LICENSE AGREEMENT
BETWEEN
PALOMAR MEDICAL TECHNOLOGIES, INC.
AND THE PROCTER & GAMBLE COMPANY
AND
THE GILLETTE COMPANY

Table of Contents

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Preamble

        This agreement (“AGREEMENT”), entered into as of the last date of execution of this AGREEMENT (“EXECUTION DATE”), and retroactively effective as of February 14, 2003 (“EFFECTIVE DATE”), is between Palomar Medical Technologies, Inc., a Delaware corporation (“PALOMAR MEDICAL TECHNOLOGIES, INC.,” and collectively with its AFFILIATES, “PALOMAR”), on the one hand, and The Procter & Gamble Company, an Ohio corporation (“The PROCTER & GAMBLE COMPANY,” and collectively with its AFFILIATES, “P&G”) and its wholly-owned subsidiary, The Gillette Company (“GILLETTE”), on the other hand.

        PALOMAR owns or otherwise controls certain patents and know-how relating to light-based products and systems for, among other things, the management and removal of human hair.

        PALOMAR and GILLETTE previously entered into that certain Amended and Restated Development and License Agreement dated as of February 14, 2007, and effective as of February 14, 2003, as further amended as of February 14, 2007 and December 21, 2007 (collectively, the “ORIGINAL AGREEMENT”), and PALOMAR and GILLETTE are terminating and superseding such ORIGINAL AGREEMENT pursuant to the terms and conditions of this AGREEMENT.

        PALOMAR and P&G now desire to enter into this AGREEMENT, through which P&G will obtain a non-exclusive license under certain of PALOMAR’s patents and know-how pursuant to the terms and conditions set forth in this AGREEMENT.

        The PARTIES therefore agree as follows:

License Grants and Right of Reference

License Under LICENSED PATENTS and LICENSED KNOW-HOW. PALOMAR hereby grants P&G a worldwide, non-exclusive, royalty-bearing license (with the right to sublicense only as permitted in Section 1.3) under PALOMAR’s rights, titles, and interests in and to the LICENSED PATENTS and LICENSED KNOW-HOW to EXPLOIT LICENSED PRODUCTS only, and only in the FEMALE FIELD.

License and Right of Reference Under PALOMAR REGULATORY DOCUMENTATION.

License and Right of Reference. PALOMAR hereby grants P&G a worldwide, non-exclusive, royalty-bearing license and right of reference (with the right to sublicense only as permitted in Section 1.3), under the PALOMAR REGULATORY DOCUMENTATION, to EXPLOIT LICENSED PRODUCTS only, and only in the FEMALE FIELD.

Letter of Authorization. No later than the EXECUTION DATE, PALOMAR shall provide to P&G a letter of authorization that grants to P&G a right of access and reference with respect to specified PALOMAR REGULATORY DOCUMENTATION for use only with LICENSED PRODUCTS in the FEMALE FIELD consistent with Section 1.2.1, which letter shall be in the form attached hereto as Exhibit B and shall be irrevocable except in the event of termination of this AGREEMENT by PALOMAR pursuant to Section 7.2.1 or 7.2.3, or by P&G pursuant to Section 7.2.2, in which case such letter shall automatically be revoked and P&G and its sublicensees shall no longer use, refer to or rely on such letter in any way.

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P&G’s Right to Sublicense. The licenses in Section 1.1 and Section 1.2 include the right for P&G to sublicense THIRD PARTIES only as may be reasonably necessary for: (a) the manufacture of LICENSED PRODUCTS on behalf of P&G or any of its permitted sublicensees for resale to P&G or any of its permitted sublicensees, (b) THIRD PARTY distributors to sell or otherwise distribute LICENSED PRODUCTS manufactured by or on behalf P&G for use in the FEMALE FIELD, (c) the importation, sale, offering for sale, transport, distribution, promotion, manufacturing and marketing of LICENSED PRODUCTS in the FEMALE FIELD in markets other than any MAJOR MARKET, (d) the limited purpose of (sub)contracting activities that P&G would have a right to perform directly hereunder, subject to provisions safeguarding non-disclosure and non-use at least as strict as those provided in this AGREEMENT, or e) in connection with P&G’s entering into a THIRD PARTY COLLABORATION. In the event of the termination of the license grants in Section 1.1 and Section 1.2 for any reason, PALOMAR shall have the right to terminate any such sublicense. P&G shall be responsible to PALOMAR for the performance of any of P&G’s permitted sublicensees under any provisions of this AGREEMENT for which P&G is responsible. P&G shall not permit any sublicensees to use or disclose any LICENSED KNOW-HOW or PALOMAR REGULATORY DOCUMENTATION (to the extent such documentation constitutes PALOMAR CONFIDENTIAL INFORMATION) without provisions safeguarding non-disclosure and non-use at least as strict as those provided in this AGREEMENT (including the rights to use and disclose same as provided in Article 5). Apart from the foregoing limited rights to sublicense, P&G shall not have any right to grant to any THIRD PARTY any sublicense under the licenses granted to P&G in Section 1.1 and Section 1.2 or to assign those licenses or the license granted to P&G in Section 1.4.1, without PALOMAR’s prior written consent, provided that P&G may assign such licenses in connection with the permitted assignment of this AGREEMENT in full pursuant to Section 11.2.

Other Project Technology Licenses.

License Under PALOMAR PROJECT TECHNOLOGY & JOINT PROJECT TECHNOLOGY – NON-LIGHT-BASED PRODUCT. PALOMAR hereby grants P&G a worldwide, exclusive (including with regard to PALOMAR), perpetual and irrevocable, royalty free license, under PALOMAR’S rights, titles, and interests in and to the PALOMAR PROJECT TECHNOLOGY **, and the JOINT PROJECT TECHNOLOGY **, to EXPLOIT NON-LIGHT-BASED PRODUCTS only. The license in this Section 1.4.1 includes the right for P&G to sublicense THIRD PARTIES through multiple tiers of sublicensing.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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P&G PROJECT TECHNOLOGY & JOINT PROJECT TECHNOLOGY -- LIGHT-BASED DEVICES Outside FIELD. P&G hereby grants PALOMAR a worldwide, exclusive (including with regard to P&G), perpetual and irrevocable, royalty free license, under P&G’s rights, titles, and interests in and to the P&G PROJECT TECHNOLOGY **, and the JOINT PROJECT TECHNOLOGY **, to EXPLOIT LIGHT-BASED DEVICES only, and only outside of the FIELD. The license in this Section 1.4.2 includes the right for PALOMAR to sublicense THIRD PARTIES through multiple tiers of sublicensing.

P&G PROJECT KNOW-HOW -- LIGHT-BASED DEVICES In FIELD. P&G hereby grants PALOMAR a worldwide, non-exclusive, royalty-free license, under P&G’s rights, titles, and interests in and to the P&G PROJECT KNOW-HOW (including P&G PROJECT INVENTIONS to the extent not covered or claimed by any P&G PROJECT PATENT) ** to EXPLOIT LIGHT-BASED DEVICES only, and only in the FIELD.

PALOMAR's Right to Sublicense. The license in Section 1.4.3 includes the right for PALOMAR to sublicense THIRD PARTIES only as may be reasonably necessary for: (a) the manufacture of LIGHT-BASED DEVICES on behalf of PALOMAR or any of its permitted sublicensees for resale to them, (b) THIRD PARTY distributors to sell or otherwise distribute LIGHT-BASED DEVICES manufactured by or on behalf PALOMAR or any of its permitted sublicensees, (c) the importation, sale, offering for sale, transport, distribution, promotion, marketing and manufacturing of LIGHT-BASED DEVICES worldwide, (d) the limited purpose of (sub)contracting activities that PALOMAR would have a right to perform directly hereunder, subject to provisions safeguarding non-disclosure and non-use at least as strict as those provided in this AGREEMENT, or (e) in connection with PALOMAR’s entering into a THIRD PARTY COLLABORATION. In the event of the termination of the license grant in Section 1.4.3, P&G shall have the right to terminate any such sublicense. PALOMAR shall be responsible to P&G for the performance of any of PALOMAR’s permitted sublicensees under Sections 1.4.2, 1.4.3, and 7.3.2 under any provisions of this AGREEMENT for which PALOMAR is responsible. PALOMAR shall not permit any sublicensees to use or disclose any P&G PROJECT KNOW-HOW without provisions safeguarding non-disclosure and non-use at least as strict as those provided in this AGREEMENT (including the rights to use and disclose same as provided in Article 5). PALOMAR shall not have any right to assign any of the licenses granted to PALOMAR hereunder, without P&G’s prior written consent, provided that PALOMAR may assign such licenses in connection with the permitted assignment of this AGREEMENT in full pursuant to Section 11.2.

License Limitations. With respect to the licenses granted herein, neither PARTY shall EXPLOIT or practice any inventions, KNOW-HOW, PATENTS or REGULATORY DOCUMENTATION licensed hereunder to such PARTY outside the scope of the applicable license (including with respect to any field limitation).

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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No Other Licenses Granted. The licenses granted to P&G in this AGREEMENT are limited to those specifically set forth in Sections 1.1, 1.2 and 1.4.1 and the licenses granted to PALOMAR in this AGREEMENT are limited to those specifically set forth herein. Nothing in this AGREEMENT is intended, or shall be construed, to grant PALOMAR or P&G, as applicable, any other licenses in or to any PATENT, KNOW-HOW, REGULATORY DOCUMENTATION or other intellectual property of the other PARTY. All rights not specifically granted by a PARTY are reserved by such PARTY.

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Development, Regulatory and Commercialization Matters

Development.

Control of Development Activities. P&G shall have the right to control any and all development activities and decisions with respect to any and all LICENSED PRODUCTS and NON-LIGHT-BASED PRODUCTS that P&G desires to EXPLOIT pursuant to the licenses granted in Sections 1.1, 1.2 and 1.4.1. **

Regulatory Activities and Approvals.

Control of Regulatory Activities.

By P&G with Respect to LICENSED PRODUCTS and NON-LIGHT-BASED PRODUCTS. P&G (or its designee) shall have the right to control any and all regulatory activities and decisions with respect to any and all LICENSED PRODUCTS and NON-LIGHT-BASED PRODUCTS that P&G desires to EXPLOIT pursuant to and consistent with the licenses granted in Sections 1.1 and 1.2 in the FEMALE FIELD only and the license granted in Section 1.4.1, respectively. Without limitation of the foregoing, P&G shall have the right to obtain and maintain REGULATORY APPROVAL(S) worldwide for LICENSED PRODUCTS and NON-LIGHT-BASED PRODUCTS that P&G EXPLOITS pursuant to and consistent with the licenses granted in Sections 1.1 and 1.2 in the FEMALE FIELD only and the license granted in Section 1.4.1, respectively. All REGULATORY DOCUMENTATION, and other filings, applications or requests pursuant to or in connection with such REGULATORY APPROVALS worldwide, shall be made in the name of P&G (or its designee). ** PALOMAR shall comply with any audit requests regarding the LICENSED PRODUCTS sold by or on behalf of P&G, made by any REGULATORY AUTHORITY to the extent required by applicable law, and P&G shall reimburse PALOMAR for its reasonable out-of-pocket expenses in connection with such compliance.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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By PALOMAR with Respect to Certain LIGHT-BASED DEVICES. PALOMAR (or its designee) shall have the right to control any and all regulatory activities and decisions with respect to any and all LIGHT-BASED DEVICES that PALOMAR and its permitted sublicensees desire to EXPLOIT pursuant to and consistent with any licenses granted to PALOMAR hereunder. Without limitation of the foregoing, PALOMAR and its permitted sublicensees shall have the right to obtain and maintain REGULATORY APPROVAL(S) worldwide for LIGHT-BASED DEVICES that PALOMAR and its permitted sublicensees EXPLOIT pursuant to and consistent with any licenses granted to PALOMAR hereunder. All REGULATORY DOCUMENTATION, and other filings, applications or requests pursuant to or in connection with such REGULATORY APPROVALS worldwide, shall be made in the name of PALOMAR (or its designee). P&G shall comply with any audit requests regarding the PALOMAR REGULATORY DOCUMENTATION made by any REGULATORY AUTHORITY to the extent required by applicable law, and PALOMAR shall reimburse P&G for its reasonable out-of-pocket expenses in connection with such compliance.

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FIRST FEMALE PRODUCT REGULATORY APPROVAL. The PARTIES acknowledge that, pursuant to the ORIGINAL AGREEMENT, PALOMAR had the right to seek REGULATORY APPROVAL in the United States for the FIRST FEMALE PRODUCT in PALOMAR’s name, and PALOMAR sought and obtained such REGULATORY APPROVAL pursuant to PALOMAR’s 510(k) notification K060839. **

Commercialization.

Of LICENSED PRODUCTS by P&G. P&G shall have the right to control any and all commercialization activities and decisions with respect to any and all LICENSED PRODUCTS that P&G desires to EXPLOIT pursuant to and consistent with the licenses granted in Sections 1.1 and 1.2. Without limitation of the foregoing, decisions relating to which technology shall be incorporated in, or used to manufacture, LICENSED PRODUCTS, and P&G’s pricing of the LICENSED PRODUCTS, shall be within the sole discretion of P&G and its permitted sublicensees.

Of LIGHT-BASED DEVICES by PALOMAR. PALOMAR shall have the right to control any and all commercialization activities and decisions with respect to any and all LIGHT-BASED DEVICES that PALOMAR and its permitted sublicensees desire to EXPLOIT pursuant to and consistent with any licenses granted to PALOMAR hereunder. Without limitation of the foregoing, decisions relating to which technology shall be incorporated in, or used to manufacture, LIGHT-BASED DEVICES, and PALOMAR’s and its permitted sublicensees' pricing of the LIGHT-BASED DEVICES, shall be within the sole discretion of PALOMAR and its permitted sublicensees.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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Of NON-LIGHT-BASED PRODUCTS by P&G. P&G shall have the right to control any and all commercialization activities and decisions with respect to any and all NON-LIGHT-BASED PRODUCTS that P&G desires to EXPLOIT pursuant to and consistent with the license granted in Section 1.4.1. Without limitation of the foregoing, decisions relating to which technology shall be incorporated in, or used to manufacture, NON-LIGHT-BASED PRODUCTS, and P&G’s pricing of the NON-LIGHT-BASED PRODUCTS, shall be within the sole discretion of P&G and its permitted sublicensees.

TRADEMARKS.

LICENSED PRODUCTS AND NON-LIGHT-BASED PRODUCTS. P&G shall have the sole right to determine the TRADEMARKS (other than TRADEMARKS owned by PALOMAR) to be used with respect to the EXPLOITATION of the LICENSED PRODUCTS and NON-LIGHT-BASED PRODUCTS marketed by P&G and its permitted sublicensees, and shall own all right, title and interest in and to such TRADEMARKS.

LIGHT-BASED DEVICES. PALOMAR shall have the sole right to determine the TRADEMARKS (other than TRADEMARKS owned by P&G) to be used with respect to the EXPLOITATION of the LIGHT-BASED DEVICES marketed by PALOMAR and its permitted sublicensees, and shall own all right, title and interest in and to such TRADEMARKS.

  Payments & Reports

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NOS-Based Payments. Subject to Section 3.1, P&G shall make NOS-based TTP and royalty payments to PALOMAR, in each case with respect to the applicable LICENSED PRODUCT(S) and TTP-BEARING PRODUCT(S), on such terms and conditions as set forth in this Article 3. For illustration purposes only, such payments are summarized in Table 3.2 below (provided that such amounts are subject to applicable adjustments as provided in this Article 3). For the avoidance of doubt, in the event of any conflict between this Section 3.2 and the other terms and conditions of this Article 3, such other terms and conditions shall control.

Table 3.2**

TTP Payments

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This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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**. On a TTP-BEARING PRODUCT-by-TTP-BEARING PRODUCT basis, P&G shall pay to PALOMAR TTPs in the amount of ** on that portion of worldwide NOS of each TTP-BEARING PRODUCT **

**. On a TTP-BEARING PRODUCT-by-TTP-BEARING PRODUCT basis, P&G shall pay to PALOMAR TTPs in the amount of ** on that portion of worldwide NOS of each TTP-BEARING PRODUCT **.

Scope of TTP Obligation. For clarity, (a) no TTPs shall be payable by P&G pursuant to Section 3.3.2 or 3.3.3 with respect to NOS of any LICENSED PRODUCT TOPICAL, (b) only one TTP under Section 3.3.2 or 3.3.3 will be payable by P&G with respect to any TTP-BEARING PRODUCT, and (c) P&G’s obligation to pay to PALOMAR TTPs pursuant to Section 3.3.2 or 3.3.3 with respect to each TTP-BEARING PRODUCT shall not commence until the first day of the TTP TERM and shall terminate with respect to all TTP-BEARING PRODUCTS on the last day of the TTP TERM. All TTPs shall be non-creditable and non-refundable and there shall be no right of set-off with respect thereto.

TTP QUARTERLY PAYMENTS. Within thirty (30) days after the EXECUTION DATE, and thereafter starting with the second QUARTER of 2008 within five (5) days after the beginning of each QUARTER during the TERM up to and including the QUARTER in which P&G LAUNCHES the first LICENSED PRODUCT anywhere in the world (but not for any QUARTER thereafter), P&G shall pay to PALOMAR One Million Two Hundred and Fifty Thousand Dollars (USD $1,250,000) as a QUARTERLY payment of TTPs payable pursuant to this Section 3.3 (each, a “TTP QUARTERLY PAYMENT”). Each TTP QUARTERLY PAYMENT shall be payable only once per QUARTER irrespective of the number of LICENSED PRODUCTS that are developed or commercialized by P&G pursuant to this AGREEMENT. TTP QUARTERLY PAYMENTS shall be non-creditable and non-refundable and there shall be no right of set-off with respect thereto.

P&G Royalty Payments.

In General. On a LICENSED PRODUCT-by-LICENSED PRODUCT and country-by-country basis, P&G shall pay to PALOMAR royalties in the amount of ** of NOS of each LICENSED PRODUCT(S) in such country during the ROYALTY TERM ** where the manufacture, sale, offer for sale, use or import of such LICENSED PRODUCT would (in the absence of the license(s) provided pursuant to this AGREEMENT) infringe a VALID CLAIM of a LICENSED PATENT in such country.

Scope of Royalty Obligation. For clarity, (a) only one royalty under this Section 3.4 will be payable by P&G with respect to any LICENSED PRODUCT, despite the existence of one or more VALID CLAIMS covering such LICENSED PRODUCT in any country, and (b) P&G’s obligation to pay to PALOMAR royalties pursuant to Section 3.4.1 shall not commence until the first day of the ROYALTY TERM for such LICENSED PRODUCT with respect to a country and shall terminate on a LICENSED PRODUCT-by-LICENSED PRODUCT and country-by-country basis on the last date of the ROYALTY TERM for such LICENSED PRODUCT in such country. All royalty payments made by P&G shall be non-creditable and non-refundable and there shall be no right of set-off with respect thereto.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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Combination Products . Notwithstanding anything contained in Sections 3.3 or 3.4, in the event that a LICENSED PRODUCT is sold in any country in the form of a combination product containing one or more products, devices, components, accessories or TOPICALS that are not LICENSED PRODUCTS (“NON-PRODUCT COMPONENTS”), then for purposes of calculating the amounts owed by P&G pursuant to Sections 3.3 and 3.4 with respect thereto, NOS of such combination product will be adjusted by multiplying actual NOS of such combination product in such country calculated pursuant to the definition of NOS by a ratio of the list prices to the trade for the product(s) at the start of each P&G FISCAL YEAR as follows:

If the LICENSED PRODUCT(s) and the NON-PRODUCT COMPONENTS are each sold separately in the United States, the ratio shall be A/(A+B), where A is the list price to the trade in the United States on July 1 of the applicable P&G FISCAL YEAR for the LICENSED PRODUCT(s), if sold separately, and B is list price to the trade in the United States on July 1 of the applicable P&G FISCAL YEAR for the NON-PRODUCT COMPONENTS, if sold separately.

If the NON-PRODUCT COMPONENTS in the combination product are not sold separately in the United States, the ratio shall be A/C, where A is the list price to the trade in the United States on July 1 of the applicable P&G FISCAL YEAR for the LICENSED PRODUCT(s), if sold separately, and C is the list price to the trade of such combination product in the United States.

If a LICENSED PRODUCT is not sold separately in the United States, the ratio shall be (C-B)/C, where B is list price to the trade in the United States on July 1 of the applicable P&G FISCAL YEAR for the NON-PRODUCT COMPONENTS in the combination product, if sold separately, and C is the list price to the trade of the combination product in the United States.

If, in the United States on July 1 of the applicable P&G FISCAL YEAR, neither the LICENSED PRODUCT nor the NON-PRODUCT COMPONENTS are sold separately, a market price for such LICENSED PRODUCT and such NON-PRODUCT COMPONENTS shall be negotiated by the PARTIES in good faith.

For clarity, a container that is a LICENSED PRODUCT and the TOPICAL within such container shall not be deemed a “combination product” for purposes of this Section 3.5.

THIRD PARTY Royalties. In the event that P&G’s EXPLOITATION of any LICENSED PRODUCTS under the license rights granted by PALOMAR to P&G under the LICENSED PATENTS triggers any payment obligations to any THIRD PARTY pursuant to an agreement originally entered into by PALOMAR and such THIRD PARTY prior to or on the EFFECTIVE DATE, including to MGH pursuant to the MGH AGREEMENTS, PALOMAR shall be solely responsible for such payments. In the event that P&G’s EXPLOITATION of any LICENSED PRODUCTS under the license rights granted by PALOMAR to P&G under the LICENSED PATENTS triggers any payment obligations to any THIRD PARTY pursuant to an agreement originally entered into by PALOMAR and such THIRD PARTY after the EFFECTIVE DATE, PALOMAR shall so inform P&G in writing and provide to P&G a copy of such THIRD PARTY agreement (subject to any confidentiality obligations). P&G shall be required to pay to PALOMAR any such payment obligations attributable to P&G’s exercise of any rights or license (or sublicense) under such THIRD PARTY agreement that accrue thirty (30) days after P&G’s receipt of such agreement, and to otherwise abide by the applicable terms and conditions of such THIRD PARTY agreement, in each case on such terms and in such manner as PALOMAR reasonably determines will permit it to satisfy its obligations to the THIRD PARTY under such agreement; provided, however, that in the event that P&G elects not to exercise any rights or a license (or sublicense) under such THIRD PARTY agreement, P&G shall so inform PALOMAR in writing and from and after such date P&G shall have no rights or license (or sublicense) and shall have no obligations to make such payments to PALOMAR for such payment obligations that accrue after such date unless and until the PARTIES otherwise mutually agree in writing.

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THIRD PARTY Royalties Owed by PALOMAR. In the event that PALOMAR’s EXPLOITATION of any product or service under the license rights granted by P&G to PALOMAR under the P&G LICENSED PATENTS in Section 7.3.2 triggers any payment obligations by P&G to any THIRD PARTY, P&G shall so inform PALOMAR in writing and provide to PALOMAR a copy of such THIRD PARTY agreement (subject to any confidentiality obligations). PALOMAR shall be required to pay to P&G any such payment obligations attributable to PALOMAR’s exercise of any rights or license (or sublicense) under such THIRD PARTY agreement that accrue thirty (30) days after PALOMAR’s receipt of such agreement, and to otherwise abide by the applicable terms and conditions of such THIRD PARTY agreement, in each case on such terms and in such manner as P&G reasonably determines will permit it to satisfy its obligations to the THIRD PARTY under such agreement; provided, however, that in the event that PALOMAR elects not to exercise any rights or a license (or sublicense) under such THIRD PARTY agreement, PALOMAR shall so inform P&G in writing and from and after such date PALOMAR shall have no such rights or license (or sublicense) and shall have no obligation to make such payments to P&G for such payment obligations that accrue after such date unless and until the PARTIES otherwise mutually agree in writing.

TTP and Royalty Payments.

In General. Royalties and TTPs payable pursuant to Sections 3.3.2, 3.3.3 and 3.4.1 shall be payable on a QUARTERLY basis within sixty (60) days after the end of each QUARTER, based upon the NOS during such QUARTER.

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This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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TTP and Royalty Statements. Each TTP and royalty payment hereunder (other than the TTP QUARTERLY PAYMENTS) shall be accompanied by a statement showing (a) the number of units of each LICENSED PRODUCT and TTP-BEARING PRODUCT sold by P&G on a country-by-country basis during the applicable QUARTER, (b) the amount of royalties and TTPs, if any, due on such NOS, (c) withholding taxes, if any, required by applicable law to be deducted, (d) the date of the FIRST COMMERCIAL SALE for each LICENSED PRODUCT in any country that occurred during the reporting period, and (e) the exchange rates used in determining the amount of USD.

Records Retention; Audit.

Record Retention. ** P&G shall keep (and shall ensure that its agents and sublicensees shall keep) records of such sales in sufficient detail to confirm the accuracy of the TTP or royalty calculations hereunder. With respect to any credits, offsets or other reductions (if any) taken against any TTP or royalty or other payment, ** P&G shall keep (and shall ensure that its agents and sublicensees shall keep) records of such credits, offsets or other reductions in sufficient detail to confirm the accuracy of them hereunder.

Audit. Upon the written request of PALOMAR and not more than once in each P&G FISCAL YEAR, P&G shall permit an independent accounting firm selected by PALOMAR, and reasonably acceptable to P&G, at PALOMAR’s expense, to have access during normal business hours, and upon reasonable prior written notice, to such of the records of P&G as may be reasonably necessary to verify the accuracy of the TTP or royalty reports hereunder **. The accounting firm shall disclose to P&G and PALOMAR whether the royalty or reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to PALOMAR.

Payment of Additional TTPs or Royalties. If such accounting firm concludes that additional TTPs or royalties were owed during such period, or excess credits, offsets or other reductions were taken, P&G shall pay the additional TTPs or royalties, as applicable, with interest calculated as provided in Section 3.12 from the date originally due, within ** after the date on which such accounting firm’s written report is delivered to P&G. If, and only if, the amount of the underpayment is greater than **, then P&G shall reimburse PALOMAR for all costs related to such audit.

Confidentiality. PALOMAR shall treat all information subject to review under this Section 3.10 in accordance with the confidentiality provisions of Article 5 and shall cause its accounting firm to enter into a reasonably acceptable confidentiality agreement with P&G obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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Mode of Payment. All payments to PALOMAR or P&G under this AGREEMENT shall be made by deposit of USD in the requisite amount to such bank account as PALOMAR may from time to time designate by notice to P&G. Payments shall be free and clear of any taxes (other than withholding and other taxes imposed on PALOMAR, which shall be for the account of PALOMAR), fees or charges, to the extent applicable. With respect to sales outside the United States, payments shall be calculated based on currency exchange rates for the QUARTER with respect to which sales remittance is made for TTPs or royalties. For each month and each currency, such exchange rate shall equal the arithmetic average of the bid and ask rate for such currency obtained from Bloomberg at 1 a.m. Cincinnati time on the last BUSINESS DAY of the month, or, if not so available, as otherwise agreed by the PARTIES. Unless otherwise designated by PALOMAR in writing, all payments to PALOMAR under this AGREEMENT shall be made by wire transfer to the following bank account:

**

Interest on Late Payments. P&G shall pay interest to PALOMAR on the aggregate amount of any payments that are not paid on or before the date such payments are due under this AGREEMENT at a rate per annum equal to **.

Withholding. P&G shall use all reasonable and legal efforts to reduce tax withholding on payments due PALOMAR hereunder. If P&G reasonably concludes that tax withholdings under the laws of any country are required with respect to payments to PALOMAR, P&G shall withhold the required amount and pay it to the appropriate governmental entity. P&G shall cooperate with PALOMAR in the event that PALOMAR claims exemption from such withholding or seeks deductions under any double taxation or other similar treaty or agreement from time to time in force, such cooperation to include, without limitation, P&G promptly providing PALOMAR with original receipts or other evidence reasonably desirable and sufficient to allow PALOMAR to document such withholdings.

Blocked Payments. In the event that, by reason of applicable law or regulation in any country, it becomes impossible or illegal for P&G to transfer payments to PALOMAR, such payments shall be deposited in local currency in the relevant country to the credit of PALOMAR in a recognized banking institution designated by PALOMAR or, if none is designated by PALOMAR within a period of thirty (30) days after its receipt of written notice from P&G, in a recognized banking institution selected by P&G and identified in a subsequent written notice given to PALOMAR.

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  Intellectual Property

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This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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**

Records. . Solely for the purpose of complying with Section 4.2.2, PALOMAR and P&G each shall maintain, or cause to be maintained, records of its respective activities performed pursuant to the ORIGINAL AGREEMENT in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall be complete and accurate and shall fully and properly reflect all work done and results achieved in connection with those activities**. Each PARTY shall have the right, during normal business hours and upon reasonable notice, to inspect and copy any such records.

**

No Further Disclosure. . The PARTIES acknowledge that each PARTY has performed its disclosure obligations with respect to PROJECT KNOW-HOW under this Agreement through the EXECUTION DATE. As of and after the EXECUTION DATE, neither PARTY shall be obligated to disclose to the other PARTY any PROJECT KNOW-HOW**.

Prosecution of PATENTS.

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Enforcement of PATENTS.

**

PATENT Marking . Each PARTY shall mark, and shall cause all their agents and (sub)licensees to mark, all products or systems made, used or sold under the terms of this AGREEMENT, or their containers, in accordance with all applicable United States patent-marking laws with respect to any PATENTS licensed to such PARTY by the other PARTY under this AGREEMENT.

  Confidentiality and Nondisclosure

Confidentiality Obligations.

General Obligations. Except as provided herein, during the TERM and for five (5) years after this AGREEMENT’s termination pursuant to Article 7, each PARTY shall hold in strict confidence and shall not publish or otherwise disclose, directly or indirectly, to any THIRD PARTY (other than such PARTY’s employees, legal counsel, consultants, auditors and advisors, collectively, “PERMITTED CONFIDANTS”) any CONFIDENTIAL INFORMATION of the other PARTY. During such period, a PARTY shall not use for any purpose, directly or indirectly, CONFIDENTIAL INFORMATION of the other PARTY or its sublicensees furnished or otherwise made known to it, except as licensed or otherwise permitted hereunder. Except as provided herein, access to the disclosing PARTY’s CONFIDENTIAL INFORMATION shall be restricted to PERMITTED CONFIDANTS of the receiving PARTY, who, in each case, need to have access to carry out a permitted use. Each PARTY shall cause its PERMITTED CONFIDANTS to abide by the applicable terms and conditions of this Article 5. The CONFIDENTIAL INFORMATION, and all copies of part or all thereof, shall be and remain the exclusive property of the disclosing PARTY, and the receiving PARTY shall acquire only such licenses and other rights as are expressly set forth in this AGREEMENT and only for as long as such licenses and rights are in effect. Each PARTY shall promptly report to the other any conduct relating to the other PARTY’s CONFIDENTIAL INFORMATION inconsistent with the provisions of this Article 5, and take such action as may be reasonably necessary and legally permissible to terminate such conduct. Each PARTY shall reproduce and include the other PARTY’s proprietary rights notices or reasonable equivalents when reproducing any item that contains the other PARTY’s CONFIDENTIAL INFORMATION if the item bears such notices or reasonable equivalents. Subject to Section 5.1.2, each PARTY shall be free to disclose its own CONFIDENTIAL INFORMATION in its sole discretion.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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Obligations With Respect to JOINT PROJECT TECHNOLOGY .1.1.1. Notwithstanding the foregoing, the following terms and conditions shall apply with respect to JOINT PROJECT TECHNOLOGY. JOINT PROJECT TECHNOLOGY shall not constitute the CONFIDENTIAL INFORMATION of either PARTY, except to the extent any such technology is expressly included in the definition of CONFIDENTIAL INFORMATION provided in Section 5.3.1. With respect to any JOINT PROJECT TECHNOLOGY that constitutes CONFIDENTIAL INFORMATION hereunder and does not fall entirely within PALOMAR EXCLUSIVE PATENT LICENSES or the P&G EXCLUSIVE PATENT LICENSE, for such period as such technology constitutes CONFIDENTIAL INFORMATION pursuant to Section 5.3.1, each PARTY shall have the right (a) to EXPLOIT such CONFIDENTIAL INFORMATION for any purpose, directly or indirectly (including the right to grant licenses with respect thereto as contemplated in Section 4.1.3.2, consistent with its rights as a joint owner thereof), and (b) to disclose such CONFIDENTIAL INFORMATION to one or more THIRD PARTIES as permitted pursuant to Section 5.2.

Permitted Disclosures . Each PARTY may disclose CONFIDENTIAL INFORMATION (including the terms of this AGREEMENT) to the extent that such disclosure is:

Made in response to a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial or local governmental or regulatory body of competent jurisdiction; provided, however, that, except where impracticable for certain disclosures (e.g., in the event of medical emergency), the receiving PARTY shall first have given notice to the disclosing PARTY and given the disclosing PARTY a reasonable opportunity to quash such order and to obtain a protective order requiring that the CONFIDENTIAL INFORMATION and documents that are the subject of such order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which the order was issued; and provided further that if a disclosure order is not quashed or a protective order is not obtained, the CONFIDENTIAL INFORMATION disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in response to such court or governmental order;

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Otherwise required by applicable law as reasonably determined by counsel to the receiving PARTY;

Made by the receiving PARTY as may be reasonably necessary or useful to prosecute or defend litigation, DISPUTES or other disputes between the PARTIES;

Made by the receiving PARTY to any REGULATORY AUTHORITY as required in connection with any filing, application or request for REGULATORY APPROVAL (in each case to the extent that using such CONFIDENTIAL INFORMATION of the other PARTY in connection with seeking such approval is consistent with the rights and licenses granted to the receiving PARTY hereunder); provided, however, that reasonable measures shall be taken to assure confidential treatment of such information to the extent practicable;

Made by the receiving PARTY or its sublicensees to THIRD PARTIES as may be necessary or useful in connection with, in the case of P&G the EXPLOITATION of LICENSED PRODUCTS in the FEMALE FIELD only or of NON-LIGHT-BASED PRODUCTS, or in the case of PALOMAR the EXPLOITATION of LIGHT-BASED DEVICES in the fields specified by the license grants by P&G to PALOMAR hereunder, as contemplated by this AGREEMENT, including actual or potential (sub)licenses, THIRD PARTY COLLABORATIONS and (sub)contracting transactions in connection therewith, provided that such THIRD PARTIES shall be subject to obligations of confidentiality and non-use with respect to such CONFIDENTIAL INFORMATION substantially similar to the obligations of confidentiality and non-use that apply to the PARTIES pursuant to this Article 5;

**

In the case of any JOINT PROJECT TECHNOLOGY that constitutes CONFIDENTIAL INFORMATION and does not fall entirely within PALOMAR EXCLUSIVE PATENT LICENSES or the P&G EXCLUSIVE PATENT LICENSE, made by a PARTY to a THIRD PARTY as may be reasonably necessary or useful in connection with (a) preparing, filing, prosecuting, maintaining, enforcing and defending JOINT PROJECT TECHNOLOGY; or (b) the EXPLOITATION of the JOINT PROJECT TECHNOLOGY, directly or indirectly, including by actual or potential (sub)licenses, THIRD PARTY COLLABORATIONS and (sub)contracting transactions, provided that in the case of disclosures to THIRD PARTIES pursuant to clause (b), such THIRD PARTIES shall be subject to obligations of confidentiality and non-use with respect to such CONFIDENTIAL INFORMATION substantially similar to the obligations of confidentiality and non-use that apply to the PARTIES pursuant to this Article 5.

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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CONFIDENTIAL INFORMATION

Defined. “CONFIDENTIAL INFORMATION” of a PARTY shall mean all information and KNOW-HOW provided by or on behalf of such PARTY to the other PARTY either in connection with the discussions and negotiations pertaining to the ORIGINAL AGREEMENT or this AGREEMENT or in the course of performing the ORIGINAL AGREEMENT or this AGREEMENT, including data; knowledge; practices; processes; ideas; research plans; engineering designs and drawings; research data; manufacturing processes and techniques; scientific, manufacturing, marketing and business plans; and financial and personnel matters relating to the disclosing PARTY or to its present or future products, sales, suppliers, customers, employees, investors or business. Without limiting the foregoing, subject to Section 5.3.2, (a) CONFIDENTIAL INFORMATION of each PARTY shall include any and all information provided by one PARTY to the other directly relating to LICENSED PRODUCTS or NON-LIGHT- BASED PRODUCTS or LIGHT-BASED DEVICES, (b) CONFIDENTIAL INFORMATION of both PARTIES shall include all JOINT PROJECT INVENTIONS until such time as the PARTIES decline to pursue PATENT protection on them or until the time for seeking PATENT protection has expired (and each PARTY shall be regarded as the receiving PARTY for purposes of this Article 5 with respect to any such CONFIDENTIAL INFORMATION, regardless of which PARTY discloses such CONFIDENTIAL INFORMATION to the other), (c) CONFIDENTIAL INFORMATION of both PARTIES shall include the terms of this AGREEMENT to the extent not publicly disclosed as part of PALOMAR’s filing of this AGREEMENT with the SEC pursuant to Section 5.6.2 (but, for clarity, not the terms of the ORIGINAL AGREEMENT to the extent publicly disclosed prior to the EXECUTION DATE), (d) P&G CONFIDENTIAL INFORMATION shall include all P&G REGULATORY DOCUMENTATION, P&G PROJECT TECHNOLOGY and the subject matter of all other P&G LICENSED PATENTS (other than JOINT PROJECT PATENTS) **, and (e) PALOMAR CONFIDENTIAL INFORMATION shall include all PALOMAR REGULATORY DOCUMENTATION, PALOMAR TECHNOLOGY and the subject 1.1.1. matter of all LICENSED PATENTS (other than JOINT PROJECT PATENTS) **; provided that notwithstanding the other terms of this definition, all inventions, KNOW-HOW and PATENTS falling entirely within (i) the PALOMAR EXCLUSIVE PATENT LICENSES shall be treated in all events as “PALOMAR CONFIDENTIAL INFORMATION” hereunder (notwithstanding the ownership thereof) and (ii) the P&G EXCLUSIVE PATENT LICENSE shall be treated in all events as “P&G CONFIDENTIAL INFORMATION” hereunder (notwithstanding the ownership thereof).

This material was omitted pursuant to a request for confidential treatment and was separately filed with the SEC on March 3, 2008.

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Exclusions. Notwithstanding the foregoing, information or KNOW-HOW of a PARTY shall not be deemed CONFIDENTIAL INFORMATION with respect to a receiving PARTY for purposes of this AGREEMENT if such information or KNOW-HOW:

was already known to the receiving PARTY, other than under an obligation of confidentiality or non-use, at the time of disclosure to, or, with respect to KNOW-HOW, discovery or development by, such receiving PARTY;

was generally available or known, or was otherwise part of the public domain, at the time of its disclosure to, or, with respect to KNOW-HOW, discovery or development by, such receiving PARTY;

became generally available or known, or otherwise became part of the public domain, after its disclosure to, or, with respect to KNOW-HOW, discovery or development by, such receiving PARTY through no fault of a PARTY other than the PARTY that CONTROLS such information and KNOW-HOW;

was disclosed to such receiving PARTY, other than under an obligation of confidentiality or non-use, by a THIRD PARTY who had no obligation to the PARTY that CONTROLS such information and KNOW-HOW not to disclose such information or KNOW-HOW to others; or

was independently discovered or developed by such receiving PARTY, as evidenced by its written records, without the use of CONFIDENTIAL INFORMATION belonging to the PARTY that CONTROLS such information and KNOW-HOW.

Public Domain. Specific aspects or details of CONFIDENTIAL INFORMATION shall not be deemed to be within the public domain or in the possession of a PARTY merely because the CONFIDENTIAL INFORMATION is embraced by more general information in the public domain or in the possession of such PARTY. Further, any combination of CONFIDENTIAL INFORMATION shall not be considered in the public domain or in the possession of a PARTY merely because individual elements of such CONFIDENTIAL INFORMATION are in the public domain or in the possession of such PARTY unless the combination and its principles are in the public domain or in the possession of such PARTY.

Use of Name. Except as expressly permitted by Section 5.6, neither PARTY shall use the name or any other insignia or TRADEMARK of the other PARTY (or any abbreviation or adaptation thereof) in any publication, press release, promotional material or other form of publicity without the prior written approval of such other PARTY in each instance. Subject to Section 5.6, the restrictions imposed by this Section shall not prohibit either PARTY from making any disclosure identifying the other PARTY that is required by applicable law.

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Press Releases and SEC Filings.

FIRST PRESS RELEASE. On or after the EXECUTION DATE, each PARTY shall have the right to issue a press release announcing this AGREEMENT in the form of Exhibit C (the “FIRST PRESS RELEASE”).

  **

Other Public Disclosure Concerning Terms of AGREEMENT. 1.1.1. Except as provided in Sections 5.6.1 and 5.6.2, or as otherwise mutually agreed in advance in writing by the PARTIES, neither PARTY shall issue a press release nor make any other public disclosure concerning the terms of this AGREEMENT (to the extent not publicly disclosed pursuant to Section 5.6.2), without the prior approval of such press release or public disclosure by the other PARTY hereto. Each PARTY shall submit any such press release or public disclosure to the other PARTY, and such other PA