Document:

Exhibit 10.3

October 22, 2002
Ms. Leen Simonet
Executive Vice President and Chief Financial Officer
Coherent, Inc.
5100 Patrick Henry Drive
Post Office Box 54980
Santa Clara, CA 95056

Dear Leen:

     This letter will confirm our mutual agreement to modify the terms of the
Promissory Note, dated as of April 30, 2001, from ESC Medical Systems Ltd.,
n/k/a "Lumenis Ltd." ("Payor") and Coherent, Inc. ("Payee"), in the principal
amount of $12,904,000 (the "Note"). Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Note.

     Payor and Payee hereby agree that (i) the Principal Amount shall be due as
follows: (A) three (3) equal monthly installments, each in the amount of One
Million Seventy-Five Thousand Dollars ($1,075,000), on October 31, 2002,
November 30, 2002 and December 31, 2002, respectively, and (B) thereafter, seven
(7) equal monthly installments, each in the amount of One Million Three Hundred
Eighty-Two Thousand Seven Hundred Fourteen Dollars and Thirty Cents
($1,382,714.30), with the first such payment due on January 31, 2003; and (ii)
interest on the unpaid Principal Amount shall accrue at the rate of nine percent
(9%) per annum and shall be payable monthly, commencing on October 31, 2002.

     Notwithstanding the foregoing, the final three (3) monthly payments of the
Principal Amount, or the remaining outstanding balance thereof, whichever is
less, shall be made not later than two (2) business days after Payor receives
net proceeds of not less than Twenty Million Dollars ($20,000,000), in the
aggregate, from an accounts receivable financing or other new financing.

     Except as expressly provided herein, the Note shall continue in full force
and effect, and the terms therein shall continue to govern the respective rights
and obligations of Payor and Payee.

<PAGE>

     Please indicate your acceptance of the terms of this letter agreement by
signing where indicated below and returning one copy to me at the address above.

                                             Very truly yours,

                                             /s/ Kevin R. Morano
                                             Kevin R. Morano

Acknowledged and Agreed to by:

COHERENT, INC.

/s/ Helene Simonet
-------------------------------------
Name:  Helene Simonet
Title: Chief Executive Officer
Date:  October 23, 2002

                                      - 2 -Exhibit 10.4

                          SECOND AMENDMENT TO SUBLEASE

     THIS SECOND AMENDMENT TO SUBLEASE (this "Second Amendment"), dated as of
October 21, 2002, between Coherent, Inc., a Delaware corporation ("Sublessor")
and Lumenis, Inc., a Massachusetts corporation ("Sublessee").

     1. Recitals: Sublessor, as "Tenant", and Sumitomo Bank Leasing and Finance,
Inc., a Delaware corporation ("Master Lessor"), as "Landlord", entered into that
certain lease dated December 23, 1996 (the "Original Master Lease"), with
respect to that certain land and improvements, including an approximately
215,548 square foot building (the "Building"), located at 2400 Condensa Way,
Santa Clara, California (the "Premises") as are more particularly described in
the Original Master Lease. The Original Master Lease was terminated and replaced
by that certain Master Lease and Security Agreement by and between Master Lessor
(now known as SMBC Leasing and Finance, Inc.) and Sublessor dated as of February
15, 2002 ("New Master Lease"). Pursuant to that certain Sublease by and between
Sublessor and Sublessee, dated as of April 30, 2001, as amended by that certain
First Amendment to Sublease, dated as of February 15, 2002 (the "First
Amendment" and, together with this Second Amendment and all exhibits thereto and
hereto, the "Sublease"), Sublessee originally subleased an approximate 125,260
square foot portion of the Premises from Sublessor along with Sublessee's
permitted use of the Common Areas. Over time, the space subleased by Sublessee
has increased to 161,834 square feet (not including Common Areas). Capitalized
terms used and not otherwise defined herein shall have the meaning ascribed to
them in the Original Master Lease and the Sublease. Sublessee and Sublessor now
desire to further amend the Sublease to reduce the size of the Subleased
Premises and to extend the term of the Sublease on the terms and conditions set
forth herein.

     2. Effective Date: The provisions of this Second Amendment shall be
effective commencing October 1, 2002.

     3. Amendment of Sublease: As of October 1, 2002, the Sublease shall be
amended as follows:

          (a) Section 1 of the Sublease: Add to the end of Section 1 the
     following sentence:

               "Effective October 1, 2002 (the "First Reduction Date"), the
          Subleased Premises shall be reduced to 157,700 square feet. On and as
          of the First Reduction Date, Exhibit B attached to this Sublease shall
          be replaced for all purposes with Exhibits B-1.1 and B-1.2 attached to
          the Second Amendment to Sublease, dated as of October 21, 2002,
          between Sublessor and Sublessee (the "Second Amendment"), and all
          references in this Sublease to Exhibit B shall mean Exhibits B-1.1 and
          B-1.2, and all references to the "Subleased Premises" shall mean the
          Subleased Premises as shown on Exhibits B-1.1 and B-1.2. Effective
          April 1, 2003 (the "Second Reduction Date"), the Subleased Premises

<PAGE>

          shall be reduced to 80,000 square feet. On and as of the Second
          Reduction Date, Exhibits B-1.1 and B 1.2 to the Sublease shall be
          replaced for all purposes with Exhibits B-2.1 and B-2.2 attached to
          the Second Amendment, and all references in this Sublease to Exhibit B
          shall mean Exhibits B-2.1 and B-2.2, and all references to the
          "Subleased Premises" shall mean the Subleased Premises as shown on
          Exhibits B-2.1 and B-2.2. Section 8 of this Sublease shall apply to
          that portion of the Subleased Premises to be surrendered on each of
          the First Reduction Date and the Second Reduction Date. In addition,
          the Second Reduction Date shall be delayed one day for each day
          personnel of Sublessee remain in that portion of the Subleased
          Premises intended to be surrendered on the Second Reduction Date."

          (b) Section 2 of the Sublease: Section 2 of the Sublease shall be
     deleted in its entirety and replaced with the following:

               "2. Subleased Premises: Subject to the terms and conditions set
          forth herein, Sublessor subleases to Sublessee, and Sublessee
          subleases from Sublessor the Subleased Premises. In connection with
          its use of the Subleased Premises, Sublessee shall have the
          non-exclusive right to use in common with Sublessor the common areas
          of the Premises as are more particularly described in Exhibit B
          attached hereto (collectively, the "Common Areas"). Sublessor shall
          provide Sublessee with reasonable access to that portion of the
          Premises not leased by Sublessee for the purposes of (i) delivering
          and picking up mail, (ii) for repair and maintenance and (iii) as is
          required or reasonably requested by Sublessee in connection with its
          use and occupancy of the Subleased Premises. This reasonable access
          shall include providing access at all times throughout the Term to
          both elevators in the Premises for use by Sublessee in common with
          other tenants."

          (c) Section 3 of the Sublease: Section 3 of the Sublease shall be
     deleted in its entirety and replaced with the following:

               "The term ("Term") of this Sublease shall commence on April 30,
          2001 ("Commencement Date") and shall terminate on the earliest to
          occur of (a) February 1, 2007 (the "Expiration Date"), (b) the date
          which is one year after delivery of written notice from Sublessor to
          Sublessee terminating the Sublease ("Sublessor Voluntary Termination")
          and (c) the date this Sublease may expire or is sooner terminated
          pursuant to its terms or by operation of law, provided, however, that
          except in conjunction with a Sublessor Voluntary Termination, if the
          Master Lease is sooner terminated pursuant to its terms, the parties
          shall enter into an alternative arrangement, as contemplated by
          Section 21 hereof, so that Sublessee shall have continued use of the
          Subleased Premises."

          (d) Section 5(a) of the Sublease: The first, second, third and fourth
     sentences of Section 5(a) and the chart of rental rates shall be deleted
     and replaced with the following:

                                      - 2 -
<PAGE>

      "Commencing on the Commencement Date, Sublessee shall pay to Sublessor
base monthly rent on a per square foot basis for the Subleased Premises as
follows:

<TABLE>
<CAPTION>
Time period                  Sq.Ft. leased (a)        Sq. Ft. per mo.       Base Rent per mo.
-----------                  -----------------       ----------------       -----------------
<S>                              <C>                       <C>                 <C>
05/01/01 - 12/31/01               162,388                  $1.75               $284,179

01/01/02 - 04/30/02               186,598                  $1.75               $326,546.50

05/01/02 - 09/30/02               186,598                  $2.25               $419,845.50

10/01/02 - 03/31/03               143,700                  $1.50               $215,550

                                   14,000(b)               $ .75               $ 10,500

04/01/03 - 09/30/03                66,000                  $1.50               $ 99,000

                                   14,000(b)               $ .75               $ 10,500

10/01/03 - 02/01/07                66,000                  $1.60               $105,600

                                   14,000(b)               $ .75               $ 10,500
</TABLE>

(a) Includes allocated common space as agreed to by Sublessor and Sublessee.

(b) The base monthly rent for the portion of the Subleased Premises designated
the "Futures Area" on Exhibits B-1.2 and B-2.2 shall be $.75 per square foot per
month as set forth above for so long as that portion of the Subleased Premises
is only used for storage by Sublessee and is not occupied by any employee of
Sublessee for any purpose except as may be required from time to time for access
to stored property ("Storage Use"). In the event Sublessee commences the use of
such space for any purpose other than Storage Use, then, commencing on the first
day of the next calendar month following the commencement of such other use,
Sublessee shall pay to Sublessor the same base monthly rent per square foot for
the Futures Areas as is paid by Sublessee for the portion of the Subleased
Premises that is not the Futures Area."

          (e) Section 5(g) of the Sublease: The following shall be added at the
     end of Section 5(g) of the Sublease.

     Except as set forth below, commencing on and as of October 1, 2002, (i)
Sublessor's Share shall be Seven Thousand Dollars ($7000.00) per month and (ii)
notwithstanding the provisions of Section 5(b) hereof, Sublessor shall pay, in
the first instance, all costs for Real Estate Taxes and insurance, and Sublessee
shall pay to Sublessor, as Additional Rent, Sublessee's Operating Expense Pro
Rata Share (as defined below) of such Real Estate Taxes and insurance
(excluding, however, Sublessor's insurance required pursuant to Section 9.1 of
the Master Lease). Notwithstanding the

                                      - 3 -
<PAGE>

foregoing, or anything to the contrary in this Sublease, in the event that
Sublessor sublets any or all of the Premises (other than the Subleased Premises
and excluding any lease or sublease of less than 2,000 square feet) to a third
party or Sublessor uses any part of the Premises for manufacturing or increases
its use for administrative purposes above Sublessor's level of use as at October
1, 2002, Sublessee shall no longer be responsible for the payment of Operating
Expenses as provided in Section 5(b) of this Sublease; instead, in such case:
(i) Sublessor shall pay all Operating Expenses for the Premises in the first
instance and shall charge Sublessee only its Operating Expense Pro Rata Share of
all Operating Expenses; and (ii) Sublessor shall no longer pay Sublessor's Share
to Sublessee. For the purposes of this Sublease, "Operating Expense Pro Rata
Share" shall mean (i) with respect to all Operating Expenses other than Real
Estate Taxes and insurance, a percentage reflecting the ratio that the space
exclusively occupied by a party bears to the total rentable space exclusively
occupied by all parties in the Premises (excluding any Common Areas and
unleased, vacant space) and (ii) with respect to Real Estate Taxes (other than
personal property tax on personal property and equipment owned by Sublessor) and
insurance (excluding, however, Sublessor's insurance required pursuant to
Section 9.1 of the Master Lease), a percentage reflecting the ratio that the
space exclusively occupied by a party bears to the total space in the Building,
all as reasonably determined by Sublessor.

          (f) Section 12 of the Sublease: Pursuant to Section 12, copies of any
     notice, demand or communication delivered to Sublessor shall be addressed
     to Dennis Bucek, Senior Vice President, Coherent, Inc.

          (g) Section 15 of the Sublease: Section 15 of the Sublease is hereby
     deleted in its entirety.

          (h) Section 16 of the Sublease: Section 16 of the Sublease is hereby
     deleted in its entirety and replaced with the following:

     "Assignment and Subletting: Sublessee shall not assign this Sublease
without Sublessor's consent, except to (a) an entity controlling, controlled by
or under common control with Sublessee, or (b) a successor entity related to
Sublessee by merger, consolidation, nonbankruptcy reorganization, or government
action. Sublessee may also sub-sublease all or a portion of the Subleased
Premises without Sublessor's consent, to a purchaser of substantially all of
Sublessee's assets in each Segment. For the purpose of this Section 16,
"Segment" shall mean each of the Surgical Segment, the Aesthetic Segment and the
Ophthalmic Segment of the Business (each as defined in the APA). Notwithstanding
the foregoing, Sublessee may sublet all or any part of the Subleased Premises
from time to time to any person or entity, provided that (i) such person or
entity (a "Permitted Subtenant") shall be subject to and shall agree to comply
in all respects with, the terms of this Sublease and the New Master Lease and
(ii) Sublessee shall remain the primary obligor to Sublessor in respect of this
Sublease, and shall guarantee such compliance by such Permitted Subtenant."

          (i) Section 19 of the Sublease: The following sentence shall be added
     to the end of Section 19:

                                      - 4 -
<PAGE>

     In the event of a Lease of more than 2,000 square feet of the Premises to
any third party, Sublessor shall have the right from time to time to reasonably
allocate parking and visitor spaces on the Premises on a pro rata basis.

     4. Cafeteria and Gym Areas: Effective on the Second Reduction Date,
Sublessee shall no longer have access to and use of the Cafeteria and Gym
facilities on the Premises; provided, however, that upon thirty (30) days
advance written notice provided by Sublessee to Sublessor requesting renewed
access to either or both of such Cafeteria and Gym facilities, such access and
use shall be restored (with any food service to be provided at the Cafeteria to
be the sole responsibility of Sublessee) for a cost of Five Thousand Dollars
($5,000) per month additional Base Rent for the Cafeteria and Two Thousand
Dollars ($2,000) per month additional Base Rent for the Gym facilities. In the
event that Sublessee exercises its right to use either or both of the Cafeteria
or Gym facilities, such facilities shall also be accessible to Sublessor's
employees remaining on the Premises for so long as such facilities are used by
Sublessee. Sublessor shall have the right, at any time, to terminate Sublessee's
use of either or both of the Cafeteria and Gym facilities on thirty (30) days
advance written notice to Sublessee.

     Upon termination of Sublessee's access to the Cafeteria and/or Gym
facilities (on the Second Reduction Date or otherwise), Sublessee shall remove
all equipment owned by it unless such equipment is purchased by Sublessor or any
other person or entity which owns or has the right to use all or any part of the
Premises.

     5. Cooperation with Respect to Sublessor Improvements: Sublessee hereby
acknowledges and agrees that in order to make the Premises suitable for
multi-tenant use, and to make the changes to the Subleased Premises as provided
herein, Sublessor may need, from time to time, to install improvements and
implement security measures to effect a secure, physical separation of the
Subleased Premises from the Premises and to reasonably control access to Common
Areas. Sublessee agrees to reasonably cooperate with Sublessor in all such
matters. In making any such improvements to the Premises, Sublessor agrees not
to unreasonably interfere with Sublessee's use and occupancy of the Subleased
Premises.

     6. Compliance with New Master Lease: As required by Section 10.1 of the New
Master Lease, Sublessee acknowledges that the Sublease is subject and
subordinate to the New Master Lease and the rights of the Master Lessor
thereunder and that this Sublease shall be terminated and the Subleased Premises
surrendered in the event of the termination of the New Master Lease, including
as a result of the exercise by Master Lessor of its rights and remedies under
the Master Lease; provided, however, that the preceding provisions of this
Section 6 shall not limit or affect in any manner the obligations of Sublessor
to make the Subleased Premises available to Sublessee for the entire Term to the
extent required under the terms and conditions of the Sublease.

     7. Effect of Second Amendment: In the event of any inconsistency between
this Second Amendment and the New Master Lease or Sublease, the terms of this
Second Amendment shall prevail. Except as specifically amended in this Second

                                      - 5 -
<PAGE>

Amendment, the Sublease shall remain in full force and effect in accordance with
its original terms.

     8. Execution in Counterparts: This Second Amendment may be executed in
counterparts by the parties hereto, and shall become binding when all parties
have each executed a counterpart hereof, and together such executed counterparts
shall constitute this Second Amendment. For the purposes of this Second
Amendment, an executed counterpart received by facsimile shall be deemed an
original. The parties hereto agree that signed counterparts hand delivered or
delivered by facsimile by both parties to the other shall satisfy any notice
requirements set forth in Section 12 of the Sublease with respect to this Second
Amendment.

                       [Signatures continued on next page]

                                      - 6 -
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have set their hands to this Second
Amendment as of the day and date first above written.

SUBLESSOR:                                  SUBLESSEE:

COHERENT, INC.,                             LUMENIS INC.,
a Delaware corporation                      a Massachusetts corporation

By: /s/ Helene Simonet                      By: /s/ Kevin R. Morano
    -------------------------------             --------------------------------

Printed Name: Helene Simonet                Printed Name: Kevin R. Morano

Its: Executive Vice President and           Its: Executive Vice President and
     Executive Vice President                    Chief Financial Officer

Date: October 22, 2002                      Date: October 23, 2002

                                      - 7 -

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