184



                                   APPENDIX II












                       PALOMAR MEDICAL TECHNOLOGIES, INC.
                             SUBSCRIPTION AGREEMENT






















                                                              Name:

                                                              Number:
<PAGE>
                                      185

                      OFFSHORE STOCK SUBSCRIPTION AGREEMENT

     This Stock Subscription  Agreement (the "Agreement"),  dated _____________,
1995,  is entered  into by and between  Palomar  Medical  Technologies,  Inc., a
Delaware    corporation    (the   "Company",    "PMTI,"   or   "Seller"),    and
___________________________    a   corporation/citizen   under   the   laws   of
_______________ (the "Buyer").

     The Company has offered for sale outside the United  States,  (as that term
is defined in Regulation S ("Regulation  S") under the United States  Securities
Act of 1933, as amended (the "Act") to the Buyer certain securities as set forth
in paragraph 1 below.

     The parties hereto agree as follows:

1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE

     (a) Subscription. Upon the basis of the representations and warranties, and
subject  to the terms and  conditions  set forth in this  Agreement,  the Seller
covenants  and agrees to sell to Buyer  __________  shares of PMTI Common  Stock
(the "Common  Stock") for an aggregate  amount of ($ US). The purchase  price of
the Common  Stock shall be 5% below the average  closing bid price of the Common
Stock from  November 20, 1995 to November 25, 1995,  as reported by the National
Association of Securities  Dealers Automated  Quotation System  ("NASDAQ").  For
every two shares of Common Stock  purchased,  a warrant to purchase one share of
Common  Stock  (the  "Warrant")  will be issued  expiring  in three  years at an
exercise  price of $5 per share of Common Stock.  The shares of Common Stock and
the shares of Common Stock underlying the Warrants (the "Shares") may be sold no
earlier than 180 days after the closing date.

     b. Form of Payment and Closing Date.  Buyer shall pay the purchase price by
delivering  good funds in United States  Dollars to "Foley,  Hoag & Eliot Client
Funds Account",  One Post Office Square,  Boston,  MA 02109 as Escrow Agent. The
closing  of the  offering  shall take place on or before  November  30,  1995 by
delivery  of the  Warrants  and stock  certificates  representing  the shares of
Common  Stock to the Buyer upon  notification  by the Escrow Agent to the Seller
that  payment  in full has been  received,  and the  funds  have  been  wired to
Seller's bank account which has been specified to the Escrow Agent.

2. SUBSCRIBER REPRESENTATIONS; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.

     a.  Offshore  Transaction.  Buyer  represents  and  warrants  to  Seller as
follows:
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                                      186

          (i)  Buyer is not  organized  under the laws of the United  States and
               was not  formed for the  purpose of  investing  in  Regulation  S
               securities and is not registered under the Securities Act;

          (ii) At the time the buy order was  originated,  Buyer was outside the
               United States;

          (iii)No offer to purchase  the Shares or the  Warrants was made in the
               United States;

          (iv) Buyer is  purchasing  the  Shares  and the  Warrants  for its own
               account and for  investment  purposes and not with a view towards
               distribution;

          (v)  All  subsequent  offers and sales of the Shares and the  Warrants
               delivered  at the  Closing  Date in the United  States or to U.S.
               persons shall be made in compliance with Regulation S pursuant to
               registration  of securities  under the  Securities Act of 1933 or
               pursuant to an  exemption  from  registration.  In any case,  the
               Common Stock and  Warrants  delivered at the Closing Date and the
               Common Stock issuable upon the exercise of the Warrants shall not
               be resold to U.S.  persons or within the United  States  during a
               prohibited  period of one hundred eighty (180) days commencing on
               the date of Closing of the purchase of the Shares;

          (vi) Buyer  understands  that the  Shares and the  Warrants  are being
               offered and sold to it in reliance  of specific  exemptions  from
               the  registration  requirements  of Federal and State  securities
               laws and that the Seller is relying  upon the truth and  accuracy
               of the representations,  warranties,  agreements  acknowledgments
               and  understandings  of  Buyer  set  forth  herein  in  order  to
               determine  the   applicability   of  such   exemptions   and  the
               suitability of Buyer to acquire the Shares and the Warrants;

          (vii)The Buyer  understands that no federal or state agency has passed
               on or made any  recommendation or endorsement of the Common Stock
               or the Warrants; and

          (viii) The  transactions  contemplated by this Agreement have not been
               pre-arranged  with a Buyer located in the United States or who is
               a U.S.  Person  and are not part of a plan or scheme to evade the
               registration provisions of the Act.

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                                      187

          (ix) Upon exercise of the Warrant,  Buyer will certify in writing that
               it is not a U.S. person and the Warrant is not being exercised on
               behalf of a U.S. person.

3. SELLER REPRESENTATIONS

     a. Reporting Company Status.  Seller is a "Reporting Company" as defined by
Rule 902 of  Regulation  S. For at least the last 12  months,  Seller  has fully
complied, to the extent applicable, with all reporting obligations under Section
13(d) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").  Seller has  registered its Common Stock pursuant to Section 12(b) of the
Exchange Act and the Common Stock trades on NASDAQ SmallCap Market.

     b. Current Public  Information.  Seller has furnished  Buyer with copies of
the  Company's  most  recent  Annual  Report on the Form  10-KSB  filed with the
Securities  and  Exchange   Commission  and  the  Forms  10-Q  filed  thereafter
(collectively the "SEC Filings"), and other publicly available documents.

     c. Offshore Transaction.

          (i)  Seller has not  offered the  securities  which are the subject of
               this  transaction  to  any  person  in  the  United  States,  any
               identifiable  groups  of U.S.  citizens  abroad,  or to any  U.S.
               person as that term is defined in Regulation S.

          (ii) At the time the buy  order  was  originated,  Seller  and/or  its
               agents reasonably believed Buyer was outside of the United States
               and was not a U.S. person.

          (iii)Seller and/or its agents reasonably  believe that the transaction
               has not been pre-arranged with a buyer in the United States.

     d. No directed  Selling  Efforts.  In regard to this  transaction,  neither
Seller nor any person acting on its behalf has  conducted any "directed  selling
efforts" as that term is defined in Rule 902 of  Regulation  S nor has Seller or
any such person  conducted  any general  solicitation  relating to the offer and
sale of the  securities  which are the  subject of this  transaction  to persons
resident within the United States or elsewhere.

     e.  Concerning the Shares.  The Common Stock when issued and delivered will
be duly and validly  authorized and issued,  fully paid and  non-assessable  and
will not subject the holders  thereof to personal  liability  by reason of being
such holders. There are no preemptive rights of any shareholder of the Company.

<PAGE>
                                      188

     f.  Subscription   Agreement  The  Subscription  Agreement  has  been  duly
authorized,  validly  executed  and  delivered  on behalf of the Seller and is a
valid and binding  agreement in  accordance  with its terms,  subject to general
principles of equity and to bankruptcy and other laws effecting the  enforcement
of creditors rights generally.

     g.  Non-contravention  The  execution  and  delivery  of  the  Subscription
Agreement  and the  consummation  of the issuance of the Shares and the Warrants
and the transactions  contemplated by the Subscription Agreement do not and will
not  conflict  with or result  in a breach by the  Seller of any of the terms or
provisions of, or constitute a default under,  the articles of  incorporation or
by-laws  of the  Seller,  or any  indenture,  mortgage,  deed of  trust or other
material  agreement or  instrument to which the Seller is a party or by which it
or any of its properties or assets are bound,  or any existing  applicable  law,
rule or regulation  or any  applicable  decree,  judgment or order of any court,
Federal or State regulatory body,  administrative  agency or other  governmental
body having jurisdiction over the Seller or any of its properties or assets.

     h. Approvals Seller is not aware of any authorization,  approval or consent
of any governmental body.

4. EXEMPTION; RELIANCE ON REPRESENTATIONS

     Buyer  understands  that the offer and sale of the Shares and the  Warrants
are not being  registered  under the 1933 Act.  Seller is  relying  on the rules
governing offers and sales made outside the United States pursuant to Regulation
S.

5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL

     Buyer  understands  that  Seller's   obligations  to  sell  the  Shares  is
conditioned upon:

     a. The receipt and acceptance by Seller of this Subscription  Agreement for
all of the Shares as evidenced by  execution of this  Subscription  Agreement by
the Seller; and

     b.  Delivery  into escrow by Buyer of good funds as payment in full for the
purchase of the Shares.

6. CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE

     Seller  understands  that  Buyer's  obligation  to  purchase  the Shares is
conditioned upon:

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                                      189

     a.  Acceptance  execution by Buyer of this  Subscription  Agreement for the
sale of Shares; and

     b. Delivery of Shares with the restrictions as described herein.

     7. GOVERNING LAW

     This Agreement  shall be governed by and interpreted in accordance with the
laws of the  Commonwealth  of  Massachusetts.  A facsimile  transmission of this
signed agreement shall be legal and binding on all parties hereto.

     8. NOTICES

     All communications hereunder shall be in writing, and, if sent to the Buyer
shall be sufficient in all respects if delivered, sent by registered mail, or by
telecopy and confirmed to the Buyer at:

         Name:
         Address:
         City:
         Country:
         Attention:

or, if sent to the Seller,  shall be delivered,  sent by  registered  mail or by
telecopy and confirmed to the Company at:

         Palomar Medical Technologies, Inc.
         66 Cherry Hill Drive
         Beverly, MA  01915
         Attention:  Paul S. Weiner, Corporate Controller
         Telephone:        (508) 921-9300
         Telecopy:         (508) 921-5801

9. FEES AND EXPENSES

     Each of the Buyer and the Seller agrees to pay its own expenses incident on
the performance of its obligations hereunder,  including but not limited to, the
fees, expenses and disbursements of such party's counsel.

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                                      190

     IN WITNESS THEREOF,  this Offshore  Securities  Subscription  Agreement was
duly executed on the date first written below.

Dated this _____ day of the month of ________________, 1995.

Official Signatory of SELLER
PALOMAR MEDICAL TECHNOLOGIES, INC.

BY:  
     -----------------------------------------
         (Authorized Signature)

     -----------------------------------------
         (Print Name and Title)



Accepted this ____ day of the month of ________________, 1995.

Official signature of BUYER



----------------------------------------------
         (Authorized Signature)

----------------------------------------------
         (Print Name and Title)