|AMENDMENT TO STOCK
OPTION AGREEMENT AND


GRANT OF RESTRICTED
STOCK
|-------------------------------------------------------------------

|         |                                   
|-------- | ----------------------------------
|To:      | Joseph P. Caruso                  
|         |                                   
|From:    | Palomar Medical Technologies, Inc.
|         |                                   
|Date:    | November 2, 2009                  
|         |                                   
|Subject: | Amendment of
Your Stock Options   

|You have agreed to amend the exercise
price of certain of your stock options granted under the 2004 Stock Incentive Plan. Your
amended options will have the exercise price, number of shares and term determined based
on the formula described to you in our meeting and summarized in the materials previously
provided to you. You will also receive a restricted stock award under the 2004 Stock
Incentive Plan for a number of shares determined based on the formula described to you in
our meeting and in the materials previously provided to you. Upon execution by Palomar of
this Amendment to Stock Option Agreement and Grant of Restricted Stock, we will complete
the attached Schedule of Amended Options and Restricted Stock Award based on these
formulas.


As described to you in our meeting
and summarized in the materials previously provided to you, you need to inform us what we
should advise E*Trade regarding your plans for the payment of the applicable taxes. Please
elect one of the following options:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | _x___
I elect to have E*Trade sell a sufficient number of my Restricted Stock granted under this
Amendment to cover applicable taxes.1
| | --------------------------------------------------------------------------------------------------------------------------------------

|____
I elect to provide to my account with E*Trade sufficient cash to cover applicable taxes.


This memo acts as an amendment to the
options described on the attached Schedule of Amended Options and Restricted Stock Award.
Except to the extent specifically provided in this Amendment, your options will continue
to be subject to the terms and conditions of the applicable option agreement and the plan
under which the options were originally granted.


This memo reflects the entire
agreement between you and Palomar Medical Technologies, Inc. concerning this transaction.
This memo may be amended only by means of a writing signed by you and an authorized
officer of Palomar Medical Technologies, Inc.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                          
| | -------------------------
| |                          
| | Joseph P. Caruso         
| |                          
| | By:/s/ Joseph P. Caruso  
| | Name:    Joseph P. Caruso
| | Date:    November 2, 2009

| |                                   
| | ----------------------------------
| |                                   
| | Palomar Medical Technologies, Inc.
| |                                   
| | By:/s/ Paul S. Weiner             
| | Name:    Paul S. Weiner           
| | Date:    November 30, 2009        
| | Title:     CFO                    

|1    
          Note that any share sales are subject to the terms of Palomars insider
          trading policy and applicable securities law restrictions.
|------------------------------------------------------------------------------------------------------------------------------------------------------------

|Schedule of Amended
Options and Restricted Stock Award



Palomar Medical
Technologies, Inc.



November 30, 2009
Name: Joseph P. Caruso
|----------------------------------------------------------------------------------------------------------------------------------------

|                                              |                  
|--------------------------------------------- | -----------------
|Grant Date of Original Options:               | May 11, 2005     
|                                             
|Expiration Date of Original Options:          | May 10, 2015     
|                                             
|Number of Shares Subject to Original Options: | 100,000          
|                                             
|Exercise Price Per Share of Original Options: | $    24.63       
|                                             
|Exercise Price Per Share for Amended Options: | $      9.15      
|                                             
|Number of Shares Subject to Amended Options:  | 39,028           
|                                             
|Term of Amended Options                       | November 29, 2019
|                                             
|Number of Shares of Restricted Stock Issued:  | 60,972           
|                                             

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