of
devises, bequests and intestate succession;  and (z) Ordinary Shares acquired by
such  Person  and  such  Person's  Affiliates  and  Associates  as a  result  of
participation by such Person and such Person's  Affiliates and Associates in any
dividend  reinvestment  plan,  stock  option  plan  or  other  similar  plan  or
arrangement  of the  Company or its  Subsidiaries  or  Affiliates  or (viii) any
Person who becomes an Acquiring  Person (as defined in the preceding  clauses of
this Section 1(a)) inadvertently or without knowledge of the terms of the Rights
and who or which,  together with all Affiliates and Associates,  thereafter does
not acquire additional Ordinary Shares while the Beneficial Owner of 15% or more
of the Ordinary  Shares then  outstanding;  provided that if so requested by the
Company,  (x) such Person  shall  certify  within 10  Business  Days of being so
requested,  that such Person had acquired the Ordinary Shares  inadvertently  or
without  knowledge of the terms of the Rights and (y) such Person shall promptly
sell any shares  acquired in excess of the applicable  threshold that would have
otherwise  caused such Person to be an  Acquiring  Person.  Notwithstanding  the
foregoing, no


                                      -5-
<PAGE>

Person  shall  become an  Acquiring  Person as the result of an  acquisition  of
Ordinary  Shares  by the  Company  which,  by  reducing  the  number  of  shares
outstanding,  increases the proportionate number of shares beneficially owned by
such  Person  to 15% or  more  of  the  Ordinary  Shares  of  the  Company  then
outstanding;  provided,  however,  that if a Person who becomes  the  Beneficial
Owner of 15% or more of the Ordinary  Shares of the Company then  outstanding by
reason of share  purchases by the Company shall,  after such share  purchases by
the Company,  become the Beneficial  Owner of any additional  Ordinary Shares of
the Company  constituting  1.5% or more of the Ordinary Shares then outstanding,
then such Person shall be deemed to be an Acquiring Person.

     (b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and  Regulations,  as in effect
on the date of this Rights Agreement, under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").

     (c)  "Audit  Committee"  shall  mean the  Audit  Committee  of the Board of
Directors  or, if there is then no such Audit  Committee,  all of the  Company's
outside  directors (as such terms is used in the Companies Law), then serving on
the Board of Directors or, if there are then no outside directors serving on the
Board of Directors, the Board of Directors.

     (d) A Person shall be deemed the "Beneficial  Owner" of and shall be deemed
to "beneficially own" any securities:

          (i)  which  such  Person  or  any  of  such  Person's   Affiliates  or
Associates,  directly or indirectly,  has the right to vote or dispose of or has
"Beneficial  Ownership"  of (as  determined  pursuant  to Rule  13d-3  under the
Exchange   Act),   including   pursuant  to  any   agreement,   arrangement   or
understanding;  provided,  however,  that  a  Person  shall  not be  deemed  the
Beneficial  Owner of, or to  beneficially  own, any  security if the  agreement,
arrangement  or  understanding  to vote such  security (1) arises  solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent  solicitation  made pursuant to, and in accordance  with, the applicable
rules and regulation of the Exchange Act and (2) is not also then  reportable on
Schedule 13D under the Exchange Act (or any comparable or successor report);


                                      -6-
<PAGE>

          (ii)  which  such  Person  or  any  of  such  Person's  Affiliates  or
Associates  has (A) the right to  acquire  (whether  such  right is  exercisable
immediately  or only  after the  passage  of time)  pursuant  to any  agreement,
arrangement or understanding  (whether or not in writing),  or upon the exercise
of conversion rights, exchange rights, rights (other than the Rights),  warrants
or options, or otherwise;  provided,  however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, securities tendered pursuant to
a tender or  exchange  offer made by or on behalf of such  Person or any of such
Person's  Affiliates or Associates  until such tendered  securities are accepted
for purchase or exchange;  or (B) the right to vote  pursuant to any  agreement,
arrangement  or  understanding;  provided,  however,  that a Person shall not be
deemed the  Beneficial  Owner of, or to  beneficially  own,  any security if the
agreement,  arrangement or understanding to vote such security (1) arises solely
from a revocable  proxy or consent  given to such Person in response to a public
proxy or consent  solicitation  made  pursuant to, and in accordance  with,  the
applicable  rules and  regulations  of the Exchange Act and (2) is not also then
reportable  on  Schedule  13D  under  the  Exchange  Act (or any  comparable  or
successor report); or

          (iii) which are  beneficially  owned,  directly or indirectly,  by any
other Person (or any  Affiliate or Associate  thereof) with which such Person or
any of such Person's Affiliates or Associates has any agreement,  arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section 1(d)(ii)(B))
or disposing of any securities of the Company;

provided,  however,  that  nothing in this  paragraph  (d) shall  cause a Person
engaged in business as an underwriter  of securities to be the Beneficial  Owner
of, or to  "beneficially  own",  any securities  acquired  through such Person's
participation  in  good  faith  in a  firm  commitment  underwriting  until  the
expiration  of forty  days  after  the date of such  acquisition;  and  provided
further,  however,  that any  shareholder  of the Company,  with  Affiliates(s),
Associate(s) or other Person(s) who may be deemed  representatives of it serving
as  director(s)  of the  Company,  shall  not be deemed  to  "beneficially  own"
securities  held by other Persons as a result of (i) Affiliates or Associates of
such  shareholder  serving  as  directors  or taking  any  action in  connection


                                      -7-
<PAGE>

therewith, (ii) discussing the status of its Ordinary Shares with the Company or
other  shareholders of the Company similarly  situated or (iii) voting or acting
in a manner similar to other shareholders  similarly situated,  absent a finding
by the Board of  Directors  of an  agreement  among such  shareholder  to act in
concert  with one  another  as  shareholders  so as to cause,  in the good faith
judgment of the Board of Directors,  each such  shareholder to be the Beneficial
Owner of the Ordinary Shares held by the other shareholder(s).

     (e)  "Business  Day"  shall  mean any day other  than a  Friday,  Saturday,
Sunday,  or a day on which banking  institutions in the State of New York or the
State of Israel are authorized or obligated by law or executive order to close.

     (f) "Companies Law" shall mean the Israeli  Companies Law,  5759-1999,  and
the regulations promulgated thereunder.

     (g) "Close of  Business"  or any given date shall mean 5:00 P.M.,  New York
City time, on such date; provided,  however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business
Day.

     (h) "Nasdaq Stock Market" The Nasdaq Stock Market, Inc.

     (i)  "Ordinary  Shares" when used with  reference to the Company shall mean
the Ordinary  Shares,  par value NIS 0.10 per share,  of the Company.  "Ordinary
Shares" when used with reference to any Person other than the Company shall mean
the share capital (or equity  interest)  with the greatest  voting power of such
other Person or, if such Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

     (j) "Person" shall mean any individual,  partnership,  firm, corporation or
other  entity,  and shall include any successor (by merger or otherwise) of such
entity.

     (k) "Section 11 Event" shall mean any event described in Section  11(a)(ii)
hereof.

     (l)  "Shares   Acquisition   Date"  shall  mean  the  date  of  the  public
announcement  (which,  for purposes of this definition,  shall include,  without
limitation,


                                      -8-
<PAGE>

a report filed  pursuant to Section 13(d) of the Exchange Act) by the Company or
an Acquiring Person indicating that an Acquiring Person has become such.

     (m)  "Subsidiary"  of any Person shall mean any corporation or other entity
of which a majority  of the  voting  power of the voting  equity  securities  or
equity interests is owned, directly or indirectly, by such Person.

     Section  2. Appointment of Rights Agent. The Company hereby appoints
the Rights  Agent to act as agent for the  Company and the holders of the Rights
(who, in accordance with Section 3 hereof,  shall prior to the Distribution Date
also be the holders of the  Ordinary  Shares) in  accordance  with the terms and
conditions thereof, and the Rights Agent hereby accepts,  such appointment.  The
Company  may from time to time  appoint  such  Co-Rights  Agent,  as it may deem
necessary or desirable.

     Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the Close of Business  on the tenth  Business  Day after the Shares  Acquisition
Date or (ii) the Close of Business on the tenth Business Day (or such later date
as the Board of Directors,  with the concurrence of the Audit  Committee,  shall
determine)  after the date of the  commencement  of (within  the meaning of Rule
14d-2 under the Exchange  Act), a tender or exchange offer the  consummation  of
which would result in any Person's  becoming an Acquiring Person  (including any
such date  which is after  the date of this  Rights  Agreement  and prior to the
issuance of the Rights; the earlier of such dates referred to in clauses (i) and
(ii) of this Section 3(a) being herein referred to as the "Distribution  Date"),
(x) the Rights will be evidenced  (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Ordinary Shares  registered in the names
of the holders  thereof (which  certificates  for Ordinary  Shares shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right  Certificates will be transferable only in connection
with the transfer of Ordinary Shares.  The Board of Directors may defer the date
set forth in clause (ii) of the preceding  sentence to a specified later date or
to an  unspecified  later date,  each to be determined by action of the Board of
Directors,  with the concurrence of the Audit Committee.  As soon as practicable
after the  Distribution  Date, the Company will prepare and execute,  the Rights
Agent will  countersign,  and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send) by first-class,  insured, postage-prepaid
mail,


                                      -9-
<PAGE>

to each  record  holder of  Ordinary  Shares as of the Close of  Business on the
Distribution  Date,  at the address of such  holder  shown on the records of the
Company,  a Right  Certificate,  in substantially  the form of Exhibit A hereto,
evidencing  one Right for each Ordinary  Share so held.  As of the  Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

     (b) At the request of any holder of Ordinary Shares,  the Company will send
or cause to be sent a copy of a Summary of Rights to Purchase  Ordinary  Shares,
in  substantially  the form  attached  hereto  as  Exhibit  B (the  "Summary  of
Rights"),  by first-class,  postage-prepaid  mail, to the address of such holder
shown on the records of the Company.  With respect to certificates  for Ordinary
Shares  outstanding  as of the Record Date,  until the  Distribution  Date,  the
Rights will be evidenced by such  certificates for Ordinary Shares registered in
the names of the holders thereof.  Until the  Distribution  Date (or the earlier
Redemption  Date or Final  Expiration  Date),  the surrender for transfer of any
certificate  for  Ordinary  Shares  outstanding  on the  Record  Date shall also
constitute  the  transfer  of the Rights  associated  with the  Ordinary  Shares
represented thereby.

     (c) Certificates issued for Ordinary Shares (including, without limitation,
certificates  issued upon  transfer or  exchange of Ordinary  Shares)  after the
Record Date but prior to the earliest of the  Distribution  Date, the Redemption
Date or the Final  Expiration  Date  shall have  impressed  on,  printed  on, or
written on or otherwise affixed to them the following legend:

          This  certificate  also  evidences  and entitles the holder  hereof to
     certain  Rights as set forth in a Bonus Rights  Agreement  between  Lumenis
     Ltd. and the Rights Agent thereunder (the "Rights Agreement"), the terms of
     which are hereby incorporated herein by reference and a copy of which is on
     file at the  principal  executive  offices of Lumenis  Ltd.  Under  certain
     circumstances,  as set forth in the Rights  Agreement,  such Rights will be
     evidenced by separate  certificates and will no longer be evidenced by this
     Certificate.  Lumenis Ltd.  will mail to the holder of this  certificate  a
     copy of the Rights  Agreement  without  charge  after  receipt of a written
     request thereof.  Under certain


                                      -10-
<PAGE>

     circumstances,  Rights  issued to  Acquiring  Persons or any  Affiliate  or
     Associate  thereof (as such terms are defined in the Rights  Agreement) may
     become null and void.

     With respect to such certificates  containing the foregoing  legend,  until
the  Distribution   Date,  the  Rights   associated  with  the  Ordinary  Shares
represented by such certificates shall be evidenced by such certificates  alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Ordinary Shares represented thereby.

     Section  4. Form of Right  Certificates.  Each Right  Certificate  (and the
forms of  election  to purchase  shares and of  assignment  to be printed on the
reverse  thereof)  shall be  substantially  the same as Exhibit A hereto and may
have such marks of identification or designation and such legends,  summaries or
endorsements  printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any applicable  law or with any rule or regulation  made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed,  or to conform to usage. Each Right Certificate
shall entitle the holder  thereof to purchase such number of Ordinary  Shares as
shall be set forth  therein at the price per share set forth therein (such price
per whole Ordinary Share, the "Purchase Price"), but the number and kind of such
shares and the Purchase Price shall be subject to adjustment as provided herein.
In addition,  the Company  shall have the right to attach a  certificate  to any
Right  Certificate  providing for the holder  thereof to certify  whether or not
such Person is or was an Acquiring  Person or an Affiliate or Associate  thereof
or whether such Person acquired the Rights  evidenced by such Right  Certificate
from any such Person.  In the event the Company  attaches such a certificate  to
any  Right  Certificate,  proper  execution  of  such  certificate  shall  be  a
prerequisite to the exercise of the Rights  associated  therewith as set fort in
the applicable provisions of this Rights Agreement.


                                      -11-
<PAGE>

     Section 5.  Countersignature and Resignation.  The Right Certificates shall
be  executed  on behalf of the  Company  by its Chief  Executive  Officer or its
President either manually or by facsimile signature,  shall have affixed thereto
the Company's seal or a facsimile thereof and shall be attested by the Secretary
or an  Assistant  Secretary  of the  Company,  either  manually or by  facsimile
signature.  The Right Certificates shall be manually countersigned by the Rights
Agent and shall not be valid for any purpose  unless so  countersigned.  In case
any officer of the  Company who shall have signed any of the Right  Certificates
shall cease to be such  officer of the Company  before  countersignature  by the
Rights Agent and issuance and delivery by the Company,  such Right Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and delivered
by the  Company  with the same  force and effect as though the Person who signed
such Right  Certificates  had not ceased to be such officer of the Company;  and
any Right  Certificate may be signed on behalf of the Company by any Person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right  Certificate,  although at the date of
execution of this Rights Agreement any such Person was not such an officer.

     Following the Distribution  Date, the Rights Agent will keep or cause to be
kept, at its principal offices, books for registration and transfer of the Right
Certificates issued hereunder.  Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights evidenced
on its face by each of the Right  Certificates and the date of each of the Right
Certificates.

Section 6. Transfer, Split-Up,  Combination and Exchange of Rights Certificates;
Mutilated,  Destroyed,  Lost  or  Stolen  Right  Certificates.  Subject  to  the
provisions  of Section 14 hereof,  any time after the Close of  Business  on the
Distribution  Date,  and at or prior to the Close of  Business on the earlier of
the Redemption Date or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Rights  Certificates  representing Rights that may have
been exchanged  pursuant to Section 23(c) hereof) may be transferred,  split up,
combined or  exchanged  for another  Right  Certificate  or Right  Certificates,
entitling the registered  holder to purchase a like number of Ordinary Shares as
the Right  Certificate  or Right  Certificates  surrendered  then  entitled such
holder to purchase. Any registered holder desiring to transfer, split


                                      -12-
<PAGE>

up, combine or exchange any Right certificate shall make such request in writing
delivered to the Rights Agent and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights  Agent.  Thereupon the Rights Agent shall  countersign  and
deliver  to  the  Person   entitled   thereto  a  Right   Certificate  or  Right
Certificates,  as the case may be, as so  requested.  The  Company  may  require
payment from the holder of Right  Certificates  of a sum sufficient to cover any
tax or governmental  charge that may be imposed in connection with any transfer,
split up, combination or exchange of such Right Certificates.

     Upon  receipt by the  Company and the Rights  Agent of evidence  reasonably
satisfactory  to them of the loss,  theft,  destruction or mutilation of a Right
Certificate,  and,  in case of  loss,  theft or  destruction,  of  indemnity  or
security  reasonably  satisfactory  to them, and, at the Company's or the Rights
Agent's  request,  reimbursement  to the  Company  and the  Rights  Agent of all
reasonable expenses  incidental thereto,  and upon surrender to the Rights Agent
and  cancellation of the Right  Certificate if mutilated,  the Company will make
and  deliver a new  Right  Certificate  of like  tenor to the  Rights  Agent for
countersignature  and  delivery  to the  registered  owner in lieu of the  Right
Certificate so lost, stolen, destroyed or mutilated.

     Section 7. Exercise of Rights;  Purchase Price;  Expiration Date of Rights.
(a) The  registered  holder of any Right  Certificate  may  exercise  the Rights
evidenced  thereby (except as otherwise  provided herein) in whole or in part at
any time after the  Distribution  Date upon surrender of the Right  Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal  office of the Rights Agent,  together with
payment of the Purchase Price for each Ordinary Share as to which the Rights are
exercised,  at or prior to the earlier of (i) the Close of Business on April 11,
2003 (the  "Final  Expiration  Date"),  or (ii) the time at which the Rights are
redeemed or exchanged as provided in Section 23 hereof (the "Redemption Date").

     (b) The  Purchase  Price  payable  pursuant to the exercise of Rights shall
initially  be  $38.00,  shall be  subject  to  adjustment  from  time to time as
provided in


                                      -13-
<PAGE>

Sections  11 and 13 hereof and shall be  payable  in lawful  money of the United
States of America in accordance with paragraph (c) below.

     (c) Upon receipt of a Right Certificate  representing  exercisable  Rights,
with the form of election to purchase duly  executed,  accompanied by payment of
the  Purchase  Price for the shares to be  purchased  and an amount equal to any
applicable  transfer  tax  required  to be paid  by the  holder  of  such  Right
Certificate in accordance with Section 9 hereof,  in cash, or by certified check
or bank  draft  payable to the order of the  Company,  the  Rights  Agent  shall
thereupon  promptly  (i)  requisition  from any  transfer  agent of the Ordinary
Shares  (or  make  available,  if  the  Rights  Agent  is  the  transfer  agent)
certificates for the number of Ordinary Shares to be purchases,  and the Company
hereby  irrevocably  authorizes  its  transfer  agent  to  comply  with all such
requests,  (ii) when  appropriate,  requisition  from the  Company the amount of
funds to be paid in lieu of issuance of  fractional  shares in  accordance  with
Section 14 hereof, (iii) promptly after receipt of such certificates,  cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate,  registered  in such  name or  names as may be  designated  by such
holder, and (iv) when appropriate, after receipt, promptly deliver such funds to
or upon the order of the registered holder of such Right Certificate.

     (d) In case the registered  holder of any Right  Certificate shall exercise
less than all the Rights evidenced thereby,  a new Right Certificate  evidencing
Rights  equivalent to the Rights  remaining  unexercised  shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.

     (e) The  Company  shall  use  its  best  efforts  to (i)  file,  as soon as
practicable  following the earliest date after the first occurrence of a Section
11 Event on which the consideration to be delivered by the Company upon exercise
of the Rights has been determined  pursuant to this Rights Agreement  (including
in accordance with Section 11(a)(iii)  hereof), or as soon as is required by law
following the  Distribution  Date, as the case may be, a registration  statement
under the  Securities  Act of 1933,  as amended  (the  "Securities  Act"),  with
respect to the Ordinary Shares or other securities  purchasable upon exercise of
the Rights on an appropriate  form,  (ii) cause such


                                      -14-
<PAGE>

registration  statement to become  effective as soon as  practicable  after such
filing and (iii) cause such  registration  statement to remain effective (with a
prospectus at all times meeting the  requirements  of the Securities  Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such  Ordinary  Shares or other  securities  and (B) the  Expiration  Date.  The
Company will also take such actions as may be  appropriate  under,  or to ensure
compliance  with,  the  securities or "blue sky" laws of the various  states and
non-U.S.  jurisdictions  in  connection  with the  exercise of the  Rights.  The
Company may temporarily  suspend, for a period of time not to exceed one hundred
twenty  (120) days after the date set forth in clause (i) of the first  sentence
of this Section 7(e), the  exercisability  of the Rights in order to prepare and
file such registration  statement and permit it to become effective or to comply
with applicable  securities law  requirements of other  jurisdictions.  Upon any
such suspension,  the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if  the  Company  shall  determine  that a  registration  statement  or  foreign
equivalent  is  required  following  the  Distribution  Date,  the  Company  may
temporarily  suspend  the  exercisability  of the  Rights  until  such time as a
registration  statement has been declared  effective and any applicable  foreign
requirements have been satisfied.  Notwithstanding  any provision of this Rights
Agreement  to  the  contrary,  the  Rights  shall  not  be  exercisable  in  any
jurisdiction if the requisite  qualification in such jurisdiction shall not have
been obtained or the exercise  thereof shall not be permitted  under  applicable
law or a registration statement shall not have been declared effective.

     Section 8.  Cancellation and Destruction of Right  Certificates.  All Right
Certificates  surrendered  for the  purpose  of  exercise,  transfer,  split up,
combination  or exchange  shall,  if surrendered to the Company or to any of its
agents,  be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered  to the Rights Agent,  shall be cancelled by it, and no Right
Certificates  shall be issued in lieu thereof  except as expressly  permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights  Agent for  cancellation  and  retirement,  and the Rights Agent shall so
cancel and retire, any other Right Certificate acquired by the Company otherwise
then upon the exercise  thereof.  The Rights Agent shall  deliver all


                                      -15-
<PAGE>

cancelled Right Certificates to the Company, or shall, at the written request of
the Company,  destroy such cancelled Right Certificates,  and in such case shall
deliver a certificate of destruction thereof to the Company.

     Section 9.  Reservation and  Availability of Ordinary  Shares.  The Company
covenants  and agrees that it will use its best  efforts to cause to be reserved
and kept available out of its authorized and unissued  Ordinary  Shares,  or any
authorized  and  issued  Ordinary  Shares  held in its  treasury,  the number of
Ordinary  Shares that will be  sufficient  to permit the exercise in full of all
outstanding Rights.

     So long as the Ordinary  Shares issuable upon the exercise of Rights may be
listed on any national securities exchange or quoted on the Nasdaq Stock Market,
the Company shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange or the Nasdaq Stock Market upon  official  notice of issuance upon
such exercise.

     The Company  covenants  and agrees that it will take all such action as may
be necessary  to ensure that all  Ordinary  Shares  delivered  upon  exercise of
Rights  shall at the  time of  delivery  of the  certificates  for  such  shares
(subject to payment of the Purchase Price),  be duly and validly  authorized and
issued and fully paid and non-assessable.

     The  Company  further  covenants  and agrees  that it will pay when due and
payable  any and all  transfer  taxes and  charges  which may be  payable by the
Company in respect of the issuance or delivery of the Right  Certificates  or of
any Ordinary Shares upon the exercise of Rights. The Company shall not, however,
be  required  to pay any  transfer  tax which may be  payable  in respect of any
transfer or  delivery  of Right  Certificates  to a Person  other  than,  or the
issuance or delivery of  certificates  for the  Ordinary  Shares in a name other
than that of, the registered holder of the Right  Certificate  evidencing Rights
surrendered  for exercise or to issue or deliver any  certificates  for Ordinary
Shares upon the  exercise of any Rights  until any such tax shall have been paid
(any such tax being payable by the holder of such Right  Certificate at the time
of surrender)  or until it has been  established  to the Company's  satisfaction
that no such tax is due.


                                      -16-
<PAGE>

     Section 10.  Ordinary  Shares  Record  Date.  Each Person in whose name any
certificate  for Ordinary Shares is issued upon the exercise of Rights shall for
all  purposes  be deemed to have  become  the  holder of record of the  Ordinary
Shares  represented  thereby on, and such  certificate  shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the  Purchase  Price (and any  applicable  transfer  taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Ordinary Shares transfer books of the Company are closed,  such Person
shall be deemed to have  become  the record  holder of such  shares on, and such
certificate  shall be  dated,  the next  succeeding  Business  Day on which  the
Ordinary Shares transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate,  as such, shall
not be entitled to any rights of a  shareholder  of the Company  with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote or to receive dividends or other distributions,  and shall not
be entitled to receive any notice of any  proceedings of the Company,  except as
provided herein.

     Section 11.  Adjustment  of Purchase  Price,  Number of Shares or Number of
Rights.  The  Purchase  Price,  the number of Ordinary  Shares or fraction of an
Ordinary  Share covered by each Right and the number of Rights  outstanding  are
subject to adjustment from time to time as provided in this Section 11.

     (a)(i) In the event the  Company  shall at any time  after the date of this
Rights  Agreement  (A)  declare a dividend  on the  Ordinary  Shares  payable in
Ordinary Shares, (B) subdivide the outstanding  Ordinary Shares, (C) combine the
outstanding  Ordinary  Shares  into a smaller  number of shares or (D) issue any
shares  of its  share  capital  in a  reclassification  of the  Ordinary  Shares
(including  any such  reclassification  in connection  with a  consolidation  or
merger in which the Company is the continuing or surviving corporation),  except
as otherwise provided in this Section 11(a), the Purchase Price in effect at the
time of the  record  date for such  dividend  or of the  effective  date of such
subdivision, combination or reclassification,  and the number and kind of shares
of share capital  issuable on such date,  shall be  proportionately  adjusted so
that the holder of any Right  exercised  after such time  shall be  entitled  to
receive the aggregate number


                                      -17-
<PAGE>

and kind of shares of share  capital  which,  if such  Right had been  exercised
immediately  prior to such date and at a time when the Ordinary  Shares transfer
books of the Company were open,  he would have owned upon such exercise and been
entitled  to receive by virtue of such  dividend,  subdivision,  combination  or
reclassification;  provided,  however,  that if the  record  date  for any  such
dividend, subdivision,  combination or reclassification shall occur prior to the
Distribution  Date,  the Company  shall make an  appropriate  adjustment  to the
Purchase Price (taking into account any additional Rights which may be issued as
a result of such dividend,  subdivision,  combination or  reclassification),  in
lieu of adjusting (as described  above) the number of Ordinary  Shares (or other
capital stock,  as the case may be) issuable upon exercise of the Rights.  If an
event occurs which would require an adjustment  under both Section  11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment  required pursuant to
Section 11(a)(ii).

          (ii) In the event any Person, at any time after the date hereof, shall
become an Acquiring  Person,  unless the event  causing such Person to become an
Acquiring Person is an acquisition of Ordinary Shares pursuant to a tender offer
or an exchange offer for all outstanding Ordinary Shares at a price and on terms
determined  by the  Board  of  Directors,  with  the  concurrence  of the  Audit
Committee,  to be (x) at a  price  that is fair  to  shareholders  (taking  into
account all factors  which such members of the Board of Directors  deem relevant
including, without limitation,  prices which could reasonably be achieved if the
Company or its assets were sold on an orderly basis designed to realize  maximum
value) and not inadequate and (y) otherwise in the best interests of the Company
and its shareholders (a "Qualified Offer"),  then, and in each such case, proper
provision  shall be made so that  each  holder of a Right,  except  as  provided
below,  shall  thereafter  have a right to  receive,  upon  exercise  thereof in
accordance  with the terms of this  Rights  Agreement,  such  number of Ordinary
Shares as shall equal the result obtained by (x)  multiplying  the  then-current
Purchase  Price by the  number  of  Ordinary  Shares  for  which a Right is then
exercisable and (y) dividing that product by 50% of the current per share market
price of the Ordinary  Shares (such number of Ordinary  Shares is herein  called
the "Adjustment Shares");  provided, however, that if the transaction that would
otherwise  give  rise  to  the  foregoing


                                      -18-
<PAGE>

adjustment is also subject to the provisions of Section 13 hereof, then only the
provisions  of Section 13 hereof  shall  apply and no  adjustment  shall be made
pursuant  to this  Section  11(a)(ii).  (To  illustrate  the  adjustment  in the
immediately  proceeding  sentence:  If (i) the "then-current  Purchase Price" is
$38.00,  (ii)  the  "number  of  Ordinary  Shares  for  which  a  Right  is then
exercisable"  is one and  (iii)  the  "current  per  share  market  price of the
Ordinary  Shares" is $10.00,  then the  Adjustment  Shares per Right  equals 7.6
Ordinary Shares.)  Notwithstanding the foregoing,  upon the occurrence of any of
the events listed above in this  subparagraph  (ii), any Rights that are or were
on or after the  earlier of the  Distribution  Date or Shares  Acquisition  Date
beneficially  owned by the Acquiring Person or any Associate or Affiliate of the
Acquiring  Person shall  become null and void without any further  action and no
holder of such  Rights  shall have any rights  whatsoever  with  respect to such
Rights,  whether under any provision of this Rights Agreement or otherwise.  Any
Right  Certificate  issued pursuant to Section 3 hereof that  represents  Rights
beneficially  owned by an Acquiring Person or any Associate or Affiliate thereof
and any Right Certificate  issued at any time upon the transfer of any Rights to
an Acquiring  Person or any Associate or Affiliate  thereof or to any nominee of
such Acquiring Person,  Associate or Affiliate, and any Right Certificate issued
pursuant  to  Section  6, 7(d) or 22 hereof or this  Section  11 upon  transfer,
exchange,  replacement or adjustment of any other Right Certificate  referred to
in this sentence,  shall contain the following legend (provided,  however,  that
the Rights  Agent shall not be  responsible  for affixing  such legend  unless a
responsible officer of the Rights Agent has actual knowledge as to the foregoing
circumstances or the Company has notified the Rights Agent in writing thereof):

     The Rights  represented by this Right  Certificate  were issued to a Person
     who  was  an  Acquiring  Person  or an  Affiliate  or any  Associate  of an
     Acquiring  Person or a nominee  thereof.  This  Right  Certificate  and the
     Rights represented hereby may become void in the circumstances specified in
     Section 11(a)(ii) of the Rights Agreement.

The term  "Responsible  Officer",  when used with  respect to the  Rights  Agent
herein, shall mean the chairman of the Board of Directors,  the vice chairman of
the Board of Directors,  the president,  each vice president, the secretary, the
treasurer,  each assistant


                                      -19-
<PAGE>

vice president,  each corporate trust officer or any other officer of the Rights
Agent customarily performing functions similar to those performed by the Persons
who at the time shall be such officers,  respectively,  or to whom any corporate
trust matter is referred  because of his knowledge of and  familiarity  with the
particular subject.

          (iii) In the  event  that  the  number  of  Ordinary  Shares  which is
authorized by the  Company's  articles of  association  but not  outstanding  or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient  to permit  the  exercise  in full of the Rights in  accordance  with
Section 11(a)(ii),  the Company shall: (A) determine the excess of (1) the value
of the  Adjustment  Shares  issuable  upon the exercise of a Right (the "Current
Value") over (2) the Purchase Price (such excess is herein called the "Spread"),
and (B) with  respect to each Right and to the extent  permitted  by  applicable
law,  make adequate  provision to substitute  for the  Adjustment  Shares,  upon
exercise of the Rights,  (1) cash,  (2) a reduction in the Purchase  Price,  (3)
Ordinary Shares or other equity  securities of the Company  (including,  without
limitation,  shares,  or units of shares,  of preferred stock which the Board of
Directors,  with the concurrence of the Audit Committee,  has deemed to have the
same value as Ordinary Shares (such shares or units of shares of preferred stock
are referred to herein as "Ordinary Share equivalents"),  (4) debt securities of
the Company,  (5) other assets, or (6) any combination of the foregoing,  having
an aggregate  value equal to the Current Value,  where such aggregate  value has
been  determined by the Board of Directors,  with the  concurrence  of the Audit
Committee;  provided,  however,  if the  Company  shall not have  made  adequate
provision to deliver value  pursuant to clause (B) above within thirty (30) days
following  the later of (x) the first  occurrence  of a Section 11 Event and (y)
the date on which the Company's  right of  redemption  pursuant to Section 23(a)
expires  (the  later of (x) and (y) being  referred  to  herein as the  "Section
11(a)(ii)  Trigger  Date"),  then  the  Company,  to  the  extent  permitted  by
applicable  law, shall be obligated to deliver,  upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price,  Ordinary Shares
(to the extent  available) and then, if necessary,  cash,  which Ordinary Shares
and/or  cash have an  aggregate  value  (to the  extent  of the  Company's  cash
resources then available)  equal to the Spread.  If the Board of Directors shall
determine in good faith that it is likely that  sufficient  additional  Ordinary
Shares could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day


                                      -20-
<PAGE>

period set forth  above may be extended  to the extent  necessary,  but not more
than one hundred twenty (120) days after the Section  11(a)(ii) Trigger Date, in
order that the Company may seek  shareholder  approval for the  authorization of
such  additional  Ordinary  Shares  (such  period,  as it may be  extended,  the
"Substitution  Period").  To the extent  that the Company  determines  that some
action  should be taken  pursuant to the first and/or  second  sentences of this
Section  11(a)(iii) the Company (x) shall provide (except as otherwise  provided
herein),  that such action shall apply uniformly to all outstanding  Rights, and
(y) may suspend the  exercisability  of the Rights until the  expiration  of the
Substitution Period in order to seek any authorization of additional  securities
and/or to decide the  appropriate  form of  distribution  to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension,  the Company  shall  issue a public  announcement  stating  that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this  Section  11(a)(iii),  the  value of the  Ordinary  Shares  shall be the
Current Market Price per share of the Ordinary  Shares on the Section  11(a)(ii)
Trigger Date and the value of any "Ordinary Share  equivalents"  shall be deemed
to have the same value as the Ordinary Shares on such date.

     (b) In case the Company  shall fix a record date for the issuance of Rights
or  warrants  to all holders of  Ordinary  Shares  entitling  them (for a period
expiring  within 45 calendar  days after such record date) to  subscribe  for or
purchase  Ordinary Shares (or securities  convertible into Ordinary Shares) at a
price per Ordinary Share (or having a conversion  price per Ordinary Share, if a
security  convertible  into  Ordinary  Shares)  less than the  current per share
market price of the Ordinary Shares (as defined in Section 11(d) hereof) on such
record date,  the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record  date by a  fraction,  the  numerator  of which  shall be the  number  of
Ordinary  Shares  outstanding  on such  record  date plus the number of Ordinary
Shares which the aggregate offering price of the total number of Ordinary Shares
so to  be  offered  (and/or  the  aggregate  initial  conversion  price  of  the
convertible  securities so to be offered)  would purchase at such current market
price  and the  denominator  of which  shall be the  number of  Ordinary  Shares
outstanding on such record date plus the number

                                      -21-
<PAGE>

of additional  Ordinary  Shares to be offered for  subscription  or purchase (or
into which the securities so to be offered are initially  convertible).  In case
such  subscription  price  may be paid in a  consideration  part or all of which
shall be in a form other than cash, the value of such consideration  shall be as
determined in good faith by the Board of Directors,  with the concurrence of the
Audit Committee, whose determination shall be described in a statement delivered
to the Rights  Agent.  Ordinary  Shares  owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such  adjustments  shall be made  successively  whenever  such a record  date is
fixed; and in the event such rights or warrants are not so issued,  the Purchase
Price shall be adjusted to be the  Purchase  Price which would then be in effect
if such record date had not been fixed.

     (c) In case the  Company  shall  fix a  record  date  for the  making  of a
distribution  to  all  holders  of  the  Ordinary  Shares  (including  any  such
distribution  made in  connection  with a  consolidation  or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular  quarterly  cash dividend out of the earnings or
retained earnings of the Company) or subscription  rights or warrants (excluding
those referred to in Section 11(b)  hereof),  the Purchase Price to be in effect
after such record date shall be determined by multiplying  the Purchase Price in
effect  immediately  prior to such record date by a fraction,  the  numerator of
which shall be the current per share  market  price of the  Ordinary  Shares (as
defined in Section 11(d) hereof) on such record date, less the fair market value
(as determined in good faith by the Board of Directors,  with the concurrence of
the Audit Committee, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the assets or evidences of indebtedness
so to be distributed or of such  subscription  rights or warrants  applicable to
one Ordinary Share and the  denominator of which shall be such current per share
market price of the Ordinary Shares. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.


                                      -22-
<PAGE>

     (d) For the purpose of any computation  hereunder,  other than computations
made pursuant to Section  11(a)(iii)  hereof,  the "Current Market Price" of the
Ordinary  Shares  on any date  shall be deemed  to be the  average  of the daily
closing prices per share of such Ordinary Shares for the thirty (30) consecutive
Trading Days (as such term is  hereinafter  defined)  immediately  prior to such
date,  and for  purposes of  computations  made  pursuant to Section  11(a)(iii)
hereof,  the Current  Market Price per share of the Ordinary  Shares on any date
shall be deemed to be the average of the daily closing  prices per share of such
Ordinary Shares for the ten (10) consecutive Trading Days immediately  following
such date;  provided,  however,  that in the event that the Current Market Price
per share of the Ordinary  Shares is  determined  during a period  following the
announcement  by the  issuer  of the  Ordinary  Shares  of (i) any  dividend  or
distribution on such Ordinary Shares,  payable in shares of such Ordinary Shares
or securities  convertible  into shares of such Ordinary  Shares (other than the
Rights),  or (ii)  any  subdivision,  combination  or  reclassification  of such
Ordinary Shares, and the ex-dividend date for such dividend or distribution,  or
the record date for such subdivision,  combination or reclassification shall not
have occurred prior to the  expiration of the requisite  thirty (30) Trading Day
period or ten (10)  Trading Day period,  as set forth above,  then,  and in each
such case,  the Current  Market  Price  shall be properly  adjusted to take into
account  ex-dividend  trading.  The closing price for each day shall be the last
sale price,  regular  way, or, in case no such sale takes place on such day, the
average of the  closing  bid and asked  prices,  regular  way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities  listed or admitted to trading on the New York Stock  Exchange or,
if the  Ordinary  Shares are not listed or  admitted  to trading on the New York
Stock Exchange, as reported in the principal consolidated  transaction reporting
system with respect to securities  listed on the principal  national  securities
exchange on which the  Ordinary  Shares are listed or admitted to trading or, if
the  Ordinary  Shares are not  listed or  admitted  to  trading on any  national
securities exchange,  the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported on
the  Nasdaq  Stock  Market or, if on any such date the  Ordinary  Shares are not
quoted on the Nasdaq  Stock  Market,  the  average of the  closing bid and asked
prices  as  furnished  by a  professional  market  maker  making a market in the
Ordinary  Shares  selected by the


                                      -23-
<PAGE>

Board.  If on any such date no market  maker is making a market in the  Ordinary
Shares,  the fair value of such  Ordinary  Shares on such date as  determined in
good faith by the Board of Directors shall be used. The term "Trading Day" shall
mean a day on which the principal  stock market on which the Ordinary Shares are
listed or admitted to trading is open for the transaction of business or, if the
Ordinary  Shares are not listed or  admitted to trading on any stock  market,  a
Business  Day. If the Ordinary  Shares are not publicly held or not so listed or
traded,  "Current Market Price" per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be described in
a  statement  filed  with the  Rights  Agent  and  shall be  conclusive  for all
purposes.

     (e) No  adjustment  in the  Purchase  Price shall be  required  unless such
adjustment  would  require an increase or decrease of at least 1% in such price;
provided,  however,  that any adjustments  which by reason of this Section 11(e)
are not  required to be made shall be carried  forward and taken into account in
any subsequent adjustment.  All calculations under this Section 11 shall be made
to the nearest cent or to the nearest  ten-thousandth of a share as the case may
be.  Notwithstanding  the first sentence of this Section  11(e),  any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the  transaction  which requires such  adjustment or (ii)
the date of the expiration of the right to exercise any Rights.

     (f) If as a result of an  adjustment  made pursuant to Section  11(a),  the
holder of any Right  thereafter  exercised  shall become entitled to receive any
shares of share capital of the Company other than  Ordinary  Shares,  thereafter
the number of such other shares so  receivable  upon exercise of any Right shall
be  subject to  adjustment  from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions  with respect to the Ordinary Shares
contained  in Section  11(a)  through  (c),  inclusive,  and the  provisions  of
Sections 7, 9, 10 and 13 hereof with respect to the Ordinary  Shares shall apply
on like terms to any such other shares.

     (g)  All  Rights  originally  issued  by  the  Company  subsequent  to  any
adjustment  made to the Purchase  Price  hereunder  shall  evidence the right to
purchase,  at the  adjusted  Purchase  Price,  the number of Ordinary  Shares or
fraction of an  Ordinary


                                      -24-
<PAGE>

Share  purchasable from time to time hereunder upon exercise of the Rights,  all
subject to further adjustment as provided herein.

     (h) Unless the Company  shall have  exercised  its  election as provided in
Section  11(i),  upon each  adjustment of the Purchase  Price as a result of the
calculations made in Section 11(b) and (c), each Right  outstanding  immediately
prior to the making of such adjustment  shall  thereafter  evidence the right to
purchase,  at the adjusted  Purchase  Price,  that number of Ordinary  Shares or
fraction  of an  Ordinary  Share  (calculated  to  the  nearest  ten-thousandth)
obtained by (i)  multiplying (x) the number of Ordinary Shares or fraction of an
Ordinary Share covered by a Right  immediately  prior to this  adjustment by (y)
the  Purchase  Price  in  effect  immediately  prior to such  adjustment  of the
Purchase  Price and (ii) dividing the product so obtained by the Purchase  Price
in effect immediately after such adjustment of the Purchase Price.

     (i) The  Company  may elect on or after the date of any  adjustment  of the
Purchase  Price  to  adjust  the  number  of  Rights,  in  substitution  for any
adjustment  in the number of Ordinary  Shares or  fraction of an Ordinary  Share
issuable upon the exercise of a Right. Each of the Rights outstanding after such
adjustment  of the  number  of Rights  shall be  exercisable  for the  number of
Ordinary  Shares  for which a Right was  exercisable  immediately  prior to such
adjustment.  Each Right held of record prior to such adjustment of the number of
Rights  shall  become  that  number  of  Rights   (calculated   to  the  nearest
ten-thousandth)  obtained by dividing the Purchase  Price in effect  immediately
prior to  adjustment  of the  Purchase  Price by the  Purchase  Price in  effect
immediately  after  adjustment of the Purchase  Price.  The Company shall make a
public  announcement of its election to adjust the number of Rights,  indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment  to be made.  This record date may be the date on which the  Purchase
Price is adjusted or any day  thereafter,  but, if the Right  Certificates  have
been  issued,  shall  be at  least 10 days  later  than  the date of the  public
announcement.  If Right  Certificates have been issued,  upon each adjustment of
that number of Rights  pursuant to this Section  11(i),  the Company  shall,  as
promptly as  practicable,  cause to be distributed to holders of record of Right
Certificates  on such  record  date Right  Certificates  evidencing,  subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such


                                      -25-
<PAGE>

adjustment,  or, at the option of the Company,  shall cause to be distributed to
such  holders  of  record  in   substitution   and  replacement  for  the  Right
Certificates  held by such  holders  prior to the date of  adjustment,  and upon
surrender thereof, if required by the company, new Right Certificates evidencing
all the Rights to which such holders  shall be entitled  after such  adjustment.
Right  Certificates  so  to  be  distributed  shall  be  issued,   executed  and
countersigned  in the manner provided for herein (and may bear, at the option of
the Company,  the adjusted  Purchase Price) and shall be registered in the names
of the holders of record of Right  Certificates  on the record date specified in
the public announcement.

     (j)  Irrespective  of any adjustment or change in the Purchase Price or the
number of Ordinary  Shares  issuable upon the exercise of the Rights,  the Right
Certificates  theretofore  and  thereafter  issued may  continue  to express the
Purchase  Price per share and the number of shares  which were  expressed in the
initial Right Certificates issued hereunder.

     (k) Before  taking any action that would cause an  adjustment  reducing the
Purchase Price below the then par value, if any, of the Ordinary Shares issuable
upon exercise of the Rights,  the Company shall take any corporate  action which
may, in the opinion of its  counsel,  be necessary in order that the Company may
validly and legally issue fully paid and  nonassessable  Ordinary Shares at such
adjusted Purchase Price.

     (l) In any case in which this Section 11 shall  require that an  adjustment
in the  Purchase  Price be made  effective  as of a record  date for a specified
event,  the Company may elect to defer  until the  occurrence  of such event the
issuing to the holder of any Right exercised after such record date the Ordinary
Shares and other share capital or securities  of the Company,  if any,  issuable
upon such exercise over and above the Ordinary Shares and other share capital or
securities of the Company,  if any,  issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment;  provided,  however, that
the  Company  shall  deliver  to such  holder a due  bill or  other  appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.


                                      -26-
<PAGE>

     (m)  Anything  in this  Section  11 to the  contrary  notwithstanding,  the
Company  shall be entitled to make such  reductions  in the Purchase  Price,  in
addition to those adjustments  expressly  required by this Section 11, as and to
the extent that it in its sole  discretion  shall  determine  to be advisable in
order that any  consolidation  or subdivision of the Ordinary  Shares,  issuance
wholly for cash of any of the  Ordinary  Shares at less than the current  market
price,  issuance wholly for cash of Ordinary Shares or securities which by their
terms are convertible into or exchangeable for Ordinary Shares,  stock dividends
or issuance  of rights,  options or warrants  referred  to  hereinabove  in this
Section  11,  hereafter  made by the Company to holders of its  Ordinary  Shares
shall not be taxable to such shareholders.

     (n) The Company  covenants  and agrees that it shall not, at any time after
the  Distribution  Date,  (i)  consolidate  with any other Person  (other than a
Subsidiary  of the Company in a  transaction  which  complies with Section 11(o)
hereof),  (ii) merge with or into any other Person  (other than a Subsidiary  of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or  transfer  (or  permit  any  Subsidiary  to sell  or  transfer),  in one
transaction  or a series  of  related  transactions,  assets  or  earning  power
aggregating  more than 50% of the assets or earning power of the Company and its
Subsidiaries  (taken as a whole) to any other Person or Persons  (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof),  if (x) at the time of or immediately after
such  consolidation,  merger or sale  there are any  rights,  warrants  or other
instruments  or  securities  outstanding  or  agreements  in effect  which would
substantially  diminish  or  otherwise  eliminate  the  benefits  intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such  consolidation,  merger  or  sale,  the  shareholders  of  the  Person  who
constitutes,  or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have received a distribution  of Rights  previously  owned by
such Person or any of its Affiliates and Associates.

     (o) The Company covenants and agrees that, after the Distribution  Date, it
will not,  except as  permitted  by Section  23 or  Section 26 hereof,  take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is  reasonably


                                      -27-
<PAGE>

foreseeable that such action will diminish  substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.

     Section 12.  Certificate  of Adjusted  Purchase  Price or Number of Shares.
Whenever an  adjustment  is made as  provided in Sections 11 and 13 hereof,  the
Company shall (a) promptly prepare a certificate  setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment,  (b) promptly
file with the Rights Agent and with each transfer agent for the Ordinary  Shares
a copy of such certificate and (c) if after the Distribution  Date, mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.

     Section 13. Consolidation,  Merger or Sale or Transfer of Assets or Earning
Power.

     (a) In the event that,  following the Shares Acquisition Date,  directly or
indirectly,  (i) the Company shall consolidate with, or merge with and into, any
other Person,  (ii) any Person shall consolidate with the Company, or merge with
and into the  Company  and the  Company  shall be the  continuing  or  surviving
corporation of such merger and, in connection  with such merger,  all or part of
the Ordinary  Shares of the Company shall be changed into or exchanged for stock
or other  securities  of any other  Person (or the Company) or cash or any other
property,  or (iii) the Company shall sell or otherwise transfer (or one or more
of  its  Subsidiaries  shall  sell  or  otherwise  transfer),  in  one  or  more
transactions, assets or earning power aggregating more than 50% of the assets or
earning  power of the  Company  and its  Subsidiaries  (taken as a whole) to any
other Person, then, and in each such case, and except as contemplated by Section
13(d), proper provision shall be made so that (A) each holder of a Right (except
as otherwise  provided herein) shall thereafter have the right to receive,  upon
the exercise thereof in accordance with the terms of this Rights Agreement, such
number of validly authorized and fully paid,  non-assessable and freely tradable
Ordinary Shares of the Principal Party (as such term is hereinafter  defined) as
shall  be equal to the  result  obtained  by (x)  multiplying  the  then-current
Purchase  Price by the  number  of  Ordinary  Shares  for  which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section  11(a)(ii))  and (y) dividing  that product by 50% of the current per
share market price of the Ordinary  Shares of such Principal  Party


                                      -28-
<PAGE>

(determined  pursuant to Section  11(d) hereof) on the date of  consummation  of
such  consolidation,  merger,  sale or transfer;  (B) such Principal Party shall
thereafter  be liable for, and shall  assume,  by virtue of such  consolidation,
merger, sale or transfer, all the obligations and duties of the Company pursuant
to this Rights  Agreement;  (C) the term "Company" shall thereafter be deemed to
refer to such  Principal  Party;  and (D) such  Principal  Party shall take such
steps (including,  but not limited to, the reservation of a sufficient number of
its Ordinary Shares in accordance with Section 9 hereof) in connection with such
consummation  as may be  necessary  to assure that the  provisions  hereof shall
thereafter be  applicable,  as nearly as  reasonably  may be, in relation to its
Ordinary Shares thereafter deliverable upon the exercise of the Rights.

     (b)  "Principal  Party"  shall  mean  (i) in the  case  of any  transaction
described  in Section  13(a)(i)  or (ii),  the Person  that is the issuer of any
securities   into  which  Ordinary  Shares  are  converted  in  such  merger  or
consolidation,  and if no securities are so issued, the Person that is the other
party to such merger or  consolidation,  and (ii) in the case of any transaction
described  in Section  13(a)(iii)  the Person  that is the party  receiving  the
greatest  portion of the assets or earning  power  transferred  pursuant to such
transaction or transactions;  provided,  however,  that in any such case, (A) if
the  Ordinary  Shares  of such  Person  are not at such  time  and have not been
continuously  over the preceding  12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect  Subsidiary  of another
Person the Ordinary Shares of which are and have been so registered,  "Principal
Party"  shall  refer to such  other  Person  and (B) in case  such  Person  is a
Subsidiary, directly or indirectly, of more than one Person, the Ordinary Shares
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Ordinary  Shares  having
the greatest aggregate market value.

     (c)(i) The Company shall not  consummate  any such  consolidation,  merger,
sale or transfer  unless the Principal  Party shall have a sufficient  number of
authorized  Ordinary  Shares which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance  with this Section 13
and unless  prior  thereto  the  Company  and such  Principal  Party  shall have
executed and delivered to the Rights Agent a  supplemental  agreement  providing
for the terms set forth in Section 13(a) and


                                      -29-
<PAGE>

(b) and further  providing  that, as soon as  practicable  after the date of any
consolidation,  merger,  sale or transfer of assets  mentioned in Section 13(a),
such Principal  Party will (A) prepare and file a registration  statement  under
the Securities  Act, with respect to the Rights and the  securities  purchasable
upon  exercise  of the  Rights  on an  appropriate  form,  and will use its best
efforts to cause such registration  statement to (1) become effective as soon as
practicable after such filing and (2) remain effective (with a prospectus at all
times meeting the  requirements  of the Securities Act) until the earlier of the
Expiration  Date or the Redemption  Date, and (B) will deliver to holders of the
Rights historical  financial  statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements for registration on
Form 10 under the Exchange Act. The Company shall not enter into any transaction
of the kind  referred to in this  Section 13 if at the time of such  transaction
there are any rights,  warrants,  instruments  or securities  outstanding or any
agreements  or  arrangements  which,  as a result  of the  consummation  of such
transaction,  would  substantially  diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.

          (ii)  The  provisions  of this  Section  13 shall  similarly  apply to
successive  mergers or consolidations or sales or other transfers.  In the event
that an event  described  in  Section  13(a)  shall  occur at any time after the
occurrence of an event described in Section 11(a)(ii), the Rights which have not
theretofore  been exercised shall  thereafter  become  exercisable in the manner
described in Section 13(a).

     (c)  Notwithstanding  anything in this Rights  Agreement  to the  contrary,
Section  13 shall  not be  applicable  to a  transaction  described  in  Section
13(a)(i) or (ii) if (i) such transaction is consummated with a Person or Persons
(or a Subsidiary  of any such Person or Persons) who  acquired  Ordinary  Shares
pursuant to a tender offer or exchange offer for all outstanding Ordinary Shares
which complies with the provisions of Section 11(a)(ii)  hereof,  (ii) the price
per Ordinary  Share offered in such  transaction  is not less that the price per
Ordinary  Share  paid to all  holders  of  Ordinary  Shares  whose  shares  were
purchased pursuant to such tender


                                      -30-
<PAGE>

offer or exchange offer,  and (iii) the form of  consideration  being offered to
the remaining  holders of Ordinary  Shares  pursuant to such  transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer.  Upon  consummation of any such transaction  contemplated by this Section
13(d), all Rights hereunder shall expire.

     Section 14. Fractional Rights and Fractional  Shares. (a) The Company shall
not be  required  to issue  fractions  of Rights or to  distribute  or cause the
Rights Agent to distribute Right Certificates which evidence  fractional Rights.
In lieu of such fractional  Rights,  to the extent  permitted by applicable law,
the  Company  may,  at its option,  pay to the  registered  holders of the Right
Certificates  with regard to which such  fractional  Rights  would  otherwise be
issuable  an amount in cash equal to the same  fraction  of the  current  market
value of a whole  Right.  For the purposes of this  Section  14(a),  the current
market  value of a whole Right shall be the closing  price of the Rights for the
Trading Day immediately  prior to the date on which such fractional Rights would
have been  otherwise  issuable.  The closing price for any day shall be the last
sale price,  regular  way, or, in case no such sale takes place on such day, the
average of the  closing  bid and asked  prices,  regular  way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities  listed or admitted to trading on the New York Stock  Exchange or,
if the  Rights  are not  listed or  admitted  to  trading  on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national  securities exchange
on which the Rights are listed or  admitted to trading or, if the Rights are not
listed or  admitted to trading on any  national  securities  exchange,  the last
quoted  price or, if not so  quoted,  the  average of the high bid and low asked
prices in the over-the-counter market, as reported on the Nasdaq Stock Market or
such other  system then in use or, if on any such date the Rights are not quoted
by any such  organization,  the average of the  closing bid and asked  prices as
furnished by a professional  market maker making a market in the Rights selected
by the Board of Directors.  If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors shall be used.

     (b) The Company shall not be required to issue fractions of Ordinary Shares
upon exercise or redemption  of the Rights or to distribute  certificates  which
evidence  fractional  Ordinary Shares. In lieu of fractional Ordinary Shares, to
the extent  permitted by applicable law, the Company may, at its option,  pay to
the  registered  holders  of


                                      -31-
<PAGE>

Right  Certificates  at the time such Rights are exercised as herein provided an
amount in cash equal to the same  fraction  of the current  market  value of one
Ordinary Share. Prior to the Shares Acquisition Date, a number of Rights must be
exercised  so that only whole  Ordinary  Shares will be issued.  For purposes of
this Section  14(b),  the current market value of an Ordinary Share shall be the
closing  price of an  Ordinary  Share  (as  determined  pursuant  to the  second
sentence of Section 11(d) hereof) for the Trading Day  immediately  prior to the
date of such exercise.

     (c) The holder of a Right by the acceptance of the Rights  expressly waives
his right to receive any  fractional  Rights or any fractional  Ordinary  Shares
upon exercise or redemption of a Right.

     Section  15.  Rights of  Action.  All  rights of action in  respect of this
Rights  Agreement,  except the rights of action  given to the Rights Agent under
Section 18 hereof, are vested in the respective  registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Ordinary Shares);  and any registered holder of any Right Certificate (or, prior
to the Distribution  Date, of any Ordinary  Shares),  without the consent of the
Rights Agent or of the holder of any other Right  Certificate  (or, prior to the
Distribution  Date, of any Ordinary Shares),  may, in his own behalf and for his
own benefit,  enforce this Rights Agreement,  and may institute and maintain any
suit, action or proceeding against the Company to enforce this Rights Agreement,
or  otherwise  enforce  or act in respect  of his right to  exercise  the Rights
evidenced  by such  Right  Certificate  in the  manner  provided  in such  Right
Certificate and in this Rights Agreement.  Without limiting the foregoing or any
remedies  available to the holders of Rights,  it is  specifically  acknowledged
that the  holders  of Rights  would not have an  adequate  remedy at law for any
breach of this Rights Agreement and will be entitled to specific  performance of
the  obligations  under,  and  injunctive  relief  against  actual or threatened
violations of, the obligations of any Person (including, without limitation, the
Company) subject to this Rights Agreement.


                                      -32-
<PAGE>

     Section  16.  Agreement  of  Right  Holders.  Every  holder  of a Right  by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:

     (a) Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Ordinary Shares;

     (b) after the  Distribution  Date, the Right  Certificates are transferable
only on the registry  books of the Rights Agent if  surrendered at the principal
office of the Rights Agent,  duly endorsed or accompanied by a proper instrument
of transfer; and

     (c) the Company may, and, upon appropriate  instruction by the Company, the
Rights  Agent  shall,  deem  and  treat  the  Person  in whose  name  the  Right
Certificate (or, prior to the Distribution Date, the associated  Ordinary Shares
certificate)  is  registered  as the  absolute  owner  thereof and of the Rights
evidenced thereby  (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated  Ordinary Shares certificate made by anyone
other than the Company or the Rights  Agent) for all  purposes  whatsoever,  and
neither the Company nor the Rights  Agent shall be affected by any notice to the
contrary.

     Section 17. Rights Certificate Holder Not Deemed a Shareholder.  No holder,
as such, of any Right Certificate  shall be entitled to vote,  receive dividends
or be deemed  for any  purpose  the holder of the  Ordinary  Shares or any other
securities  of the Company  which may at any time be issuable on the exercise of
the Rights  represented  thereby,  nor shall anything contained herein or in any
Right  Certificate  be  construed  to  confer  upon  the  holder  of  any  Right
Certificate,  as such,  any of the rights of a shareholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
shareholders  at any  meeting  thereof,  or to give or  withhold  consent to any
corporate  action,  or to receive notice of meetings or other actions  affecting
shareholders  (except as provided in Section 24 hereof), or to receive dividends
or subscription  rights,  or otherwise,  until the Right or Rights  evidenced by
such  Right  Certificate  shall  have  been  exercised  in  accordance  with the
provisions hereof.


                                      -33-
<PAGE>

     Section 18.  Concerning the Rights Agent.  The Company agrees to pay to the
Rights Agent reasonable  compensation for all services  rendered by it hereunder
in accordance  with a fee schedule to be mutually  agreed upon and, from time to
time, its reasonable  expenses and reasonable  counsel fees and other reasonable
and customary disbursements incurred in the administration and execution of this
Rights  Agreement  and the exercise  and  performance  of its duties  hereunder,
provided that the  incurrence of any such expenses shall be subject to the prior
written  approval  of the  Company,  which  approval  shall not be  unreasonably
withheld. The Company also agrees to indemnify the Rights Agent for, and to hold
it  harmless  against,  any  loss,  liability,  or  expense,   incurred  without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection  with the  acceptance
and  administration of this Rights  Agreement,  including the costs and expenses
(including  reasonable  attorney's  fees)  of  defending  against  any  claim of
liability  in the  premises,  provided  that the  Company  shall be  entitled to
control the defense of any such claim and shall not be liable for any settlement
entered into without its prior written consent.

     The Rights Agent shall be protected  and shall incur no liability for or in
respect of any action taken,  suffered or omitted by it in  connection  with its
administration  of this Rights Agreement in reliance upon any Right  Certificate
or  certificate  for  Ordinary  Shares  or  other  securities  of  the  Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice,  instruction,  direction,  consent,  certificate,  statement, or
other paper or document believed by it to be genuine and to be signed,  executed
and, where necessary, verified or acknowledged, by the proper Person or Persons.

     Section 19. Merger or  Consolidation or Change of Name of Rights Agent. Any
corporation  into which the Rights  Agent or any  successor  Rights Agent may be
merged or with which it may be consolidated,  or any corporation  resulting from
any merger or  consolidation  to which the Rights Agent or any successor  Rights
Agent shall be a party,  or any  corporation  succeeding to the corporate  trust
business  of the  Rights  Agent  or any  successor  Rights  Agent,  shall be the
successor to the Rights Agent under this Rights Agreement  without the execution
or  filing  of any paper or any  further  act on the part of any of the  parties
hereto,  provided that such  corporation  would be eligible for


                                      -34-
<PAGE>

appointment  as a  successor  Rights  Agent under the  provisions  of Section 21
hereof.  In case at the time such  successor  Rights Agent shall  succeed to the
agency created by this Rights  Agreement,  any of the Right  Certificates  shall
have been  countersigned but not delivered,  any such successor Rights Agent may
adopt the  countersignature  of the  predecessor  Rights  Agent and deliver such
Rights Certificates so countersigned;  and in case at that time any of the Right
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor  Rights Agent;  and in all such cases such
Right  Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.

     In case at any time the name of the Rights  Agent  shall be changed  and at
such time any of the Right  Certificates  shall have been  countersigned but not
delivered,  the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been  countersigned,  the Rights Agent may
countersign much Right  Certificates  either in its prior name or in its changed
name;  and in all such cases such Right  Certificates  shall have the full force
provided in the Right Certificates in this Rights Agreement.

     Section 20. Duties of Rights Agent.  The Rights Agent  undertakes  only the
duties and obligations imposed by this Rights Agreement upon the following terms
and  conditions,  by  all  of  which  the  Company  and  the  holders  of  Right
Certificates, by their acceptance thereof, shall be bound:

     (a) The  Rights  Agent may  consult  with legal  counsel  (who may be legal
counsel  for the  Company),  and the opinion of such  counsel  shall be full and
complete authorization and protection to the Rights Agent (excepting negligence,
bad faith or willful  misconduct  of the Rights Agent) as to any action taken or
omitted by it in good faith and in accordance with such opinion.

     (b) Whenever in the  performance of its duties under this Rights  Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or  established  by the Company  prior to taking or suffering  any action
hereunder,  such fact


                                      -35-
<PAGE>

or matter  (unless  other  evidence  in respect  thereof be herein  specifically
prescribed)  shall be deemed to be  conclusively  proved  and  established  by a
certificate  signed by any one of the chief executive  officer,  chief operating
officer or chief  financial  officer of the Company and  delivered to the Rights
Agent; and such certificate shall be full  authorization to the Rights Agent for
any  action  taken or  suffered  in good  faith by it in  conformity  with  such
certificate under the provisions of this Rights Agreement.

     (c) The Rights Agent shall be liable hereunder only for its own negligence,
bad faith or willful misconduct.

     (d) The  Rights  Agent  shall not be liable  for or by reason of any of the
statements  of fact or recitals  contained  in this Rights  Agreement  or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.

     (e) The Rights  Agent shall not be under any  responsibility  in respect of
the validity of this Rights  Agreement  or the  execution  and  delivery  hereof
(except  the due  execution  hereof by the  Rights  Agent) or in  respect of the
validity or  execution  of any Right  Certificate  (except its  countersignature
thereof);  nor shall it be  responsible  for any  breach by the  Company  of any
covenant  or  condition  contained  in this  Rights  Agreement  or in any  Right
Certificate;  nor shall it be responsible for any adjustment  required under the
provisions of Sections 11 or 13 hereof or responsible for the manner,  method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any  representation  or warranty
as to the  authorization  or  reservation  of any  Ordinary  Shares to be issued
pursuant to this Rights Agreement or any Right  Certificate or as to whether any
Ordinary Shares will, when so issued,  be validly  authorized and issued,  fully
paid and non-assessable.

     (f) The  Company  agrees that it will  perform,  execute,  acknowledge  and
deliver or cause to be performed, executed,  acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Right


                                      -36-
<PAGE>

Agent for the carrying out or performing  by the Rights Agent of the  provisions
of this Rights Agreement.

     (g)  The  Rights  Agent  is  hereby   authorized  and  directed  to  accept
instructions  with respect to the  performance of its duties  hereunder from any
one of the Chief Executive Officer or the President of the Company, and to apply
to any such officers for advice or  instructions  in connection  with its duties
under this Rights Agreement,  and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with  instructions of any
such officer.

     (h) The Rights Agent and any shareholder,  director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other  securities
of the Company or become pecuniarily  interested in any transaction in which the
Company  may be  interested,  or  contract  with or lend money to the Company or
otherwise  act as fully and freely as though it were not Rights Agent under this
Rights Agreement.  Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.

     (i) The Rights  Agent may execute and  exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its  attorneys  or  agents,  and the Rights  Agent  shall not be  answerable  or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the  Company  resulting  from any such  act,  default,
neglect or misconduct,  provided  reasonable care was exercised in the selection
and continued employment thereof.

     (j) At any time and from time to time after the Distribution Date, upon the
request of the Company, the Rights Agent shall promptly deliver to the Company a
list, as of the most recent  practicable date (or as of such earlier date as may
be specified by the Company), of the holders of record of Rights.

     (k) Except as  otherwise  provided  herein,  the Rights  Agent shall not be
required to expend or risk its own funds in the  performance of its duties or in
the exercise of its rights hereunder.


                                      -37-
<PAGE>

     Section 21. Change of Rights Agent The Rights Agent or any successor Rights
Agent may resign and be discharged  from its duties under this Rights  Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Ordinary  Shares by  registered  or  certified  mail.  The Company  shall
promptly notify the holders of the Right Certificates by first class mail of any
such  resignation.  The  Company  may remove the Rights  Agent or any  successor
Rights  Agent upon 30 days'  notice in writing to the Rights  Agent or successor
Rights  Agent,  as the case may be, and to each  transfer  agent of the Ordinary
Shares and to the holders of the Right  Certificates.  If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting,  the Company
shall  appoint a successor to such Rights  Agent.  If the Company  shall fail to
make such  appointment  within a period of 30 days after  giving  notice of such
removal  or  after  it has been  notified  in  writing  of such  resignation  or
incapacity by the resigning or incapacitated  Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right Certificate for
inspection by the Company),  then the Rights Agent or the  registered  holder of
any Right  Certificate may apply to any court of competent  jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court,  shall be a  corporation  organized and doing
business  under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such  corporation  is authorized
to do business in the State of New York), in good standing,  which is authorized
under  applicable  laws to  exercise  corporate  trust  powers and is subject to
supervision or examination by federal or state authority. After appointment, the
successor Rights Agent shall be vested with the same powers,  rights, duties and
responsibilities  as if it had been  originally  named as Rights  Agent  without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the  purpose.  Not later than the  effective  date of any such  appointment  the
Company shall file notice thereof in writing with the  predecessor  Rights Agent
and each transfer  agent of the Ordinary  Shares,  and mail a notice  thereof in
writing to the registered holders of the Right Certificates. Failure to give any
notice  provided for in this Section 21, however,  or any defect


                                      -38-
<PAGE>

therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the  appointment  of the successor  Rights Agent,  as the
case may be.

     Section 22. Issuance of New Right Certificates.  Notwithstanding any of the
provisions  of this  Rights  Agreement  or of the  Rights to the  contrary,  the
Company may, at its option,  issue new Right  Certificates  evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change  in the  Purchase  Price and the  number or kind or class of shares or
other securities or property  purchasable  under the Right  Certificates made in
accordance  with the  provisions  of this  Rights  Agreement.  In  addition,  in
connection  with  the  issuance  or  sale  of  Ordinary  Shares   following  the
Distribution  Date and prior to the redemption or expiration of the Rights,  the
Company (a) shall, with respect to Ordinary Shares so issued or sold pursuant to
the exercise of stock options or under any employee plan or  arrangement  of the
Company  or a  Subsidiary  or  Affiliate  thereof,  granted or awarded as of the
Distribution Date, or other securities  hereinafter  issued by the Company,  and
(b) may, in any other case,  if deemed  necessary or  appropriate  by the Board,
issue  Right  Certificates  representing  the  appropriate  number  of Rights in
connection  with such  issuance  or sale;  provided,  however,  that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel  that such  issuance  would create a  significant  risk of
material  adverse  tax  consequences  to the  Company or the Person to whom such
Right Certificate  would be issued,  and (ii) no such Right Certificate shall be
issued if, and to the extent that,  appropriate  adjustment shall otherwise have
been made in lieu of the issuance thereof.

     Section 23. Redemption and Exchange.  (a) The Board of Directors,  with the
concurrence of the Audit Committee, may, at its option, at any time prior to the
Close of Business on the earlier of (x) the tenth  Business  Day  following  the
Shares Acquisition Date (or such later date as the Board of Directors,  with the
concurrence of the Audit Committee,  shall determine,  which determination to be
made prior to the Close of  Business on the tenth  Business  Day  following  the
Shares  Acquisition  Date) and (y) the Final Expiration Date, redeem all but not
less than all the then  outstanding  Rights at a  redemption  price of $.001 per
Right,  appropriately  adjusted to reflect any stock  split,  stock  dividend or
similar  transaction  occurring after the date hereof (such redemption


                                      -39-
<PAGE>

price  per Right  being  hereinafter  referred  to as the  "Redemption  Price").
Notwithstanding anything contained in this Rights Agreement to the contrary, the
Rights shall not be exercisable after the first occurrence of an event described
in  Section  11(a)(ii)  until  such time as the  Company's  right of  redemption
hereunder has expired.  The Company may, at its option, pay the Redemption Price
in cash, Ordinary Shares of the Company (based on the current share market price
of such Ordinary  Shares at the time of  redemption,  provided,  however,  that,
unless  permitted by applicable  law, the effective  consideration  per Ordinary
Share paid to the Company  shall not be less than the par value  thereof) or any
other form of consideration deemed appropriate by the Board of Directors.

     (b)  Immediately  upon the action of the Board of  Directors  ordering  the
redemption of the Rights, and without any further action and without any notice,
the right to exercise the Rights will  terminate and the holders of Rights shall
have not further  rights other than the right to receive the  Redemption  Price.
Promptly  after the action of the Board of Directors  ordering the redemption of
the Rights, the Company shall give notice of such redemption to the Rights Agent
and the  holders of the then  outstanding  Rights by mailing  such notice to all
such holders at their last  addresses as they appear upon the registry  books of
the Rights Agent or, prior to the  Distribution  Date, on the registry  books of
the transfer  agent for the Ordinary  Shares.  Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice.  Each such notice of  redemption  will state the method by which the
payment of the Redemption Price will be made.

     (c) The Board of Directors may, at its option, at any time after any Person
becomes an Acquiring  Person,  exchange all or part of the then  outstanding and
exercisable  Rights  (which  shall not  include  Rights  that have  become  void
pursuant to the provisions of Section  11(a)(ii)  hereof) for Ordinary Shares at
an exchange  ratio of one Ordinary  Share per Right,  appropriately  adjusted to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date  hereof  (such  exchange  ratio  being  hereinafter  referred to as the
"Exchange Ratio").  Notwithstanding the foregoing,  the Board of Directors shall
not be  empowered  to effect such  exchange at any time after any Person  (other
than the Company,  any Subsidiary,  any employee  benefit plan of the


                                      -40-
<PAGE>

Company or any such  Subsidiary,  or any entity holding  Ordinary  Shares for or
pursuant  to the  terms of any such  plan),  together  with all  Affiliates  and
Associates of such Person,  becomes the  Beneficial  Owner of 50% or more of the
Ordinary Shares then outstanding.

     (d)  Immediately  upon the action of the Board of  Directors  ordering  the
exchange of any Rights pursuant to subsection (c) of this Section 23 and without
any further  action and without  any notice,  the right to exercise  such Rights
shall  terminate and the only right  thereafter of a holder of such Rights shall
be to receive that number of Ordinary  Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. The Company shall promptly
give public notice of any such exchange;  provided, however, that the failure to
give,  or any defect in,  such  notice  shall not  affect the  validity  of such
exchange.  The Company  promptly shall mail a notice of any such exchange to all
of the  holders of such Rights at their last  addresses  as they appear upon the
registry  books of the Rights  Agent.  Any notice  which is mailed in the manner
herein  provided shall be deemed given,  whether or not the holder  receives the
notice. Each such notice of exchange will state the method by which the exchange
of the  Ordinary  Shares for Rights  will be  effected  and, in the event of any
partial  exchange,  the number of Rights  which will be  exchanged.  Any partial
exchange  shall be effected  pro rata based on the number of Rights  (other than
Rights which have become void pursuant to the  provisions  of Section  11(a)(ii)
hereof) held by each holder of Rights.

     (e) In the event  that there  shall not be  sufficient  shares of  Ordinary
Shares  issued but not  outstanding  or  authorized  but  unissued to permit any
exchange  of Rights as  contemplated  in  accordance  with this  Section 23, the
Company  shall take all such action as may be necessary to authorize  additional
shares of Ordinary Shares for issuance upon exchange of the Rights.

     (f) The Company shall not be required to issue fractions of Ordinary Shares
or to distribute  certificates  which evidence  fractions of Ordinary Shares. In
lieu of such fractions  Ordinary  Shares,  there shall be paid to the registered
holders of the Right Certificates with regard to which such fractional shares of
Ordinary Shares would otherwise be issuable, an amount in cash equal to the same
fraction of the current


                                      -41-
<PAGE>

market value of an Ordinary Share.  For the purposes of this subsection (f), the
current  market  value of an Ordinary  Share  shall be the  closing  price of an
Ordinary Share (as determined  pursuant to the second  sentence of Section 11(d)
hereof) for the Trading Day immediately  prior to the date of exchange  pursuant
to this Section 23.

     Section 24. Notice of Certain Events.  In case the Company shall propose at
any time after the  Distribution  Date (a) to pay any dividend  payable in share
capital  of any class to the  holders  of  Ordinary  Shares or to make any other
distribution to the holders of Ordinary Shares (other than a regularly quarterly
cash dividend out of the earnings or retained  earnings of the Company),  or (b)
to offer to the holders of Ordinary  Shares  rights or warrants to subscribe for
or to purchase any additional  Ordinary Shares or shares of share capital of any
class  or any  other  securities,  rights  or  options,  or (c)  to  effect  any
reclassification of its Ordinary Shares other than a reclassification  involving
only the  subdivision  of  outstanding  Ordinary  Shares,  or (d) to effect  any
consolidation  or merger into or with,  or to effect any sale or other  transfer
(or to  permit  one or more of its  Subsidiaries  to  effect  any  sale or other
transfer),  in one or more  transactions,  of more  than  50% of the  assets  or
earning  power of the  Company and its  Subsidiaries  (taken as a whole) to, any
other Person, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Rights Agent and
to each holder of a Right  Certificate,  in accordance with Section 25 hereof, a
notice of such  proposed  action,  which  shall  specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on  which  such   reclassification,   consolidation,   merger,  sale,  transfer,
liquidation,  dissolution,  or  winding  up is to take  place  and  the  date of
participation therein by the holders of the Ordinary Shares, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by  clause  (a) or (b)  above  at least 10 days  prior  to the  record  date for
determining  holders of the Ordinary Shares for purposes of such action,  and in
the case of any such  other  action,  at least 10 days  prior to the date of the
taking of such  proposed  action  or the date of  participation  therein  by the
holders of the Ordinary Shares whichever shall be the earlier.

     In case any of the  events set forth in Section  11(a)(ii)  of this  Rights
Agreement  shall occur,  then,  in any such case,  the Company  shall as soon as
practicable  thereafter


                                      -42-
<PAGE>

give  to the  Rights  Agent  and to  each  holder  of a  Right  Certificate,  in
accordance  with Section 25 hereof,  a notice of the  occurrence  of such event,
which shall  specify the event and the  consequences  of the event to holders of
Rights under Section 11(a)(ii) hereof.

     Section 25. Notices. Notices or demands authorized by this Rights Agreement
to be  given  or  made  by the  Rights  Agent  or by  the  holder  of any  Right
Certificate to or on the Company shall be sufficiently  given or made if sent by
hand  delivery,  courier,   first-class  mail,  postage  prepaid,  or  facsimile
transmission  addressed  (until  another  address is delivered in writing to the
Rights Agent) as follows:

                           Lumenis Ltd.
                           Industrial Park, Yokneam
                           P.O. Box 240
                           Yokneam, 20692
                           Israel
                           Attention: President
                           Fax no.: +972-4-959-9000

     Subject  to the  provisions  of  Section  21  hereof,  any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of any Right  Certificate to or on the Rights Agent shall be sufficiently
given  or  made  if sent by  hand  delivery,  courier,  facsimile  transmission,
first-class mail, postage prepaid,  addressed (until another address is filed in
writing with the Company) as follows:

                           American Stock Transfer & Trust Company
                           5 Maiden Lane
                           New York, New York 10038
                           Attention: Corporate Trust Department
                           Fax no.: +1-718-331-1852

     Notices or demands  authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right  Certificate  (or,
prior  to the  Distribution  Date,  to  holders  of  Ordinary  Shares)  shall be
sufficiently  given  or  made  if


                                      -43-
<PAGE>

sent by  first-class  mail,  postage  prepaid,  addressed  to such holder at the
address of such holder as shown on the registry books of the Company.

     Section 26. Supplements and Amendments.  (a) Prior to the Distribution Date
subject to the  provisions  of Section  26(b),  the Company and the Rights Agent
shall,  if the Company  (upon  approval of the Board of Directors  and the Audit
Committee)  so  directs,  supplement  or  amend  any  provision  of this  Rights
Agreement  in any manner  without the  approval  of any holders of  certificates
representing  Ordinary  Shares and the Rights;  provided,  however,  that if the
effect of such supplement or amendment  would be to alter,  amend or enlarge the
scope or extent of the Rights Agent's duties,  liabilities or obligations  under
Section  18,  19, 20, 21 or this  provision  of this  Section  26  hereof,  such
supplement  or  amendment  shall only become  effective  with the prior  written
consent of the Rights Agent. From and after the Distribution Date and subject to
the provisions of Section 26(b),  the Company and the Rights Agent shall, if the
Company  (upon  approval of the Board of Directors  and the Audit  Committee) so
directs,  supplement or amend this Rights Agreement  without the approval of any
holders  of  Rights  Certificates  in order (i) to cure any  ambiguity,  (ii) to
correct or supplement any provision  contained  herein which may be defective or
inconsistent with any other provisions herein,  (iii) to shorten or lengthen any
time period hereunder,  or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem  desirable but which does not adversely
affect the interests of holders of Rights (other than an Acquiring Person). Upon
the delivery of a  certificate  from an officer of the Company which states that
the proposed  supplement  or amendment is in  compliance  with the terms of this
Section 26, the Rights Agent shall execute such  supplement or amendment.  Prior
to the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Ordinary Shares,

     (b)  Notwithstanding  anything  herein to the  contrary,  no  supplement or
amendment  shall be made to this Rights  Agreement at a time when the Rights are
not  redeemable,  except as  contemplated  by clause  (i) or (ii) of the  second
sentence of Section 26(a) hereof.


                                      -44-
<PAGE>

     Section 27.  Successors.  All the covenants  and  provisions of this Rights
Agreement  by or for the benefit of the  Company or the Rights  Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

     Section  28.  Benefits  of this  Rights  Agreement.  Nothing in this Rights
Agreement  shall be construed to give to any Person other than the Company,  the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Ordinary Shares) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive  benefit of the Company,  the Rights Agent and the registered
holders of the Right  Certificates  (and,  prior to the  Distribution  Date, the
Ordinary Shares).

     Section 29. Severability.  If any term, provision,  covenant or restriction
of this Rights  Agreement is held by a court of competent  jurisdiction or other
authority  to be invalid,  void or  unenforceable,  the  remainder of the terms,
provisions,  covenants and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected,  impaired or  invalidate;
provided, however, that notwithstanding anything in this Rights Agreement to the
contrary, if any such term,  provision,  covenant or restriction is held by such
court  or  authority  to be  invalid,  void or  unenforceable  and the  Board of
Directors  determines  in its good faith  judgment  that  severing  the  invalid
language from this Rights Agreement would adversely affect the purpose or effect
of this Rights Agreement, the right of redemption set forth in Section 23 hereof
shall be  reinstated  and shall not expire  until the Close of  Business  on the
tenth  Business Day  following  the date of such  determination  by the Board of
Directors.

     Section 30. Governing Law. This Rights Agreement and each Right Certificate
issued  hereunder  shall be deemed to be a  contract  made under the laws of the
State  of  Israel  and for all  purposes  shall  be  governed  by and  construed
exclusively in accordance  with the laws of such State.  The courts of Tel Aviv,
Israel shall have exclusive  jurisdiction  for any disputes arising out of or in
connection with this Rights Agreement.


                                      -45-
<PAGE>

     Section  31.  Counterparts.  This Rights  Agreement  may be executed in any
number of counterparts and each of such  counterparts  shall for all purposes be
deemed to be an original,  and all such counterparts  shall together  constitute
but one and the same instrument.

     Section  32.  Descriptive  Headings.  Descriptive  headings  of the several
Sections of this Rights  Agreement are inserted for  convenience  only and shall
not  control or affect  the  meaning or  construction  of any of the  provisions
hereof.

     Section 33. Determination and Actions by the Board of Directors.  The Board
of Directors (where  specifically  provided herein,  with the concurrence of the
Audit Committee) shall have the exclusive power and authority to administer this
Rights Agreement and to exercise all rights and powers  specifically  granted to
the Board of Directors or to the Company, or as may be necessary or advisable in
the administration of this Rights Agreement,  including, without limitation, the
right and power to (a) interpret the  provisions of this Rights  Agreement,  and
(b) make all calculations and  determinations  deemed necessary or advisable for
the administration of this Rights Agreement (including a determination to redeem
or not redeem the Rights or to amend the Rights  Agreement).  All such  actions,
calculations,  interpretations  and determinations  (including,  for purposes of
clause (ii) below,  all omissions with respect to the foregoing) which are done,
taken or made by the Board of Directors (where specifically provided for herein,
with the concurrence of the Audit Committee) in good faith,  shall (i) be final,
conclusive  and binding on the  Company,  the Rights  Agent,  the holders of the
Rights and all other  parties,  and (ii) not subject the members of the Board of
Directors or Audit Committee to any liability to the holders of the Rights.


                                      -46-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed, all as of the day and year first above written.


                                        LUMENIS LTD.

                                        By: /s/ Kevin R. Morano
                                            ----------------------------
                                            Name: Kevin R. Morano
                                            Title: Executive Vice President and
                                                   Chief Financial Officer


                                        AMERICAN STOCK TRANSFER & TRUST COMPANY

                                        By: /s/ Herbert J. Lemmer
                                            ----------------------------
                                            Name: Herbert J. Lemmer
                                            Title: Vice President


                                      -47-
<PAGE>

                                                                       Exhibit A

                        [Form of Bonus Right Certificate]

         Certificate No. R-                        ______  Bonus Rights

     NOT EXERCISABLE  AFTER April 11, 2003 OR EARLIER IF NOTICE OF REDEMPTION OR
     EXCHANGE IS GIVEN.  THE RIGHTS ARE SUBJECT TO REDEMPTION,  AT THE OPTION OF
     THE COMPANY, AT $.001 PER RIGHT, ON THE TERMS SET FORTH IN THE BONUS RIGHTS
     AGREEMENT.  [THE RIGHTS  REPRESENTED BY THIS  CERTIFICATE  WERE ISSUED TO A
     PERSON WHO WAS AN  "ACQUIRING  PERSON" OR AN  ASSOCIATE  OR AFFILIATE OF AN
     "ACQUIRING  PERSON" OR A NOMINEE  THEREOF.  THIS RIGHT  CERTIFICATE AND THE
     RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN
     SECTION 11(a)(ii) OF THE RIGHTS AGREEMENT.]

                             Bonus Right Certificate

                                  LUMENIS LTD.

          This certifies that, or registered assigns, is the registered owner of
the  number  of bonus  rights  (the  "Rights")  set forth  above,  each of which
entities the owner thereof,  subject to the terms,  provisions and conditions of
the Bonus Rights  Agreement dated as of April 11, 2002 (the "Rights  Agreement")
between Lumenis Ltd., an Israeli corporation (the "Company"), and American Stock
Transfer & Trust Company, as Rights Agent (the "Rights Agent"), to purchase from
the Company at any time after the Distribution  Date (as such term is defined in
the Rights  Agreement)  and prior to 5:00 P.M.  (New York City  time)  April 11,
2003, at the principal  office of the Rights Agent,  or its successors as Rights
Agent,  one fully paid,  non-assessable  Ordinary Share,  par value NIS 0.10 per
share (the "Ordinary Shares"), of the Company, at a purchase price of $38.00 per
share (the  "Purchase  Price"),  upon  presentation  and surrender of this Right
Certificate  with the Form of Election to Purchase duly executed.  The number of


                                      -48-
<PAGE>

Rights evidenced by this Right Certificate (and the number of shares which maybe
purchased  upon exercise  thereof) set forth above,  and the Purchase  Price set
forth above,  are the number and Purchase  Price as of April 11, 2002,  based on
the Ordinary Shares as constituted at such date.

     As provided in the Rights  Agreement,  the Purchase Price and the number of
Ordinary Shares which may be purchased upon the exercise of the Rights evidenced
by this Right  Certificate are subject to  modification  and adjustment upon the
happening of certain events.


----------
     * The  portion  of the  legend  in  brackets  shall  be  inserted  only  if
applicable as provided under the Rights Agreement.

          This Right Certificate is subject to all of the terms,  provisions and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof and to which
Rights Agreement  reference is hereby made for a full description of the rights,
limitations  of rights,  obligations,  duties and  immunities  hereunder  of the
Rights Agent, the Company and the holders of the Right  Certificates.  Copies of
the Rights Agreement are on file at the principal  offices of the Company and of
the Rights Agent.

          This Right Certificate, with or without other Right Certificates, upon
surrender at the  principal  office of the Rights  Agent,  may be exchanged  for
another  Right  Certificate  or  Right  Certificates  of  like  tenor  and  date
evidencing  Rights  entitling the holder to purchase a like aggregate  number of
Ordinary  Shares  as the  Rights  evidenced  by the Right  Certificate  or Right
Certificates  surrendered  shall have entitled such holder to purchase.  If this
Right  Certificate  shall be exercised in part,  the holder shall be entitled to
receive upon surrender  hereof another Right  Certificate or Right  Certificates
for the number of whole Rights not exercised.

          Subject  to  the  provisions  of  the  Rights  Agreement,  the  Rights
evidenced by this  Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right. In addition, under certain circumstances at
any time  after any


                                      -49-
<PAGE>

Person becomes an Acquiring Person, the Rights may be exchanged,  in whole or in
part, for Ordinary  Shares having  essentially the same value or economic rights
as such  shares.  Immediately  upon the action of the Board of  Directors of the
Company  authorizing  any such  exchange,  and without any further action or any
notice,  the Rights  (other than Rights which are not subject to such  exchange)
will  terminate and the Rights will only enable  holders to receive the Ordinary
Shares issuable upon such exchange.

          The Company shall not be required to issue fractional  Ordinary Shares
upon the exercise of any Right or Rights evidenced hereby.

          No holder of this Right  Certificate,  as such,  shall be  entitled to
vote or receive  dividends  or be deemed for any  purpose the holder of Ordinary
Shares  or of any  other  securities  of the  Company  which  may at any time be
issuable on the  exercise  hereof,  nor shall  anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  shareholder  of the  Company  or any right to vote for the
election  of  directors  or upon any matter  submitted  to  shareholders  at any
meeting thereof,  or to give or withhold consent to any corporate  action, or to
receive notice of meetings or other actions  affecting  shareholders  (except as
provided  in the Rights  Agreement),  or to receive  dividends  or  subscription
rights,  or  otherwise,  until  the  Right or  Rights  evidenced  by this  Right
Certificate shall have been exercised as provided in the Rights Agreement.

          This  Right  Certificate  shall  not be  valid or  obligatory  for any
purpose until it shall have been countersigned by the Rights Agent.

     WITNESS the facsimile  signature of the proper  officers of the Company and
its corporate seal.

Dated as of _____________

         ATTEST:                        LUMENIS LTD.

                                        By: ____________________________
                                            Name:
                                            Title:

    Countersigned:



                                      -50-
<PAGE>

         AMERICAN STOCK TRANSFER
         & TRUST COMPANY


         By:      _____________________
                  Authorized Signature

         Date: ______________________


                                      -51-
<PAGE>

                   [Form of Reverse Side of Right Certificate]

                               FORM OF ASSIGNMENT

             [To be executed by the registered holder if such holder
                  desires to transfer the Right Certificates.]

     FOR VALUE RECEIVED  ________________________________  hereby sells, assigns
and transfers unto _____________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

                  [Please print name and address of transferee]

this Right  Certificate  and the Rights  evidenced  thereby,  together  with all
right, title and interest therein,  and does hereby  irrevocably  constitute and
appoint  ________________  Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of substitution.

     Dated: _____________________

                                         __________________________________
                                           Signature

Signature Guaranteed:
__________________________________


                                      -52-
<PAGE>

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the  Rights  evidenced  by this Right  Certificate  [ ] are [ ] are not
beneficially  owned by an  "Acquiring  Person" or an  Affiliate  or an Associate
thereof (as defined in the Rights Agreement); and

     (2) after due inquiry and to the best  knowledge  of the  undersigned,  the
undersigned  [ ] did [ ] did not  acquire  the  Rights  evidenced  by this Right
Certificate from any person who is or was an "Acquiring  Person" or an Affiliate
or Associate thereof

     Dated: _____________________

                                         __________________________________
                                           Signature


                                      -53-
<PAGE>

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Right Certificate.)

     To: LUMENIS LTD.

          The undersigned hereby  irrevocably elects to exercise  ______________
Rights  represented by this Right  Certificate  to purchase the Ordinary  Shares
issuable  upon the exercise of such Rights and requests  that  certificates  for
such shares be issued in the name of:

Please insert social security or other identifying number

_____________________________________________________________
                           (Please print name and address)

_____________________________________________________________

If such  number of Rights  shall not be all the Rights  evidenced  by this Right
Certificate, a new

Right  Certificate for the balance remaining of such Rights shall he registered.
in the name of and delivered to:

Please insert social security
or other identifying number

_____________________________________________________________

                      (Please print name and address)
_____________________________________________________________

     Dated: _____________________

                                         __________________________________
                                           Signature


                                      -54-
<PAGE>

Signature Guaranteed:

          Signatures  must  be  guaranteed  by a  member  firm  of a  registered
national securities exchange, a member of the National Association of Securities
Dealers,  Inc.,  or a  commercial  bank or trust  company  having  an  office or
correspondent in the United States.

The undersigned hereby certifies by checking the appropriate boxes that:

          (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
beneficially  owned by an  "Acquiring  Person" or an  Affiliate  or an Associate
thereof (as defined in the Rights Agreement); and

          (2) after due inquiry and to the best  knowledge  of the  undersigned,
the  undersigned [ ] did [ ] did not acquire the Rights  evidenced by this Right
Certificate from any person who is or was an "Acquiring  Person" or an Affiliate
or Associate thereof.

     Dated: _____________________

                                         __________________________________
                                           Signature

__________________________________


                                      -55-
<PAGE>

                                     NOTICE

          The signature in the foregoing  Forms of Assignment  and Election must
conform to the name as written upon the face of this Right  Certificate in every
particular, without alteration or enlargement or any change whatsoever.

          In the  event  the  certification  set  forth  above  in the  Forms of
Assignment and Election is not completed,  the Company will deem the "Beneficial
Owner" of the Rights  evidenced  by this Right  Certificate  to bean  "Acquiring
Person"  or an  Affiliate  or  Associate  thereof  (as  defined  in  the  Rights
Agreement) and, in the case of an Assignment, will affix a legend to that effect
on any Right Certificates issued in exchange for this Right Certificate.


                                      -56-
<PAGE>


                                                                       Exhibit B

                             SUMMARY OF BONUS RIGHTS
                   TO PURCHASE ORDINARY SHARES OF LUMENIS LTD.

     On April 4, 2002,  the Board of Directors of Lumenis Ltd.  (the  "Company")
declared a  distribution  of one bonus  right (a "Right")  for each  outstanding
Ordinary  Share,  par value NIS 0.10 per share (the "Ordinary  Shares"),  of the
Company.  The  distribution  is payable on April 11, 2002 (the "Record Date") to
shareholders of record on that date.  Each Right entitles the registered  holder
to purchase from the Company one Ordinary Share at a price of $38 per share (the
"Purchase  Price"),  subject to  adjustment.  The  description  and terms of the
Rights are set forth in a Bonus  Rights  Agreement,  dated as of April 11,  2002
(the  "Rights  Agreement"),  between the Company and American  Stock  Transfer &
Trust Company, as Rights Agent (the "Rights Agent").

     Until the  earlier to occur of (i) ten  business  days  following  a public
announcement  that a  person  or  group  of  affiliated  or  associated  persons
acquired,  or obtained the right to acquire,  "Beneficial  Ownership"  of 15% or
more of the  Ordinary  Shares (an  "Acquiring  Person";  the date of such public
announcement  being called the "Shares  Acquisition  Date") or (ii) ten business
days  following  the  commencement  of a tender  offer  or  exchange  offer  the
consummation of which would result in any person's  becoming an Acquiring Person
(the earlier of such days being called the "Distribution Date"), the Rights will
be evidenced, with respect to any of the Ordinary Share certificates outstanding
as of the Record Date, by such Ordinary Share  certificate.  Among certain other
exemptions,  a person who  becomes  the  Beneficial  Owner of 15% or more of the
Ordinary  Shares as a result of  repurchases  of Ordinary  Shares by the Company
will not become an  Acquiring  Person  unless and until such  person  thereafter
acquires  additional  Ordinary Shares  representing 1.5% or more of the Ordinary
Shares  of  the  Company  then   outstanding.   Additionally,   Coherent,   Inc.
("Coherent"),  a shareholder of the Company,  is exempted from the definition of
an Acquiring  Person so long as Coherent shall not purchase or otherwise  become
(as a result of the actions of Coherent or its  affiliates  or  associates)  the
Beneficial Owner of more than 23% of the Ordinary Shares then outstanding or, if
applicable,  such greater  percentage as may be  contemplated by Section 5.18 of
the Asset Purchase Agreement by and among the


                                      -57-
<PAGE>


Company,  Energy Systems  Holdings Inc. (now known as Lumenis Holdings Inc.) and
Coherent, dated as of February 25, 2001.

     The Rights Agreement provides that, until the Distribution Date, the Rights
will  be  transferred  with  and  only  with  the  Ordinary  Shares.  Until  the
Distribution Date (or earlier redemption, exchange or expiration of the Rights),
new Ordinary  Share  certificates  issued after the Record Date upon transfer or
new issuance of the Ordinary  Shares will contain a notation  incorporating  the
Rights  Agreement  by  reference.   Until  the  Distribution  Date  (or  earlier
redemption, exchange or expiration of the Rights), the surrender for transfer of
any  certificates  for Ordinary  Shares will also constitute the transfer of the
Rights associated with the Ordinary Shares  represented by such certificate.  As
soon as  practicable  following the  Distribution  Date,  separate  certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Ordinary Shares as of the Close of Business on the Distribution  Date and
such separate Right Certificates alone will evidence the Rights.

     The Rights are not exercisable until the Distribution Date. The Rights will
expire on April 11, 2003, unless earlier redeemed or exchanged by the Company as
described below.

     The  Purchase  Price  payable,  and the number of Ordinary  Shares or other
securities  or  property  issuable,  upon  exercise of the Rights are subject to
adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
dividend on, or a subdivision,  combination or  reclassification of the Ordinary
Shares,  (ii) upon the grant to all  holders of the  Ordinary  Shares of certain
rights or warrants to subscribe for Ordinary Shares or convertible securities at
less than the  current  market  price of the  Ordinary  Shares or (iii) upon the
distribution  to holders of the Ordinary  Shares of evidences of indebtedness or
assets  (excluding  regular quarterly cash dividends out of earnings or retained
earnings or dividends  payable in Ordinary Shares) or of subscription  rights or
warrants (other than those referred to above).

     In the event that a Person becomes an Acquiring Person,  except pursuant to
an offer for all outstanding Ordinary Shares which the Board of Directors,  with
the concurrence of the Audit Committee, determines to be fair and not inadequate
and to otherwise be in the best interests of the Company and its shareholders (a
"Qualified


                                      -58-
<PAGE>


Offer"),  proper  provision shall be made so that each holder of a Right,  other
than  Rights  that  were  beneficially  owned by the  Acquiring  Person  (or any
Associate or Affiliate  thereof) on the earlier of the Distribution  Date or the
Shares Acquisition Date (which Rights will thereafter be void), shall thereafter
have the  right  to  receive,  upon the  exercise  thereof  at the then  current
Purchase  Price,  that number of Ordinary  Shares  having a market  value of two
times the  Purchase  Price.  If the Company  does not have  sufficient  Ordinary
Shares for this purpose,  the Company may, to the extent permitted by applicable
law, substitute cash, a reduction in the exercise price, other equity securities
of the Company, debt securities of the Company, other assets, or any combination
of the foregoing,  having an aggregate value equal to the value which would have
been realized if the Company had sufficient Ordinary Shares. In addition, in the
event that, at any time following the Shares  Acquisition  Date, (i) the Company
engages  in a merger  or other  business  combination  transaction  in which the
Company  is not the  surviving  corporation  (other  than with an  entity  which
acquired the shares pursuant to a Qualified Offer),  (ii) the Company engages in
a merger or other business  combination  transaction in which the Company is the
surviving corporation and the Ordinary Shares are changed or exchanged, or (iii)
50% or more of the  Company's  assets or earning  power is sold or  transferred,
proper  provision  shall be made so that each holder of a Right  (except  Rights
which have previously been voided as set forth above) shall  thereafter have the
right to receive,  upon the exercise thereof at the then current Purchase Price,
that  number  of  shares  of the  acquiring  company  which  at the time of such
transaction  would  have a market  value of two times the  Purchase  Price.  For
example,  at a  Purchase  Price of $38 per  Right,  each  Right  not owned by an
Acquiring Person (or by certain related parties) following an event set forth in
this  paragraph  would  entitle  its  holder to  purchase  $76 worth of  shares.
Assuming  that the  shares  had a per share  value of $10.00 at such  time,  the
holder of each valid Right would be entitled to purchase 7.6 shares for $38.

     At any time until ten business days following the Shares  Acquisition Date,
the Company may redeem the Rights in whole, but not in part, at a price of $.001
per  Right.  Immediately  upon the  action  of the Board of  Directors  ordering
redemption  of the Rights,  the Rights will  terminate and the only right of the
holders of Rights will be to receive the $.001 redemption price. In addition, at
any time after a person


                                      -59-
<PAGE>


becomes an Acquiring Person and prior to the acquisition by such person or group
of fifty percent (50%) or more of the outstanding Ordinary Shares, the Board may
exchange the Rights  (other than Rights owned by such person or group which have
become void),  in whole or in part, at an exchange  ratio of one Ordinary  Share
per Right (subject to adjustment).

     Until a Right is  exercised,  the  holder  thereof,  as such,  will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive  dividends.  While the distribution of the Rights will not
be taxable to shareholders or to the Company,  shareholders may,  depending upon
the circumstances,  recognize taxable income in the event that the rights become
exercisable for Ordinary Shares (or other  consideration)  of the Company or for
shares of the acquiring  company or in the event of the redemption of the Rights
as set forth above.

     Any of the  provisions of the Rights  Agreement may be amended by the Board
of  Directors  of  the  Company  prior  to  the  Distribution  Date.  After  the
Distribution  Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any  ambiguity,  to correct or  supplement  any provision
which may be defective or  inconsistent  with any other  provision  therein,  to
shorten or lengthen any time period thereunder,  or to make changes which do not
adversely  affect the  interests  of holders of Rights  (other than an Acquiring
Person). The foregoing  notwithstanding,  no amendment may be made to the Rights
Agreement  when the Rights are not  redeemable,  except to cure any ambiguity or
correct or supplement any provision  contained in the Rights  Agreement that may
be defective or inconsistent with any other provision therein.

     A copy of the  Rights  Agreement  is being  filed with the  Securities  and
Exchange Commission.  A copy of the Rights Agreement is available free of charge
from the Rights Agent.  This summary  description of the Rights does not purport
to be complete  and is  qualified  in its  entirety by  reference  to the Rights
Agreement, which is incorporated herein by reference.


                                      -60-