EXHIBIT 10(yy)

                                                                      Annex IV
                                                                         to
                                                                    Subscription
                                                                      Agreement

                          REGISTRATION RIGHTS AGREEMENT


         THIS  REGISTRATION  RIGHTS  AGREEMENT,  dated as of September  26, 1996
(this "Agreement"), is made by and between PALOMAR MEDICAL TECHNOLOGIES, INC., a
Delaware corporation (the "Company"), and the person named on the signature page
hereto (the "Initial Investor").

                              W I T N E S S E T H:


         WHEREAS,  in connection with the  Subscription  Agreement,  dated as of
September  26,  1996,   between  the  Initial  Investor  and  the  Company  (the
"Subscription Agreement"), the Company has agreed, upon the terms and subject to
the conditions of the Subscription  Agreement,  to issue and sell to the Initial
Investor an aggregate  of 10,000  shares (the  "Preferred  Shares") of preferred
stock of the Company as provided in the Subscription Agreement,  which shares of
Preferred Stock are convertible into shares (the "Conversion  Shares") of Common
Stock,  $.01 par  value  per share  (the  "Common  Stock"),  and  warrants  (the
"Warrants")  to purchase  shares (the  "Warrant  Shares" and,  together with the
Conversion Shares, the "Shares") of Common Stock; and


         WHEREAS,  to induce the  Initial  Investor  to execute  and deliver the
Subscription  Agreement,  the Company has agreed to provide certain registration
rights  under  the  Securities  Act of  1933,  as  amended,  and the  rules  and
regulations  thereunder,  or any similar  successor statute  (collectively,  the
"Securities  Act"),  and applicable  state  securities  laws with respect to the
Shares;


         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 Company and the
Initial Investor hereby agree as follows:


         1. DEFINITIONS.


         (a) As used in this  Agreement,  the  following  terms  shall  have the
following meanings:


         (i)  "Investor"  means  the  Initial  Investor  and any  transferee  or
assignee  who agrees to become  bound by the  provisions  of this  Agreement  in
accordance with Section 9 hereof.


         (ii)  "register,"   "registered,"   and   "registration"   refer  to  a
registration  effected  by  preparing  and filing a  Registration


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Statement or Statements in compliance  with the  Securities  Act and pursuant to
Rule 415 under the  Securities  Act or any successor rule providing for offering
securities on a continuous  basis ("Rule 415"),  and the declaration or ordering
of effectiveness of such Registration  Statement by the United States Securities
and Exchange Commission (the "SEC").


         (iii)  "Registrable  Securities"  means the  Shares  and any  shares of
Common  Stock  issued  by the  Company  to any  Investor  as a  dividend  on the
Preferred Shares.


         (iv)  "Registration  Statement"  means a registration  statement of the
Company under the Securities Act.


         (b) As used in this  Agreement,  the term  Investor  includes  (i) each
Investor (as defined  above) and (ii) each person who is a permitted  transferee
or  assignee  of the  Registrable  Securities  pursuant  to  Section  9 of  this
Agreement.


         (c)  Capitalized  terms  defined in the  introductory  paragraph or the
recitals to this Agreement shall have the respective  meanings therein provided.
Capitalized  terms used herein and not otherwise  defined  herein shall have the
respective meanings set forth in the Subscription Agreement.


         2. REGISTRATION.


         (A) MANDATORY  REGISTRATION.  The Company shall (i) prepare,  and on or
prior to December 1, 1996,  file with the SEC a  Registration  Statement on Form
S-3  covering  the  resale  of at  least  770,000  shares  of  Common  Stock  as
Registrable  Securities  (ii)  prepare,  and on or prior to January 1, 1997 file
with the SEC a  Registration  Statement  on Form S-3  covering  the resale of at
least  1,160,000  shares of Common Stock as  Registrable  Securities,  and which
Registration  Statements shall state that, in accordance with Rule 416 under the
Securities  Act,  such  Registration  Statements  also cover such  indeterminate
number  of  additional  shares  of  Common  Stock as may  become  issuable  upon
conversion  of the  Preferred  Shares and  exercise  of the  Warrants to prevent
dilution resulting from stock splits, stock dividends or similar transactions or
by reason of changes in the  conversion  price of the  Preferred  Shares and the
exercise price of the Warrants in accordance with the respective  terms thereof.
If at any time  after  January  1, 1997 the  number of  shares  included  in the
Registration  Statements  required to be filed as provided in the first sentence
of this Section 2(a) shall not be  sufficient  to cover the resale of the number
of shares of Common  Stock  issuable on  conversion  in full of the  unconverted
Preferred Shares and the unexercised  Warrants,  then promptly,  but in no event
later than 15 days after such insufficiency  shall occur, the Company shall file
with the SEC an additional  Registration  Statement on Form S-3 (which shall not
constitute a

                                      -2-






post-effective  amendment  to any  Registration  Statement  required to be filed
pursuant to the first  sentence of this  Section 2(a) or other  applicable  form
covering  such number of shares of Common Stock as shall be  sufficient to cover
the resale of the shares  acquired upon such  conversion  and exercise.  For all
purposes of this  Agreement  (other than Section  2(c)  hereof) such  additional
Registration Statement shall be deemed to be the Registration Statement required
to be filed by the Company  pursuant to this  Section  2(a) (i) or (ii),  as the
case may be, and the  Company and the  Investors  shall have the same rights and
obligations  (other than Section  2(c)  hereof) with respect to such  additional
Registration   Statement  as  they  shall  have  with  respect  to  the  initial
Registration  Statement  required  to be filed by the  Company  pursuant to this
Section 2(a)(i) or (ii), as the case may be.


         (B) CERTAIN  OFFERINGS.  If any  offering  pursuant  to a  Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors who hold a majority in interest of the Registrable  Securities subject
to such  underwritten  offering shall have the right to select one legal counsel
and an investment  banker or bankers and manager or managers to  administer  the
offering,  which  investment  banker or bankers or manager or managers  shall be
reasonably  satisfactory to the Company.  The Investors who hold the Registrable
Securities  to be  included  in such  underwriting  shall  pay all  underwriting
discounts and commissions and other fees and expenses of such investment  banker
or bankers and manager or managers so selected in  accordance  with this Section
2(b)  (other than fees and  expenses  relating to  registration  of  Registrable
Securities  under  federal or state  securities  laws,  which are payable by the
Company  pursuant  to  Section  5  hereof)  with  respect  to their  Registrable
Securities  and the fees and  expenses of such legal  counsel so selected by the
Investors.

         (C)  ADJUSTMENT IN CONVERSION  PRICE.  If the  Registration  Statements
covering the Registrable Securities required to be filed by the Company pursuant
to Section 2(a) hereof are not effective (i) on or before  December 31, 1996, in
case of the  Registration  Statement  to be filed  pursuant  to Section  2(a)(i)
hereof  or (ii) on or  before  January  31,  1997,  in case of the  Registration
Statement to be filed pursuant to Section 2(a)(ii)  hereof,  then the conversion
price of the Preferred  Shares shall be adjusted as provided in the  Certificate
of Designations for the Preferred Shares.


         (D)  PIGGY-BACK  REGISTRATIONS.  If  at  any  time  the  Company  shall
determine to prepare and file with the SEC a Registration  Statement relating to
an offering  for its own account or the account of others  under the  Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in 

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connection with any  acquisition of any entity or business or equity  securities
issuable in connection  with stock option or other employee  benefit plans,  the
Company  shall send to each  Investor,  who is entitled to  registration  rights
under this  Section  2(a) written  notice of such  determination  and, if within
twenty (20) days after receipt of such notice, such Investor shall so request in
writing,  the Company  shall include in such  Registration  Statement all or any
part of the  Registrable  Securities  such Investor  requests to be  registered,
except that if, in  connection  with any  underwritten  public  offering for the
account of the  Company  the  managing  underwriter(s)  thereof  shall  impose a
limitation  on the number of shares of Common Stock which may be included in the
Registration   Statement  because,  in  such  underwriter(s)'   judgment,   such
limitation  is  necessary  to effect an orderly  public  distribution,  then the
Company shall be obligated to include in such  Registration  Statement only such
limited  portion  of the  Registrable  Securities  with  respect  to which  such
Investor  has  requested  inclusion  hereunder.  Any  exclusion  of  Registrable
Securities  shall  be made pro rata  among  the  Investors  seeking  to  include
Registrable  Securities,  in proportion to the number of Registrable  Securities
sought to be included by such  Investors;  provided,  however,  that the Company
shall not  exclude  any  Registrable  Securities  unless the  Company  has first
excluded  all  outstanding  securities  the holders of which are not entitled by
right to inclusion of securities in such  Registration  Statement;  and provided
further,  however,  that,  after  giving  effect  to the  immediately  preceding
proviso,  any exclusion of  Registrable  Securities  shall be made pro rata with
holders of other  securities  having the right to include such securities in the
Registration Statement. No right to registration of Registrable Securities under
this Section 2(d) shall be construed to limit any  registration  required  under
Section 2(a) hereof.  The obligations of the Company under this Section 2(d) may
be waived by  Investors  holding  a  majority  in  interest  of the  Registrable
Securities and shall expire after the Company has afforded the  opportunity  for
the  Investors to exercise  registration  rights under this Section 2(d) for two
registrations;  provided,  however,  that any  Investor  who shall  have had any
Registrable  Securities  excluded from any Registration  Statement in accordance
with  this  Section  2(d)  shall  be  entitled  to  include  in  an   additional
Registration  Statement  filed by the  Company  the  Registrable  Securities  so
excluded.  Notwithstanding  any  other  provision  of  this  Agreement,  if  the
Registration  Statements  required to be filed  pursuant to Section 2(a) of this
Agreement  shall  have been  ordered  effective  by the SEC and  thereafter  the
Company shall have complied in all material  respects with its obligations under
this  Agreement  in respect of such  Registration  Statements,  then the Company
shall  not  be  obligated  to  register  any   Registrable   Securities  on  any
Registration Statement referred to in this Section 2(d).

         (E) ELIGIBILITY FOR FORM S-3. The Company  represents

                                      -4-





and  warrants  that it  meets  the  requirements  for  the  use of Form  S-3 for
registration  of the  sale  by the  Initial  Investor  and any  Investor  of the
Registrable  Securities  and the Company  shall file all reports  required to be
filed by the  Company  with the SEC in a timely  manner so as to  maintain  such
eligibility for the use of Form S-3.


         3.  OBLIGATIONS OF THE COMPANY.  In connection with the registration of
the Registrable Securities, the Company shall:


         (a) use its best efforts to cause each Registration  Statement relating
to  Registrable  Securities to become  effective as soon as possible  after such
Registration  Statement  is  filed  with the  SEC,  and  keep  the  Registration
Statement  effective pursuant to Rule 415 at all times until the later of (1) in
the case of any Registrable Securities, the earlier of (i) such date as is three
years after the date such  Registration  Statement is first ordered effective by
the SEC and (ii) the date on which all Registrable  Securities have been sold by
the Investors under circumstances in which the buyers may resell the Registrable
Securities without registration under the Securities Act and, (2) in the case of
Registrable  Securities that are Warrant Shares, the later of (i) the date which
is three  years  after the date such  Registration  Statement  if first  ordered
effective  by the SEC  (but in no  event  later  than  the  date  on  which  all
Registrable  Securities  that are Warrant Shares have been sold by the Investors
under  circumstances  in which the buyers may resell the Registrable  Securities
that are Warrant Shares without  registration under the Securities Act), in case
the Warrants  have been  exercised in full on a net exercise  basis and (ii) the
date which is three years after the latest  exercise  of the  Warrants  for cash
(but in no event later than the date on which all  Registrable  Securities  that
are Warrant Shares have been sold by the Investors under  circumstances in which
the buyers may resell the Registrable Securities that are Warrant Shares without
registration  under  the  Securities  Act)  (the  "Termination   Date"),   which
Registration  Statement  (including any  amendments or  supplements  thereto and
prospectuses  contained  therein)  shall not contain any untrue  statement  of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading;


         (b)  prepare  and  file  with  the  SEC  such   amendments   (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus  used  in  connection  with  the  Registration  Statement  as  may be
necessary to keep the  Registration  Statement  effective at all times until the
Termination  Date,  and,  during such period,  comply with the provisions of the
Securities Act with respect to the disposition of all Registrable  Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable  Securities  have been

                                      -5-




disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof as set forth in the Registration Statement;


         (c) furnish to each Investor whose Registrable  Securities are included
in the Registration Statement and its legal counsel, (1) promptly after the same
is  prepared  and  publicly  distributed,  filed with the SEC or received by the
Company, one copy of the Registration  Statement and any amendment thereto, each
preliminary  prospectus and prospectus and each amendment or supplement thereto,
each  letter  written by or on behalf of the  Company to the SEC or the staff of
the SEC and each  item of  correspondence  from the SEC or the  staff of the SEC
relating to such  Registration  Statement (other than any portion of any thereof
which  contains  information  for  which the  Company  has  sought  confidential
treatment)  and  (2)  such  number  of  copies  of  a  prospectus,  including  a
preliminary  prospectus,  and all  amendments and  supplements  thereto and such
other documents,  as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;


         (d) use reasonable  efforts to (i) register and qualify the Registrable
Securities covered by the Registration  Statement under such other securities or
blue sky laws of such  jurisdictions  as the  Investors  who hold a majority  in
interest of the Registrable  Securities being offered reasonably  request,  (ii)
prepare   and   file  in  those   jurisdictions   such   amendments   (including
post-effective   amendments)   and   supplements  to  such   registrations   and
qualifications as may be necessary to maintain the effectiveness  thereof at all
times  until the  Termination  Date,  (iii)  take such  other  actions as may be
necessary to maintain such  registrations  and  qualifications  in effect at all
times  until the  Termination  Date and (iv) take all other  actions  reasonably
necessary or advisable to qualify the  Registrable  Securities  for sale in such
jurisdictions;  provided,  however,  that the  Company  shall not be required in
connection  therewith or as a condition thereto to (I) qualify to do business in
any  jurisdiction  where it would not  otherwise  be required to qualify but for
this  Section  3(d),  (II)  subject  itself  to  general  taxation  in any  such
jurisdiction,  (III)  file a general  consent  to service of process in any such
jurisdiction, (IV) provide any undertakings that cause more than nominal expense
or burden to the Company or (V) make any change in its charter or by-laws, which
in each case the Board of Directors of the Company  determines to be contrary to
the best interests of the Company and its stockholders;


         (e) in the event  Investors  who hold a  majority  in  interest  of the
Registrable Securities being offered in the offering select underwriters for the
offering,   enter  into  and  perform  its  obligations  under  an  underwriting
agreement, in usual and customary form, including, without limitation, customary


                                      -6-




indemnification  and  contribution  obligations,  with the  underwriters of such
offering;


         (f) (i) as promptly as practicable  after becoming aware of such event,
notify  each  Investor  of the  happening  of any event of which the Company has
knowledge,  as a result of which the  prospectus  included  in the  Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material  fact  required to be stated  therein or  necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading,  and use its best efforts promptly to prepare a supplement
or amendment to the  Registration  Statement to correct such untrue statement or
omission,  and deliver such number of copies of such  supplement or amendment to
each Investor as such Investor may reasonably request;


         (ii) If at the time the Company  notifies the Investors as contemplated
by Section 3(f)(i):  (1) the Registration  Statement required by Section 2(a)(i)
or (ii), as the case may be, of this Agreement  shall have been effective for at
least 90  consecutive  days and (2) the Company  shall be in  compliance  in all
material  respects with its obligations  under this Agreement,  the terms of the
Preferred  Shares  and the  Warrants  and such event  relates  to a  prospective
development of the Company,  then the Company shall not be required to make such
amendment or supplement prior to five days after such notice; provided, however,
that the Company may not invoke the provisions of this Section 3(f)(ii) until at
least 50 days after the Company shall have previously invoked such provisions;


         (iii) If at the time the Company notifies the Investors as contemplated
by Section 3(f)(i):  (1) the Registration  Statement required by Section 2(a)(i)
or (ii), as the case may be, of this Agreement shall not have been effective for
at least 90  consecutive  days and (2) the Company shall be in compliance in all
material  respects with its obligations  under this Agreement,  the terms of the
Preferred  Shares  and the  Warrants  and such event  relates  to a  prospective
development of the Company,  then the Company shall not be required to make such
amendment or supplement  prior to ten trading days after such notice;  provided,
however,  that  the  Company  may not  invoke  the  provisions  of this  Section
3(f)(iii)  until at least 30 days after the end of the most recent period during
which the Company shall have previously  invoked such  provisions;  and provided
further,  however,  that any period  during  which the  Company  has invoked the
provisions  of this  Section  3(f)(iii)  shall,  regardless  of when such period
actually  shall occur,  be treated as if it were a period  subsequent to 90 days
after the Closing Date during which such  Registration  Statement had not become
effective  for the  purposes  of Section 9 of the  Certificate  of  Designations
relating to the Preferred  Shares (the  "Certificate of  Designations")  and the
Conversion Percentage (as defined in the

                                      -7-




Certificate  of  Designations)  applicable  to the  Preferred  Shares  shall  be
adjusted as provided in such Section 9 in respect of the period during which the
Company has invoked the  provisions  of this Section  3(f)(iii).  In lieu of any
such adjustment of the Conversion  Percentage (as so defined)  applicable to the
Preferred Shares, the Company shall have the right, exercisable by notice to the
Initial  Investor  given not later  than the date the  Company  gives  notice as
contemplated  by Section  3(f)(i),  to make payments to the Initial  Investor in
U.S.  dollars in such amounts and at such times as shall be determined  pursuant
to this Section  3(f)(iii).  The amount to be paid by the Company to the Initial
Investor  shall be paid at the rate of two percent (2%) per 30-day period of the
aggregate  purchase price paid by the Initial  Investor for the Preferred Shares
purchased by the Initial  Investor  pursuant to the  Subscription  Agreement for
each period  during  which,  in  accordance  with this Section  3(f)(iii),  such
Registration  Statement is  unavailable  for use by the  Investors.  Such amount
shall  be paid by the  Company  in  immediately  available  funds  within  three
business days after each such period;


         (g) as  promptly as  practicable  after  becoming  aware of such event,
notify each  Investor who holds  Registrable  Securities  being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the  SEC  of  any  stop  order  or  other  suspension  of  effectiveness  of the
Registration Statement at the earliest possible time;


         (h) permit a single firm of counsel designated as selling stockholders'
counsel by the  Investors  who hold a majority in  interest  of the  Registrable
Securities  being sold to review the  Registration  Statement and all amendments
and supplements  thereto a reasonable  period of time prior to their filing with
the SEC,  and  shall  not  file any  document  in a form to which  such  counsel
reasonably objects;


         (i)  make  generally  available  to its  security  holders  as  soon as
practical,  but not later  than  ninety  (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the Securities Act) covering a twelve-month  period beginning not
later than the first day of the  Company's  fiscal  quarter next  following  the
effective date of the Registration Statement;


         (j) at the request of the  Investors who hold a majority in interest of
the  Registrable  Securities  being sold,  furnish on the date that  Registrable
Securities  are  delivered to an  underwriter  for sale in  connection  with the
Registration  Statement  (i) a  letter,  dated  such  date,  from the  Company's
independent certified public accountants in form and substance as is customarily
given  by  independent  certified  public  accountants  to  underwriters  in  an
underwritten  public  offering,  addressed  to the 

                                      -8-



underwriters;  and (ii) an opinion,  dated such date, from counsel  representing
the Company for purposes of such Registration  Statement,  in form and substance
as is customarily  given in an underwritten  public  offering,  addressed to the
underwriters and the Investors;


         (k) make  available for  inspection by any  Investor,  any  underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant or other agent retained by any such Investor or underwriter
(collectively,  the  "Inspectors"),  all pertinent  financial and other records,
pertinent corporate documents and properties of the Company  (collectively,  the
"Records"),  as shall be  reasonably  necessary  to  enable  each  Inspector  to
exercise its due diligence  responsibility,  and cause the  Company's  officers,
directors  and  employees  to supply all  information  which any  Inspector  may
reasonably request for purposes of such due diligence;  provided,  however, that
each  Inspector  shall  hold in  confidence  and shall  not make any  disclosure
(except to an  Investor)  of any Record or other  information  which the Company
determines  in good faith to be  confidential,  and of which  determination  the
Inspectors  are so  notified,  unless  (i) the  disclosure  of such  Records  is
necessary  to avoid or correct a  misstatement  or omission in any  Registration
Statement, (ii) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government  body of competent  jurisdiction or (iii)
the information in such Records has been made generally  available to the public
other  than by  disclosure  in  violation  of this or any other  agreement.  The
Company shall not be required to disclose any  confidential  information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality  agreements (in form and substance  satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this Section
3(k). Each Investor agrees that it shall,  upon learning that disclosure of such
Records  is  sought  in  or  by  a  court  or  governmental  body  of  competent
jurisdiction or through other means, give prompt notice to the Company and allow
the  Company,  at its  expense,  to  undertake  appropriate  action  to  prevent
disclosure  of,  or to  obtain  a  protective  order  for,  the  Records  deemed
confidential.  The  Company  shall  hold in  confidence  and  shall not make any
disclosure  of  information  concerning  an  Investor  provided  to the  Company
pursuant to Section 4(e) hereof  unless (i)  disclosure of such  information  is
necessary to comply with federal or state  securities  laws, (ii) the disclosure
of such  information is necessary to avoid or correct a misstatement or omission
in any Registration Statement,  (iii) the release of such information is ordered
pursuant  to a  subpoena  or other  order from a court or  governmental  body of
competent  jurisdiction  or  (iv)  such  information  has  been  made  generally
available  to the public  other than by  disclosure  in violation of this or any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning an Investor is sought in or by a court

                                       -9-




or  governmental  body of competent  jurisdiction  or through other means,  give
prompt notice to such Investor,  at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information;


         (l) use its  best  efforts  either  to (i)  cause  all the  Registrable
Securities  covered  by the  Registration  Statement  to be listed on a national
securities exchange and on each additional national securities exchange on which
securities of the same class or series issued by the Company are then listed, if
any, if the listing of such  Registrable  Securities is then permitted under the
rules  of  such  exchange  or (ii)  secure  designation  of all the  Registrable
Securities  covered by the Registration  Statement as a National  Association of
Securities  Dealers  Automated  Quotations  System  ("NASDAQ")  "national market
system  security"  within  the  meaning  of Rule  11Aa2-1  of the SEC  under the
Securities  Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and the
quotation of the Registrable Securities on the NASDAQ National Market System or,
if,  despite the Company's  best efforts to satisfy the preceding  clause (i) or
(ii),  the Company is  unsuccessful  in satisfying  the preceding  clause (i) or
(ii),  to  secure   listing  on  a  national   securities   exchange  or  NASDAQ
authorization  and  quotation  for  such  Registrable  Securities  and,  without
limiting the  generality  of the  foregoing,  to arrange for at least two market
makers to register with the National  Association  of Securities  Dealers,  Inc.
("NASD") as such with respect to such Registrable Securities;


         (m)  provide  a  transfer  agent and  registrar,  which may be a single
entity, for the Registrable  Securities not later than the effective date of the
Registration Statement;


         (n) cooperate with the Investors who hold Registrable  Securities being
offered and the managing underwriter or underwriters,  if any, to facilitate the
timely  preparation  and delivery of  certificates  (not bearing any restrictive
legends)  representing  Registrable  Securities  to be offered  pursuant  to the
Registration  Statement and enable such certificates to be in such denominations
or amounts as the case may be, as the managing  underwriter or underwriters,  if
any, or the Investors may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may request; and,
within  three  business  days  after a  Registration  Statement  which  includes
Registrable  Securities  is ordered  effective  by the SEC,  the  Company  shall
deliver,  and shall cause legal counsel  selected by the Company to deliver,  to
the transfer agent for the Registrable  Securities (with copies to the Investors
whose  Registrable  Securities are included in such  Registration  Statement) an
instruction  in the form  attached  hereto  as  EXHIBIT 1  (without  substantive
additions thereto) and an opinion of such counsel in the form attached hereto as
EXHIBIT 2 (without substantive additions thereto); and

                                      -10-




         (o) take  all  other  reasonable  actions  necessary  to  expedite  and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.


         4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:


         (a) It shall be a condition precedent to the obligations of the Company
to complete  the  registration  pursuant to this  Agreement  with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information  regarding  itself,  the Registrable  Securities
held by it and the intended method of disposition of the Registrable  Securities
held by it as shall be reasonably  required to effect the  registration  of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably  request.  Promptly after the Company
furnishes to an Investor a draft of the  Registration  Statement as contemplated
by Section  3(h),  such  Investor  shall  complete  and submit to the Company an
Investor  Questionnaire  in the form attached hereto as EXHIBIT 3. Each Investor
will  notify the  Company  promptly of any  material  change in the  information
provided by such Investor in its Investor  Questionnaire (other than a change in
beneficial  ownership  of  securities  as  a  result  of  sales  of  Registrable
Securities pursuant to such Registration  Statement).  If the Company shall have
furnished such draft of the Registration  Statement to an Investor and, at least
one (1)  business  day prior to the filing date the Company has not received the
Investor  Questionnaire from such Investor (a "Non-Responsive  Investor"),  then
the Company may file the Registration  Statement without  including  Registrable
Securities of such Non-Responsive Investor;


         (b) Each  Investor by such  Investor's  acceptance  of the  Registrable
Securities  agrees to cooperate with the Company as reasonably  requested by the
Company  in  connection  with the  preparation  and  filing of the  Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such  Investor's  election  to  exclude  all  of  such  Investor's   Registrable
Securities from the Registration Statement;


         (c) In the  event  Investors  holding a  majority  in  interest  of the
Registrable  Securities being registered  determine to engage the services of an
underwriter,  each  Investor  agrees to enter into and perform  such  Investor's
obligations  under an  underwriting  agreement,  in usual  and  customary  form,
including,  without  limitation,   customary  indemnification  and  contribution
obligations,  with the managing underwriter of such offering and take such other
actions as are  reasonably  required  in order to  expedite  or  facilitate  the
disposition of the Registrable Securities, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such 

                                      -11-



Investor's Registrable Securities from the Registration Statement;

         (d) Each  Investor  agrees  that,  upon  receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(f) or
3(g),  such Investor will  immediately  discontinue  disposition  of Registrable
Securities  pursuant to the  Registration  Statement  covering such  Registrable
Securities  until such Investor's  receipt of the copies of the  supplemented or
amended  prospectus  contemplated by Section 3(f) or 3(g) and, if so directed by
the Company,  such Investor  shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a  certificate  of  destruction)
all  copies in such  Investor's  possession,  of the  prospectus  covering  such
Registrable Securities current at the time of receipt of such notice;


         (e)  No  Investor  may  participate  in any  underwritten  registration
hereunder  unless such Investor (i) agrees to sell such  Investor's  Registrable
Securities on the basis provided in any  underwriting  arrangements  approved by
the Investors entitled  hereunder to approve such  arrangements,  (ii) completes
and executes all questionnaires,  powers of attorney, indemnities,  underwriting
agreements  and  other  documents  reasonably  required  under the terms of such
underwriting  arrangements  and (iii)  agrees  to pay its pro rata  share of all
underwriting discounts and commissions and other fees and expenses of investment
bankers and any manager or managers of such  underwriting  and legal expenses of
the underwriters applicable with respect to its Registrable Securities,  in each
case to the extent  not  payable by the  Company  pursuant  to the terms of this
Agreement;


         (f) Each  Investor  whose  Registrable  Securities  are  included  in a
Registration  Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant to
such Registration Statement and each such Investor shall use its reasonable best
efforts to comply with the applicable  prospectus  delivery  requirements of the
Securities Act in connection with any such sale; and


         (g) Each Investor agrees to notify the Company  promptly after the date
on which all  Registrable  Securities  owned by such  Investor have been sold by
such Investor, if such date is prior to the Termination Date.


         5.  EXPENSES OF  REGISTRATION.  All expenses,  other than  underwriting
discounts and commissions and other fees and expenses of investment  bankers and
other than brokerage  commissions,  incurred in connection  with  registrations,
filings or qualifications pursuant to Section 3, including,  without limitation,
all registration,  listing and qualifications fees,


                                      -12-




printers and accounting fees and the fees and  disbursements  of counsel for the
Company and the  Investors,  shall be borne by the Company;  provided,  however,
that the  Investors  shall bear the fees and  out-of-pocket  expenses of the one
legal counsel selected by the Investors pursuant to Section 2(b) hereof.


         6.  INDEMNIFICATION.  In  the  event  any  Registrable  Securities  are
included in a Registration Statement under this Agreement:


         (a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities,  the directors, if
any, of such Investor,  the officers, if any, of such Investor,  each person, if
any, who controls any Investor  within the meaning of the  Securities Act or the
Exchange  Act,  any  underwriter  (as  defined  in the  Securities  Act) for the
Investors,  the directors, if any, of such underwriter and the officers, if any,
of such underwriter,  and each person, if any, who controls any such underwriter
within  the  meaning  of the  Securities  Act  or the  Exchange  Act  (each,  an
"Indemnified  Person"),   against  any  losses,  claims,  damages,  expenses  or
liabilities (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar  as such  Claims  (or  actions  or  proceedings,  whether  commenced  or
threatened,  in  respect  thereof)  arise  out of or are  based  upon any of the
following statements,  omissions or violations in the Registration Statement, or
any post-effective  amendment thereof, or any prospectus  included therein:  (i)
any untrue statement or alleged untrue statement of a material fact contained in
the  Registration  Statement  or any  post-effective  amendment  thereof  or the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements therein not misleading,  (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any  preliminary  prospectus  if  used  prior  to the  effective  date  of  such
Registration  Statement,  or  contained in the final  prospectus  (as amended or
supplemented,  if the Company files any amendment thereof or supplement  thereto
with the SEC) or the omission or alleged  omission to state therein any material
fact  necessary  to  make  the  statements   made  therein,   in  light  of  the
circumstances  under which the  statements  therein were made, not misleading or
(iii) any violation or alleged  violation by the Company of the Securities  Act,
the Exchange Act, any state  securities law or any rule or regulation  under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing clauses (i) through (iii) being, collectively,  "Violations"). Subject
to the  restrictions  set forth in  Section  6(d) with  respect to the number of
legal  counsel,  the  Company  shall  reimburse  the  Investors  and  each  such
underwriter  or controlling  person,  promptly as such expenses are incurred and
are due and payable, for any legal fees or other reasonable expenses incurred 

                                      -13-



by them in  connection  with   investigating   or  defending   any  such  Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement contained in this Section 6(a): (I) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information  furnished in writing to the Company by any Indemnified  Person
or underwriter for such Indemnified  Person expressly for use in connection with
the preparation of the Registration  Statement or any such amendment  thereof or
supplement  thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (II) with respect to any preliminary prospectus
shall not inure to the benefit of any such person from whom the person asserting
any such Claim purchased the Registrable Securities that are the subject thereof
(or  to the  benefit  of any  person  controlling  such  person)  if the  untrue
statement or omission of material fact contained in the  preliminary  prospectus
was  corrected  in the  prospectus,  as then  amended or  supplemented,  if such
prospectus  was timely made  available  by the Company  pursuant to Section 3(c)
hereof;  and (III) shall not apply to amounts paid in settlement of any Claim if
such  settlement is effected  without the prior written  consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect  regardless of any  investigation  made by or on behalf of
the  Indemnified  Person  and shall  survive  the  transfer  of the  Registrable
Securities by the Investors pursuant to Section 9.


         (b) In connection with any Registration  Statement in which an Investor
is participating,  each such Investor agrees to indemnify and hold harmless,  to
the same extent and in the same manner set forth in Section  6(a),  the Company,
each  of its  directors,  each  of  its  officers  who  signs  the  Registration
Statement,  each person,  if any, who controls the Company within the meaning of
the  Securities  Act  or  the  Exchange  Act,  any  underwriter  and  any  other
stockholder selling securities pursuant to the Registration  Statement or any of
its  directors  or  officers  or any person who  controls  such  stockholder  or
underwriter  within  the  meaning  of the  Securities  Act or the  Exchange  Act
(collectively and together with an Indemnified Person, an "Indemnified  Party"),
against any Claim to which any of them may become subject,  under the Securities
Act, the Exchange  Act or  otherwise,  insofar as such Claim arises out of or is
based upon any  Violation,  in each case to the extent  (and only to the extent)
that such  Violation  occurs in reliance  upon and in  conformity  with  written
information  furnished  to the  Company by such  Investor  expressly  for use in
connection with such  Registration  Statement;  and such Investor will reimburse
any legal or other  expenses  reasonably  incurred  by them in  connection  with
investigating or defending any such Claim; provided, however, that the indemnity
agreement  contained  in this  Section  6(b) shall not apply to amounts  paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such  Investor,  which  consent shall not be  unreasonably 

                                      -14-





withheld;  provided,  further,  however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim as does not exceed the amount,
if any, by which (1) the net  proceeds to such  Investor as a result of the sale
of Registrable Securities pursuant to such Registration Statement exceed (2) the
purchase price paid by such Investor for the Registrable Securities sold by such
Investor pursuant to such Registration Statement. Such indemnity shall remain in
full force and effect  regardless of any  investigation  made by or on behalf of
such  Indemnified  Party and  shall  survive  the  transfer  of the  Registrable
Securities by the Investors pursuant to Section 9.  Notwithstanding  anything to
the contrary contained herein, the  indemnification  agreement contained in this
Section 6(b) with respect to any preliminary  prospectus  shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary  prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.


         (c)  The  Company  shall  be  entitled  to  receive   indemnities  from
underwriters,  selling brokers,  dealer managers and similar securities industry
professionals participating in any distribution,  to the same extent as provided
above,  with respect to information such persons so furnished in writing by such
persons expressly for inclusion in the Registration Statement.


         (d) Promptly  after  receipt by an  Indemnified  Person or  Indemnified
Party  under  this  Section  6 of  notice  of the  commencement  of  any  action
(including any  governmental  action),  such  Indemnified  Person or Indemnified
Party  shall,  if a  Claim  in  respect  thereof  is  to  be  made  against  any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement thereof and the indemnifying party shall have
the right to  participate  in,  and,  to the  extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  parties;   provided,   however,  that  an  Indemnified  Person  or
Indemnified Party shall have the right to retain its own counsel,  with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel  retained  by the  indemnifying  party,  the  representation  by such
counsel of the  Indemnified  Person or  Indemnified  Party and the  indemnifying
party would be  inappropriate  due to actual or  potential  differing  interests
between  such  Indemnified  Person or  Indemnified  Party  and any  other  party
represented by such counsel in such  proceeding.  The Company shall pay for only
one  separate  legal  counsel for the  Investors;  such legal  counsel  shall be
selected by the  Investors  holding a majority  in  interest of the  Registrable
Securities  included in the  Registration  Statement to which the Claim relates.
The  failure  to  deliver  written  notice to the  indemnifying  party  within a
reasonable  time of the  commencement  of any such action shall not


                                      -15-




relieve such  indemnifying  party of any liability to the Indemnified  Person or
Indemnified  Party  under  this  Section  6,  except  to  the  extent  that  the
indemnifying  party is  prejudiced  in its  ability to defend such  action.  The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the  investigation  or defense,  as such
expense, loss, damage or liability is incurred and is due and payable.


         7. CONTRIBUTION.  To the extent any  indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable  under  Section  6 to the  fullest  extent  permitted  by law;  provided,
however,  that (a) no contribution shall be made under  circumstances  where the
maker would not have been liable for  indemnification  under the fault standards
set  forth in  Section  6, (b) no  seller of  Registrable  Securities  guilty of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities  who was not  guilty  of such  fraudulent  misrepresentation  and (c)
contribution by any seller of Registrable  Securities shall be limited in amount
to the net amount of  proceeds  received  by such  seller  from the sale of such
Registrable Securities.


         8. REPORTS UNDER  EXCHANGE ACT. With a view to making  available to the
Investors the benefits of Rule 144  promulgated  under the Securities Act or any
other  similar  rule or  regulation  of the SEC that may at any time  permit the
Investors to sell  securities of the Company to the public without  registration
("Rule 144"), the Company agrees to:


         (a) make and keep  public  information  available,  as those  terms are
understood and defined in Rule 144;


         (b)  file  with  the SEC in a  timely  manner  all  reports  and  other
documents required of the Company under the Securities Act and the Exchange Act;
and


         (c) furnish to each Investor so long as such Investor owns  Registrable
Securities,  promptly upon request,  (i) a written statement by the Company that
it has complied with the reporting  requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly  report
of the Company and such other  reports and documents so filed by the Company and
(iii)  such  other  information  as may be  reasonably  requested  to permit the
Investors to sell such securities pursuant to Rule 144 without registration.


         9.  ASSIGNMENT  OF THE  REGISTRATION  RIGHTS.  The  rights  to have the
Company  register  Registrable  Securities  pursuant to this Agreement  shall be
automatically  assigned by the Investors to 

                                      -16-




transferees  or  assignees  of all or any portion of such  securities  which was
issued upon conversion of at least 1,000 Preferred  Shares, or any transferee of
any portion of the Preferred Shares which is at least 1,000 Preferred Shares, or
any  combination  thereof,  only if: (a) the Investor agrees in writing with the
transferee  or assignee to assign such rights,  and a copy of such  agreement is
furnished to the Company within a reasonable time after such assignment, (b) the
Company  is,  within a  reasonable  time  after  such  transfer  or  assignment,
furnished with written notice of (i) the name and address of such  transferee or
assignee and (ii) the securities with respect to which such registration  rights
are being  transferred or assigned,  (c) immediately  following such transfer or
assignment  the further  disposition  of such  securities  by the  transferee or
assignee is restricted  under the Securities Act and applicable state securities
laws,  and (d) at or before the time the Company  received  the  written  notice
contemplated by clause (b) of this sentence the transferee or assignee agrees in
writing with the Company to be bound by all of the provisions contained herein.


         10. AMENDMENT OF REGISTRATION  RIGHTS.  Any provision of this Agreement
may be amended and the observance  thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively),  only with the
written  consent of the Company and Investors who hold a majority in interest of
the Registrable Securities.  Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company.


         11. MISCELLANEOUS.


         (a) A  person  or  entity  is  deemed  to be a  holder  of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.


         (b) Notices  required or  permitted to be given  hereunder  shall be in
writing and shall be deemed to be sufficiently  given when personally  delivered
(by hand, by courier,  by telephone line facsimile  transmission or other means)
or sent by certified mail, return receipt requested, properly addressed and with
proper postage pre-paid (i) if to the Company, at Palomar Medical  Technologies,
Inc.,  66 Cherry Hill Drive,  Beverly,  Massachusetts  01915,  Attention:  Chief
Financial  Officer,  (ii) if to the Initial  Investor,  at the address set forth
under its name in the Subscription Agreement and (iii) if to any other Investor,
at such address as such Investor  shall have provided in writing to the 

                                      -17-




Company,  or at such other address as each such party  furnishes by notice given
in accordance with this Section 11(b),  and shall be effective,  when personally
delivered,  upon receipt and,  when so sent by certified  mail,  four days after
deposit with the United States Postal Service.


         (c)  Failure of any party to  exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.


         (d) This  Agreement  shall be  enforced,  governed by and  construed in
accordance  with the laws of the  Commonwealth  of  Massachusetts  applicable to
agreements  made and to be performed  entirely  within such State.  In the event
that any  provision  of this  Agreement  is invalid or  unenforceable  under any
applicable  statute  or  rule  of law,  then  such  provision  shall  be  deemed
inoperative  to the extent that it may  conflict  therewith  and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof which
may prove invalid or  unenforceable  under any law shall not affect the validity
or enforceability of any other provision hereof.


         (e) This Agreement  constitutes the entire  agreement among the parties
hereto with respect to the subject  matter  hereof.  There are no  restrictions,
promises, warranties or undertakings,  other than those set forth or referred to
herein. This Agreement  supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.


         (f) Subject to the  requirements  of Section 9 hereof,  this  Agreement
shall inure to the benefit of and be binding upon the  successors and assigns of
each of the parties hereto.


         (g) All pronouns and any  variations  thereof  refer to the  masculine,
feminine or neuter, singular or plural, as the context may require.


         (h) The headings in this  Agreement  are for  convenience  of reference
only and shall not limit or otherwise affect the meaning hereof.


         (i) The Company acknowledges that any failure by the Company to perform
its  obligations  under  this  Agreement,  including,  without  limitation,  the
Company's obligations under Section 3(n), or any delay in such performance could
result in both direct and consequential damages to the Investors and the Company
agrees that,  in addition to any other  liability the Company may have by reason
of any such  failure or delay,  the  Company  shall be liable for all direct and
consequential damages caused by any such failure or delay.

                                      -18-





         (j) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall  constitute one and the
same agreement.  This Agreement,  once executed by a party,  may be delivered to
the other party hereto by telephone  line  facsimile  transmission  of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.



                                      -19-






         IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly
executed by their  respective  officers  thereunto duly authorized as of day and
year first above written.


                                              PALOMAR MEDICAL TECHNOLOGIES, INC.


                                               By /s/ Steve Georgiev
                                                  ------------------------
                                               Name: Steven Georgiev
                                               Title: CEO


                                               INITIAL INVESTOR:            
                                                   
                                                   
                                               NAME: GENESEE FUND LIMITED
                                                   
                                                   
                                               By /s/ A. P. de Groot
                                                  ------------------------
                                                 Name: A. P. de Groot
                                                 Title: President




                                      -1-







                                                                    EXHIBIT 1
                                                                       TO
                                                                  REGISTRATION
                                                                RIGHTS AGREEMENT

                              [Company Letterhead]


                                     [Date]


[Name and address of Transfer Agent]


Ladies and Gentlemen:

         This letter shall serve as our irrevocable  authorization and direction
to you [(1) to transfer or re-register the certificates for the shares of Common
Stock,  $.01 par  value per share  (the  "Common  Stock"),  of  Palomar  Medical
Technologies,  Inc., a Delaware  corporation  (the  "Company"),  represented  by
certificate  numbers _______ and _______ for an aggregate of _______ shares (the
"Outstanding  Shares") of Common Stock presently registered in the name of [Name
of Investor] upon  surrender of such  certificate  to you,  notwithstanding  the
legend  appearing on such  certificates,  (2)]1 to issue shares (the "Conversion
Shares") of Common Stock to or upon the order of the holder from time to time on
conversion  of the  shares  (the  "Preferred  Shares")  of Series G  Convertible
Preferred  Stock,  $.01 par value,  of the  Company,  issued by the Company upon
surrender to you for  conversion  of  certificates  for  Preferred  Shares and a
properly  completed and duly executed  Notice of Conversion in the form enclosed
herewith  and (3) to issue  shares (the  "Warrant  Shares")  of Common  Stock on
exercise of the Common Stock Purchase  Warrants (the  "Warrants") to or upon the
order of the  registered  holder from time to time upon surrender to you by such
registered  holder for  exercise of Warrants and a properly  completed  and duly
executed form of  subscription in the form enclosed  herewith.  [The transfer or
re-registration  of the certificates for the Outstanding Shares by you should be
made at such  time as you are  requested  to do so by the  record  holder of the
Outstanding Shares. The certificate issued upon such transfer or re-registration
should be  registered  in such name as  requested by the holder of record of the
certificate  surrendered  to you and  should  not bear any  legend  which  would
restrict the transfer of the shares represented  thereby.  In addition,  you are
hereby  directed  to  remove  any  stop-transfer  instruction  relating  to  the
Outstanding Shares.]* Certificates for the Conversion Shares and the Warrant

--------
         Omit if no conversions  of Preferred  Stock or no exercises of Warrants
have occurred before SEC registration is declared effective.



                                     







Shares should not bear any  restrictive  legend and should not be subject to any
stop-transfer restriction.

         Contemporaneous  with the  delivery  of this  letter,  the  Company  is
delivering to you an opinion of  ____________________ as to registration of [the
Outstanding  Shares,]2 the Conversion  Shares and the Warrants  Shares under the
Securities Act of 1933, as amended.

         Should you have any questions  concerning  this matter,  please contact
me.




                                            Very truly yours,                   
                                            
                                            
                                            PALOMAR MEDICAL TECHNOLOGIES, INC.
                                            
                                            
                                            
                                            By:______________________________
                                               Name:
                                               Title:

Enclosure
cc: [Name of Investor]



________________________________

2




                                     






                                                                   EXHIBIT 2
                                                                       TO
                                                                  REGISTRATION
                                                                RIGHTS AGREEMENT


                                     [Date]


[Name and address
of transfer agent]


                       PALOMAR MEDICAL TECHNOLOGIES, INC.
                             SHARES OF COMMON STOCK
                             ----------------------

Ladies and Gentlemen:

         We are  counsel  to  Palomar  Medical  Technologies,  Inc.,  a Delaware
corporation  (the  "Company"),  and we understand  that [Name of Investor]  (the
"Holder") has purchased from the Company an aggregate of shares (the  "Preferred
Shares") of the Company's Series G Convertible  Preferred Stock,  $.01 par value
per share, (the "Preferred Stock") convertible into shares of Common Stock, $.01
par value (the "Common Stock"),  and warrants to purchase shares of Common Stock
(the  "Warrants").  The Preferred  Shares and the Warrants were purchased by the
Holder  pursuant  to a  Subscription  Agreement,  dated as of  September , 1996,
between the Holder and the Company (the "Subscription Agreement"). Pursuant to a
Registration Rights Agreement, dated as of September , 1996, between the Company
and the Holder (the "Registration  Rights Agreement") entered into in connection
with the  purchase  by the  Holder  of the  Preferred  Shares  and the  Warrants
pursuant to the  Subscription  Agreement,  the  Company  agreed with the Holder,
among other  things,  to register  for resale by the Holder  shares (the "Common
Shares") of Common Stock issuable upon conversion of the Preferred Shares and on
exercise of the  Warrants  under the  Securities  Act of 1933,  as amended  (the
"Securities Act"), upon the terms provided in the Registration Rights Agreement.
In connection with the exercise by the Holder of its  registration  rights under
the  Registration  Rights  Agreement,   on  __________,   the  Company  filed  a
Registration  Statement on Form S-3 (File No. 333-__________) (the "Registration
Statement") with the Securities and Exchange  Commission (the "SEC") relating to
the Common Shares,  which names the Holder as a selling stockholder  thereunder.
[If notice from SEC is available: The Company has received a notice from the SEC
that the  Registration  Statement  has been declared  effective.  A 



                                   





copy of such notice is attached hereto.]

         Based on the  foregoing,  we are of the opinion that the Common  Shares
have been registered under the Securities Act.

                  This opinion has been furnished to you in connection  with the
above-referenced transaction and may not be used for any other purpose or by any
other  person.  We assume no  responsibility  to inform you of events or changes
occurring after the date hereof.

         [Other introductory and scope of examination language to be inserted]


                                       Very truly yours,





cc:[Name of Investor]



                                   



                                                                   EXHIBIT 3
                                                                      TO
                                                                 REGISTRATION
                                                                RIGHTS AGREEMENT

                             INVESTOR QUESTIONNAIRE


         Reference is made to the  Registration  Rights  Agreement,  dated as of
September __, 1996 (the "Agreement").  In connection with the preparation of the
registration statement which is the subject of the Agreement,  please provide us
with the following information:

         1. Pursuant to the "Selling  Shareholder"  section of the  Registration
Statement,  please state your organization's name exactly as it should appear in
the  Registration  Statement  and  provide  the  following  information,  as  of
September __, 1996:



____________________________________
               [name]

               (1)                                         (2)
     Number of shares which                       Number of shares, if any, 
     are being included in the                    which will be owned after 
     Registration Statement                       completion of sale of 
                                                  shares included in 
                                                  Registration Statement
    

         2.  Have you or your  organization  had any  position,  office or other
material  relationship  within  the past  three  years  with the  Company or its
affiliates  other  than  as  disclosed  in  the  Prospectus   included  in  this
Registration Statement?


           _______ Yes    ________ No

         If yes, please indicate the nature of any such relationships below:


________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________









                                           [NAME OF INVESTOR]

                                      By:_____________________________
                                      
                                      Name: __________________________
                                      
                                      Title:__________________________