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                    ASSET PURCHASE AND SETTLEMENT AGREEMENT

     This Asset Purchase and Settlement  Agreement (this "Agreement") is made as
of February 28, 1997 by and among Palomar Medical Technologies, Inc., a Delaware
corporation ("Palomar"), Nexar Technologies,  Inc., a Delaware corporation which
is a majority owned subsidiary of Palomar ("Nexar"), Technovation Computer Labs,
Inc., a Nevada corporation ("Seller"), and Babar I. Hamirani.


                              W I T N E S S E T H:

     WHEREAS,  Babar I. Hamirani has  conceived,  developed,  authored,  made or
otherwise acquired or asserted ownership of technology,  proprietary information
and/or intellectual  property for facilitating the installation,  replacement or
upgrading  of  personal  computer  components,   such  technology,   proprietary
information  and/or  intellectual  property  including but not limited to United
States Patent  Application  Serial No.  08/409,317,  filed on 3/23/95,  entitled
"System  Permitting  the  External  Replacement  of the CPU  and/or  DRAM  SIMMs
Microchip Board" and further including but not limited to an "additional" patent
application on Hamirani's  behalf, as referred to in a letter dated December 19,
1996, from Hamirani's counsel, Law Offices of Dan A. Craddock, to Mr. Ronald J.
Kransdorf;

     WHEREAS,  Nexar  contends  that it has been  assigned  certain  techn logy,
proprietary  information  and/or  intellectual  property of Babar I. Hamirani in
accord with a Key  Employment  Agreement  executed by him on or about  August 1,
1995 (the "Employment Agreement"); Babar I. Hamirani contends otherwise;

     WHEREAS,  Nexar  contends  that Babar I. Hamirani was the holder of certain
rights to options in Palomar Electronics  Corporation,  a subsidiary of Palomar,
which rights lapsed unvested upon Babar I. Hamirani's  termination of employment
on November 29, 1996; Babar I. Hamirani contends otherwise;

     WHEREAS, Babar I. Hamirani contends that he is the holder of certain rights
to options in Nexar and/or Palomar  Electronics  Corporation;  Nexar and Palomar
contend otherwise;

     WHEREAS,   Seller  is  the  owner  of  assets   including  all  technology,
proprietary information and/or intellectual property licensed to Nexar under the
License  Agreement  between the  parties  dated  August 25,  1995 (the  "License
Agreement"),   and  including   technology,   proprietary   information   and/or
intellectual property acquired from Babar I. Hamirani;

     WHEREAS,  Seller and Babar I. Hamirani  desire to sell, and Palomar desires
to  buy,  all  of  the  existing  technology,   proprietary  information  and/or
intellectual property of Seller and Babar I. Hamirani pertaining to technologies
intended to facilitate the  installation,  replacement and upgrading of personal
computers,  including  without  limitation  all of the  technology,  


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                                      260


proprietary information and/or intellectual property licensed to Nexar under the
License Agreement, or otherwise owned by Seller;

     WHEREAS,  Babar I.  Hamirani's  employment  with  Nexar was  terminated  on
November 29, 1996 and Babar I. Hamirani has raised  certain issues in connection
with such termination;

     WHEREAS,  the  parties  wish to settle  for all time all known and  unknown
claims relating to Babar I. Hamirani's termination,  the License Agreement,  the
Employment Agreement,  including Babar I. Hamirani's options claims, and further
wish to effect a sale of technology,  proprietary  information and  intellectual
property described below by Seller and Babar I. Hamirani to Palomar;

     WHEREAS,  Babar I.  Hamirani is a principal of Amerisel,  Inc, a California
corporation  (d/b/a  Computer  Universe)  ("Computer  Universe"),   which  Nexar
contends is indebted to it in the approximate  amount of $271,000 for goods sold
by Nexar, and Nexar is willing to forgive such  indebtedness in consideration of
the mutual covenants and obligations of the parties to this Agreement and for
mutual releases between Nexar and Computer Universe;

     NOW, THEREFORE,  in consideration of the mutual covenants,  representations
and warranties hereinafter set forth, the parties hereby agree as follows:


                                    ARTICLE I

                           PURCHASE AND SALE OF ASSETS

     1.0 Definitions.  As used in this Agreement,  the term "Hamirani" refers to
Babar I. Hamirani.  As used in this Agreement,  the term "affiliates"  refers to
those persons listed on Exhibit 1.0 hereto.

     1.1  Purchased  Assets.  Subject  to  the  terms  and  conditions  of  this
Agreement,  at the Closing (as defined in Section 1.4) Seller and Hamirani shall
sell,  convey,  transfer,  assign and  deliver to  Palomar,  and  Palomar  shall
purchase,   all  right,   title  and  interest  in  the  assets   defined  below
(collectively, the "Purchased Assets"):

          (i) Technology.  The Purchased  Assets shall include all right,  title
     and interest in the  following  technology,  proprietary  information,  and
     intellectual property (collectively, the "Technology"):

               (a) ISPA and XPA. All right, title and interest in any invention,
          modification,   or  advance  (whether  or  not  patentable)   created,
          developed,  realized,  acquired,  owned,  conceived  or  made by or on
          behalf of Seller or Hamirani  (independently  or with  others),  or in
          which Seller or Hamirani have a legal or equitable right of ownership,
          through the Closing Date (as defined in Section  1.4),  pertaining  to
          technologies  intended to facilitate  


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                                      261


          the installation,  replacement,  and/or upgrading of personal computer
          components  (including,  by way of non-limiting example,  technologies
          sometimes  referred to as "Inverted  Socket  Processor  Architecture,"
          "ISPA," "ISPA 1," "ISPA 2," "ISPA 3," "Cross Processor  Architecture,"
          and/or "XPA");

               (b) Patents and  Applications.  All right,  title and interest in
          all patents and patent  applications owned by, acquired by, issued to,
          naming,  filed by or on behalf  of,  Seller or  Hamirani,  or in which
          Seller  or  Hamirani  have a legal or  equitable  right of  ownership,
          through the  Closing  Date,  disclosing  or  claiming  any  invention,
          modification, or advance referred to in Section 1.1(i)(a); any further
          applications  claiming a right of priority from such patents or patent
          applications   (including,   without   limitation,   any   divisional,
          continuation,  continuation-in-part,  or convention applications); and
          any  patents   issuing  on  any  such   applications;   any   reissue,
          reexamination  or  extension  of any such  patents;  such  patents and
          applications  including, by way of non-limiting example, United States
          Patent Application Serial No. 08/409,317,  filed on 3/23/95,  entitled
          "System  Permitting  the External  Replacement  of the CPU and/or DRAM
          SIMMs   Microchip   Board"   (the   "Patent   Application")   and  the
          aforementioned   "additional"   patent  application  (not  yet  filed)
          referred to in the letter dated  December 19,  1996,  from  Hamirani's
          counsel  to  Mr.  Ronald  J.   Kransdorf   (the   "Additional   Patent
          Application");

               (c)  Copyright.  All  right,  title and  interest,  if any should
          exist, in any works of authorship, copyright applications or copyright
          registrations  created by, owned by,  acquired by, issued to,  naming,
          filed by or on behalf of,  Seller or  Hamirani,  or in which Seller or
          Hamirani  have a legal or equitable  right of  ownership,  through the
          Closing  Date,  relating  to  any  invention,  modification,  advance,
          technology, patent, or application referred to in Sections 1.1(i)(a) -
          (b)  (as  used  herein  and  throughout  this  agreement,  "copyright"
          includes copyright, moral rights and semiconductor mask work rights);

               (d)  Trademark.  All  right,  title and  interest,  if any should
          exist,  in  any  trademarks,   trademark   applications  or  trademark
          registrations,  created by, owned by,  acquired by, issued to, naming,
          filed by or on behalf of,  Seller or  Hamirani,  or in which Seller or
          Hamirani  have a legal or equitable  right of  ownership,  through the
          Closing Date, for use in connection with goods or services relating to
          any  invention,   modification,   advance,   technology,   patent,  or
          application referred to in Sections 1.1(i)(a) - (b) (including, by way
          of  non-limiting  example,  actual  or  potential  trademarks  such as
          "Inverted Socket Processor  Architecture," "ISPA," "ISPA 1," "ISPA 2,"
          "ISPA 3," "Cross Processor  Architecture,"  and/or "XPA"),  as well as
          the goodwill of Seller's or Hamirani's businesses (or that part of the
          such  goodwill)  connected  with  the  use of and  symbolized  by such
          trademarks;  in the case of trademarks and trademark  applications for
          which there is an intent to use, Seller and Hamirani  acknowledge that
          assignment of such trademarks and trademark applications is being made
          concurrent with the assignment of such businesses or portions  thereof
          to which those trademarks and trademark  applications  pertain,  which
          businesses  are ongoing and  existing;  the term  "trademark"  as used
          herein and  throughout  this agreement  refers to both  trademarks and
          service marks;


<PAGE>
                                      262


               (e) Trade Secrets.  All right, title and interest,  if any should
          exist,  in  any  trade  secrets  and  know-how  developed,   realized,
          acquired,  owned,  or made  by or on  behalf  of  Seller  or  Hamirani
          (independently or with others),  or in which Seller or Hamirani have a
          legal or  equitable  right of  ownership,  through the  Closing  Date,
          relating to any invention, modification,  advance, technology, patent,
          or application referred to in Sections 1.1(i)(a) - 1.1(i)(b);

               (f) Documentation.  All right, title and interest,  if any should
          exist, to any  documentation  (in whatever form and stored on whatever
          medium)  created by, owned by,  acquired by, issued to, filed by or on
          behalf of,  Seller or Hamirani,  or in which Seller or Hamirani have a
          legal or  equitable  right of  ownership,  through the  Closing  Date,
          relating to any invention, modification,  advance, technology, patent,
          or  application  referred to in Sections  1.1(i)(a) - 1.1(i)(b);  such
          documentation   including,   without   limitation,   all   design  and
          engineering drawings and specifications (the "Documentation");

               (g)  Prototypes.  All right,  title and  interest,  if any should
          exist,   to  any   prototypes,   mock-ups,   simulations,   or   other
          implementations  (whether or not  completed  or  functional)  created,
          developed,  realized,  acquired,  owned,  or made by or on  behalf  of
          Seller or Hamirani  (independently or with others), or in which Seller
          or Hamirani have a legal or equitable right of ownership,  through the
          Closing  Date,  relating  to  any  invention,  modification,  advance,
          technology, patent, or application referred to in Sections 1.1(i)(a) -
          1.1(i)(b);

               (h) Other  Seller  Assets.  All right,  title and interest in the
          technology,   proprietary  information  and/or  intellectual  property
          licensed  to Nexar  under the  License  Agreement,  including  without
          limitation that  constituting the "Licensed  Technology and Know-How",
          "Invention",  "Technical  Information",   "Documentation",   "Licensed
          Patent Rights", and "Improvement" through the Closing Date;

          (ii) Causes of Actions.  The  Purchased  Assets shall also include all
     right,  title and  interest  in all  causes of action,  claims and  similar
     rights  arising under law or contract for  assignment or other  transfer to
     Seller or  Hamirani,  or for  performance  of duties on behalf of Seller or
     Hamirani,  relating to any invention,  modification,  advance,  technology,
     patent  or  application  therefor,  trademark,  trademark  registration  or
     application  therefore,  work  of  authorship,  copyright  registration  or
     application therefor,  trade secret or know-how,  documentation,  prototype
     mock-ups,  simulations,  or other  implementations  referred to in Sections
     1.1(i)(a)  -1.1(i)(g) through the Closing Date. In the event Palomar and/or
     Nexar  pursue a cause of action  under this  paragraph  and  Seller  and/or
     Hamirani  are named as parties in any such legal  proceeding,  then Palomar
     and/or  Nexar  agree to defend and hold  Seller  and/or  Hamirani  harmless
     pursuant to  paragraph  8.3 below  except  insofar as such  actions are the
     result of an act or omission by Seller and/or Hamirani in  contravention of
     the purposes and terms of this Agreement.


<PAGE>
                                      263


     As used  in  this  Section  1.1,  the  terms  patent,  patent  application,
trademark, trademark application,  trademark registration,  copyright, copyright
application,  copyright  registration,  and the like, refer to the corresponding
domestic,  international,  regional and foreign intellectual property rights, if
any should  exist.  Thus,  by way of  non-limiting  example,  the  references in
Section 1.1(i)(b) to patents and patent  application  refers to domestic patents
and patent applications, international patents and patent applications, regional
patents and patent applications, and foreign patents and patent applications.

     The purchase and sale  transactions  described above in this Section 1.1 is
herein referred to as the "Asset Sale."

     1.2 No  Assumption of  Liabilities.  Neither Nexar nor Palomar shall assume
any  liabilities  or obligations  of Seller or Hamirani  whatsoever,  including,
without  limitation,  any  obligation  or  liability  relating  to  any  of  the
agreements  included in the Purchased Assets or product  warranty,  liability or
similar claims relating to products  delivered or services performed on or prior
to the date of the  Closing  or any other  claims  arising  out of  actions  (or
inaction)  or other  events  initially  occurring on or prior to the date of the
Closing.  It is agreed that Seller and Hamirani  shall be solely  liable for all
liabilities  and  obligations  arising from  Seller's or  Hamirani's  respective
ownership,  possession,  use or operation  of the  Purchased  Assets,  the sale,
licensing  or other  disposition  of the  Technology,  and other  incidents  and
occurrences  relating to the  Purchased  Assets during the period on or prior to
the date of the Closing.

     1.3.  Escrow  Agent;  Escrow  Agreement.  Union Bank of California or other
appropriate  California  financial  institution  shall  serve  as  Escrow  Agent
pursuant  to the  terms  of an  Escrow  Agreement  substantially  in the form of
Exhibit 1.3 hereto and to be mutually  agreed upon by the parties  thereto which
shall be executed at the Closing by the parties hereto and said Escrow Agent.

     1.4 The  Closing.  On the  earlier of April 30,  1997 or the closing of the
initial public offering of the common stock of Nexar (the "Closing  Date"),  (i)
Seller and Hamirani will deliver to Palomar and Nexar the various  certificates,
instruments and documents referred to in Section 6.1, and (ii) Palomar and Nexar
will deliver, or cause to be delivered, to Seller,  Hamirani,  Computer Universe
and the Escrow Agent, as the case may be, the consideration specified in Section
5.1(b),  (c), (d) and (e) and the various  instruments and documents referred to
in Section 6.2 (the "Closing"). If the closing of the initial public offering of
the common stock of Nexar occurs  before April 30, 1997,  then the Closing shall
occur on the same date as the closing of the Nexar initial  public  offering and
the Closing will be first in time.  The Closing  shall take place at the offices
of Ropers, Majeski, Kohn & Bentley, 80 North First Street, San Jose, California,
or such other place as agreed to by the parties.

                                   ARTICLE II

              REPRESENTATIONS AND WARRANTIES OF SELLER AND HAMIRANI


<PAGE>
                                      264


     Seller and Hamirani  each jointly and  severally  represent  and warrant to
Palomar  and  Nexar  that the  following  are true and  complete  as of the date
hereof.

     2.1  Organization,  Standing  and  Power.  Seller  is  a  corporation  duly
organized,  validly  existing and in good standing  under the laws of Nevada and
has full corporate  power and authority to own, lease and operate its properties
and to carry on its business as now being  conducted.  Seller is duly  qualified
and in good  standing as a foreign  corporation  in  California  and every other
jurisdiction  where  the  conduct  of  its  business  or  the  character  of its
properties  requires such  qualification,  or Seller believes  qualification  is
unnecessary  at this time.  Seller has duly  obtained all permits,  licenses and
other  qualifications  under all  applicable  laws,  regulations,  ordinances or
orders of public authorities,  or otherwise,  that Seller believes are necessary
to the current conduct of its business.  Seller has no subsidiaries and does not
control   directly  or  indirectly  or  have  any  direct  or  indirect   equity
participation in any corporation, partnership, trust or other business.

     2.2  Authority  and  Binding  Obligation.  This  Agreement  has  been  duly
authorized,  executed  and  delivered  by each of the Seller and  Hamirani,  and
Seller has the  corporate  power and  authority  to enter into and  perform  the
obligations  to be  performed  by it  hereunder,  and Hamirani has the power and
authority  to enter into and  perform the  obligations  to be  performed  by him
hereunder.  This  Agreement  and the  Bills of Sale  and  other  instruments  of
transfer  and  agreements  of Seller and  Hamirani  referred  to in Section  6.1
respectively  constitute  the  valid  and  binding  obligations  of  Seller  and
Hamirani,  enforceable  against each in accordance with their respective  terms,
except  that such  enforceability  may be  limited  by  bankruptcy,  insolvency,
moratorium  or other  similar  laws  affecting  or  relating to  enforcement  of
creditor's rights generally and is subject to general principles of equity.

     2.3 No Consents Necessary.  No consents or approvals of or notifications to
any  governmental  authority  or other  person not a party hereto is required in
connection  with the  execution  and  delivery of this  Agreement  by Seller and
Hamirani or the  performance  by Seller and Hamirani of all of their  respective
obligations hereunder.

     2.4 No Breach. Neither the execution and delivery of this Agreement nor the
consummation  of the  transactions  contemplated  hereby  will (a)  violate  any
provision of the charter or bylaws of Seller or  Hamirani's  affiliates,  or any
material law, regulation,  ordinance, judgment or decree applicable to Seller or
Hamirani or any of their respective properties or assets; (b) violate,  conflict
with or result in the  breach or  termination  of, or  otherwise  give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time,  or both,  would  constitute) a default under the terms of any material
written contract,  mortgage,  lease, bond,  indenture,  agreement,  franchise or
other  instrument  or  obligation  of Seller or  Hamirani;  or (c) result in the
creation of any lien or encumbrance  (collectively,  "Liens") upon the Purchased
Assets.

     2.5 Intellectual Property.


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                                      265


          (a) Seller  and/or  Hamirani own the  Technology  in its entirety both
     legally  and  beneficially  that  is to  be  sold,  conveyed,  transferred,
     assigned and delivered to Palomar by this Agreement. Seller and/or Hamirani
     have not assigned,  licensed,  transferred or otherwise conveyed any rights
     in the Technology to Computer Universe,  Khurum Hamirani, Tariq Hamirani or
     others.

          (b) Seller  and/or  Hamirani own legally  enforceable  rights to make,
     use, sell, offer for sale, import, disclose, duplicate, distribute, display
     and  to  prepare   derivatives   of  apparatus,   processes,   articles  of
     manufacture,  works of  authorship  and  copies  in any  medium,  goods and
     services embodying the Technology,  subject, prior to the close of business
     on the date hereof, only to the terms of the License Agreement.

     Exhibit  2.5(a)  sets  forth a true and  complete  list of all  trademarks,
trademark   applications,    trademark   registrations,   patents   and   patent
applications, copyright applications,  copyright registrations,  included in the
Technology  (collectively,  the  "Assigned   Applications/Registrations"),   and
specifies  (i) for each  such  trademark  application,  trademark  registration,
patent application,  patent, copyright application,  and copyright registration,
the  jurisdiction in which it has been filed and/or issued,  the date of filing,
the application number, and the registration number (where applicable), and (ii)
for each  such  trademark,  the  identity  of the  mark,  its dates of first use
anywhere and first use in interstate  commerce,  the goods and/or  services with
which it is used, and the jurisdictions in which it has been used.

     Exhibit  2.5(b) sets forth a true and  complete  list of all  tangible  and
intangible assets, other then the Assigned Applications/Registrations,  included
in the Purchased Assets,  including without  limitation  apparatus,  articles of
manufacture,  prototypes and  Documentation  or other tangible  media,  contract
rights, causes of action, claims and similar rights, whether accrued or not.

     Exhibit  2.5(c)  sets  forth  a true  and  complete  list  of all  material
third-party patents, trademarks,  copyrights,  know-how, proprietary information
or other technology (including software) (the "Third Party Intellectual Property
Rights"),  and any other  property of third parties which are  incorporated  in,
are, or form a part of, the  Technology.  Exhibit  2.5(c) also sets forth a true
and complete list of (i) all material licenses, sublicenses and other agreements
as to which Seller  and/or  Hamirani is a party and pursuant to which any person
is   authorized   to  use   any   of  the   Technology   and/or   the   Assigned
Applications/Registrations;  (ii) all material  licenses,  sublicenses and other
agreements  as to which Seller is a party and  pursuant to which  Seller  and/or
Hamirani is  authorized  to use any Third  Party  Intellectual  Property  Rights
relating  to any  technology  referred  to in Section  1.1(i)(a);  and (iii) all
material  licenses,  sublicenses and other  agreements as to which Seller and/or
Hamirani is a party and pursuant to which Seller  and/or  Hamirani is authorized
to make,  use,  sell,  offer  for  sale,  import,  disclose  and/or  modify  any
Technology and/or the Assigned Applications/Registrations.

     No claims are currently pending or, to the knowledge of Seller or Hamirani,
threatened by any person or entity,  nor do Seller or Hamirani know of any valid
grounds for any bona fide claims (i) to the effect  that the  manufacture,  use,
sale, offering for sale, import, disclosure, 


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                                      266


duplication, distribution, display, licensing, assignment, and/or preparation of
derivatives based on any product,  process, work of authorship or copy utilizing
the Technology infringes on any copyright, patent, trademark, or trade secret of
a third party; (ii) against the use by Seller or Hamirani of the any trademarks,
trade  names,  trade  secrets,   copyrights,   patents,   patent   applications,
technology,  know-how or computer software programs and applications relating to
any  technology  referred  to in  Section  1.1(i)(a)  used in  their  respective
businesses as currently conducted; (iii) challenging the ownership,  validity or
effectiveness  of any of Assigned  Applications/Registrations,  the  Technology,
and/or the Purchased Assets; or (iv) challenging  Seller's or Hamirani's license
or legally  enforceable  right to make use of Third Party  Intellectual  Rights.
Notwithstanding the above, all parties are aware, as evidenced by Nexar's recent
filings with the  Securities  and Exchange  Commission,  that Liaqat Y. Khan may
have a threatened claim regarding the subject technology.

     To the knowledge of Seller and Hamirani, all patents,  patent applications,
trademarks,    trademark   applications,    registered   trademarks,   copyright
applications, and registered copyrights included in the Technology are valid and
subsisting.  To the  knowledge  of Seller  and  Hamirani,  there is no  material
unauthorized   use,   infringement   or   misappropriation   of   any   Assigned
Applications/Registrations  or the Technology by any third party, including any,
current or former  officer,  director,  stockholder,  or  employee  of Seller or
Hamirani.  Notwithstanding  the above,  Seller and/or  Hamirani may have a claim
against GDA for material  unauthorized use,  infringement or misappropriation of
the  Technology in design work for Nexar (all right,  title and interest in such
claim, as well as in any related cause of action or similar rights arising under
law or contract,  are assigned and  transferred  to Palomar  pursuant to Section
1.1(ii) hereof).

          (c)  All  copies  of  any  source   code  for   software  or  firmware
     constituting  part of the  Technology  are in  Seller's  and/or  Hamirani's
     possession and control (and shall be delivered to Palomar upon Closing) and
     no officers, employees, agents, outside consulting or contract engineers or
     designers  or actual or potential  customers of Seller,  or any other third
     party, have any rights to or possess such source code.

          (d) There are no licenses or other  authorizations  not  possessed  by
     Seller or  Hamirani  which are  required  for Palomar and Nexar to utilize,
     modify,  market and distribute the Technology and Documentation to at least
     the same extent as Seller and/or Hamirani prior to the Closing Date.

          (e) Seller and Hamirani have taken all appropriate  actions to protect
     the  secrecy  and  confidentiality  of the  Technology  and the  non-public
     information  included in the Documentation.  To the knowledge of Seller and
     Hamirani, the Assigned Applications/Registrations are presently protectable
     and are not part of the  public  domain or  literature,  nor have they been
     used,  divulged  or  appropriated  for the  benefit  of any past or present
     employees or other persons, or to the detriment of Seller or Hamirani.  All
     persons who have been involved in the  development  of the  Technology  and
     Documentation have executed  confidentiality  and nondisclosure  agreements
     covering all non-public  information  included in the  Documentation in the
     forms previously  delivered to Palomar.  Notwithstanding  the above, Seller
     and/or  Hamirani have not obtained a written  Nondisclosure  Agreement with
     HCL-Hewlett Packard, Ltd. or HCL America ("HCL 


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                                      267


     America")  relating to design work  performed  for Seller  and/or  Hamirani
     regarding United States Patent Application  Serial No.  08/409,317.  Seller
     and/or  Hamirani  have not  assigned,  licensed,  transferred  or otherwise
     conveyed any rights in the Technology to HCL America.

          (f) Seller  and/or  Hamirani pay no royalty under any  Technology  and
     have the right to bring  actions for the  infringement  thereof  (except as
     limited by the License Agreement).

          (g) There are no legal or governmental proceedings pending, other than
     patent,  trademark,  and  copyright  application  prosecution  proceedings,
     relating to the Technology,  and to Seller's and Hamirani's  knowledge,  no
     such proceedings are threatened or contemplated by governmental authorities
     or others.

          (h)  Seller  and/or  Hamirani  are not aware of any facts  that  would
     preclude  assignment to Palomar and Nexar of clear title to the Technology,
     including without limitation the Assigned Applications/Registrations,  free
     from any encumbrances or liens.

          (i) The Seller  and/or  Hamirani  have complied with the USPTO duty of
     candor and  disclosure  for each of the  patents  and  patent  applications
     included in the Technology.

          (j) The Seller and/or  Hamirani are not aware of any facts which would
     render any patent,  copyright  or trademark  registrations  included in, or
     that may issue from the Technology, unenforceable or invalid.

          (k) The Seller  and/or  Hamirani  are unaware of any facts which would
     preclude  the  grant  of a  patent,  trademark  registration  or  copyright
     registration from pending applications therefor included in the Technology.

     2.6  Agreements  and  Other  Arrangements.  Exhibit  2.6  lists  all of the
agreements  and other  arrangements,  if any, to which  Seller or Hamirani are a
party or by or to which they or their  assets are bound or subject and which are
material to Seller or Hamirani,  their  businesses,  the Technology,  including,
without  limitation,  the  following:  (a) design,  engineering,  manufacturing,
assembly, joint venture and partnership agreements;  (b) license agreements; (c)
agreements  with any outside  consulting  or contract  engineers or designers or
other  representative  of Seller or Hamirani.  There have been delivered or made
available to Nexar true and complete  copies of all of the  agreements and other
arrangements  listed in  Exhibit  2.6 and all other  Exhibits  hereto.  All such
agreements and arrangements  are in full force and effect and constitute  legal,
valid  and  binding  obligations  upon  Seller  and/or  Hamirani  and,  to their
knowledge, the respective other parties thereto,  enforceable in accordance with
their  respective  terms  (except  that such  enforceability  may be  limited by
bankruptcy,  insolvency,  moratorium or other similar laws affecting or relating
to  enforcement  of  creditors'  rights  generally  and is  subject  to  general
principles of equity).  Seller and/or  Hamirani have paid in full or accrued all
material  amounts  due by it  thereunder  and  has  satisfied  in  all  material
respects,  or provided  for, all of its  material  liabilities  and  obligations
thereunder.  Except as disclosed in Exhibit 2.6,  Seller and/or Hamirani are not
in default under any material  provision of any such  agreement or  arrangement,
nor, to its  knowledge,  is any other party to such  agreement or arrangement in
default of any material 


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provision thereunder, nor does any condition exist that, with notice or lapse of
time or both, would constitute a default thereunder,  which default would have a
materially  adverse  effect  on  Seller  and/or  Hamirani  or  their  respective
businesses.

     2.7 No Employees. Other than Babar I. Hamirani, Seller has no employees and
no employee has ever been compensated for any services rendered for or on behalf
of Seller or is due any such compensation for services rendered.  Any individual
or entity  engaged by Seller or Hamirani  to perform  any  design,  engineering,
manufacturing  or assembly  services  with  respect to the  Technology  has been
retained  strictly  on the  basis of  work-for-hire  and no  liens or  ownership
interest of any kind whatsoever has arisen in connection with any such services.

     2.8 Purchase of Securities for  Investment.  The Seller and/or Hamirani are
acquiring the Palomar Shares (as defined in Section  5.1(b)) for its own account
for investment purposes only and not with a view to distribution. Each of Seller
and  Hamirani  has such  knowledge  and  experience  in  financial  and business
matters,  either alone or with advisors,  that each is capable of evaluating the
merits and risks of acquiring the Palomar Shares.

     2.9  Affiliates.  The  affiliates  of  Hamirani  are listed on Exhibit  1.0
hereto.  Hamirani  is the sole  shareholder  of Seller.  Other  than  Seller and
Computer Universe, Hamirani does not have any other affiliated businesses.

     2.10  No  Excluded   Technology.   There  is  no  technology,   proprietary
information or  intellectual  property owned by Seller or Hamirani,  or in which
Seller or Hamirani have a legal or equitable right of ownership,  which will not
be  included in the  Purchased  Assets  transferred  to Palomar and Nexar by the
Bills of Sale and other  instruments  of transfer  referred to in Section 6.1 of
the Agreement, and which are related to the Technology.

                                   ARTICLE III

               REPRESENTATIONS AND WARRANTIES OF PALOMAR AND NEXAR

     Palomar and Nexar each  represent  and warrant to Seller that the following
are true and complete as of the date hereof:

     3.1  Organization,  Standing  and  Power.  Each of Nexar and  Palomar  is a
corporation duly organized, validly existing and in good standing under the laws
of  Delaware,  duly  qualified  as a  foreign  corporation  to  do  business  in
Massachusetts  and California and has full corporate power and authority to own,
lease and  operate  its  respective  properties  and to carry on its  respective
business as proposed to be conducted.

     3.2  Authority  and  Binding  Obligation.  This  Agreement  has  been  duly
authorized,  executed and  delivered  by each of Nexar and Palomar,  and each of
Nexar and  Palomar  has the  corporate  power and  authority  to enter  into and
perform the obligations to be performed  respectively  by each  hereunder.  This
Agreement  constitutes  the valid and binding  obligations  of 


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                                      269


each of Nexar and  Palomar,  enforceable  against  each in  accordance  with its
respective terms,  except that such enforceability may be limited by bankruptcy,
insolvency,   moratorium  or  other  similar  laws   affecting  or  relating  to
enforcement of creditor's rights generally and is subject to general  principles
of equity.

     3.3 Consents and Approvals. No consents or approvals of nor notification to
any  governmental  authority  or other  person not a party hereto is required in
connection  with the  execution  and  delivery  of this  Agreement  by Nexar and
Palomar or the performance by Nexar and Palomar of their respective  obligations
hereunder.

     3.4 No Breach. Neither the execution and delivery of this Agreement nor the
consummation  of the  transactions  contemplated  hereby  will (a)  violate  any
provision  of the charter or by-laws of Nexar or Palomar nor any  material  law,
regulation,  ordinance,  judgment  or decree  applicable  to Nexar or Palomar or
their  respective  properties  or assets;  or (b) violate or  conflict  with any
agreement to which Nexar or Palomar is a party.

                                   ARTICLE IV

                              SETTLEMENT OF CLAIMS

     4.1.  Seller and Hamirani shall deliver to Palomar and Nexar at the Closing
a duly executed General Release identical in form to Exhibit 4.1 hereof.

     4.2.  Palomar and Nexar shall deliver to Seller and Hamirani at the Closing
a duly executed General Release identical in form to Exhibit 4.2 hereof.

     4.3. Seller and Hamirani shall cause Computer  Universe to deliver to Nexar
at the Closing a duly  executed  General  Release  identical  in form to Exhibit
4.3(a)  hereof;  Nexar shall deliver to Computer  Universe at the Closing a duly
executed General Release identical in form to Exhibit 4.3(b) hereof.


                                    ARTICLE V

                                  CONSIDERATION

     5.1 Consideration.  The consideration for the Purchased Assets and releases
by Seller,  Hamirani  and  Computer  Universe of all subject  claims shall be as
follows:

          (a) $75,000 in the  aggregate,  which  shall be paid to Seller  and/or
     Hamirani on the date of execution of this Agreement by the parties  hereto;
     and


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                                      270


          (b) The  number of shares of the  common  stock of  Palomar,  $.01 par
     value per share ("Palomar  Common Stock"),  which have an aggregate  market
     value  (based on the per share  closing bid of the Palomar  Common Stock on
     the  business  day  immediately  prior to The  Nasdaq  Stock  Market on the
     Closing  Date of  $1,500,000  (the  "Palomar  Shares"),  to be delivered to
     Seller and/or Hamirani on the Closing Date; and

          (c) $425,000 in the aggregate to be paid to Seller and/or  Hamirani on
     the Closing Date; and

          (d) $700,000 in deferred  consideration  to be delivered to the Escrow
     Agent on the Closing  Date  pursuant to the terms of the Escrow  Agreement;
     and

          (e)  $50,000  to be paid to  Computer  Universe  on the  Closing  Date
     pursuant to the terms of the mutual  releases  between  Nexar and  Computer
     Universe in the form of Exhibits 4.3(a) and (b) attached hereto.

                                   ARTICLE VI

                                     CLOSING

     6.1.  Obligations  of Seller and Hamirani at the  Closing.  At the Closing,
Seller and Hamirani  shall  deliver or cause to be  delivered to Palomar  and/or
Nexar the following:

          (a) (i) Bills of Sale identical in form to Exhibit 6.1(a)(i), and such
     other  instruments  of transfer  for the  Purchased  Assets  (including  by
     non-limiting   example   assignments  of  patents,   patent   applications,
     copyrights and trademarks) in form and substance reasonably satisfactory to
     Palomar, Nexar and their counsel and sufficient to convey to Palomar all of
     Seller's and Hamirani's  right,  title and interest in and to the Purchased
     Assets;   and  (ii)  such   instruments  of  transfer  shall  include,   by
     non-limiting example, assignments of the Patent Application, the Additional
     Patent  Application  and other  technology  in the form of an Assignment of
     Technology   identical  in  form  to  Exhibit  6.1(a)(ii)   sufficient  for
     recordation  with the United States  Patent and Trademark  Office and other
     governmental offices;

          (b) all  Documentation  and any  tangible or  intangible  reduction to
     practice or other representation of the Technology not already in Palomar's
     or Nexar's possession; and

          (c) a counterpart  to the Escrow  Agreement,  duly executed by Seller,
     Hamirani and the Escrow Agent;


<PAGE>
                                      271


          (d) a counterpart of the Investment and Registration  Rights Agreement
     in the form of Exhibit 6.1(d)  ("Investment  Agreement"),  duly executed by
     Seller and Hamirani;

          (e) a General Release  identical in form to Exhibit 4.1, duly executed
     by Seller and Hamirani;

          (f) a  General  Release  identical  in form to  Exhibit  4.3(a),  duly
     executed by Computer Universe;

          (g) all copies of the Assigned  Applications/Registrations  (including
     the  Patent  Application  and the  Additional  Patent  Application  not yet
     filed),  along with copies of the Patent  Application's  entire  history of
     prosecution,  or "file history",  before the respective  government offices
     (such  file  history  to  include,  but not be  limited  to,  copies of the
     application,   filing  receipts,  office  actions,  responses,  notices  of
     allowability  and/or allowance,  and any other  correspondence  between the
     applicant and  respective  government  office with respect to such Assigned
     Applications/Registrations),  which  copies  Palomar and Nexar shall have a
     right to conduct a nonqualitative inspection at the Closing; and

          (h) such other  certificates,  and documents and  instruments as Nexar
     may  reasonably   request  to  effectuate  and  evidence  the  transactions
     contemplated  hereby and the  satisfaction of the obligations of Seller and
     Hamirani under this Agreement.

     6.2  Obligations  of Nexar and  Palomar  at the  Closing.  At the  Closing,
Palomar and Nexar shall  deliver or cause to be delivered to Seller and Hamirani
the following:

          (a) the $425,000 cash consideration specified in Section 5.1(c);

          (b) the Palomar Shares;

          (c) the $700,000 deferred  consideration to be delivered to the Escrow
     Agent pursuant to the Escrow Agreement;

          (d)  the  $50,000  cash  consideration  to be  delivered  to  Computer
     Universe;

          (e) a General Release  identical in form to Exhibit 4.2, duly executed
     by Nexar and Palomar;

          (f) a  General  Release  identical  in form to  Exhibit  4.3(b),  duly
     executed by Nexar;

          (g) a counterpart to the Escrow Agreement, duly executed by Palomar;

          (h) a  counterpart  to the  Investment  Agreement,  duly  executed  by
     Palomar; and

          (i) a copy of the lock-up  agreement  between  Nexar and its directors
     and officers; and


<PAGE>
                                      272


          (j) such other  certificates,  documents and instruments as Seller may
     reasonably request to effectuate and evidence the transactions contemplated
     hereby and the  satisfaction  of the obligations of Palomar and Nexar under
     this  Agreement.  By the Closing  Date,  Seller and  Hamirani  will provide
     specific Closing instructions regarding which portions of the consideration
     shall be made out to Seller as opposed to Hamirani.

                                   ARTICLE VII

                         OTHER COVENANTS AND AGREEMENTS

     7.1 Prior Agreement  Terminated.  The License  Agreement to which Nexar and
Seller are parties, shall be automatically  terminated and have no further force
and effect as of the close of  business on the  Closing  Date and neither  party
shall thereafter have any liability whatsoever to the other thereunder.

     7.2 Non-Compete;  Non-Disparagement; No Bad Acts. Hamirani and Seller agree
that neither will during the period  commencing upon execution of this Agreement
and ending on the Closing  Date,  either alone or jointly with, or as manager or
agent for, any person, corporation, partnership, joint venture or other business
organization, directly or indirectly engage or participate in, assist or consult
with in any manner or in any capacity,  or have any interest in or make any loan
to any  person,  corporation,  partnership,  joint  venture  or  other  business
organization, or any company, which is engaged in manufacturing, development, or
sale of products incorporating any technology referred to in Section 1.1(i).

     Hamirani  and Seller  further  agree that  neither  will  during the period
ending six months  following the Closing Date,  either alone or jointly with, or
as manager or agent for, any person, corporation,  partnership, joint venture or
other  business  organization,  directly  or  indirectly,  solicit any person or
persons in the  employment  of Palomar or Nexar in any  capacity  whatsoever  to
terminate such association and work for Hamirani, Seller, or any affiliates.

     Commencing  upon execution of this  Agreement  through the period ending 12
months following the Closing Date, the parties mutually agree that they will not
make any  statement,  orally or in  writing,  which  disparages  or damages  the
reputation,  quality of work,  capabilities  or integrity of any other party, as
the law  provides,  or do any  wrongful  act or  omission  which may  damage the
reputation,  quality of work,  capabilities  or integrity of any other party, as
the law provides.


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                                      273


     Commencing  upon execution of this  Agreement  through the period ending 12
months following the Closing Date, the parties mutually agree that they will not
interfere with or damage any beneficial or contractual relationship of the other
party, as the law provides.

     7.3 Further Assurances of Seller and Hamirani. Commencing upon execution of
this Agreement (and  thereafter,  as applicable),  Seller and Hamirani shall (i)
maintain   the    pendency,    validity   and    enforceability    of   Assigned
Applications/Registrations  and shall not allow them to go  abandoned  or reduce
their scope; (ii) maintain the secrecy of all legally  protectable trade secrets
and know-how included in Technology;  and (iii) take no other actions tending to
reduce the scope of the Technology and/or Purchased  Assets.  After the Closing,
Seller and Hamirani each hereby covenant that they will (i) execute, acknowledge
and deliver any further assignments, conveyances and other assurances, documents
and  instruments of transfer  reasonably  requested by Palomar and/or Nexar from
time to time and shall take any other action  consistent  with the terms of this
Agreement  that may be  reasonably  requested  by Palomar  and/or  Nexar for the
purpose of selling, transferring,  assigning, granting, conveying, delivering or
confirming to Palomar  and/or Nexar as of the date of the Closing (or such other
date  thereafter  as  the  parties  shall  deem  appropriate)  any or all of the
Purchased  Assets;  (ii) provide any further facts and documents as may be known
and  accessible  to Seller  and/or  Hamirani  requested by Palomar  and/or Nexar
relating to the  Technology,  and testify (at Palomar and/or Nexar's cost) as to
the same in any  interference,  opposition,  litigation  or  proceeding  related
thereto,  and (iii) execute,  acknowledge and deliver any further instruments or
affidavits  reasonably  requested  by Palomar  and/or Nexar from time to time to
apply for, obtain maintain, and enforce patents,  copyrights,  trade secrets and
other proprietary  rights in the Technology  assigned  hereunder or to otherwise
carry out the purposes hereof.  Neither the Seller nor Hamirani shall retain any
copies of the Purchased Assets or materials  disclosing or containing  nonpublic
aspects  of the same.  If  requested  by Palomar  and/or  Nexar,  Seller  and/or
Hamirani,  at Palomar and/or Nexar's cost, shall prosecute or otherwise  enforce
in Seller's and/or  Hamirani's own names for the benefit of Palomar and/or Nexar
any claims,  rights or benefits that are  transferred to Palomar and/or Nexar by
this Agreement and that require  prosecution  or enforcement in Seller's  and/or
Hamirani's names.

     7.4 Further  Assurances of Palomar and Nexar. All officers and directors of
Nexar shall agree to hold their shares of Nexar stock for a period not less than
six (6) months from the date of closing of Nexar's  initial public  offering.  A
copy of the lock-up  agreement  confirming  same shall be provided to Seller and
Hamirani at the  Closing.  Palomar and Nexar  shall not fund any  litigation  or
other legal proceeding (except any defense or counterclaim)  brought in the name
of any  Palomar or Nexar  director,  officer,  employee,  or any others  against
Seller or Hamirani for the period ending four years following the Closing Date.

                                  ARTICLE VIII

                                 INDEMNIFICATION


<PAGE>
                                      274


     8.1 Survival of Representations  and Warranties.  The  representations  and
warranties made by each of the parties in this Agreement shall be deemed to have
been  relied upon by the other  parties  hereto and shall  survive the  Closing,
provided that in no event shall any party be entitled to seek indemnification in
respect of any breach of a  representation  or warranty made herein  pursuant to
this Article VIII unless the party  seeking  indemnification  has made a written
claim therefor pursuant to Section 9.9 prior to January 1, 2000.

     8.2 Indemnification Provisions.

          (i) In the event Seller and/or Hamirani  breaches (or in the event any
     third party alleges facts that, if true,  would mean Seller and/or Hamirani
     has  breached)  any of their  representations,  warranties,  and  covenants
     contained herein,  provided that Palomar and/or Nexar makes a written claim
     for  indemnification  against Seller and/or  Hamirani by notice to Hamirani
     pursuant to Section 9.9 prior to January 1, 2000,  then Seller and Hamirani
     jointly and severally agree to indemnify Nexar and Palomar from and against
     the entirety of any actions, suits, proceedings,  hearing,  investigations,
     charges,  complaints,  claims,  demands,  injunctions,  judgments,  orders,
     decrees, rulings,  damages, dues, penalties,  fines, costs, amounts paid in
     settlement,  liabilities,  obligations, taxes, liens, losses, expenses, and
     fees,  including  court costs and reasonable  attorney's  fees and expenses
     ("Adverse  Consequences") Nexar or Palomar may suffer through and after the
     date of the claim for indemnification  (including any Adverse  Consequences
     Nexar or Palomar  may suffer  after  December  31,  1999)  resulting  from,
     arising out of,  relating to, in the nature of, or caused by the breach (or
     the alleged breach).

          (ii) In the event Palomar or Nexar breaches (or in the event any third
     party  alleges  facts  that,  if true,  would  mean  Palomar  or Nexar  has
     breached) any of its representations,  warranties,  and covenants contained
     herein,  provided that Hamirani  makes a written claim for  indemnification
     against  Palomar or Nexar pursuant to Section 9.9 prior to January 1, 2000,
     then Palomar and Nexar agree to  indemnify  each of the Seller and Hamirani
     from and against the  entirety  of any Adverse  Consequences  the Seller or
     Hamirani  may  suffer   through  and  after  the  date  of  the  claim  for
     indemnification  (including any Adverse Consequences the Seller or Hamirani
     may suffer  after  December  31,  1999)  resulting  from,  arising  out of,
     relating  to, in the nature  of, or caused by the  breach  (or the  alleged
     breach).

     8.3 Matters Involving Third Parties.

          (i) If any  third  party  shall  notify  any party  (the  "Indemnified
     Party") with respect to any matter (a "Third Party  Claim")  which may give
     rise  to  a  claim  for  indemnification   against  any  other  party  (the
     "Indemnifying  Party") under this Article VIII, then the Indemnified  Party
     shall promptly notify each Indemnifying Party thereof in writing; provided,
     however,  that no delay on the part of the  Indemnified  Party in notifying
     any  Indemnifying  Party  shall  relieve  the  Indemnifying  Party from any
     obligation   hereunder   unless   (and  then  solely  to  the  extent)  the
     Indemnifying Party thereby is prejudiced.


<PAGE>
                                      275


          (ii) Any  Indemnifying  Party  will  have  the  right  to  defend  the
     Indemnified  Party against the Third Party Claim with counsel of its choice
     reasonably  satisfactory  to the  Indemnified  Party  so  long  as (A)  the
     Indemnifying Party notifies the Indemnified Party in writing within 15 days
     after the Indemnified  Party has given notice of the Third Party Claim that
     the  Indemnifying  Party  will  indemnify  the  Indemnified  Party from and
     against the entirety of any Adverse  Consequences the Indemnified Party may
     suffer  resulting  from,  arising out of, relating to, in the nature of, or
     caused by the Third Party Claim,  (B) the  Indemnifying  Party provides the
     Indemnified  Party with evidence  reasonably  acceptable to the Indemnified
     Party that the  Indemnifying  Party will have the  financial  resources  to
     defend  against  the Third  Party  Claim and  fulfill  its  indemnification
     obligations  hereunder,  (C) the Third  Party  Claim  involves  only  money
     damages and does not seek an  injunction  or other  equitable  relief,  (D)
     settlement  of, or an adverse  judgment  with  respect  to, the Third Party
     Claim is not, in the good faith judgment of the Indemnified  Party,  likely
     to establish a precedential  custom or practice  materially  adverse to the
     continuing  business  interests  of the  Indemnified  Party,  and  (E)  the
     Indemnifying  Party  conducts the defense of the Third Party Claim actively
     and diligently.

          (iii) So long as the  Indemnifying  Party is conducting the defense of
     the Third Party Claim in accordance  with Section  8.3(ii)  above,  (A) the
     Indemnified  Party  may  retain  separate  co-counsel  at its sole cost and
     expense and  participate  in the defense of the Third Party Claim,  (B) the
     Indemnified  Party will not  consent to the entry of any  judgment or enter
     into any settlement with respect to the Third Party Claim without the prior
     written   consent  of  the   Indemnifying   Party   (not  to  be   withheld
     unreasonably), and (C) the Indemnifying Party will not consent to the entry
     of any  judgment  or enter into any  settlement  with  respect to the Third
     Party Claim without the prior written consent of the Indemnified Party (not
     to be withheld unreasonably).

          (iv) In the event any of the conditions in Article 8.3(ii) above is or
     becomes unsatisfied, however, (A) the Indemnified Party may defend against,
     and consent to the entry of any judgment or enter into any settlement  with
     respect  to, the Third  Party  Claim in any manner it  reasonably  may deem
     appropriate (and the Indemnified Party need not consult with, or obtain any
     consent from,  any  Indemnifying  Party in connection  therewith),  (B) the
     Indemnifying  Parties will  reimburse the  Indemnified  Party  promptly and
     periodically  for the costs of  defending  against  the Third  Party  Claim
     (including   reasonable   attorneys'  fees  and  expenses),   and  (C)  the
     Indemnifying  Parties will remain responsible for any Adverse  Consequences
     the Indemnified  Party may suffer resulting from,  arising out of, relating
     to, in the nature  of, or caused by the Third  Party  Claim to the  fullest
     extent provided in this Article VIII.

     8.4  Other  Indemnification   Provisions.   The  foregoing  indemnification
provisions  are in  addition  to,  and  not in  derogation  of,  any  statutory,
equitable, or common law remedy any party may have for breach of representation,
warranty, or covenant.


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                                   ARTICLE IX

                               GENERAL PROVISIONS

     9.1 Publicity. Neither Hamirani nor Seller or any of their affiliates shall
issue  any  press  release  or  other  public  statement  with  respect  to  the
transactions contemplated by this Agreement without the prior written consent of
Palomar and Nexar, which consent will not be unreasonably withheld.

     9.2 Headings.  The subject headings of the Sections and subsections of this
Agreement are included for purposes of convenience only and shall not affect the
interpretation of any of its provisions.

     9.3 Entire Agreement;  Amendments and Waivers.  This Agreement  constitutes
the  entire  agreement  among  the  parties  pertaining  to the  subject  matter
contained  herein  and  supersedes  all prior  agreements,  representations  and
understandings of the parties. No supplement,  modification or amendment of this
Agreement  shall be binding unless executed in writing by the party to be bound.
No waiver of any of the provisions of this Agreement shall be deemed a waiver of
any other provision,  whether or not similar,  nor shall any waiver constitute a
continuing  waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.

     9.4   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     9.5  Severability;  Reformation.  In case any one or more of the provisions
(or parts of a provision)  contained in this Agreement shall, for any reason, be
held to be invalid,  illegal or unenforceable  in any respect,  such invalidity,
illegality or unenforceability  shall not affect any other provision (or part of
a provision) of this Agreement;  and this Agreement shall, to the fullest extent
lawful,  be reformed and construed as if such invalid,  illegal or unenforceable
provision (or part of a provision)  had never been  contained  herein,  and such
provision (or part) reformed so that it will be valid,  legal and enforceable to
the maximum extent possible, consistent with the parties' intent.

     9.6 Other Parties.  Nothing in this Agreement,  whether express or implied,
is intended to confer any rights or remedies under this Agreement on any persons
other  than the  parties to it and their  respective  successors  and  permitted
assigns,  nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision  give any third persons any right of  subrogation  or action
against any party to this Agreement.

     9.7  Assignment.  This  Agreement  shall be  binding  upon and inure to the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns. Neither this Agreement nor 


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                                      277


any of the rights,  interests and obligations hereunder shall be assigned by any
of the parties  hereto  without the prior  written  consent of the other,  which
consent shall not be unreasonably withheld,  except that Palomar may assign this
Agreement to any of its  subsidiaries  (provided that Palomar remains  obligated
hereunder) or to any purchaser of all or substantially  all of the capital stock
or assets of Palomar, whether by merger or otherwise.

     9.8 Governing Law. Except for the General  Releases in the form of Exhibits
4.1,  4.2,  4.3(a) and 4.3(b) which shall be construed in accordance  with,  and
governed  by,  the  laws of the  State of  California,  this  Agreement  and the
exhibits hereto shall be construed in accordance with, and governed by, the laws
of  The  Commonwealth  of  Massachusetts,  including,  without  limitation,  its
statutes of limitations, but without giving effect to its rules governing choice
of law.

     9.9 Notices. All notices,  requests, demands and other communications under
this  Agreement  shall be in writing and delivered by personal  delivery,  mail,
overnight courier or telecopy.  Such communications shall be deemed given, if by
personal  delivery,  when  received;  if by mail,  when mailed by  certified  or
registered  mail  (postage  prepaid  and  return  receipt  requested);  or if by
overnight  courier  or  telecopy,  when  delivered  to such  courier  or sent by
telecopy  (provided that the party giving such communication has confirmation of
such courier delivery or telecopy delivery), and, in each case, addressed to the
party to whom notice is to be given as set forth below:

                  Palomar:

                  Palomar Medical Technologies, Inc.
                  66 Cherry Hill Drive
                  Beverly, Massachusetts  01915
                  Telephone:  (508) 921-9300
                  Facsimile:  (508) 921-5801
                  Attention:  Steven Georgiev, Chairman

                  Nexar:

                  Nexar Technologies, Inc.
                  182 Turnpike Road
                  Westborough, Massachusetts  01581
                  Attention:  Albert J. Agbay
                              Chairman and Chief Executive Officer
                  Telephone:  (508) 836-8700
                  Facsimile:  (508) 836-8729

                  with a copy to:

                  Stephen K. Fogg, Esq.
                  Choate, Hall & Stewart
                  Exchange Place

<PAGE>
                                      278


                  53 State Street
                  Boston, Massachusetts  02109
                  Telephone:  (617) 248-5000
                  Facsimile:  (617) 248-4000


                  Seller and Hamirani:

                  c/o Babar I. Hamirani
                  180 Victory Circle
                  San Ramon, California  94583
                  Telephone:
                  Facsimile:

                  with a copy to:

                  Michael J. Ioannou, Esq.
                  Ropers, Majeski, Kohn & Bentley
                  60 North First Street
                  San Jose, California  95110
                  Telephone:  (408) 287-6262
                  Facsimile:  (408) 297-6819

Any party may change its  address or the  individual(s)  to whom notice is to be
given for purposes of this Section 9.9 by giving the other parties notice of the
new address or individual in the manner set forth above;  provided that any such
notice of change of address or individual shall not be in effect until received.

     9.10  Arbitration.  For the period  ending 12 months  following the Closing
Date,  or so long as there is  deferred  compensation  held by the Escrow  Agent
pursuant  to the  Escrow  Agreement,  the sole forum for the  litigation  of any
dispute arising under or in connection with this Agreement or any exhibit hereto
shall be by binding arbitration conducted by J.A.M.S/ENDISPUTE in San Francisco,
California  by a person  chosen by mutual  agreement of the parties,  and if the
parties fail to agree,  chosen by  J.A.M.S/ENDISPUTE.  The parties agree that if
the amount in controversy  exceeds  $100,000,  then the discovery  procedures as
established by the Federal Rules of Civil Procedure  shall be incorporated  into
the  J.A.M.S/ENDISPUTE  applicable  rules.  The  prevailing  party  in any  such
proceeding  shall be entitled to recover  attorney's  fees and costs incurred in
that proceeding.
<PAGE>
                                      279


     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed under seal as of the date and year first above written.

                                             PALOMAR MEDICAL TECHNOLOGIES, INC.,


          /s/
------------------------------            By:            /s/
 Witness                                        -----------------------------
                                                  Joseph P. Caruso
                                                  Treasurer and Chief Financial
                                                  Officer


                                             NEXAR TECHNOLOGIES, INC.

          /s/
-----------------------------             By:            /s/
Witness                                         ----------------------------
                                                  Albert J. Agbay
                                                  Chairman and
                                                  Chief Executive Officer


                                             TECHNOVATION COMPUTER LABS, INC.

          /s/
----------------------------              By:       /s/
 Witness                                        -----------------------------
                                                  Babar I. Hamirani
                                                  President


          /s/                                          /s/
---------------------------               --------------------------------
Witness                                      Babar I. Hamirani
<PAGE>
                                      280


                                   Exhibit 1.0

                                   Affiliates

Michelle Hamirani

Technovation Computer Labs, Inc.
Amerisel, Inc. (d/b/a Computer Universe)