NON-EXCLUSIVE PATENT LICENSE

        THIS NON-EXCLUSIVE PATENT LICENSE (this “ Agreement ”) is entered into this 6th day of November, 2006 (the “ Effective Date ”), and shall be treated as in full force and effect as of October 1, 2006, by and between Palomar Medical Technologies, Inc., a Delaware corporation, with offices at 82 Cambridge Street, Burlington, MA 01803 (“ Palomar ”), and Cynosure, Inc., a Delaware corporation with offices at 5 Carlisle Road, Westford, MA 01886 (“ Cynosure ”) (Palomar together with all Palomar Affiliates (as defined below) on the one hand, and Cynosure together with all Cynosure Affiliates (as defined below) on the other hand, each a “ Party ”, and together, the “Parties ”).

WITNESSETH:

        WHEREAS, Palomar has a license from MGH under the Anderson Patents (both as defined below) relating to the use of light to remove hair;

        WHEREAS, Cynosure and Cynosure Affiliates desire to obtain, and Palomar is willing to grant, a non-exclusive, royalty-bearing sublicense under the Anderson Patents to develop and commercialize products developed by Cynosure and Cynosure Affiliates under the following terms and conditions; and

        WHEREAS, Palomar and Palomar Affiliates desire to obtain, and Cynosure and Cynosure Affiliates are willing to grant, a fully paid up non-exclusive (sub)license under the Cynosure Patents (as defined below) under the following terms and conditions.

        NOW THEREFORE, the Parties hereby agree as follows:

1.

Definitions . The following terms (and their correlatives), in addition to terms defined on first use herein, shall have the meanings set forth below:

1.1.

Affiliates.

(a)

“ Palomar Affiliate ”shall mean any person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Palomar (i) as of the Effective Date or (ii) after the Effective Date, in each case of clauses (i) and (ii), only for so long as such person or entity satisfies the foregoing requirements.

(b)

“ Cynosure Affiliate ”shall mean any person or entity that, directly or indirectly, through one or more intermediaries (i) is controlled by Cynosure as of the Effective Date or thereafter or (ii) controls or is under common control with Cynosure (in each case provided such control arises after the Effective Date); provided, in each case of clause (i) or (ii), such person or entity is not an Excluded Third Party at the time such person or entity first meets the foregoing control requirements (unless Palomar provides its written consent in its sole discretion), and further only for so long as such person or entity satisfies the foregoing control requirements; provided, further, that El. En. S.p.A. shall not be treated as a “Cynosure Affiliate” for any purpose hereunder and thus shall be treated as a “Third Party” for all purposes hereunder. For clarity, (1)  Exhibit A lists Cynosure Affiliates as of the Effective Date, and (2) any Third Party that does not become a “Cynosure Affiliate” hereunder because of the reference to “Excluded Third Party” in clause (ii) above shall continue to be treated as a “Third Party” for all purposes hereunder.

(c)

“ Affiliates ” shall mean, with respect to any Third Party, any person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such Third Party, in each case only for so long as such person or entity satisfies the foregoing requirement.

        For purposes of this Section 1.1, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” shall mean (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance, or otherwise, or (ii) the ownership, directly or indirectly, of at least fifty percent (50%) of the voting securities or other ownership interest of an entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity); provided, that if local law restricts foreign ownership, “control” shall be deemed established by direct or indirect ownership of the maximum ownership percentage that may, under such local law, be owned by foreign interests.

1.2.

“ Anderson Patents ” shall mean (i) the Patents set forth on Exhibit B , and (ii) all other Patents that claim the right of priority to, or enjoy the benefit of an earlier filing date of, in whole or in part, directly or indirectly, one or more of the Patents identified in the immediately preceding clause (i). “ Other Anderson Patents ” shall mean the following subset of Anderson Patents: U.S. Patent No. 5,824,023 and all other Patents that claim the right of priority to, or enjoy the benefit of an earlier filing date of, in whole or in part, directly or indirectly, U.S. Patent No. 5,824,023 or the application that issued as such U.S. Patent.

1.3.

“ Consumer Field ” shall mean the field in which products or systems are intended for or marketed to consumers for personal use. For the avoidance of doubt, the “Consumer Field” shall exclude products or systems in the Professional Field.

1.4.

“ Excluded Third Party ” shall mean any Third Party and its Affiliates against which:

(a)

any suit or action involving any Anderson Patent has been instituted between Palomar or any Palomar Affiliates and such Third Party or any of its Affiliates; or

(b)

Palomar or any of Palomar Affiliates has an outstanding injunction pertaining to infringement of the Anderson Patents.

1.5.

“ Gillette ” shall mean The Gillette Company, and its successors and permitted assigns of the Gillette Agreement.

1.6.

“ Gillette Agreement ” shall mean that certain “Development and License Agreement” between Palomar and The Gillette Company dated as of February 14, 2003, as such agreement is amended as of the Effective Date and as such agreement may be amended or restated thereafter, provided that any terms of the Gillette Agreement that by operation of such amendment or restatement limit or restrict Cynosure’s or Cynosure Affiliates’ rights under this Agreement, or impose any additional obligations on Cynosure or Cynosure Affiliates, in each case other than as specified hereunder (each a “ Restrictive Gillette Term ”), shall not be binding on Cynosure or Cynosure Affiliates. In the event that any term of the Gillette Agreement is amended so that it is a Restrictive Gillette Term, only (i) the unamended terms of the Gillette Agreement as they existed immediately prior to becoming Restrictive Gillette Terms pursuant to such amendment or restatement, (ii) the amended terms of the Gillette Agreement that are not Restrictive Gillette Terms and (iii) all other terms of the Gillette Agreement that are not amended by such amendment or restatement, in each case shall apply to Cynosure and Cynosure Affiliates, and Palomar (and not Cynosure or any Cynosure Affiliates) shall be responsible to Gillette for any liability arising out of any Restrictive Gillette Term. A copy of the Gillette Agreement, excluding exhibits thereto and redactions of other commercially sensitive information, as amended as of the Effective Date is attached hereto at Appendix A .

1.7.

“ Licensed Products ” shall mean Cynosure Products (including those Cynosure Hair Modules that alone amount to a “Cynosure Product” hereunder). For clarity, Licensed Products may include future energy source modules, products, systems, components or accessories Sold by Cynosure or Cynosure Affiliates after the Effective Date, as long as such energy source module, product, system, component and accessory satisfies in full the definitional requirements for a “Licensed Product” (and its subsidiary definitions) hereunder.

1.8.

“ MGH ” shall mean The General Hospital Corporation in Boston, Massachusetts.

1.9.

“ MGH Agreement ” shall mean that certain “License Agreement” between Palomar and MGH dated as of August 18, 1995, as such agreement is amended as of the Effective Date and as such agreement may be amended or restated thereafter in a manner that is not materially inconsistent with the terms of this Agreement, provided that any terms of the MGH Agreement that by operation of such amendment or restatement limit or restrict Cynosure’s or Cynosure Affiliates’ rights under this Agreement, or impose any additional obligations on Cynosure or Cynosure Affiliates, in each case other than as specified hereunder (each a “ Restrictive MGH Term ”), shall not be binding on Cynosure or Cynosure Affiliates. In the event that any term of the MGH Agreement is amended so that it is a Restrictive MGH Term, only (i) the unamended terms of the MGH Agreement as they existed immediately prior to becoming Restrictive Gillette Terms pursuant to such amendment or restatement, (ii) the amended terms of the MGH Agreement that are not Restrictive MGH Terms and (iii) all other terms of the MGH Agreement that are not amended by such amendment or restatement, in each case shall apply to Cynosure and Cynosure Affiliates, and Palomar (and not Cynosure or any Cynosure Affiliates) shall be responsible to MGH for any liability arising out of any Restrictive MGH Term. A copy of the MGH Agreement, as redacted, as amended as of the Effective Date is attached hereto at Appendix B .

1.10.

“ Net Sales ” shall mean all amounts invoiced by Cynosure and Cynosure Affiliates, for the Sale to Third Parties of Licensed Products (collectively, the “ Actual Amounts ”), less: (i) allowances and adjustments actually credited to customers for damaged and returned product (which allowances and adjustments may be taken only on a product-by-product basis, that is an allowance or adjustment on one product, for example, a Cynergy System, shall not be taken against Sales of another type of product, for example, an Apogee 5500 System); (ii) promotional, trade, quantity, cash and prompt payment discounts separately identified on the invoice and actually allowed and taken; and (iii) Third Party charges of the following kinds collected by the seller from the buyer and separately identified on the invoice: transportation charges, insurance charges for transportation, sales taxes, excise taxes and customs duties, and governmental charges levied on or measured by the sale; provided that: (1) no deductions shall be made from Actual Amounts for any royalties owed or paid to any person or entity; and (2) Net Sales shall include upgrades or additions to, or partial replacements for, Licensed Products, where upgrades include but are not limited to swapping a new Licensed Product for a buyer’s existing product.

        For clarity and without limitation, this definition of Net Sales includes Cynosure Combination Products which do not include a Cynosure Hair Module for which no royalties are due Palomar hereunder for their Sale. However, as provided in Section 4.4, subsequent Sales of Cynosure Hair Modules for use with such Cynosure Combination Products shall affect royalties owed to Palomar. Thus, it shall be necessary to determine and keep records of the Net Sales attributable to all such Licensed Products. As a consequence, inclusion of a Licensed Product in this definition of Net Sales, by itself, shall not indicate that royalties are necessarily due Palomar hereunder on the Sale of such Licensed Product.

        The following paragraphs provide additional non-limiting examples for calculating Net Sales hereunder:

o

Trade-in of a first Cynosure Product in connection with the Sale of a second Cynosure Product shall be treated as follows: (i) the Net Sales attributed to the Sale of such second Cynosure Product (a) shall not include any deduction or other reduction for the trade-in given by Cynosure for such first Cynosure Product, unless Cynosure paid royalties to Palomar hereunder upon the Sale of such first Cynosure Product ( e.g. , there shall be no such deduction or other reduction when such first Cynosure Product is a Cynosure Other Product), and (b) shall be calculated as set forth in this definition, and such Sale of such second Cynosure Product shall be subject to the royalty obligations set forth in Section 4.4, and (ii) the Net Sales attributable to any re-Sale of such first Cynosure Product shall be calculated as set forth in this definition, and such re-Sale of such first Cynosure Product shall be subject to the royalty obligations set forth in Section 4.4. For example, without limiting the generality of the foregoing, if a customer purchases from Cynosure an Apogee 5500 System for $60,000, then under Section 4.4, Cynosure is obligated to pay Palomar a royalty of $4,500 on such Sale of the Apogee 5500 System (7.5% of $60,000). If that customer then purchases from Cynosure an Acclaim 7000 Laser System for $120,000 and is provided a credit of $20,000 in connection with a trade-in of such Apogee 5500 System that such customer previously purchased (thus paying Cynosure $100,000), then under Section 4.4, Cynosure is obligated to pay Palomar a royalty of $7,500 on such Sale of the Acclaim 7000 Laser System (7.5% of $100,000) and no amount shall be due hereunder for the $20,000 credit provided for the Apogee 5500 System. If Cynosure then re-Sells the traded-in Apogee 5500 System for $40,000, then under Section 4.4, Cynosure is obligated to pay Palomar a royalty of $3,000 on such re-Sale of the traded-in Apogee 5500 System (7.5% of $40,000).

o

Installation charges, whether or not separately invoiced or identified on an invoice, shall not be deducted from the Actual Amounts.

o

Charges for the standard warranty for a Licensed Product, whether or not separately invoiced or identified on an invoice, shall not be deducted from the Actual Amounts. However, charges separately identified on an invoice for an extended warranty (after deducting appropriate charges for the standard warranty) may be deducted from Actual Amounts.

o

Charges for standard or basic training (often referred to as inservice training or initial training) or any training by Cynosure or Cynosure Affiliates (collectively referred to as “ Standard Training”) for a Licensed Product, whether or not separately invoiced or identified on an invoice, shall not be deducted from the Actual Amounts. However, charges separately identified on an invoice for additional training by a Third Party (after deducting appropriate charges for the Standard Training, if such Third Party is to provide the Standard Training) may be deducted from Actual Amounts.

o

Excluding physically separate light-based systems which are covered in the following paragraph on Bundled Packages, charges for other products, accessories, parts or items listed on an invoice along with a Licensed Product, with no separate and distinct price set forth for those other products, accessories, parts or items on the invoice in question, shall not be deducted from Actual Amounts.

        If Cynosure or any Cynosure Affiliate Sells one or more Licensed Product(s), in combination with other, physically separate light-based systems that are not Licensed Products at a single price (a “ Bundled Package ”), then the Net Sales attributable to such Licensed Product(s), for the purpose of determining Net Sales attributable hereunder, shall be calculated by multiplying the Net Sales of such Bundled Package by the fraction A/(A+B), where A is the is the selling party’s ( i.e. , Cynosure or a Cynosure Affiliate, who shall be deemed to be a “ Selling Party ”) then current published list price(s) for the Licensed Product(s) in the relevant country during the applicable calendar quarter, and B is the then current published list prices for all other components in the Bundled Package that are not Licensed Product(s) in the relevant country during the applicable calendar quarter. For purposes of this paragraph, if there is no current published list price(s) for the Licensed Product(s) or other light-based system(s) included in a Bundled Package, then (i) the applicable values shall be determined by reference to the average Net Sales price of such Licensed Product(s) or light-based system(s) in the relevant country during the applicable calendar quarter as Sold separately in bona fide arms-length transactions by the Selling Party, or (ii) if, in any given country and applicable calendar quarter, the Licensed Product(s) and other light-based system(s) included in a Bundled Package are not all Sold separately in bona fide arms-length transactions in such country by the same Selling Party, then Net Sales of a Licensed Product(s) included within the Bundled Package shall be calculated using the formula above, using the average Net Sales price in the United States for the applicable calendar quarter of the Licensed Product(s) and the other light-based system(s), again in bona fide arms-length transactions by a single Selling Party, or (iii) if no average Net Sales prices of the Licensed Product(s) and the other such light-based system(s) is available for the United States for the applicable calendar quarter from bona fide arms-length transactions by a single Selling Party, the Net Sales of the Licensed Product(s) shall be the aggregate Net Sales of such assemblage of Products without deduction of any kind.

        For clarity, (i) transfer of a Licensed Product within Cynosure or between Cynosure and Cynosure Affiliates for subsequent Sale to a Third Party shall not be considered a Sale until a Sale is made to a Third Party and the Net Sales shall be based on the Sale to the Third Party of such Licensed Product by Cynosure or Cynosure Affiliates, (ii) a Licensed Product shall be considered “Sold” upon the earlier of shipment of or receipt of payment for such Licensed Product or Cynosure or any Cynosure Affiliate recognizing revenue with respect to such sale of Licensed Product in accordance with U.S. generally accepted accounting principles, consistently applied, and all royalty obligations on Net Sales of such Licensed Product shall accrue upon the time of Sale regardless of the time of collection by the selling entity, (iii) sales of Licensed Products by Cynosure Sublicensees (including sales by distributors and subdistributors) shall not give rise to Net Sales hereunder because those products shall have already been Sold by Cynosure or Cynosure Affiliates to such Cynosure Sublicensees, with the Net Sales arising from such Sale already accounted for under this definition, (iv) “amounts invoiced” as used above shall include the value of any monetary or other consideration to be received by Cynosure or any Cynosure Affiliates from a Sale of any Licensed Product, (v) Net Sales shall be deemed to be equal to, for any Licensed Product Sold to any Third Party for less than the seller is then charging or will immediately thereafter begin charging in bona fide arms-length transactions for comparable products, the average Net Sales price of such Licensed Product in bona fide arms-length transactions by such seller, (vi) all Sales to any distributors shall include the fair market value of all cash and other consideration received from such distributor, and (vii) all of the amounts specified in this definition shall be determined from the books and records of Cynosure and Cynosure Affiliates maintained in accordance with U.S. generally accepted accounting principles, consistently applied.

1.11.

“ Palomar Product ” shall mean any product, system, component, method, process or accessory, Sold by Palomar or Palomar Affiliates, (i) that as of the date of its Sale, is marketed as being capable of using or uses or is incorporated into a product or system that uses light to treat skin, including hair removal, treatment of vascular and pigmented lesions, acne, wrinkles, scars and tattoos, for other dermatological applications, and other treatment or cosmetic purpose(s), and (ii) the manufacture, use, sale, offering for sale or importation of which, absent the (sub)licenses granted by Cynosure and Cynosure Affiliates herein, would infringe a Valid Claim of the Cynosure Patents. For clarity and without limitation, the products and systems listed on Exhibit C are products Sold by Palomar and Palomar Affiliates up to the Effective Date.

1.12.

“ Palomar Sublicensee ” shall mean any Third Party to which Palomar or a Palomar Affiliate grants a permitted sublicense pursuant to Section 2.2(b) under the (sub)license grant from Cynosure and Cynosure Affiliates in Section 2.2(a).

1.13.

“ Patents ” shall mean (i) any patents and patent applications and any patents issuing therefrom worldwide, (ii) any substitutions, divisions, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates, term extensions (under patent or other law), certificates of invention and the like, of any such patents or patent applications, and (iii) any foreign or international equivalents of any of the foregoing.

1.14.

“ Professional Field ” shall mean the field in which products or systems are intended or marketed for sale to doctors, health care providers, beauty care professionals or other commercial service providers for use on or with patients or customers (and not for resale to any person or entity for personal use).

1.15.

“ Sale ” shall mean, with respect to a Licensed Product, the sale, distribution, lease, use (including training, preceptorships, marketing and promotional uses for which Cynosure or one or more Cynosure Affiliates is to receive monetary or other consideration), cost-per-shot arrangements and any other arrangement in which monetary or other consideration is to be received by Cynosure or one or more Cynosure Affiliates for the use of such Licensed Product.

1.16.

“ Third Party ” shall mean any person or entity, other than Palomar, Cynosure or any Palomar Affiliates or Cynosure Affiliates.

1.17.

“ Valid Claim ” shall mean either (i) a claim of an issued and unexpired Patent which has not been revoked or held permanently unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through opposition, reissue, re-examination or disclaimer or otherwise, or (ii) a claim of a pending application for a Patent which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of said application.

1.18.

“ Cynosure Modules ” shall mean Cynosure Hair Modules and Cynosure Other Modules, each as defined below:

(a)

 “ Cynosure Hair Module ” shall mean any energy source module, Sold by Cynosure or Cynosure Affiliates, that is marketed as being capable of using or uses or is incorporated into a product or system that uses optical radiation to remove hair. For clarity and without limitation, if in addition to using optical radiation to remove hair, a Cynosure Hair Module may be used for the treatment of skin (including treatment of vascular and pigmented lesions, acne, fat, cellulite, wrinkles, scars and tattoos, skin tightening, and for other dermatological applications), or other treatment or cosmetic purpose(s), it shall in all events remain a “Cynosure Hair Module” hereunder. By way of example and without limitation, the energy source modules in the products listed in Exhibit E and Exhibit F in the form they are Sold by Cynosure as of the Effective Date for hair removal are “Cynosure Hair Modules” for purposes of this Agreement.

(b)

“ Cynosure Other Module ” shall mean any energy source module, Sold by Cynosure or Cynosure Affiliates, that is marketed as being capable of using or uses or is incorporated into a product or system that uses optical radiation for the treatment of skin (including treatment of vascular and pigmented lesions, acne, fat, cellulite, wrinkles, scars and tattoos, skin tightening, and for other dermatological applications) or other treatment or cosmetic purposes, other than hair removal; in all events, other than a Cynosure Hair Module. By way of example and without limitation, the energy source modules in the products listed in Exhibit E under the heading “List of Cynosure Combination Products” in the form they are Sold by Cynosure as of the Effective Date for purposes other than for hair removal are “Cynosure Other Modules” for purposes of this Agreement.

1.19.

“ Cynosure Patents ” shall mean: (i) the Patents listed on Exhibit D ; (ii) all Patents either owned or controlled with the right to sublicense (in each case in whole or in part) by Cynosure or any Cynosure Affiliates as of the Effective Date, the practice of which would infringe any claims of the Patents identified in the immediately preceding clause (i); and (iii) all Patents claiming the right of priority to, or enjoying the benefit of an earlier filing date of, in whole or in part, directly or indirectly, to one or more of the Patents identified in the immediately preceding clause (i) or (ii), but not including claims in such Patents that do not have a priority date before the Effective Date.

1.20.

“ Cynosure Products ” shall mean Cynosure Hair Products and Cynosure Combination Products, each as defined below. “ Cynosure Other Product ” shall mean any product, system, component or accessory, Sold by Cynosure or Cynosure Affiliates, that (i) is not a Cynosure Product, and (ii) that is marketed as being capable of using or uses or is incorporated into a product or system that uses one or more Cynosure Other Modules. As of the Effective Date, the following products in the form they are Sold by Cynosure as of the Effective Date are “Cynosure Other Products” for purposes of this Agreement: Affirm System, Cynergy PL System, Photogenica SV System, TriActive System and VStar System.

(a)

 “ Cynosure Combination Product ” shall mean any product, system, component or accessory, Sold by Cynosure or Cynosure Affiliates, (i) that as of the date of its Sale, is marketed as being capable of using both at least one Cynosure Other Module and at least one Cynosure Hair Module, and (ii) the manufacture, use, sale, offering for sale, or importation of which when sold with a Cynosure Hair Module, absent the sublicense granted by Palomar herein, would infringe a Valid Claim of the Anderson Patents. For clarity and without limitation, Exhibit E lists Cynosure Combination Products in existence up to the Effective Date, examples of when a Cynosure Other Product or a Cynosure Hair Product shall become a “Cynosure Combination Product” hereunder, and an example of a marketing technique which does not change a Cynosure Hair Product into a “Cynosure Combination Product” hereunder. Further, the Parties acknowledge that (A) as of the Effective Date, the Cynosure Combination Products listed on Exhibit E (the Cynergy and Cynergy III Systems) each include an Nd:YAG laser, which is a Cynosure Hair Module hereunder, (B) the Nd:YAG laser is used for hair removal through handpieces providing spot sizes of ten (10), twelve (12) and fifteen (15) millimeters and (C) the Nd:YAG laser is also used for non-hair removal treatments ( e.g. , vascular treatments) through handpieces providing spot sizes of seven (7), five (5) and three (3) millimeters. After the Effective Date, Cynosure and Cynosure Affiliates may cease to market and sell the Cynergy and Cynergy III Systems for hair removal and modify such Cynergy and Cynergy III Systems so that the Nd:YAG laser module included therein only functions when connected to handpieces providing spot sizes of seven (7) millimeters and less ( i.e. , so that the Nd:YAG laser will not emit light through spot sizes of greater than seven (7) millimeters and, thus, will not be practical for hair removal). After the Effective Date, effective as of the date and solely to the extent that Cynosure and Cynosure Affiliates cease marketing or selling Cynergy and Cynergy III Systems for hair removal, such modified Cynergy and Cynergy III Systems shall be deemed Cynosure Other Products hereunder.

(b)

“ Cynosure Hair Product ” shall mean any product, system, component or accessory, Sold by Cynosure or Cynosure Affiliates, (i) that contains a Cynosure Hair Module, (ii) the manufacture, use, sale, offering for sale, or importation of which, absent the sublicense granted by Palomar herein, would infringe a Valid Claim of the Anderson Patents, and (iii) that as of its date of Sale, is not marketed for use in combination with a Cynosure Other Module. For clarity and without limitation, Exhibit F provides additional clarifications and lists items that are Cynosure Hair Products in existence up to the Effective Date.

1.21.

“ Cynosure Sublicensee ” shall mean any Third Party to which Cynosure or a Cynosure Affiliate grants a permitted sublicense pursuant to Section 2.1(b) under the sublicense grant from Palomar in Section 2.1(a).

2.

License Grants .

2.1.

By Palomar .

(a)

Licensed Products . Subject to the terms and conditions of this Agreement, Palomar hereby grants to Cynosure and Cynosure Affiliates a worldwide, royalty-bearing, non-exclusive sublicense, under the Anderson Patents, to make, use, sell, offer for sale and import Licensed Products (provided that those Cynosure Hair Modules that alone amount to a “Cynosure Product” hereunder are used exclusively with other Cynosure Products or Cynosure Other Products and no other products or systems of Cynosure, Cynosure Affiliates or any Third Parties), in each case only for hair removal and only outside of the Consumer Field. It is understood and agreed that (i) the foregoing sublicense grant shall cover only those Licensed Products Sold for which royalties are paid when required by this Agreement (including the cure period set forth in Section 8.3(b)) to Palomar hereunder as provided in Section 4 (including with respect to Sales of Licensed Products occurring before October 1, 2006, for which Cynosure pays royalties hereunder as specified in Section 4.2), (ii) the foregoing sublicense grant automatically extends, without any further action by Cynosure or any Cynosure Affiliates, to each person and entity that is a “Cynosure Affiliate” as of the Effective Date or becomes a “Cynosure Affiliate” thereafter, but only for so long as such person or entity remains a “Cynosure Affiliate” hereunder, and (iii) Palomar shall be in direct privity under this Agreement with any Cynosure Affiliate as a result of such sublicense grant.

(b)

Limited Sublicensing Rights . Cynosure and Cynosure Affiliates shall not have any right to grant to any Third Parties any further sublicenses under the sublicense grant set forth in Section 2.1(a), nor shall any purported sublicenses under such sublicense grants made by Cynosure or any Cynosure Affiliates or any of their sublicensees prior to October 1, 2006 be valid or enforceable, except Cynosure, and only those Cynosure Affiliates that are wholly-owned or majority-owned by Cynosure (directly or indirectly, and taking into account any local law restrictions as noted in Section 1.1), and no other Cynosure Affiliates, may grant sublicenses only as may be necessary for (i) Third Parties to distribute Licensed Products Sold by Cynosure or Cynosure Affiliates and for which royalties are payable to Palomar on Net Sales hereunder, or (ii) the manufacture of Licensed Products by Third Parties for sale only to Cynosure or Cynosure Affiliates, provided that, for each of clauses (i) and (ii), any such Third Parties are not Excluded Third Parties, and further provided that any such sublicense grants shall apply only to activities occurring on or after the actual date such sublicense grant is first memorialized in writing (and not before). Cynosure Sublicensees shall not have the right to grant any sublicenses under any such sublicense grant by Cynosure or Cynosure Affiliates. Cynosure shall be responsible to Palomar for the performance of any Cynosure Affiliates and Cynosure Sublicensees under any provisions of this Agreement for which Cynosure or any Cynosure Affiliate is responsible, even if such person or entity is also responsible to Palomar. No purchaser of any Licensed Product shall, by operation of this Agreement, receive any license, sublicense or other rights in, to or under the Anderson Patents that exceeds the scope and terms of the sublicense grant set forth in Section 2.1(a), notwithstanding the patent exhaustion/first sale doctrine. Apart from the foregoing limited right to grant further sublicenses, Cynosure and Cynosure Affiliates shall not have any right to make an Assignment or otherwise Transfer such sublicense grant except pursuant to Section 9.3(a).

(c)

License Field Limitation . Notwithstanding anything contained herein to the contrary, (i) Cynosure and Cynosure Affiliates shall not exercise, (ii) Cynosure shall not allow any Cynosure Affiliates or Cynosure Sublicensees to exercise, and (iii) with respect to any distributor, sublicense or other agreements entered into by Cynosure or any Cynosure Affiliates, or purchase orders issued or accepted by Cynosure or any Cynosure Affiliates, in each case after the Effective Date, Cynosure shall expressly prohibit in writing all Cynosure Affiliates and Cynosure Sublicensees from exercising, the sublicense grant provided for in Section 2.1(a) within the Consumer Field. With respect to not allowing certain activities by Cynosure Sublicensees as set forth in clause (ii) of the 1 ^st sentence of this Section 2.1(c), the Parties understand and agree that, without limiting Cynosure and an Cynosure Affiliate’s obligations under such clause, once Cynosure or any Cynosure Affiliate learns of any violation of their obligations not to allow any Cynosure Sublicensee to conduct those prohibited activities, Cynosure and Cynosure Affiliates shall promptly use commercially reasonable efforts to end all such prohibited activities by such Cynosure Sublicensee within a commercially reasonable time period, and if unable to end all such prohibited activities by such efforts, shall in all events within six (6) months of first learning of any such prohibited activities by such Cynosure Sublicensee: (x) terminate the sublicense to such Cynosure Sublicensee; and (y) stop Selling (directly or indirectly through other Cynosure Sublicensees or otherwise) Licensed Products to such Cynosure Sublicensee. If Palomar notifies Cynosure in writing of any Cynosure Sublicensee conducting any such prohibited activities, Cynosure shall thereafter confirm in writing to Palomar that Cynosure has complied with the immediately preceding sentence for such Cynosure Sublicensee.

(d)

Patent Marking . Cynosure and Cynosure Affiliates shall mark all Licensed Products Sold after the Effective Date in accordance with the patent laws, if any, of the jurisdictions in which such Licensed Products are manufactured, used or Sold. Without limitation, Cynosure and Cynosure Affiliates shall mark all Licensed Products Sold in the United States after the Effective Date with the applicable U.S. patent numbers of the applicable Anderson Patents.

(e)

Palomar’s Right to Grant Other Sublicenses . Subject to the terms of this Agreement, Palomar retains the right to grant sublicenses and other rights in and to the Anderson Patents as Palomar may deem appropriate in its sole discretion, provided that no such grant may limit or restrict Cynosure’s or Cynosure Affiliates’ rights under this Agreement or impose any obligation on Cynosure or Cynosure Affiliates, other than as specified hereunder.

(f)

Excluded Third Parties . The Parties intend that no Excluded Third Party, or any of their products or other technology, is to be granted any rights under the Anderson Patents sublicensed by Palomar under Section 2.1(a), either through the direct sublicense from Palomar to Cynosure and Cynosure Affiliates under Section 2.1(a) or as a Cynosure Sublicensee. Thus, the Parties have agreed to preclude any Excluded Third Party from becoming a “Cynosure Affiliate” hereunder as provided in Section 1.1(b), and further have agreed to preclude any Assignment of this Agreement by Cynosure or any Cynosure Affiliate to or otherwise involving any Excluded Third Party under Section 9.3(a). Further, Cynosure and Cynosure Affiliates hereby agree that to the extent that any of them acquires any rights or interest in or to any product(s) or other technology from any person or entity while such person or entity is an “Excluded Third Party” hereunder, whether by Assignment under Section 9.3(a), asset purchase or sale, bankruptcy, conveyance, lease, distribution arrangement, manufacturing arrangement (including any foundry arrangement), license, sublicense, option, other transfer or any other transaction of any type (any such transaction, an “ Acquisition ”), the sublicense grant set forth in Section 2.1(a) (or any sublicense thereunder granted pursuant to Section 2.1(b)) shall not apply to such product(s) or technology or any improvements or derivatives thereto (even if such person or entity at some time after the applicable Acquisition is no longer an “Excluded Third Party” hereunder), and Palomar and its sublicensees shall retain any and all rights to enforce the Anderson Patents against Cynosure, Cynosure Affiliates, such Excluded Third Party or any other Third Party with respect to the same.

2.2.

  By Cynosure .

(a)

Palomar Products . Cynosure and Cynosure Affiliates hereby grant to Palomar and Palomar Affiliates a worldwide, perpetual, irrevocable, fully paid up, royalty-free, non-exclusive license or sublicense, as the case may be, under the Cynosure Patents, to make, have made, use, sell, offer for sale and import Palomar Products. It is understood and agreed that (i) the foregoing sublicense grant automatically extends, without any further action by Palomar or any Palomar Affiliates, to each person and entity that is a “Palomar Affiliate” as of the Effective Date or becomes a “Palomar Affiliate” thereafter, but only for so long as such person or entity remains a “Palomar Affiliate” hereunder, and (ii) Cynosure shall be in direct privity under this Agreement with any Palomar Affiliate as a result of such sublicense grant.

(b)

Limited Sublicensing Rights . Palomar and Palomar Affiliates shall not have any right to grant to any Third Parties any sublicense under the license and sublicense grants set forth in Section 2.2(a), nor shall any purported sublicenses under such sublicense grants made by Palomar or any Palomar Affiliates or any of their sublicensees prior to the Effective Date be valid or enforceable, except Palomar, and only those Palomar Affiliates that are wholly-owned by Palomar (directly or indirectly, and taking into account any local law restrictions as noted in Section 1.1) and no other Palomar Affiliates, may grant sublicenses only as may be necessary for (i) the sale or distribution of Palomar Products by Third Parties acting as distributors, (ii) the manufacture of Palomar Products for resale only to Palomar, Palomar Affiliates or such Third Party distributors, or (iii) the development and commercialization of consumer products in a collaboration between Palomar or any Palomar Affiliate and a Third Party in which Palomar or a Palomar Affiliate has substantial development and/or commercialization obligations, provided that, any such sublicense grants shall apply only to activities occurring on or after the actual date such sublicense grant is first memorialized in writing (and not before). Palomar Sublicensees shall not have the right to grant sublicenses under such sublicense grants by Palomar or Palomar Affiliates except in connection with the sale or other distribution of a Palomar Product. Palomar shall be responsible to Cynosure for the performance of any Palomar Affiliates and Palomar Sublicensees under any provisions of this Agreement for which Palomar or any Palomar Affiliate is responsible, even if such person or entity is also responsible to Cynosure. No purchaser of any Palomar product shall, by operation of this Agreement, receive any license, sublicense or other rights in, to or under the Cynosure Patents that exceeds the scope and terms of the sublicense grant set forth in Section 2.2(a), notwithstanding the patent exhaustion/first sale doctrine. Apart from the foregoing limited right to grant sublicenses, Palomar and Palomar Affiliates shall not have any right to make an Assignment or otherwise Transfer such license grant except pursuant to Section 9.3(b).

(c)

Cynosure’s Right to Grant Other Sublicenses . Subject to the terms of this Agreement, Cynosure retains the right to grant sublicenses and other rights in and to the Cynosure Patents as Cynosure may deem appropriate in its sole discretion, provided that no such grant may limit or restrict Palomar’s or Palomar Affiliates’ rights under this Agreement or impose any obligation on Palomar or Palomar Affiliates, other than as specified hereunder.

2.3.

Related Licensing Provisions .

(a)

Prosecution . As between the Parties, each Party shall have the sole right (but not the obligation) in its sole discretion (subject to, for Palomar, the MGH Agreement) to prosecute, maintain, enforce and defend any Patents (sub)licensed by such Party to the other Party hereunder, and such other Party shall have no rights with respect to any such activities.

(b)

Other Transactions . (i) Palomar may assign, convey, sell, lease, encumber, license, sublicense or otherwise transfer to or grant any right in or to (collectively, “ Transfer ”) a Third Party or a Palomar Affiliate any and all of the Anderson Patents or the MGH Agreement and (ii) Cynosure and any Cynosure Affiliate may Transfer to a Third Party or other Cynosure Affiliate any and all of the Cynosure Patents, in each case provided that any such transaction is made subject to all rights and sublicense(s) of the other Party arising from this Agreement and shall not shall not impose any additional obligations on such other Party.

(c)

Licensing Fees . Except as otherwise expressly provided herein, any amounts or other consideration owed to any Third Party or a Palomar Affiliate, in the case of Palomar, or to any Third Party, in the case of Cynosure or any Cynosure Affiliate, on account of the grant of the (sub)licenses contained in this Section 2 shall be the sole responsibility of the Party granting the (sub)license.

2.4.

MGH Agreement . Palomar represents and warrants to Cynosure that the MGH Agreement, as redacted and attached hereto as Appendix B , is true and complete and in effect as of the Effective Date. In the event that the MGH Agreement is terminated for any reason before the expiration of all of the Valid Claims of the Anderson Patents, Cynosure and Cynosure Affiliates shall no longer have any further royalty obligations to Palomar under this Agreement from the date of such termination (other than for royalty obligations accrued hereunder before such date). Notwithstanding anything contained herein to the contrary, Palomar shall have no liability of any kind whatsoever as a result of such termination.

2.5.

No Other Rights . Each Party acknowledges and agrees that, as between the Parties, Cynosure and Cynosure Affiliates owns or has all right, title and interest in and to the Cynosure Patents, and Palomar and MGH have all right, title and interest in and to the Anderson Patents, other than in each case with respect to non-exclusive (sub)license grants already made by the Parties in the applicable license field hereunder, and that (i) in the case of Cynosure and Cynosure Affiliates, Palomar and Palomar Affiliates shall acquire no right, title or interest in or to the Cynosure Patents or any other Patents owned, licensed or Controlled by Cynosure, by implication, estoppel or otherwise, other than the (sub)license grant to Palomar and Palomar Affiliates set forth in Section 2.2(a) or as otherwise expressly provided herein, and (ii) in the case of Palomar, Cynosure and Cynosure Affiliates shall acquire no right, title or interest in or to the Anderson Patents or any other Patents owned, licensed or Controlled by Palomar, by implication, estoppel or otherwise, other than the sublicense grant to Cynosure and Cynosure Affiliates set forth in Section 2.1(a) or as otherwise expressly provided herein.

3.

Other Obligations of Cynosure .

3.1.

Definitions for this Section 3 .

(a)

“ Exploit ” shall mean to make, have made, import, use, sell, or offer for sale, including to research, develop, register, modify, enhance, improve, Manufacture, have Manufactured, formulate, have used, export, transport, distribute, promote, market or have sold or otherwise dispose of.

(b)

 “ Exploitation ” shall mean the making, having made, importation, use, sale, offering for sale or disposition of a product or process, including the research, development, registration, modification, enhancement, improvement, Manufacture, formulation, optimization, import, export, transport, distribution, promotion or marketing of a product or process.

(c)

“ Manufacture ” shall mean, with respect to a product or system, the manufacturing, processing, formulating, packaging, labeling, holding and quality control testing of such product or compound.

3.2.

  Covenants .

(a)

For as long as the sublicense grant by Palomar to Cynosure and Cynosure Affiliates set forth in Section 2.1(a) is in effect (the “ Sublicense Term ”), Cynosure and Cynosure Affiliates shall not Exploit or otherwise practice the sublicenses to the Anderson Patents granted to Cynosure and Cynosure Affiliates by Palomar under Section 2.1(a) by:

(i)

developing any Licensed Products intended by Cynosure or any Cynosure Affiliates for use (in whole or in part) in the Consumer Field;

(ii)

marketing any Licensed Products in the Consumer Field; or

(iii)

developing or commercializing in or outside the Consumer Field any Female Accessory Product during its period of commercialization by Gillette or any Gillette licensee, provided that any apparatus, component, accessory, disposable or Consumable as to which Cynosure or any Cynosure Affiliate has expended material financial and other resources on its development or commercialization as a Light-Based Accessory Product before such Female Accessory Product is first commercialized by Gillette or any Gillette licensee shall not be subject to the restriction contained in this Section 3.2(a)(iii). All capitalized terms used in this Section 3.2(a)(iii), but not defined herein, shall have the meanings ascribed to them in the Gillette Agreement.

(b)

During the Sublicense Term, Cynosure and Cynosure Affiliates shall label Licensed Products commercialized outside the Consumer Field pursuant to the sublicense to the Anderson Patents granted to Cynosure and Cynosure Affiliates by Palomar under Section 2.1(a) with the following phrase (or similar words which fairly convey such products are for use only outside the Consumer Field): “not intended for consumer self-use.”

(c)

During the Sublicense Term, Cynosure and Cynosure Affiliates shall not, in the development and commercialization of Licensed Products outside the Consumer Field pursuant to the sublicense to the Anderson Patents granted to Cynosure and Cynosure Affiliates by Palomar under Section 2.1(a), intentionally (1) design, modify or otherwise improve any such Licensed Product(s) with the goal or intent of improving its efficacy or performance in the Consumer Field, or (2) optimize, induce, support or encourage the use of any such Licensed Products in the Consumer Field.

(d)

 The covenants of Cynosure and Cynosure Affiliates contained in Sections 3.2(a)(i), 3.2(a)(ii) and 3.2(c) shall not prevent Cynosure or any Cynosure Affiliates from conducting any activity, or exercising or granting any licenses or other rights, with respect to the practice of the Anderson Patents, that has as its goal or intent Exploitation of a product or system outside the Consumer Field and not Exploitation of a product or system in the Consumer Field, notwithstanding the possibility that such activity, exercise or grant may have applications in the Consumer Field.

(e)

All Consumer Field Users (as defined in Section 3.3(a)), other than Palomar, are hereby granted third-party beneficiary rights to enforce the provisions of this Section 3.2 provided that Palomar has granted such Consumer Field Users such rights in writing.

3.3.

Economic Adjustments for Off-Label Sales .

(a)

 Cynosure and Cynosure Affiliates each agrees to make payments to (i) Gillette, (ii) any other Third Party to which Palomar has granted an exclusive sublicense under the Anderson Patents in a field that in whole or in part falls within the Consumer Field, and (iii) Palomar (collectively, “ Consumer Field Users ”), as appropriate, in the manner set forth below, to compensate any of them for certain lost profits, if any, resulting from net off-label purchases during the Sublicense Term of Licensed Products commercialized pursuant to the sublicense to the Anderson Patents granted to Cynosure and Cynosure Affiliates by Palomar under Section 2.1(a), for use in the Consumer Field.

(b)

 In the event that a Consumer Field User shall suffer Lost Profits (calculated in the manner set forth in Section 3.3(c)) in excess of Five Million Dollars (U.S. $5,000,000) in any calendar year, then such Consumer Field User may submit a written notice to Cynosure or any Cynosure Affiliate (a “ Lost Profits Notice ”) specifying its aggregate Lost Profits for such calendar year and enclosing copies of (A) the Independent Study (as defined below) supporting such calculation and (B) this Agreement. Within one hundred and eighty (180) days after receipt thereof, Cynosure or the Cynosure Affiliate, as applicable, shall (1) remit payment to such Consumer Field User, to such bank account designated in the Lost Profits Notice, in an amount equal to the difference between such Lost Profits and Five Million Dollars (U.S. $5,000,000) or (2) provide to such Consumer Field User a detailed written critique of such calculation, propose a revised calculation of such Consumer Field User’s Lost Profits based on a new Independent Study, and enclose a copy of such Independent Study. In the event that Cynosure or such Cynosure Affiliate, as applicable, shall propose a revised calculation, Cynosure or such Cynosure Affiliate, as applicable, and such Consumer Field User shall meet within thirty (30) days thereafter to attempt in good faith to negotiate an agreed level of Lost Profits, or otherwise settle the dispute. In the event that Cynosure or such Cynosure Affiliate, as applicable, and such Consumer Field User shall fail to reach agreement at such meeting, either of them may bring a lawsuit in any court of competent jurisdiction to resolve such dispute.

(c)

 The Lost Profits of such Consumer Field User for a calendar year during the Sublicense Term shall be determined as follows. Such Consumer Field User shall retain, at its expense, a nationally-recognized economic consulting firm to determine, for such year, on the basis of accepted accounting, market research, sampling and survey methodology, (A) the sales by Cynosure, Cynosure Affiliates, Cynosure Sublicensees and Cynosure’s agents for such year of Licensed Products, commercialized pursuant to the sublicense under the Anderson Patents granted to Cynosure and Cynosure Affiliates by Palomar under Section 2.1(a), that displaced sales by or on behalf of such Consumer Field User of products, intended for use in the Consumer Field, that use optical radiation for therapeutic or cosmetic effect, and (B) the sales of such products for such year by such Consumer Field User and its affiliates, sublicensees and agents that displaced sales of such Licensed Products by or on behalf of Cynosure or Cynosure Affiliates, (C) the average net profit of such Consumer Field User for each unit of product sold (on a country-by-country basis, as relevant), (D) the loss of sales resulting from net off-label sales, calculated on the basis of (A) and (B), and (E) the lost profits attributable to such net off-label sales, calculated on the basis of (C) and (D) (the “ Lost Profits ”). Such determinations shall be summarized and documented in a report prepared by such nationally-recognized economic consulting firm (the “ Independent Study ”).

(d)

All Consumer Field Users, other than Palomar, are hereby granted third-party beneficiary rights with respect to the provisions of this Section 3.3 provided that Palomar has granted such Consumer Field Users such rights in writing.

3.4.

Other Provisions .

(a)

The provisions of this Section 3 shall apply to Cynosure Sublicensees to the same extent as Cynosure and Cynosure Affiliates. The provisions of this Section 3 shall be in effect for only as long as the Sublicense Term, and further shall be in effect with respect to any particular Consumer Field User for only as long as such Consumer Field User has an exclusive sublicense under the Anderson Patents in a field that in whole or in part falls within the Consumer Field, provided that the end of the Sublicense Term shall not affect any obligations of Cynosure or Cynosure Affiliates under this Section 3 that have accrued as of the end of the Sublicense Term.

(b)

Palomar represents and warrants to Cynosure as of the Effective Date that the Gillette Agreement, excluding exhibits and redactions of other commercially sensitive information, and attached hereto as of the Effective Date as Appendix A , is true and complete and in effect as of the Effective Date.

4.

Compensation .

4.1.

Flow-Chart . Attached hereto as Exhibit G are flow-charts showing how to determine royalty payments for the Sale of Licensed Products in accordance with the provisions of this Section 4. The Parties intend for those flow-charts and the provisions of this Section 4 to be read and construed as one document in order to understand the royalty obligations hereunder.

4.2.

Royalties Arising from Past Sales; Releases .

(a)

Payment . The Parties agree that (A) the aggregate amount of royalties due for Sales of Licensed Products by Cynosure and Cynosure Affiliates before October 1, 2006 is equal to Ten Million U.S. Dollars (US$10,000,000), which the Parties understand and agree is based on a royalty rate of seven and one half percent (7.5%) of applicable Net Sales through September 30, 2006, in accordance with Section 4.4, and excludes all interest, penalties or damages of any kind whatsoever accruing before October 1, 2006, and (B) for the avoidance of doubt, subject to payment of the amount described in clause (A), Cynosure shall not be liable for any interest, penalties or damages with respect to such royalties due for Sales of Licensed Products by Cynosure and Cynosure Affiliates before October 1, 2006, in accordance with the release granted by Palomar in Section 4.2(b). Cynosure shall pay to Palomar such amount within two (2) days of the Effective Date. The payment required by this Section 4.2 shall be made by wire transfer, without deduction for any taxes or other charges, as provided in Section 4.11.

(b)

Release by Palomar. Upon its receipt of such payment set forth in Section 4.2(a), Palomar, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, shall release, acquit and forever discharge Cynosure, each Cynosure Affiliate and each of their respective current and former principals, officers, directors, equity holders, members, employees, partners (whether general or limited), distributors, attorneys, parents, affiliates, subsidiaries, divisions, and successors and assigns (collectively, the “ Cynosure Group ”), of and from any and all manner of obligations, damages, demands, costs, expenses, losses, liens, debts and liabilities, and any and all claims, counterclaims and causes of action (whether in law or equity) (collectively,