Document:

Exhibit 10.8

 

Summary of the Advanced Magnetics, Inc.

Director Compensation

 

Every non-employee Director will receive $4,000 per quarter for service on the Board of Directors.  A non-employee Director must attend at least 3 of 4 regularly scheduled meetings during the prior fiscal year to earn the full $4,000 quarterly fee.  If a non-employee Director attends less than 3 of the 4 regularly scheduled meetings in the prior fiscal year, this fee will be reduced for the current fiscal year by $1,000 for each missed meeting after the first missed meeting.  Any new non-employee Director will receive the full quarterly retainer fee during his or her first full year as a member of the Board of Directors.

 

In addition, each non-employee Director that is a member of the Audit Committee and/or the Compensation Committee will receive $1,000 for attendance in person or by phone at a meeting of such committees.  The Chairperson of each of the Audit Committee and the Compensation Committee shall each receive an additional annual retainer fee of $2,000.EXHIBIT 10.3

                     MARKETING, SALES AND SERVICES AGREEMENT

         This Marketing, Sales and Services Agreement ("Agreement") is entered
into this ___ day of _______200_ (the "Effective Date") by and between DOBI
MEDICAL INTERNATIONAL, INC., a Delaware corporation, with its principal place of
business located at 1200 MacArthur Blvd., Mahwah, NJ 07430, USA (hereinafter
referred to as "DOBI Medical") and _________________("Distributor"), with its
principal place of business located at_________________________________________.

         WHEREAS, DOBI Medical is in the business of developing, manufacturing
and distributing various medical products; accessories and supplies; and

         WHEREAS, Distributor is in the business of marketing, selling, and
servicing various medical services, accessories and supplies within the
Territory as specifically set forth in Schedule A; and

         WHEREAS, Distributor and DOBI Medical have agreed to enter into an
arrangement whereby DOBI Medical will appoint Distributor as its authorized
Distributor within the Territory for the purpose of marketing, selling and
servicing the single use products owned by DOBI Medical to be sold to
Distributor for resale to its customer end users, subject to the terms and
conditions set forth herein; and

NOW THEREFORE, in consideration of the mutual promises and representations made
between the parties in this Agreement, Distributor and DOBI Medical hereby agree
as follows:

1.  Definitions

         a) "Marks" include all words, symbols, insignia, devices, designs,
trade names, trademarks, service marks, or combinations thereof, owned or
licensed by DOBI Medical as identifying its products, software, documentation,
manuals, systems, devices, parts, and services.

         b) "Patents" include one or more patents issued or applications pending
in the United States Patent and Trademark Office or in any foreign jurisdiction
which are owned or licensed by DOBI Medical or an affiliate of DOBI Medical.

         c) "Products" include the single use medical imaging system and related
Software, installation, training, service and other manuals and documentation,
accessories and options, supplies, spare and replacement parts, and related DOBI
Medical's copyrights, Marks and Patents, as offered for sale or license by DOBI
Medical as a complement to mammography, and as set forth in Schedule B attached
hereto, and as may be amended from time to time by mutual written agreement.
DOBI Medical may, but is not obligated to develop any subsequent updates,
upgrades, improvements, other enhancements, new models incorporating or based
upon such technologies, features, and/or operating system. If it does, DOBI
Medical reserves the right to require additional licenses and charge different
fees with different discounts off published listed retail prices.

         d) "Purchase" shall have the meaning given to it at Section 3.c).

         e) "Services" include installation, hardware maintenance and repair,
support services, consulting, training, and all materials and other
documentation with respect to the Products sold by Distributor under the terms
of this Agreement.

         f) "Software" includes ComfortScan software embedded in the ComfortScan
system as fixed, unaltered, bundled and originally sold by DOBI Medical, and not
removable in normal operation, ii) the ComfortView CD reader software, iii)
related manuals and firmware, and iv) any subsequent releases or upgrades
associated with the Software as may be made available from time to time by DOBI
Medical.

         g) "Territory" means only the geographically bounded area(s) as
specifically set forth in attached Schedule A.

         h) "Unit" shall have the meaning given it at Section 3.a).

2.  Grant of Distributorship License

         a) Appointment and Scope. Provided Distributor is in compliance with
this Agreement, including without limitation, Distributor meeting the minimum
purchase requirement obligations per year as mutually agreed to and set forth in
Schedule D attached, DOBI Medical, subject to Section 3 a) below, hereby grants
a limited, non-transferable (subject to Section 2 d) non-exclusive license to
Distributor as DOBI Medical's authorized Distributor within the Territory with
respect to the promotion, marketing, sales and servicing of

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those single use Product(s) that are specifically set forth in Schedule B, (and
for no other products or services), for resale to its subdistributors, if any,
and customer end users within the Territory.

         b) Acceptance. Distributor understands that DOBI Medical has expended
and will continue to expend substantial efforts and funds to secure and retain
public goodwill toward DOBI Medical, the Products, Services, copyrights and
Marks, and Distributor recognizes the vital interest to DOBI Medical for it to
be well represented within the Territory in accordance with the terms and
conditions of this Agreement, including without limitation, the importance for
Distributor's customers to be trained in the proper functioning, use and
operation of the Products. Distributor hereby accepts its obligations under this
Agreement, and undertakes, at its expense, to use its best efforts to promote
the sales and servicing of the Products for resale to its customers end user
within the Territory in accordance with the terms and conditions of this
Agreement.

         c) Sublicense to Customers. For so long as Distributor is in compliance
with this Agreement, DOBI Medical hereby grants a limited, non-exclusive,
non-transferable license to sublicense to its customer end users the perpetual
right to the use of the Products in connection with the Software for the single
use and single user for which the Products are originally sold, as more fully
described in the Customer End User Agreement attached hereto a Schedule E.

         d) Sublicense to Subdistributors. For so long as Distributor is in
compliance with this Agreement, Distributor may also, after exercising due
diligence, grant sublicenses under this Agreement by appointing qualified
subdistributors within the Territory who in the judgment of Distributor are well
recognized and of good reputation, and who are experienced in selling medical
devices, provided that: i) any such sublicense shall be pursuant to and
consistent with all the terms and conditions of this Agreement, ii) DOBI Medical
has approved in writing the form of any sublicense agreement that Distributor
intends to utilize, which form must conform to this Agreement in all material
respects, and to which Distributor may not waive, alter, or change any provision
of the approved sublicense agreement without the prior written approval of DOBI
Medical, iii) Distributor shall at all times remain primarily liable to DOBI
Medical for all obligations it delegates hereunder to any such subdistributor,
including without limitation, any payment of fees, reporting, marketing, sales,
service, training, intellectual property rights and proper usage thereof,
minimum sales quotas, and certification obligations contained herein, iv) the
term of any sublicense agreement conforms in all respects to the remaining term
of this Agreement, and vi) Distributor sends a copy of any such sublicense
agreement, and any subsequent amendments or modifications, together with a
complete and accurate English translated copy, to DOBI Medical and a copy of any
notice of default to any sublicense. Distributor acknowledges and agrees that it
will, at its sole cost and expense, promptly and strictly enforce the terms and
conditions of any sublicense agreement against any such subdistributor, and
further, that any default not cured within the cure period of any its
sublicensees will be deemed a default of Distributor under this Agreement, and
subject to termination rights of DOBI Medical under Section 15 of this Agreement
in the same manner as if Distributor had defaulted. Nothing shall preclude DOBI
Medical's right to enforce any rights it may have in law or in equity directly
against any sublicensee of Distributor, however, nothing shall require DOBI
Medical to exhaust any legal or equitable remedies it may have against the
sublicensee before seeking legal recourse against Distributor.

3.       Distributor's Obligations

         a) Within thirty (30) days after the Effective Date of this Agreement,
Distributor will identify a clinical site within the territory, which must be
approved by DOBI Medical, whereby Distributor will promptly commence a market
study to meet Distributor's requirements to begin commercial sales within the
Territory.

         b) Within sixty (60) days after the Effective Date of this Agreement,
Distributor shall submit to DOBI Medical a marketing plan for the Territory.
Distributor agrees to use its best commercial efforts to actively promote the
sale of the Products within the Territory, including developing and executing a
comprehensive marketing plan, the use of direct marketing and media campaigns,
and attending and promoting the Products at trade shows and other conferences.
Distributor shall only use the Marks and promotional materials as approved by
DOBI Medical in advance (which approval shall not be unreasonably withheld or
delayed) of use and in accordance with DOBI Medical's policies. In carrying out
its obligations herein, Distributor agrees to exercise its best efforts to avoid
deceptive, misleading, or unethical practices that may be detrimental to the
goodwill, name, and reputation of DOBI Medical, its Products and Services, its
Patents, its Marks, and its other products and services. Distributor will not
make any representations, warranties, or guarantees to any customers or
prospective customers concerning the Products or anything else relating to DOBI
Medical that are inconsistent with or are in addition to those expressly set out
in writing by DOBI Medical.

         c) Minimum Purchase Requirements. Distributor shall purchase from DOBI
Medical and DOBI Medical shall have received payment in full in US currency for
at least the minimum number of Products on an annual base with quarterly
reviews, as mutually agreed to by the parties and set forth in Schedule D
attached. Time is of the essence, and, but for Distributor's promise and
representation to timely meet all the obligations set forth in this Section and
Schedule D, DOBI Medical would not have entered into this Agreement. "Purchase"
shall mean ordering the Products on or before the last day of such period with
payment made in full to DOBI Medical as mutually agreed to by the parties.
Purchases of Products made in excess of the minimum purchase requirement will be
credited towards the minimum purchase requirements for subsequent periods.
Failure to meet the minimum purchase requirement shall give rise to DOBI
Medical's right to terminate this Agreement pursuant to Section 15.a) (v) below.

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<PAGE>

         d) Account Administration and Reports. Upon execution of this
Agreement, Distributor agrees to designate an Account Manager responsible for
the oversight of this Agreement and for all administrative and non-technical
matters, including keeping DOBI Medical informed about Distributor's marketing
plan and execution, current market trends and conditions within the Territory,
customers' comments about the Products and Services, and major negotiations and
prospective sales possibilities. Distributor through its Account Manager shall
provide by electronic media quarterly, or more often if requested by DOBI
Medical all sales forecast and service/installation reports. Product Service and
installation reports shall include the customer installed base by customer name,
address, phone, fax and email numbers, contact person, Product identity (e.g.,
description and model number), site where installed, date installed, serial
number, and such other information as DOBI Medical may reasonably request, or as
may be made necessary by reason of any federal, state, local or foreign
governmental entity or industry requirement.

         e) Training. Distributor, at its own expense, shall designate a number
of its employees as reasonably determined by DOBI Medical and Distributor to
attend (i) DOBI Medical's applications training program, and, (ii) field service
technician program at a location(s) to be determined by DOBI Medical, taking
into consideration the region where Distributor is located. All classes and all
materials will be in English. All such designated trainees shall be reasonably
experienced in the sales and servicing of other medical imaging devices and must
attend and successfully complete the applicable training program to DOBI
Medical's reasonable satisfaction, including written, oral and skills testing,
in order to become certified. Distributor shall employ at least two certified
applications trainers and two certified field service technicians at all times,
and Distributor shall promptly replace any such employee whom DOBI Medical
determines in its sole discretion is no longer qualified with another certified
employee. Distributor is responsible for all compensation, insurance, travel and
living expenses of its employee trainees, plus, after the initial training
session for which there is no fee, the payment to DOBI Medical of $500 per
employee for the first day of training or portion thereof, and $300 per employee
for each additional day or portion thereof for all subsequent training sessions
after the initial training session. Distributor may train these persons using
DOBI Medical's approved training program upon DOBI certifying Distributor's
train the trainer program, and Distributor may certify such persons so long as
they satisfactorily pass DOBI Medical's standardized test.

                  (i) Distributor, at its own expense, shall arrange for its
certified trainers to attend additional DOBI Medical's training sessions in
order to obtain certification for new products and/or retain the competence
levels necessary to provide applications training to certify customer end users
of the Products in accordance with DOBI Medical's instructions, documents, and
policies. Distributor must document all applications training that it provides
to its customer end users and maintain a current list of certified customer
technicians. Distributor shall not permit any person or entity to use the
Product without assurances from the customer that its technicians will be and
remain certified in the use of the Product.

                  (ii) Distributor shall cause each trainee to execute and
maintain in effect DOBI Medical's confidentiality, non-disclosure and
non-compete agreement as a condition for certification, and provide an original
to DOBI Medical prior to such trainee commencing training. Distributor agrees to
promptly notify DOBI Medical of any threatened or actual material breach that it
becomes aware of, and to assist DOBI Medical, at DOBI Medical's expense, in
enforcing such agreement(s).

                  (iii) Prior to Distributor's installation of the Product at
the site and the training of its customers' technicians and physicians,
Distributor shall cause each of its customer end users to execute two (2)
original Customer End User Agreement on a form as attached hereto as Schedule E,
and promptly forward both originals to DOBI Medical for DOBI Medical's execution
and return one (1) original to the customer end user, with a copy to
Distributor. In the alternative, if DOBI Medical does the installation, it will
require the customer to sign the Customer End User Agreement, provide an
original to the customer end user, with a copy to Distributor. Distributor
agrees to promptly notify DOBI Medical of any threatened or actual material
breach by any customer end user or any other person or entity relating to the
subject matter of the Customer End User Agreement that it becomes aware of, and
to cooperate with DOBI Medical in enforcing any violations or threatened
violations.

         f) Facilities. Distributor shall maintain adequate facilities,
communications services and at least one complete and operational demonstration
Product along with a reasonable inventory of common replacement parts, so as to
allow for the prompt delivery and servicing of its customers, as well as
sufficient personnel and promotional and training materials to at all times
efficiently operate the business of marketing, selling and servicing the
Products and otherwise fulfilling the obligations under this Agreement.
Distributor shall keep its personnel who have a need to know current and fully
informed on the DOBI Medical Products, their installation and training,
operation, specifications, maintenance and repair, and applications. All
Services provided on DOBI Medical Products must be in accordance with DOBI
Medical's instructions, documents, and policies. DOBI Medical shall have the
right upon prior notice and at reasonable times to audit Distributor's
facilities, employees, books and records relating to compliance with this
Agreement.

         g) Quality Control. Distributor agrees to provide the Services to each
of its customers with respect to the Products in a good and workmanlike manner
and in compliance with all DOBI Medical specifications, service manuals and
other publications. Only a certified field service technician with satisfactory
basic technical skills and training and customer complaint handling in DOBI
Medical's Products, policies and procedures, and duly certified by DOBI Medical,
is permitted and authorized to install and service the Products. Distributor
shall use only authorized, original DOBI Medical replacement parts, and shall
cause each field service technician to possess all the tools and then current
technical manuals and updates in order to service and maintain the Products in
accordance with DOBI Medical's specification, policies, and procedures.
Distributor shall keep detailed, accurate, and complete documentation and
records of all field

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installation and service calls, and upon request, forward copies thereof to DOBI
Medical. All service visits shall be recorded in accordance with all applicable
legal and regulatory requirements and DOBI Medical's instructions, documents and
policies. At a minimum, all records shall include the name of the customer,
location and model number of the Product being serviced, date of Service, name
of the field service technician servicing the Product, services performed, and
test and inspection data. All service reports shall regularly be reviewed by
Distributor for quality assurance, potential reportable events, and systemic and
safety concerns, and Distributor shall promptly send a report of each such
incident to DOBI Medical. Distributor shall promptly implement any programs,
modifications or changes required by any technical bulletins, field change
notices, and safety notices it receives from DOBI Medical.

         h) Product Approval/Registration. As of the Effective Date, DOBI
Medical is ISO 9001:2000 and ISO 13485 certified, has received CE Marking for
the Product, and is in the process of seeking approval for the Product by the
United States Food and Drug Administration ("FDA") for sale in the United
States. However, Distributor understands that as of the Effective Date, no DOBI
Medical Product is currently approved by the FDA, and DOBI Medical does not
guarantee that the Product ever will be approved, and shall not be legally bound
to receive approval, by the FDA or any other federal or state agency in the
United States or by any governmental authority of any other jurisdiction,
foreign or domestic, or by any industry practice or certification entity.
Therefore, Distributor agrees not to sell any Product in or for use in any
jurisdiction if such jurisdiction requires the licensing or other approval of
the Product for sale or use in such jurisdiction, unless and until such Product
has been duly approved and/or registered for sale and use in such jurisdiction.

         i) Distributor agrees, at its expense, on behalf of and in the name of
DOBI Medical, to do all things necessary and reasonable to obtain approval
and/or registration of DOBI Medical's Product from the appropriate governmental
entities within the Territory as soon as possible. Certified copies of all
governmental approvals and registrations shall be promptly sent to DOBI Medical.
Further, if requested in writing by DOBI Medical, Distributor agrees to fully
cooperate and exercise best efforts to cause its subdistributors and its
customer end users to cooperate with DOBI Medical, at DOBI Medical's direction
and expense, to assist DOBI Medical in obtaining and maintaining any such
approvals, including providing DOBI Medical with proper documentation of
Distributor's handling of the Product, to assure that DOBI Medical's Products in
Distributor's possession comply with all orders, rules and regulations,
including without limitation, those issued by the FDA.

         j) Distributor further agrees to complete and submit to DOBI Medical,
on a quarterly basis, a Product and Service installation report for each DOBI
Medical Product installed during the previous quarter as required by the U.S.
Medical Device Directive. Such form will be supplied by DOBI Medical, and
Distributor hereby agrees to timely complete and submit such form(s) and any
other additional information or additional forms as may hereafter be required by
the U.S. Medical Device Directive, and any amendment thereto or successor
regulations, or as may be required by the FDA, or any other domestic or foreign
governmental entity.

4.   DOBI Medical's Obligations

         a) Marketing Plan. Within sixty (60) days after the Effective Date of
  this Agreement, DOBI Medical and Distributor will agree to a marketing plan
  for selling the Products within the Territory, which plan shall include DOBI
  Medical making available a marketing and sales training program to
  Distributor's sales team as soon as possible as mutually agreed to by the
  parties at no additional cost to Distributor other than as set forth in
  Section 3.d).

         b) Investigational Unit. As set forth in 3.a) above, upon
  identification of the approved clinical site for the marketing or clinical
  study, DOBI will ship Ex Works ("EXW") Mahwah, NJ, USA to Distributor, at Net
  Price to Distributor as set forth in Schedule D pursuant to the sales and
  payment terms set forth in 5.b), an investigational unit to be used for the
  study. Upon completion of the study, DOBI Medical will provide to Distributor
  any new commercially available Software releases to install into the
  investigational unit for subsequent sale of the ComfortScan system within the
  Territory describe in Schedule A.

         c) DOBI agrees to deliver the systems at the earliest time possible in
  accordance with manufacturing schedules and backlogs. DOBI Medical shall
  provide an initial support schedule and contacts for all sales, technical,
  Product and Service matters, and, upon consultation with Distributor, will
  determine the level of continued marketing, sales, training and technical
  support as deemed necessary and reasonable by DOBI Medical. DOBI Medical will
  maintain sufficient quantities of spare parts within the Territory to ensure
  reasonable response to Distributor's service requirements. Inventory levels
  will be based on local install base, component reliability, and expected lead
  times for restocking. DOBI Medical will regularly review parts inventories and
  usage history on a global basis and make adjustments accordingly.

         d) Training. DOBI Medical shall make available to Distributor in
  English, at such time and place as designated by DOBI Medical, its training
  programs for certifying Distributor's field service technicians and
  applications trainers in order to assist Distributor in organizing and
  developing its applications training program for its customer end users to
  certify its technicians in the use and operation of the Product. Subsequent
  support for training will be made available as deemed necessary and reasonable
  by DOBI Medical in accordance with Section 3. e) above and 4. e) below. DOBI
  Medical shall provide Distributor with current technical bulletins, Field
  change notices, and safety notices affecting Distributor's installations of
  Products and replacement parts.

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         e) Promotional Materials. DOBI Medical shall provide Distributor with
  reasonable quantities of promotional materials in English to assist in
  Distributor's marketing efforts. Additional materials can be purchased by the
  Distributor at DOBI Medical's then current costs plus shipping and any taxes.
  All promotional materials and other documentation and manuals relating to the
  Products and Services are in English. Any translations are at the sole cost of
  Distributor and must conform in all material respects with the English
  versions, including proper and conspicuous use of DOBI Medical's Marks and
  Patent and copyright notices, and be duly certified by a certified translator.

         f) Second Line Support. DOBI Medical shall provide at no additional
  cost ongoing second line support as reasonably requested by Distributor via
  electronic media between the hours of 9:00 AM and 5:00 PM, Eastern Time, USA,
  Monday through Friday (except US holidays). DOBI Medical will use commercially
  reasonable efforts to respond to Distributor's requests in a manner and time
  frame which are reasonably responsive considering the nature and severity of
  the concerns which gave rise to such request.

         g) DOBI Medical will designate maintenance and support personnel to
  assist Distributor's first line support personnel in providing maintenance and
  support services. DOBI Medical shall provide reasonable access to and
  assistance of its technical, sales, and service personnel as reasonably
  appropriate under the circumstances at no additional charge.

         h) Subsequent Support/Releases/Upgrades. Any subsequent support
  services, including without limitation, technical support, software or
  hardware customization or training services requested by Distributor which are
  beyond the reasonable scope of this Agreement or are not specifically required
  to be performed by DOBI Medical under this Agreement, are subject to the
  availability of DOBI Medical's clinical and technical staff, and shall be
  billed at DOBI Medical's then current time and material rates plus
  out-of-pocket expenses, and subject to such other terms and conditions which
  may be agreed upon in writing by the parties before such services are
  performed. Further, DOBI Medical reserves the right to require additional
  licenses and charge additional fees for any new (as determined in the sole
  discretion of DOBI Medical) releases, upgrades or additions to the Product,
  Software, or any new options, accessories, supplies, or new functionality
  related to the ComfortScan system .

5.   Terms and Conditions of Sales to Distributor

         a) So long as Distributor is in compliance with this Agreement, DOBI
Medical agrees to sell to Distributor the Products and related replacement parts
described in Schedule B of this Agreement at the then published, suggested,
retail net prices, delivery EXW, Mahwah, New Jersey, USA, or such other place of
manufacture, in effect on the date of acceptance by DOBI Medical of
Distributor's order, less the applicable discounts as set forth in Schedule D.
Payments must be in full and in available U.S. currency. Prices are valid for
all purchase orders issued by Distributor only if accepted in writing by DOBI
Medical within ten (10) business days of its receipt of an order. Failure to
issue a timely written acceptance or rejection shall be deemed an acceptance of
the order in issue. DOBI Medical shall inform Distributor giving at least 90
days notice prior to effecting any price changes to the Products, and at least
30 days notice as to replacement parts. All purchase orders accepted by DOBI
Medical are final. DOBI Medical will NOT allow the return of Products, except
for warranty claims approved by DOBI Medical in accordance with this Agreement.

         b) All fees are due in full and in available U.S. currency within
thirty (30) days of the date of DOBI Medical's invoice to Distributor. Upon DOBI
Medical's acceptance of each Distributor purchase order, Distributor shall
thereupon provide DOBI with an irrevocable, documentary letter of credit in a
form to DOBI Medical's reasonable satisfaction from a first class, global bank
having an affiliate in New York, NY, for the value of the purchase order.
Payment terms as between Distributor and its customers are the sole
responsibility of Distributor and failure of a customer to pay Distributor shall
in no manner relieve Distributor from payment and receipt by DOBI Medical of the
full purchase price when due pursuant to the terms of this Agreement. DOBI
Medical has the right to set off and apply any amounts paid by Distributor to
past due accounts. However, Distributor bears the entire risk of loss upon DOBI
Medical's delivery of the Products to the shipper EXW, Mahwah, NJ, USA, or such
other place of manufacturer.

         c) All past due amounts are subject to a late charge equal to one and
one-half percent (1 1/2%) per month or the maximum amount allowed by law,
whichever is less. Distributor shall be liable for all costs, including but not
limited to, reasonable attorney's fees, incurred by DOBI Medical in collecting
any past due amounts. Unless exempted, evidence of which must be provided to
DOBI Medical, Distributor shall be obligated to determine and timely pay any
applicable foreign and domestic federal, state, local and other taxes or other
charges, penalties, interest thereon (other than taxes on income payable by DOBI
Medical) applicable to the Products, Services and the transactions resulting
from this Agreement, as well as any shipping and handling fees. (If no taxes are
assessed, Distributor is solely responsible to self-assess and pay any taxes
that may be due as a result of its purchase of the Products, Services, Marks,
Patents and transactions resulting from this Agreement). Except as otherwise
provided herein, each party shall be responsible for all taxes, tariffs, duties
and other governmental charges, however designated, levied or based, on its
sale, purchase and use of the other party's Products and Services or the charges
for such Products and Services, including without limitation, sales and use
charges that may now or hereafter be imposed.

         d) Except as may by specifically authorized by DOBI Medical pursuant to
this Agreement, all payments made by Distributor hereunder are non-refundable,
and no partial payment or acceptance by DOBI Medical of any partial payment
shall be treated as anything other than as a partial payment on account without
prejudice to DOBI Medical. Distributor agrees to pay DOBI Medical on demand any
and all costs and expenses in collecting any money owed by Distributor. These
costs and expenses may include, but are not limited to,

                                  Page 5 of 22
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costs and commissions due a collection agency, reasonable attorneys' fees
(including any attorneys' fees incurred in bankruptcy or like proceedings),
court costs, expert witness fees, any witnesses' reasonable travel and living
costs, discovery costs and any reasonable attorneys' fees and costs for appeals,
together with the maximum legally allowable interest charges computed from the
date the obligation was first past due.

         e) DOBI Medical and Distributor, as the case maybe, shall cause all
Product shipments to be made in customized containers capable of withstanding
damage to the Product contained therein. All such containers shall be properly
labeled and made to accommodate any U.S. Customs or other government
inspections, including but not limited to, the use of heavy screws and bolts
(not nails) to permit the reasonable re-closing after a Customs inspection. DOBI
Medical and Distributor, as the case may be, shall assure any vehicle transport
of Distributor's Product orders is equipped with air-ride suspension or other
similar equipment to avoid Product damage. DOBI Medical or Distributor, as the
case maybe, may request that a specific freight carrier be used, and such
request will give such request due consideration, but neither party is under any
obligation to use such freight carrier.

6.       Limited Warranty

         a) Without prejudice to any local law, DOBI Medical represents and
warrants to the Distributor and to its original customer end users that the
Products or parts shall be free from defects in material or manufacturing,
except for minor errors that do not materially affect functionality or
performance, and shall conform substantially to applicable specifications in
effect as of the date of shipment EXW Mahwah, NJ, USA of the order by DOBI
Medical of the Product or part when properly installed by a Distributor's field
technician certified by DOBI Medical, and when subjected to normal, proper and
intended usage and operation by a technician of customer end user who has been
certified by Distributor. Products and parts manufactured by parties other than
DOBI Medical, where DOBI Medical acts solely as Distributor or reseller, will
carry their respective manufacturers' warranties.

         b) DOBI Medical Products shall be warranted for a period of 12 months
from the time of original installation, the date of which will be determined by
a completed, returned warranty card, which must be received by DOBI Medical at
its corporate office, attention: Service Department, within 30 days of Product
installation. If the warranty card is not so timely received by DOBI Medical,
then the warranty shall take effect 12 months from the date of shipment EXW
Mahwah, NJ, USA by DOBI Medical. In no event shall the warranty exceed 15 months
from the date of shipment EXW Mahwah, NJ, USA from DOBI Medical. Repair and
replacement parts will be warranted for 90 days from installation or 12 months
from shipment, whichever is sooner. Any component furnished without charge
during the warranty period to correct a warranty failure shall be warranted only
to the extent of the unexpired term of the warranty of the original Product or
replacement part. Warranty consideration will be given only for defective DOBI
Medical products properly returned to the factory in accordance with DOBI
Medical's warranty return procedure. DOBI Medical will act as the sole judge in
determining whether new products or parts may be defective by reason of
manufacture.

         c) In the event that a documented and reproducible flaw iin the
Product(s) inconsistent with this warranty is discoveredthat significantly
impacts system performance and/or creates a safety hazard for patient or
operators, DOBI Medical shall use commercially reasonable efforts to correct
such flaw in a timely manner. At DOBI Medical's option and at no cost to or
expense to Distributor or customer end user, DOBI Medical shall correct any such
failure by (i) repairing, adjusting, or replacing any defective or
non-conforming Products, or parts, (ii) by making available any necessary
repaired or replacement parts or assemblies, or (iii) by furnishing either new
or exchanged replacement parts or assemblies. All such returned Products and
parts shall become the property of DOBI Medical if determined by DOBI Medical to
be defective by reason of material or manufacture. DOBI Medical will bear the
cost of shipping such defective Product back to DOBI Medical.

THIS LIMITED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR USE FOR A PARTICULAR PURPOSE. DOBI MEDICAL'S WARRANTY IS EXCLUSIVE
OF, WITHOUT LIMITATION, THE FOLLOWING:

     o   Failure of Distributor or customer end user to prepare the site or
         provide power requirements or operating environmental conditions in
         compliance with any applicable instructions or recommendations of DOBI
         Medical.

     o   Failure of Distributor or customer end user to provide the proper
         incoming power required to support the Products in accordance with the
         recommendation of DOBI Medical.

     o   Any modification of Product performed by a party other than DOBI
         Medical or an authorized Distributor or a technician certified by DOBI
         Medical.

     o Combining products or furnishing services which have not been authorized
     in publications by DOBI Medical and are deemed by DOBI Medical to be
     incompatible with the Products.

                                  Page 6 of 22
<PAGE>

     o   Improper or extraordinary use of the Product, improper maintenance of
         the Product, or failure to comply with any applicable instructions or
         recommendations of DOBI Medical.

     o   Misuse, tampering, or negligent storage/handling of the Product by
         Distributor or customer end users, its employees, agents, or
         contractors.

o Acts of civil
     or military authority, fires, floods, power failures or electrical power
     surges, strikes or other labor disturbances, war, acts of terrorism, riots
     or other causes beyond the reasonable control of DOBI Medical.

     o   Installation, troubleshooting, or repair services are not included in
         this warranty, and are provided solely by the Distributor and a
         certified technician.

     o   Any installation, maintenance, repair, service, relocation or
         alteration to or of, or any other tampering with the Product performed
         by any person or entity other than DOBI Medical, Distributor, or a DOBI
         Medical certified technician without the prior written approval of DOBI
         Medical shall immediately void and cancel all warranties with respect
         to the Product.

     o   Products and any portions thereof containing any third party software
         or hardware manufactured other than by DOBI Medical, whether sold or
         given to Distributor or customer end user hereunder, are provided "AS
         IS", and DOBI Medical makes no representations or warranties in
         connection thereto. Any warranties that may be associated with any such
         third party items are the sole obligations of such third parties and
         shall pass directly through to the customer end user, and are not the
         obligation of DOBI Medical.

     o   Software maintenance after the applicable warranty period to the end
         user has expired, unless there is a separate software maintenance
         written agreement in effect between the end user and DOBI Medical.

     o   Any Products or parts damaged in transit. It is the sole responsibility
         of Distributor to adequately insure such freight and examine all
         cartons and crates carefully at time of delivery. If damage is
         apparent, Distributor should make a notation on the delivery receipt,
         request an inspection by the freight carrier, and if applicable, file
         appropriate claim(s).

7.       Limitations of Liability

         a) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOSS OF
PROFIT, OR FOR SPECIAL OR CONSEQUENTIAL DAMAGES, OR FOR ANY OTHER INDIRECT
DAMAGES SUCH AS, BUT NOT LIMITED TO, EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF IT
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NEITHER PARTY SHALL NOT BE
LIABLE TO THE OTHER FOR ANY CORRUPTION, ANY DOWN TIME OF THE PRODUCTS OR
SERVICES OR SUSPENSION OF THE SERVICES OR USE OF THE PRODUCTS, OR FOR ANY LOSS
OR MISTRANSMISSION OF PATIENT DATA, OR FOR THE SECURITY OF PATIENT DATA, OR FOR
ANY MEDICAL OR PROFESSIONAL MALPRACTICE CLAIMS. IN NO EVENT WILL EITHER PARTY BE
LIABLE TO THE OTHER FOR LOSS OR DAMAGES RESULTING DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, FROM INTENTIONAL OR NEGLIGENCE ACTS, WILLFUL MISCONDUCT,
ERRORS, OMISSIONS, INSOLVENCY OR OTHER FAULT OR CIRCUMSTANCES ATTRIBUTABLE TO
ANY THIRD PARTY.

         b) DISTRIBUTOR'S AND ANY CUSTOMER END-USER'S SOLE AND EXCLUSIVE REMEDY
FOR ANY BREACH OF WARRANTY OR REPRESENTATION BY DOBI MEDICAL CONCERNING ANY
PRODUCTS AND SERVICES SHALL BE ONLY UPON WRITTEN REQUEST OF DISTRIBUTOR OR
CUSTOMER END-USER AND ONLY IF RECEIVED BY DOBI MEDICAL WITHIN TWELVE (12) MONTHS
OF SUCH ALLEGED BREACH. IN ANY EVENT, DOBI MEDICAL'S CUMULATIVE LIABILITY TO
DISTRIBUTOR AND ITS CUSTOMER END-USERS FOR ANY AND ALL CLAIMS RELATING TO THE
USE OF OR THE INABILITY TO USE THE PRODUCTS AND SERVICES SHALL NOT EXCEED THE
TOTAL AMOUNT OF THE FEES PAID OR OWED BY DISTRIBUTOR AND ITS CUSTOMER END-USER
FOR THE PRODUCTS AND SERVICES, WHETHER BASED ON CONTRACT, TORT OR OTHERWISE.

         c) The foregoing limitations of liability represents the allocation of
risk of failure between the parties as reflected in the pricing hereunder and is
an essential element of the basis of the bargain between the parties.

                                  Page 7 of 22
<PAGE>

8.   Non-Compete and Non-Solicitation

         a) Nothing in this Agreement shall prohibit DOBI Medical from itself or
licensing others to market, sell and service the Products and any other products
and services, or use the copyrights and Marks outside the Territory after this
Agreement terminates or expires. DOBI Medical reserves to itself all rights to
market, sell, use and license the Products and Services, Patents, the Marks, and
any other products and services, other than those expressly granted to
Distributor under this Agreement.

         b) Except for the manufacturers, Distributor and developers
specifically identified in Schedule C attached hereto, during the term of this
Agreement and for a 180 days after the effective date of its termination or
expiration, Distributor shall not itself offer for sale or represent any
manufacturers, Distributor's or developers of products or other systems or
devices with non-ionizing radiation hardware and software configurations of
optical imaging devices which compete with the Products and Services, including
but not limited to, promoting, marketing, distributing, selling, leasing,
renting or servicing any such competing products and services. DOBI may, in its
sole discretion, unilaterally amend Schedule C from time to time to 1) include
manufacturers, developers and Distributors of diagnostic, screening or treatment
non-ionizing radiation medical imaging systems which DOBI Medical deems, in its
reasonable judgment, to be competitive with the Products and Services covered by
this Agreement or other competing systems, devices, products and services which
DOBI Medical offers for sale; and 2) take into account mergers and acquisitions
among competitors or which create new competitors.

         c) It is understood and agreed that DOBI Medical has expended
substantial time and money in developing and marketing the Products, and that
DOBI Medical has the right to protect and exploit the proprietary information
that is being conveyed to Distributor. Therefore, for a period of 180 days after
the effective date of its termination or expiration, Distributor will not
solicit, directly or indirectly, or encourage anyone to solicit, directly or
indirectly, any customer end-user, whether within the Territory or outside the
Territory, to terminate or replace the Products or Services, or otherwise affect
any end-user's use of the Products or Services in any manner including, without
limitation, promoting any competing product or service. Further, each party
agrees that it shall not directly or indirectly through others, solicit for
employment or hire any employee of the other party during the term of this
Agreement. Former employees shall not be solicited or hired by the other party
for a period of six (6) months after such employee's termination.

         d) If any part of this restriction is found to be unreasonable in time
or distance by a court of competent jurisdiction, each unit shall be deemed
separate and may be reduced by appropriate court order as the court deems
reasonable. If a party files suit to enforce this Section, the time periods
shall begin to run upon entry of a final, non-appealable judgment. The parties
agree that breach of this Section would cause irreparable injury to the other
party that it would be without an adequate remedy at law. Accordingly, the party
seeking the injunction shall be entitled to obtain injunctive relief (without
posting any bond or security), in addition to any other legal right or equitable
remedies it may have.

         e) Distributor hereby confirms that neither it nor any of its
subsidiaries or affiliates is bound by the terms of any agreement with any third
party which restricts in any way its engagement as a Distributor of DOBI Medical
under this Agreement. Distributor represents to the DOBI Medical that the
execution of this Agreement and the performance of its obligations hereunder
will not violate any obligations Distributor or its subsidiaries or affiliates
may have to any third party. Distributor will not disclose or make use of any
information in violation of any agreements with or rights of any third party.

9.   Confidential Information

         a) Distributor acknowledges that it may acquire certain non-public
knowledge, information, materials, and other trade secrets of DOBI Medical, in
whole or in part, concerning DOBI Medical's business, Products and Services, and
other of its products and services, all of which are proprietary and entirely
owned by DOBI Medical. "Confidential Information" means nonpublic information of
DOBI Medical that should reasonably be understood by the Distributor, because of
legends or other markings, the circumstances of disclosure, or the nature of the
information itself, to be proprietary and confidential to DOBI Medical, an
affiliate of the DOBI Medical or a third party, and includes, without
limitation, information relating to DOBI Medical's, its affiliate's or a third
party's business (including, without limitation, proposals, business plans,
financial information, pricing and discounts, customer, prospect and supplier
lists and information, personnel information and contract information),
properties, methods of operation, Software (including, without limitation,
source code, specifications, data, works in process, alpha and beta versions,
design processes and documentation, and other software of DOBI Medical),
manufacturing and design processes and documentation, trade secrets, inventions,
discoveries, know-how and other intellectual property. Confidential Information
also includes such non-public information that was disclosed by the DOBI Medical
to Distributor prior to the date hereof in connection with the business purpose
hereof, as well as information currently provided and to be provided during the
term of this Agreement. Confidential Information may be disclosed in written or
other tangible form (including on magnetic or optical media) or by electronic,
oral, visual or other means.

         b) Confidential Information shall not include information that (i) at
any time becomes a matter of public knowledge without any fault of the
Distributor; (ii) is at any time lawfully received by the Distributor from a
third party under circumstances permitting its disclosure to others; (iii) is
independently developed by the Distributor as evidenced by the Distributor's own
records; (iv) was in Distributor's possession free of any obligation of
confidence at the time of DOBI Medical's communication thereof to Distributor;
and (v) is later published or generally disclosed or furnished to the public by
DOBI Medical. Distributor shall bear the burden of showing that any of the
foregoing exclusions applies to any information or materials.

                                  Page 8 of 22
<PAGE>

         c) Distributor understands and acknowledges that such Confidential
Information disclosed to it has been developed or obtained by DOBI Medical by
the investment of significant time, effort, and expense, and that such
Confidential Information provides DOBI Medical with a significant competitive
advantage in its business. Therefore, Distributor hereby covenants not to
misappropriate or use the Confidential Information for any reason other than as
specified in this Agreement, including without limitation, for personal or
commercial gain, for a period of six (6) years from the date of disclosure. The
foregoing notwithstanding, any Confidential Information that is designated as a
"trade secret" shall be kept confidential by the Distributor for as long as it
remains a trade secret under New York law.

         d) Except as set forth in this Agreement, without the clear and express
prior written consent of a duly authorized representative of the DOBI Medical,
Distributor agrees to hold in strict confidence and not to disclose or reveal
Confidential Information received hereunder to any person except for
Distributor's employees, directors, counsel, sub Distributors, and other
authorized agents and advisors (collectively "Representatives") who are required
to have such Confidential Information in order to perform their functions in
connection with the limited purpose of this Agreement. Each permitted
Representative to whom Confidential Information is disclosed shall adhere to all
aspects of this Agreement. Distributor further agrees not to use any of the
Confidential Information received hereunder except for the purposes set forth in
this Agreement. Further, the parties understand that each other's Confidential
Information may be considered material, non-public information under U.S.
federal and state securities laws and either party could be found in violation
thereof if it takes advantage of such information by (i) trading in the other
party's or any other party's stock, or (ii) furnishing information to others in
connection with the trading of such stock.

         e) In the event Distributor or anyone to whom Distributor supplies the
Confidential Information receives a request under the terms of a subpoena or
order issued by, or in conjunction with litigation pending with a court of
competent jurisdiction or a governmental body to disclose all or any part of the
Confidential Information, Distributor agrees, to the extent lawful, to (i)
immediately notify DOBI Medical of the existence, terms and circumstances
surrounding such a request; (ii) consult with DOBI Medical on the advisability
of taking legally available steps to resist or narrow such request; (iii) if
disclosure of such Confidential Information is required, furnish only that
portion of the Confidential Information which, in the opinion of counsel,
Distributor is required to disclose; and (iv) use its best efforts to permit
DOBI Medical at its expense to obtain an order or other reliable assurance that
confidential treatment will be accorded to such portion of the disclosed
Confidential Information which DOBI Medical so designates.

         f) All Confidential Information of DOBI Medical and any Derivatives
(defined below) thereof whether created by such DOBI Medical or Distributor or
its Representatives, shall remain the property of DOBI Medical, and no license
or other rights to such DOBI Medical's Confidential Information or Derivatives
is granted or implied hereby. For purposes of this Agreement, "Derivatives"
shall mean: (i) for copyrightable or copyrighted material, any translation,
abridgment, revision or other form in which an existing work may be recast,
transformed or adapted; (ii for patentable or patented material, any improvement
thereon; and (iii)for material which is protected by trade secret, any new
material derived from such existing trade secret material, including new
material which may be protected under copyright, patent and/or trade secret
laws. To the fullest extent permitted by law, Distributor agrees, and will cause
its Representatives to agree, to convey to DOBI Medical or its nominee the
entire right, title, and interest, domestic and/or foreign, which any such party
may have, or a lesser interest therein. Distributor agrees, and will cause its
Representatives to agree, to promptly, upon DOBI Medical's request, execute all
applications for patents, copyrights, assignments and other appropriate
documents, and to perform all acts and to do all things necessary and
appropriate to carry out the intent of this Section, whether or not such person
continues in his capacity as Distributor or Representative. All materials
(including, without limitation, documents, drawings, models, apparatus,
sketches, designs, lists and all other tangible media of expression) furnished
by DOBI Medical to Distributor and which are designated in writing to be the
property of such DOBI Medical, shall remain the property of such DOBI Medical.
At DOBI Medical's request and no later than five (5) days after such request,
Distributor shall promptly destroy or deliver to such DOBI Medical, at such DOBI
Medical's option, (a) all materials furnished to Distributor by such DOBI
Medical, (b) all tangible media of expression in such Distributor's possession
or control to the extent that such tangible media incorporate any of such DOBI
Medical's Confidential Information, and (c)written certification of
Distributor's compliance with such Distributor's obligations under this
sentence.

10.  Alterations

           a) Distributor agrees itself or through any Representative or
other agent or consultant not to copy, alter, modify or otherwise change the
Product(s) sold or licensed hereunder in any way, and agrees not to reverse
engineer, disassemble, reverse assemble, decompile, or otherwise attempt to
derive source code from the Software or otherwise attempt to design around the
Product and Software, or contest the validity of any Patent or Mark owned or
applied for by DOBI Medical or its authorized affiliates.

         b) Distributor agrees not to remove or cover any DOBI Medical Marks,
trade name, or logos, or Patent or copyright notices, and not repaint or make
other changes to such Products without the prior express written permission of
DOBI Medical, which may be withheld by DOBI Medical in its sole discretion.

11.      Insurance

         a) Both parties shall procure and maintain in full force and effect
during the Term of this Agreement, at its own expense, comprehensive commercial
general and product liability insurance covering occurrences within the
Territory. Said insurance policies shall

                                  Page 9 of 22
<PAGE>

be written on an occurrence basis and shall be with a top rated insurance
carrier(s) reasonably acceptable to the other party, and shall provide coverage
of at least $500,000 US Dollars ($500,000), or equivalent local currency, per
occurrence. Each policy shall name the other party (including its officers,
directors, employees, affiliates, subdistributors, and agents) as an additional
named insured, with all such coverage being primary for such party. Upon
request, each party shall provide the other with certificates of insurance from
its insurance carrier(s) evidencing that such insurance is in effect. The
certificates must state that the insurance cannot be cancelled or changed
without at least thirty (30) days written notice to the other.

12.  Mutual Indemnification

         a) The following indemnification obligations shall apply with respect
to this Agreement, subject to the limitations set forth herein:

                  (i) DOBI Medical hereby agrees to defend, indemnify, save and
         hold Distributor harmless from and against any loss, claim, demand,
         action or expense (including attorneys' fees) arising out of any third
         party claims asserted against Distributor to the extent that such a
         claim is based upon a breach of any of DOBI Medical's obligations under
         this Agreement, or pertaining to the infringement of copyrights,
         trademarks, or Patents arising from Distributor's use, as authorized by
         DOBI Medical, of Products and Services, Patents and Marks, owned or
         licensed and supplied by DOBI Medical under this Agreement, except to
         the extent that the claim is causally connected to the acts, omissions
         or misrepresentations of the Distributor, its employees,
         representatives, officers, directors and agents, or those of its
         customer end users

                  (ii) Distributor hereby agrees to indemnify, save and hold
         DOBI Medical harmless from and against any loss, claim, demand, action
         or expense (including attorneys' fees) arising from or related to the
         negligent acts or omissions and the intentional misconduct of the
         Distributor, or arising out of any third party claims asserted against
         DOBI Medical. DOBI Medical reserves the right to undertake and assume
         the entire defense of any such action alleged against it, subject to
         the other terms and conditions of this Section.

         b) The indemnification obligations contained in this Section shall be
conditioned upon the indemnifying party's receiving:

                  (i) prompt written notice of any loss, claim, demand, action
                  or expense for which indemnification is sought, and (ii) full
                  control of the defense or settlement, and (iii) reasonable
                  cooperation in the defense of such claim, demand, or action by
                  the party seeking indemnification. The party seeking
                  indemnification shall have the right to participate in the
                  defense at its option and expense.

         c) In the event that DOBI Medical's Products, Services, Patents or
Marks become, or in DOBI Medical's sole opinion, likely to become the subject of
a claim of infringement, DOBI Medical shall have the right, at its option and
expense, either to (i) procure for Distributor and its customer end users the
right to continue using the Products, Services, Patents or Marks, or (ii)
replace or modify the same so that they become non-infringing and functionally
equivalent, or (iii) upon failure of (i) and (ii) above, terminate, without any
obligations, Distributor's and its customer end users use of the Products and
Services, and return the purchase price of same.

13.  DOBI Medical Copyrights/Marks/Patents

         a) Distributor acknowledges that all rights in any of the copyrights,
Patents and Marks associated with the business of DOBI Medical (i.e.,
trademarks, service marks, slogans, logos, designs and other similar means of
distinction), including all goodwill pertaining thereto, shall be the sole
property of DOBI Medical. Distributor may use and display such Marks and Patent
and copyright notices only in the manner and for the purpose authorized by DOBI
Medical, and only during the term of this Agreement. DOBI Medical reserves the
right to add to, change or discontinue the use of any of the copyrights, Marks
or Patents, on a selective or general basis, at any time, and to order
Distributor to change all or some items bearing the Marks to the new Marks
within a reasonable period of time without any liability to DOBI Medical.
Distributor shall not use any trademark or trade name of DOBI Medical in any
corporate, partnership, or business name without DOBI Medical's prior written
consent. In connection with fulfilling its obligations under this Agreement,
Distributor must disclose to its potential customers and the general public that
it is an authorized Distributor and licensee of DOBI Medical Systems, Inc.

         b) Distributor agrees that nothing in this Agreement gives it any
right, title or interest in the copyrights, Patents or the Marks (except the
right to use the Marks in accordance with this Agreement), that the copyrights,
Patents and the Marks are the sole property of DOBI Medical and its affiliates,
that Distributor shall not directly or indirectly contest the validity of the
copyrights, Patents and the Marks, or ownership of the copyrights, Patents and
the Marks, or DOBI Medical's right to license the copyrights, Patents and the
Marks, and that any and all uses by Distributor of the copyrights, Patents and
the Marks, and the goodwill arising there from, shall inure solely and
exclusively to the benefit of DOBI Medical. Further, upon the termination of
this Agreement, Distributor shall cease all further use in its business of
trademarks or trade names identical or similar or confusingly similar to "DOBI
Medical" or any others of its Marks.

         c) DOBI Medical will provide all Products sold to Distributor with
instruction manuals and critical caution, warning and packaging labels, written
in English language. With regards to changing equipment silk screens and panels
with translated copy, DOBI Medical and Distributor will discuss and mutually
agree to these in writing on a case-by-case basis. In the event that the
original labeling is

                                 Page 10 of 22
<PAGE>

not lawful for use in the Territory or does not comply with all legal
requirements for labeling material of the classification(s) into which the
Product fit, Distributor will advise DOBI Medical so DOBI Medical with
Distributor's assistance if requested may re-label all such Products so as to
meet all applicable legal requirements. DOBI Medical will bear the cost of such
re-labeling. Distributor will not remove any labels from the Products nor add
anything thereto without the written consent in each instance of DOBI Medical.

         d) DOBI Medical represents and warrants that it owns or has the
unencumbered right to utilize and license to Distributor all Marks, Software,
Products, copyrights and Patents and other intellectual property as under this
Agreement. DOBI Medical further represents and warrants that the Products, and
its Marks and Patents, Software are not currently the subject of any litigation
and do not to the best of its knowledge infringe the rights of any third
parties.

         e) Unless specifically authorized to do so under this Agreement, and to
the extent necessary by either party to carry out its obligations hereunder,
neither party shall use the other party's name, logos, marks, or other
intellectual property for any reason whatsoever, including without limitation
advertising and references, without the prior written consent of that party,
except that each party may refer to the other privately in discussions with its
potential investors and potential Distributors and customers, or as may be
required to meet governmental disclosure and securities laws. The parties
acknowledge that the other owns valuable property rights in all its marks,
names, designs, logos, patents, and trade secrets. None of these rights are
being granted to the other unless specified otherwise in this Agreement. Neither
shall represent that it owns any rights in the other's intellectual property.
All use of such intellectual property shall inure to the benefit of the owner
thereof.

14.  Agreement Term

         a) The term of this Agreement shall commence on the Effective Date, and
shall continue for twenty (24) months, unless sooner terminated in accordance
with the provisions hereof. Termination of this Agreement shall not terminate
either party's obligation to pay for all Products and Services or warranties
performed under the Agreement prior to discontinuation of performance due to
termination. Those provisions of this Agreement which by their nature extend
beyond termination or expiration will survive and remain in effect until all
obligations there under are satisfied, including without limitation, the
provisions dealing with warranty, confidentiality, legal and equitable ownership
to intellectual property, no compete and non-solicitation, Confidential
Information, termination, indemnification, limitation of liability, arbitration,
choice of law and payment of fees. After the initial term, this Agreement may be
renewed for successive, additional twelve (12) month periods upon mutual written
agreement of the parties.

15.  Termination

         a) It shall constitute a material default under the Agreement, with the
corresponding right of termination as stated below, if any of the following
shall occur:

         (i) In the event Distributor fails to pay any amounts due hereunder and
         such failure continues for a period of ten (10) days or more from the
         original due date, then the Agreement may be immediately terminated by
         DOBI Medical. If Distributor disputes any invoice, it must notify DOBI
         Medical in writing within ten (10) days of receipt of the invoice and
         must pay the undisputed portion of the invoice in accordance with the
         terms of this Agreement.

         (ii) In the event of a violation by a party of any provision of this
         Agreement (other than the non-payment of monies as set forth in (i)
         above, or non-compliance with laws as set forth in Section 16 b) and
         c)) which violation continues uncured for a period of thirty (30) days
         after written notice to the other party specifying such violation, then
         the Agreement may be immediately terminated by the non-breaching party.

         (iii) In the event a party makes an assignment for the benefit of
         creditors, files a voluntary petition in bankruptcy, is adjudicated
         insolvent or bankrupt, a proceeding is filed against said party to
         declare said party bankrupt and said proceeding is not dismissed within
         thirty (30) days, or said party commences any proceeding under any
         reorganization, arrangement, readjustment of debt or similar law or
         statute of any jurisdiction, then this Agreement may be terminated by
         the other party effective upon written notice.

         (iv) If Distributor markets, sells, or services the Products or
         Services outside of the Territory (except upon the prior written
         consent of DOBI Medical), then DOBI Medical may immediately terminate
         this Agreement.

         (v) If Distributor fails to meet the minimum purchase requirements on a
         per year period as agreed to and set forth on Schedule D, then DOBI
         Medical may immediately terminate this Agreement effective upon written
         notice with no rights to cure such default. Time is of the essence

         (vi) If Distributor consistently fails after three written warnings
         from DOBI Medical to meet minimum service standards as published by
         DOBI Medical, or receives three customer service complaints within any
         trailing three month period which have not

                                 Page 11 of 22
<PAGE>

         been satisfactorily responded to and attended to, or if Distributor
         fails to meet and maintain the minimum number of certified applications
         trainers and certified field trainers, then DOBI Medical may
         immediately terminate this Agreement. During such period that
         Distributor has received such a notice of default, DOBI Medical may
         itself or cause another to provide such Services to the customer end
         user without any liability to Distributor.

         (vii) Distributor's failure to strictly enforce the terms and
         conditions of any sublicense agreement against any of its
         subdistributors. Any default of subdistributors not cured within the
         cure period, will also be deemed a default of Distributor under this
         Agreement.

         b) All remedies are cumulative and may be pursued concurrently or
separately. Pursuit of one remedy is not an election of remedies or a waiver of
another remedy. Delay or failure to pursue a remedy will neither waive the
remedy nor modify the terms of this Agreement. Upon termination of the
Agreement, at the election of DOBI Medical, it may continue to provide
Distributor with service and technical and safety bulletins in order for
Distributor to provide warranty and post-warranty service to customer end users
or it may itself or license others to provide same. Within three (3) business
days after termination of this Agreement, Distributor shall submit to DOBI
Medical i) a complete list of all prospective or pending customers in which
Distributor was involved prior to the termination of this Agreement and that
have not been consummated or otherwise finalized at the time of such
termination; and ii) a complete list of the identities of any customer end-users
by name and address, phone number and contact person. Distributor further agrees
at its expense to deliver to DOBI Medical within three (3) business days after
the termination of this Agreement, all marketing literature, price lists,
specification sheets, training and technical manuals, and all other documents
and things in its possession or control relating to this Agreement, and to
return to DOBI Medical, for credit for returned goods consistence with past
practice under the Agreement, its demonstration Product and any other Products
or replacement parts it has in inventory. DOBI Medical will pay Distributor any
fees that may be due Distributor if any such leads are sold within 180 days
after the termination date, provided that Distributor complies with the
termination requirements herein, and is current in any obligations it owes DOBI
Medical.

         c) Notwithstanding anything to the contrary, if this Agreement is
terminated because of governmental action by the national government of the
Distributor or of the United States of America, neither party shall have a right
or claim to any compensation from the other as a result of said termination and
no liability or any kind shall lie against either party by reason of said
termination and neither party shall maintain any action or claim of any kind
except as permitted by this paragraph against the other in the event of such
termination.

16.  Compliance with Laws

         a) Each party will comply with any applicable federal, state, local, or
other governmental laws and regulations or industry practices in connection with
their respective rights and obligations under this Agreement. The parties agree
to comply fully with all applicable regulations of the United States Department
of Commerce and with the United States Export Administration Act, as amended
from time to time, and with all applicable laws and regulations of other
jurisdictions with respect to the importation and use of the Products and
Services to assure that such are not exported, imported or used in violation of
law.

         b) Each party agrees that they both will adhere to and comply with all
applicable U.S. and non-U.S. laws, including but not limited to anti-bribery
measures such as the U.S. Foreign Corrupt Practices Act (the "FCPA"), and will
not give, offer, agree or promise to give, or authorize the giving directly or
indirectly, of any money or other thing of value to anyone as an inducement or
reward for favorable action or forbearance from action or the exercise of
influence. Failure to comply with the provisions of all such laws, including but
not limited to the FCPA, may result in immediate termination of this Agreement
by DOBI Medical at its election.

         c) In the event of any governmental law, regulation or action
forbidding performance of any obligations of DOBI Medical or Distributor
hereunder, or in the event of inability, after exercising due diligence,
reasonable best efforts and good faith, of either to obtain any governmental
action required for the performance of its obligations hereunder, DOBI Medical
or Distributor shall be excused from the performance of such obligations except
for the obligations which survive termination. In such cases, the non-defaulting
party shall be entitled, without liability to the other party, to terminate this
agreement.

         d) Each party represents and warrants that it is a duly formed and
validly existing corporation in good standing pursuant to the laws of its
domicile, that it has the full power, authority and legal right to execute,
deliver and perform its obligations under this Agreement, and that it has not
directly or indirectly offered, promised, or authorized to pay, or paid any
compensation, or given anything of value to any official, agent, or employee of
any government or governmental agency, or any candidate for or holder of
political office, in exchange for any approval of this Agreement and the
transactions that may arise from it.

17.  Amendments

         a) This Agreement cannot be amended or modified in any manner except by
a formal amendment to this Agreement in writing duly executed and signed by a
duly authorized officer of DOBI Medical and of the Distributor.

                                 Page 12 of 22
<PAGE>

18.  Assignment or Transfer

         a) Except as otherwise specifically provided herein, this Agreement
shall not be assigned by either party, in whole or in part, without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed; except that DOBI Medical may assign this Agreement in whole
or in part without such consent to a parent, affiliate, subsidiary,
successor-in-interest or in connection with an acquisition, merger, sale of
substantially all its assets and/or stock, or a change of ownership resulting in
over 50% voting control, as long as the assuming party remains liable for all
then existing obligations, fees and warranties due and owing through the
assignment date. Any attempted assignment not permitted hereunder shall be void
and shall be deemed a material breach of this Agreement. In the event of a
change of ownership resulting in over 50% voting control with respect to DOBI
Medical, either party may terminate this Agreement by giving the other 180 days
written notice.

19.  Notices

         a) Except as otherwise specifically provided herein, any notice
required or permitted to be sent by this Agreement will be in writing and will
be (i) delivered by hand; (ii) sent by electronic medium (if the receiving
machine confirms receipt and the sending machine prints a paper copy of the
answerback message); or (iii) mailed by registered, certified or other prepaid,
receipted or express delivery service, to the address. Complying notices will be
effective (a) when delivered by hand; (b) when sent by electronic media, receipt
confirmed; (c) three (3) business days after deposited in the mail in the manner
required above, with proper postage prepaid; or (d) three (3) business days
after deposited with an express delivery service. Notices will be addressed as
follows, or as from time to time directed in writing by either party, by notice
given hereunder:

           To Distributor:

           To DOBI Medical:   DOBI Medical International, Inc.
                                   1200 MacArthur Blvd.
                                   Mahwah, NJ, USA  07430
                                   Attention:  General Counsel, Frank M. Puthoff
                                   Phone No.  (201) 760-6464 ext. 225
                                   Fax No.  (201) 760-8860

20.  Independent Contractor

         a) The relationship of DOBI Medical and Distributor established by this
Agreement is and at all times will remain one of independent contractors, and
except for the rights of Distributor hereunder, neither party will at any time
or in any way represent itself as being an agent or other representative of the
other party or as having authority to assume or create obligations or otherwise
act in any manner on behalf of the other party. Nothing in this Agreement shall
be construed as creating a franchise, partnership, or joint venture. Nothing
here shall be construed as implying that employees of either party are employees
of the other party for any purposes whatsoever.

21.  Waiver/Severability

         a) Any waiver or delay in the exercise by a party of its right to
terminate or enforce any provision of this Agreement for any breach by the other
party will not prejudice such party's right of termination or enforcement for
such breach or any further, continuing, or other breach by the other party.

         b) If any provision of this Agreement is, for any reason, held
unenforceable or invalid in any respect under the laws of any jurisdiction where
enforcement is sought, the invalidity or unenforceability will not affect (i)
any other provision of this Agreement and this Agreement will be construed as if
such unenforceable or invalid provision was not contained herein; and (ii)
enforcement or validity of such provision in any other jurisdiction.

22.  Arbitration.

         a) Except for disputes relating to Sections 8, 9, 10, and 13 of this
Agreement, any and all other disputes or controversies that shall arise under or
in connection with this Agreement or in any other way relate to this Agreement,
including its termination, shall be submitted to a panel of three arbitrators
(one arbitrator if the amount in dispute in less than $50,000) under the
International Arbitration Rules of the International Center for Dispute
Resolution, a division of the American Arbitration Association then in effect.
The parties hereby acknowledge that the United States Arbitration Act (9 USC
(Section.Section 1-16) takes precedence over any state arbitration statutes,
rules and regulations, domestic or foreign. Each of the arbitrators shall be
qualified and experienced in the business and laws of contracts and licensing,
with at least one arbitrator also being a licensed attorney. The arbitrator(s)
must base their determination solely on the terms and

                                 Page 13 of 22
<PAGE>

conditions of this Agreement and the laws in the State of New York. The
arbitrator(s) shall have the authority to award any remedies that a court may
order or grant, except that they will have no authority to award punitive
damages or any other damages not measured by the prevailing party's actual
damages, and may not in any event make any ruling, finding or award that does
not conform to the terms and conditions of this Agreement. Arbitration shall be
held in New York, New York. The parties hereby agree to accept service of
process at its principal office address and agree to the exclusive, personal
jurisdiction, forum and venue as set out herein, and waive all arguments of
forum non-conveniens. Both parties expressly covenant and agree to be bound by
the decision of the arbitrator(s) as the final determination of the matter in
dispute. Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. Each party will be responsible for its
own attorneys' fees and expenses except as otherwise provided under this
Agreement.

23.  Force Majeure

         a) Neither party shall be liable to the other for failure or delay in
the performance of a required obligation if such failure or delay is caused by
an act of any federal, state or local governmental authority, act of God, loss
of communication, delay of the other party or third parties, strike, war, acts
of terrorism, riot, fire, flood, lightning, electrical power failure, natural
disaster or other similar cause beyond its control. Written notice within thirty
(30) days of any such condition shall be provided. Either party may terminate
this Agreement if such force majeure continues for a period of ninety (90) days.

24.  Integration

         a) This Agreement constitutes the entire agreement of the parties and
supersedes any other agreement or understanding, written or oral that may have
been made or entered into with regard to the subject matter hereof.

25.      Press Releases

         DOBI Medical and Distributor agree to issue a joint press release
announcing this Agreement at a time to be mutually agreed upon by the parties.

26.  Governing Law/Interpretation

         a) This Agreement will be construed and enforced in accordance with the
laws of New York as applied to contracts entered into in and performed in New
York, New York, USA, as between New York residents without giving effect to its
conflicts of law provisions. Except for patient related suits in connection with
the authorized use of the ComfortScan system which suits shall be litigated in
local courts under local law, the parties agree that any dispute hereunder not
arbitrated shall be submitted to the courts of the State of New York or the
United States Southern District Court for New York, New York if federal
jurisdiction exists with respect to such dispute. The parties hereby agree that
service of process may be made pursuant to the notices provision of this
Agreement. The parties agree to the exclusive personal jurisdiction, forum and
venue as set out herein, and waive all arguments of forum non-conveniens. The
section headings of this Agreement are for convenience only and will neither be
considered a part of, nor affect the construction or interpretation of any
provision of this Agreement. The parties hereto acknowledge and agree that they
have each had the benefit of counsel and participated in the drafting of this
Agreement. Therefore, the rule of law which provides that if an ambiguity is
found to exist in the Agreement, the ambiguity is construed against the party
who drafted the agreement, shall not apply to the interpretation of this
Agreement.

         b) No government procurement regulations or contract clauses are
binding on either party unless required by law or mutually agreed to.

27.  Integration/Counterparts

         a) This Agreement may be executed in any number of counterparts, each
of which shall be deemed original, but such counterparts together shall
constitute but one and the same instrument. This Agreement constitutes the
entire agreement of the parties and supersedes any other agreement or
understanding, written or oral that may have been made or entered into with
regard to the subject matter hereof. The parties intend and agree that a
photocopy or facsimile of this Agreement with their signatures thereon shall be
treated as an original and shall be deemed to be as binding, valid, genuine, and
authentic as an original-signature document for all purposes including all
matters of evidence and the "Best Evidence" rules.

         b) The authorized version of this Agreement shall be the fully executed
English language version.

28.  Authority

         The undersigned represent and warrant that they are the persons legally
authorized by the indicated entities to execute this Agreement.

                                 Page 14 of 22
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

DISTRIBUTOR                              DOBI MEDICAL INTERNATIONAL, INC.

By: ______________________________       By: _________________________________
    Authorized Officer                       Vice President, Sales and Service
    Name:
    Title:

                                 Page 15 of 22
<PAGE>

                                   SCHEDULE A

                             NON-EXCLUSIVE TERRITORY

                                 Page 16 of 22
<PAGE>

                                   SCHEDULE B

                                   PRODUCT(S)

The DOBI Medical Product subject to this Agreement is the standard ComfortScan
system configuration.

Suggested Retail List Price as of the
 Effective Date of this Agreement...         $150,000.00/Unit

While this is the suggested retail price that DOBI Medical recommends that
Distributor resell this Product, Distributor is free to sell the Product for
whatever price it wishes.

                                 Page 17 of 22
<PAGE>

                                   SCHEDULE C

LIST OF DISTRIBUTOR CONTRACTS WITH OTHER COMPETING MANUFACTURERS, DEVELOPERS AND
DISTRIBUTORS PURSUANT TO SECTION 8.B) OF THE AGREEMENT

                                 Page 18 of 22
<PAGE>

                                   SCHEDULE D

               PRICING DISCOUNTS AND MINIMUM PURCHASE REQUIREMENTS

         During the initial term of this Agreement, Distributor's discount off
the then current suggested retail price for the DOBI Medical Standard
ComfortScan system configuration, (the "Product" or "Unit"), is based on the
following:

         Unit Net Price to Distributor                             $___________

         Net Price excludes all taxes, tariffs, duties, insurance, and freight.
Distributor's discount for replacement parts for the Product is __% off of the
then current suggested retail price as listed in DOBI Medical's equipment parts
pricing book.

MINIMUM PURCHASE REQUIREMENTS--SECTION 3.C) OF THE AGREEMENT.

Distributor must purchase the following minimum Units per year.

         MINIMUM UNITS PER YEAR*

First 12 months                  ___                      _ComfortScan systems

*Within 5 calendar days after each quarterly period, or more often if requested
by DOBI Medical, Distributor shall submit to DOBI Medical a written quarterly
sales report projected out over the following 12 month period, including its
list of prospective customers.

NOTES:
                  1) Standard options and/or accessories to configured systems
                  can be sold by Distributor at same discount schedule.

                  2) Prices do not include any applicable taxes, duties, or
                  tariffs, or any shipping, insurance and handling costs.

                  3) Minimum units per year are cumulative and subject to
                  Sections 3.c) and 15.a.(v) of the Agreement concerning DOBI
                  Medical's right to terminate this Agreement if such minimum
                  purchase requirements are not meet. Time is of the essence for
                  Distributor to meet these minimums.

                  4) All purchase orders shall contain at a minimum the
                  following information:

                       Purchase order number
                       Bill to and ship to name and address
                       Product description and model number
                       Requested delivery date
                       Shipping method
                       Correct price

                  5) Purchase orders shall be addressed to

                       DOBI Medical International, Inc
                       1200 MacArthur Blvd.
                       Mahwah, NJ 07430, USA
                       Attention: Sales Dept

                                 Page 19 of 22
<PAGE>

                                   SCHEDULE E

                        DOBI MEDICAL INTERNATIONAL, INC.

                           CUSTOMER END USER AGREEMENT

1. DOBI Medical International, Inc., a Delaware, USA corporation and the
developer and manufacturer of the ComfortScan(R) medical breast imaging system,
hereby grants to the undersigned Customer End User a non-exclusive,
non-transferable and perpetual right to use (i) the ComfortScan acquisition
software embedded into the ComfortScan system, (ii) the ComfortNet(TM) routing
software , and (iii) one (1) ComfortView(TM) CD reader software (including one
(1) dongle) for interpreting patient scans, each installed into or provided
along with the ComfortScan system (collectively, and together with any manuals
and other documentation, the "Software"), solely in connection with the
ComfortScan system and as delivered to the undersigned Customer End User. This
license is limited to a single site and to a single user to which the
ComfortScan system had been originally ordered and delivered by the Customer End
User. Further, as to the ComfortView software, this license is limited to a
single user with one (1) dongle to a single home and office computer. Customer
End User may make one copy of the ComfortView software for backup purposes only.
DOBI Medical reserves the right to charge a fee for any replacement dongle. The
undersigned Customer End User agrees not to assign, sublicense, share, pledge,
lease, rent or otherwise transfer the ComfortScan system or its Software without
the prior written consent of DOBI Medical International, Inc.

2. Distributor's licensor, DOBI Medical International, Inc. ("DOBI Medical"),
retains the entire right, title and interest to the ComfortScan system, the
Software, copyrights, Patents and Marks, and any copies and portions thereof. No
title to the Patents or the Marks related to the ComfortScan system is
transferred to the Distributor or Customer End-User. The ComfortScan system and
related Software contain proprietary and confidential Information of
Distributor's licensor, DOBI Medical International, Inc., and are considered
valuable intellectual property owed exclusively by DOBI Medical International,
Inc. The Customer End-User will protect the ComfortScan system and the Software
from unauthorized use or disclosure outside of the scope of this Agreement.

 3. Customer End User agrees itself, or through any agent or consultant, not to
copy, alter, modify or otherwise change the ComfortScan ordered and delivered or
licensed to Customer End User hereunder in any way, and agrees not to reverse
engineer, disassemble, reverse assemble, decompile, or otherwise attempt to
derive source code from the Software or otherwise attempt to design around the
ComfortScan system and Software, or contest the validity of any Patent or Mark
owned or applied for by DOBI Medical or its authorized affiliates. Distributor
and DOBI Medical reserve the right to audit the Customer End-User's deployment
and use of the ComfortScan system and Software for compliance with the terms of
this Agreement, with the Distributor's Agreement with DOBI Medical, and with all
applicable laws at any time during the Customer End User's normal business hours
upon reasonable notice.

4. Subsequent Support/Releases/Upgrades. Any subsequent support services,
including without limitation, technical support, software or hardware
customization or training services are beyond the reasonable scope of this
Agreement or are not specifically required to be performed by Distributor or by
DOBI Medical under this Agreement, are subject to the availability of DOBI
Medical's clinical and technical staff, and shall be billed at DOBI Medical's
then current time and material rates plus out-of-pocket expenses, and subject to
such other terms and conditions which may be agreed upon in writing by the
parties before such services are performed. Further, DOBI Medical reserves the
right to charge additional fees for any new (as determined by DOBI Medical in
its sole discretion) releases, upgrades or additions to the Product, Software,
or any new option, accessory, or new functionality related to the ComfortScan
system. DOBI Medical may, but is not obligated to develop any subsequent
updates, upgrades, improvements, other enhancements, new models incorporating or
based upon such technologies, features, and/or operating system. If it does,
DOBI Medical reserves the right to require additional licenses and charge
different fees.

5. The ComfortScan system Software incorporates various software licenses from
third parties. Therefore, to the extent that DOBI Medical is subject to such
licenses, this Customer End User license agreement is also subject to such third
party licenses.

6. Representations and Warranties

         a) Without prejudice to any local law, DOBI Medical represents and
warrants to the original Customer End User that the ComfortScan system and
Software shall be free from defects in material or manufacturing, except minor
errors that do not materially affect functionality or performance, and shall
conform substantially to applicable specifications in effect as of the date of
delivery of the ComfortScan system, when properly installed by DOBI Medical or
Distributor's certified technician, and when subjected to normal, proper and
intended usage and operation by a technician of Customer End User certified by
Distributor.

         b) The ComfortScan system and Software as ordered and delivered to
Customer End User shall be warranted for a period of 12 months from the time of
original installation, the date of which will be determined by a completed,
returned warranty card, which must be received by DOBI Medical within 30 days of
the ComfortScan system installation. If the warranty card is not timely received
by DOBI Medical, then the warranty shall take effect 12 months from the date of
shipment by DOBI Medical. In no event shall the warranty exceed 15 months from
the date of shipment from DOBI Medical. Repair and replacement parts will be
warranted for 90 days from installation

                                 Page 20 of 22
<PAGE>

or 12 months from shipment, whichever is sooner. Any component furnished without
charge during the warranty period to correct a warranty failure shall be
warranted only to the extent of the unexpired term of the warranty of the
original ComfortScan system or replacement part.

         c) Subject to Section 4.b) above, in the event that a documented and
reproducible flaw in the ComfortScan system or Software inconsistent with this
warranty is discovered that significantly impacts system performance and/or
creates a safety hazard for patient or operators, DOBI Medical shall use
commercially reasonable efforts to correct such flaw in a timely manner. At DOBI
Medical's option and at no cost to or expense to Customer End User, DOBI Medical
shall correct any such failure by 1) repairing, adjusting, or replacing any
defective or non-conforming parts or assemblies or Software, or 2) by making
available any necessary repaired or replacement parts or assemblies or Software,
3) by furnishing either new or exchanged replacement parts or assemblies or
Software. All returned parts or assemblies shall become the property of DOBI
Medical if determined by DOBI Medical to be defective by reason of material or
manufacture. DOBI Medical will bear the cost of shipping such defective part or
assembly or Software back to DOBI Medical.

         d) All proprietary and confidential information of DOBI Medical and any
Derivatives (defined below) thereof whether created by such DOBI Medical or
Distributor or its Representatives or by Customer End User or its agents or
consultants, shall remain the property of DOBI Medical, and no license or other
rights to such DOBI Medical's confidential information or Derivatives is granted
or implied hereby. For purposes of this Agreement, "Derivatives" shall mean: (a)
for copyrightable or copyrighted material, any translation, abridgment, revision
or other form in which an existing work may be recast, transformed or adapted;
(b) for patentable or patented material, any improvement thereon; and (c) for
material which is protected by trade secret, any new material derived from such
existing trade secret material, including new material which may be protected
under copyright, patent and/or trade secret laws. To the fullest extent
permitted by law, Customer End User agrees, and will cause its agents and
consultants to agree, to convey to DOBI Medical or its nominee the entire right,
title, and interest, domestic and/or foreign, which any such party my have, or a
lesser interest therein. Customer End User agrees, and will cause its agents and
consultants to agree, to promptly, upon DOBI Medical's request, execute all
applications for patents, copyrights, assignments and other appropriate
documents, and to perform all acts and to do all things necessary and
appropriate to carry out the intent of this Section, whether or not such person
continues in his capacity as a customer, agent or consultant

THIS LIMITED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR USE FOR A PARTICULAR PURPOSE. DOBI Medical's WARRANTY IS EXCLUSIVE
OF, WITHOUT LIMITATION, THE FOLLOWING:

     o   Failure of Customer End User to prepare the site or provide power
         requirements or operating environmental conditions in compliance with
         any applicable instructions or recommendations of DOBI Medical.

     o   Failure of Customer End User to provide the proper incoming power
         required to support the ComfortScan system in accordance with the
         recommendation of DOBI Medical.

     o   Any modification of ComfortScan system or Software performed by a party
         other than DOBI Medical or an authorized Distributor and DOBI Medical
         certified technician.

     o   Combining products or furnishing services which have not been
         authorized in publications by DOBI Medical and are deemed by DOBI
         Medical to be incompatible with the ComfortScan system or Software.

     o   Improper or extraordinary use of the ComfortScan system, improper
         maintenance of the ComfortScan system or Software, or failure to comply
         with any applicable instructions or recommendations of DOBI Medical.

     o   Misuse, tampering or, negligent storage/handling of the ComfortScan
         system or Software by Distributor or Customer End Use, its employees,
         agents or contractors.

     o   Fuses, glassware, high voltage cables and other items deemed by DOBI
         Medical to be expendable.

     o   Acts of civil or military authority, fires, floods, power failures or
         electrical power surges, strikes or other labor disturbances, war, acts
         of terrorism, riots or other causes beyond the reasonable control of
         DOBI Medical.

     o   Installation, troubleshooting, or repair services provided by the
         Distributor.

     o   Any installation, maintenance, repair, service, relocation or
         alteration to or of, or any other tampering with the ComfortScan system
         or Software performed by any person or entity other than DOBI Medical
         or Distributor or a DOBI Medical certified technician without the prior

                                 Page 21 of 22

<PAGE>

         written approval of DOBI Medical, shall immediately void and cancel all
         warranties with respect to the ComfortScan system and Software.

     o   The Software and any portions thereof containing any third party
         software or hardware manufactured other than by DOBI Medical, whether
         sold or given to Customer End User hereunder, is provided "AS IS", and
         DOBI Medical makes no representations or warranties in connection
         thereto. Any warranties that may be associated with any such third
         party software are the sole obligations of such third parties directly
         to the Customer End User, and not DOBI Medical.

     o   Any ComfortScan system or parts damaged in transit.

7.       Training.

         Customer End user shall at all times have a fully trained and certified
clinical technician operating the ComfortScan system for acquiring patient
scans. Likewise, Customer End User shall have on staff a licensed radiologist or
other qualified physician certified in the use and read ComfortScan system
patient scans.

8.       Limitations of Liability

         a) CUSTOMER END USER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF
WARRANTY OR REPRESENTATION BY DOBI MEDICAL CONCERNING ANY PRODUCTS AND SERVICES
SHALL BE ONLY UPON WRITTEN REQUEST OF CUSTOMER END-USER IF RECEIVED BY DOBI
MEDICAL WITHIN TWELVE (12) MONTHS OF SUCH ALLEGED BREACH. IN ANY EVENT, DOBI
MEDICAL'S CUMULATIVE LIABILITY ITS CUSTOMER END USER FOR ANY AND ALL CLAIMS
RELATING TO THE USE OF OR THE INABILITY TO USE THE PRODUCTS AND SERVICES SHALL
NOT EXCEED THE TOTAL AMOUNT OF THE FEES PAID ITS CUSTOMER END-USERS FOR THE
PRODUCTS AND SERVICES, WHETHER BASED ON CONTRACT, TORT OR OTHERWISE. A IN NO
EVENT SHALL DOBI MEDICAL BE LIABLE FOR LOSS OF PROFIT, OR FOR SPECIAL OR
CONSEQUENTIAL DAMAGES, OR FOR ANY OTHER INDIRECT DAMAGES SUCH AS, BUT NOT
LIMITED TO, EXEMPLARY OR PUNITIVE DAMAGES, EVEN IF IT HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. DOBI MEDICAL SHALL NOT BE LIABLE FOR ANY
CORRUPTION, ANY DOWN TIME OF THE PRODUCTS OR SERVICES OR SUSPENSION OF THE
SERVICES OR USE OF THE PRODUCTS, OR FOR ANY LOSS OR MISTRANSMISSION OF PATIENT
DATA, OR FOR THE SECURITY OF PATIENT DATA, OR FOR ANY MEDICAL OR PROFESSIONAL
MALPRACTICE CLAIMS. IN NO EVENT WILL DOBI MEDICAL BE LIABLE FOR LOSS OR DAMAGES
RESULTING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM ERRORS, OMISSIONS,
INSOLVENCY OR OTHER FAULT OR CIRCUMSTANCES ATTRIBUTABLE TO ANY THIRD PARTY. The
foregoing limitations of liability represent the allocation of risk of failure
between the parties as reflected in the pricing and is an essential element of
the basis of the bargain between the parties.

Accepted and Agreed to this _____of _________, 200_.

CUSTOMER END USER                             DOBI MEDICAL INTERNATIONAL, INC

-----------------------                       -----------------------------
By:  Authorized Representative                 By:  Authorized Representative

                                 Page 22 of 22
<PAGE>

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