STOCK PURCHASE AGREEMENT

     STOCK PURCHASE AGREEMENT (this "Agreement"),  dated as of December 29, 1997
by and among Palomar Medical Technologies,  Inc., a Delaware  corporation,  with
headquarters located at 45 Hartwell Avenue, Lexington,  Massachusetts 02173 (the
"Company"),  and Clearwater Fund IV, LLC, a Delaware limited  liability  company
with offices at 611 Druid Road East, Suite 200, Clearwater,  Florida, 34616 (the
"Buyer").

     WHEREAS:

     A. The Buyer  wishes to  purchase,  in the  amounts  and upon the terms and
conditions  stated in this Agreement,  shares of the Company's common stock, par
value $.01 per share ("PMTI Common  Stock"),  and shares of Nexar  Technologies,
Inc. common stock, par value $.01 per share ("Nexar Common Stock"); and

     B. The Company and the Buyer are executing and  delivering  this  Agreement
with respect to the issuance of PMTI Common Stock in reliance upon the exemption
from  securities  registration  afforded  by  Sections  4(2) and 4(6)  under the
Securities Act of 1933, as amended (the "1933 Act") and/or Rule 506  promulgated
under Regulation D ("Regulation D") by the United States Securities and Exchange
Commission (the "Commission"); and

     C. As further  inducement  to the Buyer to enter into this  Agreement,  the
parties hereto desire that the Company  provide certain  registration  rights to
the Buyer upon the terms and conditions stated in this Agreement.

     NOW THEREFORE, the Company and the Buyer hereby agree as follows:

1.   PURCHASE AND SALE OF PMTI COMMON STOCK AND NEXAR COMMON STOCK.
     -------------------------------------------------------------

     a. Purchase of PMTI Common  Stock.  The Company shall issue and sell to the
Buyer and the Buyer shall  purchase  300,000  shares of PMTI Common Stock for an
aggregate purchase price of $75,000.

     b. Purchase of Nexar Common Stock.  The Company shall sell to the Buyer and
the Buyer shall  purchase  700,000 shares of Nexar Common Stock for an aggregate
purchase price of $1,675,000.

     c. Form of Payment.  The Buyer shall pay the purchase  price for the shares
of PMTI Common Stock and the shares of Nexar Common Stock (the "Purchase Price")
by wire transfer of immediately  available  United States Dollars to the Company
on the Closing Date (as defined  below).  The Company shall promptly  deliver to
the Buyer  (a) a stock  certificate,  duly  executed  on behalf of the  Company,
representing 300,000 shares of PMTI Common Stock (the "PMTI Stock Certificate"),
(b) a stock certificate  representing 700,000 shares of Nexar Common Stock, duly
endorsed for  transfer  (the "Nexar  Stock  Certificate")  and (c) a copy of the
currently  effective   registration   statement  on  Form  S-1  filed  with  the
Commission,  as amended and supplemented to date,  registering the resale of all
shares of Nexar Common Stock  acquired  pursuant to this  Agreement  (the "Nexar
Registration Documentation").
<PAGE>

     d. Closing  Date.  The date and time of the issuance and sale of the shares
of PMTI  Common  Stock,  the sale of the  shares of Nexar  Common  Stock and the
delivery  of the Nexar  Registration  Documentation  shall be 5:00 p.m.  Eastern
Standard  Time on  December  30,  1997 or such  other  date  and  time as may be
mutually agreed to by the parties hereto (the "Closing Date"). The Company shall
deliver the PMTI Stock  Certificate as soon as reasonably  practicable after the
Closing  Date,  provided,  however,  that in no event shall the delivery of said
PMTI Stock Certificate occur later than 30 days after the Closing Date.

2.   REGISTRATION RIGHTS
     -------------------

     a.   Best Efforts.

          (i) PMTI agrees to use its  commercially  reasonable  best  efforts to
     amend or supplement its  Registration  Statement on Form S-3 filed with the
     Commission  on December  12, 1997 so as to cause as quickly as  practicable
     the  registration  of the resale by the Buyer of all shares of PMTI  Common
     Stock issuable  pursuant to this Agreement or otherwise  currently owned by
     the Buyer.

          (ii) PMTI hereby represents and warrants that a registration statement
     has been filed with the Commission  registering the resale of all shares of
     Nexar Common Stock  transferred  pursuant to this Agreement,  and that said
     registration statement is currently in effect.

     b. Damage Shares.  If either (A) the amended or  supplemented  Registration
Statement  which PMTI is  required to use its best  efforts to file  pursuant to
Section 2(a) of this Agreement (the "PMTI Registration  Statement") has not been
filed on or before the  expiration of 30 days from the date hereof;  or (B) said
PMTI Registration Statement has not been declared effective by the Commission on
or before three months from the date hereof,  or if, after the PMTI Registration
Statement has been declared  effective by the Commission,  the Buyer cannot make
sales  pursuant  to the PMTI  Registration  Statement  by reason of stop  order,
PMTI's failure to update the Registration Statement in accordance with the rules
and  regulations of the Commission or otherwise,  or if the PMTI Common Stock is
not listed or included  for  quotation  on the  National  Market of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ-NM"),  the
New York Stock Exchange (the "NYSE"),  the American Stock Exchange (the "AMEX"),
or the NASDAQ SmallCap Market  ("NASDAQ  SmallCap")  then, as partial relief for
the  damages  to the Buyer by reason of any such  delay in or  reduction  of its
ability to sell its  shares of PMTI  Common  Stock  (which  remedy  shall not be
exclusive of any other remedies  available at law or in equity) PMTI shall issue
to the Buyer such additional  shares of PMTI Common Stock (the "Damage  Shares")
<PAGE>

equal to 10,000 multiplied by the sum of: (A) the number of months (prorated for
partial  months) after the expiration of 30 days from the date hereof,  prior to
the date the PMTI Registration  Statement is so filed by PMTI; (B) the number of
months  (prorated  for partial  months) after three months from the date hereof,
and prior to the date the PMTI Registration  Statement is declared  effective by
the  Commission;  (C) the number of months  (prorated  for partial  months) that
sales cannot be made pursuant to the PMTI  Registration  Statement (by reason of
stop  order,  PMTI's  failure  to  update  the PMTI  Registration  Statement  or
otherwise) after the PMTI  Registration  Statement has been declared  effective;
and (D) the number of months  (prorated for partial months) that the PMTI Common
Stock is not listed or included for quotation on the NASDAQ-NM,  NYSE,  AMEX, or
NASDAQ  SmallCap  after  the  PMTI  Registration  Statement  has  been  declared
effective; provided, however, that in no event shall the number of Damage Shares
issued pursuant to this Section 2 exceed 120,000.

     Notwithstanding  anything to the contrary set forth in this Section 2, PMTI
shall not be required to keep the PMTI  Registration  Statement  effective for a
period  greater than six months;  provided  sales can be made  pursuant  thereto
during such six month period.

3.   BUYER'S REPRESENTATIONS AND WARRANTIES
     --------------------------------------

     The Buyer represents and warrants to the Company that:

          a. Non-Distribution. The Buyer is purchasing the shares of PMTI Common
     Stock for its own  account  and not with a view  towards,  or for resale in
     connection with, the public sale or distribution thereof except pursuant to
     sales registered under the 1933 Act.

          b. Accredited  Investor Status. The Buyer is an "accredited  investor"
     as that term is defined in Rule 501(a)(3) of Regulation D.

          c. Reliance on Exemptions.  The Buyer  understands  that the shares of
     PMTI Common Stock are being  offered and sold to it in reliance on specific
     exemptions from the registration  requirements of United States federal and
     state  securities  laws and that the Company is relying  upon the truth and
     accuracy  of,  and  the  Buyer's  compliance  with,  the   representations,
     warranties, agreements, acknowledgments and understandings of the Buyer set
     forth herein in order to determine the  availability of such exemptions and
     the eligibility of the Buyer to acquire the shares of PMTI Common Stock.

          d.  Information.  The  Buyer  and  its  advisors,  if any,  have  been
     furnished  with  all  materials  relating  to the  business,  finances  and
     operations of the Company and  materials  relating to the offer and sale of
     the aforementioned shares of PMTI Common Stock which have been requested by
     the Buyer.  The Buyer and its  advisors,  if any,  have been  afforded  the
     opportunity to ask questions of the Company and have received  complete and
     satisfactory answers to any such inquiries.  The Buyer understands that its
     investment  in the PMTI Common  Stock  involves a high degree of risk.  The
     Buyer has sought such accounting, legal and tax advice as it has considered
     necessary  to  an  informed   investment   decision  with  respect  to  its
     acquisition of such securities.
<PAGE>

          e.  Governmental  Review.  The Buyer understands that no United States
     federal or state agency or any other government or governmental  agency has
     passed on or made any  recommendation or endorsement of the  aforementioned
     shares  of  PMTI  Common  Stock  or  the  fairness  or  suitability  of the
     investment in the aforementioned shares of PMTI Common Stock, nor have such
     authorities  passed  upon or  endorsed  the merits of the  offering  of the
     aforementioned shares of PMTI Common Stock.

          f.  Transfer  or  Resale.  The Buyer  understands  that (i)  except as
     provided  in  Section 2 of this  Agreement  the PMTI  Common  Stock and the
     Damage Shares have not been and are not being registered under the 1933 Act
     or any  state  securities  laws,  and may  not be  transferred  unless  (a)
     subsequently  registered thereunder,  or (b) the Buyer shall have delivered
     to the  Company an opinion of  counsel,  reasonably  satisfactory  in form,
     scope and substance to the Company, to the effect that the securities to be
     sold or  transferred  may be sold or  transferred  pursuant to an exemption
     from such  registration;  (ii) any sale of such securities made in reliance
     on Rule 144  promulgated  under the 1933 Act may be made only in accordance
     with the terms of said Rule and  further,  if said Rule is not  applicable,
     any resale of such securities  under  circumstances in which the seller (or
     the  person  through  whom  the  sale  is  made)  may  be  deemed  to be an
     underwriter  (as  that  term  is  defined  in the  1933  Act)  may  require
     compliance  with some other  exemption  under the 1933 Act or the rules and
     regulations of the Commission thereunder; and (iii) neither the Company nor
     any other person is under any obligation to register such securities (other
     than  pursuant  to Section 2 of this  Agreement)  under the 1933 Act or any
     state  securities  laws or to comply with the terms and  conditions  of any
     exemption thereunder.

          g. Legends.  The Buyer understands that unless, and until such time as
     the PMTI Common Stock and the Damage Shares have been registered  under the
     1933 Act as contemplated by Section 2 of this Agreement,  the  certificates
     representing   such   securities   shall  bear  a  restrictive   legend  in
     substantially  the following form (and a stop-transfer  order may be placed
     against transfer of such certificates):

                  THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN
                  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED OR
                  APPLICABLE  STATE  SECURITIES  LAWS. THE SECURITIES MAY NOT BE
                  SOLD,  TRANSFERRED  OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
                  REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
                  ACT OF 1933, AS AMENDED OR APPLICABLE  STATE  SECURITIES LAWS,
                  OR  AN  OPINION  OF  COUNSEL  IN  FORM,  SUBSTANCE  AND  SCOPE
                  REASONABLY  ACCEPTABLE TO THE COMPANY THAT REGISTRATION IS NOT
                  REQUIRED UNDER SAID ACT OR APPLICABLE  STATE  SECURITIES LAWS.
                  ANY SUCH SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH OR
                  BE EXEMPT FROM APPLICABLE STATE SECURITIES LAWS.
<PAGE>

The legend set forth  above as it appears on the PMTI Stock  Certificate  and on
any certificate  representing the Damage Shares shall be removed and the Company
shall issue a  certificate  without  such legend to the holder of such shares of
PMTI Common  Stock or the Damage  Shares upon which it is  stamped,  if,  unless
otherwise  required by federal or state  securities  laws,  (a) the sale of such
shares of PMTI Common Stock or the Damage  Shares is  registered  under the 1933
Act, or (b) in  connection  with a sale  transaction,  such holder  provides the
Company  with an opinion of counsel,  in form,  substance  and scope  reasonably
acceptable  to the Company,  to the effect that a public sale or transfer of the
shares  of  PMTI  Common  Stock  or  the  Damage  Shares  may  be  made  without
registration  under the 1933 Act, or (c) such holder  provides  the Company with
reasonable  assurances that the shares of PMTI Common Stock or Damage Shares can
be sold  pursuant to Rule 144 under the 1933 Act (or a successor  rule  thereto)
without  any  restriction  as to  the  number  of  securities  acquired  as of a
particular date that can then be immediately sold.

          h.  Authorization;  Enforcement.  This  Agreement  has  been  duly and
     validly authorized,  executed and delivered on behalf of the Buyer and is a
     valid and binding agreement of the Buyer enforceable in accordance with its
     terms,  subject as to enforceability to general principles of equity and to
     bankruptcy,  insolvency,  moratorium,  and other similar laws affecting the
     enforcement of creditors' rights generally.

          i. Residency. The Buyer is a resident of the United States.

4.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
     ---------------------------------------------

     The Company represents and warrants to the Buyer that:

          a.  Organization  and  Qualification.  The  Company  and  each  of its
     subsidiaries are corporations  duly organized and existing in good standing
     under the laws of the jurisdiction in which they are incorporated,  except,
     in the case of any such subsidiaries,  as would not have a Material Adverse
     Effect (as defined  below),  and have the requisite  corporate power to own
     their properties and to carry on their business as now being conducted. The
     Company  and each of its  subsidiaries  are  duly  qualified  as a  foreign
     corporation to do business and is in good standing in every jurisdiction in
     which the nature of the business  conducted by it makes such  qualification
     necessary and where the failure so to qualify would have a Material Adverse
     Effect.  "Material Adverse Effect" means any material adverse effect on the
     operations,  properties  or  financial  condition  of the  Company  and its
     subsidiaries taken as a whole.
<PAGE>

          b.  Authorization;  Enforcement.  (i) The  Company  has the  requisite
     corporate  power and authority to enter into and perform this Agreement and
     to issue the  aforementioned  shares of PMTI  Common  Stock and the  Damage
     Shares  and to sell the  aforementioned  shares  of Nexar  Common  Stock in
     accordance  with the terms  hereof  and  thereof,  (ii) the  execution  and
     delivery of this Agreement by the Company and the consummation by it of the
     transactions contemplated hereby have been duly authorized by the Company's
     Board of Directors and no further consent or  authorization of the Company,
     its  Board of  Directors,  or its  stockholders  is  required,  (iii)  this
     Agreement  has been duly  executed and  delivered by the Company,  and (iv)
     this Agreement constitutes the valid and binding obligations of the Company
     enforceable  against the Company in  accordance  with its terms,  except as
     such  enforceability may be limited by applicable  bankruptcy,  insolvency,
     reorganization,  moratorium,  liquidation  or similar laws  relating to, or
     affecting  generally,  the enforcement of creditors' rights and remedies or
     by other equitable principles of general application.

          c. Issuance of Securities.  The  aforementioned  shares of PMTI Common
     Stock are duly authorized, validly issued and non-assessable, and free from
     all taxes, liens and charges with respect to the issue thereof. To the best
     knowledge of the Company,  the aforementioned  shares of Nexar Common Stock
     are duly authorized,  validly issued,  fully paid and  non-assessable,  and
     free from all taxes,  liens and charges with respect to the issue  thereof.
     The Damage Shares, if any, will be duly authorized,  validly issued,  fully
     paid and  non-assessable,  and free from all taxes,  liens and changes with
     respect to the issue thereof.

          d. No  Conflicts.  The  execution,  delivery and  performance  of this
     Agreement  by the  Company  and  the  consummation  by the  Company  of the
     transactions  contemplated hereby will not (i) result in a violation of the
     Articles of Incorporation or Bylaws,  as amended,  as in effect on the date
     hereof or (ii)  conflict  with,  or constitute a default (or an event which
     with notice or lapse of time or both would become a default) under, or give
     to  others  any  rights  of   termination,   amendment,   acceleration   or
     cancellation  of,  any  agreement,  indenture  or  instrument  to which the
     Company or any of its  subsidiaries is a party, or result in a violation of
     any law, rule, regulation, order, judgment or decree (including federal and
     state securities laws and regulations)  applicable to the Company or any of
     its subsidiaries or by which any property or asset of the Company or any of
     its subsidiaries is bound or affected (except for such conflicts, defaults,
     terminations,  amendments,  accelerations,  cancellations and violations as
     would  not,  individually  or in the  aggregate,  have a  Material  Adverse
     Effect).  The  business  of the  Company or its  subsidiaries  is not being
     conducted,  and shall not be conducted through the Registration  Period (as
     defined  herein),  in violation of any law,  ordinance,  regulation  of any
     governmental entity,  except for possible violations which either singly or
     in the aggregate do not have a Material Adverse Effect.  The Company is not
     required  to obtain  any  consent,  authorization  or order of, or make any
     filing or registration with, any court or governmental  agency in order for
     it to  execute,  deliver  or  perform  any of its  obligations  under  this
     Agreement in accordance with the terms hereof, except as required under the
     1933 Act and any applicable  state securities laws which have been or shall
     be duly made.
<PAGE>

          e. Commission Documents,  Financial Statements.  The Company has filed
     all reports,  schedules,  forms, statements and other documents required to
     be filed by it with the Commission  pursuant to the reporting  requirements
     of the Securities Exchange Act of 1934, as amended (the "1934 Act") (all of
     the  foregoing  filed  prior to the date hereof and all  exhibits  included
     therein and financial statements and schedules thereto and documents (other
     than  exhibits)   incorporated  by  reference  therein,  being  hereinafter
     referred to herein as the "SEC  Documents").  As of their respective dates,
     the SEC Documents  complied in all material  respects with the requirements
     of the 1934 Act and the rules and regulations of the Commission promulgated
     thereunder  applicable to the SEC Documents,  and none of the SEC Documents
     (as amended)  contained any untrue  statement of a material fact or omitted
     to state a material  fact  required to be stated  therein or  necessary  in
     order to make the statements  therein,  in light of the circumstances under
     which they were made, not misleading.  As of their  respective  dates,  the
     financial  statements of the Company included in the SEC Documents complied
     as to form in all material respects with applicable accounting requirements
     and the published  rules and  regulations  of the  Commission  with respect
     thereto.  Such financial  statements  have been prepared in accordance with
     generally accepted accounting principles,  consistently applied, during the
     periods  involved  (except  (i) as  may  be  otherwise  indicated  in  such
     financial statements or the notes thereto, or (ii) in the case of unaudited
     interim  statements,  to the extent  they may exclude  footnotes  or may be
     condensed  or  summary  statements)  and  fairly  present  in all  material
     respects the financial  position of the Company as of the dates thereof and
     the results of its  operations  and cash flows for the  periods  then ended
     (subject,  in the case of unaudited  statements,  to normal  year-end audit
     adjustments).  No other information provided by or on behalf of the Company
     to the Buyer and referred to in Section 3(d) of this Agreement contains any
     untrue  statement of a material  fact or omits to state any  material  fact
     necessary  in order to make the  statements  therein,  in the  light of the
     circumstance under which they are or were made, not misleading.

          f. Absence of Certain Changes. Since September 30, 1997 there has been
     no material  adverse  change and no  material  adverse  development  in the
     business,   properties,   operations,   financial  condition,   results  of
     operations or prospects of the Company.

          g. Absence of Litigation. Except as set forth in the SEC Documents for
     the quarter ended September 30, 1997, there is no action, suit, proceeding,
     inquiry  or  investigation  before or by any  court,  public  board or body
     pending  or,  to  the  knowledge  of the  Company,  threatened  against  or
     affecting the Company,  wherein an unfavorable decision,  ruling or finding
     would have a Material  Adverse Effect or which would  adversely  affect the
     validity or  enforceability  of, or the authority or ability of the Company
     to perform its  obligations  under,  this Agreement or any of the documents
     contemplated herein.

5.   COVENANTS.
     ---------

          a. Best Efforts.  The parties shall use their commercially  reasonable
     best efforts timely to satisfy each of the conditions described in Sections
     7 and 8 of this Agreement.

          b. Form D. The  Company  agrees to file a Form D with  respect  to the
     aforementioned  shares of PMTI Common Stock, if required,  and, if filed to
     provide a copy thereof to the Buyer promptly after such filing.
<PAGE>

          c. Reporting Status. Until the earlier of (i) the date as of which the
     Buyer may sell all of the  aforementioned  shares of PMTI Common  Stock and
     the Damage Shares without  restriction  pursuant to Rule 144(k) promulgated
     under the 1933 Act (or  successor  thereto),  or (ii) the date on which the
     Buyer has sold all the  aforementioned  shares of PMTI Common Stock and the
     Damage  Shares (the  "Registration  Period"),  the  Company  shall file all
     reports required to be filed with the Commission  pursuant to the 1934 Act,
     and the Company  shall not  terminate  its status as an issuer  required to
     file  reports  under  the 1934 Act  even if the 1934 Act or the  rules  and
     regulations thereunder would permit such termination.

          d. Use of Proceeds. The Company will use the proceeds from the sale of
     the  aforementioned  shares of PMTI Common Stock for the Company's internal
     working capital  purposes and shall not,  directly or indirectly,  use such
     proceeds  for  any  loan  to  or  investment  in  any  other   corporation,
     partnership,  enterprise or other person  except as the Company's  board of
     directors  deems  necessary  in  order to  develop  and  commercialize  the
     Company's technology.

          e. Reservation of Shares.  The Company shall at times have authorized,
     and reserved for the purpose of issuance,  a sufficient number of shares of
     PMTI Common Stock and,  when  required,  to provide for the issuance of the
     Damage Shares.

          f.  Listing.  The  Company  shall  promptly  secure the listing of the
     aforementioned  shares of PMTI Common  Stock and, if and when  issued,  the
     Damage Shares upon each national securities exchange or automated quotation
     system,  if any,  upon which  shares of PMTI  Common  Stock are then listed
     (subject to official  notice of issuance) (the "Stock  Exchange") and shall
     maintain,  so long as any other  shares of PMTI  Common  Stock  shall be so
     listed,  such  listing of all shares of PMTI Common Stock from time to time
     issuable under the terms of this Agreement.

6.   TRANSFER AGENT INSTRUCTIONS.
     ---------------------------

     The  Company  shall  instruct  its  transfer  agent to issue  certificates,
registered in the name of the Buyer or its nominee,  for the Damage  Shares,  if
any, in such  amounts as the  Company may be required to issue  pursuant to this
Agreement.  Prior to  registration of the  aforementioned  shares of PMTI Common
Stock and the Damage Shares pursuant to an effective registration statement, all
such certificates shall bear the restrictive legend specified in Section 3(g) of
this  Agreement.  Within two (2) business  days after the date on which the PMTI
Registration  Statement  is  declared  effective  or in the  case of the  Damage
Shares, any registration  statement or amended  registration  statement covering
the resale of such shares is declared  effective,  the Company  shall deliver to
its transfer agent instructions,  accompanied by any reasonably required opinion
of counsel,  that permit sales of securities  in a timely  fashion that complies
with the securities  settlement  procedures for regular way market  transactions
and  any  prospectus  delivery  requirements.   The  Company  warrants  that  no
instruction other than such instructions referred to in this Section 6, and stop
transfer  instructions to give effect to Section 3(f) hereof, in the case of the
shares of PMTI Common Stock and the Damage Shares,  prior to registration of the
<PAGE>

shares of PMTI Common Stock and the Damage  Shares  under the 1933 Act,  will be
given by the Company to its transfer agent and that the aforementioned shares of
PMTI Common Stock and the Damage Shares shall  otherwise be freely  transferable
on the books and  records of the  Company as and to the extent  provided in this
Agreement.  Nothing  in  this  Section  shall  affect  in any  way  the  Buyer's
obligations  and agreement to comply with all  applicable  securities  laws upon
resale of the  aforementioned  shares of PMTI Common Stock or the Damage Shares.
If the Buyer  provides  the  Company  with an  opinion  of  counsel,  reasonably
satisfactory in form, scope and substance to the Company, that registration of a
resale by the Buyer of any of the  shares of PMTI  Common  Stock and the  Damage
Shares  is not  required  under the 1933  Act,  the  Company  shall  permit  the
transfer,  and  promptly  instruct  its  transfer  agent  to  issue  one or more
certificates in such name and in such denominations as specified by the Buyer.

7.   CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ASSIGN.
     ---------------------------------------------------------

     The  obligation  of the  Company  hereunder  to sell and assign PMTI Common
Stock and Nexar  Common Stock is subject to the  satisfaction,  at or before the
Closing  Date,  of  each  of  the  following  conditions,  provided  that  these
conditions  are for the Company's  sole benefit and may be waived by the Company
at any time in its sole discretion:

          a. The parties shall have  executed  this  Agreement and delivered the
     same to each other.

          b. The Buyer shall have delivered the Purchase Price to the Company by
     wire  transfer  of  immediately  available  funds  pursuant  to the  wiring
     instructions provided by the Company.

          c. The  representations and warranties of each Buyer shall be true and
     correct  in all  material  respects  as of the date when made and as of the
     Closing Date as though made at that time (except for  representations.  and
     warranties  that speak as of a  specific  date),  and the Buyer  shall have
     performed,  satisfied  and  complied  in all  material  respects  with  the
     covenants,  agreements  and  conditions  required by this  Agreement  to be
     performed,  satisfied  or  complied  with by the  Buyer  at or prior to the
     Closing Date.

8.   CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
     ------------------------------------------------

     The obligation of the Buyer to purchase the  aforementioned  shares of PMTI
Common Stock and Nexar Common Stock is subject to the satisfaction, at or before
the Closing  Date,  of each of the  following  conditions,  provided  that these
conditions  are for the Buyer's  sole  benefit and may be waived by the Buyer at
any time in its sole discretion:

          a. The parties shall have  executed  this  Agreement and delivered the
     same to each other.

          b. Until the Closing  Date,  the PMTI Common Stock shall be authorized
     for quotation on the NASDAQ-NM,  the NYSE, the AMEX or the NASDAQ  SmallCap
     and trading in the Common Stock on such  quotation  system or exchange,  as
     the case may be,  shall  not  have  been  suspended  by the  Commission  or
     otherwise.
<PAGE>

          c. The representations and warranties of the Company shall be true and
     correct  in all  material  respects  as of the date when made and as of the
     Closing  Date as though made at that time (except for  representations  and
     warranties  that speak as of a specific  date) and the  Company  shall have
     performed,  satisfied  and  complied  in all  material  respects  with  the
     covenants,  agreements  and  conditions  required by this  Agreement  to be
     performed,  satisfied  or  complied  with by the Company at or prior to the
     Closing Date. The Buyer shall have received a certificate,  executed by the
     Chief  Executive  Officer of the Company,  dated as of the Closing Date, to
     the  foregoing  effect  and as to such other  matters as may be  reasonably
     requested by the Buyer.

          d. The Company shall have filed the appropriate documents necessary to
     secure the prompt listing of the aforementioned shares of PMTI Common Stock
     upon the Stock Exchange and shall have  delivered to the Buyer  appropriate
     documentation evidencing the fact that such filing has occurred.

          e. The  Company  shall have  executed  and  delivered  the Nexar Stock
     Certificate.

          f.  The  Company   shall  have   delivered   the  Nexar   Registration
     Documentation.

9.   GOVERNING LAW:  MISCELLANEOUS.
     -----------------------------

          a. Governing Law. This Agreement  shall be governed by and interpreted
     in accordance  with the laws of the State of New York without regard to the
     principles of conflict of laws.

          b.  Counterparts.  This  Agreement  may be  executed  in  two or  more
     identical  counterparts,  all of which shall be considered one and the same
     agreement and shall become effective when  counterparts have been signed by
     each party and  delivered  to the other party.  In the event any  signature
     page is delivered by facsimile transmission,  the party using such means of
     delivery shall cause four (4) additional  original executed signature pages
     to be  physically  delivered to the other party within five (5) days of the
     execution and delivery hereof.

          c.  Headings.  The headings of this  Agreement are for  convenience of
     reference and shall not form part of, or affect the interpretation of, this
     Agreement.

          d.  Severability.  If any provision of this Agreement shall be invalid
     or unenforceable in any jurisdiction,  such invalidity or  unenforceability
     shall not affect the validity or  enforceability  of the  remainder of this
     Agreement or the validity or  enforceability of this Agreement in any other
     jurisdiction.
<PAGE>

          e. Entire  Agreement:  Amendments.  This Agreement and the instruments
     referenced  herein  contain the entire  understanding  of the parties  with
     respect  to  the  matters   covered  herein  and  therein  and,  except  as
     specifically set forth herein or therein, neither the Company nor any Buyer
     makes any representation, warranty, covenant or undertaking with respect to
     such matters. No provision of this Agreement may be waived or amended other
     than by an  instrument  in writing  signed by the party to be charged  with
     enforcement.

          f.  Notices.  Any notices  required or permitted to be given under the
     terms of this Agreement shall be sent by mail or delivered personally or by
     courier and shall be effective five days after being placed in the mail, if
     mailed, certified or registered, return receipt requested, or upon receipt,
     if delivered  personally  or by courier or by  telefacsimile,  in each case
     addressed to a party. The addresses for such communications shall be:

                  If to the Company:
                  Palomar Medical Technologies, Inc.
                  45 Hartwell Avenue
                  Lexington, Massachusetts 02173

                  Telephone: (781) 676-7300
                  Telecopy:  (781) 676-7330
                  Attention: Chief Executive Officer

                  With copy to: General Counsel and Director of Finance
                  Palomar Medical Technologies, Inc.
                  45 Hartwell Avenue
                  Lexington, Massachusetts 02173

                  Telephone: (781) 676-7300
                  Telecopy:  (781) 676-7330


     If to the Buyer, at the address on the signature page.

                  With copy to:

                  Rosenman & Colin LLP
                  575 Madison Avenue
                  New York, NY  10022
                  Telephone: (212) 940-8873
                  Telecopy: (212) 940-8776
                  Attention: Todd J. Emmerman, Esq.

Each party shall provide notice to the other party of any change in address.
<PAGE>

          g.  Successors and Assigns.  This Agreement  shall be binding upon and
     inure to the  benefit of the  parties  and their  successors  and  assigns.
     Neither the Company nor the Buyer shall assign this Agreement or any rights
     or  obligations  hereunder  without the prior written  consent of the other
     (which consent may be withheld for any reason in the sole discretion of the
     party from whom consent is sought).  Notwithstanding the foregoing, a Buyer
     may assign its rights hereunder to any of its "affiliates," as that term is
     defined under the 1934 Act,  without the consent of the Company,  provided,
     however,  that any such  assignment  shall not  release  such  Buyer of its
     obligations hereunder unless such obligations are assumed by such affiliate
     and the Company has consented to such assignment and assumption.

          h. Third Party  Beneficiaries.  This  Agreement  is  intended  for the
     benefit of the parties hereto and their respective permitted successors and
     assigns,  and is not for the  benefit of, nor may any  provision  hereof be
     enforced by, any other person.

          i. Survival. The representations and warranties of the Company and the
     Buyer  contained in Sections 3, 4(d),  4(e) and 4(f) and the agreements and
     covenants set forth in Sections 5, 6, 9(g),  9(h),  9(k) and 9(l), and this
     subsection shall survive the closing.

          k.  Publicity.  The  Company  and the  Buyer  shall  have the right to
     approve before  issuance any press releases or any other public  statements
     with respect to the transactions  contemplated hereby;  provided,  however,
     that the  Company  shall be  entitled,  without  the prior  approval of the
     Buyer,  to make any press release with respect to such  transactions  as is
     required by  applicable  law and  regulations  (although the Buyer shall be
     consulted by the Company in connection with any such press release prior to
     its release and shall be provided with a copy thereof).

          l. Further Assurances. Each party shall do and perform, or cause to be
     done and performed, all such further acts and things, and shall execute and
     deliver all such other agreements, certificates, instruments and documents,
     as the other party may reasonably  request in order to carry out the intent
     and accomplish the purposes of this Agreement and the  consummation  of the
     transactions contemplated hereby.

          m. Termination. In the event that the transactions contemplated hereby
     shall not have occurred  within five (5) days after the date hereof,  Buyer
     shall have the right to terminate  this  Agreement at any time  thereafter.

                            (Signature page follows)

<PAGE>

     IN WITNESS  WHEREOF,  the Buyer and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.


PALOMAR MEDICAL TECHNOLOGIES, INC.



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


CLEARWATER FUND IV LLC



By:  /s/  Hans F. Heye
     -----------------------------
Name:     Hans F. Heye
Its:      Managing Member

Address:  c/o Clearwater Funds
          611 Druid Road East
          Suite 200
          Clearwater, FL  33756
          Attn:  Gerard P. Melia