WITHDRAWAL AGREEMENT

     WITHDRAWAL  AGREEMENT  dated as of  December  29, 1999 by and among Mark T.
Smith ("Smith"),  The Rockside Foundation  ("Rockside"),  The R. Templeton Smith
Foundation (the  "Foundation"),  Logg  Investment  Research,  Inc.  ("Logg") and
Thomas O'Brien  ("O'Brien";  together with Smith,  Rockside,  the Foundation and
Logg, the "Investors").

     The Investors  previously have acquired shares of Common Stock and Warrants
to  purchase   Common   Stock  of  Palomar   Medical   Technologies,   Inc.,   a
publicly-traded  Delaware  corporation (the "Issuer"),  and may, for purposes of
the  federal  securities  laws,  be deemed to be acting in  concert as a "group"
("Group"),  as defined in Rule 13d-5(b)(1) under the Securities  Exchange Act of
1934, as amended (the "Exchange Act"),  with respect to their ownership,  voting
and  disposition  of such shares and  warrants.  In  connection  therewith,  the
Investors  entered  into  an  agreement  dated  as  of  January  29,  1999  (the
"Agreement"),  pursuant to which the Investors authorized Smith to prepare, sign
and file certain forms with the Securities and Exchange  Commission  (the "SEC")
relating to securities  holdings in the Issuer on behalf of the Investors.  Logg
and O'Brien now desire to withdraw  from  certain  relationships  with the other
Investors  and to  cancel  the  Agreement  as it  relates  to Logg and  O'Brien.
Therefore, the Investors hereby agree as follows:

     1.  Section  16  Filings  and  Amendments:  Pursuant  to  Section  1 of the
Agreement,  Logg and O'Brien hereby inform Smith that he is no longer authorized
to prepare,  sign and file with the SEC on its and his behalf all  Statements of
Beneficial  Ownership  of  Securities  on Forms  3, 4 and 5, and all  amendments
thereto,  as required by Section 16 of the  Exchange  Act,  with  respect to any
securities of the Issuer. From and after the date hereof, Logg and O'Brien shall
be solely responsible for such filings, if required.

     2. Withdrawal from Group;  Cancellation of Further Arrangements:  Effective
as of the date hereof,  Logg and O'Brien  withdraw from the Group comprising the
Investors  with  respect to the Issuer and its  securities  and  relinquish  any
membership or other  interest they may have in The Monterey  Stockholders  Group
LLC. Logg and O'Brien shall no longer,  individually  or  collectively,  furnish
investment  advice  relating  to the Issuer or the  securities  of the Issuer to
either Smith, Rockside or the Foundation,  nor shall either Logg or O'Brien have
any form of  discretionary  authority from Smith,  Rockside or the Foundation to
execute  securities  transactions  on their  behalf with respect to the Issuer's
securities.  Logg and O'Brien agree to take all further  actions with respect to
any  brokerage  accounts  of Smith,  Rockside  or the  Foundation  necessary  or
advisable to reflect the foregoing.

     3. Smith, Rockside and the Foundation to Continue to Act and File as Group:
The Agreement remains in full force and effect as it relates to Smith,  Rockside
and the  Foundation,  which shall continue to operate as a Group with respect to
the Issuer's securities. Nothing contained herein shall be construed as contrary
to such statement.

     4. Miscellaneous.  This Agreement  constitutes the entire agreement between
the parties and may not be amended  without  the  written  agreement  of each of
them. This Agreement is governed by the laws of the State of New York and may be
executed in counterparts, which, taken together, shall constitute one Agreement.


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     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date set forth herein.

THE ROCKSIDE FOUNDATION                               /s/ Mark T. Smith
                                                      --------------------------
                                                      Mark T. Smith

By: /s/ John B. Haley
    -------------------------------
   John B. Haley, President


THE R. TEMPLETON SMITH FOUNDATION                     /s/ Thomas O'Brien
                                                      --------------------------
                                                      Thomas O'Brien


By: /s/ Edward C. Smith
    -------------------------------
     Edward C. Smith, Treasurer


LOGG INVESTMENT RESEARCH, INC.



By: /s/ Thomas O'Brien
    ------------------------------
    Thomas O'Brien, President