EXHIBIT 4.2

                          FIRST SUPPLEMENTAL INDENTURE

        First  Supplemental  Indenture,  dated as of the 15th day of  September,
1997, by and between Palomar Medical Technologies,  Inc., a Delaware corporation
(the  "Company"),  and  American  Stock  Transfer  & Trust  Company,  a New York
corporation, as trustee (the "Trustee").

                              W I T N E S S E T H:

        WHEREAS,  the Company  and the Trustee are the parties to the  Indenture
        dated as of June 24, 1996 (the  "Indenture"),  relating to the Company's
        4.5% Convertible  Subordinated  Debentures due 2003 (the  "Debentures");
        and 

        WHEREAS,  the  Company  wishes to amend the  Indentures  as set forth in
        paragraph 1 hereof (the "Amendment"); and

        WHEREAS,  the Board of Directors of the Company has duly  authorized the
        execution  and  delivery  by the  Company  of  this  First  Supplemental
        Indenture; and

        WHEREAS,  pursuant to the  provisions  of  Sections  11.2 and 9.1 of the
        Indenture,  the  holders  of not less than  66-2/3%  of the  outstanding
        aggregate  principal amount of the debentures have duly consented to the
        Amendment. 

        NOW  THEREFORE,  for good and  valuable  consideration,  the receipt and
        adequacy of which are hereby  acknowledged,  the parties  hereto  hereby
        agree as follows:  

1.      Amendment of Indenture. The definition of "Stock Price Factor" set forth
        in Section 4.1 of the Indenture is hereby amended by the deletion of the
        third paragraph of Section 4.1 of the Indenture in its entirety, and the
        substitution  of the  following in lieu  thereof:  "Stock Price  Factor"
        means a factor,  to be  calculated  by the Company  with respect to each
        December 15,  February 15, April 15, June 15,  August 15, and October 15
        (each a "Reset  Date"),  and to be  applicable  in the two full calendar
        months  following the Reset Date,  and equal to the average daily Nasdaq
        closing  price per Share (or,  if the  Company is listed or quoted on an
        exchange in the United  States other than Nasdaq,  the closing  price on
        such exchange),  for the thirty trading days  immediately  preceding the
        applicable  Reset Date;  provided that in no event shall the Stock Price
        Factor be less than U.S. $7.00 (as adjusted, if required, as provided in
        Section  4.5),  regardless  of the actual Stock Price  Factor  otherwise
        determined.

2.      Form of Debenture.  The  definition of "Stock Price Factor" which is set
        forth in each  Debenture  is hereby  amended so as to coincide  with the
        definition of "Stock Price Factor" set forth in paragraph 1 above.

3.      Effective  Date. The Amendment shall be effective as of the date of this
        First Supplemental Indenture. 4. Notation of Amendment. Debentures which
        are authenticated and delivered after the date hereof shall incorporate,
        or shall contain a notation of, the Amendment;  provided,  however, that
        neither the failure to so  incorporate  the Amendment nor the absence of
        any of such notation on any  Debenture  shall impair the validity of the
        Amendment.  5. No Other Changes. Except as expressly amended hereby, the
        Indenture  shall remain in full force and effect in accordance  with its
        terms,  and is hereby  ratified,  confirmed  and  approved.  

        IN WITNESS WHEREOF,  Palomar Medical Technologies,  Inc. has caused this
First  Supplemental  Indenture  to be signed in its  corporate  name by Louis P.
Valente, its Chief Executive Officer and President, and its corporate seal to be
affixed  hereunto;  and American  Stock Transfer & Trust Company has caused this
First  Supplemental  Indenture  to be  signed by  Herbert  J.  Lemmer,  its Vice
President,  and its corporate seal to be affixed hereunto, all as of the day and
year first above written. 

                                              PALOMAR MEDICAL TECHNOLOGIES, INC.

(CORPORATE SEAL)

                                              By:  /s/  Louis P. Valente
                                                  ------------------------------
                                                  Name:  Louis P. Valente
                                                  Title: Chief Executive Officer
                                                         and President

                                        AMERICAN STOCK TRANSFER & TRUST COMPANY,
                                         AS TRUSTEE

(CORPORATE SEAL)

                                            By:   /s/  Herbert J. Lemmer
                                                 -------------------------------
                                                 Name:   Herbert J. Lemmer
                                                 Title:  Vice President