CONSTRUCTION MANAGEMENT AGREEMENT

        This Agreement is made as of the 19th day of November, 2008 by and between Palomar Medical Technologies, Inc., a Delaware corporation having a place of business at 82 Cambridge Street, Burlington, Massachusetts (“Owner”) and Nordblom Development Company, Inc. a Massachusetts corporation having a place of business at 15 Third Avenue, Burlington, Massachusetts 01803 (“ Development Agent ”).

Preliminary Recitals

    A.        Owner is the owner of a tract of undeveloped land in Burlington, Massachusetts containing approximately 8.35 acres located on Network Drive and more particularly described on Exhibit A attached hereto (the “ Property ”) for the purpose of developing the Project, as hereinafter defined. Owner is desirous of entering into an agreement with the Development Agent for the furnishing by Development Agent of all project management and construction services to and for the benefit of Owner in connection with the development, construction and completion of the Project, as hereinafter defined.

    B.        The project (hereinafter called the “ Project ”), which will be developed on the Property will consist of a commercial building, parking, utilities, as further described on Exhibit B attached hereto and such other improvements and components as may be approved by Owner.

    C.        Owner desires to engage Development Agent to perform certain services in connection with the development, design and construction of the Project and Development Agent desires to accept such engagement, all on the terms and conditions hereinafter set forth.

        NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and Development Agent agree as follows:

        1.         Appointment . Owner hereby engages and designates Development Agent, and Development Agent hereby accepts such engagement and designation, on the conditions and for the term hereinafter set forth, as Owner’s agent for the purposes of constructing the Project and overseeing and managing the development process for the Project. Development Agent recognizes that a relationship of good faith is created by this Agreement and agrees to use its best efforts (as that term is defined in Section 7.7) and to devote such time as may be necessary to perform the services provided for herein, and such additional duties and responsibilities as are reasonably within the general scope of such services, or to cause such services to be so performed, so as to effect, to an extent reasonably possible, the efficient and economic construction of the Project.

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        2.        Development Agent’s Duties; Development Agent’s Warranties and Representations . Development Agent shall perform or cause to be performed the following services for, on behalf of and, subject to the further provisions of this Agreement, at the expense of Owner in connection with the development, construction and completion of the Project:

            2.1.        Project Plans .

                2.1.1.        Owner has entered into (i) a contract with Spagnolo Gisness & Associates, Inc. (the “ Architect ”) to design the Project, and (ii) a contract with Vanasse Hangen Brustlin, Inc. (the “ Engineer ” and collectively with the Architect, the “ Project Planners ”) to design the infrastructure and site plans for the Project. The Owner has approved the plans for the Project, the list of which is attached to the Construction Contract as Exhibit A (the “ Approved Plans ”).

                2.1.2         Owner has entered into a construction contract of even date herewith, and an Amendment No. 1 to the construction contract (as amended, the “ Construction Contract ”) for a guaranteed maximum price of $22,463,218.00 with Erland Construction, Inc. (the “ General Contractor ”) for the construction of the Project.

                2.1.3.        The Approved Plans shall not be amended by Development Agent without the written consent of Owner, and unless Owner otherwise consents in writing, the Project shall be constructed substantially in accordance with the Approved Plans and the Construction Contract, except for (i) minor changes necessitated by job conditions which are approved by the Project Planners and which do not increase or decrease any line item of the Project Budget, and (ii) changes in the Approved Plans or the work performed pursuant thereto which are approved in writing by the Project Planners and by Owner and which do not increase or decrease any line item of the Project Budget. All change orders in any event shall be submitted to and approved by Owner in writing, regardless of the provisions set forth above.

                2.1.4.        Owner hereby constitutes, designates and appoints Louis P. Valente (or any other person which Owner may hereafter designate by Notice to Development Agent) as its representative to give any consents and approvals on behalf of Owner which may be required under the terms of this Agreement, including, without limitation, any consents or approvals of Owner required as above provided in respect of the Approved Plans, changes in the Approved Plans or any deviation of the work from the Approved Plans. Any consent or approval given by such representative or any successor thereto appointed by Owner shall be binding on Owner.

                2.1.5.        The Construction Contract shall not be amended or cancelled without the prior written consent of Owner except as otherwise permitted in subsection 2.1.3.

            2.2.        Licenses and Permits . Development Agent shall use its best efforts to assist the General Contractor in procuring or causing to be procured from all governmental authorities having jurisdiction over the Project, at Owner’s expense and in Owner’s name, all necessary licenses, permits, certificates, authorizations and approvals required in connection with the construction, completion, and occupancy of the Project not yet procured by Owner as of the date hereof, including, without limitation, all requisite building permits and temporary and permanent certificates of occupancy necessary for the construction and occupancy of the Project in accordance with the Approved Plans. True copies of all such licenses, permits, authorizations and approvals shall be delivered by Development Agent to Owner promptly after the same have been procured.

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            2.3.        Project Budget; Contingency; Progress Schedule .

                2.3.1.        Owner has approved the budget (the “ Project Budget ”) attached hereto as Exhibit C. The total costs shown on the Project Budget shall be referred to herein as the “ Project Costs .” Development Agent shall not have the right, without Owner’s prior written approval, to incur or pay for or cause to be incurred or paid for any item of labor, materials or services of architects or engineers if the cost of the same would cause any increase in the Project Budget. All changes to the Project Budget which constitute an increase or decrease in any line item of the Project Budget shall require the prior written approval of the Owner

                2.3.2.        Development Agent shall review, assist and advise Owner as to all change order requests (a “ Change Order ”) and assist in negotiation, completion and execution of such change order. All Change Orders shall be approved by Owner in writing.

                2.3.3.        Attached as Exhibit D to the Construction Contract is a construction progress schedule (the “ Progress Schedule ”) for the Project setting forth the estimated dates for starting and completing the various stages of construction of the Project. Development Agent shall use its best efforts to cause the General Contractor substantially to comply with and adhere to the Progress Schedule. Development Agent shall incur no liability to Owner if for any reason it is unable, despite the use of its best efforts, to cause the General Contractor substantially to comply with and adhere to the Progress Schedule. Owner shall have the right, in its discretion, but not the obligation, to direct Development Agent to have work performed on an overtime basis from time to time.

    2.4.        Development Agent’s Duties in Connection with Project Construction . Development Agent shall, at Owner’s expense (i) cause to be purchased on behalf and in the name of Owner all materials and equipment for the Project in accordance with the Project Budget; (ii) cause the General Contractor to construct and complete the Project in accordance with the Construction Contract; (iii) cause the Project to be equipped with all fixtures, equipment and items of personal property required for the operation of the Project following completion, all substantially in accordance with the Construction Contract and the Approved Plans as the same may be amended from time to time as provided in subsection 2.1.3. The Project shall be constructed, equipped and completed in accordance with all applicable requirements of law, including, without limitation, zoning laws, ordinances and resolutions, building codes, fire, health and sanitary codes and the like. Without limiting the generality of the foregoing, Development Agent’s obligations under this Section 2.4 shall include, without limitation, the following:

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                2.4.1.        to oversee, manage and coordinate the construction of the Project. Owner shall have the right to inspect the Project as work progresses;

                2.4.2.        to oversee the performance and enforce the obligations of the General Contractor under the Construction Contract, and the Project Planners under the terms of their respective contracts; provided, however, that attorneys’ fees and similar expenses incurred by Development Agent with Owner’s prior written approval in connection with such enforcement shall be payable by Owner;

                2.4.3.        to use its best efforts to cause the Project to be completed in an expeditious manner, including causing the General Contractor to keep at the Project an adequate supply of workmen and materials;

                2.4.4.        to monitor the insurance status of the Project Planners and the General Contractor and advise Owner as to any expiration, modification, termination or pending termination of the respective insurance policies;

                2.4.5.        If requested by Owner, to cause the Contractor to procure or cause to be procured at the expense of Owner a performance bond, labor and material payment bond and a lien bond in the amount of the maximum aggregate contract sum of the Construction Contract, guaranteeing the performance by the General Contractor of the Construction Contract and payment of all costs thereof and incidental thereto, and to require the General Contractor to procure a performance bond, labor and material payment bond and a lien bond from any subcontractor which has one or more subcontracts for the Project with an aggregate value of $200,000 or more (a “major subcontractor”) in the amount of the maximum aggregate contract sum of each such subcontract guaranteeing the performance by such major subcontractor of its subcontract and payment of all costs thereof and incidental thereto. All such bond(s) shall be issued by a reputable surety company licensed to do business in the Commonwealth of Massachusetts and approved by Owner, shall name Owner and, if obtainable without additional cost, Development Agent as co-obligees as their respective interests may appear and shall be delivered to Owner;

                2.4.6.        subject to the prior written approval of Owner, to employ, discharge and supervise, or cause to be employed, discharged and, supervised, all attorneys and other professionals and personnel necessary to construct and complete a Project in accordance with the terms hereof;

                2.4.7.        to negotiate or to cause the General Contractor to negotiate final settlements with all subcontractors, mechanics and materialmen and, if any mechanic’s, materialmen’s or similar lien is filed with respect to the Project, to take such action (at the expense and with the approval of Owner), or to cause the General Contractor or the surety issuing the bonds provided for in subsection 2.4.5 to take such action, as is necessary or appropriate to contest or settle and discharge such lien;

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                2.4.8.        to use its best efforts to cause the Project Planners to discover and bring to Owner’s attention any defects in the construction of the Project or in the installation or personal property therein prior to the expiration of any applicable guaranty periods;

                2.4.9.        to hold periodic meetings, not more frequently than bi-weekly, with Owner and/or its representatives to review the progress of the construction of the Project and to review the Project Budget and the Progress Schedule in light of actual experience; provided, however, that the Project Budget shall not be revised by Development Agent without the prior written consent of Owner. Unless otherwise agreed upon, all such meetings shall be held at the principal office of The Owner;

                2.4.10.        to review and approve or take other action with respect to all applications for payment submitted by the General Contractor, the Project Planner or others and to review and approve all Change Orders pursuant to Subsection 2.3.3 above;

                2.4.11.        to ca