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                                                                   EXHIBIT 10.3

                          REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April 30,
2001, by and among ESC MEDICAL SYSTEMS LTD., a corporation duly organized and
existing under the laws of the State of Israel, having its principal office at
Yokneam Industrial Park, P.O.B. 240, Yokneam 20692, Israel (the "Company"), and
COHERENT, INC., a Delaware corporation having its principal office at 5100
Patrick Henry Drive, Santa Clara, California 95054 (the "Seller").

      This Agreement is entered into in connection with the Asset Purchase
Agreement, dated as of February 25, 2001, among the Company, Energy Systems
Holdings Inc., a corporation duly organized under the laws of the state of
Delaware, and the Seller (the "Asset Purchase Agreement"), which provides for,
among other things, the issuance by the Company to the Seller of 5,432,099
Ordinary Shares (hereinafter defined). In connection with the Asset Purchase
Agreement, the Company has agreed to provide the registration rights set forth
in this Agreement for the benefit of the Seller and any subsequent holders of
the Shares (hereinafter defined).

      1. CERTAIN DEFINITIONS.

      Capitalized terms used herein without definition shall have their
respective meanings set forth in the Asset Purchase Agreement. For purposes of
this Registration Rights Agreement, the following terms shall have the following
respective meanings:

         (a) "Commission" shall mean the Securities and Exchange Commission, or
any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular purpose.

         (b) "Effective Time" shall mean the date on which the Commission
declares the Shelf Registration effective or on which the Shelf Registration
otherwise becomes effective.

         (c) "Exchange Act" shall mean the Securities Exchange Act of 1934, or
any successor thereto, as the same shall be amended from time to time.

         (d) "Ordinary Shares" shall mean the Company's ordinary shares, par
value NIS 0.10 per share.

         (e) "Person" shall mean a corporation, association, partnership,
organization, business, individual, government or political subdivision thereof
or governmental agency.

         (f) "Registrable Securities" shall mean any Shares subject to
registration under the Securities Act pursuant to this Agreement.

         (g) "Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.

         (h) "Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.


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         (i) "Shares" shall mean the Ordinary Shares issued pursuant to the
Asset Purchase Agreement and Ordinary Shares issued as a result of any stock
dividend, split or similar event or other distribution with respect to, or any
other securities of the Company issued in exchange for or replacement of, such
Ordinary Shares.

         (j) "Shelf Registration" shall have the meaning assigned thereto in
Section 2 hereof.

      2. SHELF REGISTRATION OF SHARES; OTHER REGISTRATIONS.

         (a) The Company shall file under the Securities Act a "shelf"
registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the Seller pursuant to Rule 415 under the
Securities Act and/or any similar rule that may be adopted by the Commission of,
all Shares in accordance with the methods of distribution elected by the Seller
and set forth in such registration statement (together with any subsequently
filed registration statement, the "Shelf Registration"). The Company agrees to
use its best efforts to cause the Shelf Registration to become or be declared
effective no later than October 30, 2003(1) (the "Effective Date") (and shall
file the Shelf Registration at such time prior to the Effective Date as
necessary to enable the Shelf Registration to become effective by the Effective
Date) and to keep such Shelf Registration (or any subsequent Shelf Registration
Statement) continuously effective for a period ending on the earliest to occur
of (i) the sale of all of the Shares, (ii) such time as the Seller may sell all
of such Shares pursuant to Rule 144(k) under the Securities Act without volume
or manner of sale restrictions or (iii) April 30, 2009(2) (in any such case,
such period being called the "Effectiveness Period"). The Company further agrees
to make amendments to the Shelf Registration, (i) if required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Shelf Registration or by the Securities Act or rules and
regulations thereunder for shelf registration or (ii) if reasonably requested by
Seller. The Company agrees to furnish to the Seller copies of any such amendment
prior to its being used and/or filed with the Commission, and will not file any
such amendment to which the Seller reasonably objects.

         (b) Notwithstanding the foregoing, but subject to the immediately
following sentence, the Company may delay by up to 90 consecutive days, as
appropriate (the "Delay Period") the initial filing date of the Shelf
Registration set forth in Section 2(a) herein and following the Effective Time,
the Company may, from time to time, suspend the effectiveness of such Shelf
Registration for up to 90 consecutive days, as appropriate (a "Suspension
Period"), in each case by giving written notice to the Seller, if the Board of
Directors of the Company shall have determined, in its reasonable judgment, that
the Company shall be required to disclose any material corporate development
which disclosure would have a material adverse effect on the Company in light of
its current or future business plans ("Material Information"). Notwithstanding
the foregoing to the contrary, (i) the total number of days in which a Delay
Period, Suspension Period, Lock-up Period (as that term is defined in Section
2(c) hereof) or any restriction on trading pursuant to Section 3 hereof is in
effect shall not,

--------

     (1) 30 month anniversary of Closing.

     (2) 96 month anniversary of Closing.



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in the aggregate, exceed 120 days during any consecutive 365-day period (the
"Suspension Limit") and (ii) a Suspension Period, Delay Period or Lock-up Period
shall not begin until 30 days after the completion of a Suspension Period, Delay
Period, Lock-up Period, or restriction on trading pursuant to Section 3 hereof,
if any. For purposes of the immediately preceding sentence, the number of days
to be counted against the Suspension Limit as a result of the imposition of a
Lock-up Period shall be deemed to be two-thirds (2/3) of the actual number of
days included in the Lock-up Period, but in no event more than 60 days. By way
of illustration only, if the Company imposes upon Seller a Lock-up Period for a
period of 90 days, only 60 days will be counted against the Suspension Limit.
The Company will use its reasonable best efforts to minimize the length of any
Suspension Period, Delay Period or Lock-up Period. For purposes of the
immediately preceding sentence, it is understood by each party that a good faith
determination by the managing underwriter or underwriters as to the appropriate
duration of any Lock-up Period shall be binding on the Seller. The Seller agrees
that, upon receipt of any written notice from the Company of a Suspension
Period, the Seller shall forthwith discontinue disposition of shares during any
Suspension Period through the Shelf Registration until the Seller (i) is advised
in writing by the Company that the use of the applicable prospectus may be
resumed, (ii) has received copies of a supplemental or amended prospectus, if
applicable, and/or (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference in such
prospectus. During any Delay Period or Suspension Period, the Seller agrees to
maintain in confidence and not to disclose to any other person the fact of such
Delay Period or Suspension Period or any other information concerning it
(including, without limitation, the notice from the Company relating thereto)
until such time as (A) such information becomes a matter of public record
(whether by virtue of its inclusion in such registration statement or
otherwise), or (B) the Seller shall be required to so disclose such information
pursuant to subpoena or order of any court or other governmental agency or body
having jurisdiction over the matter (subject to the requirements of such order,
and only after the Seller shall have given the Company prompt prior written
notice of such requirement).

         (c) Subject to the Seller's participation in any underwritten offering
pursuant to Section 7, the Seller agrees that, at any time a registration
statement (that is not a Shelf Registration) for an underwritten offering of the
Company's equity securities is filed, if the managing underwriter or
underwriters determine and so notify the Seller in writing that it is in the
best interest of such offering that Registrable Securities not be sold during
and for some time after such offering, it shall agree with the underwriters in
such offering not to sell any Registrable Securities pursuant to the Shelf
Registration (except to the extent such Registrable Securities are included in
such registered underwritten offering pursuant to Section 7) or otherwise for up
to 90 days from the closing of such offering, as the managing underwriter or
underwriters deem appropriate (which period of time shall be referred to herein
as a "Lock-up Period"). Seller agrees to execute any and all appropriate
documentation to give effect to the foregoing as may be reasonably requested by
the underwriter(s); PROVIDED, HOWEVER, that (i) each executive officer, director
and affiliate of the Company (as the term "affiliates" is defined in Rule 144
promulgated under the Securities Act), (ii) each person who holds 5% or more of
the Company's then outstanding capital stock that is required to file a Schedule
13D or 13G under the Exchange Act with regard to any class of the Company's
securities (individually, a "Section 13 Filer") and (iii) each person that shall
have acquired some or all of its securities directly from the Company and is a
party to an agreement with the Company that continues to provide for the
registration of such securities also enters into a similar agreement not to sell
such securities for the Lock-Up Period. Notwithstanding anything to the contrary
in this Agreement, the lock-up




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provisions of this Section 2(c) shall not apply to Seller if Seller is not a
Section 13 Filer. Notwithstanding the foregoing, the term "Section 13 Filer"
shall not include any person identified under Rule 13d-1(b) who is permitted to
file on Schedule 13G unless such person acquired Ordinary Shares directly from
the Company.

         (d) Notwithstanding the foregoing, this "lock-up" provision as applied
to Seller shall not apply to any Ordinary Shares purchased in a public market
transaction at any time by Seller prior to, on or after the Company's public
offering. The Company may impose stop-transfer instructions with respect to its
Ordinary Shares, the Registrable Securities (or any other securities) subject to
the foregoing restriction until the end of the applicable Lock-Up Period.

         (e) Any discretionary waiver or early termination of these "lock-up"
provisions by the Company or its underwriters with respect to any individual or
entity shall similarly apply to release Seller from this "lock-up" provision on
a pro-rata basis where the number of shares released from such "lock-up" is
multiplied by a fraction with the numerator being the number of Seller's shares,
as applicable, subject to any "lock-up" provision and the denominator being the
total number of all shares subject to lock-up in the public offering.

         (f) Notwithstanding anything to the contrary herein, so long as an
officer, director or employee of Seller is a director of the Company appointed
pursuant to Section 5.13 of the Asset Purchase Agreement, the Seller shall abide
by the insider trading policies applicable to all of its directors of the
Company from time to time.

      3. REGISTRATION PROCEDURES.

         (a) In connection with any obligation of the Company to register the
Registrable Securities, the Company shall use its reasonable best efforts to
effect or cause such registration to permit the sale of the Registrable
Securities by the Seller in accordance with the Seller's intended method or
methods of distribution thereof described in the applicable registration
statement. In connection therewith, the Company shall, within the time specified
in Section 2 above:

             (i)   prepare and file with the Commission a registration statement
on any form which may be utilized by the Company and which shall permit the
disposition of the Registrable Securities in accordance with the Seller's
intended method or methods thereof, as specified in writing by the Seller;

             (ii)  comply with the provisions of the Securities Act with respect
to the disposition of all of the Registrable Securities covered by such
registration statement in accordance with the Seller's intended methods of
disposition by the Seller set forth in such registration statement as so amended
or such prospectus as so supplemented;

             (iii) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration as may be necessary to keep
such Shelf Registration continuously effective for the Effectiveness Period;
cause the related prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act.



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             (iv)  provide (A) the Seller, (B) the underwriters (which term, for
purposes of this Agreement, shall include a person deemed to be an underwriter
within the meaning of Section 2(a)(11) of the Securities Act), if any, thereof,
(C) the sales or placement agent, if any, therefor, (D) counsel for such
underwriters or agent, and (E) one counsel for the Seller the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment or supplement
thereto, including using reasonable efforts to reflect in each such document
when so filed with the Commission such comments as the Seller or its counsel may
reasonably propose;

             (v)   for a reasonable period prior to the filing of such
registration statement, and throughout the period specified in Section 2 hereof,
make available for inspection by the parties referred to in Section 3(a)(iv)
above such financial and other information and books and records of the Company
and its subsidiaries, and cause the officers, employees, counsel and independent
certified public accountants of the Company and its subsidiaries to respond to
such inquiries, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; provided,
however, that each such party shall be required to maintain in confidence and
not to disclose to any other person any information or records provided by the
Company until such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in such registration statement or
otherwise), or (B) such person shall be required so to disclose such information
pursuant to the subpoena or order of any court or other governmental agency or
body having jurisdiction over the matter (subject to the requirements of such
order, and only after such person shall have given the Company prompt prior
written notice of such requirement);

             (vi)  promptly notify the Seller, the sales or placement agent, if
any, therefor and the managing underwriter or underwriters, if any, thereof and
counsel to the Seller and confirm such advice in writing, (A) when such
registration statement or the prospectus included therein or any prospectus
amendment or supplement or post-effective amendment has been filed, and, with
respect to such registration statement or any post-effective amendment, when the
same has been declared effective, (B) of any comments by the Commission and by
the blue sky or securities commissioner or regulator of any state with respect
thereto or any request by the Commission or any other federal or state
governmental authority for amendments or supplements to such registration
statement or prospectus or for additional information, (C) of the issuance by
the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of such registration statement or the
initiation or overt threatening of any proceedings for that purpose, (D)the
occurrence of any event (other than an event in connection with a Delay Period
or Suspension Period) that would result in the registration statement no longer
complying with the requirements of applicable law or regulations including,
without limitation, the Securities Act and the rules and regulations promulgated
thereunder, (E) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or overt
threatening of any proceeding for such purpose, or (F) at any time when a
prospectus is required to be delivered under the Securities Act, if such
registration statement, prospectus, prospectus amendment or supplement or
post-effective amendment, or any document incorporated by reference in any of
the foregoing, contains an untrue




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statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;

             (vii) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto or the lifting of any suspension of the
qualification (or exemption from qualification) of any Registrable Securities
for sale in any jurisdiction in which they have been qualified for sale, in each
such case at the earliest practicable date;

             (viii) if requested by any managing underwriter or underwriters,
any placement or sales agent or the Seller, promptly incorporate in a prospectus
supplement or post-effective amendment such information as is required by the
applicable rules and regulations of the Commission that such managing
underwriter or underwriters, such agent or the Seller specifies should be
included therein relating to the terms of the sale of such Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being sold by the Seller, or agent or to any
underwriters, the name and description of the Seller, agent or underwriter, the
offering price of such Registrable Securities and any discount, commission or
other compensation payable in respect thereof, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
offering of the Registrable Securities to be sold by the Seller or agent or to
such underwriters; and make all required filings of such prospectus supplement
or post-effective amendment promptly after notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment;

             (ix)  furnish, without charge, to the Seller, each placement or
sales agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(a)(iii) a copy of such registration
statement in the form in which it became effective, each such amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein) and such number of copies of such
registration statement (excluding exhibits thereto and documents incorporated by
reference therein unless specifically so requested by the Seller, agent or
underwriter, as the case may be) and of the prospectus included in such
registration statement (including each preliminary prospectus and any summary
prospectus), in conformity with the requirements of the Securities Act, and such
other documents, as the Seller, agent, if any, and underwriter, if any, may
reasonably request in order to facilitate the offering and disposition of the
Registrable Securities owned by the Seller, offered or sold by such agent or
underwritten by such underwriter and to permit the Seller, agent and underwriter
to satisfy the prospectus delivery requirements of the Securities Act; and the
Company hereby consents to the use of such prospectus (including such
preliminary and summary prospectus) and any amendment or supplement thereto by
the Seller and by any such agent and underwriter, in each case in the form most
recently provided to such party by the Company, in connection with the offering
and sale of the Registrable Securities covered by the prospectus (including such
preliminary and summary prospectus) or any supplement or amendment thereto;

             (x)   Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration, use its best efforts to (A) register or
qualify the Registrable Securities to be included in such registration statement
under such securities laws or blue sky laws of such jurisdictions as the Seller
and each placement or sales agent, if any, therefor and underwriter, if any,



                                      -6-

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thereof shall reasonably request, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
during the respective periods such registration statements are required to
remain effective under Section 2 above and for so long as may be necessary to
enable the Seller or any agent or underwriter to complete its distribution of
Registrable Securities pursuant to such registration statement and (C) take
any and all other actions as may be reasonably necessary or advisable to
enable the Seller, agent, if any, and underwriter, if any, to consummate the
disposition in such jurisdictions of such Registrable Securities; provided,
however, that the Company shall not be required for any such purpose to (I)
qualify as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this Section
3(a)(x) or (II) consent to general service of process in any such
jurisdiction where it is not then already subject;

             (xi)  use its best efforts to obtain the consent or approval of
each governmental agency or authority, whether federal, state or local, which
may be required to effect the Shelf Registration or the offering or sale in
connection therewith or to enable the Seller to offer, or to consummate the
disposition of, its Registrable Securities;

             (xii) cooperate with the Seller and the managing underwriters, if
any, to facilitate the timely preparation and delivery of any certificates
representing Registrable Securities to be sold, which certificates shall be
printed, lithographed or engraved, or produced by any combination of such
methods, and which shall not, once sold under such registration statement, bear
any restrictive legends; and, in the case of an underwritten offering, enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriters may request at least two business days prior
to any sale of the Registrable Securities:

             (xiii) enter into one or more underwriting agreements, engagement
letters, agency agreements or similar agreements, as appropriate, including
(without limitation) customary provisions relating to indemnification and
contribution, and take such other actions in connection therewith as the Seller
shall reasonably request in order to expedite or facilitate the disposition of
the Registrable Securities; provided that the appointment of any underwriters to
participate in an underwritten offering of Registrable Securities shall be
subject to approval by the Company, which approval shall not be unreasonably
withheld

             (xiv) notify the Seller in writing of any proposal by the Company
to amend or waive any provision of these Registration Rights pursuant to Section
7(g) hereof and of any amendment or waiver effected pursuant thereto, each of
which notices shall contain the text of the amendment or waiver proposed or
effected, as the case may be;

             (xv)  in the event that any broker-dealer registered under the
Exchange Act shall underwrite any Registrable Securities or participate as a
member of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Rules of Fair Practice and the By-Laws
of the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such broker-dealer in complying with the
requirements of such Rules and By-Laws, including, without limitation, by
providing such information to such broker-dealer as may be required in order for
such broker-dealer to comply with the requirements of the Rules of Fair Practice
of the NASD;



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             (xvi) comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders as soon as
practicable but in any event not later than eighteen months after the effective
date of such registration statement, an earning statement of the Company and its
subsidiaries complying with Section 11(a) of the Securities Act (including, at
the option of the Company, Rule 158 thereunder);

             (xvii) use its best efforts to have the Shares approved for trading
in accordance with the rules of the principal securities market in the United
States on which such Shares are then trading; and

             (xviii) provide a CUSIP number for all Registrable Securities
covered by each registration statement not later than the effective date of such
registration statement.

         (b) In the event that the Company would be required, pursuant to
Section 3(a)(vi)(C), (D) or (F) above, to notify the Seller, the placement or
sales agent, if any, therefor and the managing underwriters, if any, thereof,
the Company shall, (i) no later than 30 days after the relevant event (or, if
such 30-day period ends during a Delay Period or Suspension Period, then on the
first business day following the expiration of such Delay Period or Suspension
Period), prepare and file with the Commission a new registration statement,
post-effective amendment to such registration statement, supplement to the
related prospectus or any document incorporated therein by reference or file any
other required document, (ii) as promptly as practicable, take any other action
necessary to rectify the situation described in such notice to allow Seller to
offer and sell the Registrable Securities under the registration statement as
soon as possible; PROVIDED HOWEVER, that such action need not take place during
a Suspension Period unless and to the extent such action would not involve the
disclosure of Material Information, (iii) in the case of a new registration
statement or post-effective amendment, use its reasonable best efforts to cause
it to be declared effective as promptly as practicable, and (iv) furnish to the
Seller, to each placement or sales agent, if any, and to each underwriter, if
any, a reasonable number of copies of a new prospectus or prospectus
supplemented or amended in form and substance reasonably satisfactory to them,
so that, as thereafter delivered to purchasers of Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
The Seller agrees that upon receipt of any written notice from the Company
pursuant to Section 3(a)(vi)(C), (D) or (F) hereof, the Seller shall forthwith
discontinue the offer or sale of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until the
Seller shall have received copies of such new prospectus or amended or
supplemented prospectus, and if so directed by the Company, the Seller shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in the Seller's possession of the prospectus
covering such Registrable Securities at the time of receipt of such notice;
PROVIDED, HOWEVER, that the period of time during which Seller may not offer or
sell the Registrable Securities as a result of the operation of this sentence
shall count against the Suspension Limit and the Company may not impose a
Suspension Period or Lock-Up Period within 30 days after the termination of such
restriction. In the event that the Company would be required, pursuant to
Section 3(a)(vi)(E) above, to notify the Seller, the placement or sales agent,
if any, therefor and the managing underwriters, if any, thereof, the Company
shall, as promptly as practicable, cause the Registrable Securities to remain
qualified in any jurisdiction where their qualification or exemption from
qualification has been suspended or has been threatened to be




                                      -8-
<PAGE>

suspended (each, a "Suspended Jurisdiction"); PROVIDED, HOWEVER, that the
Company shall not be required for any such purpose to (I) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be required to
qualify but for the requirements of this Section 3(b) and Section 3(a)(x) or
(II) consent to general service of process in any such jurisdiction where it is
not then already subject and, PROVIDED FURTHER, HOWEVER, that no action need be
taken during a Suspension Period unless and to the extent that such action would
not involve the disclosure of Material Information. The Seller agrees that upon
receipt of any written notice from the Company pursuant to Section 3(a)(vi)(E)
hereof that the qualification of the Registrable Securities pursuant to the
registration statement has been suspended, the Seller shall forthwith
discontinue the offer or sale of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities in any
Suspended Jurisdiction until the suspension has been remedied; PROVIDED,
HOWEVER, that the period of time during which Seller may not offer or sell the
Registrable Securities as a result of the operation of this sentence shall count
against the Suspension Limit and the Company may not impose a Suspension Period
or Lock-Up Period within 30 days after the termination of such restriction;
PROVIDED FURTHER, HOWEVER, that the foregoing proviso shall not apply to any
such period during which Seller may not offer or sell the Registrable Securities
if the applicable suspension were primarily the result of Seller's status,
particular activities or intended method of distribution.

         (c) The Seller shall furnish to the Company such information regarding
the identity of the Seller, the number of Shares beneficially owned by the
Seller and the Seller's intended method of distribution of Registrable
Securities and any other information as the Company may from time to time
reasonably request in writing, but only to the extent that such information is
required in order to properly file and have declared effective the Shelf
Registration and to otherwise comply with the Securities Act and the rules and
regulations thereunder. The Seller agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished by
the Seller to the Company or of the occurrence of any event in either case as a
result of which any prospectus relating to such registration contains or would
contain an untrue statement of a material fact regarding the Seller or its
intended method of distribution of such Registrable Securities or omits or would
omit to state any material fact regarding the Seller or its intended method of
distribution of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such prospectus shall not contain, with respect
to the Seller or the distribution of such Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. The Seller agrees that upon delivering
any notice to the Company pursuant to this Section 3(c), the Seller shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until the
Seller shall have the received copies of such amended or supplemented
prospectus, and if so directed by the Company, the Seller shall deliver to the
Company (at the Company's expense) all copies, other than permanent file copies
then in the Seller's possession of the prospectus covering such Registrable
Securities at the time of receipt of such notice.

      4. REGISTRATION EXPENSES. The Company agrees to bear and to pay or cause
to be paid promptly upon request being made therefor all expenses incident to
the Company's performance of or compliance with this Agreement, including,
without limitation, (i) all Commission and any NASD




                                      -9-
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registration and filing fees and expenses, (ii) all fees and expenses in
connection with the qualification of the Registrable Securities for offering and
sale under the State securities and blue sky laws referred to in Section 3(a)(x)
hereof, including reasonable fees and disbursements of counsel for the placement
or sales agent or underwriters in connection with such qualifications, (iii) all
fees and expenses in connection with the approval for trading of the Shares or
other Ordinary Shares on the applicable securities market, (iv) all expenses
relating to the preparation, printing, distribution and reproduction of each
registration statement required to be filed hereunder, each prospectus included
therein or prepared for distribution pursuant hereto, each amendment or
supplement to the foregoing, the certificates representing the Registrable
Securities and all other documents relating hereto, (v) internal expenses
(including, without limitation, all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), and (vi) fees,
disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or "cold
comfort" letters required by or incident to such performance and compliance)
(collectively, the "Registration Expenses"). The Seller shall pay all agency
fees and commissions and underwriting discounts and commissions attributable to
the sale of the Registrable Securities and the fees and disbursements of any
counsel or other advisors or experts retained by the Seller.

      5. [Intentionally omitted]

      6. INDEMNIFICATION.

         (a) INDEMNIFICATION BY THE COMPANY. Upon the registration of
Registrable Securities pursuant to Section 2 hereof, and in consideration of the
agreements of the Seller contained herein, the Company shall, and it hereby
agrees to, indemnify and hold harmless the Seller, its directors, officers,
partners, agents and affiliates, and each person, if any, who controls the
Seller within the meaning of either Section 15 or the Securities Act or Section
20 of the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which the Seller or such other person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) an untrue statement or alleged untrue statement of a material fact contained
in any registration statement under which such Registrable Securities were
registered under the Securities Act, or any preliminary, final or summary
prospectus contained therein or furnished by the Company to the Seller, agent or
underwriter, or any amendment or supplement thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (iii) during the
Effectiveness Period, the failure of any registration statement or prospectus
(including any summary prospectus) contained therein or furnished pursuant to
Section 3(c)(ix) hereof, as then amended or supplemented, to conform in all
material respects to the requirements of the Securities Act when a prospectus
would be required to be delivered under the Securities Act and the Company
shall, and it hereby agrees to, reimburse the Seller and such other persons, for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable to any such
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, preliminary, final or summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the




                                      -10-
<PAGE>

Company by such person expressly for use therein or made in such preliminary,
final or summary prospectus if no less than 5 days prior to its delivery to
purchasers the Company had furnished to the Seller, agent or underwriter a
revised prospectus correcting such untrue statement or alleged untrue statement
or omission or alleged omission; or (ii) an event for which the Company shall
have given written notice pursuant to Sections 3(a)(vi)(C), (D), (E) or (F) and
in connection with which Seller would not have incurred any such loss, claim,
damage or liability had Seller discontinued the offer and sale of the
Registrable Securities following Seller's receipt of such notice; provided,
further, however, that the Company shall not be released from liability under
this clause (ii) if, after receipt of the Company's notice, the Seller shall
have taken reasonable best efforts to discontinue the offer and sale of the
Registrable Securities as soon as reasonably practicable thereafter.

         (b) INDEMNIFICATION BY THE SELLER AND ANY AGENTS AND UNDERWRITERS. The
Company may require, as a condition to including any Registrable Securities in
any registration statement filed pursuant to Section 2 hereof and to entering
into any underwriting agreement with respect thereto, that the Company shall
have received an undertaking reasonably satisfactory to it from Seller and each
underwriter named in any such underwriting agreement, severally and not jointly,
to (i) indemnify and hold harmless the Company, its directors, officers who sign
any Shelf Registration and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, against any losses, claims, damages or liabilities to which the
Company or such other persons may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in such registration statement, or
any preliminary, final or summary prospectus contained therein or furnished by
the Company to the Seller, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by the Seller, agent or underwriter
expressly for use therein, and (ii) reimburse the Company and such other persons
for any legal or other expenses reasonably incurred by the Company and such
other persons in connection with investigating or defending any such action or
claim as such expenses are incurred.

         (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 6, notify such indemnifying party in writing of
the commencement of such action; but the omission to so notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense




                                      -11-
<PAGE>

thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party) and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation.

         (d) CONTRIBUTION. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 6(a) or Section 6(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 6(d) were determined by pro rata allocation (even if the Seller or any
agents or underwriters or all of them were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim, subject to the limitation on legal expenses set forth in Section 6(c)
herein. Notwithstanding the provisions of this Section 6(d), the Seller shall
not be required to contribute any amount in excess of the amount by which the
dollar amount of the proceeds received by the Seller from the sale of any
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) exceeds the amount of any damages which the Seller may have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

         (e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director and partner of the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act; and the obligations of the Seller contemplated by this
Section 6 shall be in addition to any liability which the Seller may otherwise
have and shall extend, upon the same terms and conditions, to each person, if
any, who controls the Seller within the meaning of the Securities Act.

      7. PIGGYBACK REGISTRATION RIGHTS.

         (a) NOTICE OF REGISTRATION. If, during the Effectiveness Period, at any
time or from time to time the Company shall determine to register any of its
Ordinary Shares, either for its own




                                      -12-
<PAGE>

account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans or (ii) a registration
relating solely to a transaction pursuant to Rule 145 promulgated under the
Securities Act, the Company shall promptly give to Seller written notice thereof
and include in such registration (and any related qualification under blue sky
laws or other compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made within
20 days after receipt of such written notice from the Company by Seller. Such
written request by Seller may specify all or part of the Registrable Securities.

         (b) UNDERWRITING. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Seller as a part of the written notice given pursuant to Section
7(a). In such event the right of Seller to registration pursuant to this Section
7 shall be conditioned upon Seller's participation in such underwriting and the
inclusion of Registrable Securities in the underwriting to the extent provided
herein. Seller (together with the Company and any other holders distributing
their securities through such underwriting) shall enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company and reasonably acceptable to the Company and Seller.
Notwithstanding any other provision of this Section 7, if the managing
underwriter determines that the total number of securities proposed to be sold
in the offering is so large as to materially threaten the success of such
offering, then the managing underwriter may limit the Registrable Securities to
be included in such registration, and shall deliver written notice to the Seller
of such limitation specifying the reason for such limitation and the number of
shares that Seller may thereafter include in such registration. In such event,
the managing underwriter shall first limit or exclude the securities of any
securityholder that, at such time, is not a party to a written agreement with
the Company that continues to provide for the registration of such Ordinary
Shares by the Company and shall thereafter limit or exclude the Registrable
Securities and securities proposed to be registered for the account of any
securityholder that, at such time, is a party to a written agreement with the
Company that continues to provide for the registration of such securities by the
Company, on a pro rata basis based upon the total amount of securities entitled
to be included in the registration owned by each of Seller and any such
securityholder. The Seller hereby acknowledges that the Company may, in
connection with any such registration, enter into an appropriate registration
rights agreement with its existing Section 13 Filers to permit them to
participate in such registration as contemplated by the immediately preceding
sentence. If Seller disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter and the underwriting shall be reallocated among the remaining
holders of the Company's securities in the manner set forth above.

      8. MISCELLANEOUS.

         (a) NO INCONSISTENT AGREEMENTS. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant, registration
rights with respect to Ordinary Shares or any other securities which would be
inconsistent with the terms contained in this Agreement.

         (b) SPECIFIC PERFORMANCE. The parties hereto acknowledge that there may
be no adequate remedy at law if any party fails to perform any of its
obligations hereunder and that each party may be irreparably harmed by any such
failure, and accordingly agree that each party,




                                      -13-
<PAGE>

in addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any other
party under this Agreement in accordance with the terms and conditions of this
Agreement, in any court of the United States or any State thereof having
jurisdiction.

         (c) NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be deemed effectively given when personally delivered,
transmitted by facsimile (with written confirmation of receipt) or mailed by
pre-paid certified mail, return receipt requested, or by telephone when
confirmed in writing by one of the preceding methods addressed as follows (as
applicable):

     If to the Company, to:

     ESC Medical Systems Ltd.
     Yokneam Industrial Park
     Yokneam, Israel 20692
     Attention: General Counsel
     Telephone Number: (972-4-959-9000)
     Facsimile Transmission Number: (972-4-959-9050)

     With copies of the written notice to:

     Skadden, Arps, Slate, Meagher & Flom LLP
     Four Times Square
     New York, New York 10036
     Attn: David J. Friedman, Esq.
     Telephone Number: (1-212-735-3000)
     Facsimile Transmission Number: (1-212-735-2000)

     If to the Seller, to:

     Coherent, Inc.
     5100 Patrick Henry Drive
     Santa Clara, Ca 95054
     Attention: General Counsel
     Telephone Number: (408) 764-4000
     Facsimile Transmission Number: (408) 764-8400

     with copies of the written notice to:

     Wilson Sonsini Goodrich & Rosati
     650 Page Mill Road
     Palo Alto, CA  94304-1050
     Attn: Larry W. Sonsini, Esq.
     Martin W. Korman, Esq.
     Bruce M. McNamara, Esq.
     Telephone Number: (650) 493-9300
     Facsimile Transmission Number: (650) 493-6811



                                      -14-
<PAGE>

or to such other address or number and to the attention of such other person as
either party may designate by written notice to the other party. Notice shall be
effective upon actual receipt.

         (d) SURVIVAL. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of the Seller, any
director, officer or partner of the Seller, any agent or underwriter or any
director, officer or partner thereof, or any controlling person of any of the
foregoing.

         (e) LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

         (f) HEADINGS. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.

         (g) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire understanding of the parties with respect to its subject matter. This
Agreement supersede all prior agreements and understandings between the parties
with respect to its subject matter. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a written
instrument duly executed by the Company and the Seller.

         (h) ASSIGNMENT. In connection with (i) the transfer of any of the
Shares to an affiliate of Seller or (ii) the transfer of at least 270,000 (as
such number may be adjusted for stock dividends, stock splits or other similar
transactions) of the Shares to any other Person, Seller may assign its rights
hereunder in respect of such Shares to the transferee provided that any such
transferee agrees in writing to be bound by the terms hereof. Upon such
assignment the transferee shall, insofar as the transferred Shares are
concerned, be entitled to all of the rights, and be subject to all of the
obligations, of the Seller under this Agreement, and all references to the
"Seller" herein shall thereafter be deemed to include Seller, or such
transferee, or both, as the circumstances warrant and all decisions to be made
or actions taken by Seller shall be deemed to be made or taken by the holders of
a majority in interest of the Registrable Securities.

         (i) COUNTERPARTS. This agreement may be executed by the parties
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same instrument.

         (j) ATTORNEYS' FEES. If either party commences an action against the
other party arising out of or in connection with this agreement, the prevailing
party shall be entitled to recover from the losing party reasonable attorneys
fees and costs of suit. The term "prevailing party" shall


                                      -15-
<PAGE>

include a party who obtains legal counsel or brings an action against the other
by reason of the other's breach or default and obtains substantially the relief
sought, whether by compromise, settlement or judgment, or, in the event that the
initiating party fails to substantially obtain the relief sought, whether by
compromise, settlement or judgment, then the other party shall be deemed to be
the "prevailing party".
















                                      -16-
<PAGE>


         Agreed to and accepted as of the date referred to above.

                                         ESC MEDICAL SYSTEMS LTD.


                                         By: /s/ Sagi Genger
                                             ------------------------------
                                             Name: Sagi Genger
                                             Title: Chief Financial Officer



                                         COHERENT, INC.


                                         By: /s/ Robert J. Quillinan
                                             ----------------------------------
                                             Name: Robert J. Quillinan
                                             Title: Executive Vice President
                                                    and Chief Financial Officer