|EMPLOYMENT AGREEMENT


     THIS  EMPLOYMENT  AGREEMENT  ("Agreement")  entered into as of this 1st day of July,  2001 between Palomar
 Medical  Technologies,  Inc., a Delaware  corporation  (the  "Company"),  and Joseph P. Caruso,  an individual (the
"Executive"),



WITNESSETH THAT:


     WHEREAS, the Company desires to
employ Executive as its President and Chief Operating Officer for the period and
upon and subject to the terms herein provided; and


     WHEREAS, the Company desires to be
assured that Executive will not compete with the Company for the period and
within the geographical areas hereinafter specified; and


     WHEREAS, Executive is willing to
agree to be employed by the Company for the period and upon and subject to the
terms herein provided; and


     WHEREAS, Executive does not desire
to work for the Company in a position lower than that of President and Chief
Operating Officer and is willing to agree not to compete with the Company;


     NOW, THEREFORE, in consideration
of the premises, the parties hereto covenant and agree as follows:


     Section 1.  Term of
Employment; Compensation. The Company agrees to employ Executive from July
1, 2001 until June 30, 2003 (the Term) as its President and Chief
Operating Officer, with the responsibilities normally associated with such
position (the Executive Position). The Company will
pay Executive for his services during the term of his employment hereunder at an
annual rate of Two Hundred Fifty Thousand Dollars ($250,000.00) subject to
increases thereafter as determined by the Companys Board of Directors and
Compensation Committee, payable in arrears, in equal installments, in accordance
with standard Company practice, but in any event not less often than monthly,
subject only to such payroll and withholding deductions as are required by law.
Thereafter, this Agreement shall be automatically renewed for successive periods
of two (2) years, unless you or the Company shall give the other party not less
than three (3) months prior written notice of non-renewal.


     Section 2.  Office and
Duties. Executive shall have the usual duties, responsibilities and
authority (the Executives Authority) of a President and
Chief Operating Officer, and shall report to the Companys Chief Executive
Officer, and shall perform such specific other tasks, consistent with his
position as President and Chief Operating Officer, as may from time to time be
assigned to him by the Chief Executive Officer. Executive shall devote
substantially all of his business time, labor, skill, undivided attention and
best ability to the performance of his duties hereunder. Executive may not,
without Executives consent, be required to perform Executives duties
at any location that is more than fifty (50) miles from the Companys
principal office in Burlington, Massachusetts, except that Executive agrees that
he will travel to whatever extent is reasonably necessary in the conduct of the
Companys business.



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|Section 3.  Business
Expenses. Executive shall be entitled to reimbursement for expenses incurred
by him in connection with the performance of his duties hereunder upon receipt
of vouchers therefor in accordance with such procedures as the Company has
heretofore or may hereafter establish. The Company will reimburse you for
automobile expenses during the term of this Agreement.


     Section 4.  Vacation
During Employment. Executive shall be entitled to such reasonable vacations
as may be allowed by the Company in accordance with general practices to be
established, but in any event not less than four (4) weeks during each twelve
(12) month period.


     Section 5.  Additional
Benefits. The Company shall make available to Executive at least those
perquisites presently granted to Executive. Nothing herein contained shall
preclude Executive, to the extent he is otherwise eligible, from participation
in all group insurance programs or other fringe benefit plans which the Company
may hereafter in its sole and absolute discretion make available generally to
its employees, but the Company shall not be required to establish or maintain
any such program or plan.


     Section 6.  Termination
by the Company. The Company shall have the right to terminate
Executives employment at any time for Cause. For
purposes of this Agreement, Cause shall mean (a) termination
by action of a majority of the members of the Companys Board of Directors,
acting on the written opinion of counsel, because of Executives willful
and continued refusal, without proper cause, to perform substantially
Executives duties under this Agreement; or (b) the conviction of Executive
of a felony or an act of fraud or embezzlement against the Company or any of its
divisions, subsidiaries of affiliates (which through lapse of time or otherwise
is not subject to appeal). Such termination shall be effected by written notice
thereof, personally hand delivered by the Company to Executive, and, except as
hereinafter provided, shall be effective as of the thirtieth (30th) calendar day
after such notice; provided, however, that if within such thirty (30) calendar
day period Executive shall cease Executives refusal and shall use
Executives best efforts to perform such obligations, the termination shall
not be effective.


     Section 7.  Termination
by Death. In the event Executive dies during the Term, Executives
employment shall terminate (effective on the date of Executives death) and
the provisions of Section 10 shall be applicable.


     Section 8.  Termination
by Disability. In the event that Executive suffers a disability which
prevents Executive from substantially performing Executives duties under
this Agreement for a period of at least one hundred eighty (180) consecutive or
nonconsecutive calendar days within any three hundred sixty-five (365) calendar
day period, the Company shall have the right, after such one hundred eighty
(180) calendar day period has elapsed, to terminate Executives employment
hereunder upon thirty (30) calendar days written notice to Executive and the
provisions of Section 10 shall be applicable.


     Section 9.  Termination
by Executive. Notwithstanding any other provisions of this Agreement,
Executive may terminate Executives employment either (i) in the event of a
Change in Control or (ii) by written notice served upon the
Company within thirty (30) calendar days after Executive has knowledge of an
event constituting Good Reason.


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|For purposes of this Agreement,
Change in Control shall be deemed to be (i) the sale of
all or substantially all of the assets of the Company; (ii) any person,
together with its affiliates and associates (as defined in Rule 12b-2 under the
Securities Exchange Act of 1934, or any successor rule thereto) shall become the
beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act),
including by merger or otherwise, of more than fifty percent (50%) of the total
voting power of all classes of voting stock of the Company; or (iii) that
any person, together with its affiliates and associates (as defined in Rule
12b-2 under the Securities Exchange Act of 1934, or any successor rule thereto)
has succeeded as the result of or in response to actual or threatened election
contests, whether by settlement or otherwise, in having elected to the Board of
Directors of the Company, whether at one time or on a cumulative basis, a
sufficient number of nominees to constitute (x) more than thirty percent (30%)
of the members of the Companys Board of Directors, rounded down to the
nearest whole number, if the number of directors on the Companys Board is
eight or less, or (y) more than forty percent (40%) of the members of the
Companys Board, rounded down to the nearest whole number, if the number of
directors on the Companys Board is nine or more.


     For purposes of this Agreement,
the term Good Reason shall mean:


     (i)    any action by the Company  which  results in a  diminution  in the  Executive  Position or in the
Executive's Authority;


     (ii)    any failure by the Company to
timely pay the amounts or provide the benefits described in this Agreement,
other than an isolated failure not occurring in bad faith and which is remedied
promptly after receipt of written notice thereof given by Executive; or


     (iii)    a material breach by the
Company of any of the provisions of this Agreement which failure or breach shall
have continued for thirty (30) days after written notice from Executive to the
Company specifying the nature of such failure or breach; or


     (iv)  any action by the Company that would result in a violation of Section 2.



     Section 10.  Effect of
Termination. (a) For Cause; and Death. In the event of termination of
this Agreement (i) by the Company for Cause, or (ii) by reason of the death of
the Executive, the Company shall pay Executive (or Executives beneficiary
in the event of the Executives death) any base salary or other
compensation earned (and a pro rata portion of the bonus payable with respect to
the year in which termination occurred) but not paid to Executive prior to the
effective date of such termination and, in the case of termination by reason of
death, the Company shall pay Executives beneficiary (i) the base salary
that Executive would have earned for a period of one (1) year following his
death, plus (ii) a pro rata portion of any bonuses or other incentive
compensation that Executive would have earned if he had been employed for the
full fiscal year in which he died payable at the time of payment of similar
bonuses made to other Executives of the Company, plus (iii) any death benefits
that Executive is entitled to under the Companys policies in effect on
Executives date of death.


     (b)    Without Cause; For Good
Reason. In the event of (i) termination or non-renewal of this Agreement by
the Company other than for Cause, (ii) termination of this Agreement by
Executive for Good Reason without a Change in Control, the Company shall pay
Executive, in a lump sum within thirty (30) days after termination under this
Section 10(b), the sum of (A) the amount described in Section
10(a) of this Agreement (other than the payments to be paid in case of
termination by death), and (B) the amount equal to two times (2x) the
Executives Annual Compensation in effect at the time of termination under
this Section 10(b), and the Company shall continue all of the benefits
and perquisites set forth in Section 5 for a period of two (2) years,
notwithstanding the fact that Executive may no longer be an employee eligible to
participate in one or more of the employee benefit plans maintained by the
Company.


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|(c) Change in Control. In
the event of termination or non-renewal of this Agreement by Executive or the
Company within one (1) year after a Change in Control, the Company shall pay
Executive, in a lump sum payment within thirty (30) days after termination under
this Section 10(c), the sum of (A) the amount described in Section
10(a) of this Agreement (other than the payments to be made in case of
termination by death), and (B) the amount equal to three (3x) times
Executives Annual Compensation, and the Company shall continue for a
period of two (2) years all of the benefits and perquisites set forth in
Section 5, notwithstanding the fact that Executive may no longer be an
employee eligible to participate in one or more of the employee benefit plans
maintained by the Company.


     For purposes of this Section
10(c) of this Agreement the term Executives Annual
Compensation shall mean (i) the sum of (A) the Executives
then-current salary pursuant to Section 1 and (B) any bonus
compensation to which Executive would have been entitled if Executive continued
to be employed under this Agreement or the Executives last paid bonus,
whichever is higher.


     (d) Disability.     In the
event of termination of this Agreement by reason of disability, the Company
shall continue to pay Executives Annual Compensation at the time of such
termination for a period of one (1) year, reduced by the maximum amount of
salary which may be insured under the Companys Long Term Disability Plan
at the time of disability.


     Section 11. Acceleration
and Expiration of Options. Any options or warrants to purchase capital stock
of the Company (collectively, the Options) granted by the
Company to Executive that have not yet become exercisable shall become
exercisable upon the earliest to occur of (a) the termination of
Executives employment as a result of Executives death or disability;
(b) the termination by Executive with Good Reason; (c) the termination by
Executive after a Change in Control; or (d) termination by the Company
without Cause. Notwithstanding the foregoing, all Options, whether currently
exercisable or not, shall expire and cease to be exercisable as follows:


     (a)    if the Company terminates Executive's  employment for Cause,  immediately upon the effective date
of such termination;


     (b)    if the Company terminates the
Executives employment without cause or if Executive terminates
Executives employment with the Company with Good Reason or after a Change
in Control, ninety (90) days after the effective date of such termination (but
in no event later than the date the Term would expire without giving effect to
any automatic renewal).


     (c)    if Executive dies while
employed by the Company, six (6) calendar months after Executives death
(but in no event later than the date the Term would expire without giving effect
to any automatic renewal); and


     (d)    if Executives employment
is terminated as a result of disability, six (6) calendar months after the
effective date of such termination (but in no event later than the date the Term
would expire without giving effect to any automatic renewal).


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|Section 12.  Excise Tax
Make-Whole. In the event it shall be determined that any payment or
distribution by the Company to you or for your benefit, whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (a Payment), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
Code) (or any successor thereto) or comparable state or local
tax or any interest or penalties with respect to such excise tax or comparable
state or local tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the Excise
Tax), then you shall be entitled to receive an additional payment (a
Gross-Up Payment). The Gross-Up Payment shall be equal to the
sum of the Excise Tax with respect to the Payment and all taxes (including any
interest or penalties imposed with respect to such taxes) imposed on (or
economically borne by) you (including the Excise Tax, state and federal income
taxes and all applicable withholding taxes) attributable to the receipt of the
Gross-Up Payment. For purposes of the preceding sentence, all taxes attributable
to the receipt by you of a Gross-Up Payment shall be computed assuming the
application of the maximum tax rates provided by law.


     If the Company determines that it
is required to withhold any Excise Tax or report that any Excise Tax is due, or
if the Company otherwise determines that any Gross-Up Payment is required, it
shall promptly pay such Gross-Up Payment (net of applicable wage withholding).


     If you determine that a Gross-Up
Payment is required, you shall so notify the Company in writing, specifying the
amount of Gross-Up Payment required and details as to the calculation thereof.
The Company shall, within 30 days, either pay such Gross-Up Payment (net of
applicable wage withholding) to you or furnish an unqualified opinion from
Independent Tax Counsel (as defined below), addressed to you and the Company,
that there is substantial authority (within the meaning of Section 6661 of the
Code) for the position that no Gross-Up Payment is required. In that event the
Company shall not withhold any amount of the Excise Tax or take any other action
which is inconsistent with such opinion of counsel. Independent Tax
Counsel means a lawyer with expertise in the area of executive
compensation tax law, who shall be selected by you and shall be reasonably
acceptable to the Company, and whose fees and disbursements shall be paid by the
Company.


     If the Internal Revenue Service or
other tax authority proposes in writing an adjustment to your income tax that
would result in a Gross-Up Payment, you shall promptly notify the Company in
writing and shall refrain for at least thirty days after giving such notice, if
so permitted by law, from paying any tax (including interest, penalties and
additions to tax) asserted to be payable as a result of such proposed
adjustment. Before the expiration of such period, the Company shall either pay
the Gross-Up Payment or provide an opinion from Independent Tax Counsel to you
and the Company as to whether it is more likely than not that the proposed
adjustment would be successfully challenged if the matter were to be litigated.
If the opinion provides that a challenge would be more likely than not to be
successful if the issue were litigated, and the Company requests in writing that
you contest such proposed adjustment, then you shall contest the proposed
adjustment and shall consult in good faith with the Company with respect to the
nature of all action to be taken in furtherance of the contest of such proposed
adjustment; provided that you, after such consultation with the Company, shall
determine in your sole discretion the nature of all action to be taken to
contest such proposed adjustment, including (a) whether any such action shall
initially be by way of judicial or administrative proceedings, or both, (b)
whether any such proposed adjustment shall be contested by resisting payment
thereof or by paying the same and seeking, a refund thereof, and (c) if you
shall undertake judicial action with respect to such proposed adjustment, the
court or other judicial body before which such action shall be commended and the
court or other judicial body to which any appeals should be taken. You agree to
take appropriate appeals of any judicial decision that would require the Company
to pay a Gross-Up Payment, provided the Company requests in writing that you do
so and provides an opinion from Independent Tax Counsel to you and the Company
that it is more likely than not that the appeal would be successful. You further
agree to settle, compromise or otherwise terminate a contest with the Internal
Revenue Service or other tax authority with respect to all or a portion of the
proposed adjustment giving rise to the Gross-Up Payment, if requested by the
Company in writing to do so at any time, in which case you shall be entitled to
receive from the Company the Gross-Up Payment. In no event shall you compromise
or settle all or any portion of a proposed adjustment which would result in a
Gross-Up Payment without the written consent of the Company.


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|You shall not be required to take
or continue any action pursuant to this Section 12 unless the Company
acknowledges its liability under this Agreement in the event that the Internal
Revenue Service or other tax authority prevails in the contest and timely makes
the payments required by this paragraph. The company hereby agrees to indemnify
you in a manner reasonably satisfactory to you for any fees, expenses,
penalties, interest or additions to tax which you may incur as a result of
contesting the validity of any Excise Tax and to pay you promptly upon receipt
from time to time of a written demand therefor all costs and expenses which you
may incur in connection with contesting such proposed adjustment (including
reasonable fees and disbursements of Independent Tax Counsel); provided,
however, that the Company shall not be required to reimburse any amount of tax
which you are required to pay to permit your institution of a claim for refund
under this Section 12.


     If you shall have contested any
proposed adjustment as above provided, and for so long as you shall be required
under the terms of this Section 12 to continue such contest, the Company
shall not be required to pay a Gross-Up Payment until there occurs a Final
Determination (as defined below) of your liability for the tax and any interest,
penalties and additions to tax asserted to be payable as a result of such
proposed adjustment. A Final Determination shall mean (A) a
decision, judgement, decree or other order by any court of competent
jurisdiction, which decision, judgment, decree or other order has become final
after all allowable appeals by either party to the action have been exhausted,
the time for filing such appeal has expired or you have no right under the terms
thereof to request an appeal, (B) a closing agreement entered into under Section
7121 of the Code or any other settlement agreement entered into in connection
with an administrative or judicial proceeding and with your consent, or (C) the
expiration of the time for instituting a claim for refund, or if such a claim
was filed, the expiration of the time for instituting suit with respect thereto.


     In the event you receive any
refund from the Internal Revenue Service or other tax authority on account of an
overpayment of Excise Tax, such amount, shall be promptly paid by you to the
Company.


     Section 13.  No
Mitigation; No Offset. Executive shall be under no obligation to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, and there shall be no offset against
amounts due Executive under this Agreement on account of any remuneration
attributable to any subsequent employment that Executive may obtain.


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|Section 14.  Disclosure and Assignment of Intellectual Property.


     (a)    Executive agrees that the
Company, and its successors and assigns shall own all right, title and interest
throughout the world in and to all research, information, inventions, designs,
procedures, developments, discoveries, improvements, patents and applications
therefor, trademarks and applications therefor, copyrights and applications
therefor, trade secrets, drawings, plans, systems, methods, specifications, and
all other manufacturing, engineering, technical, research and development data
and know-how (herein sometimes Intellectual Property) made,
conceived, developed and/or acquired by him solely or jointly with others during
the period of his employment with the Company or within one year thereafter,
which relate to the manufacture, production or processing of any products
developed or sold by the Company during the term of this Agreement or which are
within the scope of or usable in connection with the Companys business as
it may, from time to time, hereafter be conducted or proposed to be conducted,
whether or not made during my regular working hours and whether or not made on
the Companys premises.


     (b)    Executive agrees that any such
Intellectual Property shall constitute a work made for hire under the copyright
laws of the United States and, to the extent any such Intellectual Property
shall be determined not to be a work made for hire, Executive hereby assigns,
and, to the extent any such assignment cannot be made at the present time,
Executive hereby agrees to assign, to the Company all of my right, title and
interest throughout the world, including, without limitation, copyright, patent
and trade secret rights, in and to the Intellectual Property, together with
Executives right to file for and/or own wholly without restriction United
States and foreign patents, trademarks and copyrights with respect thereto.
Executive specifically agrees and acknowledges that the foregoing assignment
covers all results, outputs and products of his work for the Company prior to
January 1, 1997, whether as an employee or as a consultant, and all related
copyrights, patents and other proprietary rights, and that all such results,
outputs and products shall be Intellectual Property hereunder and the sole
property of the Company hereafter.


     (c)    Executive agrees to execute
all appropriate patent applications securing all United States and foreign
patents on all Intellectual Property, and to do, execute and deliver any and all
acts and instruments that may be necessary or proper to vest all Intellectual
Property in the Company or its nominee or designee and to enable the Company, or
its nominee or designee, to obtain all such patents; and Executive agrees to
render to the Company, or its nominee or designee, all such assistance as it may
require in the prosecution of all such patent applications and applications for
the re-issue of such patents, and in the prosecution or defense of all
interferences which may be declared involving any of said patent applications or
patents, but the expense of all such assignments and patent applications, or all
other proceedings referred to herein above, shall be borne by the Company.
Executive shall be entitled to fair and reasonable compensation for any such
assistance requested by the Company or its nominee or designee and furnished by
him after the termination of his employment. Executive shall make and maintain
adequate and current written records of all Intellectual Property, and Executive
shall disclose all Intellectual Property promptly, fully and in writing to the
Company immediately upon development of the same and at any time upon request.


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|Section 15.  
Confidentiality. Executive shall not, either during the period of his
employment with the Company or thereafter, reveal or disclose to any person
outside the Company or use for his own benefit, without the Companys
specific written authorization, whether by private communication or by public
address or publication or otherwise, any Confidential Information, as
hereinafter defined. The term Confidential Information as
used throughout this Agreement shall mean all trade secrets, proprietary
information and other data or information (and any tangible evidence, record or
representation thereof), whether prepared, conceived or developed by an employee
of the Company or received by the Company from an outside source, which is in
the possession of the Company (whether or not the property of the Company),
which in any way relates to the present or future business of the Company, which
is maintained in confidence by the Company, or which might permit the Company or
its customers to obtain a competitive advantage over competitors who do not have
access to such trade secrets, proprietary information, or other data or
information. All originals and copies of any of the foregoing, relating to the
business of the Company, however and whenever produced, shall be the sole
property of the Company, not to be removed from the premises or custody of the
Company without in each instance first obtaining written consent or
authorization of the Company. Upon the termination of Executives
employment in any manner or for any reason, Executive shall promptly surrender
to the Company all copies of any of the foregoing, together with any other
documents, materials, data, information and equipment belonging to or relating
to the Companys business and in his possession, custody or control, and
Executive shall not thereafter retain or deliver to any other person, any of the
foregoing or any summary or memorandum thereof.


     Section 16.  
Restriction. The Company has invested and may in the future be required
to invest substantial sums of money, directly or indirectly, to continue and
expand the business heretofore conducted by it and in connection therewith, and
as Executive recognizes that the Company would be substantially injured by
Executive disclosing to others, or by Executive using for his own benefit, any
Intellectual Property or any of the other types of information referred to in
Section 15 as Confidential Information, Executive agrees that during the
period of his employment hereunder and for a period ending twelve (12) months
after the term of this Agreement:


     (a)    He will not, directly or
indirectly, for his own account or as employee, officer, director, partner,
joint venturer or otherwise, engage within the United States or Canada, in any
phase of the business of manufacturing, distributing or selling of lasers for
use in medical or cosmetic procedures.


     (b)    Executive shall not solicit,
induce, attempt to hire, or hire any employee of the Company (or any other
person who may have been employed by the Company during the term of his
employment with the Company), or assist in such hiring by any other person or
business entity or encourage any such employee to terminate his or her
employment with the Company.


     Executive and the Company are of
the belief that the period of time, the geographic area and the range of
activities limited by this Section 16 are reasonable, in view of the
nature of the business in which the Company is engaged and proposes to engage,
the state of its product development and Executives knowledge of this
business. However, if such period, or range of activities area should be
adjudged unreasonable in any judicial proceeding, then the period of time shall
be reduced by such number of months, such area shall be reduced by elimination
of such portion of such area, and/or such range of activities shall be reduced
by elimination of such activities, as are deemed unreasonable, so that this
covenant may be enforced in such area and during such period of time as is
adjudged to be reasonable.


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|Section 17.   Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been given when delivered or three (3) days after mailing if
mailed by first-class, registered or certified mail, postage prepaid, addressed
(a) if to Executive, at the address set forth below his name on the signature
page hereof, or to such other person(s) or addresses) as Executive shall have
furnished to the Company in writing; and (b) if to the Company, at 82 Cambridge
Street, Burlington, MA 01803, Attn: Human Resource Department, with a copy to
General Counsel, Palomar Medical Technologies, Inc., 82 Cambridge Street,
Burlington, MA 01803, or to such other person(s) or addresses as the Company
shall have furnished to Executive in writing.


     Section 18.  
Assignability. In the event that the Company shall be merged with, or
consolidated into, any other corporation, or in the event that it shall sell and
transfer substantially all of its assets to another corporation, the terms of
this Agreement shall inure to the benefit of, and be assumed by, the corporation
resulting from such merger or consolidation, or to which the Companys
assets shall be sold and transferred. This Agreement shall not be assignable by
Executive, but it shall be binding upon, and shall inure to the benefit of, his
heirs, executors, administrators and legal representatives.


     Section 19.   Entire
Agreement. This Agreement contains the entire agreement between the Company
and Executive with respect to the subject matter hereof and there have been no
oral or other agreements of any kind whatsoever as a condition precedent or
inducement to the signing of this Agreement or otherwise concerning this
Agreement or the subject matter hereof. This Agreement is given in consideration
for the parties agreeing that this Agreement supersedes all previous Employment
Agreements and Severance Agreements that might have been in effect at the time
of this Agreement by and between the Executive and the Company and/or its
subsidiaries.


     Section 20.  Expenses.  The Company shall pay to the Executive all reasonable  legal and arbitration  fees
and expenses  incurred by the Executive in obtaining or enforcing any right or benefit  provided by this Agreement,
except in cases involving frivolous or bad faith litigation.


     Section 21.   Equitable
Relief. Executive recognizes and agrees that the Companys remedy at
law for any breach of the provisions of Sections 15, 16 or 17
hereof would be inadequate, and he agrees that for breach of such provisions,
the Company shall, in addition to such other remedies as may be available to it
at law or in equity or as provided in this Agreement, be entitled to injunctive
relief and to enforce its rights by an action for specific performance to the
extent permitted by law.


     Section 22.   Waivers and
Further Agreements. Any waiver of any terms or conditions of this Agreement
shall not operate as a waiver of any other breach of such terms or conditions or
any other term or condition, nor shall any failure to enforce any provision
hereof operate as a waiver of such provision or of any other provision hereof;
provided, however, that no such written waiver, unless it, by its own terms,
explicitly provides to the contrary, shall be construed to effect a continuing
waiver of the provision being waived and no such waiver in any instance shall
constitute a waiver in any other instance or for any other purpose or impair the
right of the party against whom such waiver is claimed in all other instances or
for all other purposes to require full compliance with such provision. Each of
the parties hereto agrees to execute all such further instruments and documents
and to take all such further action as the other party may reasonably require in
order to effectuate the terms and purposes of this Agreement.


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|Section 23.  
Amendments. This Agreement may not be amended, nor shall any waiver,
change, modification, consent or discharge be effected except by an instrument
in writing executed by or on behalf of the party against whom enforcement of any
waiver, change, modification, consent or discharge is sought.


     Section 24.  
Severability. If any provision of this Agreement shall be held or deemed
to be, or shall in fact be, invalid, inoperative or unenforceable as applied to
any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflicting of any provision with
any constitution or statute or rule of public policy or for any other reason,
such circumstance shall not have the effect of rendering the provision or
provisions in question, invalid, inoperative or unenforceable in any other
jurisdiction or in any other case or circumstance or of rendering any other
provision or provisions herein contained invalid, inoperative or unenforceable
to the extent that such other provisions are not themselves actually in conflict
with such constitution, statute or rule of public policy, but this Agreement
shall be reformed and construed in any such jurisdiction or case as if such
invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted in such jurisdiction or in such case.


     Section 25.  
Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument, and in pleading or proving any provision
of this Agreement, it shall not be necessary to produce more than one of such
counterparts.


     Section 26.  
The headings  contained in this Agreement are for reference  purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.


     Section 27.   General Provisions.



     (a)     Executive further agrees that
his obligations under Sections 15, 16 and 17 of this Agreement
shall be binding upon him irrespective of the duration of his employment by the
Company, the reasons for any cessation of his employment by the Company, or the
amount of his compensation and shall survive the termination of this Agreement
(whether such termination is by the Company, by Executive, upon expiration of
this Agreement or otherwise).


     (b)     Executive represents and
warrants to the Company that he is not now under any obligations to any person,
firm or corporation, and has no other interest which is inconsistent or in
conflict with this Agreement, or which would prevent, limit or impair, in any
way, the performance by him of any of the covenants or his duties in his said
employment.


     Section 28.   Gender.  Whenever  used herein,  the singular  number  shall  include the plural,  the plural
 shall include the singular, and the use of any gender shall include all genders.


     Section  29.  Governing  Law.  This  Agreement  shall  be  governed  by  and  construed  and  enforced  in
     accordance  with  the law  (other  than  the law  governing  conflict  of law  questions)  of the  Commonwealth  of
Massachusetts.


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|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|IN WITNESS WHEREOF, the parties
have executed or caused to be executed this Agreement as of the date first above
written.
|-------------------------------------------------------------------------------------------------------------------------

| | PALOMAR MEDICAL TECHNOLOGIES, INC.
                               (Registrant) | 
| | ------------------------------------------------------------------------------ | 
| | By: /s/ Louis P. Valente                                         | 
| | Name: Louis P. Valente                                           | 
| | Title: Chief Executive Officer                                   | 
|

|BY PLACING MY SIGNATURE HEREUNDER,
I ACKNOWLEDGE THAT I HAVE READ ALL THE PROVISIONS OF THIS AGREEMENT AND THAT I
AGREE TO ALL OF ITS TERMS.
|--------------------------------------------------------------------------------------------------------------------------------------------

| |                                               | 
| | --------------------------------------------- | 
| | EXECUTIVE: /s/ Joseph P. Caruso | 
| | Notice Address:                 | 
| |                                 | 

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