INTERNATIONAL DISTRIBUTOR AGREEMENT

        This International Distributor Agreement (this “Agreement”) is entered
into as of this 8th day of January, 2008 (the “Effective Date”) by and between:

        PALOMAR MEDICAL TECHNOLOGIES, INC., a Delaware corporation with its
principal place of business at 82 Cambridge Street, Burlington, MA 01803
(“Palomar”); and

        Q-MED AB (Publ), a Swedish corporation with its principal place of
business at Seminariegatan 21, 752 28 Uppsala, Sweden (“Distributor”).

        WHEREAS, Palomar has Third Party distribution relationships for Products
in countries throughout the world other than North America;

        WHEREAS, Distributor has the interest and capability to distribute
Products to the Professional Market for Aesthetic Use in those countries and
elsewhere in the world other than North America;

        WHEREAS, Distributor and Palomar recognize the desire of consumers for
overall rejuvenation of skin appearance and the potential synergistic affects
that the products of both parties can provide to consumers; and

        WHEREAS, the parties desire that Distributor become the exclusive
distributor of Products to the Professional Market for Aesthetic Use in the
world other than North America on the terms and conditions set forth below.

        NOW, THEREFORE for and in consideration of the promises, and mutual
agreements and covenants hereinafter set forth, the parties agree as follows:

1.     Definitions.

        Certain terms are defined on Exhibit A attached hereto.

2.     Transition.

        2.1    Overview.

          (a) Palomar shall use commercially reasonable efforts to effect the
transition from Palomar or Palomar’s existing distributors to Distributor, of
the rights to market, distribute and sell the Products on an exclusive basis for
the Professional Market for Aesthetic Use in all countries in the world, other
than North America, and shall keep Distributor adequately informed of the
process to allow Distributor reasonable time to plan for such transition in any
particular country.

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Distributor shall use commercially reasonable efforts to assume such exclusive
distributorship on a country-by-country basis at such time that Distributor in
its own discretion finds commercially reasonable, subject to the parties
agreeing on the Country Terms as defined and provided below.

The transition of Product distribution in the world (outside of North America)
is generally referred to as the “Transition” hereunder. The parties presently
aim to have Distributor become such an exclusive distributor in Europe by
December 31, 2008 and in the rest of the world (excluding North America) by
December 31, 2009.

           **

        2.2 Steering Committee.

          (a) The parties shall appoint a committee (the “Steering Committee“)
comprised of two members designated by Palomar and two members designated by
Distributor. The Steering Committee shall be responsible for discussing the
Transition and any Country Terms for countries under consideration for inclusion
in the Territory, but only in an advisory, non-voting capacity. Each party may
replace any of its Steering Committee members at any time upon written notice to
the other party. Each party shall designate one of its Steering Committee
members as co-chairperson of the Steering Committee.

          (b) The Steering Committee shall meet at least on a calendar quarterly
basis, with at least two in-person meetings in every 12-month period. Each of
the co-chairpersons shall be responsible, on an alternating basis with the
Palomar co-chairperson having responsibility for the initial meeting, for
preparing and circulating an agenda in advance of each meeting, and to prepare
and issue draft minutes of each meeting within thirty (30) days thereafter for
review and approval by the Steering Committee. Any Steering Committee member may
add topics to the draft agenda. Each party may invite, with the approval of the
other party (which shall not be unreasonably withheld), additional individuals
to attend one or more meetings of the Steering Committee as ad hoc guests.

        2.3 Territory.

           **

          (b) As long as any country is outside of the Territory, Palomar shall
retain all its rights outside the Territory with respect to the Products in all
respects, including the right to appoint other distributors (optionally on an
exclusive basis). In considering whether to appoint any new distributor during
the Term outside of the then-current Territory, Palomar shall notify

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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  Distributor in advance of appointing such potential distributor so that
Distributor may consider contracting with such distributor as a Sub-Distributor
hereunder (as opposed to Palomar contracting with such potential distributor)
and transitioning such country into the Territory at such time pursuant to the
terms and conditions of this Agreement, all on the following timeline:
Distributor shall have thirty (30) days after written notice from Palomar of
such potential distributor to determine whether to initiate contact with such
potential distributor, and if Distributor elects to contact the potential
distributor during such 30-day period, Distributor shall have until the date
ninety (90) days after Distributor’s receipt of the written notice from Palomar
of the potential distributor to enter into an agreement with such potential
distributor. Distributor shall inform Palomar in writing if (i) Distributor at
any time during such 30- or 90-day period, as applicable, concludes that
Distributor shall not enter into such a distributor agreement with such
potential distributor, or (ii) after the end of such 30-day or 90-day period, as
applicable, Distributor has not initiated contact or entered into such an
agreement with such potential distributor, and in each such case, Palomar shall
thereafter have the right to enter into a distribution agreement with such
potential distributor.

          (c) Before contacting any potential non-Affiliated Sub-Distributor for
any country not yet in the Territory, Distributor shall inform Palomar and
Distributor shall use commercially reasonable efforts to keep such contact and
any subsequent negotiations and agreements confidential.

        2.4     **

3.     Appointment and Acceptance.

        3.1 Appointment. Subject to the terms and conditions of this Agreement,
Palomar hereby appoints Distributor as its exclusive distributor for sales of
the Products to the Professional Market for Aesthetic Use in the Territory for
the Term. Palomar reserves the right to modify any Product or to discontinue the
sale of any Product; provided that Palomar shall provide written notice to
Distributor as soon as commercially reasonable after such decision but no later
than sixty (60) days prior to discontinuing the sale of any base unit of a
Product or thirty (30) days prior to discontinuing the sale of any handpieces,
consumables or any associated supplies, parts or components of Product.
Notwithstanding the foregoing, in the event the sale of any Product is required
to be discontinued for reasons beyond Palomar’s control, including safety
concerns regarding the Product, the recall of the Product by applicable
regulatory authorities or the lack of availability of an essential component in
the manufacture of the Product, Palomar shall have the right to discontinue the
sale of such Product to Distributor at any time upon providing written notice
thereof to Distributor.

        3.2 Acceptance. Distributor hereby accepts the above appointment and
agrees to use commercially reasonable efforts to market, distribute and sell the
Products to the Professional Market for Aesthetic Use in the Territory for the
Term in accordance with the terms and conditions of this Agreement.

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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        3.3 Resale Terms and Conditions. All resales of the Products by
Distributor to customers shall be subject to the Product Terms set forth on
Exhibit B attached hereto (the “Product Terms”). Prior to or upon delivery of
any Product to each customer, Distributor shall provide to such customer a copy
of the Product Terms, which shall form part of a contract between Distributor
and such customer (and not with Palomar). Distributor shall, to the extent not
prohibited by applicable law and regulation, enforce all of the terms and
conditions set forth in the Product Terms, and Distributor shall promptly inform
Palomar of any request by a customer to modify the Product Terms, and, upon
request by Palomar, take appropriate steps to resolve any such request for
modification as instructed by Palomar.

        3.4 Minimum Purchases.

        **

        3.5 Palomar Obligations. Palomar shall use commercially reasonable
efforts to supply Distributor during the Term with such quantities of the
Products as Distributor shall order from Palomar on terms and conditions with
respect to supply allocation and service (as set forth in Section 7.2) that
shall not be less favorable to Distributor than those agreed to by Palomar with
another Product distributor, provided that Palomar shall be entitled to meet
specific bona fide demands from its other distributors on a case-by-case basis
reasonably required to offer such distributors reasonable commercial
opportunities to distribute Products in the applicable country. **

        3.6 No Compensation. Palomar is not obligated to pay compensation for
Distributor’s performance of its obligations hereunder, and Distributor’s sole
compensation shall arise from its resale of the Products purchased hereunder.
Palomar shall not provide Distributor with any other compensation or benefits,
and Palomar shall not be responsible for reimbursement of any out-of-pocket
expenses.

        3.7 Independent Contractor Status. Each party shall act solely as an
independent contractor, and nothing in this Agreement shall be construed to give
either party the power or authority to act for, bind, or commit the other party
to any obligation of any nature. Accordingly, neither party shall use the
other’s name on its stationery, advertising, or the like in a manner which might
suggest that such party is the other’s agent and neither party shall make
quotations or write letters under the name or on behalf of the other party.
Contracts executed or otherwise entered into by Distributor with customers
(including Product Terms) or any other person or entity shall bind Distributor
but not Palomar.

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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        3.8 Limits on Appointment.

          (a) Distributor shall not, and shall cause each of its Affiliated
Sub-Distributors not to, distribute, market or sell any Product in the Excluded
Markets or otherwise outside of the Professional Market, or for any use other
than Aesthetic Use, and Distributor shall not, and shall cause each of its
Affiliated Sub-Distributors not to, support by its own actions or any Third
Party in doing any of the foregoing (which support includes, for example and
without limitation, providing any written marketing materials, conducting or
financing any clinical trials or otherwise providing any consideration in
support of same). In addition, once Distributor learns of any conduct by a
non-Affiliated Sub-Distributor of these prohibited activities, Distributor shall
use commercially reasonable efforts to end all such prohibited activities by
such Sub-Distributor within a commercially reasonable time period, which in all
events shall be within six (6) months of first learning of any such prohibited
activities by such Sub-Distributor, and if unable to end all such prohibited
activities by such efforts: (i) terminate the appointment of such
Sub-Distributor and (ii) stop selling (directly or indirectly through other
Sub-Distributors or otherwise) Products to such Sub-Distributor. If Palomar
notifies Distributor in writing of any conduct by a non-Affiliated
Sub-Distributor of any such prohibited activities, Distributor shall thereafter
confirm in writing to Palomar that Distributor has complied with the immediately
preceding sentence with respect to such Sub-Distributor. The parties agree that
if Distributor breaches its obligations under this Section 3.8(a) in one or more
countries within the Territory, Palomar shall have the right, in Palomar’s sole
discretion, to terminate the appointment of Distributor as Palomar’s exclusive
distributor in each country where the breach has occurred, in accordance with
Section 11.3.

          (b) Distributor shall advertise and promote the Products only in the
Territory and shall not engage or maintain Sub-Distributors or representatives
for the marketing, distribution or sale of any Products outside of the
Territory. To the extent not prohibited by applicable law and regulation,
Distributor shall use commercially reasonable efforts, and shall cause its
Sub-Distributors to use commercially reasonable efforts, not to sell Products
intended at the time of sale for use primarily outside the Territory, to the
extent Distributor or the applicable Sub-Distributor is aware of such intended
use. To the extent not prohibited by applicable law and regulation, Palomar
shall use commercially reasonable efforts, and shall cause its Product
distributors to use commercially reasonable efforts, not to sell Products
intended at the time of sale for use primarily inside the Territory, to the
extent Palomar or the applicable distributor is aware of such intended use.

          (c) No license, sublicense or other right in or to any intellectual
property or patent rights or other intellectual property rights shall be created
or granted hereunder expressly or by implication, estoppel or otherwise, except
as expressly permitted hereunder.

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4.     Marketing and Promotion..

        4.1 Marketing, Advertising and Promotion of Products.

          (a) Distributor shall actively promote and sell the Products, and
shall produce advertising and promotional materials for the Products to the
Professional Market for Aesthetic Use in the Territory. In connection therewith,
Distributor shall conduct such activities, including development, translation,
printing and communication of marketing, sales, medical education or other
related materials (e.g. product service agreements and accompanying terms and
conditions for service, sales literature, advertising materials and promotional
programs) as commercially necessary for the commercialization and distribution
of the Products to the Professional Market for Aesthetic Use in the Territory
and, as the case may be, for the joint commercialization of the Products and
Distributor’s proprietary products (along with all other documents and other
materials intended for public distribution created by or on behalf of
Distributor or any Sub-Distributor regarding Palomar or any Products,
collectively, “Distributor Materials”). Palomar shall provide such support (e.g.
regarding technical information relating to the Products or printed materials
such as product labels), as is reasonably necessary to permit Distributor to
fulfill any relevant regulatory requirements with regard to the Distributor
Materials. Distributor and Palomar recognize the desire of consumers for overall
rejuvenation of skin appearance and the potential synergistic affects that the
products of both parties can provide to consumers. Thus, Distributor and Palomar
shall use commercially reasonable efforts to collaborate on marketing campaigns,
including arranging and participating in symposiums, consensus groups and
advisory boards for the combined use of existing products of both companies for
present indications and registrations. Distributor shall bear its own costs
associated with Distributor Materials, and shall provide all Distributor
Materials that would entail public communication regarding the Products to
Palomar (translated in English, if applicable) for its prior review and prompt
approval insofar as the material relates to the Products, which approval shall
not be unreasonably withheld, provided that any accurate translation of any such
materials previously approved by Palomar, or any materials provided by Palomar,
shall not require Palomar’s separate approval. Unless Palomar has notified
Distributor of any objections within five (5) business days (in Boston, MA)
after receipt, Palomar shall be deemed to have approved the Distributor
Materials. Distributor shall maintain a reasonable force of sales
representatives, fully trained in the operation, features, advantages, and
benefits of the Products. Such sales force shall be able to demonstrate the
Products. Distributor shall maintain a commercially reasonable program of
advertising and promotion, which shall include display and demonstration of the
Products.

          (b) Distributor shall only promote and sell the Products under the
trademarks, trade names and model nomenclatures used by Palomar (the
“Trademarks”) and shall promote and sell the Products in a manner consistent
with any and all branding or marketing strategies adopted by Palomar and
disclosed to Distributor. In addition, Distributor shall not adopt or use any
word, name, mark, symbol, other designation or trade style that is likely to
cause confusion or dilute the Trademarks, and shall not make any unlicensed use
of the Trademarks that is confusingly similar to or dilutive of the Trademarks.

          (c) To facilitate Distributor’s performance of its obligations under
Section 4.1(a), Palomar shall, at no cost for Distributor, make available to
Distributor the following materials written in English: (i) commercial,
informational and educational materials

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  or publications created by Palomar relating to the Products; and (ii) samples
of artwork (including separations) created by Palomar, in each case which
Palomar may have in its possession or control, sufficient to allow Distributor
to translate (where necessary) and print, at its expense, sales literature,
advertising materials, promotional programs, or other materials required to
promote and sell the Products.

          (d) Palomar shall provide written notice to Distributor at least
ninety (90) days before any new Product shall become available for purchase by
Distributor for re-sale in any country in the Territory. Subject to Palomar’s
sole discretion regarding any new Product launch, the Steering Committee shall
review and discuss the timing of such launch and consider any country-specific
requests or requirements related to such new Product launch. Upon such new
Product’s becoming available for such purchase by Distributor, Palomar shall
update Exhibits C and D to include the new Product.

        4.2 Customer Information. **

        4.3 Marketing Plan. **

        4.4 Labels. Distributor shall endeavor to provide Palomar with adequate
information to allow Palomar to ensure that all labels and labeling for the
Products comply with the requirements of all filings, registration, reports,
licenses, permits and authorizations required, obtained and maintained under
applicable laws for the country or countries in which the Products are intended
for distribution and sale hereunder by Distributor. For Products intended for
distribution in the EU, the labels and labeling shall comply with applicable
Directives of the EU, the technical dossiers for the Products, the CE label and
other regulatory requirements as may be imposed by any individual country in the
EU. Labels and labeling for Products in any other country shall comply with
applicable laws. Distributor shall submit marketing materials, if any, to local
regulatory authorities only in those countries in the Territory where such
submissions are required, necessary or useful, and shall contemporaneously
provide a copy of such submissions to Palomar.

        4.5 Sub-Distributors.

          (a) Distributor shall be entitled to appoint one or more
Sub-Distributors for the distribution of Products in the Territory; provided,
however, that Distributor (i) shall not utilize or engage any Competitor (as
defined below) of Palomar as a Sub-Distributor, without the prior written
consent of Palomar, which consent shall not be unreasonably withheld, and (ii)
shall inform Palomar of the identity of all potential Sub-Distributors
reasonably in advance of their engagement to allow Palomar to comment thereon.
In no event shall any Sub-Distributor be appointed as an agent of Distributor or
Palomar, and Distributor shall not otherwise designate or appoint any party to
serve as its agent in connection with the marketing, distribution or sale of

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

7

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  the Products for the Professional Market for Aesthetic Use in the Territory,
except to the extent required for such marketing, distribution or sale of the
Products for the Professional Market for Aesthetic Use by applicable law or
regulation in a country within the Territory, and then only with the prior
written consent of Palomar (which shall not be unreasonably withheld).

          (b) Distributor shall be responsible to Palomar for the performance of
any of its Sub-Distributors under any provisions of this Agreement for which
Distributor is responsible, and Distributor shall be solely responsible for any
commitment or liabilities to any of its Sub-Distributors.

        4.6 Competing Products. During the Term, Distributor shall not, and
shall cause its Affiliated Sub-Distributors not to, directly or indirectly
engage in the manufacture, sale, offer for sale, marketing, promotion,
distribution, solicitation of orders or service of any energy-emitting (i.e.,
optical radiation, microwave, ultrasound, or radiofrequency) devices for
Aesthetic Use in the Professional Market in the Territory, other than the
Products as provided herein. In addition, once Distributor learns of any conduct
by a non-Affiliated Sub-Distributor of such activities, Distributor shall,
unless such activities have been approved by Palomar as provided in Section 4.5
(a), use commercially reasonable efforts to end all such activities by such
Sub-Distributor within a commercially reasonable time period.

        5. Intellectual Property Rights; Confidentiality.

        5.1 Right to use Intellectual Property Rights. During the Term,
Distributor shall have the non-exclusive, non-transferable (except for such
sublicensing of rights to Sub-Distributors as are an integral part of
Distributor’s agreement with such Sub-Distributors) right to use the Trademarks
and the copyrights and logos developed and used by Palomar on the Products
(collectively, “Intellectual Property Rights”), but only in connection with
Distributor’s or, as the case may be, any Sub-Distributor’s promotion, sale or
service of the Products within the Professional Market for Aesthetic Use in the
Territory in accordance with the instructions and guidelines from Palomar.
Distributor shall acquire no rights in or to the Intellectual Property Rights
except as specifically set forth herein, and all use thereof shall inure to the
benefit of Palomar. Distributor shall not publish or cause to be published any
statement nor approve or encourage any advertising or practice which might
mislead or deceive any parties or might be detrimental to the Intellectual
Property Rights, good name, goodwill or reputation of Palomar or might affect
any potential patent infringement by any Products. Within ten (10) days of
receiving a written request from Palomar, Distributor shall withdraw any
statement and discontinue any advertising or practice that uses any Palomar
Intellectual Property Rights inconsistent with the immediately preceding
sentence. Upon the expiration or termination of this Agreement, Distributor
shall have no right to market or promote any Products or to use any Intellectual
Property Rights.

        5.2 Rights in Distributor Materials. All right, title and interest in
and to any copyrights or other intellectual property rights in such Distributor
Materials that describe or otherwise apply solely to Palomar or any Products
(and any such reasonably severable portion of Distributor Materials that
describe or otherwise apply solely to Palomar or any

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Products), including translations thereof, shall be solely owned by Palomar and
shall be treated as a “work made for hire” under the copyright laws of the
United States. Distributor hereby assigns, and shall cause all Sub-Distributors
to assign, and hereby agrees to assign, if such assignment is not currently
possible, such rights to Palomar or its designee, and hereby agree to execute
all such documents to effectuate such assignment and for Palomar to protect and
enforce such rights. All right, title and interest in and to any other
copyrights or other intellectual property rights in Distributor Materials for
the joint commercialization of the Products and Distributor’s proprietary
products, including translations thereof, to the extent such Distributor
Materials are not reasonably severable portions applying solely to Palomar and
any Products owned by Palomar as provided above, shall be solely owned by
Distributor, subject to Palomar’s right to copy or use, without payment to
Distributor, any portions of such materials that relate solely to Palomar or
Products, during or after the Term, with such copy or use subject to
Distributor’s prior approval, such approval not to be unreasonably withheld.
After the Term, Distributor shall have no right to use any Distributor
Materials, including any intellectual property rights therein, that incorporate
any reference to Palomar or any of the Products, unless owned by Distributor as
provided above, and Palomar shall have no right to use any Distributor
materials, including any intellectual property rights therein, that incorporate
any reference to Distributor or any of Distributor’s proprietary products,
unless to the extent owned by Palomar as provided above.

        5.3 Proprietary and Confidential Material. The Parties agree, during the
Term and for a period of five years after the Term, not to divulge, communicate,
use to the detriment of the other party or for its own benefit any Proprietary
and Confidential Material except as permitted hereunder. “Proprietary and
Confidential Material” means any material or information that is received by a
party from the other party that is identified by the disclosing party as
proprietary and/or confidential, provided that such material does not include
information or materials which become available in the public domain without the
fault of the receiving party. Without limiting the generality of the foregoing,
Distributor specifically agrees, except to the extent not prohibited by
applicable law and regulation (and only then to such extent), that it shall not,
nor shall it permit others, to reverse engineer the Products or any parts
thereof.

        6. Forecasts; Pricing; Purchase, Sale and Delivery of Products.

        6.1 **

        6.2 Distributor Pricing. The prices to be paid by Distributor for
purchases of Products from Palomar shall be as set forth in the Palomar
International Price List in effect at the time of shipment of the relevant
Products, unless otherwise agreed to in writing by Palomar. Exhibit C attached
hereto sets forth the current Palomar International Price List, from Palomar’s
factory, warehouse, or other point of shipment designated by Palomar. **

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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        6.3 Orders. All orders from Distributor to Palomar shall be initiated by
a written purchase order specifying the quantities of Products, ship to
location(s) and requested dates of shipment (each, an “Order”) and shall be
deemed accepted within three (3) business days (in Boston, MA) after receipt by
Palomar unless Palomar within those three (3) business days notifies Distributor
in writing. Palomar shall not refuse to accept an Order which falls within the
committed forecasts.

        6.4 Order of Precedence. Any inconsistency in any documents relating to
the purchase of Products shall be resolved by giving precedence in the following
order: (i) the terms and conditions of this Agreement (including the exhibits
attached hereto); (ii) the provisions and text appearing on the face of the
applicable Order insofar as they refer to the specific Order; and (iii) other
documents, exhibits and attachments which accompany such Order.

        6.5 Taxes and Governmental Charges. Prices do not include any taxes or
other governmental charges, including import or export duties, value-added,
sales, use or privileges taxes, property or excise, or similar taxes levied by
any government. Distributor shall pay all such taxes or charges, on or before
the due date.

        6.6 Specifications. Palomar may modify the specifications of any of the
Products furnished under any Order or contract; provided the modifications do
not adversely affect the performance of the Product, and provided further that
Palomar notifies Distributor as early as is commercially reasonable of any
material changes or changes that would reasonably be expected to require
regulatory amendments or additional regulatory approvals by a governmental or
regulatory authority. In addition, Palomar may furnish suitable substitutes for
materials at any time and for any reason.

        6.7 Order Cancellation. Distributor shall be entitled to cancel any
Order or portion thereof provided that Distributor provides Palomar with written
notification at least ** days prior to the scheduled shipment date. Unless such
written notice of cancellation is received and agreed to by Palomar before the
scheduled shipment date, Order(s) shall be considered open and pending awaiting
first available ship date. Any order or portion thereof cancelled within ** days
of the scheduled shipment date shall be subject to ** restocking charge. If any
Order is cancelled in accordance with the foregoing, such cancelled Order shall
not be included in determining the Accumulated Calendar Year Minimum or
Quarterly Minimums.

        6.8 Shipment, Delivery, and Title. Dates of all shipments are estimated
and not guaranteed, however, Palomar shall use commercially reasonable efforts
to ship within ** days of its Order acceptance. Distributor is responsible for
shipping costs, and the International List Price does not include the costs of
shipping. All Products shall be tendered

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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and shipped from Palomar’s factory, warehouse or other point of shipment
designated by Palomar, at which time Palomar may render the applicable invoices.
In absence of specific instructions, Palomar shall select the carrier and ship
freight and any insurance prepaid and add to the price of the Product(s). If so
requested by Distributor, Palomar shall obtain insurance, beyond the minimum
provided by the carrier for any shipments, for the account of Distributor and at
Distributor’s sole expense. Title and risk of loss or damage to each of the
Products shall pass to Distributor (or to the customer, where Palomar ships
direct to a customer) when delivery is made to the carrier at such point of
shipment. Palomar shall be responsible for assisting Distributor in making all
claims with carriers, insurers, warehousemen and others for misdelivery,
nondelivery, loss, damage, or delay.

        6.9 Returns. No sale shall be accepted for return unless Palomar has
granted prior written authorization in its sole discretion. All returned goods
shall incur ** restocking charge unless otherwise noted in writing from Palomar.

        6.10 Terms of Payment. Terms of payment shall be net ** days from date
of invoice. All payments shall be in United States Dollars and shall be fully
net, without set-off, deduction or counterclaim.

        6.11 Late Charges. If Distributor fails to pay the price or any other
payment due to Palomar promptly and when due, Palomar may recover, in addition
to the price or payment, interest thereon at a rate equal to the lesser of **
per month or the maximum rate of interest allowable under applicable law or
regulation.

7.     Training and Service.

        7.1 Training. Distributor shall be responsible for the training of its
customers and Sub-Distributors in the proper use of the Products in accordance
with all applicable operator’s manuals and any training and informational
material provided to Distributor by Palomar.

        7.2 Service. Within the Territory, Palomar or its designee shall provide
service for the Products sold by Distributor and its Sub-Distributors as
required under the original warranty period provided for in Section 8. Following
the expiration or termination of such warranty period, Distributor shall offer
to customers the option to enter into a service agreement on terms that have
been mutually agreed between Distributor and Palomar, pursuant to which service
shall be carried out by Palomar or its designee on Distributor’s behalf. Once
Product from a customer of Distributor arrives at a service center of Palomar or
Palomar’s designee (the “Palomar Service Center”), Palomar shall perform its
service obligations in a timely and professional manner equal to or exceeding
Palomar’s current standard of service. Upon receiving service requests from
customers, Distributor shall notify Palomar and Distributor shall coordinate
Palomar’s service of the customers’ Products. Each

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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customer shall pay Distributor for such service, and Distributor shall pay
Palomar. The customer may pay on a time and materials basis or under the
separate service agreement to be executed by Distributor and customer. Any
agreement between Distributor and customer regarding service shall not obligate
Palomar more than the service agreement agreed to by Palomar and Distributor
with respect to such customer. ** During the original warranty period or the
term of any service agreement, Palomar shall be responsible for the cost of
shipping Products to and from customers or Distributor from a Palomar Service
Center, but not between customer and Distributor for which Distributor shall be
responsible. During the Term, Palomar shall maintain the same service centers in
the United States and in the European Union in existence as of the Effective
Date, or, at their option, set up substantially similar service centers of which
at least one shall always be located within the European Union, in each case, to
provide service equal to or exceeding Palomar’s current standard of service to
Distributor’s Product customers once those Products arrive at such service
center.

8.     Warranties and Liabilities.

        8.1 Limitation of Warranties and Remedies. Palomar warrants to
Distributor that the Products shall be free from defects in design, material and
workmanship under normal use and maintenance as provided in the Product Terms
for (i) where Palomar ships direct to a customer, the period (measured from the
date of shipment to the customer) set forth with respect to the applicable
Product(s) in Section 3 of the Product Terms or (ii) where Palomar ships to
Distributor or Distributor’s designee, the period (measured from the date of
shipment to Distributor or Distributor’s designee) set forth with respect to the
applicable Product(s) in Section 3 of the Product Terms, ** Distributor,
Distributor’s designee, or customer, where Palomar ships direct to a customer,
shall inspect all merchandise for obvious damage or defect upon Distributor’s or
the customer’s receipt, as applicable. If merchandise has been found defective,
the Palomar Service Department should be notified within ** business days of
such receipt. All claims for such nonconforming or defective parts, consumables
and handpieces and equipment are required to be made in writing within ** days
after arrival to Distributor, Distributor’s designee, or customer, where Palomar
ships direct to a customer, and any claims not made within that period are
deemed fully waived and released. The obligation of Palomar under the warranties
set forth in this Section 8.1 is limited, in its exclusive option, to
replacement of parts and materials that prove defective. The foregoing
notwithstanding, Palomar shall not be responsible for damage to any product
resulting from misuse, negligence or accident, or resulting from repairs or
alterations made by any person or entity not duly authorized by Palomar in
writing.

        8.2 Termination of Warranties and Service upon Non-Payment. If
Distributor shall, without due cause hereunder, fail to pay any portion of (a)
the purchase price of any Product or (b) any payment due from Distributor
pursuant to Section 7.2 for Palomar’s

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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performance of service, with respect to such Product, all warranties, remedies
and other obligations of Palomar hereunder (including any obligations to
service, repair, replace and otherwise remedy defects, errors or failures), and
all warranties, remedies and other obligations under any other contract, may,
with respect to such Product, at Palomar’s option, be terminated.
Notwithstanding the foregoing, any failure to pay for service as described in
clause (b) above shall not affect Palomar’s obligations under the initial
warranty for such Product.

        8.3 Third Party Warranties. With respect to any products sold to
Distributor by Palomar but not manufactured by Palomar, Palomar MAKES NO
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, but shall make
available to Distributor, to the extent not prohibited by applicable law and
regulation and relevant contracts, the warranties of the manufacturer of the
relevant product upon Distributor’s timely written request. For the purposes of
clarification, the above does not apply to Products or any components thereof
but only to other Third-Party products which may be sold to Distributor by
Palomar during the Term.

        8.4 No Implied Warranties. THE EXPRESS REPRESENTATIONS AND WARRANTIES
GIVEN IN THIS AGREEMENT ARE THE ONLY REPRESENTATIONS OR WARRANTIES GIVEN BY
PALOMAR WITH RESPECT TO THE PRODUCTS AND ARE GIVEN IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THOSE OF
NONINFRINGEMENT, TITLE, MERCHANTABILITY, COURSE OF DEALING, USAGE OF TRADE, AND
FITNESS FOR A PARTICULAR PURPOSE. DISTRIBUTOR’S EXCLUSIVE REMEDIES, AND
PALOMAR’S SOLE LIABILITY FOR ANY NONCONFORMITY OR DEFECT IN ANY PRODUCT SHALL BE
THOSE EXPRESSED IN THIS AGREEMENT. Without limiting the generality of the
foregoing, Palomar makes no representations or warranties, express or implied,
that any necessary permits or licenses for Products have been obtained, nor that
the Products have received the approvals of governmental or regulatory
authorities necessary for the sale of the Products within the Territory, except
for the CE mark.

        8.5 Limitation of Liability. An essential purpose of the limited
exclusive liabilities and remedies in this Agreement is allocation of risk
between Palomar and Distributor, which allocation of risks is reflected in the
purchase price for the Products. EXCEPT FOR PALOMAR’S INDEMNIFICATION
OBLIGATIONS SET FORTH IN SECTION 9.1, UNDER NO CIRCUMSTANCES SHALL PALOMAR’S
LIABILITY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR PALOMAR’S
PERFORMANCE OR ASSERTED FAILURE TO PERFORM HEREUNDER, IN CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED THE PURCHASE PRICE OF THE PRODUCT OR
PART THEREOF TO WHICH SUCH LIABILITY RELATES. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL, TORT OR ANALOGOUS
DAMAGES, INCLUDING DAMAGES RESULTING FROM LOSS OF USE, PROFITS, BUSINESS OR
GOODWILL, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY THEREOF.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, UPON TERMINATION OR EXPIRATION
OF THIS

13

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AGREEMENT FOR ANY REASON, NEITHER PARTY SHALL BE LIABLE FOR ANY INDEMNITY OR
OTHER PAYMENT TO THE OTHER PARTY OR ANY OF ITS AFFILIATES OR SUB-DISTRIBUTORS ON
ACCOUNT OF GOODWILL, LOST PROFITS, LOSS OF USE OR BUSINESS, OR ANY OTHER FACTOR,
FOR ANY REASON.

9.     Indemnity.

        9.1 Palomar Indemnity.

          (a) Patent Indemnity. If Distributor receives a claim, suit or
proceeding asserting that the sale, manufacture or use of any Product
manufactured by Palomar directly infringes a patent of a Third Party,
Distributor shall notify Palomar promptly in writing and give Palomar
information, assistance and exclusive authority to evaluate, defend, and settle
such claim. Palomar shall then at its own expense and option, (i) settle the
claim; (ii) procure for Distributor the right to sell and use the Product; (iii)
replace or modify the Product to avoid infringement; (iv) defend against such
claim; or (v) remove the Product and refund to Distributor the actual cost of
the Product paid to Palomar by Distributor. Should any court of competent
jurisdiction hold in a final decision that the sale, manufacture, or use of such
Product constitutes infringement, Palomar shall pay any costs and damages
finally awarded against Distributor on the account of such infringement, and if
the use of such Product is enjoined, Palomar shall take one more of the actions
under clauses (ii), (iii) or (v) above. Palomar reserves the right, at its sole
option, to notify Distributor in writing that as a result of a claim, suit or
proceeding or threat of same in any given country, Distributor may not market or
sell the Products in such country, effective as of such written notice. The
foregoing states the entire and complete liability of Palomar for any patent
infringement or claimed infringement by reason of the sale, manufacture, or use
of the Products or any part thereof.

          (b) **

        9.2 Distributor Notice. If Distributor shall become aware of any matter
which may constitute an infringement by a Third Party of any of Palomar’s patent
rights, copyrights, or other proprietary rights or information, Distributor
shall promptly notify Palomar of such matter and shall cooperate fully with
Palomar in any action or other proceeding which Palomar may commence to enforce
its rights.

        9.3 Distributor Indemnity. Palomar shall not be liable for any Losses
incurred by Distributor or any other person or entity, and Distributor shall
indemnify, defend, and hold Palomar and its Affiliates and their officers,
directors, agents, employees, representatives, successors, and assigns
(collectively, “Palomar Indemnitees”) harmless from and against any and all
Losses, arising out of or in connection with any claim, suit or proceeding by a
Third Party to the extent based upon (i) the use of any Product or part thereof
furnished in

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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combination with products, software or data not supplied by Palomar, (ii) any
modification made to the Products without Palomar’s prior written consent, (iii)
any grossly negligent or willful act or omission by or on behalf of Distributor,
(iv) any termination or expiration of any Sub-Distributor (to the extent not
attributable to any direct relationship, including any relationship preceding
this Agreement, entered into between Palomar and such Sub-Distributor
independently from this Agreement), (v) any termination of this Agreement (to
the extent attributable to Distributor’s breach), or (vi) any other
representation, act or omission by or on behalf of Distributor, including
Distributor’s performance of or failure to perform any term or condition of this
Agreement. Distributor shall not be liable for any Losses resulting from the
willful misconduct of any Palomar Indemnitee.

        9.4 Indemnification Procedure. A party that intends to claim
indemnification under this Section 9 shall promptly notify the indemnifying
party of any such claims in respect of which such party intends to claim such
indemnification, and if applicable such indemnifying party shall assume the
defense thereof with counsel mutually satisfactory to the parties; provided that
such party shall have the right to retain its own counsel and, in case
compensation for fees and expenses are not otherwise awarded, compensation for
such costs shall be paid by such indemnifying party provided such indemnifying
party is responsible for the defense thereof, if representation of such party by
the counsel retained by such indemnifying party would be inappropriate due to
actual or potential conflicting interests between such party and any other party
represented by such counsel. The indemnification provided for by this Section 9
shall not apply to amounts paid in settlement of any such claim if such
settlement is effected without the consent of the indemnifying party, which
consent shall not be unreasonably withheld. The failure to deliver notice to the
indemnifying party within a reasonable time after the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve the indemnifying party of any liability to the other party under this
Section 9.4 to the extent so prejudiced, but the omission so to deliver notice
to such indemnifying party shall not otherwise relieve it of any liability that
it may have to such other party. The indemnified party shall cooperate fully
with the other party in the investigation of any such claim covered by this
indemnification.

10.     Compliance with Laws; Regulatory Matters..

        10.1 Export and Trade Regulations. Both parties shall endeavor to at all
times carry out the transactions contemplated by this Agreement in conformity
with all applicable laws and regulations (including the United States Export
Administration Acts), and shall obtain all necessary permits and licenses
required in connection with the purchase, installation, sale, shipment, service
or use of the Products. Shipments by Palomar are or may be subject to
restrictions and limitations imposed by United States export controls and other
trade sanctions. Each party shall at all times use commercially reasonable
efforts to keep the other party informed of, and both parties shall at all times
use commercially reasonable efforts to comply with, such sanctions, controls,
and regulations, as well as the United States Foreign Corrupt Practices Act, in
its respective use and disposition of the Products. If Palomar learns, or has
reasonable cause to believe, or if any branch or agency of the government of the
United States claims that a violation of any applicable export regulation or
other trade sanction, export control, or trade regulation by Distributor has
occurred or is likely to occur because of any shipment by Palomar to
Distributor, Palomar shall promptly

15

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notify Distributor and may, in addition to any other remedy it may have, suspend
all shipments to Distributor until Palomar is satisfied that such violation did
not occur or has ceased to occur, or such claim is withdrawn or otherwise
resolved in favor of Palomar.

        10.2 Maintenance of Product Registrations. Distributor shall exercise
commercially reasonable efforts to obtain and Maintain, on Palomar’s behalf, any
Product Registrations in the Territory during the Term and Palomar shall
exercise commercially reasonable efforts to provide Distributor with adequate
information and supporting materials needed by Distributor to fulfill such
obligations. As used hereunder, “Maintain” means that: (i) Distributor shall
exercise commercially reasonable efforts to maintain the Product Registrations
as valid and in force with the appropriate authorities; (ii) Distributor shall
use commercially reasonable efforts to the extent possible to minimize the
number and extent of any changes to the Product Registrations; and (iii)
Distributor shall notify Palomar of any change to any of the Product
Registrations during the Term and any such change requested or required by
appropriate governmental or regulatory authorities in the Territory. As between
the parties hereto, it is agreed that the Product Registrations shall be held in
the name of Palomar, who shall be the beneficial owner of all Product
Registrations; provided that in the event the applicable regulatory authorities
in any country within the Territory do not permit Distributor to hold Product
Registrations in Palomar’s name, Distributor shall hold such Product
Registrations in its own name, shall use any such Product Registrations only as
Palomar’s exclusive distributor for sales of the Products to the Professional
Market for Aesthetic Use in the Territory for the Term and for no other use or
purpose, and shall take all actions necessary to permit Palomar to use such
Product Registrations during and after the Term, including, upon the termination
for any reason or expiration of this Agreement or Distributor’s distributorship
rights with respect to the applicable country, the transfer and assignment of
all such Product Registrations to Palomar at no cost to Palomar. Distributor may
not use the Product Registrations, or any of them, on or in respect of any
product other than the Products or use any authorization other than one or more
of the Product Registrations on or in respect of the Products, except as may be
approved in writing by Palomar. All costs to obtain or Maintain the Product
Registrations shall be borne by Distributor.

        10.3 Failure to Maintain. If, for any reason attributable to
Distributor, Distributor fails to Maintain an existing Product Registration or
any of the Product Registrations becomes at any time during the Term invalid or
not in full force and effect with the appropriate authorities in one or more
countries in the Territory, then Palomar may (i) assume Distributor’s
responsibility under this Section 10 or (ii) terminate this Agreement as
provided in Section 11.3, with respect to the country or countries so affected,
provided that Palomar is not primarily responsible for such failure.

        10.4 Changes to Product Registrations. All changes to the Product
Registrations shall be approved in advance by Palomar. Palomar may, at any time
during the Term, request that Distributor seek appropriate regulatory approvals
for changes to the Product Registrations regarding the manufacturing process or
manufacturing location for the Products; provided that Palomar shall give
Distributor reasonable prior notice of such requested changes. Distributor, upon
request of Palomar, shall use commercially reasonable efforts to obtain approval
for such changes from the appropriate authorities.

16

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        10.5 Compliance with Regulations and Guidelines. Distributor shall
promote the Products solely for the indications and other conditions of use
approved by the applicable regulatory agency of the country in question.

        10.6 Labeling. All labeling and package inserts used in any way in
connection with the Products shall comply with the Product labeling supplied or
approved in writing by Palomar and with all applicable legal and commercial
requirements in the Territory. Distributor shall promptly inform Palomar of any
local requirements affecting the labeling and package inserts of the Products
and shall remain independently obligated to be aware of regulatory requirements
in all jurisdictions where it has obtained and Maintains a Product Registration.

        10.7 No Debarment. Distributor shall not knowingly use the services of
any person or entity debarred or suspended under Section 306 of the Federal
Food, Drug and Cosmetic Act, as amended, or similar laws of other jurisdictions,
in performing its obligations or exercising its rights under this Agreement.
Distributor shall promptly notify Palomar if any person or entity whose services
Distributor is using in the performance of its obligations under this Agreement
becomes debarred or suspended.

11.     Terms and Termination.

        11.1 Term. Unless sooner terminated in accordance with this Section 11,
or in accordance with any other provisions of this Agreement, this Agreement
shall continue until terminated as provided hereunder (the “Term”).

        11.2 Termination for Convenience. Each party reserves the right, at its
sole option, to terminate this Agreement for convenience upon ** written notice
to the other party; **

        11.3 Termination for Cause by Palomar. In the event of (i) any material
breach of this Agreement by Distributor, including Distributor’s (a) ** (b)
failure to make timely payments to Palomar, (c) material sales or other export
of Products into the Excluded Markets or otherwise outside of the Professional
Market, or to the extent not prohibited by applicable law and regulation outside
of the Territory, in violation of Section 3.8, (d) material failure to comply
with export laws or other laws and regulations, (e) material failure to Maintain
applicable Product Registrations or (f) material failure to protect Palomar’s
Proprietary and Confidential Material under Section 5.3, (ii) Distributor
insolvency, or the appointment of a receiver to hold, manage or operate
Distributor’s business or (iii) the institution of proceedings by or against
Distributor under any bankruptcy or insolvency law, then in any such case
Palomar may, effective immediately upon delivery of written notice to
Distributor, terminate this Agreement in its entirety, unless the breach relates
only to one or more countries in which case such termination shall be limited to
the appointment of Distributor as Palomar’s exclusive distributor in the
country(ies) in which the breach is so

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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related; provided that in the case of a breach of this Agreement by Distributor
that is capable of being cured, it being specifically noted that failure to make
timely payments is a curable breach, Palomar shall give Distributor a period of
** from receipt of notice of the breach to cure such breach, after which the
termination shall become effective if the breach has not been cured; **

        11.4 Termination for Cause by Distributor. In the event of (i) any
material breach of this Agreement by Palomar, including Palomar’s (a) material
failure to notify Distributor as set out in this Agreement, (b) material failure
to supply Distributor with Products as set out in this Agreement, (c) material
sales or other export of Products intended at the time of sale for use primarily
inside the Territory to the extent not prohibited by applicable law and
regulation, in violation of Section 3.8, (d) material failure to provide service
and support as set out in this Agreement, (e) material failure to protect
Distributor’s Proprietary and Confidential Material, including customer
information, as set out in this Agreement or (f) material failure to comply with
export laws or other laws and regulations as set forth in Section 10.1, (ii)
Palomar insolvency, or the appointment of a receiver to hold, manage or operate
Palomar’s business or (iii) the institution of proceedings by or against Palomar
under any bankruptcy or insolvency law, then in any such case Distributor may,
effective immediately upon delivery of written notice to Palomar, terminate this
Agreement in its entirety; provided that in the case of a breach of this
Agreement by Palomar that is capable of being cured, Distributor shall give
Palomar a period of ** days from receipt of notice of the breach to cure such
breach, after which the termination shall become effective if the breach has not
been cured.

        11.5 Termination upon Change of Control. Either party may, effective
immediately upon notice thereof, terminate this Agreement at any time following
a Change of Control of the other party. For purposes of this Agreement, a
“Change of Control” means (i) a sale of all or substantially all of the business
or assets to which this Agreement relates to a Competitor, (ii) a merger,
consolidation or reorganization involving either party in which a Competitor
becomes the owner of at least fifty percent (50%) of the voting equity
securities of that party, or (iii) the acquisition of fifty percent (50%) or
more of the voting equity securities of a party by a Competitor. For purposes of
this Agreement, a “Competitor” means any Third Party which, by itself or through
any of its Affiliates, is engaged or otherwise participating in any business or
other activity involving the manufacture for commercial sale or distribution of
products that compete with (a) Products, in the case of a Competitor of Palomar,
or (b) products manufactured and sold by Distributor during the Term, in the
case of a Competitor of Distributor.

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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        11.6 Survival.

          (a) No expiration or termination of this Agreement shall affect any
rights or liabilities of the parties which may have accrued prior to the date of
expiration or termination. Upon any expiration or termination of this Agreement
for any reason, in addition to any provisions that by their terms survive, the
provisions of Sections 1, 2.4, 3.6, 3.7, 3.8 (but only with respect to
Distributor’s sale of Products under the last sentence of Section 11.3), 4.5(b),
5, 6 (but only with respect to Orders accepted or deemed to have been accepted
by Palomar prior to such termination or expiration), 8, 9, 10, 11 and 12 shall
survive and shall continue in full force and effect in accordance with their
terms, and all other rights and obligations of the parties hereunder shall
terminate.

          (b) Upon and following any expiration or termination of this Agreement
for any reason, Distributor shall immediately cease holding itself out as an
authorized distributor for Palomar and using any and all Intellectual Property
Rights, Product Registrations and Proprietary and Confidential Material and
shall promptly (and in any event within ** days, or such longer period as may be
required to transfer Product Registrations provided Distributor has initiated
such transfer and uses commercially reasonable efforts to complete same)
transfer to Palomar or Palomar’s designee at no cost all Products, Product
samples, Product Registrations and Proprietary and Confidential Material.

          (c) Upon and following any expiration or termination of this Agreement
for any reason in its entirety, or upon termination of this Agreement with
respect to any country, Distributor shall promptly (and in any event within **
days) transfer to Palomar all current customer information specified in Section
4.2 to enable Palomar to continue to provide commercially reasonable service and
support (including extending the term of any service relationship). For clarity,
(i) once any such customer of Distributor first contacts Palomar or any of
Palomar’s distributors after expiration or termination of this Agreement (as
opposed to Palomar first contacting such customer), use of information regarding
such customer shall no longer be restricted or treated as customer information
of Distributor. Notwithstanding anything in this Agreement to the contrary,
after termination or expiration of this Agreement, Palomar and its distributors
are free to contact present and potential customers as part of its general
marketing efforts, as long as customer information provided by Distributor (and
not received by Palomar under the immediately preceding sentence) is not used as
part of such efforts.

12.     General.

        12.1 Notices. Any notice herein required or permitted to be given shall
be in writing, in the English language, and may be personally served, sent by
electronic mail or facsimile machine, or sent by first class mail or certified
mail, return receipt requested. Said notice shall be deemed to have been given
(a) if personally served, when served, (b) if by electronic mail, when received
at the proper address and confirmed by reply of the recipient, (c) if by
facsimile machine when received at the proper address and number, or (d) if
mailed, on the fifth (5th)

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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business day (for Palomar, in Boston, MA, and for Distributor, in Uppsala,
Sweden) after deposit in the mail with air mail postage, prepaid and properly
addressed. For the purposes hereof, the addresses of the parties hereto shall be
as follows:

If to Distributor: Q-Med AB (PUBL) Seminariegatan 21 752 28 Uppsala, Sweden
Attn: General Counsel, Legal Department Fax: +46 18 4749097 E-mail:
c.bolin@q-med.com

If to Palomar: Palomar Medical Technologies, Inc. 82 Cambridge Street
Burlington, MA 01803 Attn: Chief Financial Officer Fax: 781-418-1188 E-mail:
pweiner@palomarmedical.com

or to any other address as a party may give in accordance with this
Section 12.1.

        12.2 Counterparts and Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute but one and the same instrument. Any
signature on any notice or other document executed in connection with this
Agreement may be transmitted by facsimile and shall be treated for all purposes
as an original document.

        12.3 Governing Law. This Agreement shall be governed by and interpreted,
construed, and enforced in accordance with the laws of England, excluding its
conflicts of laws principles.

        12.4 Governing Language. The official text of this Agreement shall be
the English language, and any interpretation or construction of this Agreement
shall be based thereon. If this Agreement or any documents or notices relating
to it are translated into another language the English version shall be
controlling in the event of discrepancy between the two.

        12.5 Third Party Rights. Except as expressly provided hereunder, the
parties do not intend to confer any benefit hereunder on any person or entity
other than the parties hereto.

        12.6 Assignment. This Agreement or any rights hereunder may not be
assigned directly or indirectly by either party, without the other party’s prior
written consent (not to be unreasonably withheld), and any such attempted
assignment shall be null and void.

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Notwithstanding the foregoing, either party may assign this (a) to any of its
Affiliates or (b) subject to Section 11.5, to any Third Party in connection with
the sale or transfer, by merger, consolidation or otherwise, of all or
substantially all of the party’s business or assets to which this Agreement
relates. This Agreement and the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

        12.7 Severability. If any one or more of the provisions contained in
this Agreement is held invalid, illegal or unenforceable in any respect in any
jurisdiction within the Territory, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby in such jurisdiction. The Parties shall in such an instance use
their reasonable best efforts to replace the invalid, illegal or unenforceable
provision(s) with valid, legal and enforceable provision(s) which, insofar as
practical, implement the purposes of this Agreement in each applicable
jurisdiction within the Territory.

        12.8 Authority and Execution. Each party hereto represents and warrants
to the other party that the person executing this Agreement on behalf of such
party is duly and validly authorized to do so on behalf of such party, with full
right and authority to execute this Agreement and to bind such party with
respect to all of its obligations hereunder.

        12.9 Waivers; Amendments. Any waiver of a breach of any term or
condition of this Agreement shall be in writing and shall not operate as a
waiver of any other or subsequent breach of such term or condition or of any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. This
Agreement may be amended or modified in whole or in part at any time only by a
writing executed by the parties hereto.

        12.10 Entire Agreement. This Agreement (including the exhibits attached
hereto) constitutes the full and entire understanding and agreement of the
parties hereto with regard to the subjects hereof, and supersede all prior
agreements or understandings, written or oral, between the parties with respect
to the subject matter hereof.

        12.11 Force Majeure. Neither party shall be held liable or responsible
to the other party nor be deemed to have breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement (other than any
obligation to pay money) if, but only to the extent that, such failure or delay
results from causes beyond the reasonable control of the affected party,
potentially including fire, floods, embargoes, terrorism, war, acts of war
(whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or any other party; provided that
the party affected shall promptly notify the other of the force majeure
condition and shall exert commercially reasonable efforts to eliminate, cure or
overcome any such causes and to resume performance of its obligations as soon as
possible, and provided further that if any such force majeure condition occurs,
Palomar may allocate production and deliveries of Product among its customers
and distributors.

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        12.12 Further Actions. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes of this Agreement.

        12.13 Cumulative Remedies; Irreparable Harm. All rights and remedies of
the parties hereunder shall be cumulative and in addition to all other rights
and remedies provided hereunder or available by agreement, at law or otherwise.
Each party acknowledges that money damages alone shall not adequately compensate
the other party for breach of any of covenants and agreements of the party
herein and, therefore, agrees that in the event of the breach or threatened
breach of any such covenant or agreement, in addition to all other remedies
available to the other party, at law, in equity or otherwise, the other party
shall be entitled to injunctive relief compelling specific performance of, or
other compliance with, the terms hereof.

        12.14 Arbitration.

          (a) The parties recognize that disputes as to certain matters may from
time to time arise which relate to either party's rights or obligations
hereunder. It is the objective of the parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation. To accomplish this objective, the
parties agree to follow the procedures set forth in this Section 12.14, if and
when a dispute arises under this Agreement; provided that in the event a dispute
cannot be resolved without an adjudication of the rights or obligations of a
Third Party, the dispute procedures set forth in this Section 12.14 shall be
inapplicable as to such dispute.

          (b) In the event of a dispute between the parties, the parties shall
first attempt in good faith to resolve such dispute by negotiation and
consultation between themselves. In the event that such dispute is not resolved
on an informal basis within forty-five (45) days, any party may, by written
notice to the other, have such dispute referred to the parties’ respective
senior managers (or their designees) for attempted resolution by good faith
negotiations within thirty (30) days after such notice is received.

          (c) In the event the designated senior managers are not able to
resolve such dispute, either party may at any time after the thirty (30) day
period submit such dispute to be finally settled by arbitration under the Rules
of Arbitration of the International Chamber of Commerce by one or more
arbitrators appointed in accordance with said Rules then in effect, except when
in conflict with the terms of this Agreement. Such arbitration shall take place
in London, England. The language of the arbitration shall be English. The
arbitration award so given shall be a final and binding determination of the
dispute and shall not include any damages expressly prohibited by Section 8.5.
Except in a proceeding to enforce the results of the arbitration or as otherwise
required by law, neither party nor any arbitrator may disclose the existence,
content or results of any arbitration hereunder without the prior written
consent of both parties.

          (d) Notwithstanding the foregoing dispute resolution procedure, in the
event of an actual or threatened breach hereunder, the aggrieved party may seek
equitable relief (including restraining orders, specific performance or other
injunctive relief) without submitting

22

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  to such dispute resolution procedure if there is a reasonable likelihood of
the occurrence of irreparable harm during the period of the dispute resolution
procedure.

        12.15 Parties Advised by Counsel. This Agreement has been negotiated
between unrelated parties who are sophisticated and knowledgeable in the matters
contained in this Agreement and who have acted in their own self interest. In
addition, each party has had the opportunity to seek advice of legal counsel.
This Agreement shall not be interpreted or construed against any party to this
Agreement because that party or any attorney or representative for that party
drafted or participated in the drafting of this Agreement.

        12.16 Publicity.

          (a) Press Releases. Subject to Section 12.16(b), press releases or
other similar public communications by a party relating to this Agreement shall
be subject to a right of reasonable prior review and approval by the other
party, which approval shall not be unreasonably withheld or delayed, provided
that such right of approval shall not apply to communications required by
applicable law or regulation, disclosures of information for which consent has
previously been obtained, or information that has been previously disclosed
publicly, and provided, further, that any draft press release or other public
communication submitted to a party for its approval shall be deemed approved if
such party fails to notify the submitting party within five (5) business days
(for Palomar, in Boston, MA, and for Distributor, in Uppsala, Sweden) of receipt
thereof as to whether or not it has been approved.

          (b) Terms and Conditions of this Agreement. Distributor understands
and agrees that Palomar shall submit a copy of this Agreement to the United
States Securities and Exchange Commission (“SEC”), and Palomar agrees to submit
to the SEC a confidential treatment request for Exhibits B,C and E attached
hereto and certain other portions of this Agreement. For all portions of this
Agreement that are so redacted, either party may disclose them to others as such
party deems reasonably necessary for its business under commercially reasonable
confidential provisions.

        12.17 Captions, Section Headings. As used in this Agreement, “including”
means “including but not limited to”, and “herein”, “hereof” and“hereunder”
refer to this Agreement as a whole. The Section headings used herein are for
reference and convenience only, and shall not enter into the interpretation of
this Agreement. Unless otherwise expressly provided herein, any reference to a
number of “days” hereunder shall refer to calendar days. References to Sections
include subsections, which are part of the related Section (e.g., a section
numbered“Section 2.2(a)” would be part of“Section 2.2”, and references to
“Section 2” would also refer to material contained in“Section 2.2”).

[remainder of this page intentionally left blank]

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IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed by
their authorized representatives as of the date first above written.

Q-MED AB (PUBL) PALOMAR MEDICAL TECHNOLOGIES, INC.     By:  /s/ Bengt
Ågerup                             By:  /s/ Joseph P.
Caruso                                          Name:  Bengt
Ågerup                             Name:  Joseph P.
Caruso                                           Title:  Chief Executive
Officer                Title:   Chief Executive Officer and President        

24

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EXHIBIT A
DEFINITIONS

        “Aesthetic Use” means (i) hair removal, (ii) the treatment or prevention
of cellulite, (iii) cosmetic anti-aging skin applications (including wrinkle
reduction, improvement in skin tone, texture and elasticity, and removal of
pigmented and vascular lesions), (iv) body recontouring, (v) the removal,
treatment or prevention of warts, subcutaneous fat, acne, tattoos, scars, birth
marks, oily skin and skin blemishes, and (vi) other dermatological applications,
but not any dentistry or any other non-dermatologic applications.

        “Affiliates” means, with respect to a 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 party, in each case only for
so long as such person or entity satisfies the foregoing requirement. For
purposes of this definition, “control” and, with correlative meanings, the terms
“controlled by” and “under common control with” means (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.

        “Excluded Markets” means (i) the market, comprised of consumers, for
personal use of systems (i.e., devices, handpieces and their associated
supplies, parts and components), whether sold to consumers directly or by resale
by physicians, health care providers, other commercial service providers or
others, (ii) the market, comprised of governmental entities, for personal use of
systems by military personnel, or (iii) any other market, comprised of persons
or entities other than physicians or health care providers, to which systems are
developed, designed or intended by Palomar to be sold, as noticed in writing by
Palomar to Distributor.

        “North America” means Canada and the United States of America, and each
of their respective territories and possessions

        “Products” means those systems (i.e., devices, handpieces and their
associated supplies, parts and components) of Palomar that from time to time are
part of Palomar’s line of intense pulsed light and laser systems for Aesthetic
Use in the Professional Market, which systems are specifically identified on
Exhibit D attached hereto and which Exhibit D may be modified by Palomar from
time to time.

        “Product Registrations” means existing and future marketing and
regulatory authorizations relating to the Products in the Territory, including
such authorizations relating to any and all existing and future Aesthetic Uses
for the Products.

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        “Professional Market” means the market, comprised of physicians, health
care providers or other commercial service providers, for the use of systems
(i.e., devices, handpieces and their associated supplies, parts and components)
on or with patients or customers (but not for resale to any person or entity
other than the foregoing physicians, health care providers and commercial
service providers), and in all events other than the Excluded Markets.

        “Sub-Distributor” means any Third Party or Affiliate of Distributor
appointed by Distributor to engage in the distribution of Products anywhere in
the Territory.

        “Territory” means those countries designated as within the Territory
pursuant to the procedures set forth in Section 2, as of the applicable
Transition Date.

        “Third Party” means any person or entity, other than Palomar,
Distributor or any Affiliates of Palomar or Distributor.

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EXHIBIT B
PRODUCT TERMS

**

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.
An aggregate of 3 pages were omitted.

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EXHIBIT C
PALOMAR INTERNATIONAL PRICE LIST

**

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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EXHIBIT D
PRODUCTS

The Palomar StarLux® 300 Pulsed® Light and Laser System (“StarLux 300”)

The Palomar StarLux® 500 Pulsed Light and Laser System (“StarLux 500”)

The Palomar MediLux® Pulsed Light System (“MediLux”)

The Palomar EsteLux® Pulsed Light System (“EsteLux”)

The Palomar Q-YAG 5™ Q-Switched Nd:YAG Laser System (“Q-YAG 5”)

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EXHIBIT E
CUSTOMER INFORMATION

**

**Omitted pursuant to request for confidential treatment by
Palomar Medical Technologies, Inc. and filed separately with the SEC.

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LIBC/3190796.6