EMPLOYMENT AGREEMENT


              This Employment Agreement (the "Agreement") is made and
entered into as of June 29, 1999 by and among ESC MEDICAL SYSTEMS LTD., a
public company incorporated under the laws of the State of Israel, with its
principal offices at the New Industrial Park, Yokneam, Israel (the
"Company"), and MR. YACHA SUTTON, residing at 6 Oppenheimer Street,
Tel-Aviv, Israel (the "Executive").

              WHEREAS, the Company desires to employ and secure for itself
the services of the Executive upon the terms and subject to the conditions
specified herein, and

              WHEREAS, the Executive desires to accept employment with the
Company upon the terms and subject to the conditions specified herein, and

              WHEREAS, for the avoidance of any doubt, it is agreed and
understood between the parties that by accepting employment with the
Company pursuant to this Agreement the Executive shall not be deemed in
breach of either the Termination Agreement between Laser Industries Ltd.
and the Executive or the Non-Competition Agreement between the Company and
the Executive, both agreements dated February 22, 1998.

              NOW, THEREFORE, in consideration of the premises and the
mutual covenants, terms and conditions hereinafter set forth, and for other
good and valuable consideration, the receipt of which is hereby
specifically acknowledged, the parties hereto agree as follows:

         1. EMPLOYMENT. The Company hereby employs the Executive in the
capacity of Chief Executive Officer of the Company upon the terms and
subject to the conditions set forth below. The Executive hereby accepts
employment with the Company upon the terms and subject to the conditions
set forth below. This agreement is personal and shall not invoke the
provisions of any collective bargaining agreement or arrangement or
extension orders, whether presently existing or shall exist in the future,
except and only to the extent so mandated by law.

         2. DUTIES. (a) The Executive agrees to devote his full business
time, attention, best efforts and ability to the affairs of the Company. He
shall report to the Board of Directors of the Company (the "Board") or to
the Executive Committee of the Board (the "Committee") or to such members
of the Board or the Committee as either of them shall designate from time
to time to direct the Executive in the execution of his duties and
responsibilities hereunder. The Executive shall have primary responsibility
for operating and managing the business of the Company in the ordinary
course of its business, with the powers and duties accorded to the position
of CEO as set forth in the Articles of Association of the Company and such
other duties consistent therewith as may be assigned to the Executive from
time to time by the Board or the Committee or such members of the Board or
the Committee as either of them shall designate from time to time to direct
the Executive in the execution of his duties and responsibilities
hereunder.

              (b) The Executive acknowledges that his capacity as CEO is a
fiduciary position and requires a special degree of trust, his duties and
responsibilities may entail irregular work hours and extensive traveling,
for which he is adequately rewarded by the compensations provided for in
this Agreement, and that accordingly the provisions of the Work Hours and
Rest Law, 1951 will not apply to his employment with the Company.

              (c) When the Executive performs services for the Company, the
Executive shall be, at all times, an employee of the Company. While
performing services for the Company, the Executive shall not engage in any
activities that may interfere or conflict with the proper discharge of his
duties.

         3. TERM AND TERMINATION. The term of this Agreement shall be
effective as of June 30, 1999 and shall continue in full force and effect
until terminated pursuant to the terms hereof.

              3.1 The Agreement and the Executive's employment may be
terminated (a) at any time at the option of either party upon ninety (90)
days prior written notice ("Prior Notice"); (b) upon the death of the
Executive; (c) in the event of the inability of the Executive to perform
his duties hereunder, whether by reason of injury (mental or physical),
illness or otherwise, incapacitating the Executive for a continuous period
exceeding 45 days or non-consecutive 45 days in any six month period; or
(d) for cause. For purposes of this Agreement, an event or occurrence
constituting "cause" includes:

                     (i)  The Executive's omission or refusal to perform
                          specific directives of the Board or the Committee
                          or such members of the Board or the Committee as
                          either of them shall designate from time to time
                          to direct the Executive in the execution of his
                          duties and responsibilities hereunder;

                     (ii) Dishonesty of the Executive affecting the Company;

                     (iii)The Executive's conviction of a felony or of any
                          crime involving moral turpitude, fraud or
                          misrepresentation;

                     (iv) Any gross negligence or bad-faith conduct of the
                          Executive resulting in material loss to the
                          Company or any of its subsidiaries or material
                          damage to the reputation of the Company or any of
                          its subsidiaries; and

                     (v) Any material breach of this Agreement.

              3.2 In the event of a termination of this Agreement and the
Executive's employment by the Company pursuant to a Prior Notice, the
Company shall only be obligated to pay (i) Executive's base salary and
benefits through the Prior Notice period specified above, provided that the
Executive continues his employment obligations through such period (if so
required by the Company), and (ii) the lump sum severance payment to which
the Executive shall be entitled pursuant to the Severance Payment Law, 1963
("Severance Payment") less any amounts received by the Executive from his
Managers' Insurance on account of severance payment (all such payments
shall be less deductions for all applicable taxes and withholdings under
any relevant laws). The Company shall have no further obligation to make
any salary payments or provide any benefits to the Executive after the
expiration of such Prior Notice period, except as required by applicable
law. Notwithstanding the foregoing, the Company may, in its sole
discretion, elect not to require the services of the Executive during the
Prior Notice period, but shall nevertheless continue to pay the Executive's
base salary and benefits through such period.

                     In addition to the payments specified in this
subparagraph 3.2, if either (a) this Agreement and the Executive's
employment is terminated by the Company at any timeother than for "cause",
or (b) following the automatic termination of this Agreement pursuant to
paragraph 3.4 below the Executive shall choose not to remain in the employ
of the Company (whether by not nominating himself for the position of
permanent CEO or by declining any other position with the Company), then
the unpaid balance of the amounts payable by the Company to the Executive
pursuant to the Non-Competition Agreement, dated February 22, 1998, between
the Company and the Executive entered in connection with the merger of the
Company with Laser Industries Ltd., will be paid to the executive in a lump
sum, in lieu of in monthly installments as provided by the said agreement.

              3.3 In the event of any termination of this Agreement and the
Executive's employment which is not referred to in paragraph 3.2 above, the
Company shall no longer be obligated to make any base salary payments or
provide any benefits of any kind whatsoever (except as required by
applicable law) to the Executive or the Executive's estate. However, any
base salary payments earned but not yet paid and any benefits (other than
base salary) to which the Executive has already become entitled under the
terms of any Company plan or policy or this Agreement but has not yet been
provided shall be made and provided by the Company to the Executive or the
Executive's estate in accordance with their respective terms.

              3.4 Notwithstanding anything to the contrary contained in
this Agreement, if not terminated earlier pursuant to any other provision
of this paragraph 3, this Agreement and the Executive's employment
thereunder shall terminate automatically on December 31, 1999, unless
otherwise agreed between the Executive and the Company. In the event of
such termination, as of such date the Company shall no longer be obligated
to make any base salary payments or provide any benefits of any kind
whatsoever to the Executive.

         4. BASE SALARY. As compensation for services rendered hereunder,
the Company shall pay the Executive a gross monthly base salary of U.S.
$15,000 (fifteen thousand U.S. Dollars), less deductions for all applicable
taxes and withholdings, payable in conformance with the regular payroll
dates and practices for executives of the Company during the term of the
Agreement. The Executive's salary level shall be reviewed by the Board or
the Committee annually or at such other times as shall be determined by the
Board or the Committee. The base salary is denominated in U.S. Dollar and
accordingly shall not be adjusted to any changes in the consumer price
index or changes in the cost of living.

         5. BENEFITS. In addition to the compensation set forth in
paragraph 4 above, the Executive shall receive the following benefits, and
only such benefits, from the Company (less deductions for all applicable
taxes and withholdings under any applicable law), it being understood that
any wage-based benefits shall be calculated exclusively on the basis of the
base salary (without consideration to any other benefit):

              (a) VACATION. The Executive shall be entitled to twenty-four
(24) business days of vacation per year in accordance with Company's
policy. The specific dates of such vacations shall be coordinated in
advance with the Board or the Committee. The Executive shall not be
entitled to accumulate or to redeem any unused vacation days in excess of
an aggregate of twelve days.

              (b) OPTIONS. The Executive shall be granted options to
purchase up to 100,000 of the Company's Ordinary Shares, par value NIS 0.10
per share, under the terms and conditions of one of the employees equity
incentive plans maintained by the Company, as the Board or the Committee
shall designated. The exercise price per share for the shares covered by
the said options shall be US$ 6.00. Notwithstanding the provisions of such
plan, the options shall fully vest with the Executive upon the completion
of his initial six months of employment with the Company, unless terminated
earlier by the Executive for whatever reason or by the Company for "cause",
shall be exercisable at any time thereafter until July 1, 2005 (regardless
of whether the Executive is still employed by or affiliated with the
Company at the time of their exercise), and shall otherwise be subject to
the provisions of the option plan under which they shall be issued.

              (c) MANAGERS INSURANCE ETC. In accordance with the Company's
general policy, the Company shall procure for the benefit of the Executive
a "Managers' Insurance Policy" (for life insurance and pension), under
customary terms, and contribute to such policy an amount equal 5% of the
Executive's base salary and 8.33% on account of the Company's severance
payment obligations, and the Company shall withhold 5% from the Executive's
base salary and contribute such amount to the said policy as the
Executive's participation. Upon any termination of the Executive employment
with the Company (other than termination by the Company under circumstances
in which severance payment is not payable) the rights in the Executive's
"Managers' Insurance Policy" shall be assigned to the Executive. The
Executive may designate for the above purpose a policy already existing in
his favor in lieu of the new policy. In addition, the Company shall pay an
amount of up to 2.5% of the Executive's base salary as premium of a
disability insurance policy in favor of the Executive, and an additional
7.5% of the base salary to an "Advanced Study Fund" ("Keren Hishtalmut")
(in which the Executive shall participate in an amount of 2.5% of his base
salary by way of withholding from his pay).

              (d) OTHER BENEFITS. The Board or the Committee shall consider
such additional benefits to the Executive as generally provided by the
Company to its senior executives under its current remuneration policy. The
Executive shall be entitled to use a Company vehicle in accordance to the
Company's existing policies, with respect to the type of vehicle, coverage
of costs and expenses and grossing of applicable taxes.

              (e) INDEMNIFICATION. Subject to the approvals required by the
Companies Ordinance [New Version], 1983, the Company shall enter with the
Executive into the Indemnity Agreement in the form attached hereto as
Exhibit A.

         6. CONFIDENTIAL INFORMATION. The Executive agrees not to divulge
or use, except in furtherance of the Company's business at any time during
his employment or after the termination of his employment with the Company,
any confidential and other proprietary information ("Confidential
Information") obtained at any time, disclosed to the Executive or developed
by the Executive in the course of the Executive's employment with the
Company or regarding the business of either the Company, its subsidiaries,
affiliates, or any of its customers, except that the Executive may disclose
certain necessary information to co-workers employed at the Company and to
third parties when required to do so in connection with the performance of
his duties hereunder. "Confidential Information" shall mean information
which is not known to the public and shall include, but not be limited to,
trade secrets, know-how, data, technical or non-technical, whether written,
graphic or oral, the names and addresses of prospective or existing
investors, customers, supply sources, ideas, financial information,
operations policies, marketing strategies, business development plans,
corporate assets, financial forecasts, and historical financial results.

         7. COVENANT NOT TO SOLICIT BUSINESS. (a) Upon termination of this
Agreement the Executive agrees that for a period of two (2) years he will
not directly or indirectly solicit any business from individuals or
entities that are customers or distributors of the Company, its
subsidiaries or any of their respective affiliates, at the time of the
termination of this Agreement, without the prior written consent of the
Board.

              (b) For a period of two (2) years from the date of
termination of this Agreement, without the prior written consent of the
Board or the Committee, the Executive shall not employ, offer to employ, or
in any way directly or indirectly solicit or seek to obtain or achieve the
employment of any person employed by either the Company, its subsidiaries,
affiliates, or any successors or assigns thereof now or during a two (2)
year period from the date of the Executive's termination of employment,
except for those executives who have left the Company, its subsidiaries,
affiliates, or any successors or assigns thereof more than one (1) year
prior to the date of the Executive's termination of employment with the
Company.

              (c) For a period of two (2) years from the date of
termination of this Agreement, without the prior written consent of the
Board or the Committee, the Executive shall not participate, directly or
indirectly (whether as advisor, principal, agent, partner, officer,
director, employee, stockholder, associate or consultant of), in any
Business Entity (except for an interest of less than 5% in any entity whose
securities are traded in any exchange). For purposes of this paragraph
7(c), the term "Business Entity" shall mean any person, partnership,
corporation or other business entity that at the time of the Executive's
involvement with the Company is involved in any competition with any
business carried on by the Company or its affiliates or subsidiaries prior
to the date of this Agreement or hereafter conducted by the Company or its
affiliates or subsidiaries during the term of this Agreement anywhere in
the world.

              (d) The parties hereto agree that the duration and area for
which the covenant not to compete set forth in paragraph 7(c) above is to
be effective and reasonable, in terms of their geographical and temporal
scope. In the event that any court determines that the time period and/or
area are unreasonable and that such covenant is to that extent
unenforceable, the parties hereto agree that such covenant shall remain in
full force and effect for the greatest period of time and in the greatest
geographical area that would not render it unenforceable. In addition, the
Executive acknowledges and agrees that a breach of paragraph 6 or sections
(a), (b) or (c) of this paragraph 7 shall cause irreparable harm to the
Company, its subsidiaries, and/or its affiliates and that the Company shall
be entitled to specific performance of this Agreement or an injunction
without proof of special damages, together with the costs and reasonable
attorney's fees and disbursements incurred by the Company in enforcing
their rights under paragraph 6 and this paragraph 7.

         8. INTELLECTUAL PROPERTY ASSIGNMENT. Any invention or know-how
which shall be conceived, developed or reduced to practice by the Executive
during the period of his employment relating to the business of the Company
or the use of any of its technologies, notwithstanding that it is perfected
or reduced to specific form at any time thereafter provided that its
conception arose during such period, including all rights therein and in
any patent or other form of intellectual property or legal protection with
respect thereto, shall become the sole property of the Company, without
need for any specific action or notice or any consideration to the
Executive other than as provided for by this Agreement. The Executive shall
cooperate with the Company and assist it in obtaining any patent or other
form of legal protection for such inventions or know-how for no additional
compensation (other than the coverage of the Executive's reasonable out if
pocket expenses).

         9. REIMBURSEMENT OF EXPENSES. (a) The Company shall reimburse the
Executive in the amount of US$1,500 per month for the cost of his apartment
located in New York City, which shall be used for the Company's business.

              (b) The Company shall reimburse the Executive for all costs
relating to the maintenance and use of one telephone line at his home,
which shall be used for Company's matters only, and the maintenance and use
of a cellular phone.

         10. DEDUCTIONS AND WITHHOLDINGS. The Company shall be entitled to
deduct and withhold from any amount payable to the Executive, whether
pursuant to this Agreement or otherwise, any and all taxes, withholdings or
other payments as required under any applicable law.

         11. NO ASSIGNMENT BY EXECUTIVE. The Executive shall have no right
to assign any of the rights nor to delegate any of the duties created by
this Agreement and any assignment or attempted assignment of the
Executive's rights, and any delegation or attempted delegation of the
Executive's duties, shall be null and void (except for such delegations of
authority to other officers of the Company as necessary and customary for
the fulfillment of the Executive's duties). The Company retains the right
at any time to assign any of its rights or delegate any of its duties under
this Agreement.

         12. CONDITIONS. The Executive represents that he has full
authority to enter into this Agreement and that the performance of his
duties under this Agreement will not interfere with or violate the terms of
any other agreement, arrangement or understanding.

         13. BENEFIT. Except as otherwise expressly provided herein, this
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, beneficiaries, personal representatives,
successors and assigns.

         14. NOTICES. All notices hereunder shall be in writing and
delivered by hand or telefaxed or mailed to the address stated below of the
party to which such notice is given, or to such changed address as such
party shall have given to the other party by written notice provided,
however, that any notice of change of address shall be effective only upon
receipt by the other party.

              To the Company:      P.O. Box 240
                                   Yoqneam, Israel

              Attention:           Chairman of the Executive Committee

              To Executive:        6 Oppenheimer Street
                                   Ramat-Aviv, Tel-Aviv
                                   Israel

         15. SEVERABILITY OF PROVISIONS. If any of the provisions of this
Agreement is held invalid, such provisions shall be severed and the
remainder of the Agreement shall remain in force and shall not be affected
thereby.

         16. NO ORAL CHANGES. This instrument constitutes and contains the
entire Agreement between the parties except as otherwise expressly stated
herein. This Agreement may be changed only in writing, and must be signed
by the party against whom enforcement of any waiver, modification,
discharge or other change is sought.

         17. WAIVER. Either party's failure to insist upon strict
compliance with any of the terms, covenants or conditions hereof shall not
be deemed a waiver of such term, covenant or condition, nor shall any
waiver or relinquishment of any right or power hereunder at any one or more
times be deemed a waiver or relinquishment of such right or power at any
other time or times.

         18. ENTIRE AGREEMENT. The Agreement contained in this instrument
supersedes and cancels any and all prior agreements between the parties
hereto, express or implied, written or oral, relating to the subject matter
hereof (excluding, for the avoidance of doubt, any of the agreements
mentioned in the preamble of this Agreement). This Agreement sets forth the
entire agreement between the parties hereto with respect to the subject
matter hereof.

         19. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Israel. Any litigation concerning any claims under or breach of this
Agreement shall be brought exclusively in the competent courts of the
Tel-Aviv-Jaffa District.

         20. DESCRIPTIVE HEADINGS. The paragraph headings contained herein
are for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.

         21. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all such counterparts shall
constitute one and the same instrument.

         22. SURVIVAL. The provisions of paragraphs 6, 7 and 8 shall survive
any termination of this Agreement.

                                    * * * *



              IN WITNESS WHEREOF, the Company and the Executive have
executed this Employment Agreement, as of the day and year first above
written.






                                              ESC MEDICAL SYSTEMS LTD.

                                              By:   /s/ Tom Hardy
                                                    ------------------------
                                                    Tom Hardy
                                                    Director





                                              YACHA SUTTON

                                              /s/ Yacha Sutton
                                              ------------------------------