CERTIFICATE OF DESIGNATION,
                          PREFERENCES AND RIGHTS OF THE
                        SERIES A PARTICIPATING CUMULATIVE
                               PREFERRED STOCK OF
                       PALOMAR MEDICAL TECHNOLOGIES, INC.


                  Pursuant to Section 151 of the General  Corporation Law of the
State of Delaware,  Palomar Medical  Technologies,  Inc. (the "Corporation"),  a
corporation  organized  and existing  under the General  Corporation  Law of the
State of Delaware,  in  accordance  with the  provisions of Section 103 thereof,
DOES HEREBY CERTIFY:

                  That,  pursuant to the authority  conferred  upon the Board of
Directors  of  the   Corporation  by  Article  FOURTH  of  the  Second  Restated
Certificate  of   Incorporation   of  the  Corporation   (the   "Certificate  of
Incorporation"),  the board of directors of the  Corporation  on April 15, 1999,
adopted the following resolution creating a series of Preferred Stock designated
as Series A Participating Cumulative Preferred Stock:

                  RESOLVED,  that, pursuant to the authority vested in the Board
         of Directors of the  Corporation  in accordance  with the provisions of
         the  Certificate  of  Incorporation  of the  Corporation,  the Board of
         Directors  hereby  designates  and  establishes  100,000  shares of its
         authorized but unissued  Preferred  Stock as its Series A Participating
         Cumulative  Preferred  Stock,  $.01 par value (the  "Series A Preferred
         Stock");  that such Series A  Preferred  Stock shall have the terms set
         forth below:

         Section 1. Designation and Number of Shares.  The shares of such series
shall be designated as "Series A Participating  Cumulative Preferred Stock" (the
"Series A  Preferred  Stock"),  $.01 par value.  The number of shares  initially
constituting the Series A Preferred Stock shall be 100,000;  provided,  however,
that, if more than a total of 100,000  shares of Series A Preferred  Stock shall
be issuable upon the exercise of Rights (the  "Rights")  issued  pursuant to the
Rights  Agreement  dated as of April  20,  1999,  between  the  Corporation  and
American  Stock  Transfer  &  Trust  Company,   as  Rights  Agent  (the  "Rights
Agreement"), the Board of Directors of the Corporation,  pursuant to Section 151
of the General  Corporation  Laws of  Delaware,  shall direct by  resolution  or
resolutions  that a certificate be properly  executed,  acknowledged,  filed and
recorded,  in  accordance  with the  provisions  of said  Section  103  thereof,
providing for the total number of shares of Series A Preferred Stock  authorized
to  be  issued  to  be  increased  (to  the  extent  that  the   Certificate  of
Incorporation then permits) to the largest number of whole shares (rounded up to
the nearest whole number) issuable upon exercise of such Rights.

         Section 2. Dividends or Distributions.

                (a) Subject to the prior and  superior  rights of the holders of
shares of any other series of Preferred Stock or other class of capital stock of
the  Corporation  ranking prior and superior to the shares of Series A Preferred
Stock with respect to dividends, the holders of shares of the Series A Preferred
Stock shall be entitled  to  receive,  when,  as and if declared by the Board of
Directors,  out of the assets of the Corporation legally available therefor, (1)
quarterly dividends

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payable in cash on the last day of each  fiscal  quarter  in each year,  or such
other dates as the Board of Directors of the  Corporation  shall  approve  (each
such date being  referred to herein as a  "Quarterly  Dividend  Payment  Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or a fraction of a share of Series A Preferred  Stock,  in the amount
of $1.00 per whole share  (rounded  to the nearest  cent) less the amount of all
cash  dividends  declared  on the  Series  A  Preferred  Stock  pursuant  to the
following clause (2) since the immediately  preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly  Dividend  Payment Date,  since the
first  issuance of any share or fraction of a share of Series A Preferred  Stock
(the  total of which  shall  not,  in any  event,  be less  than  zero)  and (2)
dividends payable in cash on the payment date for each cash dividend declared on
the Common  Stock in an amount per whole share  (rounded  to the  nearest  cent)
equal to the Formula  Number (as  hereinafter  defined) then in effect times the
cash  dividends then to be paid on each share of Common Stock.  In addition,  if
the  Corporation  shall pay any dividend or make any  distribution on the Common
Stock  payable in assets,  securities  or other forms of non-cash  consideration
(other than dividends or distributions  solely in shares of Common Stock), then,
in each such case,  the  Corporation  shall  simultaneously  pay or make on each
outstanding  whole share of Series A Preferred  Stock a dividend or distribution
in like kind equal to the Formula  Number then in effect times such  dividend or
distribution  on each share of the Common  Stock.  As used herein,  the "Formula
Number" shall be 1000;  provided,  however,  that if at any time after April 20,
1999, the Corporation  shall (i) declare or pay any dividend on the Common Stock
payable in shares of Common Stock or make any  distribution  on the Common Stock
in shares of Common Stock,  (ii)  subdivide (by a stock split or otherwise)  the
outstanding  shares of  Common  Stock  into a larger  number of shares of Common
Stock or (iii) combine (by a reverse stock split or otherwise)  the  outstanding
shares of Common Stock into a smaller number of shares of Common Stock,  then in
each such event the Formula  Number shall be adjusted to a number  determined by
multiplying  the Formula Number in effect  immediately  prior to such event by a
fraction,  the  numerator  of which is the number of shares of Common Stock that
are outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding  immediately prior to such
event (and  rounding  the result to the  nearest  whole  number);  and  provided
further,  that, if at any time after April 20, 1999, the Corporation shall issue
any shares of its capital stock in a merger, reclassification,  or change of the
outstanding  shares of Common Stock,  then in each such event the Formula Number
shall be  appropriately  adjusted to reflect  such merger,  reclassification  or
change  so that each  share of  Series A  Preferred  Stock  continues  to be the
economic  equivalent of a Formula Number of shares of Common Stock prior to such
merger, reclassification or change.

                (b) The Corporation  shall declare a dividend or distribution on
the Series A Preferred Stock as provided in Section 2(a) immediately prior to or
at the same time it  declares a dividend  or  distribution  on the Common  Stock
(other  than a  dividend  or  distribution  solely in  shares of Common  Stock);
provided,  however, that, in the event no dividend or distribution (other than a
dividend or  distribution in shares of Common Stock) shall have been declared on
the Common Stock during the period between any Quarterly  Dividend  Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per
whole share on the Series A Preferred  Stock  shall  nevertheless  be payable on
such subsequent  Quarterly Dividend Payment Date. The Board of Directors may fix
a record date for the  determination  of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared thereon,

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<PAGE>

which  record  date shall be the same as the record  date for any  corresponding
dividend or distribution on the Common Stock.

                (c)  Dividends  shall  begin  to  accrue  and be  cumulative  on
outstanding  shares of Series A  Preferred  Stock  from and after the  Quarterly
Dividend  Payment Date next pre ceding the date of original issue of such shares
of Series A Preferred Stock;  provided,  however,  that dividends on such shares
which are  originally  issued  after the record  date for the  determination  of
holders of shares of Series A  Preferred  Stock  entitled to receive a quarterly
dividend and on or prior to the next succeeding  Quarterly Dividend Payment Date
shall begin to accrue and be cumulative  from and after such Quarterly  Dividend
Payment Date.  Notwithstanding  the  foregoing,  dividends on shares of Series A
Preferred  Stock which are  originally  issued  prior to the record date for the
determination  of  holders of shares of Series A  Preferred  Stock  entitled  to
receive a quarterly  dividend on the first Quarterly Dividend Payment Date shall
be calculated as if cumulative from and after the last day of the fiscal quarter
next preceding the date of original issuance of such shares.  Accrued but unpaid
dividends  shall not bear  interest.  Dividends  paid on the  shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time  accrued  and  payable  on such  shares  shall be  allocated  pro rata on a
share-by-share basis among all such shares at the time outstanding.

                (d) So long as any  shares of the Series A  Preferred  Stock are
outstanding,  no dividends  or other  distributions  shall be declared,  paid or
distributed,  or set aside for  payment or  distribution,  on the  Common  Stock
unless,  in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.

                (e) The holders of the shares of Series A Preferred  Stock shall
not be  entitled  to receive  any  dividends  or other  distributions  except as
provided herein.

         Section 3. Voting  Rights.  The holders of shares of Series A Preferred
Stock shall have the following voting rights:

                (a) Each holder of Series A Preferred Stock shall be entitled to
a number of votes equal to the  Formula  Number then in effect for each share of
Series A Preferred  Stock held of record on each matter on which  holders of the
Common Stock or stockholders  generally are entitled to vote,  multiplied by the
maximum  number of votes  per share  which  any  holder of the  Common  Stock or
stockholders  generally  then have with  respect to such  matter  (assuming  any
holding  period  or other  requirement  to vote a  greater  number  of shares is
satisfied).

                (b) Except as otherwise  provided  herein or by applicable  law,
the holders of shares of Series A  Preferred  Stock and the holders of shares of
Common  Stock shall vote  together as one class for the election of directors of
the Corporation and on all other matters  submitted to a vote of stockholders of
the Corporation.

                (c) If, at the time of any annual  meeting of  stockholders  for
the election of directors, the equivalent of six quarterly dividends (whether or
not consecutive)  payable on any share or shares of Series A Preferred Stock are
in default,  the number of directors  constituting the Board of Directors of the
Corporation  shall be increased by two. In addition to voting  together with the
holders of Common Stock for the election of other directors of the  Corporation,
the

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holders of record of the Series A Preferred Stock,  voting separately as a class
to the  exclusion  of the  holders of Common  Stock,  shall be  entitled at said
meeting of stockholders (and at each subsequent annual meeting of stockholders),
unless all  dividends  in arrears  have been paid or declared  and set apart for
payment  prior  thereto,  to  vote  for the  election  of two  directors  of the
Corporation,  the holders of any Series A Preferred Stock being entitled to cast
a number of votes per share of Series A  Preferred  Stock  equal to the  Formula
Number.  Until the default in  payments of all  dividends  which  permitted  the
election of said  directors  shall cease to exist,  any  director who shall have
been so elected  pursuant to the next  preceding  sentence may be removed at any
time,  either with or without cause, only by the affirmative vote of the holders
of the  shares  of  Series A  Preferred  Stock at the  time  entitled  to cast a
majority of the votes  entitled to be cast for the election of any such director
at a special  meeting of such holders  called for that purpose,  and any vacancy
thereby  created  may be  filled by the vote of such  holders.  If and when such
default shall cease to exist,  the holders of the Series A Preferred Stock shall
be divested of the foregoing special voting rights,  subject to revesting in the
event of each and every  subsequent like default in payments of dividends.  Upon
the termination of the foregoing  special voting rights,  the terms of office of
all persons who may have been elected directors  pursuant to said special voting
rights shall forthwith terminate,  and the number of directors  constituting the
Board of Directors  shall be reduced by two. The voting  rights  granted by this
Section  3(c) shall be in addition  to any other  voting  rights  granted to the
holders of the Series A Preferred Stock in this Section 3.

                (d) Except as provided  herein,  in Section 11 or by  applicable
law, holders of Series A Preferred Stock shall have no special voting rights and
their consent  shall not be required  (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for authorizing or taking
any corporate action.

         Section 4. Certain Restrictions.

                (a)  Whenever   quarterly   dividends  or  other   dividends  or
distributions  payable on the Series A Preferred  Stock as provided in Section 2
are in  arrears,  thereafter  and until all  accrued  and unpaid  dividends  and
distributions,  whether or not declared,  on shares of Series A Preferred  Stock
outstanding shall have been paid in full, the Corporation shall not

                           (i)  declare  or pay  dividends  on,  make any  other
         distributions  on, or redeem  or  purchase  or  otherwise  acquire  for
         consideration  any  shares  of  stock  ranking  junior  (either  as  to
         dividends or upon liquidation, dissolution or winding up) to the Series
         A Preferred Stock;

                           (ii)  declare or pay  dividends  on or make any other
         distributions  on any shares of stock ranking on a parity (either as to
         dividends  or upon  liquidation,  dissolution  or winding  up) with the
         Series A Preferred Stock, except dividends paid ratably on the Series A
         Preferred  Stock  and all such  parity  stock on  which  dividends  are
         payable or in arrears in  proportion  to the total amounts to which the
         holders of all such shares are then entitled;

                           (iii)   redeem  or  purchase  or  otherwise   acquire
         for consideration shares of any stock ranking on a parity (either as to
         dividends or upon liquidation, dissolution or

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         winding  up)  with the  Series A  Preferred  Stock;  provided  that the
         Corporation  may at any time  redeem,  purchase  or  otherwise  acquire
         shares of any such parity  stock in exchange for shares of any stock of
         the  Corporation  ranking  junior  (either  as  to  dividends  or  upon
         dissolution,  liquidation  or  winding  up) to the  Series A  Preferred
         Stock; or

                           (iv) purchase or otherwise  acquire for consideration
         any shares of Series A Preferred  Stock, or any shares of stock ranking
         on a parity with the Series A  Preferred  Stock,  except in  accordance
         with a purchase offer made in writing or by publication  (as determined
         by the Board of  Directors)  to all  holders of such  shares  upon such
         terms as the Board of Directors,  after consideration of the respective
         annual  dividend rates and other relative rights and preferences of the
         respective  series  and  classes,  shall  determine  in good faith will
         result in fair and equitable  treatment among the respective  series or
         classes.

                (b) The  Corporation  shall not  permit  any  subsidiary  of the
Corporation  to purchase or otherwise  acquire for  consideration  any shares of
stock of the Corporation  unless the Corporation  could,  under paragraph (a) of
this Section 4,  purchase or  otherwise  acquire such shares at such time and in
such manner.

         Section 5. Liquidation  Rights.  Upon the  liquidation,  dissolution or
winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends  or upon  liquidation,  dissolution  or  winding  up) to the  Series A
Preferred  Stock  unless,  prior  thereto,  the  holders  of  shares of Series A
Preferred  Stock shall have  received an amount  equal to the accrued and unpaid
dividends and  distributions  thereon,  whether or not declared,  to the date of
such  payment,  plus an amount equal to the greater of (x) $1.00 per whole share
or (y) an aggregate  amount per share equal to the Formula Number then in effect
times the  aggregate  amount to be  distributed  per share to  holders of Common
Stock or (2) to the holders of stock ranking on a parity (either as to dividends
or upon  liquidation,  dissolution  or winding  up) with the Series A  Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in  proportion to the total amounts to which the holders
of all such shares are entitled upon such  liquidation,  dissolution  or winding
up.

         Section 6.  Consolidation,  Merger,  etc. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash  or any  other  property,  then  in any  such  case  the  then
outstanding  shares  of  Series A  Preferred  Stock  shall  at the same  time be
similarly  exchanged  or changed  into an amount per share  equal to the Formula
Number then in effect times the aggregate amount of stock,  securities,  cash or
any other  property  (payable  in kind),  as the case may be,  into which or for
which each share of Common Stock is exchanged or changed. In the event both this
Section 6 and Section 2 appear to apply to a  transaction,  this  Section 6 will
control.

         Section 7. No Redemption; No Sinking Fund.

                (a) The shares of Series A Preferred  Stock shall not be subject
to  redemption  by the  Corporation  or at the  option of any holder of Series A
Preferred Stock; provided,

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however,  that the  Corporation  may purchase or otherwise  acquire  outstanding
shares of Series A Preferred  Stock in the open market or by offer to any holder
or holders of shares of Series A Preferred Stock.

                (b) The shares of Series A Preferred  Stock shall not be subject
to or entitled to the operation of a retirement or sinking fund.

         Section 8. Ranking.  The Series A Preferred  Stock shall rank junior to
all other  series of  Preferred  Stock of the  Corporation,  unless the Board of
Directors  shall  specifically   determine   otherwise  in  fixing  the  powers,
preferences  and relative,  participating,  optional and other special rights of
the shares of such series and the  qualifications,  limitations and restrictions
thereof.

         Section 9.  Fractional  Shares.  The Series A Preferred  Stock shall be
issuable upon exercise of the Rights issued pursuant to the Rights  Agreement in
whole shares or in any fraction of a share that is one one-thousandth (1/1000th)
of a share or any integral  multiple of such  fraction  which shall  entitle the
holder, in proportion to such holder's  fractional shares, to receive dividends,
exercise voting rights,  participate in distributions and to have the benefit of
all other rights of holders of Series A Preferred  Stock.  In lieu of fractional
shares, the Corporation, prior to the first issuance of a share or a fraction of
a share of Series A  Preferred  Stock,  may elect (1) to make a cash  payment as
provided  in the  Rights  Agreement  for  fractions  of a share  other  than one
one-thousandth  (1/1000th) of a share or any integral multiple thereof or (2) to
issue  depository  receipts  evidencing such  authorized  fraction of a share of
Series A  Preferred  Stock  pursuant  to an  appropriate  agreement  between the
Corporation  and a depository  selected by the  Corporation;  provided that such
agreement shall provide that the holders of such depository  receipts shall have
all the rights, privileges and preferences to which they are entitled as holders
of the Series A Preferred Stock.

         Section 10. Reacquired  Shares.  Any shares of Series A Preferred Stock
purchased  or otherwise  acquired by the  Corporation  in any manner  whatsoever
shall be retired and canceled promptly after the acquisition  thereof.  All such
shares shall upon their  cancellation  become  authorized but unissued shares of
Preferred  Stock,  without  designation  as to series until such shares are once
more  designated  as part of a  particular  series  by the  Board  of  Directors
pursuant to the provisions of Article 4 of the Certificate of Incorporation.

         Section 11.  Amendment.  None of the powers,  preferences and relative,
participating, optional and other special rights of the Series A Preferred Stock
as provided  herein or in the Certificate of  Incorporation  shall be amended in
any manner  which  would  alter or change  the  powers,  preferences,  rights or
privileges  of the  holders  of Series A  Preferred  Stock so as to affect  them
adversely without the affirmative vote of the holders of at least 66-2/3% of the
outstanding  shares of Series A  Preferred  Stock,  voting as a separate  class;
provided,  however,  that no such amendment  approved by the holders of at least
66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to
apply to the powers,  preferences,  rights or privileges of any holder of shares
of Series A Preferred Stock originally  issued upon exercise of the Rights after
the time of such approval without the approval of such holder.

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                IN WITNESS WHEREOF,  the Corporation has caused this Certificate
of  Designation  to be duly executed in its corporate name by its president duly
authorized on this 20th day of April, 1999.

                                   PALOMAR MEDICAL TECHNOLOGIES, INC.


                                   By:  /s/  Louis P. Valente
                                        -----------------------------
                                             Louis P. Valente