<PAGE>
                                      248


                             SUBSCRIPTION AGREEMENT
                       PALOMAR MEDICAL TECHNOLOGIES, INC.

     THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE  COMMISSION OR THE SECURITIES  COMMISSION OF ANY STATE BECAUSE THEY
ARE BELIEVED TO BE EXEMPT FROM REGISTRATION  UNDER SECTIONS 4(2) AND 4(6) OF THE
SECURITIES  ACT OF 1933,  AS AMENDED (THE "ACT").  THIS  SUBSCRIPTION  AGREEMENT
SHALL NOT CONSTITUTE AN OFFER TO SELL NOR A SOLICITATION  OF AN OFFER TO BUY THE
SECURITIES  IN ANY  JURISDICTION  IN WHICH SUCH OFFER OR  SOLICITATION  WOULD BE
UNLAWFUL.  THE SECURITIES ARE  "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT  AS  PERMITTED  UNDER  THE ACT  PURSUANT  TO  REGISTRATION  OR  EXEMPTION
THEREFROM.

     IN  REACHING  THE  CONCLUSION  THAT  SUBSCRIBER  DESIRES  TO  PURCHASE  THE
DEBENTURES,  SUBSCRIBER HAS CAREFULLY EVALUATED SUBSCRIBER'S FINANCIAL RESOURCES
AND INVESTMENT  POSITION,  AND THE RISKS  ASSOCIATED WITH THIS  INVESTMENT,  AND
ACKNOWLEDGES  THAT  THE  DEBENTURES  INVOLVE  A HIGH  DEGREE  OF RISK  AND  THAT
SUBSCRIBER COULD LOSE THE ENTIRE INVESTMENT.

     This   Subscription   Agreement  (the   "Agreement")  is  executed  by  the
undersigned (the  "Subscriber") in connection with the offer and subscription by
the undersigned to purchase 6% Convertible Debentures Due _____________, 2002 (5
years from Closing Date),  with all interest due at maturity  ("Debentures")  of
Palomar Medical Technologies, Inc., a Delaware corporation (the "Company") in an
aggregate  principal  amount of  $_________________  U.S. The terms on which the
Debentures may be converted into Common Stock (such Common Stock  underlying the
Debentures being referred to herein as (the "Shares") and the other terms of the
Debentures are set forth therein and in Sections herein.  This Subscription and,
if  accepted by the  Company,  the offer and sale of  Debentures  and the Shares
(collectively, the "Securities"), are being made in reliance upon the provisions
of  Sections  4(2) and 4(6) of the  United  States  Securities  Act of 1933,  as
amended (the "Act").  The undersigned,  in order to induce the Company will rely
thereon, represents, warrants and agrees as follows:

<PAGE>
                                      249


1. OFFER TO SUBSCRIBE; PURCHASE PRICE

     The  Subscriber  hereby offers to purchase and subscribes for the number of
     Debentures set forth on the signature page hereto,  at a price of 100%. The
     Closing  shall be deemed to occur when this  Agreement has been executed by
     both Subscriber and Company (the "Closing Date" or "Debenture  Date").  The
     Company  agrees  to  deliver   certificates   representing  the  Debentures
     subscribed within 10 days of Closing.  On or prior to the Closing Date, the
     Subscriber  will  deliver to the Company  the full  amount of the  Purchase
     Price by 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.

2. REPRESENTATIONS AND WARRANTIES BY SUBSCRIBER

     Subscriber hereby represents and warrants as follows:

          (a)  Subscriber  is  an  Accredited   Investor  as  evidenced  by  the
     Subscriber meeting at least one of the following standards:

               (A) is an  individual  and had income in excess of $200,00 in the
          two most recent tax years (or $300,000 income jointly with his spouse)
          and reasonably  expect to have income at the same level in the current
          tax year; or

               (B) is an  individual  and his net  worth  (i.e.  excess of total
          assets over total  liabilities),  either individually or together with
          my spouse, is at least $1,000,000; or

               (C) is a trust, corporation, partnership, or organization defined
          in  Section  501(c)(3)  of the Code,  not  formed  for the  purpose or
          purchasing the Debentures, with assets in excess of $5,000,000; or

               (D) is a national bank; a state banking institution, the business
          of which is  substantially  confined to banking and is  supervised  by
          state banking officials;  a savings and loan association;  a broker or
          dealer  registered  pursuant to Section 15 of the Securities  Exchange
          Act of 1934; an insurance  company;  an investment  company registered
          under the  Investment  Company  Act of 1940;  a  business  


<PAGE>
                                      250


          development  company as defined in Section  2(a)(48)  of that Act or a
          private business  development company as defined in Section 202(a)(22)
          of the Investment  Advisors Act of 1940; a Small  Business  Investment
          Company  licensed by the Small Business  Administration  under Section
          301(c)  or (d) of the Small  Business  Investment  Act of 1958;  or an
          employee  benefit  plan within the meaning of Title I of the  Employee
          Retirement Income Security Act of 1974, if the investment  decision is
          made by a plan  fiduciary,  as defined  in Section  3(21) of such Act,
          which  is  either a bank,  savings  and  loan  association,  insurance
          company, or registered  investment adviser, or if the employee benefit
          plan has total assets in excess of $5,000,000 or, a self-directed plan
          where the investment decisions are made by accredited investors; or

               (E) is an  entity in which  each of the  equity  owners  meet the
          standards set forth in any of the immediately preceding  subparagraphs
          (A),   (B),   (C),  or  (D).  (IF  YOU  MEET  THE  STANDARDS  IN  THIS
          SUBPARAGRAPH, PLEASE ALSO COMPLETE THE FOLLOWING:)

               I certify that the  following is a complete list of all owners of
               equity or trustees, that each such owner or trustee has initialed
               the space  opposite  his name and that each such owner or trustee
               understands that by initialing that space he is representing that
               he is an  accredited  investor  satisfying  either  A,  B, C or D
               above.

               Name of Owner of              Type of
               Equity or Trustee       Accredited Investor            Initials

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

          (b) The Subscriber 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 offer and sale of the Debentures and
     the offer of the Shares which have been  requested by the  Subscriber.  The
     Subscriber and its advisors,  if any, have been afforded the opportunity to
     ask  questions of the Company and have received  complete and  satisfactory
     answers to any such  inquiries.  Without  limiting  the  generality  of the
     foregoing,  the Subscriber 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, 1995 (as amended by Amendment  No. 1 thereto on Form  10-KSB/A
     filed with the Securities and Exchange  Commission (the "SEC" on August 23,
     1996),  (2) Quarterly  Reports on Form 10-QSB for the fiscal quarters ended
     March 31,  1996 (as  amended by  Amendment  No. 1 thereto on Form  10-QSB/A
     filed with SEC on August 23,  1996),  June 30, 1996 and September 30, 1996,
     (3) Current  Report on Form 8-K, dated May 3, 1996, as amended by Amendment
     No. 1  thereto  on Form  8-K/A  dated May 3,  1996,  (4)  definitive  Proxy
     Statement for its 1996 Annual Meeting of Stockholders, and (5) Registration
     Statement  


<PAGE>
                                      251


     on Form S-3 (the "December  Registration  Statement") declared effective on
     December 27, 1996 (Registration No. 333-18003),  in each case as filed with
     the SEC.

          (c) Subscriber is acquiring the Debentures solely for Subscriber's own
     account, for investment,  and not with a view to the distribution  thereof.
     Subscriber's  financial  condition is such that he is not under any present
     necessity  or  constraint  to dispose  of the  Debentures  to  satisfy  any
     existing  or  contemplated   debt  or  undertaking.   If  Subscriber  is  a
     corporation,  trust,  association,  partnership,  or any other entity other
     than an  individual,  the purchase of the Debentures by Subscriber has been
     duly  authorized  as  required  by law or  agreement  to be taken,  and the
     Debentures constitute a legal investment for such entity.

          (d) Subscriber is aware of the fact that the Debentures  have not been
     registered, nor is registration  contemplated,  under the Securities Act of
     1933 (the "Act"),  and,  accordingly,  no federal agency has recommended or
     endorsed  the  purchase  of the  Debentures  or passed on the  adequacy  or
     accuracy  of the  information  set  forth  in the Form  10-KSB.  Subscriber
     understands  that since the Debentures have not been  registered  under the
     Act, they must be held indefinitely unless they are subsequently registered
     under the Act or unless, in the opinion of counsel for the Company,  a sale
     or transfer may be made without registration thereunder.  Subscriber agrees
     that the  Debentures  may bear a legend  restricting  the transfer  thereof
     consistent  with  the  foregoing  and  that a  notation  may be made in the
     records of the Company's  transfer  agent  restricting  the transfer of the
     Debentures in manner consistent with the foregoing.

          (e) Subscriber, in electing to subscribe for the Securities hereunder,
     has  relied  upon  an  independent   investigation   made  by  it  and  its
     representative,  if any.  Subscriber  has  been  given  no oral or  written
     representations or assurances from the Company or any representation of the
     Company other than as set forth in this Agreement or in a document executed
     by a duly authorized representative of the Company making reference to this
     Agreement.

          (f) If Subscriber  desires to sell and  distribute  Registered  Shares
     over a period of time,  or from  time to time,  at then  prevailing  market
     prices,  then  Subscriber  shall  execute and  deliver to the Company  such
     written  undertakings as the Company and its Counsel may reasonably require
     in  order  to  assure  full  compliance  with  relevant  provisions  of the
     Securities  Act  and  the  Exchange  Act  including,   without  limitation,
     providing the Company with 48 hours' prior written notice of each such sale
     and providing the Company with assurances,  reasonably  satisfactory to the
     Company,  that  Subscriber will meet the prospectus  delivery  requirements
     under the Security Act.
<PAGE>
                                      252


3. REGISTRATION RIGHTS

     The Company agrees to file and use  reasonable  efforts to make effective a
registration  statement with the Securities and Exchange  Commission (the "SEC")
(on Form  S-3,  Form S-2,  its  successor  form,  or any  other  form  under the
Securities  Act of 1933 under which the Shares  underlying  the  Debentures  are
eligible to be  registered),  within 180 days of the Closing Date,  covering the
Shares underlying the Debentures,  at the Company's cost and expense  (excluding
the costs of legal  counsel to the holders of the  Debentures).  The  subscriber
shall  furnish the Company with such  information  as the Company may request in
writing and as shall be required in connection with any registration thereunder.

4. RESALES

     Subscriber  acknowledges  and agrees that the Securities may only be resold
(a) pursuant to a  Registration  Statement  under the Act; or (b) pursuant to an
exemption from registration.

5. SUBSEQUENT TRANSFER OF SECURITIES

     Once a  registration  statement  has been filed and  declared  effective as
contemplated  in Section 3 above,  the Company  agrees,  and shall  instruct its
transfer  agent,  that the Securities may be transferred to any person or entity
who is not an affiliate of the Company  without (a) any further  restriction  on
transfer or (b) the entry of a "stop  transfer"  order against such  Securities,
provided  that the  person(s) or  entity(ies)  requesting  transfer  furnish the
appropriate representations to the Company's legal counsel.

6. RELEASE OF PROCEEDS TO THE COMPANY

     The  proceeds of the  offering  shall be  released to the Company  upon the
Closing of this offering, as defined in Section 1 of this Agreement.

7. TERMS OF CONVERSION

     The Debentures shall contain the following  provisions in Section 3 thereof
regarding the conversion of the Debentures:

     The Holder of this Debenture is entitled,  at its option, at any time after
     180 days after the Debenture  Date until  maturity  hereof,  to convert the
     principal  amount of the Debenture or any portion of the  principal  amount
     hereof which is at least One Hundred Thousand  Dollars  ($100,000 U.S.) or,
     if at the time of such election to convert,  the aggregate principal amount
     of all  Debentures  registered  to the  Holder  is less  than  One  Hundred
     Thousand  Dollars  ($100,000  U.S.),  then the whole amount  thereof,  into
     Shares of Common Stock of the Company at a conversion  price for each share
     of Common  Stock equal to $11.00 U.S.;  provided  that in any 30 day period
     the Holder of these Debentures (or its transferee) may convert no more than
     33% (or 34% of the  Debentures,  in the last 30 day  period  available  for
     conversion of the  Debentures) of the  Debentures  purchased by the Holder,
     whether or not such Holder  exercised  its right to 


<PAGE>
                                      253


     convert  the  Debenture  after 180 days  after  the  Debenture  Date.  Such
     conversion  shall be  effectuated  by  surrendering  the  Debentures  to be
     converted to the Company with the form of conversion notice attached hereto
     as Exhibit A,  executed  by the Holder of this  Debenture  evidencing  such
     Holder's  intention  to convert this  Debenture or a specified  portion (as
     above provided)  hereof,  and accompanied,  if required by the Company,  by
     proper  assignment  hereof in blank. The Company shall use its best efforts
     to have the  Shares of Common  Stock  issued  and  delivered  to the Holder
     thereof within ten business days of the receipt of the conversion  form and
     Debentures(s). If the Debenture is converted into Shares of Common Stock of
     the  Company  within the twelve  months  following  the Closing  Date,  all
     accrued but unpaid interest shall be waived by the Holder. If, however, the
     Debenture is converted into shares of Common Stock after twelve months from
     the Closing Date,  then the amount of all accrued but unpaid interest shall
     be  shall be  subject  to  conversion.  No  fractions  of  shares  or scrip
     representing  fractions  of shares  will be issued on  conversion,  but the
     number of shares issuable shall be rounded down to the nearest whole share.
     The date on which notice of  conversion  is given shall be deemed to be the
     date on which the Holder has delivered the  Debenture,  with the conversion
     notice duly executed, to the Company.

     8. TERMS OF REDEMPTION

     The Debentures shall contain the following  provisions in Section 5 thereof
regarding the redemption of the Debentures:

     The Company may, at any time the Debentures are  outstanding,  upon 20 days
     written  notice  to the  Holder,  elect to  redeem  the full  amount of the
     Debentures then outstanding or a pro rata portion thereof. The Holder shall
     have 10 days  after  receipt of written  notice of  redemption  to submit a
     Notice of Conversion to the Company if the Holder  desires to convert.  The
     redemption price shall be calculated at 110% of the amount of the Debenture
     being redeemed. All accrued but unpaid interest shall be waived at the time
     of  redemption.  All accrued but unpaid  interest  will also be paid at the
     time of  redemption.  Each  Holder of the  Debenture  shall be  entitled to
     redeem a pro rata portion of the Debentures being redeemed by the Company.

9. GOVERNING LAW

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the  Commonwealth of  Massachusetts  except for matter arising under the
Act or the Securities  Exchange Act of 1934 which matters shall be construed and
interpreted in accordance with such laws.


<PAGE>
                                      254


10. NOTICES

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

         Name:
         Address:
         City:
         Country:
         Attention:

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

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


<PAGE>
                                      255


     The undersigned  hereby  subscribes for  $______________  U.S. in principal
amount of Debentures and pays herewith funds in the same amount.

     The undersigned  acknowledges that this subscription shall not be effective
unless accepted by the Company as indicated below.

Dated this 12 day of February, 1997.



Soginvest Bank
(Printed Name)


         /s/                                         /s/
----------------------------                ----------------------------------
B. Pini                                     M. Wenger
(Signature)


V. Stazione 9   C.P. 663   CH - 6602  Locarno-Muralto
(Mailing Address)


THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 13 DAY OF March, 1997.

                                              PALOMAR MEDICAL TECHNOLOGIES, INC.




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