| 1. | Name of Holder:  Joseph P. Caruso |
|----|---------------------------------------------|

| 2. | Date of Grant: August 16, 2008 |
|----|--------------------------------|

| 3. | Maximum number of SARs forwhich this Award is exercisable: 25,000 |
|----|-------------------------------------------------------------------|

| 4. | SAR Exercise Price:  $7.97 |
|----|--------------------------------------|

| 5. | Expiration Date of Award:  In the event that the Holder fails to satisfy the tax withholding obligations within 14 days of a Vesting Date, the SARs which have vested on such date shall expire without any payment or benefit delivered by the Company, and shall thereafter be of no further force or effect. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 6. | Vesting Schedule: This Award shall become exercisable for 33 1/3% of the maximum number of SARs granted on the second one year anniversary of the Date of Grant, and shall become exercisable for an additional 33 1/3% on each one year anniversary thereafter (each, a “Vesting Date”).  All vesting shall cease upon the date of termination of employment or provision of services, except as provided in Section 8 below. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | Termination of Employment or Services.  This Award shall terminate immediately upon the termination of the Holder’s employment with, or provision of services to, the Company, for any reason, except as provided in Section 8 below, and no payment or other benefit shall be provided by the Company with regard to any SARs that have not vested as of such date. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8. | Acceleration of Vesting:  Any SARs granted under this Award that have not yet vested shall vest fully upon the earliest to occur of:  (a) termination of the Holder’s employment as a result of death or “Disability”; (b) termination of the Holder’s employment by the Holder with “Good Reason”; (c) termination of the Holder’s employment by the Company without “Cause”; or (d) a “Change in Control” of the Company.  For purposes of this Award, the terms “Disability,” “Good Reason,” “Cause,” and “Change in Control” shall have the meanings set forth in the current Employment Agreement between the Holder and the Company. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | Tax Withholding.  The Company’s obligation to deliver shares upon a Vesting Date under this Award shall be subject to the Holder’s satisfaction of any federal, state and local income and employment tax withholding requirements, as set forth at Section 12 of the Plan. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | Notice. Any notice to be given to the Company hereunder shall be deemed sufficient if addressed to the Company and delivered to the office of the Company, 82 Cambridge Street, Burlington, MA 01803, attention of Chief Financial Officer, or such other address as the Company may hereafter designate. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Any notice to be given to the Holder hereunder shall be deemed sufficient if addressed to and delivered in person to the Holder at his or her address furnished to the Company or when deposited in the mail, postage prepaid, addressed to the Holder at such address or when sent to the Holder via e-mail at the Holder’s Company e-mail address. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Palomar Medical Technologies, Inc.                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | By:/s/ Paul S. Weiner                           |
|   |        Chief Financial Officer                                                                                                                      |
|   |                                                                                                                                                                              |
|   | Electronically Accepted and Agreed to:                                                                                                                                            |
|   |                                                                                                                                                                              |
|   | By: /s/ Joseph P. Caruso                                                                                                                                      |

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