STOCK PURCHASE AGREEMENT

     THIS  STOCK  PURCHASE  AGREEMENT,  dated  as of  December  31,  1997  (this
"Agreement"),  by and between  PALOMAR  MEDICAL  TECHNOLOGIES,  INC., a Delaware
corporation,  with  headquarters  located  at  45  Hartwell  Avenue,  Lexington,
Massachusetts 02173 (the "Company"), and the undersigned (the "Buyer").

                              W I T N E S S E T H:

     WHEREAS,  the Buyer wishes to  purchase,  upon the terms and subject to the
conditions of this Agreement, outstanding shares of Common Stock, $.01 par value
(the "Nexar Common Stock"), of Nexar Technologies,  Inc., a Delaware corporation
("Nexar"),  held by the Company, upon the terms and subject to the conditions of
this Agreement; and

     WHEREAS, in connection herewith the Company and the Buyer have executed and
delivered, one to the other, an Exchange Agreement,  dated as of the date hereof
(the "Exchange Agreement");

     NOW THEREFORE,  in  consideration  of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

1.   AGREEMENT TO PURCHASE; PURCHASE PRICE.

     (a)  PURCHASE  OF SHARES.  The Buyer  hereby  agrees to  purchase  from the
Company on the Closing  Date the number of shares (the "Nexar  Shares") of Nexar
Common Stock set forth on the signature  page of this Agreement for the purchase
price set forth on the signature page of this Agreement.

     (b)  DELIVERIES  TO ESCROW  AGENT AND FORM OF PAYMENT.  Promptly  after the
execution and delivery of this Agreement by the parties hereto,  but in no event
later than the Closing Date,  the Buyer shall deposit the purchase price for the
Nexar Shares by  delivering  good funds in United  States  Dollars to the escrow
agent (the "Escrow Agent") identified in the Joint Escrow Instructions  attached
hereto as ANNEX I (the  "Joint  Escrow  Instructions")  against  delivery of the
Nexar  Shares to the Buyer at the  closing.  Promptly  after the  execution  and
delivery of this Agreement by the parties hereto, but in no event later than the
Closing  Date,  the Company  shall  deliver a  certificate  for the Nexar Shares
(which will include  39,264 shares of Common Stock which are not included in the
Nexar Shares and which are not being sold or  transferred  to the Buyer pursuant
to this  Agreement) to the Escrow Agent against  delivery of the purchase  price
for the Nexar Shares to the Escrow Agent. By signing this  Agreement,  the Buyer
and the Company each agrees to all of the terms and conditions of, and becomes a
party to, the Joint  Escrow  Instructions,  all of the  provisions  of which are
incorporated herein by this reference as if set forth herein in full.

     (c) METHOD OF PAYMENT.  Deposit of the purchase  price for the Nexar Shares
by the Buyer with the Escrow Agent shall be made by wire transfer of funds to:

                  Citibank, N.A.
                  153 East 53rd Street
                  New York, New York 10043

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                  ABA#021000089
                  For Further Credit to A/C#37179446
                  for credit to the account of Brian W. Pusch 
                  Attorney Escrow Account
                  Reference:  Advantage/Palomar

     (d) CLOSING DELIVERIES.  At the closing,  the Nexar Shares shall be held by
the Escrow Agent until the Escrow Release Date (as defined herein) and an amount
equal to the  purchase  price to be paid by the Buyer for the Nexar Shares shall
be held by the Escrow Agent until the Escrow Release Date.

2.   BUYER REPRESENTATIONS, WARRANTIES, ETC.

     The Buyer  represents  and warrants to, and covenants and agrees with,  the
Company as follows:

     (a)  PURCHASE  FOR  INVESTMENT.  The Buyer is  acquiring  the rights  under
Section 8 of this Agreement (the "Price  Guarantee  Rights") for its own account
for investment  only and not with a view towards the public sale or distribution
thereof;

     (b) ACCREDITED INVESTOR. The Buyer is an "accredited investor" as that term
is defined in Rule 501 of the General Rules and Regulations under the Securities
Act of 1933, as amended (the "1933 Act"), by reason of Rule 501(a)(3);

     (c)  REOFFERS  AND RESALES.  All  subsequent  offers and sales of the Price
Guarantee  Rights by the Buyer  shall be made  pursuant to  registration  of the
Price  Guarantee  Rights  under the 1933 Act or  pursuant to an  exemption  from
registration;

     (d) COMPANY  RELIANCE.  The Buyer  understands that the Company is agreeing
with the Buyer  concerning the Price Guarantee  Rights in reliance on exemptions
from the  registration  requirements  of the 1933 Act and exemptions  from state
securities  laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the representations,  warranties,  agreements,
acknowledgments  and  understandings  of the Buyer set forth  herein in order to
determine the  availability  of such exemptions and the eligibility of the Buyer
to receive the Price Guarantee Rights;

     (e)  INFORMATION  PROVIDED.  The Buyer and its advisors,  if any, have been
furnished with all materials  relating to the business,  finances and operations
of the Company and materials  relating to the Price Guarantee  Rights which have
been  requested  by the Buyer;  the Buyer and its  advisors,  if any,  have been
afforded  the  opportunity  to ask  questions  of the Company and have  received
satisfactory  answers to any such inquiries.  Without limiting the generality of
the  foregoing,  the Buyer has had the  opportunity  to obtain and to review the
Company's  (1) Annual Report on Form 10-KSB for the fiscal year ended  December
31, 1996, (2) Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31,  June 30 and  September  30,  1997,  (3)  Current  Report  on Form 8-K dated
December  9,  1997,  and (4)  Amendment  No.  1 to the  Company's  Registration
Statement on Form S-3 (Registration  No.  333-42129) (the "Company  Registration
Statement")  filed with the SEC on  December  18, 1997  (collectively,  the "SEC
Reports");  the  Buyer has had the  opportunity  to  obtain  and to  review  the
Prospectus,  dated April 15, 1997 as supplemented to the date of this Agreement,
of Nexar  relating to the Nexar Shares (the "Nexar  Prospectus");  and the Buyer
understands  that the Price  Guarantee  Rights and its  investment  in the Nexar
Shares involve a high degree of risk;

     (f)  ABSENCE OF  APPROVALS.  The Buyer  understands  that no United  States
federal  or state  agency or any other  government  or  governmental  agency has
passed on or made any  recommendation  or endorsement of the Nexar Shares or the
Price Guarantee Rights;

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<PAGE>

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

     (h)  FORWARD-LOOKING  INFORMATION.  The Buyer acknowledges that, except for
the  historical  material  contained  herein or in the SEC Reports,  the matters
disclosed  herein and therein  regarding  the Company and its  subsidiaries  are
forward-looking  statements under the federal securities laws that involve risks
and  uncertainties,  including,  but not limited to,  product  demand and market
acceptance risks, the effect of economic  conditions,  the impact of competitive
products and pricing,  product development,  commercialization and technological
difficulties,  capacity and supply  constraints or difficulties,  the results of
financing  efforts,  actual  purchases  under  agreements,  the  effect  of  the
Company's  accounting  policies,  and other risks  detailed in the SEC Reports.
Actual results could differ  materially  from those  estimated or anticipated in
these  forward-looking  statements.  Without  limiting  the  generality  of  the
foregoing,  the Buyer  acknowledges  the Risk  Factors  set forth in the Company
Registration Statement.

3.   COMPANY REPRESENTATIONS, WARRANTIES, ETC.

     The Company  represents and warrants to, and covenants and agrees with, the
Buyer that:

     (a)  ORGANIZATION  AND  AUTHORITY.   The  Company  is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware,  and has all requisite corporate power and authority (i) to own, lease
and operate its properties and to carry on its business as now being  conducted,
and (ii) to execute,  deliver and perform its  obligations  under this Agreement
and the  other  agreements  to be  executed  and  delivered  by the  Company  in
connection herewith, and to consummate the transactions contemplated hereby. The
Company is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions  wherein such qualification is necessary and where
failure so to qualify  could have a  material  adverse  effect on the  business,
properties, operations, condition (financial or other), results of operations or
prospects of the Company.

     (b) CONCERNING THE NEXAR SHARES. The Nexar Shares have been duly authorized
by Nexar and are fully paid and  non-assessable  and will not subject the holder
thereof to personal  liability by reason of being such holder.  The Nexar Shares
are  owned  beneficially  and of record  by the  Company,  free and clear of all
liens, pledges, charges, equities, encumbrances,  claims and rights of others of
any  nature  whatsoever  and,  upon  transfer  of the Nexar  Shares to the Buyer
pursuant to this Agreement,  the Buyer will acquire good and marketable title to
such  shares,  free  and  clear  of  all  liens,  pledges,  charges,   equities,
encumbrances, claims and rights of others of any nature whatsoever. There are no
preemptive rights or similar rights of any stockholder of the Company,  as such,
to acquire any of the Nexar Shares or the Price Guarantee Rights.

     (c)  AGREEMENT.  This  Agreement  has  been  duly and  validly  authorized,
executed and delivered by the Company and this  Agreement is a valid and binding
agreement of the Company enforceable in accordance with its terms, subject as to
enforceability  to general  principles of equity and to bankruptcy,  insolvency,
moratorium  and other similar laws  affecting  the  enforcement  of  creditors'
rights generally.

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<PAGE>

     (d) NON-CONTRAVENTION.  The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions  contemplated by
this  Agreement do not and will not  conflict  with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under, the
certificate  of  incorporation  or by-laws  of the  Company,  or any  indenture,
mortgage,  deed of trust or other material  agreement or instrument to which the
Company is a party or by which it or any of its  properties or assets are bound,
or any applicable law, rule or regulation or any applicable decree,  judgment or
order  of  any  court,   United  States  federal  or  state   regulatory   body,
administrative  agency or other  governmental body having  jurisdiction over the
Company or any of its properties or assets.

     (e) APPROVALS.  No  authorization,  approval or consent of, or filing with,
any court, governmental body, regulatory agency,  self-regulatory  organization,
or stock exchange or market or the stockholders of the Company is required to be
obtained or made by the Company for (x) the execution,  delivery and performance
by the Company of this  Agreement,  (y) the  transfer  and delivery of the Nexar
Shares  to the  Buyer  pursuant  to this  Agreement  and (z) the  incurrence  or
performance  by the  Company  of  its  obligations  with  respect  to the  Price
Guarantee Rights, other than the requirements of any applicable blue sky laws.

     (f) INFORMATION  PROVIDED.  The information provided by or on behalf of the
Company to the Buyer in connection  with the  transactions  contemplated by this
Agreement (other than the Nexar Prospectus),  including, without limitation, the
information referred to in Section 2(e) of this Agreement,  does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they are made, not misleading.

     (g) ABSENCE OF CERTAIN CHANGES.  Since December 31, 1996, there has been no
material  adverse  change and no material  adverse  development in the business,
properties, operations, condition (financial or other), results of operations or
prospects  of the  Company  and its  subsidiaries  taken as a whole,  except  as
disclosed in the SEC Reports.

     (h) ABSENCE OF CERTAIN PROCEEDINGS. Except as disclosed in the SEC Reports,
there is no action, suit, proceeding,  inquiry or investigation before or by any
court,  public board or body pending or, to the  knowledge of the Company or any
of its subsidiaries,  threatened  against or affecting the Company or any of its
subsidiaries,  wherein an unfavorable  decision,  ruling or finding would have a
material  adverse effect on the properties,  business,  condition  (financial or
other),  results of operations or prospects of the Company and its  subsidiaries
taken as a whole or the  transactions  contemplated  by this Agreement or any of
the documents  contemplated  hereby or which would adversely affect the validity
or enforceability  of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents.

     (i)  PROPERTIES.  The Company and its  subsidiaries  have good title to all
property real and personal  (tangible and  intangible) and other assets owned by
them, free and clear of all security  interests,  charges,  mortgages,  liens or
other  encumbrances,  except such as are described in the SEC Reports or such as
do not  materially  interfere with the use of such property made, or proposed to
be made,  by the  Company or its  subsidiaries.  The  leases,  licenses or other
contracts or  instruments  under which the Company and its  subsidiaries  lease,
hold  or are  entitled  to use  any  property,  real  or  personal,  are  valid,
subsisting  and  enforceable  with only  such  exceptions  as do not  materially
interfere  with the use of such  property  made,  or proposed to be made, by the
Company or its subsidiaries. Neither the Company nor any of its subsidiaries has
received  notice of any material  violation of any  applicable  law,  ordinance,
regulation, order or requirement relating to its owned or leased properties.

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<PAGE>

     (j) LABOR RELATIONS.  No material labor problem exists or, to the knowledge
of the Company,  is imminent with respect to any of the employees of the Company
or any of its subsidiaries.

     (k) SEC FILINGS.  The Company has timely filed all required forms,  reports
and other  documents  with the SEC since  December 31, 1996.  All of such forms,
reports and other documents complied, when filed, in all material respects, with
all applicable  requirements of the 1933 Act and the Securities  Exchange Act of
1934, as amended (the "1934 Act").

     (l)  CONCERNING  THE  NEXAR  SHARES.  The Nexar  Shares  may be sold by the
Company to the Buyer pursuant to the  Registration  Statement of which the Nexar
Prospectus  forms a part and  upon  acquisition  of the  Nexar  Shares  from the
Company  pursuant to this  Agreement,  the Buyer may resell such shares  without
registration under the 1933 Act and without  restriction on the volume or manner
of sale  thereof  so long as the  Buyer is not an  "affiliate"  (as such term is
defined  for  purposes  of  the  1933  Act)  of  Nexar,  subject  to  applicable
limitations on trading in securities while in possession of material  non-public
information concerning Nexar.

4.   CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

     (a) TRANSFER RESTRICTIONS.  The Buyer acknowledges that the Price Guarantee
Rights have not been and are not being  registered  under the  provisions of the
1933  Act  and  may  not  be  transferred  unless  (A)  subsequently  registered
thereunder  for resale or (B) the Buyer shall have  delivered  to the Company an
opinion of counsel,  reasonably satisfactory in form, scope and substance to the
Company,  to the effect that the Price Guarantee Rights or portion thereof to be
sold or transferred may be sold or transferred  without such  registration;  (2)
any sale of the Price Guarantee  Rights made in reliance on Rule 144 promulgated
under  the 1933 Act may be made only in  accordance  with the terms of said Rule
and further,  if said Rule is not applicable,  any resale of the Price Guarantee
Rights or any portion thereof under  circumstances  in which the seller,  or the
person  through whom the sale is made,  may be deemed to be an  underwriter,  as
that term is used in the 1933  Act,  may  require  compliance  with  some  other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (3)  neither the Company  nor any other  person is under any  obligation  to
register  the Price  Guarantee  Rights  under the 1933 Act or to comply with the
terms and conditions of any exemption thereunder (other than pursuant to Section
4(d) hereof).

     (b)  REPORTING  STATUS.  So long as the Company  shall have any  obligation
under this Agreement  with respect to the Price  Guarantee  Rights,  the Company
shall file all reports  required to be filed with the SEC pursuant to Section 13
or 15(d) of the 1934 Act, and the Company shall not,  prior to the date which is
two years after the Closing Date,  terminate its status as an issuer required to
file  reports  under  the  1934  Act  even  if the  1934  Act or the  rules  and
regulations thereunder would permit such termination.

     (c) USE OF PROCEEDS.  Neither the Company nor any subsidiary of the Company
owns or has any present  intention of acquiring any "margin stock" as defined in
Regulation G (12 CFR Part 207) of the Board of Governors of the Federal  Reserve
System ("margin  stock").  The proceeds of sale of the Nexar Shares will be used
for general  working  capital  purposes and in the  operation of the  Company's
business. None of such proceeds will be used, directly or indirectly (1) to make
any loan to or  investment  in any other person or (2) for the purpose,  whether
immediate, incidental or ultimate, of purchasing or carrying any margin stock or
for the purpose of maintaining,  reducing or retiring any indebtedness which was
originally  incurred to  purchase or carry any stock that is  currently a margin
stock  or  for  any  other  purpose  which  might  constitute  the  transactions
contemplated  by this  Agreement a "purpose  credit"  within the meaning of such
Regulation  G.  Neither the Company nor any agent acting on 

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its behalf has taken or will take any action which might cause this Agreement or
the transactions  contemplated  hereby to violate  Regulation G, Regulation T or
any other  regulation of the Board of Governors of the Federal Reserve System or
to  violate  the 1934  Act,  in each  case as in  effect  now or as the same may
hereafter be in effect.

     (d) BLUE SKY LAWS.  On or before the Closing  Date,  the Company shall take
such action as shall be necessary to qualify, or to obtain an exemption for, the
Price  Guarantee  Rights  under  such of the  securities  or "blue  sky" laws of
jurisdictions  in the United  States as shall be  applicable  to the sale of the
Price  Guarantee  Rights to the Buyer  pursuant to this  Agreement.  The Company
shall  furnish  copies  of all  filings,  applications,  orders  and  grants  or
confirmations of exemptions relating to such securities or "blue sky" laws on or
before the Closing Date.

     (e) CERTAIN EXPENSES.  Whether or not the closing occurs, the Company shall
pay or  reimburse  the Buyer for all  reasonable  expenses  (including,  without
limitation,  legal fees and  expenses  of counsel to the Buyer)  incurred by the
Buyer in  connection  with  this  Agreement  and the  transactions  contemplated
hereby.  For purposes of this provision,  invoices of the Buyer's legal counsel
in the form customarily given by such counsel to the Buyer shall be satisfactory
detail and evidence of the same.

     (f) BEST EFFORTS.  Each of the parties shall use its best efforts timely to
satisfy each of the conditions to the other party's obligations to complete the
closing of the transactions  contemplated by this Agreement set forth in Section
6 or 7, as the case may be, of this  Agreement on or before the Closing Date and
to satisfy each of the other  party's  conditions  to escrow  release in Section
5(b)(2) or 5(b)(3), as the case may be, on or before the applicable date.

5.   CLOSING DATE; ESCROW RELEASE.

     (a) CLOSING  DATE.  The date of the sale of the Nexar Shares (the  "Closing
Date") shall be January 8, 1998. Such closing shall occur on the Closing Date at
the  offices of the Escrow  Agent.  The Buyer and the Company  agree that,  upon
completion of the closing on the Closing Date,  the Nexar Shares shall be deemed
to be sold by the Company and  purchased  by the Buyer and only  delivery of the
Nexar  Shares to the Buyer upon  release  from  escrow by the  Escrow  Agent and
delivery of the  purchase  price to the Company  upon release from escrow by the
Escrow Agent shall not have occurred.

     (b) ESCROW  RELEASE.  (1) The Buyer  hereby  instructs  the Escrow Agent to
submit to Nexar or its  transfer  agent  the  certificate  for the Nexar  Shares
promptly  after the Closing Date to register  the transfer  thereof to the Buyer
and to dispatch  the balance of the shares of Common Stock  represented  by such
certificate to the Company.

          (2) The release by the Escrow  Agent of the Nexar  Shares to the Buyer
shall be subject to the following conditions precedent,  any or all of which may
be waived by the Company:

               (A) on or before  January 15, 1998,  the Buyer and the  custodian
          (the "Custodian") identified in the Custody Agreement, dated as of the
          date  hereof in the form  attached  hereto  as ANNEX II (the  "Custody
          Agreement")  shall have executed and delivered,  one to the other, the
          Custody Agreement and the Buyer shall have furnished a copy thereof to
          the Company;

               (B) on or before January 15, 1998, the closing under the Exchange
          Agreement  shall have  occurred and the Buyer shall have  executed and
          delivered  to the  Company a general  release  and  waiver in the form
          specified in the Exchange Agreement;

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               (C) on or before  January 29,  1998,  the Nexar Shares shall have
          been  transferred  of record  to, and  registered  in the name of, the
          Buyer, without restrictive legend; and

               (D) on or before  January 29, 1998, a certificate  for the 39,264
          shares of  Common  Stock  included  in the  certificate  for the Nexar
          Shares shall have been returned to the Company.

          (3) The  release by the Escrow  Agent to the  Company of the  purchase
price for the Nexar Shares  shall be subject to  satisfaction  of the  following
conditions precedent any or all of which may be waived by the Buyer:

               (A) the  representations  and  warranties  of the Company in this
          Agreement  made as of the date of this Agreement and as of the Closing
          Date shall have been true and correct in all  material  respects as of
          the date of this Agreement and as of the Closing Date;

               (B) the  Company  shall  have  performed  on or before the Escrow
          Release Date all covenants and  agreements of the Company  required to
          be performed on or before the Escrow Release Date.

               (C) on or before January 15, 1998, a notification by the Buyer to
          the Attorney General of the Commonwealth of Massachusetts  pursuant to
          G.L.  c.  271,  Sec.  49(d)  of  the  laws  of  the   Commonwealth  of
          Massachusetts  making  the  provisions  of G.L.  c.  271,  Sec.  49(a)
          inapplicable to the transactions  contemplated by this Agreement shall
          have  been  given  to and  accepted  by the  Attorney  General  of the
          Commonwealth of Massachusetts;

               (D) on or before  January 15, 1998, the Buyer shall have received
          a certificate, dated the Closing Date, of the Secretary of the Company
          certifying  (1) the  certificate of  incorporation  and by-laws of the
          Company as in effect on the Closing Date,  (2) all  resolutions of the
          Board of Directors (and committees thereof) of the Company relating to
          this Agreement and the transactions  contemplated  hereby and (3) such
          other matters as reasonably requested by the Buyer;

               (E) on or before  January 29,  1998,  the Nexar Shares shall have
          been  transferred  of record  to, and  registered  in the name of, the
          Buyer, without restrictive legend; and

               (F) on or before  January 15, 1998, the Buyer shall have received
          an opinion of counsel  for the  Company,  dated the Closing  Date,  in
          form, scope and substance reasonably satisfactory to the Buyer, to the
          effect set forth in ANNEX III attached hereto.

               (G) on or before  January 15, 1998, the Buyer shall have received
          a certificate,  dated the Closing Date, of the Chief Executive Officer
          or the Chief Financial  Officer of the Company  confirming the matters
          set forth in Section 7(b).

          (4) The date on which  all of the  conditions  precedent  in  Sections
5(b)(2) and 5(b)(3) are satisfied or waived is referred to herein as the "Escrow
Release Date."

          (5) On the  Escrow  Release  Date,  the  Company  and the Buyer  shall
instruct the Escrow Agent that the Escrow Release Date has occurred.

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<PAGE>

          (6) If the Escrow Release Date does not occur on or before January 29,
1998,  then the Escrow  Agent  shall  release to the Company all shares of Nexar
Common Stock in the  possession  of the Escrow Agent and shall release an amount
equal to the  purchase  price for the Nexar  Shares to the  Buyer.  If the Nexar
Shares have been issued in the name of the Buyer,  the Buyer shall  cooperate in
causing such shares to be re-issued in the Company's name.

6.   CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

     The Buyer  understands  that the  Company's  obligation  to sell the Nexar
Shares  to the  Buyer  pursuant  to  this  Agreement  on  the  Closing  Date  is
conditioned  upon the satisfaction of the following  conditions  precedent on or
before the Closing Date (any or all of which may be waived by the Company in its
sole discretion):

     (a)  The  receipt  and  acceptance  by the  Company  of this  Agreement  as
evidenced  by  execution  of this  Agreement  by the Company and  delivery of an
executed counterpart of this Agreement to the Buyer or its legal counsel;

     (b)  Delivery by the Buyer to the Escrow  Agent of good funds as payment in
full of an amount equal to the purchase price for the Nexar Shares in accordance
with Section 1(c) hereof; and

     (c) The accuracy on the Closing Date of the  representations and warranties
of the Buyer  contained in this Agreement as if made on the Closing Date and the
performance  by the Buyer on or before the  Closing  Date of all  covenants  and
agreements of the Buyer required to be performed on or before the Closing Date.

7.   CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

     The Company  understands  that the Buyer's  obligations to purchase and pay
for the  Nexar  Shares  pursuant  to this  Agreement  on the  Closing  Date  are
conditioned  upon the satisfaction of the following  conditions  precedent on or
before the  Closing  Date (any or all of which may be waived by the Buyer in its
sole discretion):

     (a)  Delivery  by the  Company to the Escrow  Agent of the Nexar  Shares in
accordance with this Agreement; and

     (b) The accuracy on the Closing Date of the  representations and warranties
of the Company  contained  in this  Agreement as if made on the Closing Date and
the  performance  by the Company on or before the Closing Date of all  covenants
and agreements of the Company required by this Agreement and all other documents
and instruments relating hereto to be performed on or before the Closing Date.

8.   PRICE GUARANTEE RIGHTS.

     (a) CUSTODY  DEPOSIT.  If the Nexar Shares are released by the Escrow Agent
to the Buyer on the Escrow  Release  Date in  accordance  with the Joint  Escrow
Instructions, immediately following such release on the Escrow Release Date, the
Buyer shall deposit  400,000 of the Nexar Shares with the Custodian  pursuant to
the  Custody  Agreement.  Such  deposit  shall be made  solely for  purposes  of
administering  the  provisions  of this  Section  8 with  respect  to the  Price
Guarantee  Rights and shall not in any way limit or affect the  ownership of the
Nexar Shares by the Buyer and shall not in any manner  create any lien,  pledge,
charge,  equity,  encumbrance,  claim  or  right of the  Company  of any  nature
whatsoever in or with respect to the Nexar Shares.  For purposes of this Section
8, the Nexar  Shares shall be deemed to include any  

                                       8
<PAGE>

additional  shares of Nexar  Common  Stock  distributed  to or  received  by the
Custodian as a stock  dividend,  stock split or other  distribution on the Nexar
Shares held by the Custodian.

     (b) RELEASE FROM CUSTODY.  The Buyer shall have the right from time to time
to direct the  Custodian  to release  from custody the Nexar Shares by notice to
the Custodian in the form attached as Exhibit A to the Custody  Agreement (each,
a "Release  Notice");  PROVIDED,  HOWEVER,  that the aggregate Release Price (as
defined  herein) of all Nexar Shares  released  from custody by the Buyer during
any period of 30  consecutive  days may not  exceed  $666,667.00;  and  PROVIDED
FURTHER,  HOWEVER,  that the Buyer shall be required to direct the  Custodian to
release all of the Nexar  Shares to the Buyer on or before the date which is two
years after the Closing  Date.  The Buyer shall furnish to the Company a copy of
each Release Notice given by the Buyer to the Custodian  within one Business Day
after the Buyer gives such Release  Notice to the  Custodian.  A Release  Notice
given by the Buyer to the  Custodian  shall be deemed for all  purposes to be in
proper  form  unless the  Company  notifies  the Buyer in writing  within  three
Business  Days after such  Release  Notice has been given  (which  notice  shall
specify all defects in such Release Notice),  and any Release Notice  containing
any such defect  shall  nonetheless  be effective on the date given if the Buyer
promptly  undertakes to correct all such  defects.  No such claim of error shall
limit or delay the  buyer's  right to release of the Nexar  Shares to which such
Release Notice  relates.  Any Nexar Shares as to which the Buyer has not given a
Release  Notice on or before the date which is two years after the Closing  Date
shall be automatically released on the date which is two years after the Closing
Date (the "Automatic Release") and the Redemption Price for such shares shall be
calculated as of such date.

     (C)  RELEASE  PRICE.  For  purposes  of  computing  the amount of the Price
Guarantee  Rights,  a Release  Price  shall be  determined  for each Nexar Share
released pursuant to a Release Notice or the Automatic Release.  As used herein,
the following terms shall have the following meanings:

          "Market Price" of any security on any date means the closing bid price
of such  security  on such date on the  Nasdaq  National  Market  or such  other
securities exchange or other market on which such security is listed for trading
which constitutes the principal securities market for such security, as reported
by Bloomberg,  L.P. (subject to equitable adjustments from time to time on terms
reasonably  acceptable  to the Buyer and the Company for (1) stock  splits,  (2)
stock dividends, (3) combinations, (4) capital reorganizations,  (5) issuance to
all holders of Nexar Common Stock rights or warrants to purchase shares of Nexar
Common Stock, (6) the distribution by Nexar to all holders of Nexar Common Stock
of evidences of indebtedness of Nexar or cash (other than regular quarterly cash
dividends),  (7)  repurchases  of  shares of Nexar  Common  Stock in one or more
transactions which, individually or in the aggregate,  result in the purchase of
more than ten  percent of the Nexar  Common  Stock  outstanding  and (8) similar
events  relating to the Nexar Common  Stock,  in each such case which occur,  or
with respect to which "ex-"  trading of the Nexar  Common Stock begins  during a
period of five  consecutive  Trading Days used for determining the Release Price
of any Nexar Shares).

          "Release  Date"  means any date on which a Release  Notice is given by
the  Buyer  pursuant  to the  Custody  Agreement  and the date of the  Automatic
Release, if any.

          "Release  Percentage"  means,  with respect to any Release  Date,  the
applicable percentage set forth opposite such date below:

         DATE                                                 RELEASE PERCENTAGE

         Closing Date through 30th day thereafter                    100%

         31st through 60th day after Closing Date                     95%

                                       9
<PAGE>

         61st through 90th day after Closing Date                     90%

         91st day after Closing Date and thereafter                   85%

          "Release  Price" means,  for any Release Date,  the product of (x) the
arithmetic  average of the Market  Price of the Nexar  Common Stock for the five
consecutive  Trading  Days ending on the Trading Day prior to such  Release Date
TIMES (y) the Release Percentage applicable to such Release Date.

          "Trading Day" means a day on whichever of (x) the national  securities
exchange or (y) the Nasdaq  National  Market which at the time  constitutes  the
principal securities market for the Common Stock is open for general trading.

     (d) PAYMENT OF PRICE GUARANTEE RIGHTS. If after release of all of the Nexar
Shares by the Custodian under the Custody  Agreement the ("Final Release Date"),
the  aggregate  Release  Price  for all of the Nexar  Shares  shall be less than
$2,000,000.00  then the Company  shall pay to the Buyer as and when  required by
this Agreement an amount equal to the amount by which $2,000,000.00  exceeds the
aggregate Release Price for all of the Nexar Shares. The amount, if any, payable
by the Company to the Buyer  pursuant to this Section 8(d) shall be paid by wire
transfer in immediately available funds on the date which is two years after the
Closing  Date,  to such account as shall be specified for such purpose by notice
from the Buyer to the  Company.  Any amount due under this Section 8(d) which is
not paid when due shall accrue interest at the rate of 14% per annum until paid.

9.   MISCELLANEOUS.

     (a) This Agreement  shall be governed by and interpreted in accordance with
the laws of the Commonwealth of Massachusetts.

     (b) This  Agreement  may be  executed  in  counterparts  and by the parties
hereto on separate counterparts,  all of which together shall constitute one and
the same  instrument.  A  facsimile  transmission  of this  Agreement  bearing a
signature  on behalf of a party hereto shall be legal and binding on such party.
Although  this  Agreement  is dated as of the date  first set forth  above,  the
actual date of  execution  and  delivery of this  Agreement by each party is the
date set forth below such party's  signature on the signature page hereof.  Any
reference in this Agreement or in any of the documents executed and delivered by
the parties hereto in connection  herewith to the date of execution and delivery
of this  Agreement  shall be deemed a  reference  to the later of such dates set
forth below each party's respective signature on the signature page hereof.

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

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

     (e) This  Agreement may be amended only by an instrument in writing  signed
by the party to be charged with enforcement.

     (f)  Failure  of any  party to  exercise  any right or  remedy  under  this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
or any course of  dealings

                                       10
<PAGE>

between  the  parties,  shall not  operate as a waiver  thereof or an  amendment
hereof,  nor shall any single or partial exercise of any such right or power, or
any  abandonment  or  discontinuance  of steps to enforce such a right or power,
preclude any other or further exercise thereof or exercise of any other right or
power.

     (g) Any notices  required or  permitted to be given under the terms of this
Agreement  shall be sent by mail or delivered  personally  (which shall  include
telephone  line  facsimile  transmission  with answer back  confirmation)  or by
courier  and shall be  effective  five days after being  placed in the mail,  if
mailed, or upon receipt,  if delivered  personally or by courier, in the case of
the Company  addressed to the Company at its address  shown in the  introductory
paragraph of this  Agreement,  Attention:  Director of Finance  (telephone  line
facsimile  transmission  number (781) 676-7330) or, in the case of the Buyer, at
its  address  shown  on the  signature  page of this  Agreement,  with a copy to
Genesee  International,  Inc.,  10500 N.E.  8th Street,  Suite  1920,  Bellevue,
Washington  98004-4332  (telephone  line  facsimile  transmission  number  (425)
462-4645) or such other  address as a party shall have provided by notice to the
other party in accordance with this provision.

     (h) Prior to the Closing Date, the Buyer shall have the right to assign its
rights and obligations  under this Agreement with respect to the purchase of all
or any  portion of the Nexar  Shares,  provided  any such  assignee,  by written
instrument duly executed by such assignee,  assumes all obligations of the Buyer
hereunder  with  respect to the  purchase of the portion of the Nexar  Shares so
assigned and makes the same  representations and warranties with respect thereto
as the Buyer makes in this  Agreement,  whereupon the Buyer shall be relieved of
any further  obligations,  responsibilities  and liabilities with respect to the
purchase  of all or the  portion  of the Nexar  Shares  the  obligation  for the
purchase of which has been so  assigned.  Any  transfer  of Nexar  Shares by the
Buyer of rights  under this  Agreement  after the Closing  Date shall be made in
accordance with Section 4(a).

     (i) The respective representations, warranties, covenants and agreements of
the Buyer and the Company contained in this Agreement or made by or on behalf of
them,  respectively,  pursuant to this  Agreement  shall survive the delivery of
payment  for the  Preferred  Shares  and shall  remain in full  force and effect
regardless  of any  investigation  made by or on  behalf  of them or any  person
controlling or advising any of them.

     (j) This Agreement and its Annexes set forth the entire  agreement  between
the parties  hereto with respect to the subject  matter hereof and supersede all
prior  agreements  and  understandings,  whether  written or oral,  with respect
thereto.

     (k) The language used in this  Agreement  will be deemed to be the language
chosen by the parties to express  their  mutual  intent,  and no rules of strict
construction will be applied against any party.

                                       11
<PAGE>

     IN WITNESS  WHEREOF,  this  Agreement has been duly executed by the parties
hereto by their  respective  officers  thereunto duly  authorized as of the date
first set forth above.

NUMBER OF NEXAR SHARES:  500,000

PURCHASE PRICE:  $2,000,000.00

                                       ADVANTAGE FUND LIMITED

                                       By:   /s/  A.P. de Groot
                                          ---------------------
                                                A.P. de Groot
                                                President

                                       Address:
                                       c/o CITCO
                                       Kaya Flamboyan 9
                                       Curatao, Netherlands Antilles

                                       Facsimile No.:     011-599-97322008

                                       PALOMAR MEDICAL TECHNOLOGIES, INC.

                                       By:   /s/  Joseph P. Caruso
                                          -------------------------------
                                         Title:   Chief Financial Officer
<PAGE>
   
                                                                      ANNEX I
                                                                        TO
                                                                  STOCK PURCHASE
                                                                     AGREEMENT

                            JOINT ESCROW INSTRUCTIONS

                                    Dated as of the date of the  Stock  Purchase
                                    Agreement   to  Which  These  Joint   Escrow
                                    Instructions Are Attached

Law Offices of Brian W Pusch,
   as Escrow Agent
Penthouse Suite
29 West 57th Street
New York, New York   10019
Attention:  Brian W. Pusch, Esq.

Dear Sir or Madam:

         As Escrow Agent for both Palomar Medial Technologies,  Inc., a Delaware
corporation  (the  "Company"),  and the  purchaser  (the "Buyer") of shares (the
"Nexar  Shares")  of  Common  Stock,   $.01  par  value  per  shares,  of  Nexar
Technologies,  Inc., a Delaware corporation, which are owned by the Company, who
is named in the Stock  Purchase  Agreement  between the Company and the Buyer to
which a copy of these Joint Escrow is attached as ANNEX I (the "Agreement"), the
Escrow Agent pursuant to the terms of the Agreement (the "Escrow Funds") and any
interest  credited  by the  depository  bank for the Escrow  Funds (the  "Escrow
Interest"), in accordance with the following instructions:

         1. After  receipt of written  notice  from the Company and the Buyer to
the Escrow Agent that their respective  conditions precedent to the release from
this escrow  have been  satisfied  or waived by the  Company and the Buyer,  the
Escrow  Agent  shall,  after  deduction  of the amount  referred  to in the next
succeeding  sentences,  release  the  Escrow  Funds to or upon the  order of the
Company and shall release the Nexar Shares and the Escrow Interest to the Buyer.
After  receipt  of such  notices  (x) a portion  of the  Escrow  Funds  shall be
released  to or upon the order of the Buyer in  payment of the  expenses  of the
Buyer payable by the Company in accordance with Section 4(e) of the Agreement in
such amount as may be  specified  in writing by or on behalf of the Buyer to the
Escrow  Agent prior to release of the Escrow Funds and (y) $10,000 of the Escrow
Funds shall be released to or upon the order of the  Custodian in payment of the
Custodian's  annual  fees  under the  Custody  Agreement  for two years from the
Closing  Date. If Escrow Funds are released to or upon the order of the Company,
the amount  thereof  shall be reduced  by all wire  transfer  fees in respect of
release  of the Escrow  Funds.  If the  Company  and the Buyer do not notify the
Escrow  Agent on or before  January  29. 1998 that their  respective  conditions
precedent  to the release from this escrow have been  satisfied or waived,  then
the Escrow Agent shall  release the Escrow Funds and the Escrow  Interest to the
Buyer and shall release the Nexar Shares to the Company.  Prior to the return of
the Escrow Funds to the Buyer,  the Buyer shall  furnish  such tax  reporting or
other  information as shall be  appropriate  for the Escrow Agent to comply with
applicable United States laws. The Escrow Agent shall deposit all funds received
hereunder in the Escrow Agent's attorney escrow account at Citibank, N.A. Except
as otherwise  specifically  provided in this paragraph 1, the Escrow Agent shall
not be liable for  interest  on the Escrow  Funds for any reason,  including  by
reason of any delay or mistake  in  delivery  of the  Escrow  Funds or any other
funds held by the Escrow Agent hereunder.
<PAGE>

         2.  The  Escrow  Agent's  duties  hereunder  may be  altered,  amended,
modified or revoked only by a writing  signed by the Company,  the Buyer and the
Escrow Agent.

         3. The Escrow Agent shall be obligated only for the performance of such
duties as are  specifically set forth herein and may rely and shall be protected
in relying or refraining  from acting on any instrument  reasonably  believed by
the  Escrow  Agent to be genuine  and to have been  signed or  presented  by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow Agent may do or omit to do hereunder as Escrow Agent while acting
in good faith,  and any act done or omitted by the Escrow Agent  pursuant to the
advice of the Escrow Agent's  attorneys-at-law  shall be conclusive  evidence of
such good faith.  In no event shall the Escrow  Agent incur any  liability or be
held  responsible,  if the Nexar Shares,  once  released from escrow  hereunder,
shall become lost, stolen, destroyed, mutilated or misplaced while in transit to
any person,  provided the Escrow Agent shall have dispatched the same by a means
customarily used by the Escrow Agent.

         4. The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person,  firm or
corporation,  excepting  only  order or  process  of courts of law and is hereby
expressly  authorized to comply with and obey orders,  judgments or decree,  the
Escrow  Agent shall not be liable to any of the  parties  hereto or to any other
person,  firm or  corporation  by  reason  of  such  decree  being  subsequently
reversed,  modified,  annulled, set aside, vacated or found to have been entered
without jurisdiction.

         5. The Escrow  Agent  shall not be liable in any  respect on account of
the identities,  authorities or rights of the parties executing or delivering or
purporting  to execute or  deliver  the  Agreement  or any  documents  or papers
deposited or called for hereunder.

         6. The Escrow Agent shall not be liable for the outlawing of any rights
under the Statute of Limitations with respect to these Joint Escrow Instructions
or any documents or Escrow Funds deposited with or held by the Escrow Agent.

         7. The Escrow Agent shall be entitled to employ such legal  counsel and
other  experts as the Escrow  Agent may deem  necessary  properly  to advise the
Escrow Agent in connection with the Escrow Agent's  obligations  hereunder,  may
rely  upon the  advice  of such  counsel,  and may pay such  counsel  reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the Buyer
in  connection  with the  transactions  contemplated  by the  Agreement  and may
continue  to act as legal  counsel for the Buyer  notwithstanding  its duties as
Escrow Agent hereunder.

         8. The Escrow Agent's  responsibilities as Escrow Agent hereunder shall
terminate if the Escrow Agent shall resign by written  notice to the Company and
the  Buyer.  In the event of any such  resignation,  the Buyer  shall  appoint a
successor Escrow Agent reasonably acceptable to the Company.

         9. If the Escrow Agent reasonably requires other or further instruments
in connection  with theses Joint Escrow  Instructions  or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

         10. It is  understood  and agreed that  should any  dispute  arise with
respect to the delivery and/or ownership or right of possession of the documents
or  Escrow  Funds  held by the  Escrow  Agent  hereunder,  the  Escrow  Agent is
authorized  and  directed,  in its sole  discretion(a)  to retain in the  Escrow
Agent's possession without liability to anyone all or any part of said documents
or Escrow Funds until such  disputes  shall have been  settled  either by mutual
written  agreement  of the  parties  concerned  or by a final  order,  decree or
judgment  of a court of  competent  jurisdiction  after the time for  appeal has
expired and no appeal has been perfected, but the Escrow Agent shall be under no
duty whatsoever to institute or defend any such  proceedings or (b) at any time,
to  deposit  the   documents  or  Escrow  Funds  with  any  court  of  competent
jurisdiction  in the State of New York,  in which  event the Escrow  Agent shall
give notice thereof to the Buyer and the Company and shall thereupon be relieved
and discharged from all further obligations hereunder.
<PAGE>

         11. The Company and the Buyer jointly and severally  agree to indemnify
and hold harmless the Escrow Agent from any and all claims,  liabilities,  costs
or expenses in any way arising from or relating to the duties or  performance of
the Escrow Agent hereunder other than any such claim, liability, cost or expense
to the extent the same shall have been determined by final unappealable judgment
of a court of competent  jurisdiction to have resulted from the gross negligence
or willful misconduct of the Escrow Agent.

         12.  Any  notice  required  or  permitted  hereunder  shall be given in
writing  (unless  otherwise  specified  herein) and shall be deemed  effectively
given upon  personal  delivery  or  transmission  by  telephone  line  facsimile
transmission  or three  business  days after deposit in the United States Postal
Service,  by  registered  or  certified  mail  with  postage  and fees  prepaid,
addressed  to each of the other  parties  thereunto  entitled  at the  following
addresses,  or at such  other  addresses  as a party may  designate  by ten days
advance written notice to each of the other parties hereto.

COMPANY:                          At the address set forth in the introductory
                                  paragraph  of the Agreement

                                  Attention:  Director of Finance

                                  Facsimile No. (781) 676-7330

                                  with a copy to:

                                  At the address set forth in the introductory
                                  paragraph  of the Agreement

                                  Attention:  General Counsel

                                  Facsimile No. (617) 676-7330

BUYER:                            At the address set forth in the Stock Purchase
                                  and Exchange Agreement to which these Joint
                                  Escrow Instructions are attached

                                  Facsimile No. (425) 462-4645

ESCROW AGENT:                     Law Offices of Brian W Pusch
                                  Penthouse Suite
                                  29 West 57th Street
                                  New York, New York  10019

                                  Facsimile No. (212) 980-7055

         13. By signing  these  Joint  Escrow  Instructions,  the  Escrow  Agent
becomes a party hereto only for the purpose of these Joint Escrow  Instructions;
the Escrow Agent does not become a party to the Agreement.  The Company ;and the
Buyer  have  become  parties  hereto  by their  execution  and  delivery  of the
Agreement, as provided therein.

         14. This  instrument  shall be binding upon and inure to the benefit of
the parties hereto,  and their respective  successors and permitted  assigns and
shall be governed by the laws of the State of New York.

<PAGE>


         15.  Capitalized  terms used herein and not  otherwise  defined  herein
shall have their respective meanings provided in the Agreement.

ACCEPTED BY ESCROW AGENT:



          /s/
------------------------------
Brian W. Pusch, as Escrow Agent
<PAGE>


                                                                     ANNEX II
                                                                        TO
                                                                  STOCK PURCHASE
                                                                     AGREEMENT

                                CUSTODY AGREEMENT

         THIS   CUSTODY   AGREEMENT,   dated  as  of  December  31,  1997  (this
"Agreement"),  by and between  ADVANTAGE FUND LIMITED,  a British Virgin Islands
corporation (the "Company"),  and BRIAN W. PUSCH, not in his individual capacity
but as custodian (the "Custodian")

                              W I T N E S S E T H:
                              - - - - - - - - - -

         WHEREAS, the Company and Palomar Medical Technologies, Inc., a Delaware
corporation ("Palomar"),  have executed and delivered, one to the other, a Stock
Purchase  Agreement,  dated  as  of  December  31,  1997  (the  "Stock  Purchase
Agreement"),  pursuant to which, among other things,  Palomar has agreed to sell
to the Company,  and the Company has agreed to purchase from  Palomar,  upon the
terms and subject to the  conditions of the Stock  Purchase  Agreement,  500,000
outstanding  shares of Common Stock,  $.01 par value (the "Nexar Common Stock"),
of Nexar Technologies, Inc., a Delaware corporation ("Nexar"); and

         WHEREAS,  pursuant  to the Stock  Purchase  Agreement,  the Company has
agreed with Palomar,  among other things,  to execute and deliver this Agreement
and,  immediately  following  the  release  from escrow in  connection  with the
closing of the  purchase  of the Nexar  Shares  pursuant  to the Stock  Purchase
Agreement,  to deposit  400,000  shares of Nexar Common Stock with the Custodian
pursuant to this  Agreement for the purposes set forth in Section 8 of the Stock
Purchase Agreement;

         NOW  THEREFORE,  in  consideration  of  the  premises  and  the  mutual
covenants contained in this Agreement and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

         1. DEPOSIT OF  CERTIFICATES.  Immediately  following the closing of the
purchase  of the Nexar  Shares by the  Company  pursuant  to the Stock  Purchase
Agreement, the Company shall deposit with the Custodian one or more certificates
for an aggregate of 400,000 shares of Nexar Common Stock. Such shares,  together
with any additional  shares of Nexar Common Stock  distributed to or received by
the  Custodian as a stock  dividend,  stock split or other  distribution  on the
shares of Nexar Common Stock held by the Custodian are referred to herein as the
"Nexar Shares". The certificates for the Nexar Shares shall be registered in the
name of the Custodian or shall be  accompanied  by duly executed stock powers in
blank with any necessary signature guarantees.  The Custodian shall be entitled,
in its discretion,  to retain possession of certificates for the Nexar Shares or
to deposit the Nexar Shares in a segregated  brokerage account maintained in the
name of the Custodian with  PaineWebber  Incorporated or another  brokerage firm
which is a member of the National Association of Securities Dealers, Inc.

         2. RELEASE OF NEXAR SHARES.  At any time or from time to time after the
deposit of the Nexar Shares by the Company with the  Custodian,  the Company may
give a  Release  Notice,  in the form  attached  hereto as  EXHIBIT  A (each,  a
"Release  Notice"),  to the  Custodian in order to release Nexar Shares from the
custody of the Custodian.  A Release Notice given by the Company shall be deemed
for all purposes to be in proper form unless the  Custodian or Palomar  notifies
the Company in writing  within five business days after such Release  Notice has
been given (which notice shall specify all defects in such Release Notice),  and
any Release Notice  containing any such defect shall nonetheless be effective on
the date given if the Company  promptly  undertakes to correct all such defects.
No such  claim of error  shall  limit or delay  performance  of the  Custodian's
obligation  to  release  all  Nexar  Shares  not  in  dispute.  As  promptly  as
practicable following the date on which a Release Notice is given, the Custodian
shall  release to the  Company  the  number of Nexar  Shares  specified  in such
Release  Notice  until  such time as the  Custodian  no  longer  holds any Nexar
Shares. Any Nexar Shares for which the Company has not given a Release Notice on
or before the date which is two years after the Closing  Date (as defined in the
Stock Purchase  Agreement) shall be  automatically  released by the Custodian on
the date which is two years after the Closing Date.
<PAGE>

         3. DUTIES OF CUSTODIAN.  The Custodian  shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely and
shall be  protected  in  relying or  refraining  from  acting on any  instrument
reasonably  believed by the  Custodian  to be genuine and to have been signed or
presented by the proper party or parties.  In no event shall the Custodian  have
any responsibility or liability for the accuracy of the information set forth in
any Release Notice or for the  determination  of any  calculation to be made for
purposes  of  Section  8 of the  Stock  Purchase  Agreement  or  otherwise.  The
Custodian  shall not be  personally  liable for any act the  Custodian may do or
omit to do hereunder as Custodian  while acting in good faith,  and any act done
or  omitted  by  the  Custodian  pursuant  to  the  advice  of  the  Custodian's
attorneys-at-law shall be conclusive evidence of such good faith.

         4.  DISREGARD OF WARNINGS;  JUDICIAL  ORDERS.  The  Custodian is hereby
expressly  authorized  to  disregard  any and all  warnings  given by any  other
person,  firm or  corporation  other than the Company,  excepting only orders or
process of courts of law and is hereby  expressly  authorized to comply with and
obey orders,  judgments or decrees of any court.  In case the Custodian obeys or
complies with any such order,  judgment or decree,  the  Custodian  shall not be
liable to any of the parties hereto or to any other person,  firm or corporation
by reason of such decree being subsequently  reversed,  modified,  annulled, set
aside, vacated or found to have been entered without jurisdiction.

         5. NO LIABILITY FOR  GENUINENESS.  The Custodian shall not be liable in
any  respect  on account of the  identity,  authorities  or rights of the person
executing or delivering  or purporting to execute or deliver the Stock  Purchase
Agreement  or any  notice,  document  or  instrument  deposited  or  called  for
hereunder.

         6. STATUTE OF  LIMITATIONS.  The Custodian  shall not be liable for the
outlawing  of any rights under the Statute of  Limitations  with respect to this
Agreement or any document or instrument  deposited with or held by the Custodian
pursuant to this Agreement.

         7.  RETENTION  AND  ADVICE OF LEGAL  COUNSEL.  The  Custodian  shall be
entitled to employ such legal  counsel and other  experts as the  Custodian  may
deem  necessary  properly  to  advise  the  Custodian  in  connection  with  the
Custodian's obligations hereunder, may rely upon the advice of such counsel, and
may pay such counsel reasonable compensation therefor,  subject to reimbursement
thereof as and to the extent  provided in Section 11. The Custodian has acted as
legal  counsel for the Company and the  Custodian  may  continue to act as legal
counsel for the Company notwithstanding its duties as Custodian hereunder.

         8 RESIGNATION.  The Custodian's responsibilities as Custodian hereunder
shall  terminate if the Custodian shall resign by 20 days' notice to the Company
and Palomar.  In the event of any such resignation,  the Company shall appoint a
successor Custodian who is reasonably acceptable to Palomar. The Custodian shall
transfer any Nexar Shares to any successor  Custodian  promptly after receipt by
the Custodian of notice from the Company of the appointment of such successor.
<PAGE>

         9. FURTHER  ASSURANCES.  If the Custodian  reasonably requires other or
further  instruments in connection with this Agreement or obligations in respect
hereto, the Company shall furnish such instruments.

         10. DISPUTES. It is understood and agreed that should any dispute arise
with respect to the release  and/or right of possession of the Nexar Shares held
by the Custodian  hereunder,  the Custodian is authorized  and directed,  in its
sole discretion (a) to retain in the Custodian's possession without liability to
anyone all or any part of the Nexar Shares until such  disputes  shall have been
settled  either by mutual  written  agreement  of the parties  concerned or by a
final order,  decree or judgment of a court of competent  jurisdiction after the
time for appeal has expired and no appeal has been perfected,  but the Custodian
shall be under no duty whatsoever to institute or defend any such proceedings or
(b) at any time,  to deposit  any or all of the Nexar  Shares  with any court of
competent  jurisdiction  in the State of New York,  in which event the Custodian
shall give notice  thereof to the Company  and  Palomar and shall  thereupon  be
relieved and discharged from all further obligations hereunder.

         11. FEES AND EXPENSES;  INDEMNITY. (a) The Company agrees to pay to the
Custodian  an annual fee in the amount of $5,000  for the  Custodian's  services
under this  Agreement,  which fee shall be payable in advance for two years.  In
the event the Custodian  resigns,  the Custodian shall refund a pro rata portion
of such fee to the Company,  less any amounts due to the  Custodian  pursuant to
Section 11(b)

         (b) In addition to the amounts  payable  pursuant to Section  11(a) the
Company  agrees to pay or reimburse the Custodian for, and to indemnify and hold
harmless the Custodian from, any and all claims, liabilities,  costs or expenses
in any  way  arising  from or  relating  to the  duties  or  performance  of the
Custodian hereunder other than any such claim, liability, cost or expense to the
extent the same shall have been determined by final,  unappealable judgment of a
court of competent  jurisdiction  to have resulted from the gross  negligence or
willful misconduct of the Custodian.

         12. NOTICES.  Any notice required or permitted hereunder shall be given
in writing (unless otherwise  specified herein) and shall be deemed  effectively
given upon personal  delivery  (which shall  include  telephone  line  facsimile
transmission or courier service), addressed to each person thereunto entitled at
the following  addresses,  or at such other address as such person may designate
by ten days advance written notice to each of the other parties hereto.

the Company:                        c/o CITCO
                                    Kaya Flamboyan 9
                                    Curatao, Netherlands Antilles

                                    Facsimile No.: 011-599-932-2008

                                    with a copy to:

                                    Genesee International, Inc.
                                    10500 N.E. 8th Street
                                    Suite 1920
                                    Bellevue, Washington 98004-4332

                                    Facsimile No.: (425) 462-4645

Custodian:                          Law Offices of Brian W Pusch
                                    Penthouse Suite
                                    29 West 57th Street
                                    New York, New York 10019

                                    Facsimile No.:  212-980-7055
<PAGE>

Palomar:                            45 Hartwell Avenue
                                    Lexington, Massachusetts 02175

                                    Attention:  Director of Finance

                                    Facsimile No.:  781-676-7330

                                    with a copy to:

                                    Attention:  General Counsel

                                    Facsimile No.:  781-676-7330

         13. AMENDMENT,  MODIFICATION, ETC. No amendment,  modification, waiver,
discharge or  termination  of any provision of this Agreement nor consent to any
departure  by the  Custodian  or the  Company  therefrom  shall in any  event be
effective  unless  the same  shall be in  writing  and signed by the party to be
charged  with  enforcement,  and then shall be  effective  only in the  specific
instance and for the purpose for which given.  No course of dealing  between the
parties hereto shall operate as an amendment of, or a waiver of any right under,
this  Agreement.  Notwithstanding  any other  provision  of this  Agreement,  no
amendment,  modification,  waiver,  discharge or termination of any provision of
this  Agreement  which  materially  increases the rights of the Company shall be
effective unless also signed by Palomar,  which is hereby expressly made a third
party  beneficiary  of this  Agreement  for  purposes of this  provision of this
Agreement.

         14.  GOVERNING LAW. This instrument  shall be binding upon and inure to
the benefit of the parties hereto, and their respective successors and permitted
assigns  and shall be  governed  by the laws of the  State of New York,  without
giving effect to principles of conflicts of law.

         IN WITNESS  WHEREOF,  the Company has caused this  Agreement to be duly
executed and delivered by one of its officers  thereunto duly authorized and the
Custodian has duly executed  this  Agreement,  in each case as of the date first
set forth above.

                                       ADVANTAGE FUND LIMITED


                                       By:
                                          --------------------------------------
                                           A.P. deGroot
                                           President

                                          --------------------------------------
                                           Brian W. Pusch, as
                                           Custodian


<PAGE>
                                                                       EXHIBIT A

                                 RELEASE NOTICE

TO:      Law Offices of Brian W Pusch,
            as Custodian
         29 West 57th Street
         Penthouse Suite
         New York, New York 10019

         Facsimile No.:  (212) 980-7055

with a copy to:

         Palomar Medical Technologies, Inc.
         45 Hartwell Avenue
         Lexington, Massachusetts 02173

         Attention:  Director of  Finance

         Facsimile No.:  (781) 676-7330

         (1)  Pursuant  to the  terms  of the  Custody  Agreement,  dated  as of
December  31, 1997 (the  "Custody  Agreement"),  by and between  Advantage  Fund
Limited, a British Virgin Islands corporation,  and Brian W. Pusch, as Custodian
(the "Custodian"), the undersigned hereby elects to release ____________________
Nexar Shares.  Capitalized  terms used herein and not otherwise  defined  herein
have the  respective  meanings  provided  in the  Custody  Agreement  or, if not
defined in the Custody Agreement, provided in the Stock Purchase Agreement.

         (2)  Please  release  ______________  Nexar  Shares to the  person  and
address specified immediately below or, if additional space is necessary,  on an
attachment hereto:

                         Delivery Instructions
                         for Common Stock:        
                                                  ------------------------------
                                                  ------------------------------
                                                  ------------------------------
                                                  ------------------------------

                  (3)    Release Date:            ------------------------------

                         Applicable Market Prices:   $
                                                      --------------------------
                                                     $
                                                      --------------------------
                                                     $
                                                      --------------------------


                                                     $
                                                      --------------------------

                                                     $
                                                      --------------------------

                         Release Price:              $
                                                      --------------------------

                                                NAME:

Date                                            By: 
    -------------------                            -----------------------------
                                                   Title:
<PAGE>
                                           Annex III to Stock Purchase Agreement

                                                     January 26, 1998

Advantage Fund Limited
c/o CITCO
Kaya Flamboyan 9
Curacao, Netherlands Antilles

         Re:      PALOMAR MEDICAL TECHNOLOGIES, INC.

Ladies and Gentlemen:

         We have  acted as  counsel to Palomar  Medical  Technologies,  Inc.,  a
Delaware corporation (the "Company"), in connection with the sale by the Company
to you of 500,000 shares (the "Nexar  Shares") of Common Stock,  $.01 par value,
of Nexar  Technologies,  Inc.,  a Delaware  corporation,  pursuant  to the Stock
Purchase  Agreement,  dated as of December  31, 1997 (the  "Agreement"),  by and
between  the  Company  and you (the  "Buyer").  Capitalized  terms  used and not
otherwise  defined  herein shall have the respective  meanings  assigned to such
terms in the Agreement.

         In connection  with our rendering of the opinions  expressed  below, we
reviewed (i) the Certificate of  Incorporation  (the "Charter") and By-Laws (the
"By-Laws") of the Company, each as amended to date; (ii) a certificate issued by
the  Secretary  of State of the State of  Delaware  dated  January  9, 1998 with
respect to the legal  existence  and good  standing of the Company in  Delaware;
(iii) the relevant  records of meetings of the directors and stockholders of the
Company and consents of the directors and stockholders filed therewith; (iv) the
Agreement,  the Joint Escrow  Instructions  and the Custody  Agreement;  (v) the
other documents  delivered at the Closing or in connection with the transactions
contemplated by the Agreement;  (vi) the  agreements,  instruments and documents
listed on Exhibit A attached  hereto (the  "Listed  Agreements")  and (vii) such
other  documents and  certificates  as we have deemed  necessary to enable us to
render the opinions expressed below.

         In rendering the opinion expressed in paragraph 1 below with respect to
the legal existence and good standing of the Company in Delaware, we have relied
solely  upon  the  certificate  referred  to in  clause  (ii)  of the  preceding
paragraph, and such opinion is given as of the date of such certificate.


<PAGE>


         With respect to the opinion  expressed  in  paragraph 4 below,  we note
that we did not  observe  or  supervise  the  activities  of the  Company or its
representatives  in connection with the offering and sale of the Price Guarantee
Rights. In rendering such opinion we have assumed without  investigation that in
connection with such offering and sale there has been no general solicitation or
general  advertising by the Company or its  representatives  with respect to the
Price  Guarantee  Rights.  We have also  assumed  that no person  subject to 950
C.M.R.  14.402(b)(9)(F)  has engaged in any activity prohibited thereby and that
no subsequent  offer or sale of securities of the Company will adversely  affect
the availability of the exemptions from registration  referred to in paragraph 4
of this opinion with respect to the offer or sale of the Price Guarantee Rights.

         With respect to the opinion  expressed  in  Paragraph 5 below,  we have
been  orally  advised  by  a  representative  of  the  Securities  and  Exchange
Commission  (the  "SEC")  that the  Registration  Statement  of which  the Nexar
Prospectus  forms a part was  effective  on the Closing Date and we have assumed
that such  Registration  Statement was effective on such date and that the Nexar
Shares constitute shares that were registered under such Registration Statement.
We express no opinion regarding the conformity of such Registration Statement to
the  rules  and  regulations  of the  SEC or the  accuracy  or  adequacy  of the
information set forth therein.

         When an  opinion  set  forth  below  is  given  to our  knowledge,  the
knowledge  is  limited  to the  facts  or  other  information  known to David A.
Broadwin,  Esquire,  Marcel A.  Bryar,  Esquire,  Dean F.  Hanley,  Esquire  and
Alexander H. Pyle, Esquire,  who are the individual lawyers in our firm who were
actively  involved  in  representation  of  the  Company  with  respect  to  the
transactions  contemplated  by the  Agreement  and,  except as expressly  stated
herein,  without  any special or  additional  investigation  undertaken  for the
purposes of this opinion.

         In rendering the opinions  expressed  herein, we have also examined and
have relied  completely  upon all of the  representations  and  warranties as to
matters  of  fact  contained  in the  Agreement  and  contained  in the  related
instruments  and other  documents  delivered by the Company to you in connection
with the Closing or the transactions  contemplated by the Agreement, and we have
assumed the completeness  and accuracy of all factual matters  described in such
representations and warranties.

         We have not, except as specifically  noted above,  made any independent
review or  investigation  of facts  relating to the Company,  including  without
limiting the generality of the foregoing,  any investigation as to the existence
of any actions,  suits or proceedings  pending or threatened against the Company
or  agreements,  judgments,  injunctions,  orders or  decrees  binding  upon the
Company or which might result in the imposition of any lien or other encumbrance
on any assets of the Company.


<PAGE>


         We have assumed the  authenticity  and  completeness  of all  documents
furnished to us as  originals,  the  genuineness  of all  signatures,  the legal
capacity of natural  persons,  the  conformity to the originals of all documents
furnished to us as copies,  and the accuracy and  completeness  of all corporate
records made available to us by the Company.

         You have not asked us to pass upon the Buyer's  power and  authority to
enter  into  the  Agreement,  the  Joint  Escrow  Instructions  or  the  Custody
Agreement.  Accordingly,  for the purposes of this opinion, we have assumed that
the Buyer has all requisite power and authority to enter into the Agreement, the
Joint Escrow  Instructions  and the Custody  Agreement  and to effect all of the
transactions thereunder,  and that the Agreement, the Joint Escrow Instructions,
the Custody  Agreement  and each other  agreement or instrument we have reviewed
constitutes the legal, valid and binding obligation of all parties thereto other
than the Company.

         We have made such examination of Massachusetts law, federal law and the
corporation  law of the State of Delaware as we deem  necessary for the purposes
of this  opinion.  We do not  purport to pass herein on the laws of any state or
jurisdiction other than the federal law of the United States of America, the law
of The  Commonwealth  of  Massachusetts  and the corporation law of the State of
Delaware.  Our opinions  are given only as of the date hereof,  and we expressly
disclaim any continuing obligation or undertaking to supplement or update any of
our  statements  herein.  We have assumed  that the Buyer is not an  "interested
stockholder"  within  the  meaning  of  Section  203  of  the  Delaware  General
Corporation  Law and is not an  "affiliate"  of Nexar  within the meaning of the
1933 Act.

         The opinions herein  expressed are qualified to the extent that (i) the
validity or  enforceability of any provisions of any agreement or instrument may
be  subject  to or  affected  by  any  bankruptcy,  reorganization,  insolvency,
moratorium or similar law of general application from time to time in effect and
relating to or affecting the rights or remedies of creditors generally, (ii) the
remedy of specific  performance or any other equitable remedy may be unavailable
in any  jurisdiction  or may be withheld as a matter of judicial  discretion and
(iii) the  enforcement  of any  rights or  remedies  is or may be  subject to an
implied  duty on the part of the party  seeking to enforce  such  rights to take
action and make  determinations  on a  reasonable  basis and in good  faith.  In
addition,  we express no opinion herein as to: prospective  waivers of rights to
notice or a hearing or of other  rights  granted  by  constitution  or  statute;
powers of attorney; provisions purporting to relieve parties of the consequences
of their own  negligence  or  misconduct;  provisions  purporting  to  establish
evidentiary  standards;  or provisions to the effect that rights or remedies are
not exclusive,  that every right or remedy is cumulative and may be exercised in
addition to any other right or remedy,  or that  failure to exercise or delay in
exercising rights and remedies will not operate as a waiver of any such right or
remedy.  With your  permission,  we have  assumed  for all  purposes  under this
opinion that the Company is not, and following  completion  of the  transactions
contemplated  by the Agreement will not be,  insolvent,  left with  unreasonably
small capital,  or unable to pay its debts as they mature. We express no opinion
as to the  effect  of the  laws of any  jurisdiction  other  than  Massachusetts
wherein  the  Company  or you may be  located,  or  wherein  enforcement  of the
Agreement  may be  limited,  with  respect  to the  rates  of  interest  legally
chargeable or collectible thereunder.


<PAGE>


         Based upon and subject to the foregoing, we are of the opinion that:

(1)      The Company is a corporation  duly organized,  validly  existing and in
         good  standing  under  the laws of the  State of  Delaware  and has all
         requisite  corporate  power and  authority  to conduct its  business as
         currently conducted.

(2)      The Company has all  requisite  power and  authority  to enter into the
         Agreement and to consummate the transactions  contemplated thereby. The
         execution,   delivery  and   performance   of  the  Agreement  and  the
         consummation of the  transactions  contemplated  thereby have been duly
         authorized  by  all  necessary  corporate  action  on the  part  of the
         Company.  The  Agreement  has been duly  executed and  delivered by the
         Company and constitutes the legal,  valid and binding obligation of the
         Company enforceable against the Company in accordance with its terms.

(3)      The sale and delivery in accordance  with the terms of the Agreement of
         the Nexar  Shares will pass good and valid title to such  shares,  free
         and clear of all  liens,  claims or  encumbrances,  to the Buyer if the
         Buyer  purchases  the Nexar Shares in good faith and without  notice of
         any such lien,  claim or  encumbrance or any other adverse claim within
         the  meaning  of the  Uniform  Commercial  Code as now in effect in The
         Commonwealth of Massachusetts.

(4)      Assuming the accuracy as of the date hereof of the  representations and
         warranties  of the  Buyer  set  forth in the  Agreement,  the Buyer may
         obtain the Price  Guarantee  Rights  pursuant to the Agreement  without
         registration under the 1933 Act.

(5)      The  Nexar  Shares  could be sold by the  Company  to the  Buyer on the
         Closing Date pursuant to the Registration  Statement of which the Nexar
         Prospectus  forms a part; and upon acquisition of the Nexar Shares from
         the Company pursuant to the Agreement, the Buyer will not be subject to
         restrictions  on the  resale  thereof  arising  under the 1933 Act as a
         result  of the  manner  of  sale  of such  shares  contemplated  by the
         Agreement.

(6)      No  authorization,   approval  or  consent  of,  or  filing  with,  any
         governmental  body,  regulatory  agency  or stock  exchange,  market or
         automated  quotation  system  or the  stockholders  of the  Company  is
         required  to be  obtained  or made by the  Company  for the sale of the
         Nexar Shares to the Buyer pursuant to the Agreement or for the creation
         or  payment  of the Price  Guarantee  Rights  except  such as have been
         obtained or made.


<PAGE>


(7)      Except for the effects,  if any, that may arise from lawsuits disclosed
         in the  SEC  Reports,  to our  knowledge,  there  is no  action,  suit,
         proceeding,  inquiry or  investigation  before or by any court,  public
         board or body pending or threatened against or affecting the Company or
         any of its  subsidiaries,  wherein an unfavorable  decision,  ruling or
         finding  would  have a  material  adverse  effect  on  the  properties,
         business,  condition  (financial  or other),  results of  operations or
         prospects of the Company and its  subsidiaries  taken as a whole or the
         transactions  contemplated  by the  Agreement  or any of the  documents
         contemplated  thereby or  delivered  in  connection  therewith or which
         would  adversely  affect  the  validity  or  enforceability  of, or the
         authority or ability of the Company to perform its  obligations  under,
         the Agreement or any of such other documents.

(8)      The  execution,   delivery  and  performance  by  the  Company  of  the
         Agreement, the offer and sale of the Nexar Shares to the Buyer pursuant
         to the Agreement and the  fulfillment  of and the  compliance  with the
         terms of the  Agreement  by the Company  will not result in a breach of
         any of the terms or provisions of, or constitute a default  under,  the
         Charter or By-Laws,  or any law,  statute,  rule or regulation to which
         the Company is subject or any Listed Agreement.

         The opinions are limited to the matters expressly stated herein and are
rendered  solely for your  benefit  and may not be quoted or relied upon for any
other purpose or by any other person.

                                                     Very truly yours,

                                                     FOLEY, HOAG & ELIOT LLP



                                                     By:
                                                        ------------------------
                                                           A partner

cc:      American Stock Transfer
          & Trust Company
<PAGE>
                                   EXHIBIT A

                                    EXHIBIT A

Agreement  and Plan of  Reorganization  dated  March 9,  1996 by and  among  the
Company, TTI Acquisition Corp., Tissue Technologies, Inc. and Mario Barton

Amendment to Agreement  and Plan of  Reorganization  dated April  29,1996 by and
among the Company,  TTI Acquisition Corp., Tissue  Technologies,  Inc. and Mario
Barton

Letter from the Company to Tissue Technologies, Inc. waiving the Company's right
to  receive  indemnification  under  Section  6 of the  Agreement  and  Plan  of
Reorganization under certain circumstances

Plan of Merger  dated May 3, 1996 by and between the  Company,  TTI  Acquisition
Corp. and Tissue Technologies, Inc.

Stock Purchase Agreement dated March 19, 1996, by and between Dynaco Acquisition
Corp.,  Comtel  Electronics,  Inc.,  Mikel C.  Green,  Peter  Rogal and  Palomar
Electronics Corp.

Agreement for Purchase of Stock dated July 12,1996,  by and between the Company,
Eleanor Roberts Weisman and Wallace Roberts

Restated Certificate of Incorporation, as amended

Bylaws, as amended

Patent  License  Agreement  by and between  the Company and Patlex  Corporation,
effective as of January 1, 1992

1996 Stock Option Plan

Amended 1996 Employee Stock Purchase Plan

Form of Stock Option Agreement under the 1996 Stock Option Plan

Securities  Purchase  Agreement between the Company and The Travelers  Insurance
Company dated July 12, 1996

Warrant to purchase Common Stock of the Company, dated July 12, 1996

Subscription  Agreement dated September 26, 1996 between the Company and Genesee
Fund Limited
<PAGE>

Registration  Rights  Agreement dated September 26, 1996 between the Company and
Genesee Fund Limited

Warrant to purchase Common Stock of the Company dated September 27, 1996

Berckeley  Subscription  Agreement dated December 31, 1996 and Amendment thereto
dated January 10, 1997

Berckeley Debenture dated December 31, 1996

High Risk Opportunities Hub Fund, Ltd. Subscription  Agreement dated January 14,
1997

High Risk Opportunities Hub Fund, Ltd. Debenture dated January 13, 1997

Securities   Purchase   Agreement   dated  December  31,  1996  between  Palomar
Electronics Corporation and Clearwater Fund IV, LLC

Securities  Purchase  Agreement  dated as of December 18, 1996  between  Palomar
Electronics Corporation, the Company and The Travelers Insurance Company

Securities   Purchase   Agreement   dated  December  31,  1996  between  Palomar
Electronics Corporation and GFL Advantage Fund Limited

Option  Agreement  dated December 31, 1996 between the Company and GFL Advantage
Fund Limited

Common Stock Purchase Warrant dated December 31, 1996

Form of Net Warrant to Purchase Common Stock

Subscription   Agreement  dated  December  27,  1996  between  the  Company  and
Finmanagement, Inc.

Subscription  Agreement  dated as of April 12, 1996  between the Company and GFL
Advantage Fund Limited

Registration  Rights  Agreement  dated as of April 17,  1996 by and  between the
Company and GFL Advantage Fund Limited

Warrant dated as of April 16, 1996

Form of Warrant to purchase Common Stock dated February 1, 1996
<PAGE>

Form of Offshore Stock Subscription Agreement dated February 1, 1996

Form of Subscription Agreement dated as of March 10, 1997

Form Registration Rights Agreement dated as of March 10, 1997

Form of 5% Convertible Debenture due March 10, 2002

Subscription  Agreement  dated as of March 13,  1997  between  the  Company  and
Soginvest Bank

Form of 6% Convertible Debenture due March 13, 2002

Asset Purchase and Settlement Agreement dated February 28, 1997 by and among the
Company, Nexar Technologies, Inc., Technovation Computer Labs, Inc. and Babar I.
Hamirani

Employment  Agreement  dated as of May 1, 1996 between the Company and Ronald G.
Wheeland

Employment Agreement dated as of January 1, 1997, between the Company and Steven
Georgiev

Employment  Agreement  dated as of January  1, 1997,  between  the  Company  and
Michael H. Smotrich

Employment Agreement dated as of January 1, 1997, between the Company and Joseph
P. Caruso

Key Employee Agreement dated as of May 15, 1997 between the Company and Louis P.
Valente

Employment  Agreement  dated as of January  1, 1997,  between  the  Company  and
Anthony Fiorillo

Securities  Purchase  Agreement dated March 27, 1997 between the Company and RGC
International Investors, LDC

Registration  Rights  Agreement dated March 27, 1997 between the Company and RGC
International Investors, LDC

Form of 4.5% Convertible Subordinated Promissory Note dated October 17,1996

Form of Subscription Agreement dated October 16, 1996

Supplement to Securities Purchase Agreement dated May 5, 1997

Supplement to Registration Rights Agreement dated May 5, 1997
<PAGE>

Supplement to Securities Purchase Agreement dated May 23, 1997

Supplement to Registration Rights Agreement dated May 23, 1997

Agreement dated December 30, 1993 by and between the Company, Dynaco Corporation
and Dynaco West Corporation

First  Amendment to Purchase and Sale  Agreement  dated  January 24, 1994 by and
between the Company, Dynaco Corporation and Dynaco West Corporation

Purchase and Sale Agreement dated March 14, 1995, by and between the Company and
SPMT Acquisition Corp., Spectrum Medical Technologies, Inc., Sanford R. Lane and
CSF Investments Ltd.

Purchase  and  Sale  Agreement  dated  June  5,  1995,  by  and  between  Dynaco
Acquisition Corporation and Allard Industries, Inc.

Company's 1991 Stock Option Plan, as amended

Company's 1993 Stock Option Plan

Company's 1995 Stock Option Plan

Form of Stock Option Grant under the Company's  1991, 1993 and 1995 Stock Option
Plans

Form of Company Warrant to Purchase Common Stock

Lease for premises at 66 Cherry Hill Drive,  Beverly,  Massachusetts,  dated May
25, 1993

The Company's 401(k) Plan

Form of 6%, 7% and 8% Convertible Debentures due September 30, 2002

Form of Registration Rights Agreement dated September 30, 1997

Form of Securities Purchase Agreement dated September 30, 1997

Stock  Purchase  Agreement  dated  December 9, 1997 between and among  Biometric
Technologies Corp., the Company and Dynaco Corp. and certain exhibits thereto.

Securities  Purchase  Agreement  dated as of  December  29,1997 by and among the
Company and Clearwater Fund IV, LLC