Exhibit 10.32


                                       79

<PAGE>


                     Confidentiality and Severance Agreement

This Confidentiality and Severance Agreement (the "Agreement") is made as of
this 31st day of May, 2000, by and between Robert L. Crutchfield, an individual
residing at 1028 Kings Mountain Road, Tuscaloosa, Alabama 35406 (the
"Employee"), and Surgical Laser Technologies, Inc., a Delaware corporation (the
"Company").

     WHEREAS, the Company desires to engage the services of the Employee as Vice
President, Business Planning and also as President of its wholly-owned
subsidiary, Surgical Innovations and Services, Inc., a Delaware corporation
("SIS"), and the Employee desires to assume such roles as Vice President and
President, respectively, pursuant to the terms of a letter dated April 20, 2000
from the President of the Company to the Employee (the "Offer Letter"); and

     WHEREAS, the Offer Letter provides that the terms of confidentiality,
severance and related matters will be set forth in a collateral written
agreement;

     NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

     1.   Confidentiality.

     (a) From its inception, the Company has provided to and confided in the
     Employee, and may provide to him and confide in him in the future, business
     methods and systems, techniques, methods of operation, discoveries and
     inventions developed at great expense by the Company ("Trade Secrets") and
     which the Employee recognizes to be unique assets of the Company's
     business. The Employee shall not, during or at any time after his
     employment by the Company or SIS, directly or indirectly, in any manner
     utilize or disclose to any person, firm, corporation, association or other
     entity, except to directors, consultants or employees of the Company or SIS
     in the course of his duties and when required by law: (i) any such Trade
     Secrets, (ii) any sales prospects, customer lists, products, research or
     data of any kind, or (iii) any information relating to strategic plans,
     sales, costs, profits or the financial condition of the Company or SIS or
     any of its customers or prospective customers, which are not generally
     known to the public or recognized as standard practice in the industries in
     which the Company shall be engaged. The Employee further covenants and
     agrees that he will promptly deliver to the Company all tangible evidence
     of the knowledge and information described in (i), (ii) and (iii), above,
     prior to or at the termination of the Employee's employment by the Company
     or SIS.

     (b) The Employee shall not, either during his employment or at any time
     after the termination thereof, make any public statement (including a
     private statement reasonably likely to be repeated publicly) reflecting
     adversely on the Company or SIS or their business prospects, except for
     such statements which during the Employee's employment he may be required
     to make in the ordinary course of his service as an employee of the Company
     or SIS.

     2.   Severance.

     (a) In the event that the Company should terminate the Employee's
     employment from the Company and SIS without cause (as defined in Section
     2(c) hereof), then for a period of one (1) year from such termination date
     (the "Restricted Period"), the Company shall continue to pay the Employee
     his then base salary under the Company's normal payroll procedures and
     shall further continue to provide at no cost to the Employee all fringe
     benefits which he had enjoyed immediately prior to termination, with the
     following exceptions: vacation pay and entitlement to bonus shall cease to
     accrue to the Employee during the Restricted Period and the Employee shall
     cease to receive from the Company a car allowance, whether paid directly to
     him or by way of making lease payments on his behalf. In the event that the
     Company should terminate the Employee for cause or in the event that the
     Employee voluntarily terminates his employment from the Company or SIS,
     then the Company shall have no obligation hereunder to continue during the


                                       80

<PAGE>


     Restricted Period to pay Employee his base salary or to continue any fringe
     benefits, except as may otherwise be prescribed by law.

     (b) At the end of the Restricted Period, the Employee will be given the
     option to take over the payments and ownership of any of any disability and
     life insurance policies which the Company may have been providing for the
     Employee's benefit, provided that such an option exists under the terms of
     the applicable policy.

     (c) For purposes of Section 2(a) hereof, "cause" shall include any of the
     following: (i) habitual intoxication or being under the influence of
     alcohol or illegal substances while performing services for the Company;
     (ii) indictment by a grand jury for commission of a felony unless such
     indictment is dismissed within 60 days of is issuance; (iii) theft,
     misappropriation, embezzlement of Company or SIS assets or other fraud or
     dishonesty resulting or intended to result directly or indirectly in
     personal enrichment at the expense of the Company or SIS; (iv) regularly
     failing or refusing to follow the policies or directives reasonably
     established by the Company or SIS; (v) willfully and persistently failing
     to the attend to the Employee's duties; or (vi) committing acts amounting
     to gross negligence or willful misconduct to the detriment of the Company
     or its affiliates.

     3.   Non-competition.

     (a) Subject to the geographic limitation of Section 3(b), and irrespective
     of whether the Employee's termination of employment from the Company and
     SIS was voluntary or involuntary, the Employee shall not, during the period
     of his employment and during the Restricted Period engage in, or in any way
     be concerned with or negotiate for, or acquire or maintain any ownership
     interest in, any business or activity which is the same as or competitive
     with that which was conducted by the Company or SIS or which has been
     engaged in or developed by the Company at any time during the term of
     employment for specific implementation in the immediate future by the
     Company, irrespective of whether any such activity is conducted directly or
     indirectly by the Employee, and irrespective of whether any such activity
     was conducted on the Employee's own behalf or on behalf of any other
     person, firm, corporation, association or other entity, whether as an
     employee or otherwise; provided that the foregoing shall not prohibit the
     ownership of less than 1% of the outstanding capital stock of a company
     whose capital stock is listed for trading on a national securities exchange
     or quoted on the Nasdaq Stock Market.

     (b) The Employee acknowledges that the Company is engaged in business
     throughout the United States and in many foreign countries and that the
     Company intends to continue expanding the geographic scope of its
     activities, and especially those of SIS. Accordingly, and in view of the
     nature of his positions and responsibilities, the Employee agrees that the
     provisions of Section 3(a) shall be applicable to each State and each
     foreign country, possession or territory in which the Company or SIS may be
     engaged in business at the time of the termination of his employment.

     (c) The Employee agrees that during the period of his employment and during
     the Restricted Period he will not, directly or indirectly, for himself or
     on behalf of any third party, at any time in any manner: (i) request or
     cause any of the Company's or SIS's customers to cancel or terminate any
     existing or continuing relationship with the Company or SIS; (ii) solicit,
     entice, persuade, induce, request or otherwise cause any employee, officer
     or agent of the Company or SIS to refrain from rendering services to the
     Company or SIS or to terminate his or her relationship, contractual or
     otherwise, with the Company or SIS; (iii) induce or attempt to influence
     any supplier to cease or refrain from doing business or to decline to do
     business with the Company or SIS; (iv) divert or attempt to divert any
     supplier from the Company or SIS; or (v) induce or attempt to influence any
     supplier to decline to do business with any businesses of the Company or
     SIS as such businesses are constituted immediately prior to the termination
     of his employment.

     (d) The Employee agrees that during the period of his employment and during
     the Restricted period, he will not, directly or indirectly, for himself or
     on behalf of any third party, solicit for business, accept any business
     from or otherwise do or contract to do business with, any person or entity
     who, at the time of, or any time during the twelve (12) months preceding,
     such termination, was an active customer or was actively


                                       81

<PAGE>


     solicited by the Company or SIS according to the books and records of the
     Company or SIS and within the actual or constructive knowledge of the
     Employee, provided, however, that nothing herein shall prohibit the
     Employee during the Restricted Period from transacting business he solicits
     which is not competitive with services or products offered, furnished or
     sold by the Company or SIS to such person or entity. During the period of
     his employment, the Employee shall not engage in any activity or investment
     if such activity or investment substantially interferes with his duties as
     an employee of the Company or SIS.

     4.   Discoveries.

     The Employee shall, without additional compensation, promptly disclose in
     writing to the President of the Company all ideas, formulae, programs,
     systems, improvements, devices, processes, business concepts, discoveries
     and inventions (hereinafter referred to singly as a "Discovery" and
     collectively as "Discoveries"), whether or not suitable for patent or
     copyright, which the Employee, while employed by the Company or SIS,
     conceives, makes, develops, acquires or reduces to practice, whether alone
     or with others and whether during or after usual working hours, and which
     are related in any respect to the Company's business or interests, or those
     of SIS, or which are used or usable by the Company or SIS, whether such
     Discovery is a machine, apparatus, process, article or other object. The
     Employee transfers and assigns to the Company all right, title and interest
     in and to each of such Discoveries, including any and all domestic and
     foreign patent rights or copyrights therein and any renewals thereof. On
     request of the Company, the Employee shall (without additional
     compensation) from time to time during his employment or after the
     termination thereof, execute such further instruments (including without
     limitation copyright registrations, applications for letters patent and
     assignments of either) and do all such other acts and things as may be
     deemed necessary or desirable by the Company to protect and/or enforce its
     rights in respect of such Discoveries. All expenses of filing or
     prosecuting or defending any copyright or any patent application shall be
     borne by the Company, but the Employee shall cooperate in filing,
     prosecuting or defending any such application.

     5.   Notice.

     Any notice required or permitted to be given under this Agreement shall be
     in writing and shall be deemed to have been given when sent by certified
     mail, postage prepaid, addressed as follows:

     If to the Company:

     Surgical Laser Technologies, Inc.
     147 Keystone Drive
     Montgomeryville, PA 18936
     Attn: the President

     If to the Employee, at his personal residence as set forth above.

     Any party may change the persons and addresses to which notice or other
     communications are to be sent by giving written notice of such change to
     the other party in the manner provided for giving notice.

     6.   Unenforceability, Invalidity.

     If any term or provision of this Agreement is held to be invalid or
     unenforceable for any reason, such invalidity or unenforceability shall not
     affect any other term or provision hereof, and this Agreement shall
     continue in full force and effect as if such invalid or unenforceable term
     or provision (to the extent of the invalidity or unenforceability) had not
     been contained herein.

     7.   Waivers, Changes.

     No waiver by either party of any condition or of the breach by the other of
     any term or covenant contained in this Agreement, whether by conduct or
     otherwise, in any one or more instances shall be deemed or


                                       82

<PAGE>


     construed as a further or continuing waiver of any such condition or breach
     or a waiver of any other condition or of the breach of any other term or
     covenant set forth in the Agreement. Moreover, the failure of either party
     to exercise any rights hereunder shall not bar the later exercise thereof.

     8.   Governing Law.

     This Agreement is entered into and shall be construed in accordance with
     the laws of the Commonwealth of Pennsylvania.

     9.   Equitable Remedies.

     The Employee acknowledges that his compliance with the covenants in
     Sections 1, 3 and 4 of this Agreement is necessary to protect the good will
     and other proprietary interests of the Company and SIS and that, in the
     event of any violation by the Employee of the provisions of Sections 1, 3
     or 4, the Company will sustain serious, irreparable and substantial harm to
     its business or to the business of SIS, the extent of which will be
     difficult to determine and impossible to remedy by an action at law for
     money damages. Accordingly, the Employee agrees that in the event of such
     violation or threatened violation by the Employee, the Company shall be
     entitled to an injunction before trial from any court of competent
     jurisdiction as a matter of course and upon the posting of not more than a
     nominal bond, in addition to all such other legal and equitable remedies as
     may be available to the Company. The Employee further agrees that, in the
     event any of the provisions of Sections 1, 3 or 4 of this Agreement are
     determined by a court of competent jurisdiction to be contrary to any
     applicable statute, law or rule, or for any reason to be unenforceable as
     written, such court may modify any of such provisions so as to permit
     enforcement thereof as thus modified.

     10.  Arbitration.

     Except as provided in Section 9, any controversy or claim arising out of or
     relating to this Agreement, or the breach hereof, shall be settled by
     arbitration in Philadelphia, Pennsylvania, in accordance with the laws of
     the Commonwealth of Pennsylvania by three (3) arbitrators, one of whom
     shall be appointed by the Company, one by the Employee and the third of
     whom shall be appointed by the first two arbitrators. If either party fails
     to select an arbitrator within 30 days after written notice of demand for
     arbitration from the other, the other party may have such arbitrator
     appointed by the American Arbitration Association. If the first two
     arbitrators cannot agree on the appointment of a third arbitrator within 30
     days after their selection, then the third arbitrator shall be appointed by
     the American Arbitration Association. The arbitration shall be conducted in
     accordance with the rules of the American Arbitration Association. Judgment
     upon the award rendered by the arbitrators may be entered in any court
     having jurisdiction hereof. In the event that it shall be necessary or
     desirable for the Company and/or the Employee to retain legal counsel
     and/or incur other costs and expenses in connection with the enforcement of
     any or all of either party's rights under this Agreement, each party shall
     bear its own costs and expenses in connection with the enforcement of its
     rights (including any arbitration award in court), regardless of the final
     outcome.

     11.  Successors.

     The Agreement shall inure to the benefit of and be binding on the parties
     and their respective successors in interest. The Employee shall not pledge,
     hypothecate, anticipate or in any way create a lien upon any amounts
     provided under this Agreement. This Agreement and the benefits payable
     hereunder shall not be assignable by either party without the prior written
     consent of the other; provided, however, that nothing in this Section 11
     shall preclude the Employee from designating a beneficiary to receive any
     benefit payable hereunder upon his death or preclude the executors,
     administrators or other legal representatives of the Employee or his estate
     from assigning any rights hereunder to which they become entitled, to the
     person or persons entitled thereto.


                                       83

<PAGE>


     12.  Entire Agreement.

     (a) This Agreement constitutes the full and complete understanding and
     agreement of the Employee and the Company respecting the subject matter
     hereof, and supersedes all prior understandings and agreements, oral or
     written, express or implied. This Agreement may not be modified or amended
     orally, but only by an agreement in writing, signed by the party against
     whom enforcement of any waiver, change, modification, extension or
     discharge is sought. It is understood and agreed that this Agreement does
     not constitute an employment agreement, but that the Employee's employment
     by the Company and SIS is terminable at will by either party.

     (b) The section headings of this Agreement are for convenience of reference
     only and are not to be considered in the interpretation of the terms and
     conditions of this Agreement.

     (c) This Agreement may be executed in one or more counterparts, each of
     which shall be deemed to be an original but all of which together will
     constitute one and the same instrument.


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date fist
written:


Witness:

/s/ Jeanne H. Hodgins                    /s/ Robert L. Crutchfield
    ---------------------                    -----------------------------------
                                             Robert L. Crutchfield


Attest:                                      Surgical Laser Technologies, Inc.

/s/ Davis Woodward, Sec'y                By: /s/ Michael R. Stewart
-------------------------                    -----------------------------------
                                             Michael R. Stewart, President & CEO


                                       84