Document:

Exhibit 10.1

March 1,2002

Mr. Kevin Morano
10 Woodnere Way
Pennington, New Jersey 08534

Dear Kevin,

I am pleased to confirm our offer to you on February 21, 2002,  at Lumenis Ltd.,
as Executive  Vice  President and Chief  Financial  Officer  reporting to me. As
agreed when you accepted  our offer on February  21,  2002,  your start date was
March 1, 2002. Our total compensation plan is as follows:

Compensation

o    Your starting salary will be $9,615.39 paid alternating Friday's,  which is
     equivalent to $250,000 on an annualized basis.

o    As a senior member of  management,  you will be eligible to  participate in
     the Lumenis Management Bonus Program up to a 100% base participation  rate.
     The plan is  specifically  designed to reward  participants  based upon the
     attainment of specific Company targets and personal performance.

o    The Company will pay your club dues up to $9,000.00 per year.

o    If your  employment  is  terminated  by the Company for reasons  other than
     "just cause",  the Company will grant you three (3) months of severance pay
     at your base salary.

Stock

The Company intends to grant you a stock option of. 200,000 Lumenis shares. This
option is based on Board approval. The grant date is March 4, 2002 and the price
is the  closing  price on March 1, 2002.  Vesting  will occur over three  years,
33.3% on each of your first three grant anniversary dates.

Conditions Of Employment

All  prospective  employees  are required as a condition of  employment to enter
into the Company's  Proprietary  Information  Agreement.  A copy is enclosed for
your  review.  Please  review  this  document  carefully  since  the  terms  and
conditions  are  incorporated  into and are an  integral  part of this  offer of
employment.  By signing below,  you acknowledge that you understand and agree to
the terms of this offer and acknowledge  that you understand that the Company is
an "at will" employer,  which means that either you or the Company can terminate
your employment relationship at any time with or without notice or cause.

The terms and  conditions  contained in this offer letter  supersede any and all
representations  whether oral or written, made to you by anyone acting on behalf
of the Company.

Kevin,  we are excited  about you joining us. To confirm  your oral  acceptance,
please sign below and return the original to Winona  Watkins,  Santa Clara Human
Resources  Department  at 2400 Condensa  Street,  Santa Clara,  California.  The
enclosed copy is for your records.  If you have any questions,  please feel free
to contact me at 212-515-4188.

  Sincerely,

     /s/
Yacha Sutton
CEO
Offer Accepted.                                    Date:

Start Date:

                                      -29-Exhibit 10.2

                             DISTRIBUTION AGREEMENT

                                     Between

                                  Lumenis Inc.

                                       And

                              Eclipse Medical, Ltd.

                              for the territory of

                                     "Texas"

      This  Distribution  Agreement  (this  "Agreement")  is entered into and is
effective as of the 31st day of December, 2001 (hereinafter "Effective Date") by
and between Lumenis Inc., a Massachusetts  company,  with its principal place of
business  located at 2400 Condensa  Street,  Santa Clara,  California,  USA (the
"Company"), and Eclipse Medical, Ltd., a Texas limited partnership (successor by
statutory  conversion  to Eclipse  Medical,  Inc.) with its  principal  place of
business  located at 3728 Realty Road,  Addison,  Texas,  USA  (hereinafter  the
"Distributor").

      In  consideration  of the  undertakings  and  obligations  hereinafter set
forth, it is mutually agreed as follows:

            1. DISTRIBUTORSHIP

                  A.  Appointment.  Subject to the terms and  conditions of this
      Agreement,  the Company  hereby  appoints the  Distributor as an exclusive
      distributor and service provider in the Territory of Texas, as detailed in
      Exhibit F attached  hereto (the  "Territory")  of the  Company's  products
      listed in Exhibit A attached  hereto and made a part hereof subject to the
      terms of this  Agreement (the  "Product" or  "Products").  For purposes of
      clarification,  the  Distributor  shall not have (i)  distribution  rights
      pursuant to this Agreement for any of the Company's products not listed in
      Exhibit A; nor (ii) servicing rights to (v) the Coherent line of products,
      including,  without limitation,  any products  manufactured in the past by
      Coherent  Medical Group (until such time as the  Distributor has completed
      training with respect to such products, to the reasonable  satisfaction of
      the  Company),  (w)  any  outstanding  service  contracts  which,  at  the
      Effective  Date,  customers  may have with the Company or any third party,
      (x) services rendered by the Company as part of warranties  offered by the
      Company prior to the Effective Date, (y) repairs and services not rendered
      on-site at the end user customer's  premises ("depot"  services),  and (z)
      any renewals of such arrangements. The Distributor does hereby accept this
      appointment  as exclusive  distributor  of the  Products in the  Territory
      subject to the terms of this Agreement.

                  B. Price List.  The Company may revise the products  listed in
      Exhibit A, by written notice to the Distributor,  as it deems appropriate,
      but shall fulfill any outstanding  orders accepted by it prior to the date
      of such  notice;  provided  that any such  revision  shall not  remove any
      Products listed thereon unless the Company ceases to  manufacture,  market
      or distribute such Product in the United States, or unless  unavailability
      of such Product or component thereof is due to governmental regulation.

<PAGE>

                        For all purposes  of  this Agreement "List Price"  shall
      mean the retail price for Products as published from  time to time by  the
      Company in the U.S. Price List.

                  C.  Exclusivity.  The Company  shall not  designate  any other
      Person as its  representative or distributor of Products in the Territory,
      and the Company shall not sell or otherwise  deliver the Products in or to
      the  Territory  except  through  the  Distributor,  except as  provided in
      Exhibit A. "Person" means an individual, a partnership,  a corporation,  a
      limited liability company, an association, a joint stock company, a trust,
      a joint venture, an unincorporated organization, a governmental entity (or
      any department,  agency,  or political  subdivision  thereof) or any other
      entity.

            2. DUTIES OF THE DISTRIBUTOR

                  A. Sales and Expertise.  The Distributor agrees to use all its
      best commercial efforts to employ qualified sales and technical  personnel
      familiar  with the Products for the purposes of the  marketing and service
      requirements as set forth herein.

                  B. Performance of Service. The Distributor will look after the
      general  interests  of the  Company  in  connection  with  performing  the
      services set forth in this Agreement.  The Distributor  shall use its best
      commercial  efforts  to fully  and  actively  introduce  and  promote  the
      purchase  and  use  of  the  Products  and  obtain  orders  therefor.  The
      Distributor shall also have the following responsibilities:

                       (i)  maintain  active  contacts  with all  potential  and
      actual customers and users of the Products.

                       (ii) keep the Company fully informed of all governmental,
      commercial, and industrial activities and plans which do or are reasonably
      likely to affect the sale of Products in the Territory.

                       (iii) provide  technical  liaison between the Company and
      customers  in  the  development  and  analysis  of  specifications  and in
      language interpretation of tenders and bids.

                       (iv) achieve a sufficient  level of  understanding of the
      Products to enable the  Distributor  to provide  technical  information to
      customers and effectively sell the Products.

                  The  Distributor  shall  maintain  during  the  terms  of  the
      Agreement,  a  complete  record  of all  sales  of the  Products,  showing
      customer name,  date of sale,  shipping  date,  instrument  model,  serial
      number,  and sales order  acknowledgement  and  invoices  for all Products
      covered by this  Agreement as well as of the  furnishing  of the Company's
      standard  limited  warranty  and  special  terms  of the  sale,  including
      warranty,  installation  date  and  other  appropriate  information.  This
      information  shall be promptly  supplied to the Company on a monthly basis
      or the product  warranty shall be void. The  Distributor  shall notify the
      Company on each purchase order of the name and address of the customer and
      the sales  price.  The  Distributor  shall also keep the Company  informed
      about  competitive/market  information  through Win/Loss reports using the
      format shown in Exhibit E.

                  C. Training.

                                      -2-
<PAGE>

                  (i) Within 90 days after date of signature of this  Agreement,
      the Distributor undertakes to send at least one or more suitably qualified
      technician(s)  (as reasonably  determined by the Company) to the Company's
      place  of  manufacture,  or to  such  other  place  as the  Company  shall
      designate,  for  instruction by the Company in the  installation  and full
      servicing  of the  Company's  Products  and to be  certified  as a Company
      certified technician. The curriculum of instruction shall be determined by
      the Company and shall be written and conducted in English.

                       (ii) The  Company  will  provide  this  training  free of
      charge, on a technical level similar to instruction given to the Company's
      service and maintenance personnel.

                       (iii)  The  Distributor  shall  bear and pay all  travel,
      salary,  insurance and living  expenses of its  personnel  incurred in the
      course of such  instruction.  Thereafter,  the  Distributor  shall, at the
      Company's  request,  send at least  one  technician  during  each two year
      period   subsequent  to  the  first  two  years  hereunder  for  refresher
      instruction  to the Company's  place of manufacture or such other place as
      the Company shall designate, subject to all terms and conditions mentioned
      above.

                       (iv) The material  failure of the  Distributor  to comply
      with the  provisions  of this Section 2.C.  shall be considered a material
      default under the terms of this Agreement.

                       (v) The  Distributor  will be deemed  to comply  with the
      provision of this Section 2.C in the event it employs a suitably qualified
      technician who has visited the Company's  place of manufacture and who has
      been instructed by the Company in the past two (2) years.

                  D.  Distributor   Cooperation.   The  Distributor   agrees  to
      continuously  keep  the  Company  informed  of its  marketing  efforts  by
      furnishing,  on a monthly  and/or  quarterly  basis,  as the  Company  may
      request, detailed market analysis and reports concerning the Distributor's
      sales  strategy,   sales  forecasts,   visits  to  prospective  customers,
      competition,  inventory,  customers'  data,  sales  volume and other facts
      relating  to sales  of  Products  as the  Company  may  from  time to time
      reasonably  request.  In addition,  the  Distributor  shall provide to the
      Company  the  names,   addresses,   telephone   and  fax  numbers  of  the
      Distributor's  end  user  customers,  as well as the Part  Number,  Serial
      Number and date of  installation  for the Products sold. The  Distributor,
      upon  request,   undertakes  to  provide  the  Company's  duly  authorized
      representative  with copies of quotations or invoices relating to sales in
      the Territory.

                  E.  Advertising.  The  Distributor  shall provide the Company,
      free of charge,  with copies of all of the  Distributor's  advertising and
      promotional  materials,  including  audio  visual  aids,  as  they  become
      available,  shall consult with the Company prior to their  distribution to
      the  market,  and such  materials  shall be subject to veto by the Company
      (upon  which  veto  the  Distributor  will not use  such  advertising  and
      promotional materials).

                  F. Warranty.  The Distributor shall provide to each purchasing
      customer a copy of the Company's standard limited warranty.

            3. DUTIES OF THE COMPANY

                  A. Materials.  The Company shall,  from time to time, upon the
      Distributor's  request,  provide  the  Distributor  with  advertising  and
      promotional materials,

                                      -3-
<PAGE>

      including sales and technical  brochures when available in such reasonable
      quantities and in such form as it normally  furnishes to  distributors  in
      similar  markets.  Additional  quantities  may be ordered at the Company's
      prices  then in effect.  During  each  semi-annual  (January-June)  period
      throughout the Term (as defined in Section 6.A), the Distributor  shall be
      entitled to purchase from the Company one  demonstration  unit (such model
      as shall be specified by the Distributor)  from each major Product line of
      the Company for a price equal to 50% of List Price. Any such demonstration
      units sold by the  Distributor  to any customer shall be clearly marked by
      the  Distributor  as  a   "Demonstration   Unit."  Any  equipment  or  any
      audio-visual aids loaned to the Distributor for promotional or advertising
      purposes shall remain the exclusive property of the Company,  and shall be
      returned by the  Distributor  to the Company  upon  written  demand of the
      Company,  or upon termination of this Agreement,  reasonable wear and tear
      excepted.

                  B. Documents. The Company will furnish to the Distributor upon
      request,  at no charge,  drawings,  manuals,  Spare Parts and Tools Lists,
      servicing   documentation,   shipping  and  packing   specifications   and
      instructions,  in  such  reasonable  quantities  and in  such  form  as it
      normally furnishes to distributors in similar markets.

                  C. Response to Inquiries.  The Company shall promptly  respond
      to all inquiries from the  Distributor  concerning  matters  pertaining to
      this Agreement.

                  D. Delivery Time. The Company shall minimize  delivery time as
      much as  possible  and use all  reasonable  efforts  to  fulfill  delivery
      obligations as committed by the Company in acceptances.

                  E.  Quotations  to  Exporters.  The Company shall refrain from
      giving  quotations  to  exporters  for  Products  to  be  shipped  to  the
      Territory, unless otherwise agreed to in writing by the Distributor.

                  F. New  Developments.  The Company will inform the Distributor
      of  new  product   developments   within  a  reasonable  time  after  such
      developments are publicly announced.

                  G.  Training.  The  Company  will  provide  sales and  service
      training  for  the  Distributor's  personnel  from  time  to  time as more
      particularly   discussed   above  in  Section  2.C.  It  is  required  for
      Distributor's personnel to attend these seminars. All expenses, other than
      tuition,  for  Distributor's  personnel to attend these  seminars  will be
      borne by the Distributor.

                  H. Loan. The Company agrees to make to the Distributor, at the
      Effective  Date,  a cash loan by wire  transfer to a  Distributor  account
      designated  by the  Distributor  in the amount of One  Million Two Hundred
      Fifty Thousand dollars  ($1,250,000)  (hereinafter "Loan") to be evidenced
      by a promissory note  substantially in the form attached hereto as Exhibit
      G (hereinafter  "Note"),  provided that the Company may defer disbursement
      of said loan until the  earlier of January 11,  2002 or the  Business  Day
      following its receipt of the written  consent of its bank lender under the
      Company's  outstanding bank credit  agreement.  As used in this Agreement,
      "Business  Day" shall  mean a day on which  Banks are open in New York and
      Texas. The Note will be personally guaranteed,  jointly and severally,  as
      to the  initial  fifty  percent  (50%)  thereof by the  principals  of the
      Distributor:  Thomas, Paul and Kevin O'Brien (the "Principals"), and as to
      the entire  principal  amount thereof by O'Brien  Medical Ltd. and O'Brien
      Holdings LLC.

                                      -4-
<PAGE>

            4. TERMS AND CONDITIONS OF SALE

                  A. Purchase Price

                        (i) The Distributor shall pay the prices set forth in
      Exhibit A. In case the Distributor orders Products or quantities of
      Products which are not listed in the Product price list, then the price
      shall be as quoted by the Company. The Company reserves the right to
      increase prices in its Product price list upon 60 days written notice to
      the Distributor. All prices shall remain firm for at least 90 days.

                        (ii) All sales are FOB factory. All costs of delivering
      the Products to the Distributor (including, but not limited to, costs for
      land, air and/or ocean freight, insurance, port, customs and forwarding
      fees, if any) shall be paid by the Distributor. All prices include cost of
      packing and crating for air shipment.

                  B. Orders and Payment of Purchase Price. The Distributor shall
      submit its orders for Products in writing to Company.  Orders shall not be
      deemed accepted until confirmed in writing by the Company.  The placing by
      the Distributor of a purchase order and The Company's  acceptance  thereof
      under and in  accordance  with this  Agreement  shall create a contract of
      sale between the Company and the Distributor on the terms of such purchase
      order and of this  Agreement.  In the event of a  discrepancy  between the
      terms of this Agreement and the terms of any purchase order,  the terms of
      this Agreement shall prevail.  The Distributor  will provide a three month
      rolling  forecast on a monthly  basis of predicted  sales and purchases by
      product and such  additional  sales data as is needed to effectively  plan
      sales and  shipments  in the  Territory  by the  Company.  Payment  by the
      Distributor to the Company of the net purchase  price,  and  reimbursement
      for costs of delivery, if any, and other charges hereunder,  shall be made
      by cash or by wire transfer of immediately  available funds within 30 days
      (except in the case of any  undelivered  purchase  orders  placed prior to
      January 1, 2002,  for which payment shall be made prior to March 20, 2002)
      after the shipment date.  Notwithstanding  any other remedies available to
      the  Company  under this  Agreement,  the  Company  shall be  entitled  to
      immediately suspend and/or cancel deliveries of any of its Products to the
      Distributor  upon any  nonpayment.  Any payment not  received  within five
      Business Days of the due date shall accrue interest at the rate of 12% per
      annum from the due date. In addition,  upon such failure to make a payment
      for Product  purchases  when due, all amounts  outstanding  to the Company
      from the Distributor shall become  immediately due and payable  regardless
      of their scheduled payment date. Any Product payments  aggregating $10,000
      or more (including  accrued but unpaid interest and default  interest,  if
      any) not  received by the  Company  within  five  Business  Days after the
      earlier  of (i)  Distributor's  receipt  from  the  Company  of a  monthly
      statement showing amounts due and their respective due dates (including in
      respect of such payments not received) and (ii) notice from the Company of
      such  non-payment,  shall  constitute a payment default by the Distributor
      for  which the  Company  may  immediately  deliver  a  Termination  Notice
      pursuant to Section 6.D. The provisions of Section 6.D regarding  required
      notice and a period to cure shall not apply to default  due to  nonpayment
      by the Distributor.

                  C. Passage of Title,  Delivery.  Deliveries of Products to the
      Distributor  shall be according to the Company  commitments made from time
      to time in response to the  Distributor's  forecasts of need,  firm orders
      and  consistency  with  the  Company's   delivery   commitments  to  other
      customers.

                        Title to the Products purchased hereunder shall pass to
      Distributor and all risk of loss or damage to such Products shall be borne
      by the Distributor from the time such Products are given over to the first
      common carrier. Unless otherwise specified in the

                                      -5-
<PAGE>

      purchase order accepted by the Company, the Company shall arrange for
      shipment of the Products from the place of manufacture or storage to the
      port or point of destination set forth in the order. The Company shall
      arrange for freight and insurance coverage on Products, at the
      Distributor's request and cost, of the type and in the amounts specified
      by the Distributor, or, if unspecified, that which in the Company's
      judgment may be proper, provided that the Distributor shall cover the
      Company's actual cost for such coverage.

                        All Products shall be inspected upon receipt from the
      carrier, and claims should be filed with the carrier immediately in the
      event there is evidence of damage. As used in the clauses appearing herein
      or attached hereto, "delivery" shall occur when Products are shipped to
      the point of destination.

                  D. Acceptance.  Each Product furnished by the Company shall be
      deemed   accepted  by  the   Distributor   unless   notice  of  defect  or
      nonconformity  is received  within  thirty (30) days of delivery or within
      five (5) days of installation, whichever occurs sooner.

                  E. Proprietary Rights. The Distributor  undertakes to promptly
      inform the Company of any possible  infringement  by third  parties of the
      Company's  proprietary  rights  including any duplication of the Products,
      and to  participate  with the Company  regarding any legal action  against
      such infringement which, in the Company's judgment, should be necessary.

                        In the event that the Distributor notifies the Company
      of a claim it has received that the Products or part thereof purchased by
      the Distributor hereunder infringes a third party's proprietary rights in
      the Territory, then the Company agrees, at its discretion, either to (a)
      defend the claim at its expense, with the cooperation of the Distributor
      or (b) make changes in the Product or part thereof to avoid the claim, or
      (c) purchase the right to use such proprietary right or (d) refund to the
      purchaser the purchase price of the Product upon the Company taking
      possession of such Product. The foregoing states the entire liability of
      Company with respect to infringement of patents or other proprietary
      rights by the Products or part thereof, or by their operation.

                  F. Spare Subassemblies,  Spare Parts,  Supplies and Tools. The
      Distributor  shall maintain an inventory of spares,  subassemblies,  spare
      parts and supplies  (referred to collectively as "Spares and Tools").  The
      Distributor  shall  maintain  sufficient  inventory of Spares and Tools to
      enable  the  Distributor  to  maintain  Products  in use in  Distributor's
      Territory,  provided that during the Term the Company shall make available
      for purchase by the Distributor reasonable quantities of Spares and Tools,
      at prices in effect on the date any  purchase  order for such  Spares  and
      Tools is received by the Company.

                  G. Warranty.

                        (i) The Company  warrants  that the systems  included in
      Exhibit  A shall be free  from  defects  for a period of one year from the
      date of the first installation,  provided however,  that in no event shall
      any  warranty  extend more than 15 months from the date of shipment of the
      Product.  This warranty  shall be valid and available only to the original
      purchaser  of a  Product  from  Distributor,  and  not to  any  subsequent
      purchaser, assignee or user of such Product.

                       This warranty does not apply to any  demonstration  units
      provided  to or  purchased  by  Distributor,  nor  to  certain  parts  and
      subassemblies which have a defined limited

                                      -6-
<PAGE>

      life, and other accessories as defined by the Company.  A complete list of
      such parts and subassemblies may be obtained directly from the Company.

                       This warranty  shall not cover  consumable  components or
      accessories.

                       The  liability  of the  Company  under this  warranty  is
      limited to the  repair by the  Company or  replacement  (at the  Company's
      option) of any  allegedly  defective  part or parts under  warranty at its
      expense,  at  either a  Company  authorized  service  center,  or,  at the
      Company's option, at user's place of business. Defective parts replaced by
      the Company as mentioned  above,  shall be returned to the Company and the
      Company shall have title to such parts.

                       It is a condition precedent to the Company's undertakings
      under this warranty that the  Distributor  notifies the Company  promptly,
      but not later than 30 days after  delivery  or  occurrence  of any alleged
      defect.  Such  notice  shall  describe  the full  extent and nature of the
      problem.

                       (ii) This warranty shall not apply to a Product which has
      been   repaired  or  altered  not  in   accordance   with  the   Company's
      instructions,  nor shall it apply to a Product  which has been  subject to
      misuse,  unauthorized use,  negligence,  accident  (including fire, water,
      explosion, smoke, vandalism, etc.), or which has been operated contrary to
      the Company's instructions. The warranty is void, if at any time:

                             (a) anyone other than Company authorized  personnel
      removes a Product  casing  and/or  attempts to make or makes any  internal
      changes,  removals,  attachments or additions to the Product or components
      thereof;

                             (b) the power  supplied  to the Product or any part
      thereof  differs from the rated value,  or any external device attached by
      user creates conditions exceeding the tolerance of the Product; or

                             (c)   Products  are   repaired   using   electronic
      components  (other than  standard  passive  electronic  components  not of
      unique  design) not  supplied by the Company  unless the Company has first
      consented to such repair in writing.

                       (iii)  The  Company  makes  no  warranty  in  respect  to
      accessories  and other parts made by other  manufacturers,  whether or not
      warranted by such manufacturers,  which have been attached or connected to
      the Product after  installation,  unless such  accessories and other parts
      have been supplied and attached or installed by the Company.

                       Products or parts  thereof  may be  returned  for repair,
      replacement or adjustment only with the Company's  prior written  consent.
      No credit allowances will be given or replacements  shipped unless defects
      are verified by the Company or Company-authorized personnel.

                       EXCEPT AS  OTHERWISE  SET  FORTH  HEREIN,  THE  FOREGOING
      WARRANTY  IS THE  DISTRIBUTOR'S  SOLE AND,  EXCLUSIVE  REMEDY  TOWARD  THE
      COMPANY,  AND IS IN  LIEU OF ANY AND  ALL  OTHER  WARRANTIES,  GUARANTEES,
      PROMISES, OR REPRESENTATIONS  WHETHER WRITTEN, ORAL OR IMPLIED,  INCLUDING
      WARRANTIES  OF  MERCHANTABILITY,   SATISFACTORINESS  OR  FITNESS  FOR  ANY
      PARTICULAR  PURPOSE OR USE.  IN NO EVENT  SHALL THE  COMPANY BE LIABLE FOR
      LOSS OF

                                      -7-
<PAGE>

      USE,  LOSS OF  PROFITS,  OR OTHER  COLLATERAL,  SPECIAL  OR  CONSEQUENTIAL
      DAMAGES.

                       (iv) It shall be the  responsibility  of the Distributor,
      at its sole  expense,  to install  Products,  service  its  customers  and
      perform   in-warranty   service  at   end-user's   site.   the   Company's
      responsibility  shall be limited to replacing or repairing defective parts
      and materials  under warranty and to provide backup  technical  support to
      the Distributor.

                       The Distributor shall have its personnel certified by the
      Company  (pursuant to Section 2.C. (i) above) perform all  maintenance and
      repair service of Products purchased hereunder. Performance of maintenance
      and repair  service by  Distributor's  personnel  certified by the Company
      shall not void the Warranty referenced above.

                  H. Product Labeling, Trademarks and Tradenames

                       (i)  Product  Labeling.  Products  shall be  labeled  and
      identified at point of manufacture.  The Distributor  shall be responsible
      for compliance with all local laws and  regulations  relating to labeling.
      Such  labeling  and  identification  shall  be only as  acceptable  to the
      Company  and  may be  altered  or  added  to by the  Distributor  only  as
      previously  agreed  upon in writing  by the  Company.  The  failure of the
      Distributor to comply with these provisions shall be considered a material
      default under the terms of this Agreement.

                       (ii)   Trademarks   and   Tradenames.   The   Distributor
      acknowledges the validity and proprietary value of the Company  trademarks
      and  tradename  including,  but not  limited to, the name  "LUMENIS."  The
      Company shall retain sole  ownership of all goodwill  associated  with the
      Products,  as represented and symbolized by the trademarks and tradenames,
      and the Distributor shall not register any of the Company's  trademarks or
      tradenames  in  its  name.  The  Distributor  undertakes  to  display  the
      Company's  trademarks and tradenames solely in connection with identifying
      the  Company  in  the  sale  and  marketing  of  Products  hereunder.  The
      Distributor  shall not remove copyright notices or any trademarks from the
      products. The Distributor shall not be entitled to use said trademarks and
      tradenames  in  conjunction  with the  Distributor's  own  trademarks  and
      tradenames  etc.  except in the manner  authorized  by the Company,  which
      authorization  will not be  unreasonably  withheld and in compliance  with
      distribution  standards and specifications  established by the Company. In
      the event that the Company  determines that the Distributor is not meeting
      such standards and specifications,  the Distributor shall immediately,  at
      the Company's  instructions,  take all steps necessary to ensure that such
      standards and  specification  are met or cease all further use and display
      of  the  trademarks  and  tradenames.   In  the  event  of  expiration  or
      termination  of  this  Agreement,   the  Distributor   shall   immediately
      discontinue  all use of the Company's  trademarks or tradenames  except as
      may be required for the sale of the Distributor's inventory of Products.

            5. COVENANTS

                  A. Territorial Limitations and Competitive Lines

                       (i)  Territorial  Limitations.  During  the  Term and the
      Non-Competition   Period  (as  defined  in  Section   6.C),   neither  the
      Distributor, the Distributor's Affiliates nor the Principals shall solicit
      orders from or make deliveries to end-users or third parties, or establish
      distribution  outlets  outside  the  Territory,  in each case  without the
      Company's express prior written consent.

                                      -8-
<PAGE>

                       (ii)   Competitive   Lines.   During  the  Term  and  the
      Non-Competition   Period,  neither  the  Distributor,   the  Distributor's
      Affiliates nor the Principals shall, directly or indirectly, engage in the
      manufacture,  assembly,  development,  sale,  distribution  or  service of
      products which are competitive to the Products sold hereunder  without the
      express  prior  written  consent  of the  Company.  In  case of  doubt  or
      disagreement,  the Company shall have the power to reasonably determine if
      a product is competitive to the Products sold hereunder. In the event that
      the  Company  notifies  the  Distributor  of its  determination  that  the
      Distributor,  Distributor's  Affiliates or any of the Principals is or are
      engaged  in a  violation  of this  provision;  then at the  option  of the
      Company  at any time  thereafter;  (a) this  Agreement  may be  terminated
      forthwith  by the Company or (b) the  Company  may cancel the  exclusivity
      provisions   herein  and  either  appoint  one  or  more  distributors  or
      representatives  to sell,  lease  or  otherwise  market  and  service  the
      Products  in the  Territory  on such  terms  as the  Company,  in its sole
      discretion may determine, or sell the Products directly in the Territory.

                  B. Use of  Technical  Data.  During  the Term the  Distributor
      shall be entitled to use,  subject to its  obligations  of  non-disclosure
      imposed by Section 5.C.  below,  the  Company's  technical  data and other
      know-how relating to the Products supplied by the Company for the sole and
      limited  purposes of performing  installation,  maintenance  or adjustment
      service and repair of Products.

                  C.  Distributor  Obligations  with  Respect  to the  Company's
      Technology

                       (i) The  Distributor  agrees to receive in confidence any
      information  disclosed by the Company to the Distributor,  including,  but
      not  limited  to,  the  Company's  inventions  or  technical  information,
      surgical data or processes  (hereinafter  "Confidential  Information") and
      not to disclose any of the  Confidential  Information to any other person,
      firm or corporation,  and to use the Confidential Information only for the
      Distributor's  own use in order to  fulfill  its  obligations  under  this
      Agreement.

                       The Distributor agrees that the Confidential  Information
      received from the Company shall be disclosed only to such of its employees
      and sales or  service  representatives  as have a need to know  about such
      Confidential Information for a use authorized by this Agreement.

                       (ii) For the purposes of this Section 5.C.,  Confidential
      Information  shall not include any  information  disclosed  by the Company
      hereunder  which (a) is  already  known to the  Distributor  and which the
      Distributor  had in its possession in written or physical  embodiment from
      prior  to  the  disclosure,   unless  such  Confidential  Information  was
      previously  disclosed by the Company,  (b) is  rightfully  received by the
      Distributor  in the  routine  course of  business  from a third  party who
      acquired such Confidential Information and the right to disclose same from
      the  Company;  (c) is  approved  for  release  or  publication  by written
      authorization  of  the  Company;  or (d) is  published  by an  established
      publisher (other than the  Distributor) in a printed  publication of which
      copies have been disseminated  publicly to more than fifty (50) parties in
      a country wherein the Company has sold a substantial quantity of Products.

                       (iii) The obligations respecting Confidential Information
      imposed  on the  Distributor  shall  continue  during  the  term  of  this
      Agreement  and for a period  of three (3) years  after the  expiration  or
      termination  of  this  Agreement.   The   Distributor   shall  return  all
      Confidential  Information,  including all copies  thereof,  to the Company
      upon expiration,  termination or cancellation of this Agreement or at such
      earlier time upon the Company's request.

                                      -9-
<PAGE>

                       (iv) The  Distributor  undertakes to bind its  employees,
      officers, sales, technical,  maintenance and service representatives,  and
      other third  parties to whom  Confidential  Information  is  disclosed  as
      permitted hereunder, to the terms and conditions contained herein.

                       (v) Unless  otherwise  specifically  stated herein,  this
      Agreement  does not grant the  Distributor  any  manufacturing,  assembly,
      production  or  licensing  rights,  or any rights in any  patents,  patent
      applications,  trademarks,  and tradenames,  copyrights or know-how of the
      Company.

                       (vi) The Distributor hereby  acknowledges and agrees that
      in the event of any violation hereof, the Company shall also be authorized
      and  entitled  to  obtain  from  any  court  of  competent   jurisdiction,
      preliminary  and  permanent  injunctive  relief  as well  as an  equitable
      accounting of all profits or benefits and past,  present and future losses
      to the Company  arising out of such  violation,  which rights and remedies
      shall be  cumulative  and in addition  to any other  rights or remedies to
      which the Company shall be entitled under law or under this Agreement.

                  D. Indemnification.

                       (i)  The  Distributor  shall  be  liable  for  and  shall
      indemnify,  defend,  and hold the  Company  harmless  against  any  costs,
      liability,  damages, or loss from any claims,  actions,  suits, judgments,
      proceedings,  demands, recoveries or expenses,  including, but not limited
      to,  attorneys'  fees,  arising out of, based on, or caused by (a) product
      claims,  representations,  or warranties, whether written or oral, made or
      alleged  to be made by the  Distributor  or the  Distributor's  employees,
      agents  or  independent  contractors,   in  its  advertising,   publicity,
      promotion,  or sale of any of the  Products  where  such  product  claims,
      representations,  or  warranties  were not  provided by or approved by the
      Company,  (b)  labeling  of the  Products  which  was not  provided  by or
      approved by the  Company,  (c)  negligent  handling of the Products by the
      Distributor  or  the  Distributor's   employees,   agents  or  independent
      contractors, (d) negligent installation, demonstration, service or testing
      of the Products by the Distributor or the Distributor's employees,  agents
      or independent  contractors or (e) any modifications by the Distributor or
      the Distributor's  employees,  agents or independent  contractors,  to the
      Products.  The  foregoing  indemnification  obligations  shall  relate  to
      Products whether sold under this Agreement or prior thereto.

                       (ii) The Company  agrees to indemnify,  defend,  and hold
      harmless the  Distributor,  its  employees  or agents  against any claims,
      suits, or judgments for personal injury,  property damage, or death to any
      third party made or instituted  against the Distributor to the extent that
      they are caused by the failure, malfunction, or defect of the Products not
      caused by actions of the Distributor.  This indemnification is conditioned
      upon the Distributor  notifying the Company as soon as it becomes aware of
      any such  claim  or  action  and the  Distributor's  cooperation  with and
      authorization  of the Company to carry out the sole management and defense
      of any such claim or action. This indemnification is also conditioned upon
      the Distributor  having complied with Section 2.F hereof.  To the extent a
      claim for indemnification arises under this provision, the Company agrees,
      at its own  expense,  to pay the cost to defend  against any such claim or
      action,  including the cost of defense  counsel up to a maximum  aggregate
      amount of $10 million for all claims relating to Products. The Distributor
      shall not  negotiate,  compromise  or settle any claim,  action,  suit, or
      judgment  without the  Company's  prior  written  consent.  The  foregoing
      indemnification  obligations  shall relate to Products  whether sold under
      this Agreement or prior thereto.

                                      -10-
<PAGE>

                       (iii) The parties agree that the Company shall assume and
      exclusively  control,  and the Company hereby assumes,  the defense of all
      present  and  future  litigations  and  proceedings  brought  against  the
      Distributor  which relate to the Company Products  previously or hereafter
      sold by the Distributor,  with counsel of the Company's  choice,  provided
      that (x) the  Distributor and its affiliates will be responsible for their
      share of the judgments or settlements, as appropriate, such share to be in
      accordance with the apportionment of liability in the settlement,  verdict
      or arbitration, or if there is no such apportionment,  such share to be as
      agreed  upon by the  parties;  or,  if they  fail to  agree  promptly,  as
      determined by  arbitration  in accordance  with Section 9.I and (y) if the
      Company  determines  that  there  may be a  conflict  of  interest  in the
      defenses  of the  Company  and the  Distributor,  the  Company  may engage
      separate  counsel  for  itself  and  the   Distributor.   The  Distributor
      represents  and  warrants  to Company  that  attached  hereto as  Schedule
      5.D.(iii) is a true and correct list (prepared by the  Distributor) of all
      such  present  litigation  and  proceedings.  The  Distributor  agrees  to
      cooperate  with the  Company and its counsel in the defense of such claims
      and to  realize  the  maximum  benefit  from any  insurance  coverage  the
      Distributor has with respect thereto,  and the Distributor  agrees to make
      available  to the  Company and its counsel  Distributor's  -personnel  and
      provide any  testimony  and access to its books and records in  connection
      with any such  present or future  litigation  or  proceeding.  The parties
      agree not to assert any cross claims against each other in any third party
      litigation,  and to reserve those claims for resolution  among the parties
      or, if they  cannot  resolve  the  matter,  then to submit  the  matter to
      arbitration  pursuant to Section 9.I.  Notwithstanding  the  foregoing but
      subject  to any  judgment  or  order  rendered  by a  court  of  competent
      jurisdiction,  the  Distributor  shall not be  obligated to enter into any
      settlement  agreement pursuant to which the Distributor is (A) required to
      take or  refrain  from  taking any  action or (B)  required  to accept any
      liability,  in  each  case,  without  the  Distributor's  express  written
      consent, which consent may not be unreasonably withheld;  provided that if
      the Distributor refuses to enter into a settlement agreement worked out by
      the Company,  then (even if the matter is one for which the Company has an
      indemnification   obligation  under  Section  5.D.(ii))  the  fairness  of
      requiring the Company to pay (and the Company's obligation to pay) further
      counsel fees or other defense costs for the benefit of the  Distributor in
      such  matter or any  amounts in excess of what the matter  could have been
      settled for may be submitted by either party for arbitration in accordance
      with Section 9.I.

                       (iv) The  Distributor  expressly  disclaims its statutory
      indemnification rights.

                       (v) Claims by  indemnification  under  Section  5D(i) and
      (ii) shall be brought  within one year after  resolution of the underlying
      claim (pursuant to Section 5.D(iii) or otherwise).

                  E.  Reinstatement.  The Company shall be entitled to an offset
      against any  liabilities  otherwise  payable to the Distributor if, at any
      time before,  on or after the  Termination  Date, an additional  amount is
      required to be paid to or on behalf of the Distributor,  or its successors
      or assigns, or to any other claimant or representative of the Distributor,
      because of the transactions occurring pursuant hereto, whether on or after
      the Effective Date, including, without limitation,  pursuant to Section 7,
      in the event of the insolvency,  bankruptcy,  dissolution,  liquidation or
      reorganization  of  the  Distributor,  or  upon  or  as a  result  of  the
      appointment of a custodian,  receiver,  intervenor or  conservator  of, or
      trustee or similar officer for the Distributor or for any substantial part
      of its  property,  or upon  any  settlement  or  compromise  of any  claim
      effected  by  the  Distributor  with  any  claimant  (including,   without
      limitation,  the  Distributor)  in  connection  with any such  insolvency,
      bankruptcy, dissolution, liquidation or reorganization.

                                      -11-
<PAGE>

            6. Term, Default and Termination

                  A.  Term.  This  Agreement  shall  continue  in full force and
      effect  until the  earliest  of  (hereinafter  the  "Term") (i) sixty (60)
      months from the Effective Date, i.e. up to the 31st day of December, 2006;
      (ii) the FM Termination Date (as defined in Section 9.C hereof)  following
      a Force Majeure (as defined in Section 9.C); (iii) termination pursuant to
      Section  6.E or the  final  sentence  of  Section  9.B  hereof;  or (iv) a
      permitted  termination  by either party,  upon written notice to the other
      party, pursuant to the following:

                       (x) Either party may terminate this Agreement in its sole
      discretion  (notwithstanding that the other party is not in default) after
      December  31,  2002 upon 60 days prior  written  notice to the other party
      (which  notice may be given prior to December  31,  2002);  and (y) either
      party may  terminate  this  Agreement  pursuant to Section 6.D following a
      default by the other party.

                  The date this Agreement  terminates  pursuant this Section 6.A
      is the  "Termination  Date." The provisions of Section 5.C, 5.D, 5.E, 6.B,
      6.C., 7 and 9 shall survive the termination of this Agreement.

                  B.  Transition.   Upon  termination  of  this  Agreement,  the
      Distributor shall diligently cooperate with the Company to effect a smooth
      and orderly transition in the sale of the Products in the Territory.  From
      the time that a notice of  termination  is received by either  party until
      the effective  termination  date, the Distributor  shall refer all Product
      inquiries to the Company, shall support the Company' existing customers in
      the Territory and shall cooperate,  as much as reasonably  possible,  with
      any newly appointed distributor after the termination period.

                  C.  Covenant  Not to  Compete.  During  the  Term  and for the
      twenty-four    (24)   months   following   the   Termination   Date   (the
      "Non-Competition  Period"),  none of the  Distributor,  the  Distributor's
      Affiliates,  Principals  or holders of any  direct or  indirect  ownership
      interest in the Distributor  will engage,  directly or indirectly,  in the
      Territory, in the manufacture,  assembly,  development, sale, distribution
      or service of products  which are  competitive  to the Products  which had
      been sold hereunder.  In case of doubt or disagreement,  the Company shall
      have the power to reasonably  determine if a product is competitive to the
      Products  which  had  been  sold  hereunder.  During  the Term and for the
      twenty-four  (24)  months  following  the  Termination  Date,  none of the
      Distributor,  the Distributor's  Affiliates,  Principals or holders of any
      direct or indirect ownership interest in the Distributor at any time on or
      after the date hereof shall directly or indirectly:  (i) cause,  induce or
      attempt to cause or induce any  customer,  supplier,  licensee,  licensor,
      franchisee,  employee,  consultant  or  other  business  relation  of  the
      Company,  Lumenis or any of their  Affiliates to cease doing business with
      the Company,  Lumenis Ltd., an Israeli corporation  ("Lumenis"),  or their
      respective Affiliates, to deal with any competitor of the Company, Lumenis
      or their  respective  Affiliates  that is  engaged  in the  laser or light
      technology  business  or in any  way  interfere  with  any  third  party's
      relationship  with the Company,  Lumenis or their  respective  Affiliates;
      (ii) hire, retain or attempt to hire or retain any employee or independent
      contractor  of the Company,  Lumenis or their  respective  Affiliates;  or
      (iii) disparage the Company, Lumenis or any of their respective Affiliates
      or any of their shareholders,  directors,  officers,  employees or agents.
      "Affiliate"  of any  specified  Person means any other Person  directly or
      indirectly controlling or controlled by or under direct or indirect common
      control  with such  specified  Person.  For  purposes of this  definition,
      "control" (including, with correlative meanings, the terms, "controlling,"
      "controlled by" and "under common control with"),  as used with respect to
      any Person,  shall mean the  possession,  directly or  indirectly,  of the
      power to direct or cause the

                                      -12-
<PAGE>

      direction of the  management or policies of such Person,  whether  through
      the   ownership  of  voting   securities,   by  agreement  or   otherwise.
      Notwithstanding  the  foregoing,  this Section 6.C shall not apply if this
      Agreement is  terminated by the  Distributor  as a result of the Company's
      default.

                  D. Default. Subject to Section 4.B hereof, in the event of any
      default in the  performance of any of its covenants or  obligations  under
      this Agreement by either party hereto, the non-defaulting party may send a
      written  "Default  Notice"  explaining  the  nature of the  default to the
      defaulting  party,  which  notice shall be mailed in  accordance  with the
      notice provisions of Section 9.J hereof; provided that if after the giving
      of a  Default  Notice  and prior to the  Termination  Date an FM Notice is
      given  pursuant to Section 9.C within seven (7) days after  receipt of the
      Default  Notice,  the Default  Notice will be deemed  superceded by the FM
      Notice, and the parties shall proceed pursuant to Section 9.C and not this
      Section 6.D.

                        If any default is not fully cured within 45 days (there
      is no period to cure for a payment default for Products pursuant to the
      final two sentences of Section 4.B) after mailing such default notice, the
      non-defaulting party may mail a Termination Notice terminating the
      distributorship under this Agreement, provided that the Company may
      immediately deliver a Termination Notice for a payment default by the
      Distributor pursuant to Section 4.B if all such defaulted amounts exceed
      in the aggregate $10,000 (including accrued and unpaid interest and
      default interest, if any). Such Termination Notice shall become effective
      immediately upon mailing except that this Agreement shall continue in
      force for the purpose of adjusting the rights of the parties hereto which
      may be accrued prior to termination, and with respect to those provisions
      hereof (such as, without limitation, in Sections 5, 6, 7 and 9) which are
      intended to remain in effect after the Termination Date.

                        For purposes of this Section 6.D., any default by any of
      the Distributor's Affiliates or the Principals shall be deemed a default
      by the Distributor.

                  E. Bankruptcy.  In the event either party  voluntarily files a
      petition  in   bankruptcy   or   liquidation,   or  has  such  a  petition
      involuntarily  filed  against it, which is not  discharged  within 45 days
      after filing,  or is placed in receivership,  or in the hands of a trustee
      for the benefit of  creditors  or enters into any  analogous  situation or
      position  under  the law of any  relevant  jurisdiction  or  ceases  doing
      business in the  marketing,  distribution,  manufacture,  sale or lease of
      Products,  the other  party may  terminate  this  Agreement  by  mailing a
      Termination Notice effective immediately upon mailing.

            7. TERMINATION PAYMENT AND ASSETS ACQUISITION

                  A.  Acquisition.  Upon  termination of this Agreement,  on the
      Termination  Date (the  "Purchase  Date"),  the Company shall purchase the
      Distributor's  Lumenis  Business  Assets (as defined below) and pay to the
      Distributor the Purchase Price  therefor,  provided that the Company shall
      not be entitled to acquire the  Distributor's  Lumenis Business Assets and
      the Company shall not be obligated to pay the Purchase  Price (or any part
      thereof)  to the  Distributor  in the event the  Company  terminates  this
      Agreement (i) as a result of default by the Distributor  under Section 6.D
      or (ii) pursuant to Section 6.E or the final sentence of Section 9.B.

                  B. Purchase  Price.  (i) The price to be paid for the purchase
      of the  Distributor's  Lumenis  Business  Assets  (as may be  adjusted  as
      provided in this Section 7.B., the "Purchase Price") shall be equal to 90%
      of the product of (x)  average  quarterly  gross  revenues  determined  in
      accordance with U.S. generally accepted accounting principles

                                      -13-
<PAGE>

      ("GAAP") and  actually  collected by the  Distributor  and its  affiliated
      service business, O'Brien Medical, Ltd. ("OB Medical"), from the sales and
      servicing  of the  Products  made or  performed  during  the  twelve  full
      calendar  quarters  (before or after the date hereof)  ending prior to the
      Purchase  Date,  net (for each such  quarter) of sales or use (or similar)
      taxes received from customers and net of rebates, refunds,  chargebacks or
      any other  amounts  directly or  indirectly  returned to  customers in any
      manner or  otherwise  repaid,  refunded  or netted  from  revenues  of the
      Distributor  or OB Medical  (which  relate to  Products  sold or  serviced
      during such quarter)  ("Quarterly  Net Revenue"),  multiplied by (y) four;
      provided that:  (1) amounts  collected  during the three months  following
      such twelfth  calendar  quarter (the "Tail  Period") for Products  sold or
      serviced during such prior calendar quarters, net of the aforesaid,  shall
      be included in Quarterly  Net  Revenues for the calendar  quarter to which
      such revenues  related;  (2) if the Distributor  terminates this Agreement
      pursuant to Section  6.A.(x),  then if the Termination Date is in 2003 the
      Purchase Price shall be reduced by 50% and if the  Termination  Date is in
      2004 the Purchase Price shall be reduced by 25%; (3) if Company terminates
      this Agreement  pursuant to Section 6.A(x) or the  Distributor  terminates
      this  Agreement  pursuant  to Section  6.A.(y)  following a default by the
      Company,  then if the Termination Date is in 2003 the Purchase Price shall
      be  increased by 50% and if the  Termination  Date is in 2004 the Purchase
      Price shall be increased by 25%; and (4) if the Agreement is terminated by
      reason of Force Majeure pursuant to Section 9.C, then if the Force Majeure
      event occurred during 2002, the Purchase Price shall be $2,500,000, and if
      the Force Majeure event occurred after 2002, then the Purchase Price shall
      be determined pursuant to the provisions of this Section 7.B which precede
      the proviso,  but the  calculation  of the Average  Quarterly Net Revenues
      shall  exclude all  calendar  quarters in which such Force  Majeure  event
      occurred or was  continuing,  and the  resulting  Purchase  Price shall be
      reduced by 25%.

                       (ii)  Quarterly  Net Revenue  shall be  determined by the
      Distributor's outside accounting firm (the "Auditor") within 30 days after
      the end of such calendar  quarter (the "Quarterly  Determination")  at the
      Distributor's expense. The Distributor's annual financial statements shall
      be audited by the Auditor at the Distributor's  expense. The Auditor shall
      determine  the  Purchase  Price  within 30 days  after the end of the Tail
      Period.  The  Auditor's  report  setting  forth  the  computation  of  the
      Quarterly  Determination and the Purchase Price, as the case may be, shall
      be submitted in writing to the  Distributor  and the Company.  The Company
      and its  representatives,  including,  without  limitation,  a "Big  Five"
      auditing firm  selected by Company (the  "Reviewing  Auditor")  shall have
      access to the books and records of the Distributor during regular business
      hours to verify the  determination  and computations  made by the Auditor.
      After receipt of the Auditor's  report of the Purchase  Price, it shall be
      promptly reviewed by the Reviewing Auditor, who shall make a determination
      of the  Purchase  Price  at  the  Company's  expense.  Unless  either  the
      Distributor  or the Company  notifies  the other  within  thirty (30) days
      after  receipt of the  Reviewing  Auditor's  report that it objects to the
      computation  of the Purchase  Price set forth in the  Reviewing  Auditor's
      report, the Reviewing Auditor's  determination and report shall be binding
      and  conclusive  for  the  purposes  of  this  Agreement.  If  either  the
      Distributor  or the Company  notifies the other in writing  within  thirty
      (30) days after receipt of the Reviewing  Auditor's report that it objects
      to the  computation  set forth  therein,  then the Purchase Price shall be
      determined by negotiation between the Company and the Distributor.  If the
      Company and the Distributor  are unable to reach  agreement  within thirty
      (30) days after such notification, the determination of the Purchase Price
      shall be submitted to a mutually agreeable third-party firm of independent
      certified public  accountants  ("Special  Accountants") for determination,
      whose determination shall be binding and conclusive on the parties. If the
      Special Accountants determine that the Purchase Price as determined by the
      Reviewing  Auditor has been  understated  by 3% or more,  then the Company
      shall  pay the  Special  Accountants'  fees,  costs and  expenses.  If the
      Purchase  Price  as  determined  by the  Reviewing  Auditor  has not  been
      understated or understated by less

                                      -14-
<PAGE>

      than 3%, then the  Distributor  shall pay the Special  Accountants'  fees,
      costs and expenses. If the Company and the Distributor cannot agree on the
      Special  Accountants,  the matter  shall be submitted  to  arbitration  in
      accordance with Section 9.I.

                                      -15-
<PAGE>

                  C.  Provisions  Relating  to  Distributor's  Lumenis  Business
      Assets.  (i) As used herein,  the  Distributor's  Lumenis  Business Assets
      consist of the following:

                       (x)  all  of  the   Distributor's   records  relating  to
      customers who have purchased the Company's  products from the  Distributor
      at any time, whether before or after the Effective Date of this Agreement;

                       (y) all service contracts entered into by the Distributor
      or  OB  Medical  under  which  the  Distributor  or  OB  Medical  performs
      maintenance  and other  services on the Company's  Products and all of the
      records relating thereto (the "Service Agreements");

                       (z) the names  "Eclipse"  and  "O'Brien  Medical" and any
      trademarks,  tradenames,  internet  domain  names  or  other  intellectual
      property relating thereto.

                       (ii)  Distributor,  OB Medical and O'Brien  Holdings  LLC
      hereby  agree to amend their  limited  partnership  and limited  liability
      company certificates,  respectively, and agreements within five days after
      the  Purchase  Date to  change  their  names to  eliminate  "Eclipse"  and
      "O'Brien" therefrom.  The Company agrees to grant back to the Principals a
      royalty-free,  non-exclusive  license of the names  "Eclipse" and "O'Brien
      Medical" for uses which do not compete with the business of the Company or
      its  affiliates,  on  terms  to be  agreed  upon  by the  Company  and the
      Principals.

                  D. Purchase Price Payment. If the Purchase Price is $1,250,000
      or less, it shall be payable in a single installment  payable on the later
      of the last day of the month  following  the  month in which the  Purchase
      Price is finally determined  pursuant to Section 7.B or the first Business
      Day in 2005 (the "First Installment Date"), which amount will be offset as
      set forth in the Note and subject to offset  against any then  outstanding
      accounts  receivable  from the  Distributor (or any other amounts owing by
      the  Distributor) to the Company or its Affiliates.  If the Purchase Price
      exceeds  $1,250,000,  then  $1,250,000  shall  be  payable  on  the  First
      Installment  Date,  and the balance of the Purchase Price shall be paid to
      the  Distributor  in  five  (5)  equal   installments  over  a  period  of
      approximately  30  months  following  the  First   Installment  Date  (the
      "Installments"),  in the case of the  first  and  subsequent  installments
      subject to the above-mentioned offsets.  Notwithstanding the preceding two
      sentences,  if the Company voluntarily  terminates this Agreement pursuant
      to  Section  6.A(x)  then  50%  of  the  Purchase  Price  (subject  to the
      above-mentioned  offsets and in the manner set forth herein), but not more
      than  $1,250,000  shall be payable on the last day of the month  following
      the month in which the Purchase  Price is finally  determined  pursuant to
      Section  7.B and the  balance of the  Purchase  Price shall be paid as set
      forth in the preceding two sentences.  The second Installment is payablein
      six months after the First  Installment  Date, and another  Installment is
      payable  every six months  thereafter  (on the last day of each such sixth
      month) until full payment of the Purchase Price . The Company, at its sole
      discretion,  may,  upon  notice  to the  Distributor  on or  prior  to any
      scheduled Installment payment date (including the First Installment Date),
      elect to make payment, in part or in whole, of the Installment due on such
      date, and/or some or all of the future  installments  either in cash or by
      causing a publicly  traded  affiliate  of the  Company  (or of a permitted
      assignee  pursuant to Section 9.B)  ("Issuer") to issue to the Distributor
      shares of common stock (in the case of Lumenis, currently called "ordinary
      shares") of Issuer  ("Issuer  Shares");  the number of Issuer Shares to be
      issued is to be determined by dividing the cash amount of such Installment
      payment  being  satisfied  with Issuer  Shares by the closing price of the
      Issuer  Shares of common stock on the Business Day  immediately  preceding
      the date such Installment  payment is due;  provided that the Distributor,
      by  written  notice  to the  Company  not  less  than 15 days  prior to an
      Installment payment date,

                                      -16-
<PAGE>

      may require the Company to pay up to twenty  percent  (20%) of such and up
      to 20% of future  Installment  payments in cash (the "Cash Portion"),  the
      exact  percentage of the Cash Portion to be specified in such notice;  and
      provided  further  that in no  event  shall  the  aggregate  Cash  Portion
      payments  elected by the  Distributor  exceed twenty  percent (20%) of the
      Purchase  Price..  The  Company  will use its best  efforts to have Issuer
      cause its transfer agent to deliver to the Distributor within ten Business
      Days after the scheduled  Installment  payment date  certificates  for the
      aggregate number of Issuer Shares being delivered in satisfaction, in part
      or in whole, of such Installment of the Purchase Price.  Said certificates
      will bear a restrictive transfer legend referring to the Securities Act of
      1933, as amended (the "Securities  Act"), as set forth in Section 7.G. Any
      Installment  due on a day which is not a Business Day shall be paid on the
      next business day.

                  E. Acquisition Closing Deliverables. On the Purchase Date, (i)
      the  Distributor  and OB Medical will (A) assign,  transfer and convey the
      Distributor's  Lumenis  Assets to the Company,  together with an indemnity
      reasonably   satisfactory   to  the  Company  and  its  counsel  from  the
      Distributor  and OB Medical with respect to any  pre-transfer  defaults or
      liabilities under the Service Agreements,  (B) execute such instruments of
      sale, transfer,  conveyance, and assignment as the Company and its counsel
      reasonably may request; and (C) deliver all authorizations,  consents, and
      approvals of governments and governmental agencies necessary to consummate
      the purchase; (ii) the Company will execute and deliver to the Distributor
      and OB Medical an assumption of the post-Purchase  Date obligations of the
      Distributor or OB Medical under the Service Agreements.

                  F.  Allocation.  The  Distributor  and the  Company  agree  to
      cooperate to achieve a proper  allocation  of the Purchase  Price (and all
      other  capitalizable   costs)  for  all  purposes   (including   financial
      accounting and tax purposes).

                  G.  Securities  Laws   Representations   and  Restrictions  on
      Transfer.

                       (i)  The  Distributor  represents  and  warrants  to  the
      Company that the Distributor (i) understands  that the Issuer Shares to be
      issued have not been,  and will not be,  registered  under the  Securities
      Act, or under any state securities laws, and are being offered and sold in
      reliance upon federal and state  exemptions for transactions not involving
      any public  offering,  (ii) is  acquiring  such shares  solely for its own
      account for investment  purposes,  and not with a view to the distribution
      thereof,  (iii) is a sophisticated  investor with knowledge and experience
      in business and financial matters,  (iv) has received certain  information
      concerning  Lumenis  and has  had the  opportunity  to  obtain  additional
      information  as  desired  in order to  evaluate  the  merits and the risks
      inherent in acquiring  and holding the Issuer  Shares,  and (v) is able to
      bear the  economic  risk and lack of  liquidity  inherent  in holding  the
      Issuer Shares.

                       (ii) The  Distributor  acknowledges  and agrees  that the
      Issuer  Shares  (or  any  right  to  receive  Issuer  Shares)  may  not be
      Transferred  (as  hereinafter  defined)  without  registration  under  the
      Securities Act and any applicable state  securities laws,  except pursuant
      to an exemption from such  registration  under the Securities Act and such
      laws.  Accordingly,  the  Distributor  will refrain from  Transferring  or
      otherwise  disposing of any of the Issuer Shares, or any interest therein,
      without  registration  under the Securities  Act and any applicable  state
      securities  laws,  except pursuant to an exemption from such  registration
      under the  Securities  Act and such laws,  as  evidenced  by an opinion of
      counsel  satisfactory to Lumenis which the  Distributor  shall procure and
      provide to Lumenis prior to any such Transfer. "Transfer" means any direct
      or  indirect  offer,  sale,  transfer,   assignment,   other  disposition,
      exchange, gift, assignment, pledge or grant of any security interest.

                                      -17-
<PAGE>

                       (iii) The certificates  representing the Issuer Shares to
      be delivered to the Distributor,  and any certificates subsequently issued
      with respect  thereto or in  substitution  therefor  (including any shares
      issued or issuable  in respect of any such  shares  upon any stock  split,
      stock dividend,  recapitalization  or similar event or upon a Transfer (if
      permitted  pursuant  to the  preceding  subparagraph  (ii)) shall bear the
      following legend:

      THE SECURITIES  EVIDENCED  HEREBY WERE ORIGINALLY  ISSUED IN A TRANSACTION
      EXEMPT FROM  REGISTRATION  UNDER SECTION 5 OF THE  SECURITIES  ACT OF 1933
      (THE  "SECURITIES  ACT") AND APPLICABLE STATE LAW, AND MAY NOT BE OFFERED,
      SOLD OR OTHERWISE  TRANSFERRED IN THE ABSENCE OF SUCH  REGISTRATION  OR AN
      APPLICABLE  EXEMPTION  THEREFROM  (IN EACH CASE  BASED  UPON AN OPINION OF
      COUNSEL  SATISFACTORY TO THE ISSUER THAT REGISTRATION UNDER THE SECURITIES
      ACT IS NOT REQUIRED).

            8. ADDITIONAL EFFECTIVE DATE TRANSACTIONS;  CERTAIN  REPRESENTATIONS
OF THE DISTRIBUTOR

                  A. Service Fees.  Within fifteen (15) days after the Effective
      Date,  the Company will pay the  Distributor a one time fee,  equal to ten
      percent  (10%) of the Company's net revenues on all sales of new equipment
      in the  Territory  from August 1, 2001 until the  Effective  Date, as full
      payment for  servicing  by the  Distributor  of Products in the  Territory
      during such period for which the  Distributor  has not yet been reimbursed
      by the Company. If the parties cannot agree on the amount of this payment,
      it shall be settled by arbitration in accordance with Section 9.I.

                  B. Delinquent Receivables. The Company hereby agrees to cancel
      on the Effective Date all  outstanding  past due accounts  receivable from
      the  Distributor.  On the  Effective  Date,  the Company  will provide the
      Distributor   with  a  cancellation  of  the  delinquent   receivables  in
      substantially the form of Exhibit I hereto.

                  C.  Mutual   Releases.   As  a  condition   precedent  to  the
      effectiveness of this Agreement, the Company, the Distributor,  OB Medical
      and the Principals will enter into the Release, attached hereto as Exhibit
      H, whereby each party  releases the other party from all claims such party
      has or may have against such other party.

                  D.  Outstanding  Commissions.   Within  five  days  after  the
      Effective  Date,  the Company  shall pay the  Distributor  all accrued but
      unpaid  commissions  in respect of sales of  Products  by the  Distributor
      during  November  2001 and an estimated  amount for such  commissions  for
      December 2001, with the latter to be trued up by January 31, 2002.

                  E. Solvency  Representation.  The  Distributor  represents and
      warrants to the Company as follows:

                       (i) On  the  Effective  Date  after  consummation  of the
      transactions  set forth in this  Section  8, the  Distributor  will not be
      insolvent. As used in this section,  "insolvent" means that the sum of the
      debts  and other  probable  liabilities  of the  Distributor  exceeds  the
      present fair saleable value of the Distributor's assets.

                       (ii)  Immediately  after  the  Effective  Date:  (i)  the
      Distributor  will be able to pay its liabilities as they become due in the
      usual  course  of  its  business;  (ii)  the  Distributor  will  not  have
      unreasonably small capital with which to conduct its present or

                                      -18-
<PAGE>

      proposed  business;  (iii) the Distributor will have assets (calculated at
      fair  market  value)  that  exceed its  liabilities;  and (iv) taking into
      account  all  pending  and to the  best  of  the  Distributor's  knowledge
      threatened litigation,  final judgments against the Distributor in actions
      for money damages are not reasonably  anticipated to be rendered at a time
      when, or in amounts such that, the  Distributor  will be unable to satisfy
      any such  judgments  promptly in accordance  with their terms (taking into
      account the maximum  probable amount of such judgments in any such actions
      and the  earliest  reasonable  time  at  which  such  judgments  might  be
      rendered) as well as all other  obligations of the  Distributor.  The cash
      available  to  the  Distributor,  after  taking  into  account  all  other
      anticipated uses of the cash, will be sufficient to pay all such debts and
      judgments promptly in accordance with their terms.

            9. MISCELLANEOUS TERMS

                  A.  Amendments  and Waivers.  No amendment of any provision of
      this  Agreement  shall be valid  unless the same  shall be in writing  and
      signed  by  the   parties.   No  waiver  by  any  party  of  any  default,
      misrepresentation,  or breach of warranty or covenant  hereunder,  whether
      intentional  or not,  shall be deemed to extend to any prior or subsequent
      default, misrepresentation, or breach of warranty or covenant hereunder or
      affect in any way any rights  arising by virtue of any prior or subsequent
      such occurrence.

                  B. Assignment.  Unless the Company  consents in writing,  this
      Agreement and the rights and  obligations  granted  hereunder shall not be
      assigned  or  otherwise  transferred,   directly  or  indirectly,  by  the
      Distributor.  The Company,  may, upon written  notice to the  Distributor,
      assign  or  otherwise  transfer  this  Agreement  and/or  the  rights  and
      obligations  arising  hereunder  to: (i) any Person,  provided the Company
      remains liable for payment of the Purchase  Price;  (ii) any Person (other
      than an Affiliate of the Company)  upon such  Person's  direct or indirect
      acquisition  of all or  substantially  all of the assets of the aesthetics
      business  of the  Company;  or (iii)  any  Person or  affiliated  group of
      Persons (other than an Affiliate of the Company) that  acquires,  directly
      or indirectly,  beneficial  ownership of more than 50% of the  outstanding
      shares of capital stock of the Company or Lumenis having  ordinary  voting
      power  or  with or  into  which  the  Company  or  Lumenis  is  merged  or
      consolidated.  In addition,  in the event of any transfer of  intellectual
      property of or relating to the  Company to an  Affiliate  of the  Company,
      this  Agreement  will  automatically  be assigned to such Affiliate to the
      extent of such intellectual property and solely for said purpose, with the
      Company to remain liable for the Purchase Price.  Unless  otherwise agreed
      by the parties, in the event that control (whether by shares or otherwise)
      or ownership of the Distributor is, directly or indirectly, sold, or being
      sold or transferred to a third party, the Company, in its sole discretion,
      may terminate this Agreement upon written notice of 90 days.

                  C. Force Majeure. If by reason of causes beyond the control of
      either  party  hereto,  including,  but not  limited  to,  labor  problems
      strikes,  failure of major  subcontractors,  fire, acts of God, accidents,
      act of war or  terrorism,  civil unrest,  governmental,  legal or judicial
      restrictions,  or  inability  to  obtain  power,  material,  equipment  or
      transportation,  a party is delayed in its performance in whole or in part
      of its  obligations as set forth herein (other than payment for Products),
      then such party  shall be  excused  for such delay and such delay will not
      make the party  liable in damages to the other  party.  The party  delayed
      shall immediately  notify the other party of the reasons for the delay and
      its  estimated  duration  (the "FM  Notice"),  and  shall  take all  steps
      necessary  to  minimize  such  delay.  Upon  delivery of the FM Notice the
      obligations of the parties under this Agreement  shall be suspended  until
      the earlier of (i) the cessation of the disrupting  event or occurrence or
      (ii) six calendar months after the delivery of the FM Notice, but no later
      than six  months and ten days  after the date of the  disrupting  event or
      occurrence (the "Disrupted Period").

                                      -19-
<PAGE>

                  As soon as  practicable  after the  delivery of the FM Notice,
      the parties shall cooperate to address any problem that may then exist and
      to modify this Agreement,  or determine new practicable working conditions
      and  terms,  to  maintain  the  relationship  of the  parties  under  this
      Agreement during the Disrupted Period (the "Interim Agreement").

                  Should the parties fail to reach an Interim Agreement,  either
      party may terminate this Agreement after the close of the Disrupted Period
      by  delivering  written  notice to the other  party  (the "FM  Termination
      Notice"),  such termination to take effect immediately upon receipt of the
      FM Termination Notice (the "FM Termination Date").

                  D. Relationship of the Parties. Nothing in this Agreement, nor
      anything to be done pursuant to its terms and conditions,  is intended to,
      nor  shall it  create a  partnership,  joint  venture  or  principal-agent
      relationship between the parties.  This Agreement is intended to establish
      a supplier-distributor  relationship.  The Distributor shall not represent
      itself other than as an  authorized  distributor  of the Company and shall
      save and hold harmless the Company from damages,  losses,  indemnities and
      liabilities,  including  cost of litigation  arising from or in connection
      with any representation not authorized by this Agreement.

                  E. Specific Performance.  Each of the parties acknowledges and
      agrees that in the event of any breach under  Sections  5.A.(ii),  5.C. or
      6.C. the other party or its Affiliates would be damaged irreparably in the
      event  any of the  provisions  of  this  Agreement  are not  performed  in
      accordance   with  their   specific   terms  or  otherwise  are  breached.
      Accordingly,  each of the  parties  agrees  that  the  other  party or its
      Affiliates  shall be entitled to an injunction or  injunctions  to prevent
      breaches of such provisions of this Agreement and to enforce  specifically
      such  provisions of this Agreement and the terms and provisions  hereof in
      any  action  instituted  in any  court of the  United  States or any state
      thereof having jurisdiction over the parties and the matter in addition to
      any other remedy to which it may be entitled, at law or in equity.

                  F. Rights and Remedies.  The rights and remedies provided each
      of the parties  herein  shall be  cumulative  and in addition to any other
      rights and  remedies  provided  by law or  otherwise.  Any  failure in the
      exercise by either party of its rights to terminate  this  Agreement or to
      enforce any  provision of this  Agreement  for any default or violation by
      the other party shall not prejudice  such party's right of  termination or
      enforcement for such or any other default or violation.

                  G.  Severability.  The  parties  agree  that  it  is  not  the
      intention  of either  party to violate  any public  policy,  statutory  or
      common law and that if any provision herein violates the applicable law of
      any  jurisdiction  where it is unlawful,  such part will be severable  and
      will not affect the validity or  enforceability of the remaining terms and
      provisions  hereof or the validity or enforceability of the offending term
      or provision  in any other  situation  or in any other  jurisdiction.  The
      parties  agree that with  respect to any part of this  Agreement  which is
      held to be  unenforceable  or void,  that they will attempt to renegotiate
      such part in a manner consistent with the intention of the parties.

                  H.  Governing  Law.  This  Agreement  shall be governed by and
      construed in  accordance  with the domestic  laws of the State of New York
      without  giving  effect to any choice or conflict of law provision or rule
      (whether  of the State of New York or any other  jurisdiction)  that would
      cause the application of the laws of any jurisdiction other than the State
      of New York.

                                      -20-
<PAGE>

                  I. Arbitration and Jurisdiction.

                       (i)  General.  All  disputes  under this  Agreement,  all
      claims of breach or default  hereunder,  and all matters  relating thereto
      shall be determined by  arbitration  in New York, New York by the majority
      decision of three  arbitrators (the  "Arbitrators"),  one of whom shall be
      designated  by the Company,  the second of whom shall be designated by the
      Distributor  and the third of whom shall be  selected  by the  Arbitrators
      appointed by the Company and the  Distributor,  or in the event of failure
      to agree on a third arbitrator by such means, by the American  Arbitration
      Association.   Except  as  otherwise  provided  in  this  Agreement,   the
      Commercial Arbitration Rules of the American Arbitration Association shall
      govern any arbitration  under this Agreement.  The Arbitrators  shall have
      full  power to  award  any  remedy  which  they  deem  appropriate  in the
      circumstances,   including   without   limitation,   damages  or  specific
      performance  or  other  injunctive   relief.   Any  determination  by  the
      Arbitrators shall be enforceable in any court having proper  jurisdiction.
      All  expenses  of the  arbitration  shall be borne in such  manner  as the
      Arbitrators determine.

                       (ii)  Arbitration  Schedule.  Any  arbitration  hereunder
      shall be conducted in accordance with the following schedule:

                             (a) The Company or the Distributor may serve on the
      other a notice  demanding  arbitration,  which  notice  shall  specify all
      claims that it wishes to have resolved  through  arbitration.  This notice
      shall include the name of the Arbitrator appointed by the party submitting
      the notice.

                             (b)  Within  twenty  (20) days  after  receipt of a
      notice of claim,  the party so served  shall serve an answer,  which shall
      include  (if the party has not itself  filed a notice  and  specifications
      under  subsection A above),  the name of the Arbitrator  appointed by that
      party.  All claims  and any  answers  thereto  shall be  consolidated  and
      arbitrated together.

                             (c) Within  five (5)  business  days after both the
      Company  and the  Distributor  have  received  notice  of the  name of the
      Arbitrator  appointed by the other,  the third Arbitrator will be selected
      or his selection committed to the American Arbitration  Association in New
      York,  New York upon the  application  of either  the  Distributor  or the
      Company.

                             (d) On the  request  of either  the  Company or the
      Distributor,  the Arbitrators  shall permit such  reasonable  discovery as
      they deem  appropriate,  on such terms and within  such time as they shall
      allow.

                             (e) All claims and any evidence in support of those
      claims shall be submitted to the  Arbitrators in such manner as they shall
      direct within such time period as they shall  determine.  The  Arbitrators
      shall  promptly  issue a decision  resolving  all  disputes and claims and
      awarding  such  relief  as they  deem  appropriate  in the  circumstances,
      including,  if the Arbitrators  deem  appropriate,  an award of attorneys'
      fees.

                       (iii)  Jurisdiction.  The Parties agree that any judicial
      action,  suit or proceeding  brought  against any Party hereto  authorized
      pursuant to the provisions of this  Agreement,  or to enforce any decision
      of the arbitrators  rendered  pursuant to this Section 8.I, may be brought
      in the Federal District Court of the Southern District of New York, and by
      execution  and  delivery of this  Agreement  the parties each (i) accepts,
      generally and unconditionally, the nonexclusive jurisdiction of such court
      and any related appellate court,

                                      -21-
<PAGE>

      and  irrevocably  agrees to be bound by any judgment  rendered  thereby in
      connection with this Agreement,  (ii) irrevocably  waives any objection it
      may now or  hereafter  have as to the  venue of any such  action,  suit or
      proceedings brought in such a court on the grounds that such a court is an
      inconvenient  forum. The Parties each hereby waive its personal service of
      process,  provided that service of process upon it is made by certified or
      registered mail,  return receipt  requested,  at its address  specified or
      determined  in  accordance  with the  provisions  of  Section  8.K of this
      Agreement,  and  service  so made shall be deemed  completed  on the third
      business day after such service is deposited in the mail.  Nothing  herein
      shall affect the right to serve  process in any other manner  permitted by
      law.

                  J. Entirety of Agreement. This Agreement sets forth the entire
      understanding  and agreement  between the parties  herein  concerning  the
      subject  matter  covered  herein,  and  supersedes  and cancels any prior,
      contemporaneous,  oral or written  agreement  or  representation,  if any,
      between the parties.  This  Agreement may be modified only by a subsequent
      agreement or undertaking duly executed by the parties.

                  K. Notices.  Any notices or demand required or permitted to be
      given  hereunder  shall be in writing and deemed to be given and  received
      when mailed as described herein; a notice or demand is deemed to have been
      mailed when (i) it has been  deposited in the official mail of the country
      from which it is being sent,  by  certified  or  registered  mail,  return
      receipt requested and mail postage prepaid or (ii) is received,  if mailed
      otherwise.  The following are the addresses of the parties for the purpose
      of notice:

      If to the Company:

      Lumenis Inc.
      2400 Condensa Street
      Santa Clara, California  95051-0901
      Attention:  Michal Drayman, Senior Financial Officer - Americas

      with a copy to:

      Stephen Kaplitt, Esq.
      Vice President and General Counsel
      Lumenis Inc.
      375 Park Avenue (11th Floor)
      New York, New York  10152
      USA

      If to the Distributor or the Principals:

      Eclipse Medical, Ltd.
      3728 Realty Road
      Addison, Texas  75001
      USA
      Attention:  Paul O'Brien

      Any change of address shall be given by written notice.

                                      -22-
<PAGE>

                      [signature page follows immediately]

                                      -23-
<PAGE>

            IN WITNESS  WHEREOF,  the parties  have caused this  Agreement to be
      executed  by the duly  authorized  officers  as of the date first  written
      above.

        LUMENIS INC.                              ECLIPSE MEDICAL, LTD.

        By: /s/ Sagi Genger                       By: /s/ O'Brien Holdings, LLC
           -----------------------------             ---------------------------
           Name: Sagi Genger                         Name: /s/Paul O'Brien
           Title: Chief Operating Officer            Title: Manager

        For the purposes of signifying agreement to
        Sections 5.C. and 6.C. hereof:

        /s/ Thomas M. O'Brien
        ------------------------------------
        Thomas M. O'Brien

        /s/ Paul O'Brien
        ------------------------------------
        Paul. O'Brien

        /s/ Kevin O'Brien
        ------------------------------------
        Kevin. O'Brien

        O'BRIEN MEDICAL, LTD.

        By: OBRIEN HOLDINGS, LLC

        By: /s/ Paul O'Brien
           ---------------------------------
           Name: Paul O'Brien
           Title:  Manager

        O'BRIEN HOLDINGS, LLC

        By: /s/ Paul O'Brien
           ---------------------------------
           Name: Paul O'Brien
           Title: Manager

                                      -24-
<PAGE>

                                    EXHIBIT A

I. Products.  All the Company products and accessories  listed in the U.S. Price
   List for:

            U.S. Aesthetic Laser Products and Accessories
            U.S. Aesthetic IPL Products and Accessories

      Specifically  excluded from the  Distributor's  appointment  are sales and
service of all products sold exclusively through U.S. national distributors, and
sales and service of  ophthalmic  and  surgical  products,  surgical  lasers for
dental  applications and all present and future GyneLase products and any future
products for gynecological applications.

II. A. The Distributor Direct Purchases from The Company

      The Distributor is responsible for purchasing from the Company and payment
to the Company for all Company products the Distributor resells to its customers
in its assigned territory. The Distributor prices are:

            Product:  72% of the Company's  retail list prices for such Product.
            No additional  discounts apply unless approved in advance in writing
            by the Company.

            Accessories/supplies:  72% of the  Company's  retail list prices for
            such Product accessories and supplies. No additional discounts apply
            unless approved in advance in writing by the Company.

            Service  Spare Parts:  Those  prices for service  parts in the Price
            List for service spare parts.  No additional  discounts apply unless
            approved in advance in writing by the Company.

      B. The  Distributor's  customer buys  directly from the Company.  Should a
customer in the Territory decide to purchase or require purchases  directly from
the Company, the following will apply:

                  a. The Company must quote the customer directly. The
            Distributor cannot quote on the Company' behalf. Prices quoted will
            be off USA Direct List. In the event of a hospital or government
            tender, the Distributor must provide a copy. If a Company quote
            leads to a customer sale and subsequent customer payment, then the
            Distributor will receive a commission equal to 28% of the sale price
            of products and accessories sold to customer and such sales price
            (when received) shall be included in gross revenues of the
            Distributor for the applicable calendar quarter for the purposes of
            Section 7.B of the Distribution Agreement (subject to the netting
            provisions thereof). Any discount pricing to

<PAGE>

            customer will be shared equally between the Distributor and the
            Company.

                  b. The Distributor's customer purchase order payment must be
            made out to the Company.

III. Minimum orders. A minimum order value per the Distributor purchase order is
outlined below:

            Product: $5,000 USD
            Accessories: $ 200 USD
            Service Parts: $ 200 USD

      The  Distributor  will pay a $25.00  handling charge for any orders placed
for amounts less than those outlined above.

                                      - 2 -
<PAGE>

                                    EXHIBIT B

                           [Intentionally left blank]

<PAGE>

                                    EXHIBIT C

                           [Intentionally left blank]

<PAGE>

                                    EXHIBIT D

                           [Intentionally left blank]

<PAGE>

                                    EXHIBIT E

                                 Win/Loss Report

Order/Lost Business Report

Sales Representative __________________________________ Date __________________

Customer/Prospect,   Name:______________________________Institution

                     Name:______________________________Key Individuals

                     Address:__________________________________________________

           Private Practice |_|

           Institution |_|

Product__________________________________Configuration_________________________

Sale Price_________________________

o     Demo done Yes |_| No |_|

o     Formal presentation done Yes |_| No |_| If so, what?____________________

o     Name and title of decision maker________________________________________

o     Name and title of major influencer______________________________________

o     Number of contacts required to close sale_______________________________

o     Will customer purchase future Lumenis products? Yes |_| No |_|

o     What was the source of the initial lead?________________________________

o     Competition present at initial contact Yes |_| No |_|

o     Was there a competitive demo? Yes |_| No |_|

      Presentation Yes |_| No |_|

o     Competitive product price_______________________________________________

o     Competitive product configuration_______________________________________

<PAGE>

o     Competitive info________________________________________________________

o     Reason you won |_| Lost |_| the sale____________________________________

                                      -2-
<PAGE>

                                    EXHIBIT F

<PAGE>

                                    EXHIBIT G

<PAGE>

                                    EXHIBIT H

                                     RELEASE

      Reference is made to the Distribution Agreement,  dated as of December 31,
2001 (the "Distribution  Agreement"),  by and among Lumenis Inc. (the "Company")
and Eclipse Medical,  Ltd., a Texas limited partnership (the "Distributor") , as
distributor.  Capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to such terms in the Distribution Agreement.

      NOW THEREFORE:

      The Distributor  and each of the undersigned  Principals and Affiliates of
the  Distributor  (each a "Distributor  Releasor"),  on behalf of itself and its
respective parents,  affiliates,  direct and indirect  subsidiaries,  directors,
officers,   stockholders,   heirs,  executors,   administrators,   predecessors,
successors  and  assigns,   fully  and  unconditionally   releases  and  forever
discharges  the  Company,   together  with  its  direct  and  indirect  parents,
affiliates  (including,  without limitation,  sister  corporations),  direct and
indirect  subsidiaries,  successors and assigns and all their present and former
directors,  officers,  stockholders,  employees,  representatives,  contractors,
consultants,    agents,   attorneys,   heirs,   executors   and   administrators
(collectively,  the "Company  Releasees")  from all  actions,  causes of action,
suits,  debts,  dues,  sums  of  money,  accounts,   reckonings,  bonds,  bills,
specialties,   covenants,  contracts,   controversies,   agreements,   promises,
variances,   trespasses,   damages,  judgments,  extents,  executions,   claims,
liabilities,  and demands whatsoever, in law, admiralty or equity (collectively,
"Claims"),  which any Distributor Releasor,  any Distributor Releasor's parents,
affiliates, direct and indirect subsidiaries, directors, officers,

<PAGE>

stockholders,  heirs, executors,  administrators,  predecessors,  successors and
assigns  ever had,  now have or  hereafter  can,  shall or may have  against any
Company  Releasee,  for,  upon,  or by  reason  of any  matter,  cause  or thing
whatsoever from the beginning of time to the Effective Date, including,  but not
limited  to,  (x) any Claims  relating  to or  arising  out of any  distribution
agreement  between  the  Company or any Company  Releasee  and the  Distributor,
O'Brien Medical, Ltd. ("O'Brien") or any other Distributor Releasor, and (y) any
other business,  course of dealing or other relationship between any Distributor
Releasor and any Company Releasee, but excluding claims under or pursuant to the
Distribution  Agreement  (including,  without  limitation,  for  indemnification
pursuant to Section 5.D thereof) or documents executed pursuant thereto; and

      The  Company  ("Company  Releasor")  on behalf of itself and its  parents,
affiliates, direct and indirect subsidiaries, directors, officers, stockholders,
predecessors,  successors and assigns,  fully and  unconditionally  releases and
forever  discharges the Distributor  and each of the undersigned  Principals and
Affiliates of the  Distributor,  together with its direct and indirect  parents,
affiliates  (including,  without limitation,  sister  corporations),  direct and
indirect   subsidiaries,   heirs,   executors,   administrators,   predecessors,
successors  and assigns and all their  present and former  directors,  officers,
stockholders,  employees,  representatives,  contractors,  consultants,  agents,
attorneys, heirs, executors and administrators  (collectively,  the "Distributor
Releasees")  from all actions,  causes of action,  suits,  debts,  dues, sums of
money, accounts,  reckonings, bonds, bills, specialties,  covenants,  contracts,
controversies,  agreements, promises, variances, trespasses, damages, judgments,
extents,  executions,  claims,  liabilities,  and  demands  whatsoever,  in law,
admiralty or equity (collectively, "Claims"), which the Company Releasor,

                                      -2-
<PAGE>

the Company Releasor's parents,  affiliates,  direct and indirect  subsidiaries,
directors,  officers,  stockholders,  predecessors,  successors and assigns ever
had,  now have or  hereafter  can,  shall or may have  against  any  Distributor
Releasee,  for, upon, or by reason of any matter, cause or thing whatsoever from
the beginning of time to the Effective Date, including,  but not limited to, (x)
any Claims relating to or arising out of any distribution  agreement between the
Company Releasor and Eclipse, O'Brien or any other Distributor Releasee, and (y)
any other business,  course of dealing or other relationship between the Company
Releasor and any Distributor Releasee, but excluding Claims under or pursuant to
the Distribution Agreement (including,  without limitation,  for indemnification
pursuant to Section 5.D thereof) or documents executed pursuant thereto.

      Each Distributor  Releasor signing this Release warrants that he or it has
the  full  authority  of the  Distributor  Releasor  to sign on  behalf  of such
Distributor  Releasor,  and that such  Distributor  Releasor  has not  conveyed,
assigned or transferred any Claims which such  Distributor  Releasor has against
any Company Releasee.

      The Company warrants that it has full authority to sign this Release,  and
has not  conveyed,  assigned  or  transferred  any Claims  which the Company has
against any Distributor Releasee.

      This Release may not be changed orally.

                      [signature page follows immediately]

                                      -3-
<PAGE>

      IN WITNESS  WHEREOF,  each of the undersigned has executed this Release in
his  individual  capacity or has caused this  Release to be executed by its duly
authorized officer as of this 31st day of December, 2001.

ECLIPSE MEDICAL, LTD.

By:_____________________
   Name:
   Title:

O'BRIEN MEDICAL, LTD.

By:  O'BRIEN HOLDINGS, LLC

   By:_____________________
      Name:
      Title:

-----------------------------
Thomas M. O'Brien

-----------------------------
Paul O'Brien

-----------------------------
Kevin O'Brien

LUMENIS INC.

By:_____________________
   Name:
   Title:

                                      -4-
<PAGE>

                                    EXHIBIT I

                                  LUMENIS INC.

                                                         as of December 31, 2001

Eclipse Medical, Ltd.
3728 Realty Road
Addison, Texas 75001

Gentlemen:

      This will  confirm  that as of the date  hereof we have  cancelled  on our
books and records an aggregate of  $____________  of past  receivables  due from
Eclipse Medical,  Ltd.,  which  receivables are described on Schedule A attached
hereto.

      This receivables cancellation  confirmation is being delivered pursuant to
Section 8.B of the Distribution  Agreement,  dated the date hereof,  between you
and us.

                                                LUMENIS INC.

                                                By:__________________________
                                                   Name:
                                                   Title:

<PAGE>

                               SCHEDULE 5.D.(iii)

1. Robert Yoeman, M.D., Austin, TX - Vasculight H.R.
2. Gary Ketter, M.D., Dallas, TX - Epilight
3. Ungaro Mancuci, M.D., Beaumont, TX - Epilight
4. Smooth Contours (Mr. Rick Brown), Dallas, TX - Epilight

All claims relate to alleged  misrepresentations as to product effectiveness and
performance.

                                      -2-

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