Property Agreement

This Property Agreement ("Agreement") is made the 30th day of October, 1996
between Terry A. Fuller, Ph.D., for himself and his sole proprietorship Fuller
Research Laboratories (collectively called hereinafter "Fuller"), Fuller
Research Corporation, wholly-owned corporation of Fuller (called hereinafter
"FRC"), and Surgical Laser Technologies, Inc. (called hereinafter "SLT" or the
"Company").

                               Background Premises

Whereas Fuller has been an executive officer of SLT since June 1990. Fuller is
in process of leaving the employ of SLT.

Whereas in an agreement of lease dated March 29, 1991, Fuller through Fuller
Research Laboratories leased to SLT certain personal property. That initial
agreement expired on February 11, 1993. A subsequent Lease Agreement was entered
on February 12, 1993, and expired on February 11, 1995.

Whereas starting in February 1991, Fuller and FRC lent to SLT, for use in its
business and without charge, certain other equipment and supplies held by Fuller
and FRC.

Whereas FRC entered into a License Agreement dated May 31, 1994 with SLT for
rights under U.S. Patent No. 4,822,997. Certain minimum royalty payments are due
to FRC under the License Agreement; and

Whereas Fuller has had possession of certain equipment of SLT to use the same in
furtherance of the business of SLT.

Now therefore, in consideration of the premises set forth above and the promises
set forth below, Fuller, FRC and SLT, intending to be legally bound hereby, and
in order to effect an orderly restoration of the property of SLT, Fuller and FRC
and to settle any financial claims related to the use by a party hereto of the
other party's property, agree to the following:

                                 Mutual Promises

1.  Property on Lease from Fuller Research Laboratories.

         a.  Cessation of Rental of Equipment.

         Although the Lease Agreement expired on February 11, 1995 and was not
         formally renewed, SLT continued to use all but four (4) items of
         equipment covered under the Lease Agreement, those four items being the
         Nicolet Spectrometer, the Tektronix High Speed Oscilloscope, the Gould
         Chart Recorder, and the Buehler Ecomet. SLT's continuing use of such
         equipment shall be deemed terminated as of July 8, 1996. In discharge
         of

<PAGE>


         Fuller's claims for rent unpaid but accruing during or after the Lease
         Agreement, SLT shall pay $12,115 to Fuller on the execution of this
         Agreement.

         b.  Purchase of South Bend Drill Press and Vise

         SLT has offered to purchase for $3,000 the South Bend drill press,
         which had been on rent under the lease from Fuller, and to purchase for
         $150 a vise which Fuller had lent to SLT and which SLT has used with
         the drill press. Fuller has accepted the offers. SLT shall pay the
         aggregate purchase price of $3,150 upon execution of this Agreement.
         The drill press and vise are sold in an as-is condition.

         c.  Swap of Table Tops.

         Fuller had rented the NRC Optical Table to SLT; the table measures
         4'x 8' and has pneumatic cushion legs. SLT has an optical table that
         measures 4'x 6' with wood veneer siding and that does not have
         pneumatic cushion legs. The legs of the two tables are interchangeable.
         Fuller and SLT are willing to exchange the 4'x 8' table top, but not
         the legs, of the NRC table for the veneered 4'x 6' table top, but not
         the legs, of the optical table owned by SLT. No cash shall pass from
         either party to the other to balance the exchange.

         d.  Return of Other Property.

         With the exception of the South Bend drill press, which SLT is
         purchasing under Paragraph 1(b); the table top of the NRC Optical
         Table, which is covered under Paragraph 1(c); and the Tektronix High
         Speed Oscilloscope, the Zeiss Metalloscope and the Zeiss Stereo
         Microscope, which have already been returned to Fuller, SLT shall
         deliver, at its expense, the equipment covered under the Lease
         Agreement dated February 12, 1993, to sites in the Greater Philadelphia
         area which Fuller has designated. That equipment, the respective
         delivery sites, are set forth in Exhibit A attached hereto. The
         delivery sites include the basement of Fuller's residence on Morgan
         Road, Rydal; 104 Park Drive, Montgomeryville; and Fuller's warehouse
         space in South Jersey. Such delivery shall be made by the end of
         November 1996. Terms relating to the Scanning Electron Microscope are
         covered more specifically in Paragraph 1(e).

         e.  Scanning Electron Microscope (SEM).

         It shall be incumbent upon SLT to establish, by means of trained
         technicians, that the SEM is in normal functioning condition fit for
         being covered by a service contract at prevailing rates for such a
         device in such condition. SLT shall establish this condition at its
         business site. If the device should be found, upon testing, not to be
         in normal functioning condition, it shall be incumbent upon SLT, at its

<PAGE>

         expense, to restore the device to such condition. Consistent with
         Paragraph 1(d), the SEM shall be delivered to the Rydal destination by
         the end of November 1996. It is understood that the device must not be
         transported in assembled condition, but must be transported in
         dismantled condition and reassembled to functioning condition at the
         delivery site, all at SLT's expense.

2. Property on Loan from Fuller and FRC.

         a.  Replacing Missing Chairs.

         FRC lent to SLT the use of eight (8) orange office chairs. Such chairs
         are missing. To discharge FRC's claim for the eight chairs, SLT will
         provide FRC with 8 wooden, yellow-upholstered chairs presently found at
         104 Park Drive. Such replacement chairs will be delivered to FRC in
         accordance with Paragraph 2(b).

         b.  Return of Property.

         Property that Fuller and FRC lent to SLT for use in its business is
         listed in Exhibit B (excepting the 8 chairs covered in Paragraph 2(a)).
         SLT shall deliver at its expense the property listed in Exhibit B to
         sites in the Greater Philadelphia area which Fuller has designated in
         Exhibit B. Those sites include the basement of Fuller's residence on
         Morgan Road, Rydal; 104 Park Drive, Montgomeryville; and Fuller's
         warehouse space in South Jersey. Such delivery shall be made by the end
         of November 1996. Marked on Exhibit B are those items of property that
         have already been returned to Fuller or FRC, and certain items for
         which SLT is searching.

         c.  Final Survey and Chance Discoveries.

         Toward the end of November 1996, SLT and Fuller shall arrange to survey
         together the locations at which SLT has property. SLT and Fuller shall
         investigate for any property which was obviously lent, and not later
         given or sold, by Fuller or FRC to SLT and which was overlooked due to
         confusion arising from SLT's concurrent relocation and therefore not
         included on Exhibit B. Should any such property be identified, it shall
         be returned to Fuller by the end of November 1996. Similarly, if SLT
         should by chance later discover any property which was obviously lent,
         and not later given or sold, by Fuller or FRC to SLT and which did not
         turn up in the latter survey, SLT shall so apprise Fuller and arrange
         for the return of the same to him.

3.  Payments due Under the License Agreement from FRC.

         Pursuant to Section 3.2 and Schedule D of the License Agreement dated
         May 31, 1994, the minimum monthly royalty was to increase from $2,000
         to $3,000, starting in March 1996. SLT has inadvertently continued to
         pay the monthly minimum royalty at $2,000 per month through October
         1996.

<PAGE>


         SLT shall pay the arrearage of $8,000, plus interest at 7% (amounting
         to $212.88), on the execution of this Agreement. It is understood and
         agreed that payment of this arrearage does not waive any other rights
         of a party to the License Agreement.

4.  Settlement of Other Property Matters.

         a.  Lap-top Computer.

         SLT has offered to sell to Fuller, at a price equal to its net book
         value, the Hewlett Packard lap-top computer that Fuller has used during
         his employ. Fuller has declined such offer. Fuller shall be entitled to
         use such lap-top computer until the end of his employ with SLT, at
         which time he shall return it to the Company.

         b.  Car Phone.

         Fuller has contracted with a third party for the use of a car phone;
         SLT has reimbursed Fuller his payments made to the third party under
         that contract. SLT hereby relinquishes in favor of Fuller any equity
         that may have inured or may yet inure to it by virtue of its
         reimbursements to Fuller. Upon presentation of the Company's standard
         form for reimbursement of expenses, the Company shall reimburse Fuller
         the monthly charge for use of the car phone through the end of his
         employ, and not thereafter. Such remaining monthly charges shall be at
         a level commensurate with such charges pre-dating this Agreement.

         c.  Gateway Computer.

         SLT acknowledges that the Gateway P5 90 computer in Fuller's possession
         is Fuller's own personal property, acquired on June 15, 1994 through an
         exchange of property.

         d.  Return of Company Property.

         Fuller undertakes to return to SLT the belt sander being used in
         Fuller's basement at Morgan Road. Such delivery shall be effected at
         Morgan Road, when SLT delivers the SEM pursuant to Paragraph 1(e) and
         the Enco green belt sander. SLT hereby acknowledges that Fuller has
         otherwise, to its satisfaction, restored to SLT any of its property
         that Fuller was using in pursuance of Company business, excepting such
         property as Fuller shall need to serve the balance of his employ. Among
         such miscellaneous items already returned are a laser pointer, a
         dictaphone, a slide projector and carousels, and the keys to Building
         B; yet to be returned by execution of this Agreement is Fuller's Amex
         credit card.


<PAGE>



         e.  Use of Space at Park Drive.

         It is understood and agreed that SLT has assented to take off-lease,
         effective October 28, 1996, ca. 250 square feet from its Lease
         Agreement with CompuCraft Fabricators, Inc. for space at 104 Park
         Drive. It shall be Fuller's responsibility to negotiate a lease for
         such space directly with CompuCraft.

5. Entire Understanding and Release.

         This Property Agreement represents the parties' entire agreement and
         mutual release with respect to the subject matter hereof and claims
         related thereto. This Agreement supersedes all prior understandings or
         agreements, whether written or oral, including without limitation the
         Lease Agreement from Fuller Research Laboratories.

In witness whereof, the parties hereto have set their hands to this document.


Surgical Laser Technologies, Inc.

By: W.Keith Stoneback
    -----------------

Terry A. Fuller, Ph.D. for himself and Fuller Research Laboratories

Signature: Terry A. Fuller
           ---------------

Fuller Research Corporation

By: Terry A. Fuller, Predident & CEO
    --------------------------------


<PAGE>



              Exhibits A and B are not included in this submittal.