-48-

                            STOCK PURCHASE AGREEMENT

     THIS  AGREEMENT  is  made  and  entered  into as of  March  19,  1996  (the
"Effective  Date")  by  and  between  DYNACO   ACQUISITION   CORP.,  a  Delaware
corporation  (the  "Purchaser"),  and COMTEL  ELECTRONICS,  INC.,  a  California
corporation  (the  "Company"),  and  MIKEL C.  GREEN  and  PETER  ROGAL  (herein
collectively referred to as the "Shareholders"),  and PALOMAR ELECTRONICS, INC.,
a  Delaware  corporation  ("Palomar  Electronics")   (hereinafter   collectively
referred to as the "Parties").

                                    RECITALS

     WHEREAS,  Palomar  Electronics  is a wholly  owned  subsidiary  of  Palomar
Medical,  Inc., a Delaware corporation,  and Dynaco is a wholly owned subsidiary
of Palomar Electronics;

     WHEREAS,  the  Company  is engaged in the  assembly  of circuit  boards and
electronic components;

     WHEREAS,  the Purchaser  currently  owns 10% of the issued and  outstanding
common  stock  of the  Company  and  the  Shareholders,  collectively,  own  the
remaining 90% of the Company;

     WHEREAS,  the Purchaser wishes to acquire  additional  shares of the common
stock of the Company,  which together with Purchaser's  present share ownership,
will  constitute an ownership of 80.32% of the issued and  outstanding  stock of
the Company;

     WHEREAS,  the Parties contemplate that such acquisition will be effected by
means of the purchase of 1,325 shares by Mikel C. Green  ("Green"),the  purchase
of 23,675  shares by Peter  Rogal  ("Rogal")  and the  simultaneous  purchase by
Purchaser from the Company, pursuant to this Agreement, of 500,000 shares of the
currently  authorized  and  unissued  common  stock of the  Company no par value
(collectively,  the "Shares"), at a price of $0.055 per share, which the Parties
agree is fair market value; and

     WHEREAS,  the Parties  hereto  desire to enter into this  Agreement for the
purpose of setting forth  certain,  representations,  warranties,  and covenants
made by each to the other as an  inducement to the execution and delivery of the
Agreement and as conditions precedent to the consummation of the Agreement;

     NOW,  THEREFORE,  in  consideration  of  the  mutual  promises  and  mutual
covenants  contained  herein,  the receipt and  sufficiency  of which are hereby
acknowledged, the Parties agree as follows:

<PAGE>
                                      -49-

                                    ARTICLE 1

                                  TERMS OF SALE

     1.1 Agreement to Sell and Purchase.  Subject to the terms and conditions of
this Agreement,  the Company agrees to issue and sell to the Purchaser,  and the
Purchaser  agrees to purchase from the Company,  500,000 shares of the currently
authorized  and  unissued  no par value  common  stock of the  Company,  for the
purchase  price  of  $0.055  per  share  (or  an  aggregate  purchase  price  of
$27,500.00),  payable in cash or cashiered funds at the Closing Date, as defined
in Section 1.2 herein.

     1.2.  Closing  Date.  The sale and  purchase  provided  for herein shall be
consummated  and closed at the  offices of  McKenna & Cuneo,  L.L.P.,  444 South
Flower Street, Los Angeles, California 90071 at 11:59 P.M. (local time) on March
19, 1996 (the "Closing  Date"),  or at such other place as the parties  mutually
agree.

                                    ARTICLE 2

       REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS

     As an  inducement  for  the  Purchaser  to  enter  into  and  perform  this
Agreement,  the Company and its Shareholders represent and warrant to Purchaser,
as of the  Effective  Date and as of the Closing Date, as if made on the Closing
Date, as follows:

     2.1 The Company has provided to the  Purchaser  true,  correct and complete
copies of the  Company's  financial  statements,  federal and state tax returns,
filings,   creditor  lists,  accounts  payable,  books  and  records,   material
contracts, and all other material information.

     2.2 The Company is a duly  organized and validly  existing  corporation  in
good  standing  under  the laws of the  State of  California  and in each  other
jurisdiction  in which it transacts  business,  and each officer  executing  the
Agreement on behalf of the Company has all power and authority to enter into and
execute and deliver such Agreement.

     2.3 All actions  required by the Company or the  Shareholders  necessary to
authorize  and approve the  Agreement  and the  issuance of the Shares have been
taken and are in full force and effect and have not been rescinded,  modified or
revoked.

     2.4 The Shares,  when issued to the Purchaser  pursuant to this  Agreement,
are free and clear of all liens,  pledges,  security interests,  encumbrances or
adverse claims,  other than rights created under that certain  Restricted  Share
Agreement  dated even date  herewith,  and the Company has all right,  power and
authority to issue such  Shares,  and the Shares,  when issued,  will be validly

<PAGE>
                                      -50-

issued and outstanding and non-assessable.  The 10,000 Shares currently owned by
Purchaser are duly and validly issued and outstanding Shares.

     2.5 The assets of the Company, both real and personal,  mixed, tangible and
intangible, necessary or useful for the operation of the Company's business (the
"Assets") are in good condition and repair,  ordinary wear and tear excepted and
suitable  for the uses  intended.  The  Assets  materially  comply  with and are
operated  in  conformity  with all  applicable  laws,  ordinances,  regulations,
orders, permits and other requirements.

     2.6 All consents and approvals  required to be obtained by the Company from
its  shareholders  or any other person in order to consummate  the  transactions
contemplated  herein  have  been  obtained  and are in full  force  and  effect,
including without limitation all leases of real, personal, or mixed property.

     2.7  The  Company  has  all  requisite   franchises,   permits,   licenses,
authorizations,  variances,  and  approvals of  governmental  or  administrative
authorities  necessary to conduct its business as presently  conducted,  and all
such approvals and permits are in full force and effect, and no condition exists
that,  with the giving of notice or passage of time,  or both,  would  result in
either a violation or  revocation  of any approval or permit  necessary  for the
Company to conducts its business.

     2.8 The Company and the  Shareholders  have made  available for  inspection
and/or  caused to be delivered to the Purchaser  all  information  and documents
material to its decision to purchase the Shares,  including  without  limitation
all  financial  statements  and state and  federal tax  returns  concerning  the
Company  for the  periods  January  1,  1995  through  February  29,  1996  (the
"Financial  Statements"),  all books and records of the Company,  all  financial
data of the Company since its inception,  and physical inspection of the offices
and facilities; provided, however, that Purchaser acknowledges that although the
Financial  Statements  list  MIDOCS  as an  asset  of the  Company,  it has  not
considered  such asset in its due diligence  review of the Company and that such
asset shall be transferred  after the Closing Date to Comtel  Security  Systems,
Inc. The Company and the Shareholders,  after due  investigation,  represent and
warrant that: (i) the Financial  Statements are true and correct in all material
respects and fairly  present the financial  position and results of operation of
the Company as of the Closing Date; and (ii) the Company's books and records are
true and correct in all material respects and fairly and accurately  reflect the
income,  expenses,  Assets and liabilities of the Company,  including the nature
thereof  and the  transactions  giving  rise  thereto,  and  provide  a fair and
accurate basis for the preparation of Financial Statements.

     2.9 The  Company  does not  have any  liabilities  or  obligations,  either
absolute,  accrued,  contingent  or  otherwise,  which  individually  or in  the
aggregate  are  material  to the  financial  condition  of the  Company  for the
operation  of its  business  that  have  not  been  reflected  in the  Financial
Statements provided to the Purchaser.

<PAGE>
                                      -51-

     2.10 Except as disclosed on Schedule  2.10,  there has been no (i) material
changes in the financial condition, Assets or liabilities,  management,  results
of operations or prospects of the Company or its business, other than changes in
the ordinary course,  which either  individually or in the aggregate,  have been
and are materially  adverse;  (ii) damage,  destruction or loss to the Company's
Assets  which was not fully  insured;  (iii) except as disclosed in Schedules to
this Agreement,  sale,  transfer,  assignment,  lease, pledge or mortgage of any
Assets  having a value in excess of  $2,000,  individually,  or  $5,000,  in the
aggregate;  (iv) material  contract or right  (including any letter of intent or
similar  rights,  whether  or not  binding  as a  contract)  modified,  amended,
canceled,  revoked,  rescinded  or  waived;  and  (v)  obligation  or  liability
undertaken or incurred (whether absolute,  accrued, contingent or otherwise, and
whether or not due) which has not been  disclosed  to the  Purchaser  in writing
prior to the Closing Date.

     2.11 Except as set forth in Schedule  2.11,  the Company has no  obligation
for  borrowed  money and has not  guaranteed  or entered  into any  agreement to
guaranty borrowed money or any other indebtedness. The Company's liabilities and
accounts  payable as of December 31, 1995,  and February 29, 1996, are set forth
in Schedule 2.11. Except as set forth in Schedule 2.11, the Company has no other
accounts  payable or liabilities and no accounts payable that are past due as of
the Closing Date.

     2.12 The  Company's  accounts  receivable,  except as set forth in Schedule
2.12, are accurate and collectible  and, except for any reserve for bad debts or
unrecoverable losses that is disclosed in the Financial Statements, have a value
equal to the face amount of such accounts receivable.

     2.13 None of the Company's accounts receivable, except as shown on Schedule
2.13,  are owing from a debtor,  that, to the knowledge of the Company or either
of the Shareholders, has become bankrupt or is insolvent or have been pledged to
any third party.

     2.14 All returns,  reports, and other forms related to income and any other
taxes (including,  without limitation,  sales, use and excise taxes) required to
be filed or paid by the Company  have been timely  filed and paid in  accordance
with  applicable  law  (after  taking  into  account  any  extensions   properly
obtained),  and no  penalties,  interest or other charges are due or will become
due with  respect  to such  returns.  The  Company  has paid all  taxes  due any
governmental  authority  and no audit is pending with respect to any tax return,
report, form or other amount due.

     2.15 The books and records and other financial  information  concerning the
Company are true,  complete and accurate in all material respects and maintained
in accordance with sound business practices.  The minute books and other records
of the Company  reflect  accurately the record of all meetings and other actions
taken by the Company and its Shareholders.

     2.16 Except for those  benefit plans listed on Schedule  2.16,  the Company
has no employee or other benefit plans, including,  without limitation,  medical
plans, retirement plans, 

<PAGE>
                                      -52-

disability plans, and deferred compensation  agreements,  and the Company is not
in default under any such plan and is in full  compliance  with  applicable  law
(regulatory or otherwise) with respect to such plans.

     2.17 Except as disclosed in Schedule  2.17,  there is no action,  suit,  or
proceeding (legal, equitable or administrative) pending or, to the Shareholders'
knowledge,  threatened  against  either  the  Company  or  either or both of the
Shareholders which, if adversely determined,  could materially affect either the
Company, its Assets,  business or prospects or the Assets, business or prospects
of the Shareholders.

     2.18 The Company has provided to the  Purchaser a true and complete list of
all patents,  applications for patents,  trademarks, trade names, service marks,
copyrights  and other  applications  owned by the  Company  or  material  to the
conduct of its business  ("Intellectual  Property").  The Company represents and
warrants,  and, to the best  knowledge of the  Shareholders,  the  Shareholders,
individually,  represent  and warrant,  that all such  Intellectual  Property is
owned by the Company or the Company has the right,  pursuant to written  license
or other valid or enforceable  agreements,  to use such Intellectual Property in
the  conduct of its  business,  free and clear of all liens,  charges,  security
interests, adverse claims, pledges,  encumbrances,  and demands of any nature or
kind  whatsoever,  of all right,  title and interest in and to the  Intellectual
Property.  The  Company  is not in default  under any  contracts  or  agreements
relating to the Intellectual  Property, and no event has occurred that, with the
passage of time or the giving of notice,  or both,  would  constitute  a default
under any contract or agreement relating to the Intellectual Property.

     2.19 There is no person who has  challenged or might have a valid basis for
a challenge  against the use by the Company of the  Intellectual  Property,  and
there is no person who,  as of the  Effective  Date,  has any right or title to,
interest in, or claim,  lien,  charge,  or encumbrance  against the Intellectual
Property  (whether  by  virtue  of  contract,   decree,  operation  of  law,  or
otherwise),  and there are no applications  for or  registrations of any patent,
trade-mark,   trade  name,   industrial  design,   copyright  or  other  similar
industrial,   intellectual   or   proprietary   protection  in  respect  of  the
Intellectual Property;

     2.20 The  operations of the Company do not conflict with or infringe  upon,
and no one has asserted that the Company's operations conflict or infringe upon,
any proprietary rights,  trademarks,  trade names, service marks or patents held
by any other person, and there are no claims,  disputes,  actions,  proceedings,
suits,  appeals or other matters pending or threatened  against the Company with
respect to any such other marks.

     2.21 The Company is not in violation of any local,  state or federal law or
regulation  and has received no notice of any alleged  violation of any such law
or regulation.

     2.22 The Company has  disclosed to the  Purchaser  all material  contracts,
obligations,  commitments, agreements, contracts, and leases, whether written or
oral, to which the 

<PAGE>
                                      -53-

Company is a party or to which its properties and Assets are subject or by which
it is bound (collectively, the "Commitments"), and the Company is not in default
under any of the Commitments and no event has occurred that, with the passage of
time or the giving of notice,  or both,  would  constitute  a default  under any
Commitment, except as disclosed in Schedule 2.22.

     2.23  Neither  the  Company  nor the  Shareholders  have  knowledge  of any
existing  facts or  conditions  which have not been  disclosed in writing to the
Purchaser,  which  are  material  or which may give  rise to any  charge,  lien,
litigation,  proceeding or  investigation by any third party against the Company
or which, if adversely determined to the Company, would materially and adversely
affect the business, prospects or financial condition of the Company.

     2.24  Neither  this  Agreement  nor any  Schedule  hereto,  nor  any  other
agreement,  schedule or information  furnished the Purchaser (or their attorneys
or agents)  contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statement contained therein not misleading.

     2.25 To the knowledge of the Shareholders and the Company,  the Company is,
and at all times has been, in full compliance  with, and has not been and is not
presently in violation of or liable under, any federal,  state,  county or local
statues,  laws,  regulations,  rules,  ordinances,  codes,  licenses and permits
relating in any way to the  protection of the  environment,  including,  without
limitation,  the Clean Air Act, the Clean Water Act, the Federal Water Pollution
Control  Act of  1972,  the  Resource  Conservation  and  Recovery  Act of  1976
("RCRA"), the Comprehensive  Environmental Response,  Compensation and Liability
Act of 1980 ("CERCLA"), and the Toxic Substances Control Act, and any amendments
or  extensions  of the  foregoing  and the  regulations  promulgated  thereunder
(collectively,  the "Environmental  Laws"). To the knowledge of the Shareholders
and the  Company,  the  Company  has not  received  any  notice of any actual or
potential violation of or failure to comply with any Environmental Law or of any
actual or  threatened  obligation  to undertake or bear the cost of any expense,
liability,  or other liability  arising from or under any Environmental Law with
respect to any of the  properties  or Assets or with  respect to any property or
facility at or to which any "hazardous materials" were generated,  manufactured,
refined,  transferred,  imported, used or processed by the Company or from which
hazardous   materials  have  been   transported,   treated,   stored,   handled,
transferred, disposed, recycled or received.

     2.25.1 The Company and the  Shareholders  have no knowledge that any of its
owned or leased  properties is contaminated by or contains any toxic  substance,
as defined in RCRA. No claim,  action,  suit or proceeding is pending or, to the
Company's or the Shareholders' knowledge, threatened against the Company, before
any court or other governmental  authority or arbitration tribunal,  relating to
hazardous substances,  pollution or the environment, and there is no outstanding
judgement,  order, writ,  injunction,  decree, or award against or affecting the
Company or its Assets or properties  with respect to the same. To the knowledge,
information  and belief of the  Company  and the  Shareholders,  there has never
been, and there is not presently occurring, any release, a threatened release or
clean up of chemicals  produced by, or resulting from, any business,  

<PAGE>
                                      -54-

commercial or industrial activities, operations, or processes, including without
limitation hazardous  substances,  as defined under CERCLA, and has not received
any information  requests under CERCLA from any government  agency.  Neither the
Company nor any of the  Shareholders  have any  knowledge  of a violation of the
Environmental  Laws in  connection  with the  ownership,  use,  maintenance,  or
operation  of any of the  Company's  leased  or owned  properties  by the  owner
thereof or any other person.  The Company and the Shareholders have no knowledge
of any facts or circumstances  which the Company  reasonably  expects could form
the basis for the  assertion  of any "claim"  against  the  Company  relating to
environmental matters including, without limitation, any claim arising from past
or present environmental  practices asserted under the Environmental Laws, which
the Company or the Shareholders  believe might have a material adverse effect on
the business,  results of  operations,  financial  condition or prospects of the
Company taken as a whole.

     2.25.2 To the knowledge of the Shareholders  and the Company,  there are no
hazardous materials present on any of the Company's leased properties, including
hazardous  materials  contained in barrels,  above or underground storage tanks,
landfills,  land deposits, dumps, equipment (whether moveable or fixed) or other
containers,  either  temporary or  permanent,  and deposited or located in land,
water,  sumps, or any other part of such  properties,  or incorporated  into any
structure  therein or thereon.  To the  knowledge  of the  Shareholders  and the
Company,  none of the  Shareholders,  the Company nor any other person for whose
conduct  they are or may be held  responsible  has  permitted or conducted or is
aware of, any "hazardous  activity"  conducted with respect to any properties or
assets  (whether  real,  person or mixed)  in which  the  Company  has or had an
interest except in full compliance with all applicable Environmental Laws.

     2.25.3 The Company has delivered to the Purchaser true and complete  copies
and results of any  reports,  studies,  analyses,  tests or  monitoring,  to the
extent such items exist and are in the possession of Company or of which Company
has  knowledge,  by the Company  pertaining to hazardous  materials or hazardous
activities in, on, or under the Company's properties or concerning compliance by
the  Company  or any  other  person  for whose  conduct  they are or may be held
responsible with all Environmental Laws.

     2.25.4 As used herein,  the terms  "hazardous  substance(s)"  or "hazardous
material(s)"  shall  include  any  pollutants,   dangerous   substances,   toxic
substances,  hazardous wastes,  hazardous materials,  or hazardous substances as
defined in or pursuant to RCRA and CERCLA, or any other federal, state, or local
environmental law, ordinance,  rule or regulation,  except that, for purposes of
this Agreement,  "petroleum"  (including crude oil or any faction thereof) shall
be deemed a  "hazardous  substance".  "Release"  shall have the same  meaning as
defined in CERCLA.  "Claim"  shall mean any and all claims,  demands,  causes of
actions, suits, proceedings,  administrative  proceedings,  losses,  judgements,
attorney'  fees,  and any other expenses  incurred,  assessed or sustained by or
against the Company or the  Shareholders.  "Hazardous  activity"  shall mean the
distribution,   generation,  handling,  importing,  management,   manufacturing,
processing, production, refinement, release, storage, transfer, treatment or use
of hazardous  materials in, on, under, about or from any properties or assets in
which the Company has or had an interest. As used in this Section 2.25, 

<PAGE>
                                      -55-

the term  "knowledge"  shall refer to the actual knowledge of the Company and/or
the Shareholders.

                                    ARTICLE 3

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

     As an inducement  to the Company to enter into and perform this  Agreement,
the Purchaser represents and warrants to the Company as follows:

     3.1  Organization  of the  Purchaser.  The Purchaser is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  with adequate  corporate  power and authority to own its property and
conduct its business and to enter into and perform this Agreement.

     3.2 Corporate  Authorization.  The execution,  delivery and  performance of
this  Agreement by the  Purchaser  have been duly and validly  authorized by the
Purchaser's Board of Directors.  Such execution,  delivery and performance,  and
the acquisition of Shares  contemplated  hereby,  do not and will not violate or
conflict  with or result in any default or loss of a material  benefit under the
Purchaser's Certificate of Incorporation or By-laws or any mortgage,  indenture,
lease,  agreement or other instrument or any court or governmental agency order,
judgment or decree to which the  Purchaser is a party or subject or by which the
Purchaser is bound.

     3.3 No Broker's or Finder's  Fee. No agent,  broker,  financial  adviser or
other firm or person is or will be entitled to any  broker's or finder's  fee or
similar payment by the Purchaser in connection with this Agreement.

                                    ARTICLE 4

                 REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR

     As an inducement  to the Company to enter into and perform this  Agreement,
Dynaco and Palomar Electronics  (collectively,  the "Guarantor")  represents and
warrants to the Company as follows:

     4.1  Organization  of the  Guarantor.  The Guarantor is a corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  with adequate  corporate  power and authority to own its property and
conduct its business and to enter into and perform this Agreement.

     4.2 Corporate  Authorization.  The execution,  delivery and  performance of
this  Agreement by the  Guarantor  have been duly and validly  authorized by the
Guarantor's  Boards of 

<PAGE>
                                      -56-

Directors.  Such  execution,  delivery  and  performance  as provided  under the
Guaranty  contemplated  hereby,  do not and will not violate or conflict with or
result in any  default  or loss of a  material  benefit  under  the  Guarantor's
Certificates  of  Incorporation  or By-laws or any mortgage,  indenture,  lease,
agreement  or other  instrument  or any  court  or  governmental  agency  order,
judgment or decree to which the  Guarantor is a party or subject or by which the
Guarantor is bound.

     4.3 No Broker's or Finder's  Fee. No agent,  broker,  financial  adviser or
other firm or person is or will be entitled to any  broker's or finder's  fee or
similar payment by the Guarantor in connection with this Agreement.

                                    ARTICLE 5

                              ADDITIONAL AGREEMENTS

     5.1 Investigation. The Company shall:

          5.1.1 Afford to the Purchaser, and its accountants,  counsel and other
     representatives,  full access, at any time or times during the period prior
     to the Closing Date, to all of the properties,  books,  contracts,  leases,
     tax returns and other records of the Company; and

          5.1.2 At any time or times during such period, furnish promptly to the
     Purchaser all  information  concerning  the business,  Assets,  properties,
     personnel and any other  information or  documentation  with respect to the
     Company as the Purchaser may request.

     5.2  Confidentiality.  The Purchaser shall use its best efforts to maintain
as confidential  any  information  obtained  pursuant to  negotiations  with the
Company,  except that this  restriction  shall not apply to any such information
which is or comes into the public domain is required to be disclosed,  or at any
time comes into its possession from third parties who have the right to disclose
such information otherwise than in connection with this Agreement.

     5.3 Certain Consents.  In the event of a request by the Company for written
consent from the Purchaser for purposes of Article 2 hereof, the Purchaser shall
use reasonable efforts to respond to such request promptly; the Company shall be
entitled to rely,  for  purposes of any of such  clauses,  on a written  consent
signed on behalf of the Purchaser by its President,  or by any other  authorized
officer of the Purchaser.

     5.4 Name;  Location.  The Company and the  Shareholders,  individually  and
collectively,  hereby agree to use best  efforts to take all  actions,  or shall
cause such actions to be taken,  including without  limitation  execution of all
appropriate  documentation,  necessary to relocate the Company's  main office to
Irvine,  California as soon as reasonably possible,  unless the Parties agree in
writing  otherwise.  The Company and the  Shareholders  further hereby  covenant
that, after consummation of the transaction as contemplated  herein, the Company
shall  retain the name  

<PAGE>
                                      -57-

"Comtel Electronics,  Inc.", unless such name shall be changed as provided under
the amended Bylaws of the Company dated even date herewith.

     5.5 Operating  Capital.  Upon the Closing Date (subject to the satisfaction
of all  conditions  set forth  herein),  Palomar  Electronics  shall  provide to
Company  standby  letters of credit to secure  payments to vendors by Company in
the total amount of One Million and No/100 Dollars  ($1,000,000.00),  from which
Company  may draw  funds as needed  solely to pay the bona fide  claims of third
party  vendors of  Company;  provided  that such funds shall not be drawn to pay
vendors  that  are  controlled  or  affiliated  in any way with  Company  or the
Shareholders.  Upon  the  Closing  Date  (subject  to  the  satisfaction  of all
conditions  set forth  herein),  Palomar  Electronics  shall further  provide to
Company  cash in the total  amount of Five  Hundred  Fifty  Thousand  and No/100
Dollars ($550,000) as follows:  (i) $150,000.00 to be used to purchase equipment
from New Media,  Inc.; and (ii) $400,000.00 to be used as working capital solely
to finance  operations  of Company;  provided  that such funds shall be drawn by
Company,  as  needed,  during  the first 45 days after the  Closing  Date,  upon
presentation to Palomar  Electronics'  Board of Directors of a reasonable  basis
for the request for such funds, the uses to which requested funds are to be put,
and approval of Palomar's Board of Directors.

     5.6 Release of Green Guaranty. At the Closing Date, Purchaser hereby agrees
to release  Green from his personal  guaranty of the loan dated January 29, 1996
between Purchaser, as lender, and Company, as borrower.

     5.7  Purchaser's   Agreement  to  Finance  Capital  Equipment  of  Company.
Purchaser  hereby  agrees to use  reasonable  efforts  to obtain  financing  for
purchases of capital  equipment by Company,  upon  presentation  to  Purchaser's
Board of Directors of a reasonable basis for the request for such funds, the use
of such funds, and the approval of the Board of Directors, with such approval to
be based on determination  of a reasonable  return of investment on said capital
expenditure  of  Company;  provided,  however,  that  such  obligation  shall be
suspended  at any time as  Palomar  Electronics  shall be  unable  to fund  such
purchases  due to its  insolvency,  bankruptcy,  appointment  of a receiver,  or
inability to pay its obligations as they become due.

     5.8  Preemptive  Rights.  Each of the  Shareholders  waives any  preemptive
rights he may have in  connection  with the  issuance of the Shares to Purchaser
pursuant  to this  Agreement.  Green and Rogal  hereby  agree to cause a written
waiver of  preemptive  rights to be executed  and  delivered to Purchaser on the
Closing  Date.  Any Shares issued by the Company after the Closing Date shall be
subject to preemptive rights for each of the shareholders, unless a Registration
Statement has been filed within the Securities and Exchange Commission, in which
event no shareholder shall be entitled to preemptive rights.

<PAGE>
                                      -58-

                                    ARTICLE 6

               CONDITIONS PRECEDENT TO OBLIGATION OF THE PURCHASER

     The  obligation  of the  Purchaser  to  consummate  the sale  and  purchase
provided  for herein is subject to the  satisfaction  on the Closing Date of the
following conditions precedent, unless (except in the case of the conditions set
forth in Section 6.3 hereof) waived in writing by the Purchaser:

     6.1 Representations  and Warranties.  The representations and warranties of
the Company and the Shareholders  contained in Article 2 of this Agreement shall
be true in all material  respects as of the Effective Date and as of the Closing
Date as though made on and as of the Closing  Date,  and the Company  shall have
duly  performed and complied  with, in all material  respects,  all  agreements,
covenants and conditions required under this Agreement.

     6.2 Adverse  Changes.  There shall have been no changes after  February 29,
1996,  in  the  results  of  operations,  condition  (financial  or  otherwise),
properties,  Assets,  business or prospects of the Company, which are materially
adverse.

     6.3 Regulatory Approvals.  All approvals and consents required by law to be
received in  connection  with the  acquisition  of Shares  contemplated  by this
Agreement or in connection with any of the matters or transactions  contemplated
hereby,  shall have been received,  shall be satisfactory in all respects to the
Purchaser and shall be in effect.  All conditions or requirements  prescribed by
any such approval or consent (or by law in connection therewith) shall have been
satisfied.

     6.4 Litigation. No litigation, proceeding or investigation shall be pending
or threatened,  and no order,  notice or regulation of any court or governmental
agency  shall be in effect,  which  restrains  or  prohibits  or which  seeks to
restrain or prohibit or obtain  damages or other relief in  connection  with the
acquisition of Shares  contemplated by this Agreement,  or which (in the opinion
of the Purchaser) makes consummation of such acquisition inadvisable.

     6.5 New Company  Directors and Officer.  Concurrently with the consummation
of the sale and purchase provided for herein, the Shareholders shall validly and
lawfully  elect an  additional  director of the Company to be  designated by the
Purchaser, and the Board of Directors of the Company shall amend and execute the
Company's  Bylaws  to  provide  for  five  directors  of the  Company,  and  the
Shareholders  shall have entered into a  Shareholders  Agreement  providing  for
three  positions  on the  Board  of  Directors  of the  Company  to be  held  by
representatives designated by the Purchaser. The Company further shall amend any
By-laws of the Company which,  in the Purchaser's  opinion,  may be necessary or
appropriate to implement the terms and conditions of this Agreement.

<PAGE>
                                      -59-

     6.6 Legal Matters.  All legal matters in connection with this Agreement and
the transactions contemplated hereby shall have been approved by counsel for the
Purchaser,  and there shall have been  furnished  to such counsel by the Company
certified  copies of such  corporate  records of the  Company and copies of such
other documents as such counsel may reasonably have requested for such purpose.

     6.7 No Other Conditions. The Purchaser specifically acknowledges that there
are no other  conditions  precedent to consummation of the sale of the Shares to
the Purchaser, as contemplated in this Agreement.

                                    ARTICLE 7

                CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY

     The obligation of the Company to consummate the sale and purchase  provided
for herein is subject to the  satisfaction  on the Closing Date of the following
conditions precedent, unless waived in writing by the Company:

     7.1 Representations  and Warranties.  The representations and warranties of
the  Purchaser  contained  in Article 3 of this  Agreement  shall be true in all
material respects as of the Effective Date and as of the Closing Date, as though
made on and as of the Closing Date, and the Purchaser  shall have duly performed
and complied  with,  in all material  respects,  all  agreements,  covenants and
conditions required by this Agreement to be performed or complied with by it.

     7.3 Legal Matters.  All legal matters in connection with this Agreement and
the transactions contemplated hereby shall have been approved by counsel for the
Company,  and there shall have been  furnished to such counsel by the  Purchaser
certified  copies of such corporate  records of the Purchaser and copies of such
other  documents as Company's  counsel may  reasonably  have  requested for such
purpose.

     7.4 Representations  and Warranties.  The representations and warranties of
the Guarantor  contained in Articles 4 and 5 of this Agreement  shall be true in
all material  respects as of the  Effective  Date and as of the Closing Date, as
though made on and as of the Closing Date.

     7.5 No Other  Conditions.  The  Company and its  Shareholders  specifically
acknowledge that there are no other conditions  precedent to consummation of the
sale of the Shares to the Purchaser, as contemplated in this Agreement.

<PAGE>
                                      -60-

                                    ARTICLE 8

                                     CLOSING

     8.1  Items to be  Delivered  to the  Purchaser.  Subject  to the  terms and
conditions of this Agreement,  at the closing of the sale and purchase  provided
for  herein on the  Closing  Date,  the  Company  shall  deliver  the  following
documents to the Purchaser:

          8.1.1 A duly issued stock certificate of the Company registered in the
     name of the Purchaser,  in proper form, and evidencing all of the Shares to
     be issued and sold by the Company to the Purchaser as provided hereunder;

          8.1.2  Such  other  documents  and  showings  as shall  be  reasonably
     requested by the Purchaser;

          8.1.3  The  fully  executed  Shareholders  Agreement  dated  even date
     herewith;

          8.1.4 An executed  Employment  Agreement of even date herewith between
     the Company and Green and an executed  Independent  Contractor Agreement of
     even  date  herewith   between  the  Company  and  DSI,  Inc.,  an  Arizona
     corporation;

          8.1.5 Certified resolutions by the Board of Directors and shareholders
     of the Company  authorizing  all actions  taken or  authorized  to be taken
     hereunder; and

          8.1.6 A waiver of preemptive rights, executed by all Shareholders with
     respect to the Shares issued pursuant to this Agreement.

     8.2  Items  to be  Delivered  to the  Company.  Subject  to the  terms  and
conditions of this Agreement,  at the closing of the sale and purchase  provided
for herein on the Closing  Date,  the  Purchaser  shall  deliver  the  following
payment and documents to the Company:

          8.2.1 Payment,  in cash or other  immediately  available funds, in the
     amount of the aggregate  purchase price (referred to in Section 1.1 hereof)
     payable to the Company for the Shares;

          8.2.2  Executed  Stock  Grants  between  the Company and Green and the
     Company and Rogal, dated even date herewith; and 

<PAGE>
                                      -61-

          8.2.3  Such  other  documents  and  showings  as shall  be  reasonably
     requested by the Company.

                                    ARTICLE 9

                            AMENDMENT AND TERMINATION

     9.1 Amendment.  This Agreement may not be amended,  except by an instrument
in writing signed on behalf of each of the parties hereto.

     9.2 Termination.

          9.2.1  This  Agreement  may be  terminated  at any  time  prior to the
     consummation of the sale and purchase provided for herein by mutual consent
     in writing of the Purchaser and the Company.

          9.2.2 If this Agreement is terminated for any reason, neither party to
     this Agreement shall have any liability  hereunder of any nature whatsoever
     to the other;  provided,  however,  that (a) this paragraph 9.2.2 shall not
     preclude liability from attaching to a party who has caused the termination
     hereof by a willful  act or a willful  failure to act in  violation  of the
     terms and provisions  hereof,  except that termination of this Agreement by
     the Purchaser  shall in no event result in any liability  whatsoever on the
     part of the Purchaser,  and (ii)  termination  of this Agreement  shall not
     terminate  or  affect  the  agreements  of the  parties  contained  in this
     paragraph 9.2.2 or in Section 5.2 hereof (with respect to  confidentiality)
     or Section 10.5 hereof (with respect to the payment of expenses).

                                   ARTICLE 10

                            MISCELLANEOUS PROVISIONS

     10.1  Survival  of   Representations   and   Warranties.   The   respective
representations,  warranties  and  agreements  of the parties  hereto  contained
herein and contained in any certificate or other document  delivered pursuant to
this  Agreement  shall be  deemed  to be made at the  Effective  Date and at the
Closing Date, if any, and shall survive the Closing Date.

     10.2 Indemnification.

          10.2.1 The Company agrees to indemnify and hold the Purchaser harmless
     from, for and against any claim, loss, damage, cost, or expense,  including
     without  limitation  attorneys' and accountants' fees and any and all costs
     and  expenses of  litigation,  which the  Purchaser  may incur or suffer by
     reason of the inaccuracy of any  representation  or warranty of the Company
     or the  Shareholders,  whether  individually or collectively,  set forth in
     Article 2 or 5 herein or in any 

<PAGE>
                                      -62-

     certificate  or  other  document   delivered  by  the  Company  or  by  the
     Shareholders in accordance with the provisions  hereof or the breach of any
     of the agreements or covenants of the Company or the Shareholders contained
     herein or in any certificate or other document  delivered by the Company or
     the  Shareholders in accordance with the provisions  hereof.  The Purchaser
     may contest any claim or liability which, if established,  would be subject
     to   indemnification   hereunder  and,  in  such  event,  all  legal  fees,
     disbursements and other costs and expenses of such contest shall also be an
     item of indemnification hereunder.

          10.2.2  The  Guarantor  further  agrees to  indemnify  and hold  Green
     harmless from, for and against any claim,  loss,  damage,  cost or expense,
     including without  limitation  attorneys' and accountants' fees and any and
     all costs and  expenses of  litigation,  which Green may incur or suffer by
     reason of: (i) default by Company on the Small Business Administration Loan
     ("SBA")  dated  November  1995 between  Company and The Bank of Los Angeles
     (the "SBA Loan"),  including  without  limitation those incurred due to the
     SBA exercising  its rights against Green as personal  guarantor of such SBA
     loan;  and (ii) default by Company on that certain lease dated  December 7,
     1995  between  Stanley  Novak,  as  lessor,  and Green,  in his  individual
     capacity,  as lessee.  Purchaser  shall use its best efforts to cause Peter
     Rogal to be  released  from any  personal  guaranty of the SBA Loan and, if
     such release cannot be obtained,  Purchaser and Guarantor  shall  indemnify
     Rogal against any and all claims, suits or liabilities, including attorneys
     fees and  costs,  that may be  asserted  against  Rogal  by  reason  of his
     guaranty of the SBA Loan.

          10.2.3 The Purchaser agrees to indemnify and hold the Company harmless
     from, for and against any claim, loss, damage,  cost or expense,  including
     without  limitation  attorneys' and accountants' fees and any and all costs
     and expenses of litigation, which the Company may incur or suffer by reason
     of the  inaccuracy of any  representation  or warranty of the Purchaser set
     forth in Article 3 hereof or in any certificate or other document delivered
     by the Purchaser in accordance with the provisions  hereof or the breach of
     any of the agreements or covenants of the Purchaser  contained herein or in
     any certificate or other document  delivered by the Purchaser in accordance
     with the provisions  hereof,  excluding breach of any agreement as provided
     in Sections 5.6, 5.7 and 5.8 herein.

     10.4 Notices.  All notices and other  communications  hereunder shall be in
writing and shall be deemed at the time delivered personally or, if mailed three
(3) days after  placing in the U.S.  Mails,  by  registered  or  certified  mail
(return receipt  requested),  postage  prepaid,  to the parties at the following
addresses  (or at such other  address for a party as shall be  specified by like
notice):

<PAGE>
                                      -63-

          (a) if to the Purchaser, at:

               Dynaco Acquisition Corp
               1000 S. Priest Drive
               Tempe, Arizona 85281
               Attn.: Lyle Jensen

              with a copy to:

               Palomar Electronics
               66 Cherry Hill Drive
               Beverly, Massachusetts 01915

              with a copy to:

               James E. Brophy III
               Ryley, Carlock & Applewhite
               101 North First Avenue, Ste. 2700
               Phoenix, Arizona  85003-1973

          (b) if to the Company, at:

               Comtel Electronics, Inc.
               One Technology, Bldg. A
               Irvine, California  92718
               Attn:  Mr. Mikel C. Green

              with a copy to:

               DSI, Inc.
               Attn:  Mr. Peter Rogal
               8776 East Shea Blvd., E-B-3A, Suite 571
               Scottsdale, AZ 85260

              and to:

               Mr. Mikel Green
               c/o Comtel Electronics
               One Technology, Bldg. A
               Irvine, CA  92718

              and to:
<PAGE>
                                      -64-

               Susan B. Myers, Esq.
               McKenna & Cuneo
               444 South Flower Street
               Los Angeles, California  90071

          Written  notice given by any other  method  shall be deemed  effective
     only when actually received by the party to whom given.

     10.5 Knowledge.  The term  "knowledge" as used in this Agreement shall mean
all matters that are known or, in the exercise of reasonable diligence and after
due inquiry,  should be known to the Company , the Shareholders,  or as the case
may be, the Purchaser,  including without limitation,  due and proper inquiry of
the senior  employees,  agents,  counsel and advisors of the Company and, as the
case may be, the Purchaser.

     10.6 Expenses.  Whether or not the sale and purchase provided for herein is
consummated,  the Purchaser and the Company and the Shareholders shall each bear
their own legal,  accounting and other expenses incurred in connection with this
Agreement and such sale and purchase.

     10.8 Entire  Agreement.  This Agreement  supersedes and abrogates all prior
understandings,  communications and agreements (whether written or oral) between
the Company.  the  Shareholders  and the  Purchaser  with respect to the subject
matter hereof,  and this Agreement  constitutes the entire agreement between the
Company, the Shareholders and the Purchaser with respect to such subject matter.

     10.9  Execution  and  Counterparts.  This  Agreement may be executed in any
number of  counterparts,  each and all of which shall be deemed for all purposes
to be one agreement.

     10.10 Publicity.  The Purchaser, the Company and the Shareholders shall not
issue or cause the publication of any press release or other  announcement  with
respect to this Agreement or the  acquisition of Shares  contemplated  hereby or
otherwise make any disclosures  relating thereto to the press or any third party
without the prior written consent of all other parties; provided,  however, that
such  consent  shall  not  be  required  where  such  release,  announcement  or
disclosure  is  required  by  applicable  law or the rules or  regulations  of a
securities exchange, other regulatory authority or governmental agency.

     10.11 Assignment;  Benefit of the Agreement. No rights under this Agreement
may be assigned by either party hereto, without the prior written consent of the
other  parties  hereto.  This  Agreement  shall be binding upon and inure to the
benefit of the Purchaser,  the Company and the Shareholders and their respective
successors  and  permitted  assigns and is not intended to confer upon any other
person any rights or remedies hereunder.

<PAGE>
                                      -65-

     10.12 Further  Assurances.  After the Closing Date, the Company, at its own
expense,  shall do, execute,  acknowledge,  and deliver all further acts, deeds,
conveyances,  transfers, documents and assurances necessary or proper to vest in
the  Purchaser  good title to all  Shares to be issued  and sold by the  Company
hereunder,  free and  clear  of any  liens,  claims,  charges,  or  encumbrances
whatsoever,  and otherwise to effect the acquisition of the Shares  contemplated
by this Agreement.

     10.13  Governing Law. The parties hereby agree that this Agreement shall be
governed by, and construed in accordance with, the substantive laws of the State
of  Arizona,  without  respect to  conflict of laws  principles,  including  all
matters of construction or interpretation of this Agreement.

     10.14  Headings.  The headings in this  Agreement  are intended  solely for
convenience  of reference  and shall be given no effect in the  construction  or
interpretation of this Agreement.

     IN WITNESS WHEREOF, the Purchaser, the Company and Palomar Electronics (for
purposes  of  Article  IV,   Section  5.5  and  Section  10.2.2  only)  and  the
Shareholders  (for purposes of Section 2 only) have caused this  Agreement to be
executed  by  their  respective  officers  thereunto  duly  authorized  and  the
Shareholders  shall  have  caused the  Agreement  to be  executed  all as of the
Effective Date.

"PURCHASER"                                          "COMPANY"

DYNACO ACQUISITION CORP.,                    COMTEL ELECTRONICS, INC.
a Delaware corporation                       a California corporation


By:            /s/                           By:       /s/
   ------------------------------                ---------------------------
   Lyle E. Jensen, its President                 Mikel C. Green, Its President

<PAGE>
                                      -66-
<TABLE>
<C>                                         <C>
For the sole  purpose of Section 2 herein:  For the sole  purpose of Article IV, Section 5.5
                                            and Section 10.2.2 herein
</TABLE>

"SHAREHOLDERS"                              "PALOMAR ELECTRONICS"

---------------------------------           PALOMAR ELECTRONICS , INC.,
Peter Rogal                                 a Delaware corporation


---------------------------------           ----------------------------------
Mikel C. Green                              Lyle E. Jensen, Its Vice President