EXHIBIT 10(xx)


                             SUBSCRIPTION AGREEMENT

                  THIS  SUBSCRIPTION   AGREEMENT,   dated  as  of  the  date  of
acceptance set forth below, by and between PALOMAR MEDICAL TECHNOLOGIES, INC., a
Delaware  corporation,  with  headquarters  located  at 66  Cherry  Hill  Drive,
Beverly, Massachusetts 01915 (the "Company"), and the undersigned (the "Buyer").

                              W I T N E S S E T H:

                  WHEREAS,   the  Company  and  the  Buyer  are   executing  and
delivering  this  Agreement  in  reliance  upon the  exemption  from  securities
registration  afforded by Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"); and

                  WHEREAS,  the  Buyer  wishes to  purchase,  upon the terms and
subject to the conditions of this Agreement,  shares of non-voting,  convertible
preferred  stock of the Company which will be convertible  into shares of Common
Stock,  $.01 par value per share (the "Common  Stock"),  of the Company upon the
terms and subject to the conditions of such preferred  stock,  and in connection
therewith to receive  warrants to purchase  shares of Common  Stock,  subject to
acceptance of this Agreement by the Company;

                  NOW THEREFORE, in consideration of the premises and the mutual
covenants  contained  herein  and other  good and  valuable  consideration,  the
receipt and sufficiency of which are hereby  acknowledged,  the parties agree as
follows:

                  1.       AGREEMENT TO SUBSCRIBE; PURCHASE PRICE; WARRANTS.

                  A.  SUBSCRIPTION.  The  undersigned  hereby agrees to purchase
from the  Company  the number of shares  (the  "Preferred  Shares")  of Series G
Convertible  Preferred Stock, $.01 par value per share (the "Preferred  Stock"),
of the Company set forth on the  signature  page of this  Agreement,  having the
terms and  conditions as set forth in the form of  Certificate  of  Designations
attached hereto as ANNEX I (the  "Certificate of Designations") at the price per
share and for the aggregate  purchase  price set forth on the signature  page of
this  Agreement.  The purchase price for the Preferred Stock shall be payable in
United States Dollars. The Buyer hereby agrees that certificates for a number of
Preferred  Shares equal to (i) 40% of the total number of Preferred Shares shall
bear  the  first  legend  set  forth in  Section  9(a)(ii)  of the  terms of the
Preferred  Stock in the  Certificate of  Designations  and (ii) 60% of the total
number of  Preferred  Shares  shall bear the second  legend set forth in Section
9(a)(ii) of the terms of the Preferred Stock in the Certificate of Designations.
In addition to issuance of the Preferred Shares,  the Company shall issue to the
Buyer on the Closing  Date (as herein  defined)  warrants to purchase  shares of
Common Stock,  such warrants to be in the form attached 

                                      -1-




hereto as ANNEX II (the  "Warrants").  The  number  of  shares  of Common  Stock
initially purchasable upon exercise of the Warrants to be issued by the Buyer on
the Closing  Date shall be the  quotient  obtained by dividing (1) the number of
shares of Common Stock into which the number of Preferred Shares to be issued to
the Buyer on the Closing Date would be  convertible  on the Closing Date, if the
Preferred  Shares were  convertible  on the Closing  Date,  by (2) four (4). The
shares of Common Stock  issuable upon  conversion  of the  Preferred  Shares are
referred  to herein  as the  "Conversion  Shares."  The  shares of Common  Stock
issuable  upon  exercise of the  Warrants are referred to herein as the "Warrant
Shares."  The  Conversion  Shares and the Warrant  Shares are referred to herein
collectively as the "Common  Shares." The Common Shares and the Preferred Shares
are referred to herein collectively as the "Shares." The Shares and the Warrants
are referred to herein collectively as the "Securities."

                  B. FORM OF PAYMENT. The Buyer shall pay the purchase price for
the Preferred  Shares by delivering  good funds in United States  Dollars to the
escrow agent (the "Escrow  Agent")  identified in the Joint Escrow  Instructions
attached hereto as ANNEX III (the "Joint Escrow Instructions"). Such delivery of
funds shall be made against  delivery by the Company of the certificates for the
Preferred Shares and the Warrants registered in the name of the Buyer.  Promptly
following  payment by the Buyer to the Escrow Agent of the purchase price of the
Preferred Shares, but in no event later than the Closing Date, the Company shall
deliver  certificates for the Preferred  Shares and the Warrants,  registered in
the name of the Buyer, to the Escrow Agent. By signing this Agreement, the Buyer
and the Company each agrees to all of the terms and conditions of, and becomes a
party to, the Joint  Escrow  Instructions,  all of the  provisions  of which are
incorporated herein by this reference as if set forth in full.

                  C. METHOD OF PAYMENT.  Payment of the  purchase  price for the
Preferred Shares shall be made by wire transfer of funds to:

                  Citibank, N.A.
                  153 East 53rd Street
                  New York, New York 10043

                  ABA#021000089
                  For Further Credit to A/C#37179446
                  for credit to the account of Brian W. Pusch Attorney 
                  Escrow Account
                  Reference:  GFL/Palomar

Not later than 4:00 p.m., New York City time, on the date which is five New York
Stock Exchange trading days after the Company shall have accepted this Agreement
and returned a signed  counterpart of


                                      -2-



this   Agreement  to  the Buyer,  the Buyer shall  deposit with the Escrow Agent
the aggregate purchase price for the Preferred Shares.

                  2.  BUYER   REPRESENTATIONS,   WARRANTIES,   ETC.;  ACCESS  TO
INFORMATION; INDEPENDENT INVESTIGATION.

                  The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows:

                  a. The  Buyer  is  purchasing  the  Preferred  Shares  and the
Warrants for its own account for investment only and not with a view towards the
public sale or distribution thereof;

                  b.  The  Buyer is an  "accredited  investor"  as that  term is
defined in Rule 501 of the General Rules and  Regulations  under the 1933 Act by
reason of Rule 501(a)(3);

                  c. All  subsequent  offers and sales of the  Securities by the
Buyer shall be made pursuant to registration of the Securities being offered and
sold under the 1933 Act or pursuant to an exemption from registration;

                  d. The Buyer  understands  that the  Preferred  Shares and the
Warrants are being offered and sold, and the Common Shares are being offered, to
it in reliance on specific  exemptions  from the  registration  requirements  of
United States federal and state  securities laws and that the Company is relying
upon  the  truth  and  accuracy  of,  and  the  Buyer's   compliance  with,  the
representations,  warranties, agreements,  acknowledgments and understandings of
the Buyer  set  forth  herein in order to  determine  the  availability  of such
exemptions and the eligibility of the Buyer to acquire the Preferred  Shares and
the Warrants and to receive an offer of the Common Shares;

                  e. The Buyer and its  advisors,  if any,  have been  furnished
with all  materials  relating to the  business,  finances and  operations of the
Company and materials relating to the offer and sale of the Preferred Shares and
the Warrants and the offer of the Common Shares which have been requested by the
Buyer. The Buyer and its advisors, if any, have been afforded the opportunity to
ask questions of the Company and have received complete and satisfactory answers
to any such  inquiries.  Without  limiting the generality of the foregoing,  the
Buyer has had the  opportunity  to obtain and to review the Company's (1) Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1995 (as amended by
Amendment No. 1 thereto on Form 10-KSB/A  filed with the Securities and Exchange
Commission (the "SEC") on August 23, 1996), (2) Quarterly Reports on Form 10-QSB
for the fiscal  quarters  ended March 31, 1996 (as  amended by 

                                      -3-




Amendment No. 1 thereto on Form 10-QSB/A  filed with the SEC on August 23, 1996)
and June 30, 1996, (3) Current Report on Form 8-K, dated May 3, 1996, as amended
by  Amendment  No. 1 on Form  8-K/A  dated May 3,  1996,  (4)  definitive  Proxy
Statement for its 1996 Special  Meeting of  Stockholders,  and (5)  Registration
Statement on Form S-3 (the "August Registration  Statement") filed on August 23,
1996 (Registration No. 333-10681), in each case as filed with the SEC. The Buyer
understands that its investment in the Shares involves a high degree of risk;

                  f. The Buyer  understands  that no United  States  federal  or
state agency or any other  government  or  governmental  agency has passed on or
made any recommendation or endorsement of the Securities; and

                  g.  This  Agreement  has  been  duly and  validly  authorized,
executed  and  delivered  on behalf  of the  Buyer  and is a valid  and  binding
agreement of the Buyer  enforceable in accordance with its terms,  subject as to
enforceability  to general  principles of equity and to bankruptcy,  insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.

                  h. The Buyer  acknowledges  that,  except  for the  historical
material  contained  herein or in the SEC  filings  referenced  in Section  2(e)
hereof, the matters disclosed herein and therein are forward-looking  statements
under  the  federal  securities  laws  that  involve  risks  and  uncertainties,
including,  but not limited to, product demand and market  acceptance risks, the
effect of economic  conditions,  the impact of competitive products and pricing,
product development,  commercialization and technological difficulties, capacity
and supply constraints or difficulties, the results of financing efforts, actual
purchases under agreements, the effect of the Company's accounting policies, and
other risks  detailed in the Company's SEC filings.  Actual results could differ
materially  from  those  estimated  or  anticipated  in  these   forward-looking
statements.  Without  limiting  the  generality  of  the  foregoing,  the  Buyer
acknowledges the Risk Factors set forth in the August Registration Statement.

                  3.       COMPANY REPRESENTATIONS, ETC.

                  The Company represents and warrants to the Buyer that:

                  A.  CONCERNING THE  SECURITIES.  The Securities have been duly
authorized and the Preferred Shares, when issued and paid for in accordance with
this  Agreement,  and the Common  Shares,  when  issued upon  conversion  of the
Preferred  Shares or exercise of the Warrants,  as the case may be, will be duly
and  validly  issued,  fully paid and  non-assessable  and will not  subject the
holder thereof to personal  liability by reason of being such holder.  There are
no preemptive rights of any stockholder of the Company,  as such, to acquire any
of the Securities. The Common Stock is listed for trading on the Nasdaq SmallCap
Market ("Nasdaq") and (1) the Company and the Common Stock meet the criteria for
continued  

                                      -4-




listing and  trading on Nasdaq;  (2) the  Company  has not been  notified  since
January 1, 1994 by the National  Association of Securities Dealers,  Inc. of any
failure or  potential  failure to meet the criteria  for  continued  listing and
trading on Nasdaq  and (3) no  suspension  of trading in the Common  Stock is in
effect.

                  B.  SUBSCRIPTION  AGREEMENT;  REGISTRATION  RIGHTS  AGREEMENT;
WARRANTS. This Agreement,  the Registration Rights Agreement,  the form of which
is attached hereto as Annex IV (the "Registration  Rights  Agreement"),  and the
Warrants have been duly and validly  authorized by the Company,  this  Agreement
has been duly executed and delivered on behalf of the Company and this Agreement
is and the  Registration  Rights  Agreement and the Warrants,  when executed and
delivered by the Company,  will be valid and binding  agreements  of the Company
enforceable  in  accordance  with  their   respective   terms,   subject  as  to
enforceability  to general  principles of equity and to bankruptcy,  insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally.

                  C.  NON-CONTRAVENTION.  The  execution  and  delivery  of this
Agreement by the Company and the  consummation by the Company of the issuance of
the Shares and the  Warrants  and the other  transactions  contemplated  by this
Agreement,  the Registration Rights Agreement, the Warrants and the terms of the
Preferred  Stock do not and will not conflict  with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
certificate  of  incorporation  or by-laws  of the  Company,  or any  indenture,
mortgage,  deed of trust or other material  agreement or instrument to which the
Company is a party or by which it or any of its  properties or assets are bound,
or any applicable law, rule or regulation or any applicable decree,  judgment or
order  of  any  court,   United  States  federal  or  state   regulatory   body,
administrative  agency or other  governmental body having  jurisdiction over the
Company or any of its properties or assets.

                  D.  APPROVALS.  No  authorization,  approval or consent of any
court, governmental body, regulatory agency,  self-regulatory  organization,  or
stock  exchange or market or the  stockholders  of the Company is required to be
obtained by the Company for the issuance and sale of the Shares and the Warrants
as  contemplated  by this  Agreement,  the terms of the Preferred  Stock and the
Warrants.

                  E.  INFORMATION  PROVIDED.  The information  provided by or on
behalf of the  Company  to the Buyer and  referred  to in  Section  2(e) of this
Agreement  does not contain any untrue  statement of a material  fact or omit to
state any material fact  necessary in order to make the statements  therein,  in
the light of the circumstance under which they are made, not misleading.

                                      -5-




                  F. ABSENCE OF CERTAIN CHANGES.  Since December 31, 1995, there
has been no material adverse change and no material  adverse  development in the
business, properties,  operations, financial condition, results of operations or
prospects of the Company,  except as disclosed in the  documents  referred to in
Section 2(e) hereof.

                  G.  ABSENCE  OF   LITIGATION.   There  is  no  action,   suit,
proceeding,  inquiry or  investigation  before or by any court,  public board or
body  pending or, to the  knowledge  of the Company or any of its  subsidiaries,
threatened against or affecting the Company or any of its subsidiaries,  wherein
an unfavorable decision,  ruling or finding would have a material adverse effect
on  the  properties,  business,  condition  (financial  or  other),  results  of
operations or prospects of the Company and its subsidiaries  taken as a whole or
the  transactions  contemplated  by  this  Agreement  or any  of  the  documents
contemplated   hereby  or  which  would   adversely   affect  the   validity  or
enforceability  of, or the  authority  or ability of the  Company to perform its
obligations under, this Agreement or any of such other documents.

                  4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

                  A. TRANSFER RESTRICTIONS.  The Buyer acknowledges that (1) the
Preferred  Shares and the  Warrants  have not been and are not being  registered
under the provisions of the 1933 Act and, except as provided in the Registration
Rights  Agreement,  the Common Shares have not been and are not being registered
under  the  1933  Act,  and  may  not be  transferred  unless  (A)  subsequently
registered  thereunder  or (B) the Buyer shall have  delivered to the Company an
opinion of counsel,  reasonably satisfactory in form, scope and substance to the
Company,  to the effect that the Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; (2) any sale of the
Shares or the Warrants made in reliance on Rule 144  promulgated  under the 1933
Act may be made only in accordance  with the terms of said Rule and further,  if
said Rule is not  applicable,  any  resale  of such  Shares  or  Warrants  under
circumstances in which the seller,  or the person through whom the sale is made,
may be deemed to be an  underwriter,  as that term is used in the 1933 Act,  may
require compliance with some other exemption under the 1933 Act or the rules and
regulations  of the SEC  thereunder;  and (3)  neither the Company nor any other
person is under any  obligation  to register the Shares  (other than pursuant to
the  Registration  Rights  Agreement)  or the Warrants  under the 1933 Act or to
comply with the terms and conditions of any exemption thereunder.

                  B. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that,
in addition to the legend on certificates for the Preferred Shares  contemplated
by Section 1(a) hereof and Section  9(a)(ii) of the Certificate of Designations,
the certificates  for 

                                       -6-




the Preferred Shares, and the Warrants,  and, until such time as the Shares have
been registered  under the 1933 Act as contemplated by the  Registration  Rights
Agreement, the certificates for the Common Shares, may bear a restrictive legend
in  substantially  the following form (and a  stop-transfer  order may be placed
against transfer of the certificates for the Shares):

                  The securities  represented by this  certificate have not been
                  registered  under the Securities Act of 1933, as amended.  The
                  securities  have been acquired for  investment  and may not be
                  sold,  transferred  or assigned in the absence of an effective
                  registration statement for the securities under the Securities
                  Act of  1933,  as  amended,  or an  opinion  of  counsel  that
                  registration is not required under said Act.

                  C. REGISTRATION RIGHTS AGREEMENT.  The parties hereto agree to
enter into the Registration Rights Agreement, on or before the Closing Date.

                  D. NASDAQ  NOTIFICATION  FORM;  REPORTING STATUS. On or before
the Closing  Date,  the Company shall notify the Nasdaq of the issuance and sale
of the Preferred Stock and Warrants pursuant to this Agreement and shall provide
evidence of such  notification to the Buyer.  So long as the Buyer  beneficially
owns any of the Preferred Shares, the Warrants or the Common Shares, the Company
shall file all reports  required to be filed with the SEC pursuant to Section 13
or 15(d) of the  Securities  Exchange Act of 1934,  as amended (the "1934 Act"),
and the Company  shall not  terminate  its status as an issuer  required to file
reports  under the 1934 Act even if the 1934 Act or the  rules  and  regulations
thereunder would permit such termination.

                  E. USE OF PROCEEDS. The Company will use the proceeds from the
sale of the Preferred Shares and the Warrants for the Company's internal working
capital purposes,  mergers and  acquisitions,  investments and general corporate
purposes.

                  F. BLUE SKY LAWS. On or before the Closing  Date,  the Company
shall  take  such  action  as shall be  necessary  to  qualify,  or to obtain an
exemption  for,  the  Preferred  Shares and the  Warrants  for sale to the Buyer
pursuant to this  Agreement  and the Common  Shares for issuance to the Buyer on
conversion of the Preferred Shares and on exercise of the Warrants under such of
the securities or "blue sky" laws of jurisdictions in the United States as shall
be applicable to the sale of the Preferred  Shares to the Buyer pursuant to this
Agreement  and the issuance of the Common  Shares to the Buyer on  conversion of
the  Preferred  Shares.  The  Company  shall  furnish  copies  of  all  filings,
applications,  orders and grants or confirmations of exemptions relating to such
securities or "blue sky" laws on or prior to the Closing Date.

                                      -7-




                  5.       TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.

                  A.  TRANSFER  AGENT   INSTRUCTIONS.   Promptly  following  the
delivery by the Buyer of the aggregate  purchase price for the Preferred  Shares
in  accordance  with  Section  1(c)  hereof,  and prior to the Closing  Date the
Company will irrevocably  instruct its transfer agent to issue  certificates for
the Common Shares from time to time upon conversion of the Preferred  Shares and
exercise of the Warrants in such  amounts as specified  from time to time to the
transfer agent in the notices of conversion  surrendered in connection with such
conversions  and  referred  to in  Section  5(b)  of  this  Agreement  or in the
subscription  forms  attached  to  the  Warrants,  as  the  case  may  be,  such
certificates  to bear the restrictive  legend  specified in Section 4(b) of this
Agreement  prior to  registration  of the  Common  Shares  under  the 1933  Act,
registered in the name of the Buyer or its nominee and in such  denominations to
be specified by the Buyer in connection with each conversion of Preferred Shares
or  exercise  of  Warrants,  as the case may be. The  Company  warrants  that no
instruction other than such instructions  referred to in this Section 5 and stop
transfer   instructions   to  give  effect  to  Section  4(a)  hereof  prior  to
registration  of the  Common  Shares  under  the  1933  Act will be given by the
Company to the  transfer  agent and that the Common  Shares  shall  otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement. Nothing in this Section 5(a) shall affect in any way
the Buyer's  obligations and agreement to comply with all applicable  securities
laws upon  resale of the  Shares.  If the Buyer  provides  the  Company  with an
opinion of counsel  reasonably  satisfactory in form, scope and substance to the
Company that  registration  of a resale by the Buyer of any of the Securities in
accordance  with clause (1)(B) of Section 4(a) of this Agreement is not required
under the 1933 Act (which opinion expressly states that it may be relied upon by
the Company and its counsel in delivering instructions to the Company's transfer
agent),  the Company  shall permit the transfer of such  Securities  and, in the
case of the Common Shares, promptly, but in no event later than three days after
receipt of such opinion,  instruct the Company's  transfer agent to issue one or
more share  certificates in such name and in such  denominations as specified by
the Buyer. The provisions of Section 3(n) of the  Registration  Rights Agreement
shall  supersede  this Section 5(a) with respect to the Common  Shares once said
Section 3(n) becomes applicable.

                  B.  CONVERSION  PROCEDURE.  In connection with the exercise of
conversion  rights relating to the Preferred  Shares the Buyer or any subsequent
holder of the  Preferred  Shares  shall,  in addition  to any other  requirement
imposed by the terms of the Preferred  Shares as set forth in the Certificate of
Designation, complete, sign and furnish to the Company a notice of conversion in
the  form  attached  hereto  as  Annex V which  notice  of  conversion  properly
completed  and duly executed  shall be deemed a sufficient 

                                      -8-





notice of conversion for all purposes of the Certificate of Designations.

                  6.       STOCK DELIVERY INSTRUCTIONS.

                  The  certificates  for the Preferred Shares and Warrants shall
be delivered by the Company to the Escrow Agent  pursuant to Section 1(b) hereof
on a delivery against payment basis at the closing.

                  7.       CLOSING DATE.

                  The date and time of the  issuance  and sale of the  Preferred
Shares and issuance of the Warrants  (the  "Closing  Date") shall be 12:00 noon,
New York City time, on the date which is three New York Stock  Exchange  trading
days after the date on which the Buyer has deposited the purchase  price for the
Preferred  Shares with the Escrow Agent in accordance  with Section 1(c) hereof,
or such other  mutually  agreed to time.  The closing shall occur on the Closing
Date at the offices of the Escrow Agent.

                  8.       CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND 
                           ISSUE.

                  The Buyer  understands  that the Company's  obligation to sell
the  Preferred  Shares  and issue the  Warrants  to the Buyer  pursuant  to this
Agreement is conditioned upon:

                  a. The receipt and acceptance by the Company of this Agreement
executed by the Buyer as evidenced by execution of this Agreement by the Company
and delivery of an executed  counterpart  of this  Agreement to the Buyer or its
legal counsel;

                  b.  Delivery by the Buyer to the Escrow Agent of good funds as
payment  in full of an amount  equal to the  purchase  price  for the  Preferred
Shares in accordance with Section 1(c) hereof; and

                  c. The accuracy on the Closing Date of the representations and
warranties  of the Buyer  contained in this  Agreement as if made on the Closing
Date and the  performance  by the Buyer on or  before  the  Closing  Date of all
covenants and  agreements of the Buyer required to be performed on or before the
Closing Date.

                  9.       CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

         The Company  understands  that the Buyer's  obligation  to purchase the
Preferred Shares and acquire the Warrants is conditioned upon:

                                      -9-





                  a.  Delivery  by  the  Company  to  the  Escrow  Agent  of the
certificates  for the Preferred  Shares and the Warrants in accordance with this
Agreement;

                  b. The accuracy on the Closing Date of the representations and
warranties of the Company  contained in this Agreement as if made on the Closing
Date and the  performance  by the Company on or before the  Closing  Date of all
covenants and  agreements  of the Company  required to be performed on or before
such Closing Date; and

                  c.  Receipt by the Buyer on the Closing  Date of an opinion of
counsel for the Company,  dated the Closing Date,  in form,  scope and substance
reasonably  satisfactory  to the  Buyer,  to the  effect  set  forth in Annex VI
attached hereto.

                  10.  GOVERNING LAW;  MISCELLANEOUS.  This  Agreement  shall be
governed by and interpreted in accordance  with the laws of the  Commonwealth of
Massachusetts.  A facsimile transmission of this signed Agreement shall be legal
and binding on all  parties  hereto.  The  headings  of this  Agreement  are for
convenience   of   reference   and  shall  not  form  part  of,  or  affect  the
interpretation  of, this Agreement.  If any provision of this Agreement shall be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder of this Agreement or the validity or  enforceability of this Agreement
in any other  jurisdiction.  This Agreement may be amended only by an instrument
in  writing  signed by the party to be charged  with  enforcement.  Any  notices
required or  permitted  to be given under the terms of this  Agreement  shall be
sent by  mail or  delivered  personally  (which  shall  include  telephone  line
facsimile  transmission)  or by courier and shall be  effective  five days after
being placed in the mail, if mailed, or upon receipt, if delivered personally or
by courier,  in each case addressed to a party at such party's  address shown in
the introductory paragraph or on the signature page of this Agreement (facsimile
number 508-921-5801,  in the case of the Company, and 703-834-6627,  in the case
of the Buyer) or such other  address as a party shall have provided by notice to
the other party in accordance  with this provision and, in the case of notice to
the Company,  with a copy to Foley,  Hoag & Eliot LLP,  One Post Office  Square,
Boston,  Massachusetts 02109, Attention:  David Broadwin, Esq. (facsimile number
617-832-7000)  and,  in the  case of  notice  to the  Buyer,  with a copy to Law
Offices of Brian W Pusch,  Penthouse  Suite, 29 West 57th Street,  New York, New
York 10019 (facsimile  number  212-980-7055).  The Buyer shall have the right to
assign its rights and  obligations  under  this  Agreement  with  respect to the
purchase  of all or any  portion  of the  Preferred  Shares  and  the  Warrants,
provided such assignee,  by written  instrument  duly executed by such assignee,
assumes all  obligations of the Buyer  hereunder with respect to the purchase of
the portion of the Preferred  Shares and Warrants so assigned and

                                      -10-





makes the same  representations and warranties with respect thereto as the Buyer
makes in this  Agreement,  whereupon  the Buyer shall be relieved of any further
obligations,  responsibilities  and liabilities  with respect to the purchase of
all or the portion of the Preferred Shares and Warrants so assigned. In the case
of any such assignment, the Company shall agree in writing with such assignee to
make  available  to  such  assignee  the  benefits  of the  Registration  Rights
Agreement  with  respect to the Common  Shares  issuable  on  conversion  of the
Preferred  Shares or exercise of the Warrants with respect to which the purchase
under this Agreement has been so assigned.


                                      -11-






                  IN WITNESS  WHEREOF,  this Agreement has been duly executed by
the Buyer or one of its officers  thereunto  duly  authorized as of the date set
forth below.


NUMBER OF SHARES:  10,000

PRICE PER SHARE:  $1,000.00

AGGREGATE PURCHASE PRICE:  $10,000,000.00

NAME OF BUYER: GENESEE FUND LIMITED


SIGNATURE /s/ A. P. de Groot
          ----------------------------
Title: President
       -------------------------------
Date:  9/26/96
       -------------------------------

Address:   c/o CITCO
           Kaya Flamboyan 9
           Curacao, Netherlands Antilles

                  This  Agreement  has been  accepted  as of the date set  forth
below.

PALOMAR MEDICAL TECHNOLOGIES, INC.


By: /s/ Steven Georgiev
    ----------------------------------
Title: Chairman - CEO
       -------------------------------
Date:  9/26/96
       -------------------------------




                                      -12-