-84-

                         SECURITIES PURCHASE AGREEMENT


        THIS SECURITIES  PURCHASE AGREEMENT (this "Agreement") is by and between
Palomar Electronics Corporation (the "Company"), a Delaware corporation, Palomar
Medical  Technologies,  Inc., a Delaware corporation  ("Palomar"),  each with an
office at 66 Cherry Hill Drive,  Beverly,  Massachusetts  01915 U.S.A.,  and The
Travelers Insurance company, a Connecticut corporation (the "Purchaser").

        IN CONSIDERATION of the mutual covenants contained in this Agreement and
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged,  and intending to be legally  bound  hereby,  the parties agree as
follows:

        SECTION 1.  Authorization of Shares. The Company has authorized the sale
of 200,000 shares (the "Shares") of common stock,  par value $.01 per share (the
"Common Stock"), of Nexar Technologies,  Inc., a Delaware corporation ("Nexar"),
owned by the Company.

        SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
defined below),  the Company will sell to the Purchaser,  and the Purchaser will
buy from the Company,  upon the terms and conditions  hereinafter set forth, the
Shares for an aggregate purchase price of $2,000,000 (the "Purchase Price").

        SECTION 3. Payment of Purchase  Price.  On or prior to the Closing Date,
as defined  below,  the Purchaser will deliver to the Company the full amount of
the Purchase Price by check or wire transfer to the account set forth below.

                  Citibank
                  399 Park Avenue
                  New York, NY  10048

                  ABA 021000089
                  Account Number:  40611172
                  Account Name:  Dean Witter Reynolds, Inc.
                  For Further Credit to:
                  Account Number 593109782
                  Account Name:  Palomar Medical Technologies, Inc.

        SECTION  4.  The  Closing.   The   consummation   of  the   transactions
contemplated by this Agreement (the "Closing")  shall occur on December 18, 1996
(the  Closing  Date") at the  offices  of the  company or at such other time and
place as shall be agreed by the Company and the Purchaser.  At the Closing,  the
Company shall deliver to the Purchaser one or more  certificates  for the Shares
registered in the name of the Purchaser or its nominee.

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                                      -85-

        SECTION 5. Representations,  Warranties an Covenants of the Company. The
Company and Palomar hereby  jointly and severally  represent and warrant to, and
covenant with, the Purchaser as follows:

        SECTION 5.1. Organization. Nexar is duly organized, validly existing and
in good standing  under the laws of the State of Delaware.  Nexar has full power
and authority to own and operate its  properties  and to conduct its business as
currently conducted and is registered or qualified to do business and is in good
standing in each  jurisdiction  in which it owns or leases property or transacts
business and where the failure to be so qualified would have a material  adverse
effect upon the  business,  financial  condition,  properties  or  operations of
Nexar.

        SECTION 5.2. Due Authorization.  The Company has all requisite power and
authority to execute,  deliver and perform its obligations under this Agreement,
and this Agreement has been duly  authorized and validly  executed and delivered
by the Company and  constitutes  the valid and binding  agreement of the Company
enforceable  against  the  Company  in  accordance  with its  terms,  except  as
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  usury,  fraudulent  conveyance  or  similar  laws
affecting  creditors' and contracting  parties'  rights  generally and except as
enforceability  may be subject to general  principles of equity  (regardless  of
whether such enforceability is considered in a proceeding in equity or at law).

        SECTION  5.3.  Ownership  of the  Shares.  The company is the record and
beneficial  owner of the  shares  free and  clear  of any  adverse  claim of any
person.  At the  Closing,  Purchaser  will  acquire  good and valid title to the
Shares free and clear of any adverse claim of any person.

        SECTION  5.4.  Non-Contravention.  The  execution  and  delivery of this
Agreement,  the sale of the Shares to be sold by the Company hereunder,  and the
consummation of the transactions  contemplated  hereby will not conflict with or
constitute a violation  of, or default  (with the passage of time or  otherwise)
under,  any material  agreement or instrument to which the Company or Nexar is a
party or by which  either  is bound or the  Certificate  of  Incorporation  (the
"Charter")  or the By-Laws of the Company or Nexar nor result in the creation or
imposition of any lien,  encumbrance,  claim,  security  interest or restriction
whatsoever upon any of the material properties or assets of the Company or Nexar
or an  acceleration of  indebtedness  pursuant to any  obligation,  agreement or
condition contained in any material bond, debenture,  note or any other evidence
of indebtedness or any material indenture,  mortgage, deed of trust or any other
agreement or instrument to which the Company or Nexar is a party or by which the
Company  or Nexar is bound or to which  any of the  property  or  assets  of the
Company or Nexar is subject, nor conflict with, or result in a violation of, any
law, administrative regulation,  ordinance or order of any court or governmental
agency,  arbitration  panel or authority  applicable to the Company or Nexar. No
consent,   approval,   authorization   or  other  order  of,  or   registration,
qualification or filing with, any regulatory  body,  administrative  agency,  or
other  governmental body in the United States,  other than with respect to "blue
sky" laws, is required 

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                                      -86-

for the  valid  issuance  and sale of the  Shares  to be sold  pursuant  to this
Agreement (other than such as have been made or obtained).

        SECTION 5.5.  Capitalization.  The  authorized and  outstanding  capital
stock of Nexar and rights to acquire  capital stock of Nexar are as set forth on
Schedule  5.5.  hereto.  Except  as set  forth in  Schedule  5.5,  there  are no
outstanding  shares of, or rights to acquire  shares of, capital stock of Nexar.
The  Shares  have been duly  authorized,  validly  issued and are fully paid and
nonassessable.

        SECTION  5.6.  Legal   Proceedings.   There  is  no  material  legal  or
governmental  proceeding pending or, to the knowledge o the Company,  threatened
or  contemplated to which Nexar is or may be a party or of which the business or
property of Nexar is or may be subject.

        SECTION 5.7. No  Violations.  Nexar is not in violation o its Charter or
By-Laws, in violation of any law, administrative regulation,  ordinance or order
of any court or governmental  agency,  arbitration panel or authority applicable
to Nexar,  which  violation,  individually  or in the  aggregate,  would  have a
material  adverse effect on the business or financial  condition of Nexar, or in
default in any material respect in the performance of any obligation,  agreement
or condition  contained in any bond,  debenture,  note or any other  evidence of
indebtedness in any indenture, mortgage, deed of trust or any other agreement or
instrument  to which Nexar is a party or by which Nexar is bound or by which the
properties of Nexar are bound or affected,  and there exists no condition which,
with the  passage f time or the  giving of notice or both,  would  constitute  a
material  default  under  any such  document  or  instrument  or  result  in the
imposition of any material penalty or the acceleration of any indebtedness.

        SECTION  5.8.   Governmental  Permits,  Etc.  Nexar  has  all  necessary
franchises,  licenses,  certificate and other  authorizations  from any foreign,
federal, state or local government or governmental agency,  department,  or body
that are  currently  necessary  for the  operation  of the  business of Nexar as
currently  conducted,  the absence of which would have a material adverse effect
on the business or operations of Nexar.

        SECTION 5.9.  Financial  Statements.  The Company has made  available to
Purchaser  certain  internally  generated  financial  statements  of Nexar  (the
"Financial Statements").  The Financial Statements and the related notes present
fairly the financial position of Nexar as of the dates indicated therein and its
results of operations  and cash flows for the periods  therein  specified.  Such
Financial  Statements  (including  the  related  notes)  have been  prepared  in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified.

        SECTION 5.10.  No Material  Adverse  Change.  Since the date of the most
recent  balance  sheet  included  in the  Financial  Statements,  Nexar  has not
incurred any material  liabilities or obligations,  direct or contingent,  other
than in the  ordinary  course of  business,  and there has not been any material
adverse change in its business, financial condition or results of operations.

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                                      -87-

        SECTION  5.11.  Intellectual  Property.  Nexar  has the right to use all
intellectual  property  (the  "Intellectual  Property")  now  used  by it in its
business.  Nexar  owns all  right,  title  and  interest  in and to,  all of the
intellectual  property it owns, free and clear of any liens or encumbrances.  In
any case in which Nexar does not own the Intellectual  Property, it has good and
valid  licenses for the same which are in full force and effect.  No claims have
been  asserted  with  respect  tot he use of any such  Intellectual  Property or
challenging or questioning the validity or  effectiveness of any such license or
agreement.

        SECTION  5.12.  Title  to  Properties  and  Assets.  Nexar  has good and
marketable  title  to its  properties  and  assets,  and has  good  title to its
leasehold  interests,  in each case, free and clear of any liens, except (i) the
lien of current  taxes not yet due and payable  and (ii) minor liens  arising in
the ordinary course of business which do not in any case materially detract from
the value of the property subject thereto or impair Nexar's operations.

        SECTION 6. Representations, Warranties an covenants of the Purchaser.

                (a) The  Purchaser  represents  and warrants  to, and  covenants
with, the Company,  as of the date hereof and as of the Closing Date,  that: (i)
the Purchaser is an "accredited investor" as defined in Rule 501 of Regulation D
promulgated under the Securities Act; (ii) the Purchaser is acquiring the Shares
for its own account for investment and with no present intention of distributing
any of such  Shares  other than to any  affiliate  of the  Purchaser;  (iii) the
Purchaser will not, directly or indirectly,  voluntarily  offer,  sell,  pledge,
transfer or  otherwise  dispose of (or  solicit  any offers to buy,  purchase or
otherwise  acquire or take a pledge of) any of the Shares,  except in compliance
with the Securities Act and the rules and  regulations  promulgated  thereunder;
(iv) the  Purchase  is an  "institutional  buyer"  within the meaning of Section
36b-21(b)(8) of the Connecticut Uniform Securities Act, (v) the Purchase has had
an opportunity  to ask questions and receive  answers from the management of the
Company and Nexar regarding  Nexar, its business and the offering of the Shares;
and (vi) the Purchaser has, in connection with its decision to purchase  Shares,
relied solely upon the  representations  and warranties of the Company contained
herein.

                (b) The  Purchaser  agrees  not to make  any  sale of the  Share
except pursuant to an effective  registration statement under the Securities Act
or an exemption from the registration requirements thereof.

                (c) The  Purchaser  further  represents  and  warrants  to,  and
covenants  with,  the Company  that (i) the  Purchaser  has full  right,  power,
authority  and  capacity  to enter into this  Agreement  and to  consummate  the
transactions contemplated hereby and has taken all necessary action to authorize
the execution,  delivery and  performance of this  Agreement,  and (ii) upon the
execution and delivery of this  Agreement,  this  Agreement  shall  constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms,  except  as  enforceability  may be  limited  by  applicable  bankruptcy,
insolvency, reorganization,  moratorium, usury, fraudulent conveyance or similar
laws affecting  creditors' and contracting  parties' rights 

<PAGE>
                                      -88-

generally and except as enforceability  may be subject to general  principles of
equity (regardless of whether such  enforceability is considered in a proceeding
in equity or at law).

                (d) The  Purchaser  represents  that it  understands  and agrees
that, until  registered under the Securities Act or transferred  pursuant to the
provisions of Rule 144 promulgated  thereunder,  all  certificates  evidence the
Shares  shall bear a legend,  prominently  stamped or printed  therein,  reading
substantially as follows:

                "The Securities  represented by this  certificate  have not been
                registered under the Securities Act of 1933, as amended,  or the
                securities  laws  of  any  state.  These  securities  have  been
                acquired for investment and not with a view toward  distribution
                or resale.  Such  securities may not be offered for sale,  sold,
                delivered  after sale,  transferred,  pledged or hypothecated in
                the absence of an  effective  registration  statement,  covering
                such  securities   under  the  Act  and  any  applicable   state
                securities  laws,  unless the  holder  shall  have  obtained  an
                opinion of counsel  satisfactory  to the  corporation  that such
                registration is not required.

        SECTION 7.  Survival  of  Representations,  Warranties  and  Agreements.
Notwithstanding  any  investigation  made by any  party to this  Agreement,  all
covenants,  agreements,  representations  and warranties made by the Company and
the Purchaser herein shall survive the Closing.

        SECTION 8. Lock-up  Agreements with Underwriters;  Registration.  In the
event of an initial  underwritten  public offering of Nexar's equity securities,
the  Purchaser  agrees  to  enter  into an  agreement  with the  Underwriter  or
Underwriters' Representative for such offering restricting the sale, transfer or
other  disposition  of the  Shares  for a period  not to exceed  180 days to the
extent  that such  agreement  is  required  to be  executed by members of senior
management of Nexar.

        SECTION 9. Legal Fees. The Company agrees to pay the reasonable fees and
expenses of the Purchaser's  counsel in connection with the purchase and sale of
the Shares up to a maximum of $5,000.

        SECTION 10. Conditions to Closing.

                (a)  The   obligations   of  the  Purchaser  to  consummate  the
transactions  contemplated  hereby shall be subject to the  satisfaction  by the
Company of each of the following  conditions on or before the Closing Date,  any
one or more of which may be waived by the Purchaser:

                    (i) The  representations  and  warranties of the Company set
forth in this  Agreement  delivered  to the  Purchaser  by or on  behalf  of the
Company shall e true and correct as if made on the Closing Date.

<PAGE>
                                      -89-

                    (ii) Each of the covenants,  agreements and conditions to be
performed and satisfied by the Company pursuant to this Agreement at or prior to
Closing shall have been duly performed and satisfied.


                (b)  The   obligations   of  the  Company  to   consummate   the
transactions  contemplated  hereby  shall e subject tot he  satisfaction  by the
Purchaser of each of the following conditions on or before the Closing Date, any
one or more of which may be waived by the Company:

                    (i) The  representations and warranties of the Purchaser set
forth in this  Agreement  shall be true and  correct  as if made on the  Closing
Date.

                    (ii) Each of the covenants,  agreements and conditions to be
performed and satisfied by the Purchaser  pursuant to this Agreement at or prior
to Closing shall have been duly performed and satisfied.

                    (iii) The  Purchase  shall have paid the  Purchase  Price in
accordance with Section 3.

        SECTION 11. No Brokers.  The parties hereto hereby  represent that there
are no  brokers or finders  entitled  to  compensation  in  connection  with the
transactions contemplated hereby.

        SECTION  12.  Notices.  All  notices,   requests,   consents  and  other
communications  hereunder  shall be in writing,  shall be mailed by  first-class
registered or certified mail, postage prepaid, and shall be deemed given when so
mailed:

                (a) if to the Company to:

                         General Counsel
                         Palomar Medical Technologies, Inc.
                         66 Cherry Hill Drive
                         Beverly, MA  01915

                    with a copy to:

                         Foley, Hoag & Eliot LLP
                         One Post Office Square
                         Boston, MA  02109
                         Attn:  David Broadwin

                (b) if to the Purchaser,  at its address as set forth at the end
of this  Agreement,  or at such  other  address  or  addresses  as may have been
furnished to the Company in writing.

<PAGE>
                                      -90-

        SECTION 13.  Termination.  Either party to this  Agreement may terminate
this  Agreement  upon  written  notice  to the  other at any  time  prior to the
Closing.

        SECTION 14.  Changes.  Any term of the  Agreements  may be  amended  or
compliance  therewith  waived  with the  written  consent of the Company and the
holders of a majority of the Shares purchased pursuant tot he Agreement.

        SECTION 15. Tag Along Rights.  In the event the Company should decide to
sell  from  time to time any  shares  of  Common  Stock or  other  common  stock
equivalent  to any third party,  Purchaser  shall have the right to sell its pro
rata portion of the Shares to such third party on the same terms and conditions.
The Company  shall give prompt  written  notice to Purchaser of the terms of any
such offer.  Notwithstanding  the foregoing,  if Purchaser  should own less than
2.5% of the  outstanding  Common Stock, it shall be entitled to sell the greater
of (x) the remaining Shares or (y) its pro rata portion.

        SECTION 16. Confidentiality. No press release or public announcement may
be made  naming  Purchaser  or its  affiliates  without  the  prior  consent  of
Purchaser;  provided that Nexar may disclose  Purchaser's  stockholdings  in the
prospectus for Nexar's initial public offering or as may be required by law.

        SECTION 17. No Impairment.  Each of Palomar, the Company and Nexar agree
that until such time as the Shares have been registered pursuant to the terms of
the Registration Rights Agreement and sold by Purchaser,  they will not take any
action,  directly or indirectly,  that could reasonably be expected to adversely
affect or  otherwise  impair  (i) the value of the  Shares or (ii) the rights of
Purchaser under this Agreement,  the Registration  Rights Agreement or otherwise
under law.

        SECTION 18.  Headings.  The  headings  of the  various  sections of this
Agreement have been inserted for  convenience of reference only and shall not be
deemed to be part of this Agreement.

        SECTION 19.  Severability.  If any provision contained in this Agreement
shall be  invalid,  illegal  or  unenforceable  in any  respect,  the  validity,
legality and enforceability of the remaining  provisions  contained herein shall
not in any way be affected or impaired thereby.

        SECTION  20.  Governing  Law.  This  Agreement  shall be governed by and
construed  in  accordance  with  the  internal  laws  of  The   Commonwealth  of
Massachusetts and United States federal law.

        SECTION  21.  Counterparts.  This  Agreement  may  be  executed  in  two
counterparts,  each of which shall  constitute  an original,  but both of which,
when taken  together,  shall  constitute  but one  instrument,  and shall become
effective  when one or more  counterparts  have been signed by each party hereto
and delivered to the other parties.

<PAGE>
-91-

        IN WITNESS  WHEREOF,  the parties  hereto  have  caused this  Securities
Purchase Agreement to be executed by their duly authorized representatives as of
the following date.

Dated:  December 18, 1996           PALOMAR ELECTRONICS CORPORATION



                                    By:                        /s/
                                             -----------------------------------
                                    Name:             Joseph P. Caruso
                                    Title:            Chief Financial Officer


                                    PALOMAR MEDICAL TECHNOLOGIES, INC.



                                    By:                        /s/
                                             -----------------------------------
                                    Name:             Steven Georgiev
                                    Title:            CEO/Chairman


           [Purchaser Signature Page Continues on the Following Page]

<PAGE>
                                      -92-

                   PURCHASER SIGNATURE PAGE AND QUESTIONNAIRE


        The  undersigned  Purchaser  hereby  executes  the  Securities  Purchase
Agreement with Palomar Electronics Corporation and Palomar Medical Technologies,
Inc. (the "Company") and hereby authorizes this signature page to be attached to
a counterpart  of such  document  executed by a duly  authorized  officer of the
Company.

                                             THE TRAVELERS INSURANCE COMPANY



                                             By:                        /s/
                                                  ------------------------------
                                             Name:             Jordan M. Stitzer
                                             Title:            Vice President

Name in which Shares are to be
Registered:                                  TRAL & Co.

Address of registered holder:                One Tower Square
                                             Hartford, Connecticut  06183

Social Security or Tax ID Number:            06-0546090

Contact name and telephone number            Edward F. Hinchliffe, III
regarding settlement and                     Name
registration:                                (203)277-6113
                                             Telephone Number