-111-

THIS  SECURITY  HAS NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933 OR
APPLICABLE  STATE  SECURITIES  LAWS  AND  MAY NOT BE  SOLD,  OFFERED  FOR  SALE,
TRANSFERRED,  PLEDGED OR  OTHERWISE  DISPOSED  OF UNLESS IT HAS BEEN  REGISTERED
UNDER  THOSE  LAWS OR UNLESS  THE  COMPANY  HAS  RECEIVED  AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION  UNDER EACH OF THOSE LAWS
IS AVAILABLE.

                         Right to  Purchase  50,000  Shares of  Common  Stock of
                                              Palomar Medical Technologies, Inc.


                       PALOMAR MEDICAL TECHNOLOGIES, INC.

                          Common Stock Purchase Warrant


     PALOMAR MEDICAL TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
hereby  certifies  that,  for value  received,  GFL  Advantage  Fund  Limited or
registered assigns (the "Holder"),  is entitled,  subject to the terms set forth
below,  to purchase  from the Company at any time or from time to time after the
date hereof,  and before 5:00 p.m., New York City time, on the  Expiration  Date
(as hereinafter  defined),  50,000 fully paid and nonassessable shares of Common
Stock,  $.01 par value per share,  of the Company at a purchase  price per share
equal to the Purchase Price (as hereinafter defined).  The number of such shares
of Common Stock and the Purchase  Price are subject to adjustment as provided in
this Warrant.

     As used herein the following terms,  unless the context otherwise requires,
have the following respective meanings:

          (a) The term  "Business  Day" as used herein shall mean a day on which
     the New York Stock Exchange is open for business.

          (b) The term "Common Stock" includes the Company's Common Stock,  $.01
     par  value per  share,  as  authorized  on the date  hereof,  and any other
     securities  into which or for which the Common  Stock may be  converted  or
     exchanged pursuant to a plan of recapitalization,  reorganization,  merger,
     sale of assets or otherwise.

          (c) The term "Company"  shall include  Palomar  Medical  Technologies,
     Inc. and any corporation  that shall succeed to or assume the obligation of
     Palomar Medical Technologies, Inc. hereunder.

          (d) The term "Expiration Date" refers to December 31, 2001.

<PAGE>
                                     -112-

          (e) The term "Other Securities" refers to any stock (other than Common
     Stock) and other  securities of the Company or any other person  (corporate
     or  otherwise)  which  the  Holder  of this  Warrant  at any time  shall be
     entitled  to  receive,  or shall have  received,  on the  exercise  of this
     Warrant,  in lieu of or in addition to Common  Stock,  or which at any time
     shall  be  issuable  or  shall  have  been  issued  in  exchange  for or in
     replacement of Common Stock or Other Securities pursuant to Section 4.

          (f)  The  term  "Purchase  Price"  shall  mean  $6.5625,   subject  to
     adjustment as provided in this Warrant.

     1. Exercise of Warrant.

          1.1  Exercise.  (a) This Warrant may be exercised by the Holder hereof
     in full or in part at any time or from  time to time  during  the  exercise
     period specified in the first paragraph hereof until the Expiration Date by
     surrender of this Warrant and the  subscription  form annexed  hereto (duly
     executed)  by  such  Holder,  to  the  Company  at  its  principal  office,
     accompanied  by payment,  in cash or by  certified  or official  bank check
     payable to the order of the Company in the amount  obtained by  multiplying
     (a) the number of shares of Common  Stock  designated  by the Holder in the
     subscription  form by (b) the Purchase Price then in effect. On any partial
     exercise the Company will forthwith  issue and deliver to or upon the order
     of the Holder  hereof a new Warrant or Warrants of like tenor,  in the name
     of the Holder  hereof or as such Holder (upon payment by such Holder of any
     applicable  transfer taxes) may request,  providing in the aggregate on the
     face or faces  thereof  for the  purchase of the number of shares of Common
     Stock for which such Warrant or Warrants may still be exercised.

               (b)  Notwithstanding  any other provision of this Warrant,  in no
          event shall GFL Advantage Fund Limited ("GFL") be entitled at any time
          to  purchase a number of shares of Common  Stock on  exercise  of this
          Warrant in excess of that number of shares upon  purchase of which the
          sum of (1) the number of shares of Common Stock  beneficially owned by
          GFL and any  person  whose  beneficial  ownership  of shares of Common
          Stock would be aggregated with GFL's beneficial ownership of shares of
          Common Stock for purposes of Section 13(d) of the Securities  Exchange
          Act of 1934, as amended (the "Exchange  Act"),  and  Regulation  13D-G
          thereunder, (each a "GFL Person" and collectively,  the "GFL Persons")
          (other than shares of Common Stock deemed  beneficially  owned through
          the ownership of the unexercised portion of this Warrant,  unconverted
          shares of Series G Convertible Preferred Stock, $.01 par value, of the
          Company  beneficially  owned by all GFL  Persons  and other  rights to
          acquire  shares of Common Stock which contain  limitations  similar to
          this  Section  1.1(b))  and (2) the  number of shares of Common  Stock
          issuable  upon exercise of the portion of this Warrant with respect to
          which the  determination  in this sentence is being 

<PAGE>
                                     -113-

          made,  would result in beneficial  ownership by any GFL Person of more
          than 4.9% of the outstanding  shares of Common Stock.  For purposes of
          the  immediately  preceding  sentence,  beneficial  ownership shall be
          determined  in  accordance  with Section 13(d) of the Exchange Act and
          Regulation 13D-G  thereunder,  except as otherwise  provided in clause
          (1) of the immediately preceding sentence.  For purposes of the second
          preceding  sentence,  the Company shall be entitled to rely, and shall
          be fully protected in relying, on any statement or representation made
          by Genesee to the Company in connection with a particular  exercise of
          this  Warrant,  without any  obligation  on the part of the Company to
          make any  inquiry or  investigation  or to examine  its records or the
          records of any transfer agent for the Common Stock.

          1.2 Net Issuance.  Notwithstanding  anything to the contrary contained
     in Section 1.1,  the Holder may elect to exercise  this Warrant in whole or
     in part by receiving shares of Common Stock equal to the net issuance value
     (as determined below) of this Warrant,  or any part hereof,  upon surrender
     of this Warrant at the principal office of the Company together with notice
     of such  election,  in which event the Company  shall issue to the Holder a
     number of shares of Common Stock computed using the following formula:

                  X = Y (A-B)
                            A

          Where:  X = the  number of shares of Common  Stock to be issued to the
          Holder

                  Y = the number of shares of Common Stock as to which this
          Warrant is to be exercised

                  A = the current fair market value of one share of Common Stock
          calculated  as of the  last  trading  day  immediately  preceding  the
          exercise of this Warrant

                  B = the Purchase Price

          As used  herein,  current  fair market  value of Common  Stock as of a
     specified  date shall mean with  respect to each share of Common  Stock the
     average of the  closing  bid prices of the  Common  Stock on the  principal
     securities  market on which the Common Stock may at the time be traded over
     a period  of five  Business  Days  consisting  of the day as of  which  the
     current fair market  value of a share of Common  Stock is being  determined
     (or if such day is not a Business Day, the Business Day next preceding such
     day) and the four  consecutive  Business  Days prior to such day. If on the
     date for which  current  fair market value is to be  determined  the Common
     Stock is not eligible  for trading on any  securities  market,  the current
     fair market  value of Common  Stock  shall be the  highest  price per share
     which the Company  could then  obtain  from a willing  buyer (not a current
     employee or director) 

<PAGE>
                                     -114-

     for  shares  of Common  Stock  sold by the  Company,  from  authorized  but
     unissued  shares,  as determined in good faith by the Board of Directors of
     the Company,  unless prior to such date the Company has become subject to a
     merger, acquisition or other consolidation pursuant to which the Company is
     not the surviving party, in which case the current fair market value of the
     Common Stock shall be deemed to be the value received by the holders of the
     Company's  Common Stock for each share  thereof  pursuant to the  Company's
     acquisition.

     2.  Delivery  of  Stock  Certificates,   etc.,  on  Exercise.  As  soon  as
practicable  after the exercise of this  Warrant,  and in any event within three
business days thereafter,  the Company at its expense  (including the payment by
it of any  applicable  issue or stamp taxes) will cause to be issued in the name
of and delivered to the Holder  hereof,  or as such Holder (upon payment by such
Holder  of  any  applicable   transfer  taxes)  may  direct,  a  certificate  or
certificates  for the  number of fully paid and  nonassessable  shares of Common
Stock (or Other  Securities)  to which such  Holder  shall be  entitled  on such
exercise,  in such  denominations  as may be requested by such Holder,  plus, in
lieu of any fractional  share to which such Holder would  otherwise be entitled,
cash equal to such fraction multiplied by the then current fair market value (as
determined in accordance with  subsection 1.2) of one full share,  together with
any  other  stock  or other  securities  any  property  (including  cash,  where
applicable)  to which such Holder is  entitled  upon such  exercise  pursuant to
Section 1 or otherwise.

     3.   Adjustment   for   Dividends   in   Other   Stock,   Property,   etc.;
Reclassification, etc. In case at any time or from time to time, all the holders
of Common Stock (or Other Securities)  shall have received,  or (on or after the
record date fixed for the  determination  of  stockholders  eligible to receive)
shall have become entitled to receive, without payment therefor,

          (a) other or additional  stock or other  securities or property (other
     than cash) by way of dividend, or

          (b) any cash (excluding cash dividends  payable solely out of earnings
     or earned surplus of the Company), or

          (c)  other  or  additional  stock  or  other  securities  or  property
     (including   cash)  by  way  of   spin-off,   split-up,   reclassification,
     recapitalization, combination of shares or similar corporate rearrangement,

other than additional shares of Common Stock (or Other  Securities)  issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5), then and in each such case the Holder of this Warrant, on the
exercise  hereof as  provided  in Section 1, shall be  entitled  to receive  the
amount of stock and other  securities and property  (including cash in the 

<PAGE>
                                     -115-

cases  referred  to in  subdivisions  (b) and (c) of this  Section 3) which such
Holder would hold on the date of such  exercise if on the date hereof the Holder
had been the holder of record of the number of shares of Common Stock called for
on the face of this Warrant and had thereafter,  during the period from the date
hereof to and including the date of such exercise,  retained such shares and all
such other or additional stock and other securities and property (including cash
in the  case  referred  to in  subdivisions  (b)  and  (c) of  this  Section  3)
receivable by the Holder as aforesaid  during such period,  giving effect to all
adjustments called for during such period by Section 4.

     4. Exercise upon Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time,  the Company shall (a) effect a  reorganization,  (b)
consolidate  with or  merge  into  any  other  person,  or (c)  transfer  all or
substantially all of its properties or assets to any other person under any plan
or arrangement  contemplating the dissolution of the Company, then, in each such
case,  as a condition of such  reorganization,  consolidation,  merger,  sale or
conveyance, the Company shall give at least 30 days notice to the Holder of such
pending  transaction  whereby the Holder  shall have the right to exercise  this
Warrant  prior  to any  such  reorganization,  consolidation,  merger,  sale  or
conveyance. Any exercise of this Warrant pursuant to notice under this paragraph
shall be  conditioned  upon the closing of such  reorganization,  consolidation,
merger,  sale or conveyance  which is the subject of the notice and the exercise
of this Warrant shall not be deemed to have occurred until  immediately prior to
the closing of such transaction.

     5. Adjustment for Extraordinary Events. In the event that the Company shall
(i)  issue  additional  shares  of the  Common  Stock  as a  dividend  or  other
distribution  on  outstanding  Common Stock,  (ii)  subdivide or reclassify  its
outstanding  shares of Common Stock, or (iii) combine its outstanding  shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event,  the Purchase  Price  shall,  simultaneously  with the  happening of such
event,  be adjusted by multiplying  the then Purchase  Price by a fraction,  the
numerator  of which  shall be the number of shares of Common  Stock  outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common  Stock  outstanding  immediately  after such event,  and the
product so obtained shall  thereafter be the Purchase Price then in effect.  The
Purchase Price, as so adjusted,  shall be readjusted in the same manner upon the
happening of any successive  event or events described herein in this Section 5.
The Holder of this Warrant shall thereafter,  on the exercise hereof as provided
in  Section 1, be  entitled  to receive  that  number of shares of Common  Stock
determined  by  multiplying  the number of shares of Common Stock which would be
issuable on such exercise as of immediately prior to such issuance by a fraction
of which (i) the numerator is the Purchase Price in effect  immediately prior to

<PAGE>
                                     -116-

such issuance and (ii) the  denominator  is the Purchase  Price in effect on the
date of such exercise.

     6.  Further  Assurances.  The  Company  will  take all  action  that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and  nonassessable  shares of stock,  free from all taxes,  liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.

     7. Notices of Record Date, etc. In the event of

          (a) any taking by the  Company of a record of the holders of any class
     of securities  for the purpose of determining  the holders  thereof who are
     entitled  to  receive  any  dividend  on,  or any right to  subscribe  for,
     purchase or otherwise acquire any shares of stock of any class or any other
     securities or property, or to receive any other right, or

          (b) any capital reorganization of the Company, any reclassification or
     recapitalization of the capital stock of the Company or any transfer of all
     or  substantially  all of the assets of the Company to or  consolidation or
     merger of the Company with or into any other person, or

          (c)  any  voluntary  or   involuntary   dissolution,   liquidation  or
     winding-up of the Company,

then and in each such event the  Company  will mail or cause to be mailed to the
Holder, at least ten days prior to such record date, a notice specifying (i) the
date on which any such record is to be taken for the  purpose of such  dividend,
distribution  or right,  and stating the amount and character of such  dividend,
distribution  or  right,  (ii)  the  date  on  which  any  such  reorganization,
reclassification,    recapitalization,    transfer,    consolidation,    merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed,  as of which  the  holders  of  record  of  Common  Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such reorganization,
reclassification,    recapitalization,    transfer,    consolidation,    merger,
dissolution,  liquidation or  winding-up,  and (iii) the amount and character of
any stock or other  securities,  or  rights or  options  with  respect  thereto,
proposed to be issued or granted,  the date of such proposed  issue or grant and
the  persons or class of persons to whom such  proposed  issue or grant is to be
offered or made. Such notice shall also state that the action in question or the
record date is subject to the  effectiveness  of a registration  statement under
the Securities Act of 1933, as amended (the  "Securities  Act"),  or a favorable
vote of stockholders if either is required. Such notice shall be mailed at least
ten days prior to the date  specified in such notice on 

<PAGE>
                                     -117-

which any such action is to be taken or the record date, whichever is earlier.

     8.  Reservation  of Stock,  etc.,  Issuable on Exercise  of  Warrants.  The
Company will at all times  reserve and keep  available,  solely for issuance and
delivery on the exercise of this  Warrant,  all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.

     9.  Transfer of  Warrant.  This  Warrant  shall inure to the benefit of the
successors to and assigns of the Holder.  This Warrant and all rights hereunder,
in whole or in part,  is  registrable  at the  office or  agency of the  Company
referred  to below by the  Holder  hereof in  person  or by his duly  authorized
attorney, upon surrender of this Warrant properly endorsed.

     10.  Register of Warrants.  The Company  shall  maintain,  at the principal
office of the Company (or such other office as it may designate by notice to the
Holder  hereof),  a  register  in which the  Company  shall  record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each successor and prior owner of such Warrant.  The Company
shall  be  entitled  to treat  the  person  in whose  name  this  Warrant  is so
registered as the sole and absolute owner of this Warrant for all purposes.

     11. Exchange of Warrant.  This Warrant is exchangeable,  upon the surrender
hereof by the Holder  hereof at the office or agency of the Company  referred to
in Section 10, for one or more new  Warrants of like tenor  representing  in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for purchase hereunder,  each of such new Warrants
to represent  the right to subscribe  for and purchase  such number of shares as
shall be designated by said Holder hereof at the time of such surrender.

     12. Replacement of Warrant. On receipt of evidence reasonably  satisfactory
to the Company of the loss,  theft,  destruction  or  mutilation of this Warrant
and, in the case of any such loss,  theft or  destruction  of this  Warrant,  on
delivery of an indemnity agreement or security  reasonably  satisfactory in form
and amount to the Company or, in the case of any such  mutilation,  on surrender
and  cancellation  of this Warrant,  the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.

     13.  Warrant  Agent.  The  Company  may,  by written  notice to the Holder,
appoint  an agent  having an office in the  United  States of  America,  for the
purpose of issuing  Common Stock (or Other  Securities)  on the exercise of this
Warrant  pursuant to Section 1, exchanging this Warrant  pursuant to Section 11,
and replacing this Warrant pursuant to Section 12, or any of the foregoing,  and
thereafter any such issuance, exchange or 

<PAGE>
                                     -118-

replacement, as the case may be, shall be made at such office by such agent.

     14. Remedies. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Company
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate,  and that such terms may be specifically  enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.

     15. No Rights or  Liabilities  as a  Stockholder.  This  Warrant  shall not
entitle the Holder  hereof to any voting rights or other rights as a stockholder
of the  Company.  No provision of this  Warrant,  in the absence of  affirmative
action by the Holder hereof to purchase  Common Stock,  and no mere  enumeration
herein of the rights or privileges of the Holder hereof,  shall give rise to any
liability  of such  Holder for the  Purchase  Price or as a  stockholder  of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

     16. Notices,  etc. All notices and other communications from the Company to
the registered  Holder of this Warrant shall be mailed by first class  certified
mail, postage prepaid, at such address as may have been furnished to the Company
in  writing  by such  Holder  or at the  address  shown  for such  Holder on the
register of Warrants referred to in Section 10.

     17.  Transfer  Restrictions.  By  acceptance  of this  Warrant,  the Holder
represents  to the Company that this Warrant is being  acquired for the Holder's
own  account and for the  purpose of  investment  and not with a view to, or for
sale in  connection  with,  the  distribution  thereof,  nor  with  any  present
intention of  distributing  or selling the Warrant or the Common Stock  issuable
upon  exercise  of the  Warrant.  The Holder  acknowledges  and agrees that this
Warrant and, except as otherwise  provided in the Registration  Rights Agreement
by and  between  the  Company  and the  original  Holder  of this  Warrant  (the
"Registration  Rights  Agreement"),  the Common Stock  issuable upon exercise of
this  Warrant  (if any)  have not been  (and at the time of  acquisition  by the
Holder,  will not have been or will not be), registered under the Securities Act
or under the securities  laws of any state,  in reliance upon certain  exemptive
provisions of such statutes. The Holder further recognizes and acknowledges that
because  this  Warrant  and,  except  as  provided  in the  Registration  Rights
Agreement,  the Common Stock issuable upon exercise of this Warrant (if any) are
unregistered, they may not be eligible for resale, and may only be resold in the
future pursuant to an effective  registration statement under the Securities Act
and any applicable  state securities laws, or pursuant to a valid exemption from
such registration requirements.  Unless the shares of Common Stock issuable upon
exercise of this Warrant have  theretofore  been 

<PAGE>
                                     -119-

registered  for resale under the Securities  Act, the Company may require,  as a
condition  to the issuance of Common Stock upon the exercise of this Warrant (i)
in the case of an exercise in accordance with Section 1.1 hereof, a confirmation
as of the date of  exercise  of the  Holder's  representations  pursuant to this
Section 17, or (ii) in the case of an exercise in  accordance  with  Section 1.2
hereof,  an opinion of counsel  reasonably  satisfactory to the Company that the
shares of Common  Stock to be issued upon such  exercise  may be issued  without
registration under the Securities Act.

     18. Legend.  Unless theretofore  registered for resale under the Securities
Act, each certificate for shares issued upon exercise of this Warrant shall bear
the following legend:

          The  securities   represented  by  this   certificate  have  not  been
          registered  under  the  Securities  Act  of  1933,  as  amended.   The
          securities  have been  acquired  for  investment  and may not be sold,
          transferred  or assigned in the absence of an  effective  registration
          statement  for the  securities  under the  Securities  Act of 1933, as
          amended,  or an opinion of counsel that  registration  is not required
          under said Act.

     19.  Miscellaneous.  This  Warrant  and any terms  hereof  may be  changed,
waived,  discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.  This Warrant shall be construed and enforced in accordance  with and
governed by the  internal  laws of the State of  Delaware.  The headings in this
Warrant are for  purposes of  reference  only,  and shall not limit or otherwise
affect  any of the terms  hereof.  The  invalidity  or  unenforceability  of any
provision  hereof shall in no way affect the validity or  enforceability  of any
other provision.

<PAGE>
                                     -120-

     IN WITNESS  WHEREOF,  Palomar  Medical  Technologies,  Inc. has caused this
Warrant to be  executed  on its  behalf by one of its  officers  thereunto  duly
authorized.

Dated:  December 31, 1996                     PALOMAR MEDICAL TECHNOLOGIES, INC.



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

<PAGE>
                                     -121-

                              FORM OF SUBSCRIPTION

                   (To be signed only on exercise of Warrant)

TO PALOMAR MEDICAL TECHNOLOGIES, INC.

     1. The undersigned Holder of the attached original, executed Warrant hereby
elects to  exercise  its  purchase  right  under such  Warrant  with  respect to
______________  shares of Common  Stock,  as defined in the Warrant,  of Palomar
Medical Technologies, Inc. (the "Company").

     2. The undersigned Holder (check one):

          (a)  elects to pay the  aggregate  purchase  price for such  shares of
     Common  Stock (the  "Exercise  Shares")  (i) by lawful  money of the United
     States or the enclosed  certified or official  bank check payable in United
     States  dollars to the order of the Company in the amount of  $___________,
     or (ii) by wire  transfer  of United  States  funds to the  account  of the
     Company in the amount of $____________, which transfer has been made before
     or simultaneously  with the delivery of this Form of Subscription  pursuant
     to the instructions of the Company;

         or

          (b) elects to receive  shares of Common  Stock having a value equal to
     the value of the Warrant  calculated in accordance  with Section 1.2 of the
     Warrant.

     3.  Please  issue a stock  certificate  or  certificates  representing  the
appropriate  number of shares of Common Stock in the name of the  undersigned or
in such other names as is specified below:

     4. If this form is being  submitted by GFL Advantage Fund Limited  ("GFL"),
GFL hereby  represents  to the Company that the exercise of the Warrant  elected
hereby does not violate Section 1.1(b) of the Warrant.



         Name:    
                  -------------------------------------

         Address: 
                  -------------------------------------

                  -------------------------------------


Dated:____________  ___,  ____                    ____________________________
                                       (Signature must conform to name of Holder
                                        as specified on the face of the Warrant)


                                                  ----------------------------

                                                  ----------------------------
                                                            (Address)