EXHIBIT 4.1


                       PALOMAR MEDICAL TECHNOLOGIES, INC.

                    AMENDED 1996 EMPLOYEE STOCK PURCHASE PLAN

1.      Purpose of the Plan

        The purpose of the Palomar  Medical  Technologies,  Inc.  Employee Stock
Purchase Plan is to encourage  ownership of the common stock of Palomar  Medical
Technologies, Inc. ("Palomar") by its eligible employees and any and each of its
participating subsidiaries,  thereby enhancing such employees' personal interest
in the  continued  success  and  progress  of  Palomar.  The plan is intended to
facilitate  regular  investment  in the  common  stock of  Palomar  by  offering
employees a convenient  means to make  purchases at a discounted  price  through
payroll  deductions.  The Plan is  intended  to comply  with the  provisions  of
Section 423 of the Internal Revenue Code of 1986, as amended.

2.      Definitions

        For purposes of the Plan,  the  following  terms shall have the meanings
indicated below:

        (a)     "Business Day" shall mean a day on which there is trading on the
                New York Stock Exchange.

        (b)     "Code" shall mean the Internal  Revenue Code of 1986,  as it may
                be amended from time to time.

        (c)     "Committee"  shall mean the Compensation  Committee of the Board
                of Directors of Palomar.

        (d)     "Common Stock" shall mean Palomar's common stock, par value $.01
                per share.

        (e)     "Company" shall mean Palomar and any of its subsidiaries (within
                the  meaning  of  Section  424(f)  of the Code)  whose  Board of
                Directors  has adopted the Plan,  with  approval of the Board of
                Directors of Palomar, and which has not terminated participation
                in or  withdrawn  from the Plan by action  of such  subsidiary's
                Board of Directors or the Board of Directors of Palomar.

        (f)     "Compensation"  shall  mean the amount of a  Participant's  base
                wages,  overtime,  commissions,  cash  bonuses,  premium pay and
                shift  differential,  before giving  effect to any  compensation
                reductions  made in  connection  with  any  plans  described  in
                Section 401(k) or Section 125 of the Code.

        (g)     "Custodian" shall mean the custodian  appointed by the Committee
                pursuant to Section 7 hereof to hold the shares of Common  Stock
                purchased under the Plan and subsequent  Dividends reinvested or
                paid to Participant in cash.

        (h)     "Dividends"  shall  mean all cash  dividends  paid on  shares of
                Common Stock held in any Employee's Account.

        (i)     "Account"  shall  mean  a  separate  account  maintained  by the
                Custodian for each Participant which reflects,  at any time, the
                number of shares of  Common  Stock  purchased  under the Plan by
                such  Participant  as well as reinvested  Dividends  held by the
                Custodian.

        (j)     "Entry Date" shall mean the first  Business Day of each Purchase
                Period.

        (k)     "Eligible  Employee"  shall mean,  with  respect to any Purchase
                Period,   an   employee  of  the  Company  who  is  eligible  to
                participate in the Plan in such Purchase  Period under the rules
                set forth in Sections 5 and 8 hereof.

        (l)     The  "Fair  Market  Value"  of a share  of  Common  Stock on any
                Business  Day shall be the closing bid price for such day of the
                Common  Stock on the  principal  securities  market on which the
                Common  Stock is traded.  If on the date for which  Fair  Market
                Value is to be  determined  the Common  Stock is no eligible for
                trading on any  securities  market,  the Fair Market  Value of a
                share of Common Stock shall be determined by the Committee.

        (m)     "Participant"  shall mean, with respect to any Purchase  Period,
                each Eligible  Employee who has elected to have amounts deducted
                from his or her  Compensation  pursuant  to Section 6 hereof for
                such Purchase Period.

        (n)     "Plan" shall mean this 1996 Employee Stock Purchase Plan, as the
                same may be amended from time to time.

        (o)     "Purchase  Date"  shall  mean  the  last  Business  Day of  each
                Purchase Period.

        (p)     "Purchase  Period"  shall mean each of the three  month  periods
                ending on the last days of March,  June,  September and December
                during the period when the Plan is in effect. The first Purchase
                Period  shall begin on October 1, 1996 and end on  December  31,
                1996.

3.      Common Stock Available Under the Plan

        The  maximum  number of shares of Common  Stock  which may be  purchased
under the Plan shall be 1,000,000  shares,  except as such maximum number may be
adjusted  as  provided in Section 12 hereof.  Shares of Common  Stock  purchased
under the Plan may be authorized and previously unissued shares, treasury shares
(including  shares  purchased from time to time by Palomar),  or any combination
thereof.

4.      Administration of Plan

        The Plan shall be  administered  by the Committee.  The Committee  shall
have the authority,  consistent  with the Plan, to interpret the Plan, to adopt,
amend and rescind rules and regulations for the  administration  of the Plan and
to make all  determinations  in connection  therewith  which may be necessary or
advisable,  and all such  actions  shall be binding for all  purposes  under the
Plan. The Plan shall be administered at the expense of the Company.

5.      Eligibility

        Each  employee of the Company  shall be eligible to  participate  in the
Plan  during each  Purchase  Period,  provided  that he or she is not, as of the
Entry Date for such Purchase Period:

        (a)     an employee who is customarily employed by the Company for fewer
                than 20 hours  per  week,  or for five or  fewer  months  in any
                calendar year; or

        (b)     an employee  who owns  (within the meaning of Section  424(d) of
                the Code)  stock  possessing  5% or more of the  total  combined
                voting  power  or  value of all  classes  of  stock of  Palomar,
                treating as owned on Entry Date,  for  purposes of this  clause,
                Common Stock which such  employee  would be entitled to purchase
                on Purchase Date for such  Purchase  Period but for this Section
                5(c).

6.      Participation

(a)     On the Entry date for each Purchase Period,  Palomar shall grant to each
        Participant  in the Plan for such Purchase  Period an option to purchase
        on the Purchase Date for such Purchase  Period,  at the applicable price
        specified  in Section 7 hereof,  the  number of shares of Common  Stock,
        including any fractional share,  which may be purchased,  at such price,
        with such participant's payroll deductions received during such Purchase
        Period, subject to the terms and conditions of the Plan.

(b)     Eligible Employees may elect to participate in the Plan as follows:

        (i)     Each  Eligible  Employee may elect to  participate  in the Plan,
                effective on the Entry Date for any Purchase  Period,  by making
                an election to  participate at least 15 days prior to such entry
                Date.  Such  election  shall  authorize the Company to deduct an
                amount  chosen by the  employee  equal to any  whole  percentage
                between  1  and  15  percent,  inclusive  from  such  Employee's
                Compensation paid during such Purchase Period.

        (ii)    After making the election  pursuant to Section 6(b)(i) hereof, a
                Participant shall  automatically  continue to participate in the
                Plan during  subsequent  Purchase  Periods until the Participant
                either  withdraws  from the  Plan or  ceases  to be an  Eligible
                Employee. The percentage the Participant's Compensation deducted
                in subsequent Purchase Periods shall be the percentage specified
                in the election made pursuant to Section  6(b)(i),  as it may be
                changed  from time to time  pursuant  to  Section  6(b)(iii)  or
                6(b)(iv) hereof.

        (iii)   Except as provided in Section  6(b)(iv)  hereof,  after the last
                date for making an election  described in Section 6(b)(i) hereof
                for the Purchase Period, a Participant shall not be permitted to
                increase or reduce the percentage of Compensation  deducted from
                his or her  Compensati  paid  during  each  purchase  period.  A
                Participant  may elect to reduce or increase the  percentage  of
                his or her  Compensation  deducted  pursuant  to the Plan to any
                whole percentage  between 1 and 15,  inclusive,  effective for a
                subsequent  Purchase Period by filing an election not later than
                15 days prior to the Entry Date for such Purchase Period.

        (iv)    A Participant  may elect at any time to reduce the percentage of
                his or her Compensation  deducted  pursuant to the Plan to zero,
                effective  commencing  with the next  payroll  period  beginning
                after the  making of such  election.  All cash  amounts  already
                deducted during a Purchase Period prior to the  effectiveness of
                any such election shall be refunded to the Participant.

(c)     No interest will be paid to Participants on any payroll deductions.

(d)     A   Participant   may  at  any  time  elect  to  withdraw  from  further
        participation  in the  Plan,  effective  as of  the  next  Business  day
        following such  election.  Any  Participant  whose  employment  with the
        Company   terminates  for  any  reason  (including   without  limitation
        termination  by reason of death or  disability)  shall be deemed to have
        made a  withdrawal,  effective  the next  Business  Day  following  such

<PAGE>

        termination of employment.  Upon any withdrawal,  (i) no further amounts
        shall be deducted from such Participant's Compensation effective for any
        payroll period  beginning  after the effective date of withdrawal,  (ii)
        any outstanding  option granted to such Participant under the Plan shall
        terminate as of the  effective  date of the  withdrawal,  and no further
        purchases  of  Common  Stock  under  the  Plan  shall  be made  for such
        Participant  or after  such  date,  and  (iii) as soon as  possible  the
        Company  will  refund  all cash  deducted  during the  Purchase  Period.
        Following any such withdrawal  from the Plan, an employee's  eligibility
        to  participate  again in the Plan will be subject to all  provisions of
        Section 5 and 8 hereof.

(e)     Notwithstanding  any other  provision  of the Plan,  an employee who has
        withdrawn  from the Plan pursuant to Section 6(d) hereof shall be deemed
        to have made an  irrevocable  election  not to  participate  in the Plan
        during the two consecutive  Purchase Periods  immediately  following the
        one in which such withdrawal was made.

(f)     Any election  permitted by this Section 6 (other than an election deemed
        made  pursuant  to  Section  6(e))  shall be made in writing on the form
        prescribed for such purpose by the Committee from time to time and shall
        be delivered to the person or persons  designated by the Committee.  Any
        such election  shall be deemed made when such form is completed,  signed
        by the Participant and received by such designee.

7.      Purchases of Common Stock

        On the Purchase Date for each Purchase Period, all options granted under
the Plan on the first Business Day of such Purchase Period shall be deemed to be
exercised,  and all  amounts  deducted  pursuant  to  Section 6 hereof  from the
Participant's  Compensation during such Purchase Period shall be applied on such
date to purchase whole and  fractional  shares of Common Stock from the Company,
unless such  Participant has withdrawn from the Plan during such Purchase Period
effective on or prior to such  Purchase  Date.  With respect to shares of Common
Stock  purchased,  the  purchase  price  per  share  shall be the  lesser of (i)
eighty-five percent (85%) of the Fair Market Value of a share of Common Stock on
the Entry Date of the Purchase Period, or (ii) eighty-five  percent (85%) of the
Fair  Market  Value  of a share of  Common  Stock  on the  Purchase  Date of the
Purchase  Period.  The Committee shall appoint the Custodian for the Plan and to
hold all whole and fractional  shares purchased under the Plan and to maintain a
separate Account for each  Participant,  in which Common Stock purchased by such
Participant  under  the  Plan  shall  be held  and  Dividends  received  will be
reinvested.  Each  Participant  shall receive a statement as soon as practicable
after  the end of  each  Purchase  Period  reflecting  purchases  for his or her
account under the Plan through the end of such Purchase Period.

8.      Limitation on Number of Shares purchased

        Notwithstanding  any other  provision of the Plan, the maximum number of
whole and fractional  shares of Common Stock which a Participant may purchase in
a Purchase  Period under the Plan and under all other  "employee  stock purchase
plans" (within the meaning of Section 423 of the Code) maintained by Palomar and
its subsidiaries (within the meaning of Section 424(f) of the Code) shall be the
number  determined  by dividing  $6,250 by the Fair  Market  Value of a share of
Common Stock on the Entry Date for such Purchase  Period.  In the event that the
amount of  payroll  deductions  is  greater  than  $6,250 in any given  Purchase
Period,  the  Company  will  refund  the  excess to the  Participant  as soon as
practicable after such Purchase Date.
<PAGE>

9.      Rights as a Stockholder

        From and after the  Purchase  Date on which  shares of Common  Stock are
purchased by the Participant  under the Plan, such Participant shall have all of
the rights and  privileges  of a  stockholder  of Palomar  with  respect to such
shares.  Prior to the  Purchase  Date on which  shares  of  Common  Stock may be
purchased  by a  Participant,  such  Participant  shall not have any rights as a
stockholder of Palomar.

10.     Notice of Disposition of Stock

        Each  Participant  agrees,  by his or her  participation in the Plan, to
promptly  notify  Palomar  in  writing of any  disposition  of any Common  Stock
purchased  under the Plan  occurring  within 2 years after the Entry Date of the
Purchase Period in which such stock was purchased.

11.     Rights Not Transferable

        Rights  under the Plan are not  transferable,  except  that the right to
receive  shares  pursuant to the Plan may be  transferred by will or the laws of
descent and  distribution.  Options  granted to a  Participant  hereunder may be
exercised only by such Participant.

12.     Adjustment for Capital Changes

        In the event of any  capital  change by reason of any stock  dividend or
split,  recapitalization,  merger  in which  Palomar  is the  surviving  entity,
combination or exchange of shares or similar  corporate  change,  the number and
type of shares or other  securities of Palomar which  Participants  may purchase
under the Plan,  and the maximum  aggregate  number of such shares or securities
which may be purchased under the Plan,  shall be  appropriately  adjusted by the
Board of Directors of Palomar.

13.     Amendments

        The Board of Directors of Palomar may at any time, or from time to time,
amend the Plan in any respect,  except that, without  stockholder  approval,  no
amendment  shall be made (a)  increasing  the  number  of  shares  which  may be
purchased  under the Plan (other  than as  provided  in Section 12 herein),  (b)
materially  increasing the benefits  accruing to  Participants or (c) materially
modifying the requirements as to eligibility for participation in the Plan.

14.     Laws and Regulations

        (a)  Notwithstanding  any other  provision  of the Plan,  the  rights of
Participants  to purchase  Common Stock hereunder shall be subject to compliance
with all applicable  Federal,  state and foreign laws, rules and regulations and
the rules of each stock  exchange  upon  which the Common  Stock is from time to
time listed.

        (b) The Plan and the purchase of Common Stock hereunder shall be subject
to additional rules and regulations, not inconsistent with the Plan, that may be
promulgated from time to time by the Committee  regarding purchases and sales of
Common Stock.
<PAGE>

15.     Employment

        The Plan  shall not confer any right to  continued  employment  upon any
employee of the Company.

16.     Effective Date of the Plan; Termination

        (a) The Plan shall  become  effective  on  October  1, 1996,  subject to
approval by the  shareholders  of Palomar in accordance  with applicable law and
the requirements of Section 423 of the Code.

        (b) The Plan and all rights hereunder shall terminate on the earliest to
occur of:

                (i) the date on which  the  maximum  number  of shares of Common
        Stock  available  for purchase  under the Plan as specified in Section 3
        hereof has been purchased;

                (ii) the  termination  of the Plan by the Board of  Directors of
        Palomar; or

                (iii) the effective date of any consolidation or merger in which
        Palomar is not the  surviving  entity,  any  exchange or  conversion  of
        outstanding  shares of Palomar for or into  securities of another entity
        or other consideration, or any complete liquidation of Palomar.

        In the event that on any Purchase  Date the  remaining  shares of Common
Stock  available for purchase under the Plan are  insufficient  to fully satisfy
Participants'  outstanding  options,  such remaining  available  shares shall be
apportioned  among and sold to such  Participant in proportion to the amounts of
payroll  deductions  and the excess payroll  deduction  shall be returned to the
Participant as soon as practicable thereafter.

        Upon any  termination of the Plan, any shares in the employee's  Account
shall  be  delivered  by the  Custodian  to  the  employee  or his or her  legal
representative as soon as practicable following such termination.