Exhibit 10.1

DEVELOPMENT AND LICENSE AGREEMENT

        THIS DEVELOPMENT AND LICENSE AGREEMENT (this “Agreement”) is entered
into as of February 14, 2003 (the “Effective Date”), by and between The Gillette
Company, a Delaware corporation (“The Gillette Company,” and collectively with
its Affiliates, “Gillette”), and Palomar Medical Technologies, Inc., a Delaware
corporation (“Palomar Medical Technologies, Inc.,” and collectively with its
Affiliates, “Palomar”). Gillette and Palomar are sometimes referred to herein
individually as a “party” and collectively as the “parties.”

RECITALS

        WHEREAS, Palomar has developed light-based systems for, among other
things, the management of human hair;

        WHEREAS, Gillette has specialized experience in, among other things, the
development and worldwide commercialization of consumer hair management products
and systems for personal use; and

        WHEREAS, subject to the terms and conditions set forth below, the
parties desire to enter into a collaboration for the development and
commercialization of light-based, consumer products and systems for personal use
for female hair management.

        NOW, THEREFORE, in consideration of the foregoing premises, the mutual
promises and covenants of the parties contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby agree
as follows:

ARTICLE I
R&D PROGRAM

        1.1 IN GENERAL.

                (a)   Conduct of the R&D Activities. Each of Palomar and
Gillette shall perform, or cause to be performed, its respective R&D Activities
in accordance with this Agreement, including the initial R&D plan attached
hereto as Exhibit A (the “Initial R&D Plan”). The Initial R&D Plan shall be
revised, updated and extended as the R&D Committee may direct at least
semi-annually, with the Initial R&D Plan and any such revisions, updates or
extensions thereto hereinafter referred to as the “R&D Plan.”

                (b)   Scope of the R&D Program. The purpose of the R&D Program
shall be to develop one or more Light-Based Hair Management Products in the
Female Field, including the First Female Product.

                (c)   Duration of the R&D Program. The term of the R&D Program
shall commence on April 1, 2003 (the “Commencement Date”) and, unless earlier
terminated in accordance with Section 10.4(a), shall end on the latest to occur
of (i) nine hundred twelve (912)

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days after the Commencement Date, (ii) the date on which Palomar has completed
the last R&D Activity required to be performed by Palomar pursuant to the R&D
Plan, or (iii) the date on which Regulatory Approval in the United States is
received for the First Female Product (the “R&D Period”).

                (d)   R&D Leader and Key Personnel. Each party shall conduct its
day-to-day R&D Activities under the direction and supervision of a project
leader designated by such party (the “R&D Leader”). The R&D Leader of each party
shall be the primary contact for the other party with respect to the R&D
Activities. The R&D Leader and the other scientific and technical personnel of
Palomar considered by Gillette to be key personnel for the R&D Activities (the
“Palomar Key Personnel”), and the minimum amount of time that each will devote
to the R&D Activities, are listed by name or job description on Schedule 1.1(d).
(For those Key Personnel listed on Schedule 1.1(d) by job description but not by
name, at the point at which Palomar assigns a Person to the position, it will
notify Gillette in writing of the identity of such Person and the position to
which such Person was assigned). Palomar shall not substitute persons for the
Palomar Key Personnel or materially reduce the time commitment of any Palomar
Key Personnel to the R&D Activities without the prior written approval of
Gillette, which approval with respect to the Palomar Key Personnel other than
the R&D Leader shall not be unreasonably withheld. Palomar shall use
commercially reasonable efforts to obtain from each of its Key Personnel and
other persons substantially involved in conducting Palomar’s obligations with
respect to the R&D Activities, Additional Activities and Commercial Assessment
Period Additional Activities covenants not to compete with Palomar in the
development or commercialization of Light-Based Hair Management Products in the
Field during such person’s involvement in the R&D Activities or this Agreement
and for a six (6) month period following the termination of such person’s
involvement in such activities. During the Restricted Access Period, Palomar
shall not be required to disclose to Gillette or any Gillette representative
serving on the R&D Committee any data or information concerning any Female
Product, Palomar Technology or any other Information and Inventions, other than
that data and information with respect to which Gillette has a right of
evaluation during such period pursuant to Section 1.3(a)(i), or as the parties
may otherwise mutually agree.

                (e)   Subcontracting. Either party may subcontract its work
obligations for the R&D Activities; provided, however, that except in the case
of R&D Activities designated in the R&D Plan as activities for which
subcontractors will be used (the “R&D Plan Subcontracted Activities”), Palomar
shall not subcontract R&D Activities without Gillette’s prior written consent in
any instance where a single subcontractor Person will be paid more than
seventy-five thousand dollars ($75,000) or in the event that all subcontractors
will be paid more than three hundred and seventy-five thousand dollars
($375,000) in the aggregate for all R&D Activities (other than R&D Plan
Subcontracted Activities) subcontracted by Palomar hereunder. Each party shall
be responsible to the other for the performance of any of its subcontractors
under any provisions of this Agreement for which such party is responsible.
Neither party shall disclose to any subcontractor nor permit any subcontractor
to use the other party’s Technology, nor any Joint Technology, Confidential
Information or Controlled Information without provisions safeguarding non-use
and non-disclosure at least as restrictive as those provided in this Agreement.

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        1.2 Palomar Rights and Obligations During R&D Period. All of Palomar’s
obligations under this Section 1.2 are subject in part to Gillette’s payment
obligations with respect to the R&D Program as provided in Section 1.3(b)(iii):

                (a)   In General. Palomar shall (i) perform, or cause to be
performed, its R&D Activities as required pursuant to the R&D Plan in good
scientific manner, and in compliance in all material respects with all
Applicable Law and good clinical, laboratory and Manufacturing practices, and
(ii) allocate sufficient time, effort, equipment and skilled personnel to
complete its R&D Activities. Without limiting the foregoing, Palomar’s
obligations under the R&D Plan shall include consulting with Gillette during the
R&D Period and informing Gillette in a timely manner of Palomar’s research and
development with respect to Female Products.

                (b)   Reporting. Within thirty (30) days after the end of each
Calendar Quarter in which R&D Activities are performed, Palomar shall provide to
the R&D Committee a written progress report, which report shall describe the R&D
Activities Palomar has performed, or cause to be performed, during such Calendar
Quarter, evaluate the work performed in relation to the goals of the R&D Plan,
and provide such other information as may be required by the R&D Plan or,
subject to Section 1.3(a)(i), reasonably requested by the R&D Committee with
respect to the R&D Activities.

                (c)   Supply of Resources and Facilities for Use in R&D Program.
Subject to Section 1.3(b)(iii), Palomar shall supply at no additional cost to
Gillette, any and all funding, materials, equipment, facilities and other
resources reasonably required to carry out Palomar’s obligations under the R&D
Plan.

                (d)   R&D and Clinical Supply of Prototypes During the R&D
Period. Subject to Section 1.3(a)(i), as provided in the R&D Plan, Palomar shall
supply Prototypes (i) for use by Gillette in conducting an evaluation of the
First Female Product, Palomar Technology or the R&D Activities, and (ii) for use
by the parties in carrying out the R&D Activities, including Clinical Trials, in
each case in the number and within the time period provided in the R&D Plan.
Such Prototypes when provided by Palomar to Gillette shall be treated as Palomar
Confidential Information hereunder, and during the Restricted Access Period,
Gillette may use the Prototypes only in accordance with the protocols developed
by Gillette, provided that, (i) prior to using the Prototypes, Gillette shall
provide to Palomar advance written notice of such protocols and any material
changes thereto made by Gillette subsequent to providing such notice, (ii)
Palomar shall have forty-eight (48) hours to provide to Gillette comments
thereon and (iii) upon Gillette’s receipt of any such comments prior to the
expiration of such period Gillette shall consult with Palomar in good faith
regarding such comments prior to using the Prototypes. Gillette shall promptly
disclose to Palomar all Information and Inventions arising from the use of the
Prototypes in accordance with Section 8.1(c)(i). ALL PROTOTYPES ARE PROVIDED “AS
IS”, WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND. In the event that
Gillette reasonably requests Palomar to supply more than the number of
Prototypes that Palomar is required to deliver to Gillette pursuant to the R&D
Plan, Palomar shall supply such additional Prototypes and Gillette shall pay for
them in accordance with Section 1.8 as Additional Activities hereunder.

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                (e)   Regulatory Approval. Palomar shall have the right, in
consultation with Gillette, to develop the appropriate strategy for obtaining
and maintaining the Regulatory Approval in the United States for the First
Female Product, provided that all IDEs, Regulatory Documentation and other
filings, applications or requests pursuant to or in connection with the
Regulatory Approval in the United States for the First Female Product shall be
made in the name of Palomar (all U.S. Regulatory Documentation developed by
Palomar for the First Female Product, the “Palomar U.S. Regulatory
Documentation”). Palomar shall use Commercially Reasonable Efforts consistent
with the R&D Plan to obtain Regulatory Approval for the First Female Product in
the United States within the applicable FDA Approval Period. Palomar shall
conduct all communications with the U.S. Regulatory Authorities with regard to
the First Female Product; provided, however, that subject to all Applicable Law,
Palomar shall (i) notify Gillette as soon as reasonably practicable in advance
of all meetings and significant communications with the U.S. Regulatory
Authorities relating to the First Female Product, (ii) permit representatives of
Gillette to attend such meetings, unless Gillette representatives’ presence
would materially impede the Regulatory Approval process in the United States,
and (iii) forward to Gillette copies of written correspondence to and from the
U.S. Regulatory Authorities related to the First Female Product, promptly upon
submission thereto or receipt therefrom, as applicable. Notwithstanding anything
contained in this Section 1.2(e) to the contrary, and without limitation of any
other right or remedy that may be available to Gillette, in the event that
Palomar refuses or otherwise fails during any one hundred and eighty (180) day
period during the R&D Period to use Commercially Reasonable Efforts consistent
with the R&D Plan to obtain Regulatory Approval for the First Female Product in
the United States, upon thirty (30) days’ prior written notice to Palomar and
Palomar’s failure to cure such refusal or failure within forty-five (45) days of
Palomar’s receipt of such notice, Gillette shall have the right to seek
Regulatory Approval for the First Female Product in the United States in the
name of Gillette, and shall have the right to reference and otherwise use any
Palomar U.S. Regulatory Documentation in connection therewith, consistent with
the terms of the license granted by Palomar to Gillette in Section 4.1(a)(ii).

        1.3 GILLETTE RIGHTS AND OBLIGATIONS DURING R&D PERIOD.

                (a)   Gillette’s Access Rights.

                                (i)   Gillette’s Right of Evaluation During
Restricted Access Period. During the Restricted Access Period, Gillette shall
have access to clinical and safety data relating to the First Female Product,
but no Palomar Technology or other Information and Inventions owned or
Controlled by Palomar. During such period, Palomar shall supply to Gillette
pursuant to Section 1.2(d) and in accordance with the R&D Plan such Prototypes
as Gillette may reasonably request for the purpose of evaluating the safety,
efficacy and functionality of such Prototypes; provided, however, that Gillette
shall not reverse engineer, disassemble, decompile or otherwise modify, test or
analyze the Prototypes, any part thereof or software contained therein during
such period.

                                (ii)   Gillette’s Right of Access After
Restricted Access Period. In the event that Gillette does not terminate this
Agreement pursuant to Section 10.4(a), from and after the expiration of the
Restricted Access Period, Gillette shall have the right from time to time during
the R&D Period upon written request to Palomar to evaluate all Regulatory

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Documentation and all Information and Inventions relating to or comprising any
Female Product(s) or the Palomar Technology, but in each case only to the extent
Controlled by Palomar. Within five (5) business days of receipt of such request,
Palomar shall (1) provide to Gillette copies of any and all Regulatory
Documentation, Patents and inventions disclosure documents, and copies of any
other documentation reasonably requested by Gillette (in the form in which such
other documentation is maintained by Palomar), (2) grant access to Gillette
during reasonable business hours at Palomar’s research facility for Gillette to
review all such documentation and such Information and Inventions, and (3)
respond to reasonable inquiries made by Gillette relating to such documentation
and Information and Inventions, in each of clauses (1) and (2), that has not yet
been disclosed to Gillette.

                (b)   Gillette Obligations.

                                (i)   In General. Gillette shall (A) perform, or
cause to be performed, its R&D Activities as required pursuant to the R&D Plan
in good scientific manner, and in compliance in all material respects with all
Applicable Law and good clinical, laboratory and Manufacturing practices, and
(B) allocate sufficient time, effort, equipment and skilled personnel to
complete its R&D Activities. Without limiting the foregoing, Gillette’s
obligations under the R&D Plan shall include consulting with Palomar during the
R&D Period and informing Palomar in a timely manner of Gillette’s development
and commercialization-related decisions with respect to Female Product(s).

                                (ii)   Regulatory Approval. Gillette shall have
the right to obtain and maintain Regulatory Approval(s) for (A) the First Female
Product in all countries other than the United States, and (B) all Female
Products other than the First Female Product in all countries worldwide, and all
IDEs, Regulatory Documentation, and other filings, applications or requests
pursuant to or in connection with the such Regulatory Approvals shall be made in
the name of Gillette (or its designee). During the Exclusivity Period, at
Gillette’s written request, Palomar shall consult with Gillette on the process
of filing for and obtaining Regulatory Approvals for such Female Products in
such countries. Gillette shall pay Palomar in accordance with Section 1.8 for
all Costs incurred by Palomar in connection with Palomar’s performance of its
obligations pursuant to this Section 1.3(b)(ii) as Additional Activities
hereunder.

                                (iii)   R&D Funding for the Initial R&D Plan.
Prior to the first day of the applicable Calendar Quarter, Gillette shall pay to
Palomar the amounts set forth in Section 6.1(b). Gillette’s total obligations to
make payments to Palomar in connection with Palomar’s performance of its
obligations under the Initial R&D Plan shall be as set forth in Section 6.1(b).
In the event that Palomar’s costs and expenses relating to the Initial R&D Plan
(including obtaining Regulatory Approval for the First Female Product in the
United States) exceed the amount to be paid by Gillette to Palomar with respect
to such activities, then Palomar shall bear such excess costs and expenses
unless otherwise agreed in writing by the parties or except as otherwise
provided pursuant to Section 1.6(b).

                                (iv)   Reporting. Within thirty (30) days after
the end of each Calendar Quarter in which R&D Activities are performed, Gillette
shall provide to the R&D Committee a written progress report, which report shall
describe the R&D Activities Gillette has performed, or caused to be performed,
during such Calendar Quarter, evaluate the work

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performed in relation to the goals of the R&D Plan, and provide such other
information as may be required by the R&D Plan or reasonably requested by the
R&D Committee with respect to the R&D Activities.

                                (v)   Gillette Costs. Gillette shall be solely
responsible for all costs and expenses (including all its Costs) that it incurs
in connection with the R&D Activities.

        1.4 R&D COMMITTEE.

                (a)   Formation and Authority of R&D Committee. Palomar and
Gillette shall establish a research oversight and management committee (the “R&D
Committee”), which shall oversee the R&D Activities performed by the parties and
approve any changes in the R&D Plan.

                (b)   Composition of R&D Committee. The R&D Committee shall be
comprised of two (2) representatives of each of Gillette and Palomar. Each party
shall designate one (1) of its representatives to be such party’s “R&D Committee
Leader.” Each party shall notify the other of its initial representatives and
R&D Committee Leader within ten (10) business days after the execution of this
Agreement. From time to time, each party may substitute its representatives or
R&D Committee Leader on three (3) days’ prior written notice to the other party.

                (c)   Procedural Rules of R&D Committee. The R&D Committee shall
meet at least once each Calendar Quarter, or as otherwise agreed to by the
parties, with the location of such meetings alternating between Palomar and
Gillette facilities. In the event that either party hosts a R&D Committee
meeting at a site outside of Eastern Massachusetts, the hosting party shall
reimburse the other party for all reasonable out-of-pocket travel expenses
incurred by the other party in having its members of the R&D Committee attend
such meeting. The R&D Committee Leaders shall send notices and agendas for all
regular R&D Committee meetings to all R&D Committee members. Each party shall
use commercially reasonable efforts to cause its representatives to attend the
meetings of the R&D Committee. A representative of Gillette shall be designated
at all times to act as the chair of the R&D Committee (the “R&D Committee
Chair”). The R&D Committee shall adopt such standing rules as shall be necessary
for its work. A quorum of the R&D Committee shall exist whenever there is
present at a meeting at least one (1) representative appointed by each party.
Members of the R&D Committee may attend a meeting either in person or by
telephone, video conference or similar means in which each participant can hear
what is said by the other participants. Representation by proxy shall not be
allowed. In addition, each party may, at its discretion, invite non-voting
employees, and with the consent of the other party, consultants or vendors, to
attend the meetings of the R&D Committee. Subject to Section 1.4(d), the R&D
Committee shall take all action by (i) consensus of the R&D Committee Leader of
both Gillette and Palomar, or if the R&D Committee Leader for either party is
not present at the meeting, the other representative of such party present at a
meeting at which a quorum exists, or (ii) by written resolution approved by all
of the members of the R&D Committee.

                (d)   Resolution of Disputes Arising Among the R&D Committee.
Issues coming before the R&D Committee that require action, approval or
resolution and for which the

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R&D Committee is unable to reach consensus as provided in Section 1.4(c) on a
mutually acceptable action, approval or resolution, shall be resolved by the R&D
Committee Chair, provided, however, that at the written request of the Palomar
R&D Committee Leader, prior to final resolution of any dispute by the R&D
Committee Chair, a meeting shall be held between the Chief Executive Officer of
Palomar and the Vice President of Research and Development of The Gillette
Company, who shall attempt in good faith to negotiate a resolution (subject to
Board of Directors or equivalent approval, where applicable). In the event of
any such escalation of a dispute, Gillette shall retain the final right of
decision, except that in case of any disputed matter, the resolution of which by
Gillette would result in (i) a significant delay in the timetable for the
development or Regulatory Approval of the First Female Product, or (ii) an
increase in the costs relating to the development or Regulatory Approval of the
First Female Product, such change shall require the mutual written consent of
both parties unless, with respect to clause (ii) only (and not clause (i)),
Gillette agrees to bear one hundred percent (100%) of such additional costs.
This Section 1.4(d) shall not apply to the procedure established by the parties
pursuant to Section 8.2(a).

                (e)   Minutes of R&D Committee Meetings. The party hosting any
meeting shall appoint one person (who need not be a member of the R&D Committee)
to attend the meeting and record the minutes of the meeting. Such minutes shall
be circulated to the parties promptly following the meeting for review, comment
and distribution. Such minutes shall be deemed approved by both of the parties
unless a party objects to the accuracy of such minutes by providing written
notice to the other party within ten (10) days of receipt of such minutes. Any
modifications to the R&D Plan approved at a R&D Committee meeting shall be
considered approved and shall constitute an amendment thereto upon R&D Committee
ratification of the meeting minutes related thereto.

                (f)   Limitations on Authority of R&D Committee. Each party to
this Agreement shall retain the rights, powers, and discretion granted to it
under this Agreement, and no such rights, powers, or discretion shall be
delegated to or vested in the R&D Committee unless such delegation or vesting of
rights is expressly provided for in this Agreement or the parties expressly so
agree in writing. Except in the case of amendments to the R&D Plan made pursuant
to Section 1.4(e), the R&D Committee shall not have the power to amend or modify
this Agreement, which may only be amended or modified as provided in
Section 14.7.

        1.5 R&D Records. Palomar and Gillette each shall maintain, or cause to
be maintained, records of its respective R&D Activities in sufficient detail and
in good scientific manner appropriate for patent and regulatory purposes, which
shall be complete and accurate and shall fully and properly reflect all work
done and results achieved in the performance of its respective R&D Activities,
and which shall be retained by such party for at least five (5) years after the
termination of this Agreement, or for such longer period as may be required by
Applicable Law or for the pendency of any application for Patent. Each party
shall have the right, during normal business hours and upon reasonable notice,
to inspect and copy any such records; provided, however, that Palomar shall not
have any obligation to make such records available to Gillette during the
Restricted Access Period, to the extent that such records (a) contain
information other than information as to which Gillette has a right of
evaluation during

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such period pursuant to Section 1.3(a)(i), or (b) concern Joint Inventions and
related Joint Technology with respect to which Palomar has no disclosure
obligation pursuant to Section 8.1(c)(i).

        1.6 GILLETTE’S FIRST DECISION POINT.

                (a)   The First Decision Point. On or before the First Decision
Point, Gillette shall determine in its sole discretion whether it desires to
continue participating in the development and commercialization of the Female
Product(s). In the event that Gillette determines on or before the First
Decision Point not to continue participating in such development and
commercialization, Gillette shall terminate this Agreement pursuant to
Section 10.4(d). In the event that Gillette fails to terminate this Agreement
pursuant to Section 10.4(d), Gillette shall be deemed to have elected to
continue participating in such development and commercialization and Gillette
shall make the First Development Completion Payment to Palomar pursuant to
Section 6.1(d)(i) on or before the First Development Completion Payment Date.

                (b)   Assumption that Pre-Market Approval Not Required. The
Initial R&D Plan has been prepared and the initial R&D Payments have been
determined on the assumption that the First Female Product will be a 510(k)
Product and not a PMA Product. In the event that the First Female Product is
determined by the FDA to be a PMA Product, Gillette may elect to terminate this
Agreement in accordance with Section 10.4(b), or elect to continue participating
in such development and commercialization for such product. In the event that
Gillette elects to continue participating in such development and
commercialization, the parties shall cooperate in good faith to agree upon a
revised R&D Plan and additional R&D Payments required to implement and carry out
such revised plan, provided that, subject to Gillette’s right to credit certain
amounts pursuant to the proviso in this sentence, Gillette shall be solely
responsible for any incremental Costs of Palomar and Gillette, and shall pay
Palomar additional R&D Payments in an amount equal to Palomar’s incremental
Costs, which result from or relate to classification of such product as a PMA
Product; provided, however, that fifty percent (50%) of the total amount of such
incremental Costs, not to exceed in the aggregate two million five hundred
thousand dollars ($2,500,000), are creditable by Gillette against the First
Development Completion Payment only (and no other payments owed by Gillette to
Palomar hereunder), if any, owed by Gillette to Palomar. Following the adoption
by the parties of such revised R&D Plan, the parties shall cooperate in good
faith to implement and carry out the R&D Activities set out in such R&D Plan.

        1.7 Additional Light-Based Hair Management Product(s). After the
Restricted Access Period and during the Exclusivity Period, Palomar shall
promptly notify Gillette in writing of each Light-Based Hair Management Product
other than the First Female Product, which (a) has an application in the Female
Field, (b) is reasonably expected to be commercially successful, and (c) is
Controlled by Palomar (each an “Additional Light-Based Hair Management
Product”). Palomar shall provide to Gillette with respect to each Additional
Light-Based Hair Management Product a report (the “Additional Product Report”)
providing material data and information Controlled by Palomar, in whole or in
part, concerning (i) such product’s safety and efficacy, (ii) its commercial
potential, and (iii) the intellectual property rights Controlled by Palomar, in
whole or in part, claiming or covering such product, and

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contractual obligations of Palomar and any known patent-related or other
restriction that Palomar reasonably believes would limit or otherwise affect the
parties’ rights to fully Exploit such product. In the event that Gillette
desires to develop and commercialize such Additional Light-Based Hair Management
Product in the Female Field jointly with Palomar, the parties shall negotiate in
good faith to agree upon an R&D plan (with respect to each additional product, a
“Supplemental R&D Plan”) and R&D payments (with respect to each additional
product, “Supplemental R&D Payments”) for such product. Upon the parties
entering into a mutually acceptable written agreement adopting the Supplemental
R&D Plan and the Supplemental R&D Payments with respect to such Additional
Light-Based Hair Management Product, references herein to the “R&D Plan” and
“R&D Payments” shall automatically be deemed to include references to the
“Supplemental R&D Plan,” and “Supplemental R&D Payments,” respectively. Any such
Additional Light-Based Hair Management Product, and the parties’ rights and
obligations with respect thereto, shall be subject to the terms and conditions
of this Agreement, including ARTICLE VI, except to the extent that any term or
condition (A) applies expressly or by clear implication only to the First Female
Product developed pursuant to this Agreement, or (B) is supplemented, modified
or replaced by the Supplemental R&D Plan or Supplemental R&D Payments, or is
otherwise amended by the parties pursuant to Section 14.7. All information
contained in the Additional Product Report shall be treated as Palomar
Confidential Information hereunder. This Section 1.7 shall terminate in its
entirety when the Exclusivity Period ends or is terminated. For the avoidance of
doubt, Gillette’s election not to develop or commercialize jointly with Palomar
any Additional Light-Based Hair Management Product shall not in any way diminish
or otherwise affect the licenses or other rights that are granted by Palomar to
Gillette in this Agreement.

        1.8 PALOMAR COSTS.

                (a)   Additional Activities.

                                (i)   Gillette may request that Palomar perform
or have performed activities or services during the term of this Agreement,
provided Gillette pay Palomar’s reasonable Costs arising therefrom in accordance
with this Section 1.8(a), pursuant to various provisions of this Agreement (such
activities and services in each case, “Additional Activities”). Additional
Activities include, without limitation, any activities or services to be
performed by Palomar that are subsequently added to the Initial R&D Plan. This
Section 1.8 specifies the procedure whereby Gillette shall pay Palomar’s Costs
for the performance of Additional Activities:

                                        (1)   With respect to all incremental
out-of-pocket costs and expenses to be incurred by Palomar in the performance of
Additional Activities, including all costs for materials, Palomar shall have the
right to invoice Gillette for fifty percent (50%) of such out-of-pocket costs
and expenses upon Palomar issuing a purchase order to a Third Party giving rise
to them, and Gillette shall pay Palomar such amounts within forty-five (45) days
of receiving such invoice from Palomar with no right of set-off. For all
Palomar’s incremental Costs incurred in performing Additional Activities, other
than those out-of-pocket costs and expenses already paid by Gillette in
accordance with the immediately preceding sentence, Palomar shall invoice
Gillette on a monthly basis for all Costs already incurred by Palomar, and
Gillette shall pay Palomar in full within forty-five (45) days of receiving such
invoice from

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Palomar with no right of set-off or credit. Palomar shall provide to Gillette
with any such invoice a detailed summary of any and all Costs incurred by
Palomar during the period covered by such invoice, which summary shall be
accompanied by documentation of any such Costs. For the avoidance of doubt,
incremental out-of-pocket costs and other Costs incurred by Palomar in
connection with Additional Activities shall include only those costs which are
in addition to amounts that Palomar was to incur prior to Gillette’s request
that it perform such Additional Activities, and any amount allocable to R&D
Activities that the R&D Committee cancels, reduces or for which Additional
Activities are substituted, shall be applied to offset or credit costs incurred
by Palomar in connection with Additional Activities.

                                        (2)   At Gillette’s request and prior to
the performance of any Additional Activities, Palomar shall provide Gillette
with a reasonably detailed good faith estimate of Palomar’s Costs for the
performance of Additional Activities after receiving from Gillette a reasonably
detailed description of such Additional Activities (the “Estimate”). At
Gillette’s request, the parties shall meet and discuss the Estimate. In the
event that Palomar reasonably anticipates that Palomar’s Costs for the
performance of Additional Activities will be greater than the applicable
Estimate (an “Overrun”), then Palomar shall, prior to performing the portion of
Additional Activities which will result in the Overrun, notify Gillette and
provide Gillette with a reasonably detailed accounting of the difference between
Palomar’s revised estimate of its Costs and the original applicable Estimate. At
Gillette’s option, (A) some or all of the remaining Additional Activities shall
be postponed or canceled, or (B) Palomar shall continue to perform such
Additional Activities and the parties shall negotiate in good faith to provide
for an increase in the Estimate to cover any such difference, which increase
shall be due and payable as provided in Section 1.8(a)(i)(1); provided, however,
that in the event that Gillette elects to have Palomar proceed with such
Additional Activities, Gillette shall not be required to pay to Palomar any
Costs that exceed the Estimate for the relevant activities by more than twenty
percent (20%) without Gillette’s prior written consent (the “Authorized
Overruns”).

                (b)   Books. Palomar shall maintain materially complete and
accurate books, records and accounts that, in reasonable detail, fairly reflect
any Costs to be paid by Gillette pursuant to this Section 1.8 in conformity with
GAAP. Such books, records and accounts shall be Palomar Confidential
Information. Palomar shall retain such books, records and accounts until the
later of (1) three (3) years after the end of the period to which such books,
records and accounts pertain, or (2) the expiration of the applicable tax
statute of limitations (or any extensions thereof), or for such longer period as
may be required by Applicable Law. Gillette shall have the right, during normal
business hours and upon reasonable notice, to inspect and copy any such books,
records and accounts for purposes of conducting an audit of them.

ARTICLE II
COMMERCIALIZATION

        2.1 GILLETTE’S COMMERCIALIZATION RIGHTS AND OBLIGATIONS.

                (a)   Gillette’s Commercialization Rights and Obligations. From
and after the expiration of the R&D Period for the First Female Product, until
such time as Gillette elects to opt-out of the commercialization of such product
pursuant to Section 2.3, Gillette shall have the following rights and
responsibilities:

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                                (i)   Commercialization of Female Products.
Subject to Palomar’s obligations as set forth in Section 2.2, during the
Exclusivity Period, Gillette shall have the sole right to commercialize,
Manufacture or have Manufactured, distribute and sell the Female Product(s). The
parties acknowledge and agree that all commercialization decisions, including
decisions relating to which, if any, of the Palomar Technology, Joint Technology
or Gillette Technology shall be incorporated in, or used to Manufacture, Female
Products, and Gillette’s Exploitation and pricing of the Female Products, shall
be within the sole discretion of Gillette. Subject to Section 3.1, Gillette
reserves the right to determine the Product Specifications for Female Product(s)
that Gillette commercializes. Palomar acknowledges that Gillette is in the
business of researching, developing, Manufacturing, marketing and selling
consumer products and nothing in this Agreement shall be construed as imposing
on Gillette the duty to Exploit or otherwise commercialize any Female Product
for which payments are due hereunder to the exclusion of, or in preference to,
any other Gillette product.

                                (ii)   Manufacturing. Subject to Section 3.1,
Gillette shall have the right to Manufacture (or to have Manufactured by a Third
Party) a supply of each Female Product for use in CUTs and all commercial supply
of each Female Product for sale to consumers for use in the Consumer Field. In
accordance with the terms of Section 1.3(b)(ii), Palomar shall cooperate with
Gillette in good faith and assist Gillette in obtaining any and all Regulatory
Approvals required for Gillette or such Third Party to Manufacture each Female
Product.

                                (iii)   Trademarks.

                                        (1)   Gillette shall have the sole right
to determine the Trademarks to be used with respect to the development and
commercialization of the Female Products on a worldwide basis, and shall own all
right, title and interest in and to such Trademarks.

                                        (2)   In the event that Palomar requests
that Gillette display on the Female Product(s) (including labels, packaging or
inserts therefore) a Trademark or marketing logo provided by Palomar (the
“Palomar Marks”), Gillette shall consider such request but shall have no
obligation to use Palomar Marks. In the event that Gillette elects, in its sole
discretion, to display one of more Palomar Marks on the Female Product, (A) the
parties shall consult on the manner and location of such display, provided that
such display shall not be more prominent than the trademark and marketing logo
of Gillette but in any event shall have a commercially reasonable size and
location, (B) Gillette shall permit Palomar to review all material regulatory
filings which relate to all proposed labels, packaging, package inserts, and
promotional materials required under this Agreement to include the Palomar
Marks, if permitted by Applicable Law, prior to the filing of any such materials
with any Regulatory Authority, and (C) subject to the terms and conditions of
this Agreement, the parties shall enter into a commercially reasonable agreement
granting to Gillette a non-exclusive license to use such Palomar Marks solely in
connection with the Exploitation of Female Products.

                                        (3)   During and after the term of this
Agreement, and except with respect to any Palomar Marks licensed to Gillette as
provided in Section 2.1(a)(iii)(2), Palomar shall not use any Trademark used by
Gillette at any time to identify or distinguish any

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Female Product, or any Trademark that is confusingly similar to, misleading or
deceptive with respect to, or that dilutes any Trademark used by Gillette at any
time to identify or distinguish any Female Product.

                                (iv)   Costs and Expenses of Commercialization
Activities. Except as otherwise expressly provided herein, Gillette shall be
solely responsible for all costs and expenses in connection with
commercialization activities. For the avoidance of doubt, Gillette shall not
have any obligation to reimburse Palomar for any costs or expenses incurred by
Palomar prior to the Effective Date in connection with Palomar Technology,
Palomar Male Technology or Female Product Technology, unless otherwise expressly
provided herein.

                (b)   Gillette’s Diligence Obligations. Palomar’s sole remedies
for any failure by Gillette to commercialize Female Product(s) are as follows.

                                (i)   In the event that Gillette fails to Launch
a Female Product comprising an apparatus for delivering laser light to radiate
areas of the skin in one or more Major Markets within forty-eight (48) months
following the Launch Decision, Palomar shall have the right within thirty (30)
days after the end of such 48-month period to terminate this Agreement pursuant
to Section 10.5; provided, however, that Palomar shall not have the right to
terminate this Agreement pursuant to Section 10.5 in the event that, prior to
the end of such 48-month period, Gillette pays to Palomar ten million dollars
(US $10,000,000) on account of such failure to Launch.

                                (ii)   In the event that Gillette fails to
Launch a Female Product comprising an apparatus for delivering laser light to
radiate areas of the skin in one or more Major Markets within sixty (60) months
following the Launch Decision, Palomar shall have the right within thirty (30)
days after the end of such 60-month period to terminate this Agreement pursuant
to Section 10.5; provided, however, that Palomar shall not have the right to
terminate this Agreement pursuant to Section 10.5 in the event that, prior to
the end of such 60-month period, Gillette pays to Palomar ten million dollars
(US $10,000,000) on account of such failure to Launch (the payment obligations
of Gillette pursuant to the provisos contained in Section 2.1(b)(i) and this
Section 2.1(b)(ii), collectively the “Failure to Launch Payments”).

                                (iii)   In the event that Gillette fails to
Launch a Female Product comprising an apparatus for delivering laser light to
radiate areas of the skin in one or more Major Markets within seventy-two (72)
months following the Launch Decision, Palomar shall have the right to terminate
this Agreement pursuant to Section 10.5.

For the avoidance of doubt, (A) the rights and remedies of Palomar specified in
Sections 2.1(b)(i), 2.1(b)(ii) and 2.1(b)(iii) are cumulative of one another,
(B) the Failure to Launch Payments are in addition to and not in lieu of the
Annual Exclusivity Collaboration Payments set forth in Section 6.1(g), (iii) no
portion of any Failure to Launch Payments shall offset, reduce or be credited
against any other payment obligations of either party hereunder, including any
payment obligations under ARTICLE VI or ARTICLE VIII. Except with respect to any
obligations of Gillette pursuant to Section 1.3(b), Gillette shall be deemed to
satisfy its diligence obligations hereunder, whether contractually or at common
law, with respect to the Exploitation of Female Product(s) and Non-Light Based
Products through the payment by

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Gillette to Palomar of the Annual Exclusivity Collaboration Payments and the
Launch Payments on the terms and conditions provided for herein.

        2.2 PALOMAR’S POST-R&D PERIOD.

                (a)   During the Commercial Assessment Period. Palomar
acknowledges and agrees that the First Development Completion Payment, if any,
made by Gillette to Palomar at the First Development Completion Payment Date
pursuant to Section 6.1(d)(i) is intended, among other things as set forth in
Section 6.1(d)(iii), to compensate Palomar for Palomar’s performance, upon
request by Gillette, of reasonable services during the Commercial Assessment
Period. From and after completion of the R&D Program with respect to the first
Female Product, until the completion of the Commercial Assessment Period,
Palomar shall, at no additional cost or expense to Gillette, perform activities
related to the commercialization of Female Products as Gillette may reasonably
request (the “Commercial Assessment Period Additional Activities”); provided,
however, that the performance by Palomar of such activities shall not exceed
three (3) FTEs during the Commercial Assessment Period; provided further, that
Gillette shall reimburse Palomar for any out-of-pocket costs and expenses
reasonably incurred by Palomar to perform such activities (including any travel
expenses). Palomar shall have the right, with Gillette’s prior written consent,
not to be unreasonably withheld, to subcontract Commercial Assessment Period
Additional Activities, provided that (1) with respect to those Commercial
Assessment Period Additional Activities that are of the type that Palomar
subcontracted in connection with the R&D Plan, (a) those Commercial Assessment
Period Additional Activities performed by the subcontractor(s) shall not be
counted against the FTEs provided for in the previous sentence, and (b) the
costs of such subcontracting shall be treated as out-of-pocket costs and
expenses of Palomar subject to reimbursement provided for in the previous
sentence, and (2) with respect to those Commercial Assessment Period Additional
Activities that are of the type that Palomar performed (without subcontracting)
under the R&D Plan, (x) those Commercial Assessment Period Additional Activities
performed by the subcontractor(s) shall be counted against the FTEs provided for
in the previous sentence, and (y) the costs of such subcontracting shall not be
treated as out-of-pocket costs and expenses of Palomar subject to reimbursement
provided for in the previous sentence (except to the extent that costs and
expenses reasonably incurred by the subcontractor would qualify as out-of-pocket
costs and expenses of Palomar if such costs and expenses were incurred by
Palomar in the first instance). Any activities performed in excess of those FTEs
shall be paid for by Gillette in accordance with Section 1.8 as Additional
Activities hereunder.

                (b)   Following the Commercial Assessment Period. From and after
completion of the Commercial Assessment Period with respect to the First Female
Product until the end of the Exclusivity Period, Palomar shall cooperate with
any and all reasonable requests for consultation or assistance from Gillette
with respect to the development and commercialization of the Female Product
Technology, including by making its employees, consultants and other scientific
staff available upon reasonable notice during normal business hours at their
respective places of employment to consult with Gillette on issues arising
during such development and commercialization. In addition, during the
Exclusivity Period, in the event that Gillette reasonably concludes following
the completion of the Commercial Assessment Period with respect to the First
Female Product that design modifications are necessary or appropriate to
maximize such product’s commercial potential, Palomar shall, at

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Gillette’s election, cooperate with Gillette in good faith to adopt a work plan
for the additional development work, and perform additional activities to
implement such modifications as the parties may mutually agree. For all
activities and services performed by Palomar under this Section 2.2(b), Gillette
shall pay Palomar in accordance with Section 1.8 as Additional Activities
hereunder.

        2.3 Second Decision Point. In the event that, pursuant to
Section 1.6(a), Gillette fails to terminate this Agreement in accordance with
Section 10.4(d) on or before the First Decision Point, Gillette shall have the
right to opt-out of the commercialization process for the First Female Product
on or before the Second Decision Point. In the event that Gillette determines on
or before the Second Decision Point to opt-out of the commercialization process,
Gillette shall terminate this Agreement pursuant to Section 10.4(d). In the
event that Gillette fails to terminate this Agreement pursuant to
Section 10.4(d) on or before Second Decision Point, Gillette shall be deemed to
have elected to continue commercializing Female Product(s) (such election, the
“Launch Decision”), and Gillette shall make the Second Development Completion
Payment to Palomar in the amount set forth in Section 6.1(d)(i) on or before the
Second Development Completion Payment Date.

ARTICLE III
CUT SUPPLY

        3.1 CUT SUPPLY.

                (a)   In General. The parties shall confer in good faith to
determine which party, if either, shall supply the Female Product for use by
Gillette in CUTs (the “CUT Female Product”), provided that Gillette shall have
the right to make a final determination with respect thereto. In the event that
Gillette desires an Estimate of the Manufacturing Costs that would be incurred
by Palomar in connection with the Manufacture of CUT Female Products, Gillette
shall provide to Palomar the Product Specifications on or before the later of
(i) eight hundred and forty-two (842) days after the Effective Date, in the
event that as of such date the R&D Period has not been extended past the nine
hundredth twelfth (912th) day after the Effective Date, or (ii) sixty (60) days
prior to the end of the projected end of the R&D Period, in the event that as of
such date the R&D Period has been extended past the nine hundredth twelfth
(912th) day after the Effective Date. Palomar shall provide to Gillette, not
later than thirty (30) days after the receipt of such Product Specifications, a
good faith Estimate as to all Costs that would be incurred by Palomar in
connection with the Manufacture of CUT Female Products. In the event that
Gillette elects to have Palomar supply the CUT Female Product for use by
Gillette in CUTs, Gillette shall so notify Palomar in writing not later than ten
(10) days after the last day of the R&D Period (such notice, the “Ten-Day
Notice”). In the event that Gillette does not so notify Palomar on or before the
last day of such ten-day period that Palomar will supply the CUT Female Product
for use by Gillette in CUTs, then Gillette shall be deemed to have determined
that Gillette shall supply the CUT Female Product.

                (b)   Product Specifications. With the Ten-Day Notice, Gillette
shall provide to Palomar complete Product Specifications for the CUT Female
Product (the “CUT Product Specifications”), which CUT Product Specifications
(i) shall contain commercially reasonable tolerances, where appropriate,
(ii) shall comply with the applicable U.S. Regulatory

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Approval, (iii) in the case of Female Products other than the First Female
Product, shall specify a Female Product that is the same as or substantially
similar to the First Female Product, and (iv) may be modified or changed by
Gillette only in accordance with Section 3.4.

                (c)   Supply of CUT Female Products. Palomar shall use
commercially reasonable efforts to supply to Gillette within one hundred and
twenty (120) days (the last day of such period, the “Delivery Date”) of
receiving the Ten-Day Notice and the CUT Product Specifications, and Gillette
shall purchase from Palomar, three hundred (300) units of the CUT Female
Product, which CUT Female Product shall conform to the CUT Product
Specifications; provided, however, that in the event that Palomar Manufactures
Prototypes in connection with the R&D Activities, that conform to and comply
with the requirements set forth in this ARTICLE III with respect to CUT Female
Products, such Prototypes shall be delivered by Palomar to Gillette as “CUT
Female Products” and there shall be a corresponding reduction in the number of
units of the CUT Female Product that Gillette shall purchase pursuant to this
Section 3.1 (such number of units of the CUT Female Product that Gillette shall
purchase pursuant to this Section 3.1, the “Total CUT Supply”). The parties may
mutually agree to have Palomar supply additional units of the CUT Female
Product, or other Female Product(s) for use by Gillette in CUTs that do not
conform with the CUT Product Specifications, provided that any such agreement or
supply by Palomar shall not act to delay in any way the Commercial Assessment
Period Termination Date.

                (d)   Effects of Delays in Supply of CUT Female Product. In the
event that Palomar determines that, for whatever reason, it will not deliver to
Gillette the Total CUT Supply by the Delivery Date, Palomar shall promptly
notify Gillette thereof in writing and inform Gillette of the new delivery date
(which date shall be the earliest possible date on which Palomar can deliver the
units). Upon receipt of such notice, and to the extent Gillette determines that
the delay in delivery is likely to impact adversely the CUT schedule, Gillette
shall act promptly to adjust the CUT schedule in light of such delay.

                                (i)   A delay in the supply by Palomar to
Gillette of the Total CUT Supply, which delay is attributable to Gillette, shall
reduce the 240-day period provided for in clause (b) of the definition of
Commercial Assessment Period by an amount of time equal to the period of delay
attributable to Gillette. For example, and without limitation, delays
attributable to Gillette shall include the following: (i) if Gillette fails to
provide the CUT Product Specifications with the Ten-Day Notice as specified in
Section 3.1(a), or otherwise provides CUT Product Specifications that do not
comply with the requirements of Section 3.1, then the 240-day period shall be
reduced on a day-by-day basis for each day that the CUT Product Specifications
are late or are not in compliance, or (ii) if Gillette fails to pay Palomar the
Advanced CUT Female Product Costs in a timely manner as specified in
Section 3.2, then the 240-day period shall be reduced on a day-by-day basis for
each day that the full amount of such payment is late.

                                (ii)   A delay in the supply by Palomar to
Gillette of the Total CUT Supply, which delay is attributable to Palomar, shall
increase the 240-day period provided in clause (b) of the definition of
Commercial Assessment Period by up to sixty (60) days (or such larger number of
days as the parties mutually agree) in the event that Gillette reasonably
determines that such delay(s) will result in a delay in the CUT schedule.

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        3.2 Price. The parties hereby agree that the price (the “Manufacturing
Fee”) of each unit of CUT Female Product supplied by Palomar pursuant to this
ARTICLE III shall be equal to Palomar’s Costs to Manufacture such unit of CUT
Female Product calculated in accordance with Section 1.8 and Schedule A-2 (the
“Manufacturing Cost”). With respect to all out-of-pocket costs and expenses to
be incurred by Palomar in supplying units of CUT Female Product under this
ARTICLE III, including all costs and expenses for components to be incorporated
into those units (collectively, the “Advanced CUT Female Product Costs”),
Palomar shall have the right to invoice Gillette for fifty-percent (50%) of the
Advanced CUT Female Product Costs upon Palomar issuing a purchase order to a
Third Party giving rise to them, and Gillette shall pay Palomar such amounts
within forty-five (45) days of receiving such invoice from Palomar. With respect
to all Manufacturing Costs other than Advanced CUT Female Product Costs, upon
shipping units of CUT Female Product to Gillette, Palomar shall invoice Gillette
for such units of CUT Female Product, and Gillette shall make a payment to
Palomar within forty-five (45) days after receipt by Gillette of such invoice.
Gillette shall have the right, during normal business hours and upon reasonable
notice, to review and audit Palomar’s books and records to confirm the
Manufacturing Costs.

        3.3 Female Product(s) Requirements. Upon Gillette’s request, Palomar
shall promptly provide to Gillette in writing, with respect to the CUT Female
Product supplied to Gillette by Palomar under this ARTICLE III, such warranties
as Gillette may reasonably request to confirm that, during the Commercial
Assessment Period, the CUT Female Products conform to the CUT Products
Specifications and are in compliance with the applicable U.S. Regulatory
Approval (which warranties shall not apply to any intellectual property rights).
In the event of any breach of such warranties, Gillette’s sole and exclusive
remedy shall be, at Palomar’s sole discretion, for Palomar to replace the
defective CUT Female Product unit or repair such unit. The foregoing
notwithstanding, Palomar shall not be responsible for damage to any CUT Female
Product resulting from misuse, negligence or accident or resulting from repairs,
alterations or installation made or authorized by any Person other than Palomar.
EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 3.3, THE CUT FEMALE PRODUCT IS
PROVIDED “AS IS”, WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND.

        3.4 Amendment of CUT Product Specifications and Manufacturing Process.
Gillette reserves the right to amend, modify or supplement the CUT Product
Specifications for the CUT Female Product for the purpose of complying with Good
Manufacturing Practices or the applicable Regulatory Approvals or for any other
reasonable business purpose, provided that any such amendment, modification or
supplement shall not act to delay in any way the Commercial Assessment Period
Termination Date, and further provided that any such amendment, modification or
supplement shall not increase the cost to manufacture the CUT Female Product
unless the Manufacturing Fee is correspondingly increased. Palomar may not
amend, modify or supplement the CUT Product Specifications for the CUT Female
Product in any respect without the prior written consent of Gillette.

        3.5 Records; Notification of Inspections; Communications. Palomar shall
maintain all records necessary to comply with all Applicable Law relating to the
Manufacture of the CUT Female Product. Gillette shall have the right, during
normal business hours and upon reasonable prior notice to Palomar, to inspect
any Palomar (or subcontractor) facility at which a CUT Female Product is
Manufactured, the equipment and materials used in Manufacturing such

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product, and the records relating to the Manufacture of such product. Palomar
shall promptly notify Gillette in writing of any proposed or unannounced visit
or inspection by any Regulatory Authority of any Palomar (or subcontractor)
facility at which a CUT Female Product is Manufactured. Subject to all
Applicable Law, Gillette shall have a right to be present to participate in any
such announced visit or inspection, unless the Gillette representative’s
presence would impede the visit or inspection, and to receive copies of all
written communications with any Regulatory Authority with respect thereto.

        3.6 Controlling Terms and Conditions. The parties agree that the terms
and conditions of this Agreement, including this ARTICLE III, shall control the
supply of CUT Female Product hereunder, and that the terms and conditions of any
purchase order or form of acceptance exchanged by the parties with respect to
the supply of CUT Female Product by Palomar to Gillette, shall not apply
thereto.

ARTICLE IV
LICENSE GRANTS

        4.1 GRANTS TO GILLETTE.

                (a)   License Grants in the Female Field. In partial
consideration of the royalties payable to Palomar by Gillette hereunder, and
subject in the case of Sections 4.1(a)(i) and 4.1(a)(ii) to ARTICLE X, and in
all cases to all other terms and conditions of this Agreement, Palomar hereby
grants to Gillette:

                                (i)   a worldwide, exclusive (including with
regard to Palomar), royalty-bearing license (with the right to sublicense only
as permitted in Section 4.1(b)), under Palomar’s rights, titles, and interests
in and to the Palomar Technology and the Joint Technology to Exploit Female
Products;

                                (ii)   a worldwide, exclusive (including with
regard to Palomar), royalty-bearing license and right of reference (with the
right to sublicense only as permitted in Section 4.1(b)), under Palomar’s
rights, titles and interests in and to the Palomar U.S. Regulatory
Documentation, to Exploit Female Products;

                                (iii)   a worldwide, perpetual, irrevocable,
exclusive (including with regard to Palomar) license, with the right to grant
sublicenses (through multiple tiers of sublicensing), under all of Palomar’s
rights, titles, and interests in and to the Joint Technology (including the MGH
Joint Patents), to Exploit Non-Light-Based Products; and

                                (iv)   a worldwide, perpetual, irrevocable,
non-exclusive license, with the right to grant sublicenses (through multiple
tiers of sublicensing), under all of Palomar’s rights, titles, and interests in
and to any MGH Joint Technology with respect to which Gillette does not receive
an ownership interest pursuant to Section 8.1(c)(ii)(2), to Exploit processes,
products and systems outside the Field (except (1) to the extent that Palomar
has granted to Gillette in Section 4.1(a)(iii) exclusive rights to Exploit such
processes, products and systems (in which case Gillette’s rights shall be as
provided in such Section) or (2) for Exploitation of Light-Based Products).

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The exclusive nature of the license grants contained in this Section 4.1(a)
shall not prevent Palomar or any of its licensees or sublicensees from
conducting any activity, or exercising or granting any licenses or other rights,
as otherwise permitted under this Agreement, with respect to the Palomar
Technology, Joint Technology or Palomar U.S. Regulatory Documentation that has
as its goal or intent (i) Exploitation of a product or a system outside the
Female Field and not Exploitation of a product or system inside the Female
Field, notwithstanding the possibility that such activity, exercise or grant may
have applications inside the Female Field, or (ii) Exploitation of a product or
system (other than a Non-Light Based Product) and not Exploitation of a
Non-Light Based Product, notwithstanding the possibility that such activity,
exercise or grant may have applications as a Non-Light-Based Product. This
paragraph shall remain in full effect as long as any of the license grants
contained in this Section 4.1(a) are in effect.

                (b)   Sublicenses. Gillette shall not have the right to grant to
any Third Parties any sublicenses under the license grants set forth in
Section 4.1(a)(i) and 4.1(a)(ii), except as may be necessary for (i) the
Manufacture of Female Products on behalf of Gillette or any of its permitted
sublicensees, (ii) Third Party distributors to sell or otherwise distribute
Female Products as provided hereunder, (iii) the importation, sale, offering for
sale, transport, distribution, promotion and marketing of Female Products in
markets other than any Major Market, or (iv) for the limited purpose of
subcontracting as provided for by Section 1.1(e). In the event of the
termination of the license grants set forth in Section 4.1(a)(i) or 4.1(a)(ii)
for any reason, Palomar shall have the right to (A) terminate such sublicense
agreement(s) or (B) assume them from Gillette, provided that such assumption by
Palomar is consistent with the terms and conditions of such sublicense
agreement(s). Gillette shall be responsible to Palomar for the performance of
any of Gillette’s permitted sublicensees under any provisions of this Agreement
for which Gillette is responsible. Gillette shall not permit any sublicensees to
use or disclose any Palomar Technology or Palomar U.S. Regulatory Documentation
(in each case, to the extent such technology or documentation constitutes
Palomar Confidential Information or Gillette Controlled Information) without
provisions safeguarding non-disclosure and non-use at least as strict as those
provided in this Agreement. Apart from the foregoing limited rights to
sublicense, Gillette shall not have any right or authority to sublicense, assign
or otherwise transfer the license grants set forth in Section 4.1(a)(i) or
4.1(a)(ii) without Palomar’s prior written consent in its sole discretion,
provided that Gillette may transfer those license grants in connection with the
permitted assignment of this Agreement in full pursuant to Section 14.2.

                (c)   No Other Right. Gillette shall have no right, express or
implied, to the Palomar Technology, Palomar Male Technology, Palomar U.S.
Regulatory Documentation, or Palomar’s right, title, and interest in and to the
Joint Technology in or outside the Field except as expressly provided in
Section 4.1(a) or as otherwise expressly provided in this Agreement. Gillette
shall not at any time use or practice, or grant licenses or other rights under,
Palomar Technology, Palomar Male Technology, Palomar U.S. Regulatory
Documentation, Palomar Confidential Information or Palomar’s right, title, and
interest in and to the Joint Technology, except as expressly permitted by this
Agreement. All rights in and to Palomar Technology, Palomar Male Technology,
Palomar U.S. Regulatory Documentation, or Palomar’s right, title, and interest
in and to the Joint Technology, which are not expressly provided to Gillette in
this Agreement, shall be retained by Palomar.

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        4.2 GRANTS TO PALOMAR.

                (a)   Palomar Technology and Joint Technology for Female Product
Development. Subject to Section 14.2 and ARTICLE X, Gillette hereby grants to
Palomar during the Exclusivity Period a worldwide, non-exclusive, royalty-free
license, with the right to sublicense only in accordance with Section 4.2(e),
under Gillette’s right, title and interest in and to the Palomar Technology and
the Joint Technology (i) to conduct the R&D Activities, Additional Activities
and Commercial Assessment Period Additional Activities, (ii) to research and
develop Additional Light-Based Hair Management Products for use in the Female
Field for the sole purpose of presenting to Gillette such product opportunities
pursuant to Section 1.7, and (iii) to use the Manufacturing Process for the
Female Product(s) to make and have made the Female Product(s) for Gillette, in
each case only to the extent necessary for Palomar to fulfill its obligations to
Gillette under this Agreement. For the avoidance of doubt, nothing in this
Section 4.2(a) grants to Palomar the right to offer to sell, sell, have sold,
import or export any product or system.

                (b)   Gillette Technology for Female Product Development.
Subject to Section 14.2 and ARTICLE X, Gillette hereby grants to Palomar during
the Exclusivity Period a worldwide, non-exclusive, royalty-free license, with
the right to sublicense only in accordance with Section 4.2(e), under Gillette’s
right, title and interest in and to the Gillette Technology, (i) to conduct the
R&D Activities, Additional Activities and Commercial Assessment Period
Additional Activities, (ii) to research and develop Additional Light-Based Hair
Management Products in the Female Field for the sole purpose of presenting to
Gillette such product opportunities pursuant to Section 1.7, and (iii) to use
the Manufacturing Process for the Female Product(s) to make and have made the
Female Product(s) for Gillette, in each case only to the extent necessary for
Palomar to fulfill its obligations to Gillette under this Agreement. For the
avoidance of doubt, nothing in this Section 4.2(b) grants to Palomar a license
or other rights under the Gillette Technology to offer to sell, sell, have sold,
import or export any Female Product, or any other product or system.

                (c)   Gillette Technology for Male Product Development. Subject
to Section 14.2 and ARTICLE X, Gillette hereby grants to Palomar a worldwide,
non-exclusive, royalty-free license, with the right to sublicense only in
accordance with Section 4.2(e), under Gillette’s right, title and interest in
and to the Gillette Technology, (i) to research and develop one or more
Light-Based Hair Management Products for use in the Male Field, and (ii) to use
the Manufacturing Process for a Light-Based Hair Management Product in the Male
Field to make and have made such product, in each case (A) for the sole purpose
of presenting product opportunities to Gillette pursuant to Section 5.1, and (B)
only during the period commencing on the first day of the R&D Period and ending
on the last day of the Option Exercise Period (unless Gillette agrees in writing
to extend such period). For the avoidance of doubt, nothing in this Section
4.2(c) grants to Palomar a license or other rights under the Gillette Technology
to offer to sell, sell, have sold, import or export any Light-Based Hair
Management Product in the Male Field, or any other product or system.

                (d)   Joint Technology for Light-Based Products. Gillette hereby
grants to Palomar a worldwide, perpetual, irrevocable, exclusive (including with
regard to Gillette), royalty-free license, with the right to grant sublicenses
(through multiple tiers of sublicensing),

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under all of Gillette’s rights, titles, and interests in and to the Joint
Technology to Exploit Light-Based Products intended or marketed for use outside
the Field. Gillette shall not practice or use, or grant licenses or other rights
under, Joint Technology for the purpose of Exploiting Light-Based Products
outside the Field. The exclusive nature of the license grant contained in this
Section 4.2(d) shall not prevent Gillette or any of its (sub)licensees from
conducting any activity, or exercising or granting any licenses or other rights,
as otherwise permitted under this Agreement, with respect to the Joint
Technology that has as its goal or intent Exploitation of a product or a system,
other than a Light-Based Product intended or marketed for use outside the Field,
and not as its goal or intent Exploitation of a Light-Based Product intended or
marketed for use outside the Field, notwithstanding the possibility that such
activity, exercise or grant may have an application as a Light-Based Product
outside the Field.

                (e)   Sublicenses.

                                (i)   Palomar shall have the right to grant to
one or more Third Parties a sublicense under the license granted by Gillette to
Palomar in Section 4.2(a) or 4.2(b) only (i) to the extent consistent with the
provisions governing subcontracting as provided for by Section 1.1(e), or (ii)
for the limited purpose of Manufacturing the Prototypes or the CUT Female
Product for Gillette pursuant to this Agreement.

                                (ii)   Palomar shall have the right to grant to
one or more non-commercial Third Parties (e.g., academic institutions, hospitals
or governmental entities) a sublicense under the license granted by Gillette to
Palomar in Section 4.1(c). Palomar shall use commercially reasonable efforts to
include in each agreement in which Palomar grants to a Third Party such a
(sub)license, terms and conditions that protect and preserve the intellectual
property interests of Palomar and Gillette with respect to the technology
(sub)licensed by Palomar thereunder.

                                (iii)   In the event of the termination of the
license grants set forth in Section 4.2(a), 4.2(b) or 4.2(c) for any reason,
each such sublicense shall be deemed to terminate. Palomar shall be responsible
to Gillette for the performance of any of Palomar’s permitted sublicensees under
any provisions of this Agreement for which Palomar is responsible. Palomar shall
not permit any sublicensees to use or disclose any Gillette Technology (to the
extent such technology constitutes Gillette Confidential Information or Palomar
Controlled Information) without provisions safeguarding non-disclosure and
non-use at least as strict as those provided in this Agreement. Apart from the
foregoing limited rights to sublicense, Palomar shall not have any right or
authority to sublicense, assign or otherwise transfer the license grants set
forth in Section 4.2(a), 4.2(b) or 4.2(c) without Gillette’s prior written
consent in its sole discretion, provided that Palomar may transfer those license
grants in connection with the permitted assignment of this Agreement in full
pursuant to Section 14.2.

                (f)   No Other Right. Palomar shall have no right, express or
implied, to the Gillette Technology (including the Gillette Licensed Patents) or
Gillette’s right, title, and interest in and to the Joint Technology in or
outside the Field except as expressly provided in Section 4.2(a), 4.2(b), 4.2(c)
or 4.2(d) or as otherwise expressly provided in this Agreement. Palomar shall
not at any time use or practice, or grant licenses or other rights under the
Gillette Technology, Gillette Confidential Information, or Gillette’s right,
title and interest in and to the

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Joint Technology, except as expressly permitted by this Agreement. All rights in
and to Gillette Technology or Gillette’s right, title, and interest in and to
the Joint Technology, which are not expressly provided to Palomar in this
Agreement, shall be retained by Gillette.

ARTICLE V
OTHER COVENANTS OF THE PARTIES

        5.1 OPTION FOR THE MALE FIELD.

                (a)   Grant of Male Option. Subject to ARTICLE X, Palomar hereby
grants to Gillette an option (the “Male Option”) for a worldwide, exclusive
(including with regard to Palomar), royalty-bearing license, under Palomar’s
rights, titles, and interests in and to the Palomar Male Technology, Joint
Technology and Palomar U.S. Regulatory Documentation to Exploit Light-Based Hair
Management Products for use in the Male Field (collectively, “Male Products”).

                (b)   Exercise of Male Option. Palomar may elect to provide
Gillette one opportunity (the “Male Product Opportunity”) to exercise the Male
Option with respect to Male Products by Palomar’s providing to Gillette written
notice thereof (the “Opportunity Notice”), which opportunity shall be with
respect to the Male Product that, at the time such opportunity is offered to
Gillette, is the most commercially promising Male Product that is in Palomar’s
Control and that Palomar has, directly or indirectly, conceived or developed.
Subject to Section 14.2(d), Palomar shall not be obligated to provide to
Gillette the Male Product Opportunity at any time. Gillette may exercise its
Male Option with respect to Male Products, pursuant to the following terms and
conditions:

                                (i)   Prior to offering to Gillette the Male
Product Opportunity, Palomar shall conduct with respect to one (1) Male Product
comprising an apparatus for delivering light to radiate areas of the skin
(the “Subject Male Product”) sufficient preclinical, clinical and other testing
to demonstrate that the product meets the Safety and Efficacy Standards.

                                (ii)   Prior to or simultaneous with Palomar’s
providing to Gillette the Opportunity Notice, Palomar shall provide to Gillette
in writing (A) material preclinical, clinical and other testing data, and any
other material information in Palomar’s Control, with respect to the Subject
Male Product, which data and information shall contain sufficient scientific
evidence to demonstrate that the Subject Male Product satisfies the Safety and
Efficacy Standards, and (B) material information concerning the intellectual
property rights Controlled by Palomar claiming or covering such product, and
contractual obligations of Palomar and any known patent-related restrictions
that Palomar reasonably believes would limit or otherwise affect the parties’
rights to fully Exploit the Subject Male Product (collectively, the “Evaluation
Materials”). The Evaluation Materials shall be treated as Palomar Confidential
Information hereunder.

                                (iii)   The Opportunity Notice provided by
Palomar to Gillette shall be in writing and shall contain a legend that contains
the words “Opportunity Notice” and shall state that such notice is being
provided to Gillette pursuant to this Section 5.1(b)(iii). The

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effective date of the Opportunity Notice shall be the date on which such notice
is received by Gillette, provided that, if as of such date either (A) Gillette
has not received from Palomar all Evaluation Materials, or (B) the second (2nd)
anniversary of the Effective Date has not yet occurred, then the effective date
of the Opportunity Notice shall be deemed to be the first date on which (x)
Gillette has received from Palomar such materials, and (y) such second
anniversary has occurred (the “Opportunity Notice Effective Date”).

                                (iv)   Gillette shall have sixty (60) days after
the Opportunity Notice Effective Date (the “Option Exercise Period”) within
which to exercise the Male Option by providing to Palomar written notice thereof
(an “Option Exercise Notice”).

                                (v)   In the event that Gillette elects not to,
or otherwise fails to exercise the Male Option within the Option Exercise
Period, then the Male Option shall terminate in its entirety and Palomar shall
not have any further obligation under this Section 5.1. Upon the termination of
the Male Option, (i) Palomar shall be free to exercise rights under the Palomar
Male Technology or Palomar’s rights, title and interest in and to the Joint
Technology to Exploit, or to grant to a Third Party rights under the Palomar
Male Technology or such Joint Technology to Exploit, Male Products in the Male
Field, (ii) the covenant granted by Palomar to Gillette in Section 5.2(b) shall
terminate, and (iii) Gillette shall return to Palomar or destroy, at Palomar’s
option, all Evaluation Materials and any materials embodying Evaluation
Materials (except that one copy of such materials may be retained by Gillette in
the offices of its outside counsel).

                (c)   Negotiation of Definitive Agreement With Respect to
Subject Male Product. In the event that Gillette exercises the Male Option in
accordance with Section 5.1(b)(iv), the parties shall negotiate in good faith
for a period of ninety (90) days from the date of the Option Exercise Notice the
terms and conditions to be included in a definitive agreement governing the
grant by Palomar to Gillette of a license for the Male Field (the “Male
Collaboration Agreement”). The Male Collaboration Agreement shall (1) reflect a
deal structure substantially similar to the one in this Agreement, (2) contain
financial terms that are commercially reasonable taking into consideration the
stage of development and market potential for the Subject Male Product, which
terms are similar in structure to those contained in ARTICLE V, including the
potential for an up-front payment by Gillette to Palomar, (3) contain grants by
Palomar to Gillette of licenses for the Male Product with respect to the Male
Field that are the same in scope as the licenses granted to Gillette in
Section 4.1(a) for Female Products, and (4) contain grants by each party of
covenants that are the same in scope as the covenants granted to the other party
in ARTICLE IV and this ARTICLE V with respect to the Female Field. In the event
that the parties are unable within such ninety (90) day period to negotiate and
enter into the Male Collaboration Agreement, either party may initiate the
dispute resolution process set forth in Section 13.2. From and after the
effective date of a Male Collaboration Agreement, each party’s rights with
respect to Male Products shall be as set forth in that agreement.

        5.2 PALOMAR COVENANTS RELATING TO EXPLOITATION OF TECHNOLOGY AND
PRODUCTS.

                (a)   During the Exclusivity Period, Palomar covenants to
Gillette that, except as provided in Sections 4.2(a) and 4.2(b), Palomar shall
not, (i) except in connection with

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R&D Activities, Additional Activities or Commercial Assessment Period Additional
Activities, (1) conduct any activity for the benefit of, or sponsored by any
Third Party, that has as its goal or intent discovering, identifying, Exploiting
or otherwise commercializing Light-Based Hair Management Products in the Female
Field, (2) otherwise exercise rights under the Palomar Technology or Joint
Technology with a goal or intent to Manufacture, sell, have sold, import, export
or otherwise commercialize any Light-Based Hair Management Products in the
Female Field, or any Female Accessory Product or (ii) grant any license or other
rights to any Person to utilize any intellectual property Controlled by Palomar
(including any Palomar Technology or Joint Technology) with the goal or the
intent of discovering, identifying, Exploiting or otherwise commercializing (1)
Light-Based Hair Management Products in the Female Field, or (2) any Female
Accessory Product. Subject to the terms and conditions of this Agreement,
including Sections 5.3 and 5.4, the restrictions contained in this
Section 5.2(a) shall not prevent Palomar from conducting any activity, or
exercising or granting any rights or licenses, that has as its goal or intent
Exploitation of a product or system (other than a Female Accessory Product)
outside of the Female Field and not Exploitation of a product or system in the
Female Field, notwithstanding the possibility that any such product or system
may have applications in the Female Field.

                (b)   Prior to and during the Option Exercise Period with
respect to the Male Option set forth in Section 5.1, Palomar covenants to
Gillette that Palomar shall not utilize, or grant any license or other rights to
any Person to utilize, any intellectual property Controlled by Palomar
(including any Palomar Male Technology or Joint Technology) with the goal or
intent of Exploiting Light-Based Hair Management Products in the Male Field,
except in accordance with this Section 5.2(b). Prior to and during the Option
Exercise Period, Palomar shall have the right to utilize any intellectual
property Controlled by Palomar (including any Palomar Male Technology or Joint
Technology) to research and develop Light-Based Hair Management Products in the
Male Field for the sole purpose of developing a Male Opportunity to present to
Gillette, and Palomar may enter into agreements with one or more non-commercial
Third Parties (e.g., academic institutions, hospitals or governmental entities)
as may be necessary or desirable to advance such efforts and such purpose,
provided that such agreements shall not grant any commercialization rights (or
options for such rights) to such Third Parties in the Male Field. Subject to the
terms and conditions of this Agreement, including this Section 5.2(b) and
Sections 5.3 and 5.4, the restrictions contained in this Section 5.2(b) shall
not prevent Palomar from conducting any activity, or exercising or granting any
rights or licenses, that has as its goal or intent Exploitation of a product or
system (other than a Female Accessory Product) outside of the Male Field and not
Exploitation of a product or system in the Male Field, notwithstanding the
possibility that any such product or system may have applications in the Male
Field.

                (c)   Palomar covenants to Gillette that, in the event that at
any time during the Exclusivity Period, Palomar enters into an agreement with a
Third Party whereby the Third Party grants to Palomar a license with respect to
any intellectual property that would, if such intellectual property were owned
by Palomar, constitute Palomar Technology under this Agreement, Palomar shall
use commercially reasonable efforts to obtain from such Third Party the right to
grant to Gillette a sublicense under such license on terms and conditions that
are no less favorable to Gillette than those terms and conditions in this
Agreement that apply to Gillette’s Exploitation of Female Products, which
sublicense shall be subject, without limitation, to the last two full sentences
of Section 6.1(i).

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        5.3 Covenants Relating to Exploitation. Palomar acknowledges and agrees
that the exclusivity granted by Palomar to Gillette under the Palomar
Technology, Palomar Male Technology and Palomar’s right, title and interest in
and to the Joint Technology to Exploit Female Products (and in the event that
the parties enter into the Male Collaboration Agreement, Male Products), is of
critical importance to Gillette, and that without such exclusivity, Gillette
would not have entered into this Agreement. Gillette acknowledges and agrees
that Palomar’s ability to retain or grant to Third Parties exclusivity with
respect to Palomar Technology and Palomar Male Technology outside the Exclusive
Field and with respect to Joint Technology to Exploit Light-Based Products
outside the Field is of critical importance to Palomar, and without the ability
to retain or grant to Third Parties such exclusivity, Palomar would not have
entered into this Agreement. In order to ensure that Gillette receives the
benefit of such exclusivity in the Exclusive Field, and that Palomar retains the
benefits of such exclusivity outside the Exclusive Field, the parties agree as
follows:

                (a)   Palomar covenants to Gillette that:

                                (i)   Palomar will include in each Third Party
agreement in which Palomar grants to the Third Party a license or other rights
under any Palomar Technology, Palomar Male Technology or Joint Technology to
sell, have sold, offer for sale or otherwise commercialize one or more
Light-Based Products in the Consumer Field or Professional Field (each such
Third Party a “Palomar Licensee,” and each such agreement, a “Palomar License
Agreement”), terms and conditions that prohibit the Palomar Licensee, at any
time during the Exclusivity Period, from Exploiting any such Technology, by:

                                        (1)   developing any Light-Based Product
intended by Palomar (or such Third Party) for use (in whole or in part) in the
Exclusive Field;

                                        (2)   marketing any Light-Based Product
in the Exclusive Field; or

                                        (3)   developing or commercializing in
or outside the 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 Palomar or
any Palomar Licensee 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
5.3(a)(i)(3).

                                (ii)   Palomar will include in each Palomar
License Agreement, terms and conditions that, during the Exclusivity Period:

                                        (1)   require the Palomar Licensee to
label Light-Based Products commercialized in the Consumer Field or Professional
Field pursuant to such license with the following phrase (or similar words which
fairly convey such products are for use only in the licensed field): “intended
only for use in the “x” field,” where “x” shall mean the field of use for which
the Third Party holds such license and shall in any event exclude the Exclusive
Field;

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                                        (2)   prohibit the Palomar Licensee, in
the development and commercialization of Light-Based Products in the Consumer
Field or Professional Field, from intentionally (A) designing, modifying or
otherwise improving any Light-Based Product(s) with the goal or intent of
improving its efficacy or performance in the Exclusive Field; or (B) optimizing,
inducing, supporting or encouraging the use of any Light-Based Products in the
Exclusive Field;

                                        (3)   grant to Gillette Third Party
beneficiary rights to enforce any provision of such agreement that corresponds
to the covenants of Palomar contained in this Section 5.3(a); and

                                        (4)   grant to Gillette the rights
required pursuant to Section 5.4(b).

                                (iii)   In the event that Palomar develops or
commercializes any Light-Based Products directly as opposed to granting a
(sub)license(s) or other right(s) to a Third Party(ies) as contemplated in
Sections 5.3(a)(i) and 5.3(a)(ii), Palomar shall comply with the terms of
Sections 5.3(a)(i) and 5.3(a)(ii) to the same extent as if Palomar were standing
in the shoes of any Third Party referred to in such Sections (e.g., by doing
that which a Third Party would be required to do and by refraining from doing
that which a Third Party would be prohibited from doing), provided that Sections
5.3(a)(i) and 5.3(a)(ii) shall, prior to the Male Option Termination Date, not
apply to Palomar’s activities related to the Exploitation of Light-Based
Products in the Male Field, so long as Palomar complies with Section 5.2(b).

                                (iv)   The covenants of Palomar contained in
Sections 5.3(a)(i)(1), 5.3(a)(i)(2) and 5.3(a)(ii)(2), which apply directly to
Palomar and will apply to Palomar Licensees, shall not prevent Palomar or any
Palomar Licensee from conducting any activity, or exercising or granting any
licenses or other rights, as otherwise permitted under this Agreement, with
respect to the Palomar Technology, Palomar Male Technology, Joint Technology or
otherwise, that has as its goal or intent Exploitation of a product or system
outside the Exclusive Field and not Exploitation of a product or system in the
Exclusive Field, notwithstanding the possibility that such activity, exercise or
grant may have applications in the Exclusive Field.

                (b)   Gillette covenants to Palomar that:

                                (i)   Gillette will include in each Third Party
agreement in which Gillette grants to a Third Party a license or other rights
under any Palomar Technology, Palomar Male Technology or Joint Technology to
sell, have sold, offer for sale or otherwise commercialize one or more Female
Products (each such Third Party a “Gillette Licensee,” and each such agreement,
a “Gillette License Agreement”), terms and conditions that prohibit the Gillette
Licensee from Exploiting any such technology, by:

                                        (1)   With respect to the Joint
Technology, developing any Light-Based Product intended by Gillette (or any
Gillette Licensee) for use (in whole or in part) outside the Field, and with
respect to the Palomar Technology, developing any Light-Based

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Product intended by Gillette (or such Third Parties) for use (in whole or in
part) outside the Female Field;

                                        (2)   marketing any Light-Based Product
outside the Exclusive Field;

                                        (3)   developing or commercializing in
or outside the Field any Light-Based Accessory Product during its period of
commercialization by Palomar or any Palomar Licensee, provided that any
apparatus, component, accessory, disposable or Consumable as to which Gillette
or any Gillette Licensee has expended material financial and other resources on
its development or commercialization as a Female Accessory Product before such
Light-Based Accessory Product is first commercialized by Palomar or any Palomar
Licensee, shall not be subject to the restriction contained in this Section
5.3(b)(i)(3).

                                (ii)   Gillette will include in each Gillette
License Agreement, terms and conditions that:

                                        (1)   require the Gillette Licensee to
label Female Products with the following phrase (or similar words which fairly
convey such products are for use only in the Female Field): “intended only for
use in the management or removal of female hair”;

                                        (2)   prohibit such Gillette Licensee,
in the development and commercialization of Female Products, from intentionally
(A) designing, modifying or otherwise improving any Female Product(s) with the
goal or intent of improving its efficacy or performance outside the Female
Field, or (B) optimizing, inducing, supporting, or encouraging the use of Female
Products outside the Female Field.

                                (iii)   grant to Palomar Third Party beneficiary
rights to enforce any provision of such agreement that corresponds to the
covenants of Gillette contained in this Section 5.3(b), provided that such
agreement grants to Gillette a reciprocal right in accordance with Section
5.3(a)(ii)(3).

                                (iv)   grant to Palomar Licensees the rights
required pursuant to Section 5.4(a).

                (c)   In the event that Gillette develops or commercializes any
Female Product directly as opposed to granting a (sub)license(s) or other
right(s) to a Third Party(ies) as contemplated in Section 5.3(b)(i) and
5.3(b)(ii), Gillette shall comply with the terms of Sections 5.3(b)(i) and
5.3(b)(ii) to the same extent as if Gillette were standing in the shoes of any
Gillette Licensee referred to in such Sections (e.g., by doing that which a
Gillette Licensee would be required to do and by refraining from doing that
which a Gillette Licensee would be prohibited from doing), provided that nothing
contained in this Section 5.3(c) shall limit the scope of the license granted by
Palomar to Gillette in Section 4.1.

                (d)   The covenants of Gillette contained in
Sections 5.3(b)(i)(1), 5.3(b)(i)(2) and 5.3(b)(ii)(2) shall not prevent Gillette
or any Gillette Licensee from conducting any activity, or exercising or granting
any licenses or other rights, as otherwise permitted under this Agreement, with
respect to the Palomar Technology, Joint Technology or otherwise, that has

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as its goal or intent Exploitation of a product or system with respect to the
Joint Technology, inside the Field, and with respect to all other such
technology, inside the Exclusive Field, notwithstanding the possibility that
such activity, exercise or grant may have applications outside the Field and
Exclusive Field, respectively.

        5.4 ECONOMIC ADJUSTMENTS FOR OFF-LABEL SALES

                (a)   Gillette Covenants.

                                (i)   In order to preserve for each of the
Palomar Licensees the economic benefits of the exclusivity granted by Palomar to
such Palomar Licensee under the Palomar Technology, Palomar Male Technology or
Joint Technology to Exploit Light-Based Products in the Consumer Field or the
Professional Field, as the case may be, Gillette agrees to make payments to such
Palomar Licensee in the manner set forth in subparagraph (ii) below, to
compensate such Palomar Licensee for certain lost profits, if any, resulting
from net off-label purchases of Female Products by end-users in the exclusive
field of such Palomar Licensee.

                                (ii)   In the event that any Palomar Licensee
shall suffer Lost Profits (calculated in the manner set forth in subparagraph
(iii) below) in excess of Five Million Dollars (US $5,000,000) in any calendar
year, then such Palomar Licensee may submit a written notice to Gillette (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) the relevant Palomar License Agreement.
Within one hundred and eighty (180) days after receipt thereof, Gillette shall
(1) remit payment to such Palomar Licensee, 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 ($5,000,000) or (2) provide to such Palomar
Licensee a detailed written critique of such calculation, propose a revised
calculation of such Palomar Licensee’s Lost Profits based on a new Independent
Study, and enclose a copy of such Independent Study. In the event that Gillette
shall propose a revised calculation, Gillette and such Palomar Licensee 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
the parties shall fail to reach agreement at such meeting, either party may
bring a lawsuit in any court of competent jurisdiction to resolve such dispute.

                                (iii)   The Lost Profits of a Palomar Licensee
for a calendar year shall be determined as follows. Such Palomar Licensee 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 of Female Products for such year
that displaced sales of Light-Based Products by or on behalf of Palomar’s
Licensee in the exclusive field of such Palomar Licensee, as specified in the
relevant Palomar License Agreement, and (B) the sales of Light-Based Products
for such year by such Palomar Licensee or its sublicensees or agents that
displaced sales of Female Products by or on behalf of Gillette; (C) the average
net profit of such Palomar Licensee for each unit of Light-Based 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

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determinations shall be summarized and documented in a report prepared by such
nationally-recognized economic consulting firm (the “Independent Study”).

                                (iv)   Notwithstanding any other provision of
this Section 5.4, Gillette shall have no obligation to make any payment to any
Palomar Licensee hereunder (A) if such Palomar Licensee has materially breached
any provision of the relevant Palomar License Agreement corresponding to any
negative covenant set forth in Section 5.3(a) hereof or (B) if the Lost Profits
claimed by such Palomar Licensee relate to a period after the termination or
expiration of the period of license exclusivity provided for in the relevant
Palomar License Agreement.

                                (v)   Gillette hereby consents to Palomar’s
granting to each Palomar Licensee in the relevant Palomar License Agreement
third party beneficiary rights to enforce directly against Gillette any
provision of this Section 5.4(a), provided that such Palomar License Agreement
includes a provision corresponding to that described in Section 5.4(b).

                (b)   Palomar Covenants. Palomar agrees to include in each
Palomar License Agreement covenants that bind the relevant Palomar Licensee in
the same manner and to the same extent that Gillette is bound by Section 5.4(a),
mutatis mutandis (such that Gillette is accorded thereunder the rights of a
Palomar Licensee under Section 5.4(a) hereof). Further, Palomar agrees to
include in each Palomar License Agreement a grant to Gillette of third party
beneficiary rights to enforce any such provision of such agreement.

        5.5 Duration and Scope of Section 5.3. Insomuch as certain of the
provisions of Section 5.3 are intended to apply to Gillette and any Gillette
Licensee, and Palomar and any Palomar Licensee, this Section 5.5 sets forth the
general principles for the duration and scope of Section 5.3:

                (a)   For as long as Gillette or a Palomar Licensee has an
exclusive (sub)license under a license granted to it by Palomar under the
Palomar Technology or Joint Technology (as the case may be) sufficient in scope
to Exploit, in the case of Gillette, Female Products, and in the case of the
Palomar Licensee, Light-Based Products outside the Field, then the Person
receiving such license shall enjoy the benefits of the restrictions contained in
Section 5.3(a) or 5.3(b), respectively, (i.e., as long as the licenses grants in
Section 4.1(a)(i) and 4.1(a)(ii) remain exclusive to Gillette, Gillette shall
enjoy the benefit of the restrictions contained in Section 5.3(a)). At such time
as Gillette or the Palomar Licensee, as the case may be, no longer has any such
exclusive license, then Gillette or the Palomar Licensee shall no longer enjoy
the benefits of such restrictions.

                (b)   For as long as Gillette or a Palomar Licensee is granted a
(sub)license by Palomar, whether exclusive or non-exclusive in scope, under the
Palomar Technology or Joint Technology sufficient in scope to Exploit, in the
case of Gillette, Female Products, and in the case of the Palomar Licensee,
Light-Based Products outside the Field, then Gillette or the Palomar Licensee,
respectively, shall be subject to the restrictions contained in Section 5.3(a)
or 5.3(b), as applicable (i.e., so long as the license grants in Section
4.1(a)(i) and 4.1(a)(ii) remain in force, Gillette shall be subject to the
restrictions contained in Section 5.3(b)).

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                (c)   For the avoidance of doubt, (i) if Gillette or any such
Palomar Licensee only has non-exclusive rights under Palomar Technology or Joint
Technology, Gillette or such Palomar Licensee, respectively, shall not enjoy the
benefit of the restrictions contained in Sections 5.3(a) or 5.3(b), but shall be
subject to the restrictions contained in Sections 5.3(a) or 5.3(b), as
applicable, (ii) the ownership interest that Gillette retains in Joint
Technology, as distinguished from the license interest from Palomar under
Section 4.1, shall not by itself render Gillette subject to the restrictions
contained in Section 5.3(b), and (iii) for this Agreement, ARTICLE X sets forth
if and when Section 5.3 will terminate, and this Section 5.5 is not intended to
vary ARTICLE X or any other provision of this Agreement in any way, with the
understanding that ARTICLE X is intended to reflect the principles set forth in
this Section 5.5.

        5.6 Restrictions Reasonable. The parties acknowledge and agree that all
restrictions contained in this ARTICLE V are reasonable, valid and necessary for
the adequate protection of (a) in the case of Gillette, Gillette’s Female
Product(s) business, and the Male Option granted by Palomar to Gillette until
the Male Option Termination Date, and (b) in the case of Palomar, Palomar’s
Light-Based Product business, and that neither party would have entered into
this Agreement without the protection afforded to it by the other party pursuant
to this ARTICLE V.

ARTICLE VI
PAYMENTS

        6.1 Payments to Palomar for Female Products.  Subject to the terms and
conditions set forth in this Agreement, Gillette shall make the following
payments to Palomar:

                (a)   R&D Advance Payment. Gillette shall pay to Palomar five
hundred thousand dollars (US $500,000) within ten (10) business days of the
Effective Date (the “R&D Advance Payment”), which amount shall be fully
creditable against the final payment that Gillette shall be required to make to
Palomar pursuant to Section 6.1(b) in connection with the R&D Program. Except as
expressly provided in the immediately preceding sentence, such payment shall
otherwise be non-creditable and non-refundable and there shall be no right of
set-off with respect thereto.

                (b)   R&D Payments. For the first ten (10) full Calendar
Quarters after the Effective Date, Gillette shall pay to Palomar for each such
Calendar Quarter seven hundred thousand dollars (US $700,000) to support the R&D
Activities (each such payment, an “R&D Payment” and collectively the “R&D
Payments”) in accordance with Section 1.3(b)(iii). For the avoidance of doubt,
Gillette shall be required to pay to Palomar seven million dollars (US
$7,000,000) in the aggregate, and no more than seven million five hundred
thousand dollars (US $7,000,000) in the aggregate, unless otherwise expressly
provided herein, in Section 14.2(d), or as the parties may otherwise agree, in
connection with the R&D Program (which amount shall be inclusive of the five
hundred thousand dollar (US $500,000) payment made by Gillette to Palomar
pursuant to Section 6.1(a) and credited against payments made in connection with
the R&D Program as provided in that Section). In the event that this Agreement
is terminated by Gillette pursuant to Section 10.4(a) before the final R&D
payment becomes due, Gillette’s shall be obligated to make R&D Payments to
Palomar in the amount of four million five hundred thousand dollars ($4,500,000)
in the aggregate (against which amount the five hundred thousand

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dollar ($500,000) payment made by Gillette to Palomar pursuant to Section 6.1(a)
shall be credited). In the event that this Agreement is terminated by Gillette
pursuant to Section 10.4(b) before the final R&D payment becomes due, Gillette
shall be obligated to make R&D Payments to Palomar with respect to the two (2)
Calendar Quarters after the Calendar Quarter in which Gillette provides to
Palomar written notice of such termination (against which amounts the five
hundred thousand dollar ($500,000) payment made by Gillette to Palomar pursuant
to Section 6.1(a) shall be credited). In the event that this Agreement is
terminated by Gillette pursuant to Section 10.4(d) or by Palomar pursuant to
Section 10.3 before the final R&D Payment becomes due, Gillette shall be
obligated to pay Palomar all remaining R&D Payments (against which remaining
amount the five hundred thousand dollar ($500,000) payment made by Gillette to
Palomar pursuant to Section 6.1(a) shall be credited). In the event that this
Agreement is terminated by Gillette pursuant to Section 10.3 for Palomar’s
uncured material breach before the final R&D Payment becomes due, Gillette shall
have no further obligation from and after the date on which Gillette provides to
Palomar written notice of such termination to pay Palomar any additional R&D
Payments. In the event that Gillette is obligated to pay Palomar one or more R&D
Payments after the termination of this Agreement as provided above, all such R&D
Payments shall become due and payable within thirty (30) days of when any such
termination becomes effective. All R&D Payments shall be non-creditable and
non-refundable and there shall be no right of set-off with respect thereto.

                (c)   Manufacturing Payments. In the event that Gillette elects
to have Palomar Manufacture the CUT Female Product, Gillette shall pay to
Palomar Manufacturing Fees with respect to such CUT Female Product, calculated
in accordance with Section 3.2. All Manufacturing Fees shall be non-creditable
and non-refundable and there shall be no right of set-off with respect thereto,
except in the event that an audit provided for in Section 3.2 confirms that
Gillette overpaid Palomar.

                (d)   Development Completion Payment(s).

                                (i)   Development Completion Payments. In the
event that Gillette fails to terminate this Agreement in accordance with
Section 10.4(d) on or before the First Decision Date or Second Decision Date, as
applicable, Gillette shall pay to Palomar the applicable Development Completion
Payment(s) on or before the First Development Completion Payment Date or the
Second Development Completion Payment Date, as the case may be:

Development Event Development Completion Payment       First Development
Completion   $2,500,000 (“First Development Completion Payment”) Payment Date  
        Second Development Completion   $10,000,000 (“Second Development
Completion Payment,” and Payment Date   together with the First Development
Completion Payment,     “Development Completion Payments”)

                                (ii)   Development Completion Payments Not
Creditable or Refundable; Payable Only Once. Except as provided in Section
1.6(b) and 14.2, Development Completion Payments made by Gillette at the First
Development Completion Payment Date and the Second Development Completion
Payment Date shall not be refundable or creditable against TTPs or royalty
payments or any other payments owed by Gillette to Palomar hereunder and there
shall be no right of set-off with respect thereto. Each Development Completion
Payment

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shall be payable only once irrespective of the number of Female Products that
are developed or commercialized by the parties pursuant to this Agreement.

                                (iii)   Understanding. The parties understand
and agree that the Development Completion Payments are made for partial
reimbursement of costs expended by Palomar for its development of Palomar
Technology prior to the Effective Date, as further described in
Section 6.1(e)(i).

                (e)   TTPs to Be Made by Gillette to Palomar for Female
Products.

                                (i)   Introduction. The parties understand and
agree that Palomar shall disclose to Gillette a substantial amount of Palomar
Technology developed before the Effective Date. The parties further understand
and agree that Palomar has expended significant effort and capital to develop
such Palomar Technology and without it, the parties would not be able to
commercialize Female Products in the time-frame or manner contemplated by this
Agreement. Gillette shall pay Palomar the TTPs set forth in this Section 6.1(e),
the Development Completion Payments set forth in Section 6.1(d), the Annual
Exclusivity Collaboration Payments set forth in Section 6.1(g), the Failure to
Launch Payments set forth in Section 2.1(b), and the lump-sum payments set forth
in Section 6.2(a) as partial reimbursement for Palomar’s development and
disclosure of such Palomar independently-developed technology. By means of the
TTPs, the parties mutually agree that they have shared equitably the risk
involved in determining the value of such Palomar Technology and the risk
involved in developing and commercializing Female Products (including the risk
involved in creating a new market sector).

                                (ii)   TTPs. On a Female Product-by-Female
Product basis, Gillette shall pay to Palomar on account of sales or
distributions of each such product by Gillette or any of its agents or
(sub)licensees, TTPs in the amount of four percent (4%) of worldwide Net Sales
of each Female Product(s); provided, however, in the case of each Female Product
Lotion, Gillette’s obligation to pay to Palomar TTPs with respect to such Female
Product Lotion shall be two percent (2%). Notwithstanding the foregoing, except
as otherwise expressly provided in Section 6.1(g), 6.1(h) or ARTICLE VIII, all
such TTPs shall be non-creditable and non-refundable and there shall be no right
of set-off with respect thereto, except in the event that an audit confirms that
Gillette had overpaid Palomar as provided in Section 6.8, whereupon any
over-payment shall be addressed as provided in that Section.

                                (iii)   TTP Period. Gillette’s obligation to pay
to Palomar TTPs pursuant to Section 6.1(e)(ii) shall commence on the date of
First Commercial Sale of a Female Product and shall continue on a Female
Product-by-Female Product basis for as long as such Female Product is sold or
distributed by or on behalf of Gillette or any of its agents or (sub)licensees.

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         (f) Royalties for Female Products.

                                (i)   Royalties. On a Female Product-by-Female
Product and country-by-country basis, Gillette shall pay to Palomar on account
of sales or distributions of each such product by Gillette or any of its agents
or (sub)licensees, royalties in the amount of two percent (2%) of Net Sales of
each Female Product where the Manufacture, sale, offer for sale, use or import
of such Female Product would (in the absence of the license(s) or other
ownership interests provided pursuant to this Agreement (including any of
Gillette’s ownership or other interests in the Joint Patents)) infringe a Valid
Claim of a Palomar Patent or Joint Patent; provided, however, in the case of
each Female Product Lotion, Gillette’s obligation to pay to Palomar royalties
with respect to such Female Product Lotion shall be one percent (1%).
Notwithstanding the foregoing, that in the event that such Manufacture, sale,
offer for sale, use or import of such Female Product(s) would infringe an MGH
Valid Claim(s) but no other Valid Claim, Gillette’s obligation pursuant to this
Section 6.1(f) shall be reduced to one percent (1%) of such Net Sales and shall
apply only if and to the extent that Palomar has a corresponding payment
obligation to MGH under an MGH Agreement. Except as otherwise expressly provided
in Section 6.1(g), 6.1(h) or ARTICLE VIII, all royalty payments under this
Section 6.1(f)(i) shall be non-creditable and non-refundable and there shall be
no right of set-off with respect thereto, except in the event that an audit
confirms that Gillette had overpaid Palomar as provided in Section 6.8,
whereupon any over-payment shall be addressed as provided in that Section.

                                (ii)   Royalty Period. Gillette’s obligation to
pay to Palomar royalties pursuant to Section 6.1(f)(i) shall commence on the
date of First Commercial Sale of a Female Product and terminate on a Female
Product-by-Female Product and country-by-country basis on the date of the last
to expire of any Valid Claim of a Palomar Patent or Joint Patent in such country
covering the Manufacture, sale, offer for sale, importation or use of such
product.

                (g)   Annual Exclusivity Collaboration Payments. As further
reimbursement to Palomar for its development and disclosure of Palomar
Technology as described in Section 6.1(e)(i) and in partial consideration of the
exclusivity granted by Palomar to Gillette pursuant to ARTICLE IV and ARTICLE V,
Gillette shall pay Palomar the Annual Exclusivity Collaboration Payments (as
defined below) set forth in this Section 6.1(g). Subject to ARTICLE X, within
thirty (30) days after the first anniversary of the Second Development
Completion Payment Date (such anniversary, the “Exclusivity Payment Date”), and
thereafter within thirty (30) days after each anniversary of the Exclusivity
Payment Date, Gillette shall pay to Palomar ten million dollars (US $10,000,000)
(each, an “Annual Exclusivity Collaboration Payment”). For the twelve-month
period commencing on the second anniversary of the Exclusivity Payment Date and
any future such anniversary of the Exclusivity Payment Date, as the case may be,
and ending twelve months thereafter (each twelve month period, an “Annual
Exclusivity Collaboration Period”), the Annual Exclusivity Collaboration Payment
paid during the first thirty (30) days of the corresponding Annual Exclusivity
Collaboration Period shall be (A) fully creditable against any and all TTPs or
royalties owed by Gillette to Palomar for Net Sales during the corresponding
Annual Exclusivity Collaboration Period, and (B) payable only once irrespective
of the number of Female Products that are developed or commercialized by the
parties pursuant to this Agreement; provided, however, that in the event that
Gillette elects pursuant to Section 10.2 to terminate the Exclusivity Period,
from and after such termination date

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no Annual Exclusivity Collaboration Payments shall be payable by Gillette to
Palomar. For avoidance of doubt, any credits, offsets or other reductions
available under this Agreement for Gillette to credit against TTPs and royalties
owed by Gillette to Palomar (taking into account Section 6.6(b)) shall not be
used to reduce any Annual Exclusivity Collaboration Payments.

                (h)   TTP and Royalty Reductions. Subject to Section 6.6(b), on
a Female Product-by-Female Product and country-by-country basis, with respect to
each Female Product sold by Gillette or any of its agents or (sub)licensees to
one or more Third Parties in a particular country, during any given Calendar
Quarter, if the sum of TTPs and royalty payments owed by Gillette to Palomar and
by Gillette to one or more Third Parties in connection with sales of such
product in such country exceeds ten percent (10%) of the Net Sales of such
product in such country (prior to application of this Section), then
thirty-three percent (33%) of the difference of (1) the sum of (A) the
applicable royalty rate and the TTP rate payable to Palomar (as provided in
Sections 6.1(e)(ii) and 6.1(f)(i)) (the sum of such rates, the “Female Product
Payment Rate”) and (B) the rates of royalties and TTPs payable to such Third
Parties, minus (2) ten percent (10%), shall be reduced from the Female Product
Payment Rate payable to Palomar for such Calendar Quarter (which reduction shall
be applied pro rata to each of the royalty rate and the TTP rate); provided,
however, that in any Annual Exclusivity Collaboration Period, in no event shall
this Section 6.1(h) reduce the amount of any Annual Exclusivity Collaboration
Payment. Notwithstanding anything contained in this Agreement to the contrary,
(i) amounts paid by Gillette to Palomar pursuant to Section 6.1(i) shall be
excluded from the royalty reduction provisions contained in this Section 6.1(h),
and (ii) except as otherwise expressly provided in Section 8.5, amounts paid by
the parties pursuant to that Section shall be excluded from the royalty
reduction provisions contained in this Section 6.1(h).

                (i)   Third Party Royalties. In the event that Gillette’s
Exploitation of Female Products triggers any payment obligations to any Third
Party pursuant to an agreement originally entered into by Palomar and such Third
Party prior to or on the Effective Date, including to MGH pursuant to the MGH
Agreements, Palomar shall be solely responsible for such payments. In the event
that Gillette’s Exploitation of Female Products triggers any payment obligations
to any Third Party pursuant to an agreement originally entered into by Palomar
and such Third Party after the Effective Date, Palomar shall so inform Gillette
in writing and provide to Gillette a copy of such Third Party agreement.
Gillette shall be required to pay to Palomar any such payment obligations
attributable to Gillette’s exercise of any rights or license (or sublicense)
under such Third Party agreement that accrue after Gillette’s receipt of such
agreement; provided, however, that in the event that Gillette elects not to
exercise any rights or a license (or sublicense) under such Third Party
agreement, Gillette shall so inform Palomar in writing and from and after such
date Gillette shall have no rights or license (or sublicense) and shall have no
obligations to make such payments to Palomar for such payment obligations that
accrue after such date unless and until the parties otherwise mutually agree in
writing.

        6.2 PAYMENTS TO PALOMAR FOR GILLETTE JOINT INDEPENDENT PRODUCTS AND
OTHER INDEPENDENT PRODUCTS.

                (a)   Lump-Sum Payments for Gillette Joint Independent Products
and Other Independent Products. In partial consideration of the exclusivity
granted by Palomar to

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Gillette pursuant to ARTICLE IV and ARTICLE V, Gillette hereby agrees to make
the following payments to Palomar:

                                (i)   Launch During Exclusivity Period. Subject
to Sections 6.2(a)(iii) and 6.2(a)(iv), in the event that, during the
Exclusivity Period, Gillette Launches a Gillette Joint Independent Product or an
Other Independent Product in the Field, within thirty (30) days of such Launch,
Gillette shall pay to Palomar on account of the Launch of such product, five
million dollars (US $5,000,000). In the event that, subsequent to such Launch,
Gillette terminates the Exclusivity Period pursuant to Section 10.2, within
thirty (30) days of the end of the Exclusivity Period, Gillette shall pay to
Palomar on account of the Launch of such product, an additional five million
dollars (US $5,000,000). Such payments shall be non-creditable and
non-refundable and there shall be no right of set-off with respect thereto.

                                (ii)   Launch After Termination of Exclusivity
Period. Subject to Sections 6.2(a)(iii) and 6.2(a)(iv), in the event that, after
the termination, if any, of the Exclusivity Period, Gillette Launches a Gillette
Joint Independent Product or an Other Independent Product in the Field, within
thirty (30) days of such Launch, Gillette shall pay to Palomar on account of the
Launch of such product, ten million dollars (US $10,000,000). Such payment shall
be non-creditable and non-refundable and there shall be no right of set-off with
respect thereto.

                                (iii)   Lump-Sum Payments Contingent on
Regulatory Approval in the United States for first Female Product.
Notwithstanding anything contained in Sections 6.2(a)(i) and 6.2(a)(ii), in the
event that, as of the date of Gillette’s Launch of a Gillette Joint Independent
Product or Other Independent Product in the Field, Palomar has not obtained
Regulatory Approval in the United States for the First Female Product,
Gillette’s obligation to make a lump-sum payment to Palomar pursuant to Section
6.2(a)(i) or 6.2(a)(ii), as applicable, shall be deferred until thirty (30) days
after such Regulatory Approval is obtained. In the event that Palomar fails to
obtain Regulatory Approval in the United States for the First Female Product,
Gillette shall have no obligation to make any payment(s) to Palomar pursuant to
Sections 6.2(a)(i) and 6.2(a)(ii).

                                (iv)   Lump-Sum Payment(s) Payable Only Once.
Once Gillette has made a payment(s) to Palomar pursuant to Section 6.2(a)(i) or
6.2(a)(ii) on account of the first Gillette Joint Independent Product or Other
Independent Product Launched by Gillette in the Field, Gillette shall have no
further obligation to make payments to Palomar pursuant to Section 6.2(a)(i) or
6.2(a)(ii) on account of any subsequent or other Gillette Joint Independent
Product or Other Independent Product Launched by Gillette in the Field.

                (b)   TTPs for Gillette Joint Independent Products and Other
Independent Products.

                                (i)   Gillette Joint Independent Products.
Gillette shall pay to Palomar on account of sales or distributions of each
Gillette Joint Independent Product in the Field by Gillette or any of its agents
or (sub)licensees, on a Gillette Joint Independent Product-by-Gillette Joint
Independent Product basis, TTPs in the amount of four percent (4%) of worldwide
Net Sales of such product; provided, however, that in the case of each
Independent

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Product Lotion, Gillette’s obligation to pay to Palomar TTPs with respect to
such Independent Product Lotion shall be two percent (2%). Gillette’s obligation
to pay to Palomar TTPs pursuant to this Section 6.2(b)(i) shall commence on the
date of First Commercial Sale of the Gillette Joint Independent Product and
shall continue, on a Gillette Joint Independent Product-by-Gillette Joint
Independent Product basis, for (A) in the case of a Gillette Joint Independent
Product Launched by Gillette during the Exclusivity Period, as long as such
Gillette Joint Independent Product is sold by or on behalf of Gillette or any of
its agents or (sub)licensees, and (B) in the case of a Gillette Joint
Independent Product Launched within ten (10) years after the termination of the
Exclusivity Period, twenty (20) years after the Launch of the first Gillette
Joint Independent Product in the Field that is Launched during the ten (10)
years after the termination of the Exclusivity Period.

                                (ii)   Other Independent Products. Gillette
shall pay to Palomar on account of sales or distributions of each Other
Independent Product in the Field by Gillette or any of its agents or
(sub)licensees, on an Other Independent Product-by-Other Independent Product
basis, TTPs in the amount of (A) one percent (1%) of worldwide Net Sales of such
product, with respect to sales occurring during the Exclusivity Period, and (B)
two percent (2%) of worldwide Net Sales with respect to such product, with
respect to sales occurring after the Exclusivity Period has terminated.
Gillette’s obligation to pay to Palomar TTPs pursuant to this Section 6.2(b)(ii)
shall commence on the date of First Commercial Sale of each Other Independent
Product and shall terminate on the tenth (10th) anniversary of the First
Commercial Sale of the first Other Independent Product Launched by Gillette in
the Field.

                (c)   Royalties for Gillette Joint Independent Products.
Gillette shall pay to Palomar on account of sales or distributions of each
Gillette Joint Independent Product(s) in the Field by Gillette or any of its
agents or (sub)licensees, on a Gillette Joint Independent Product-by-Gillette
Joint Independent Product and country-by-country basis, royalties in the amount
of two percent (2%) of Net Sales of such product; provided, however, that in the
case of each Independent Product Lotion, Gillette’s obligation to pay to Palomar
royalties with respect to such Independent Product Lotion shall be one percent
(1%). Notwithstanding the foregoing, in the event that such Manufacture, sale,
offer for sale, use or import of such Gillette Joint Independent Product(s)
would infringe an MGH Valid Claim(s) but no other Valid Claim, Gillette’s
obligation pursuant to this Section 6.2(c) shall be reduced to one percent (1%)
of such Net Sales and shall apply only if and to the extent that Palomar has a
corresponding payment obligation to MGH under an MGH Agreement. Gillette’s
obligation to pay to Palomar royalties pursuant to this Section 6.2(c) shall
commence on the date of First Commercial Sale of the Gillette Joint Independent
Product and terminate on a country-by-country basis on the date of the last to
expire of any Valid Claim of a Joint Patent covering such product.

                (d)   Royalties for Non-Light Based Products. In the event, and
only to the extent, that the Manufacture, sale, offer for sale, use or import of
a Non-Light Based Product outside the Field by or on behalf of Gillette or any
of its sublicensees pursuant to the license granted to Gillette in Section
4.1(a)(iii) would (in the absence of such license) infringe a Valid Claim of an
MGH Patent or an MGH Joint Patent, Gillette shall pay to Palomar on account of
sales or distributions of each such Non-Light Based Product, on a Non-Light
Based Product,-by-Non-Light Based Product basis, royalties in the amount of one
percent (1%) of Net Sales of such product; provided, however, that Gillette’s
obligation pursuant to this Section 6.2(d) shall apply

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only if and to the extent that Palomar has a corresponding payment obligation to
MGH under an MGH Agreement. Gillette’s obligation to pay to Palomar royalties
pursuant to this Section 6.2(d) shall commence on the date of First Commercial
Sale of the Non-Light Based Product and terminate on a country-by-country basis
on the date of the last to expire of any Valid Claim of a MGH Patent or MGH
Joint Patent covering such product. Except as otherwise expressly provided in
ARTICLE VIII, all royalty payments under this Section 6.2(d) shall be
non-creditable and non-refundable and there shall be no right of set-off with
respect thereto, except in the event that an audit confirms that Gillette had
overpaid Palomar as provided in Section 6.8, whereupon any over-payment shall be
addressed as provided in that Section.

                (e)   Royalties for Products or Systems Exploited Pursuant to
the License Grant by Palomar to Gillette in Section 4.1(a)(iv). In the event,
and only to the extent, that the Manufacture, sale, offer for sale, use or
import of a product or system outside the Field by or on behalf of Gillette or
any of its sublicensees pursuant to the license granted to Gillette in Section
4.1(a)(iv) would (in the absence of such license) infringe a Valid Claim of a
Joint Patent with respect to which Gillette does on have an ownership interest,
Gillette shall pay to Palomar on account of sales or distributions of each such
products or systems, on a product-by-product or system-by-system basis (as
applicable), royalties in the amount of one percent (1%) of Net Sales of such
product; provided, however, that Gillette’s obligation pursuant to this Section
6.2(e) shall apply only if and to the extent that Palomar has a corresponding
payment obligation to MGH under an MGH Agreement. Gillette’s obligation to pay
to Palomar royalties pursuant to this Section 6.2(e) shall commence on the date
of First Commercial Sale of such product or system in such country and terminate
on a country-by-country basis on the date of the last to expire of any Valid
Claim of any such Joint Patent covering such product or system. Except as
otherwise expressly provided in ARTICLE VIII, all royalty payments under this
Section 6.2(e) shall be non-creditable and non-refundable and there shall be no
right of set-off with respect thereto, except in the event that an audit
confirms that Gillette had overpaid Palomar as provided in Section 6.8,
whereupon any over-payment shall be addressed as provided in that Section.

        6.3 PAYMENTS TO GILLETTE.

                (a)   Products Claimed by Gillette Licensed Patents. Subject to
the terms, conditions and limitations of this Agreement, including Section
6.3(b), in the event that Palomar Exploits, or grants to a Third Party a
sublicense to Exploit, any product or service covered by a Gillette Licensed
Patent, and provided that Gillette has granted to Palomar a license under the
Gillette Licensed Patents that is being exercised by such Exploitation, Palomar
shall pay to Gillette on a product-by-product and country-by-country basis,
royalties in the amount of one percent (1%) of Net Sales of such product or
service in such country, which Net Sales shall be calculated as provided in the
definition of “Net Sales,” substituting therein “Palomar” for “Gillette”
wherever such term appears. The royalty obligations under this Section 6.3(a)
shall terminate, on a country-by-country basis, with respect to each product for
which a royalty is payable upon the expiration date in such country of the last
to expire of any Valid Claim of a Gillette Licensed Patent covering such product
or service.

                (b)   Third Party Royalties. In the event that Palomar’s
Exploitation of any product or service under the rights granted by Gillette to
Palomar under the Gillette Licensed Patents triggers any payment obligations by
Gillette to any Third Party, Gillette shall so inform

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Palomar in writing and provide to Palomar a copy of such Third Party agreement.
Palomar shall be required to pay to Gillette any such payment obligations
attributable to Palomar’s exercise of any rights or license (or sublicense)
under such Third Party agreement that accrue after Palomar’s receipt of such
agreement; provided, however, that in the event that Palomar elects not to
exercise any rights or a license (or sublicense) under such Third Party
agreement, Palomar shall so inform Gillette in writing and from and after such
date Palomar shall have no such rights or license (or sublicense) and shall have
no obligation to make such payments to Gillette for such payment obligations
that accrue after such date unless and until the parties otherwise mutually
agree in writing.

        6.4 TTP and Royalty Reductions for Independent Products. Subject to
Section 6.6(b), on an Independent Product-by-Independent Product and
country-by-country basis, with respect to each Independent Product sold by
Gillette or any of its agents, distributors or (sub)licensees to one or more
Third Parties in a particular country, during any given Calendar Quarter, if the
sum of TTPs and royalty payments owed by Gillette to Palomar and by Gillette to
one or more Third Parties in connection with sales of such Independent Product
in such country, exceeds ten percent (10%) of the Net Sales of such product in
such country (prior to application of this Section), then thirty-three percent
(33%) of the difference of (1) the sum of (A) the applicable TTP rate and
royalty rate payable to Palomar (as provided in this ARTICLE VI) (the sum of
such rates, the “Independent Product Payment Rate”) and (B) the rates of TTPs
and royalties payable to such Third Parties, minus (2) ten percent (10%), shall
be reduced from the Independent Product Payment Rate payable to Palomar for such
Calendar Quarter (which reduction shall be applied pro rata to each of the TTP
rate and the royalty rate). Notwithstanding anything contained in this Agreement
to the contrary, amounts paid by Gillette to Palomar pursuant to Section 6.1(i)
shall be excluded from the royalty reduction provisions contained in this
Section 6.4.

        6.5 Royalty Reductions for Gillette Licensed Patents. On
product/service-by-product/service and country-by-country basis, with respect to
each product/service sold by or distributed by Palomar or any of its agents,
distributors or (sub)licensees to one or more Third Parties in a particular
country for which Palomar is obligated to pay Gillette a royalty pursuant to
Section 6.3, during any given Calendar Quarter, if the sum of royalty payments
owed by Palomar to Gillette and by Palomar to one or more Third Parties, as the
case may be, in each case in connection with sales of such product/service in
such country, exceeds ten percent (10%) of the Net Sales of such product/service
in such country (prior to application of this Section), then thirty-three
percent (33%) of the difference of (1) the sum of (A) the applicable royalty
rate payable to Gillette (as provided in this ARTICLE VI) (the sum of such
rates, the “Product/Service Payment Rate”) and (B) the rates of TTPs and
royalties payable to such Third Parties, minus (2) ten percent (10%), shall be
reduced from the Product/Service Payment Rate payable to Gillette for such
Calendar Quarter; provided, however, that in no event shall the Product/Service
Payment Rate be reduced more than thirty-three percent (33%) in any Calendar
Quarter. For purposes of this Section, for sales by Palomar or any of its of its
agents or (sub)licensees, Net Sales shall be calculated as provided in the
definition of “Net Sales,” substituting therein “Palomar” for “Gillette”
wherever such term appears. Notwithstanding anything contained in this Agreement
to the contrary, amounts paid by Palomar to Gillette pursuant to Section 6.3(b)
shall be excluded from the royalty reduction provisions contained in this
Section 6.5.

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        6.6 TTP AND ROYALTY PAYMENTS.

                (a)   In General. Running royalties and TTPs payable pursuant to
Sections 6.1(e)(ii), 6.1(f)(i), 6.2(b)(i), 6.2(b)(ii), 6.2(c) and 6.3 shall be
payable on a Calendar Quarterly basis, within sixty (60) days after the end of
each Calendar Quarter, based upon the Net Sales during such Calendar Quarter,
commencing with the Calendar Quarter in which the First Commercial Sale of a
Product is made. Royalties shall be calculated in accordance with GAAP and with
the terms of this ARTICLE VI.

                (b)   Offsets, Credits and Reductions. Notwithstanding any right
of Gillette (i) pursuant to Article VIII to offset or credit certain amounts
against royalties or TTPs owed by Gillette to Palomar in this Agreement, or (ii)
pursuant to Section 6.1(h) or 6.4 to otherwise reduce the amount of royalties or
TTPs payable by Gillette to Palomar, the aggregate credits, offsets and other
reductions that Gillette shall be permitted to apply in any given Calendar
Quarter with respect to a particular product shall not exceed, in the case of
royalties, if any, royalties in the amount of one percent (1%) of Net Sales
during such Calendar Quarter with respect to such product, and in the case of
TTPs, if any, TTPs in the amount of one percent (1%) of Net Sales during such
Calendar Quarter with respect to such product. Credits, offsets and reductions
not exhausted in any Calendar Quarter may be carried into future Calendar
Quarters, subject to the foregoing sentence.

                (c)   Covenants. The parties have agreed to the TTPs set forth
in Sections 6.1(e) and 6.2(b) and the royalties set forth in Sections 6.1(f) and
6.2(c). Gillette hereby stipulates to the fairness and reasonableness of such
TTPs and royalties and covenants not to allege or assert, or cause any Third
Party to allege or assert, that the TTP or royalty obligations are unenforceable
or illegal in any way. To the extent permitted by Applicable Law, Gillette
further covenants to include in any agreement with a Third Party in which it
grants to such Third Party a sublicense under any license granted to it by
Palomar hereunder a term that prohibits such Third Party from alleging or
asserting to any court or other appropriate governmental entity that the
payments owed to Gillette by such Third Party on account of payments owed by
Gillette to Palomar under this Agreement are unenforceable or illegal in any
way. In the event that Gillette asserts or alleges, or causes any Third Party to
assert or allege, to any court or other appropriate governmental entity that
such TTPs or royalties are not legal or otherwise enforceable, this assertion or
allegation will constitute a material breach by Gillette hereunder and Palomar
shall have the right to terminate this Agreement immediately in accordance with
Section 10.3 because of the material breach by Gillette without any opportunity
to cure.

        6.7 TTP and Royalty Statements. Each TTP and royalty payment hereunder
shall be accompanied by a statement showing (a) the number of units of each
product sold by the payor party on a country-by-country basis during the
applicable Calendar Quarter, (b) the amount of royalties and TTPs, if any, due
on such Net Sales, (c) withholding taxes, if any required by Applicable Law to
be deducted, (d) the date of the First Commercial Sale for all Products in any
country that occurred during the reporting period, (e) any calculation
concerning a reduction in TTPs or royalties pursuant to Section 6.1(h), 6.4 or
6.5, as applicable, and (f) the exchange rates used in determining the amount of
United States dollars. In addition, each TTP and royalty and other payment
hereunder shall be accompanied by a statement showing (i) any credits, offsets
or other reductions (if any) taken against such payment, (ii) a reasonably
detailed

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statement of the source of such credits, offsets or other reductions; (iii) the
provision(s) of this Agreement expressly authorizing such credits, offsets or
other reductions, (iv) the extent to which such credits, offsets or other
reductions were capped pursuant to Section 6.6(b) or any provision of ARTICLE
VIII; and (v) the amount and nature any credits, offsets and other reductions
that are carried into future Calendar Quarters as a result of being capped
pursuant to such Section or ARTICLE.

        6.8 RECORDS RETENTION; AUDIT.

                (a)   Record Retention. Until the third (3rd) anniversary of
December 31 of the Calendar Year in which a product for which a party owed to
the other party TTP or royalty payments is sold or distributed, the paying party
shall keep (and shall ensure that its agents and (sub)licensees shall keep)
records of such sales in sufficient detail to confirm the accuracy of the TTP or
royalty calculations hereunder. With respect to any credits, offsets or other
reductions (if any) taken against any TTP or royalty or other payment, until the
third (3rd) anniversary of December 31 of the Calendar Year in which any such
credit, offset or other reduction is taken, the paying party shall keep (and
shall ensure that its agents and (sub)licensees shall keep) records of such
credits, offsets or other reductions in sufficient detail to confirm the
accuracy of them hereunder.

                (b)   Audit. Upon the written request of the receiving party and
not more than once in each Calendar Year, the paying party shall permit an
independent certified public accounting firm of nationally recognized standing
selected by the receiving party, and reasonably acceptable to the paying party,
at the receiving party’s expense, to have access during normal business hours,
and upon reasonable prior written notice, to such of the records of the paying
party as may be reasonably necessary to verify the accuracy of the TTP or
royalty reports hereunder for any Calendar Year ending not more than twenty-four
(24) months prior to the date of such request. The accounting firm shall
disclose to the paying party and the receiving party whether the royalty or
reports are correct or incorrect and the specific details concerning any
discrepancies. No other information shall be provided to the receiving party.

                (c)   Payment of Additional TTPs or Royalties. If such
accounting firm concludes that additional TTPs or royalties were owed during
such period, or excess credits, offsets or other reductions were taken, the
paying party shall pay the additional TTPs or royalties, as applicable, with
interest calculated as provided in Section 6.10 from the date originally due,
within thirty (30) days after the date on which such accounting firm’s written
report is delivered to the paying party. If, and only if, the amount of the
underpayment is greater than two percent (2%) of the total amount owed, then the
paying party shall reimburse the receiving party for all costs related to such
audit.

                (d)   Confidentiality. The receiving party shall treat all
information subject to review under this Section 6.8 in accordance with the
confidentiality provisions of ARTICLE IX and shall cause its accounting firm to
enter into a reasonably acceptable confidentiality agreement with the paying
party obligating such firm to retain all such financial information in
confidence pursuant to such confidentiality agreement.

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        6.9 Mode of Payment. All payments to Palomar or Gillette under this
Agreement shall be made by deposit of United States Dollars in the requisite
amount to such bank account as the receiving party may from time to time
designate by notice to the paying party. Payments shall be free and clear of any
taxes (other than withholding and other taxes imposed on the receiving party,
which shall be for the account of such party), fees or charges, to the extent
applicable. With respect to sales outside the United States, payments shall be
calculated based on currency exchange rates for the Calendar Quarter with
respect to which sales remittance is made for TTPs or royalties. For each month
and each currency, such exchange rate shall equal the arithmetic average of the
daily exchange rates (obtained as described below) during the Calendar Quarter;
each daily exchange rate shall be obtained from The Wall Street Journal, Eastern
United States Edition, or, if not so available, as otherwise agreed by the
parties. Unless otherwise designated by Palomar in writing, all payments to
Palomar under this Agreement shall be made by wire transfer to the following
bank account:

  Banknorth   370 Main Street   Worcester, MA 01608   ABA No.: 211370545  
Account No.: 8241022982   Account Name: Palomar Medical Technologies, Inc.

        6.10 Interest on Late Payments. Each party shall pay interest to the
other party on the aggregate amount of any payments that are not paid on or
before the date such payments are due under this Agreement at a rate per annum
equal to the lesser of (a) the prime rate, as published in The Wall Street
Journal, Eastern United States Edition, plus one and one-half percent (1.5%), on
the last business day preceding the date of payment, or (b) the highest rate
permitted by applicable law, calculated on the number of days such payment is
delinquent.

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

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

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ARTICLE VII
REPORTS

        7.1 Complaints. Each party shall maintain a record of any and all
complaints it receives with respect to the Female Product(s) as required by
Applicable Law. Each party shall notify the other party in reasonable detail of
any complaint received by it relating to any Female Product within thirty (30)
days after receiving the complaint, and in any event in sufficient time to allow
such other party to comply with any and all regulatory and other requirements
imposed upon it in any jurisdiction in which the Female Product(s) is being
marketed.

        7.2 Adverse Event Reporting. Each party shall provide the other party
with all information necessary or desirable for such other party to comply with
all Applicable Law with respect to the Female Product(s). In the event that the
Female Product(s) is a PMA Product, the parties shall (a) develop appropriate
adverse experience reporting procedures; (b) provide any material information on
the Female Product(s) from pre-clinical or clinical laboratory studies, as well
as serious or unexpected adverse experience reports from Clinical Trials of the
Female Product(s); and (c) report and provide such information in such a manner
and time so as to enable the parties to comply with all Applicable Law in
countries for which Regulatory Approval is or will be sought.

        7.3 PRODUCT RECALL.

                (a)   Notification and Recall. In the event that any Regulatory
Authority issues or requests a recall or takes similar action in connection with
a Female Product, or in the event either party determines that an event,
incident or circumstance has occurred that may result in the need for a recall
or market withdrawal, the party notified of or desiring such recall or similar
action shall, within twenty-four (24) hours, advise the other party thereof by
telephone or facsimile. Following notification of a recall, within seventy-two
(72) hours, Gillette shall decide whether to conduct a recall (except in the
case of a government-mandated recall) and the manner in which any such recall
shall be conducted.

                (b)   Recall Expenses. Gillette shall bear the expenses of any
recall of a Female Product; provided, however, that Palomar shall bear the
direct expense to Gillette of a recall to the extent that such recall resulted
from Palomar’s gross negligence or willful misconduct. (For the avoidance of
doubt, nothing contained in this Section 7.3(b) shall in any way alter or
diminish any indemnification obligation of Palomar pursuant to ARTICLE XI.) Such
expenses of recall shall include expenses for notification, destruction or
return of the recalled Female Product and any refund to consumers of amounts
paid for the recalled Female Product. In the event that Palomar bears any such
expenses of a recall, notwithstanding the last sentence of Section 7.3(a),
Gillette shall consult with Palomar in good faith on the manner in which any
such recall shall be conducted. The rights and remedies of Gillette under this
Section shall be cumulative and in addition to any other rights or remedies that
may be available to Gillette under this Agreement or at law.

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ARTICLE VIII
INTELLECTUAL PROPERTY RIGHTS

        8.1 INTELLECTUAL PROPERTY OWNERSHIP.

                (a)   Ownership of Gillette Patents and Gillette Know-How.
Subject to the license grants to Palomar in this Agreement, as between the
parties, Gillette shall own and retain all right, title and interest in and to
any and all Gillette Patents, Gillette Know-How and Gillette Regulatory
Documentation.

                (b)   Ownership of Palomar Patents, Palomar Know-How and Palomar
U.S. Regulatory Documentation. Subject to the license grants to Gillette in this
Agreement, as between the parties, Palomar shall own and retain all right, title
and interest in and to all Palomar Patents, Palomar Know-How and Palomar U.S.
Regulatory Documentation.

                (c)   Ownership and Exploitation of Joint Inventions and Joint
Technology.

                                (i)   Palomar shall own all right, title and
interest in and to all (A) Joint Inventions first conceived or reduced to
practice during the Restricted Access Period, and (B) all Joint Technology with
respect thereto. At the end of the Restricted Access Period, provided that
Gillette does not terminate this Agreement pursuant to Section 10.4(a), Palomar
shall assign, and hereby does assign, to Gillette, without payment of additional
consideration, an equal, undivided interest in all such Joint Inventions and
Joint Technology conceived or reduced to practice on or before the last day of
the Restricted Access Period. If Gillette terminates this Agreement pursuant to
Section 10.4(a), then there shall be no assignment by Palomar to Gillette of any
such interest and any such Joint Inventions or Joint Technology shall be deemed
“Palomar Patents” or “Palomar Know-How,” as the case may be, and shall no longer
be treated as “Joint Inventions” or “Joint Technology” hereunder. If Gillette
does not terminate this Agreement pursuant to Section 10.4(a), Gillette, on the
one hand, and Palomar, on the other hand, shall each own an equal, undivided
interest in (1) Joint Inventions first conceived or reduced to practice after
the Restricted Access Period, and (2) all Joint Technology with respect thereto.
Each party agrees to disclose to the other party promptly in writing any and all
Joint Inventions and Joint Technology that are conceived or reduced to practice
by or on behalf of such party, provided that Palomar shall not disclose to
Gillette during the Restricted Access Period any Joint Invention or Joint
Technology, and provided further that Palomar shall have no obligation to
disclose to Gillette any Joint Invention or Joint Technology at any time in the
event Gillette terminates this Agreement pursuant to Section 10.4(a). In
addition, the party with an obligation to make such disclosures agrees, as
necessary to evidence joint ownership of any and all such Joint Inventions and
Joint Technology, to assign (and hereby assigns) to the other party or to cause
its employees and agents to assign to the other party, without payment of
additional consideration, an equal, undivided interest in such Joint Inventions
or Joint Technology, as the case may be.

                                (ii)   Notwithstanding Section  8.1(c)(i), there
may be instances in which Joint Inventions and related Joint Technology arise
from work performed by a party in collaboration with a non-profit entity that is
not obligated to assign such Joint Inventions and Joint Technology to such
party, rights to which shall be treated as follows for purposes of this
Agreement:

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                                        (1)   In the event that either party
proposes to subcontract any R&D Activities, Additional Activities or Commercial
Assessment Period Additional Activities to any non-profit entity that would
retain an ownership interest in any Joint Inventions and related Joint
Technology conceived or reduced to practice in connection with the performance
of such activities, the subcontracting party shall notify the R&D Committee and
the R&D Committee shall determine whether to permit such subcontract on the
terms with the non-profit entity proposed by the subcontracting party, whereupon
the parties shall mutually agree in good faith how to treat any such Joint
Inventions and related Joint Technology under this Agreement.

                                        (2)   As of the date first written
above, the parties understand and agree that the Initial R&D Plan provides that
certain R&D Activities will be performed by MGH pursuant to the MGH Agreements,
and MGH will retain an ownership interest in the Joint Inventions and related
Joint Technology arising from such activities to the extent that an individual
affiliated with MGH is an inventor of such Joint Inventions, all as provided in
the MGH Agreements. In addition, Palomar may subcontract to MGH additional
activities to be performed by Palomar hereunder. With respect to those Joint
Inventions in which MGH retains an ownership interest (the “MGH Joint
Inventions) and the related Joint Know-How, Joint Patents and Joint Technology
(the “MGH Joint Know-How,” “MGH Joint Patents,” and “MGH Joint Technology,”
respectively), Palomar shall assign to Gillette as provided in
Section 8.1(c)(ii) an equal and undivided share of Palomar’s partial interest in
the MGH Joint Inventions and MGH Joint Technology, to the extent that Palomar
owns a partial interest therein and is not a mere licensee with respect thereto.
All references to Joint Inventions, Joint Technology, Joint Patents and Joint
Know-How hereunder, to the extent they apply to MGH Joint Inventions, MGH Joint
Technology, MGH Joint Patents and MGH Joint Know-How, shall be subject to the
terms and conditions of the MGH Agreements, and all rights and obligations of
the parties with respect to the foregoing shall be subject to such agreements.

                                (iii)   Subject to all of the terms and
conditions of this Agreement, each party may Exploit Joint Inventions and Joint
Technology without an accounting or obligation to, or consent required from, the
other party. Except in connection with a Third Party Collaboration, neither
party may (sub)license any Joint Technology for use outside the Field without
the other party’s prior written consent, which shall not be unreasonably
withheld; provided that (A) Gillette’s consent shall not be required for Palomar
to (sub)license Joint Technology (whether or not in connection with a Third
Party Collaboration) for Exploitation by one or more Third Party(ies) of
Light-Based Products outside the Field, and (B) Palomar’s consent shall not be
required for Gillette to (sub)license Joint Technology (whether or not in
connection with a Third Party Collaboration) for the Exploitation by one or more
Third Parties of Non-Light-Based Products.

        8.2 VARIOUS PATENT MATTERS.

                (a)   Inventorship Procedure. During the R&D Period, the R&D
Committee shall, at the written request of either party and consistent with the
terms of this Agreement, establish a mutually agreeable procedure for
determining inventorship of Information and Inventions asserted by one party to
be Joint Inventions and Joint Technology both during the

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R&D Period and thereafter. Any such procedure shall be subject to the dispute
resolution procedure set forth in Section 13.1.

                (b)   U.S. Patents. Any Joint Invention that would be rendered
unpatentable in the United States solely on account of prior art under one or
more of subsections 102(e), (f), or (g) of Title 35, U.S.C., but for the absence
of an obligation of assignment of such Joint Invention (or an undivided interest
therein) to the other party hereto, is hereby subjected to an obligation of
assignment to such other party of such interest in such invention as renders
such Joint Invention patentable in the United States and thereby gives rise to a
Joint Patent. Such assignment shall have force and effect only with respect to
Joint Patents granted in the United States. The rights of the parties with
respect to any Joint Invention subject to an obligation of assignment under this
Section 8.2(b), except for subject matter patentable to the assignee in the
absence of the assignment, shall be the same as the rights that would have
applied under this Agreement had no obligation to assign under this
Section 8.2(b) existed. If and only if required to give force and effect to the
immediately preceding sentence and, in such case, only to the extent required to
give such force and effect, each assignee under this Section 8.2(b) hereby
grants to each of the assignors under this Section 8.2(b) such irrevocable
licenses, if any, as are required to vest in the assignor all rights the
assignor would have enjoyed absence the applicable assignment.

        8.3 PROSECUTION OF PATENTS.

                (a)   Palomar Patents.

                                (i)   During the Gillette Exclusive License
Period. For as long as the license grants by Palomar to Gillette contained in
Section 4.1(a)(i) and 4.1(a)(ii) are in effect and are exclusive (as opposed to
non-exclusive) in nature (such grants, the “Gillette Exclusive Licenses,” and
such period the “Gillette Exclusive License Period”), the following provisions
of this Section  8.3(a)(i) shall apply to the Palomar Patents:

                                        (1)   In General. Subject to
Sections 8.3(a)(i)(2) and 8.3(a)(i)(3), Palomar shall be responsible for
preparing, filing, prosecuting and maintaining throughout the world the Palomar
Patents. In this regard, Palomar shall prepare, file, prosecute and maintain
applications to secure Palomar Patents for the Female Product Technology and,
unless Gillette consents in writing otherwise, any other patentable Palomar
Know-How, in the United States and all other PCT member countries and in such
non-PCT member countries as Gillette may from time to time designate in writing.
Palomar shall pay all Patent Costs incurred by Palomar arising from the
preparation, filing, prosecution or maintenance of the Palomar Patents.

                                        (2)   Cooperation. Palomar shall
regularly provide Gillette with copies of all patent applications filed by
Palomar pursuant to Section 8.3(a)(i)(1) and other related material submissions
and correspondence with any patent authorities, as applicable, in sufficient
time to allow for review and comment by Gillette. In addition, Palomar shall
provide Gillette and its counsel with an opportunity to consult with Palomar and
its counsel regarding the filing and contents of any application, amendment,
registration, submission, response or correspondence with any patent authorities
in connection therewith, and Palomar shall accede to the reasonable requests of
Gillette regarding the filing and prosecution of the Palomar Patents.

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                                        (3)   Election not to Prosecute or Pay
Patent Costs. If Palomar elects not (A) to pursue the preparation, filing,
prosecution or maintenance of a Palomar Patent in a particular country, or (B)
to take any other action with respect to a Palomar Patent in a particular
country that is necessary or useful to establish or preserve rights thereto or
(C) to pay the Patent Costs associated with any such activities, then in each
such case Palomar shall so notify Gillette promptly in writing and in good time
to enable Gillette to meet any deadlines by which an action must be taken to
establish or preserve any such rights in such Palomar Patent in such country.
Upon receipt of each such notice by Palomar or if, at any time, Palomar fails to
initiate any such action within thirty (30) days after a request by Gillette
that it do so (or within such shorter time as may be required to prevent the
forfeiture of rights), and thereafter diligently pursue such action, Gillette
shall have the right, but not the obligation, to pursue the preparation, filing,
or support the continued prosecution or maintenance, of such Palomar Patent. If
Gillette elects to pursue such filing or provide such support, then Gillette
shall (x) control the filing, preparing, prosecuting and maintaining of such
Palomar Patent, with all the rights and obligations with respect to such Palomar
Patent set forth in Sections 8.3(a)(i)(1) and 8.3(a)(i)(2) and reversed, by
switching the names of the parties in each of those Sections, and (y) be
responsible for all Patent Costs incurred by Gillette in connection therewith;
provided, however, that, subject to Section 6.6(b), Gillette shall have the
right to offset fifty percent (50%) of such Patent Costs against royalties
payable by Gillette to Palomar, which offset shall not exceed in any Calendar
Quarter royalties in the amount of one percent (1%) of Net Sales, and
(ii) against TTPs payable by Gillette to Palomar, which offset shall not exceed
in any Calendar Quarter TTPs in the amount of one percent (1%) of Net Sales (and
which offsets shall be applied first to amounts attributable to such royalties
and second to amounts attributable to TTPs). Subject to Section 6.6(b), offsets
not exhausted in any Calendar Quarter shall be carried into future Calendar
Quarters.

                                        (4)   To the extent that a Third Party
licensor has retained any right to prepare, file, prosecute or maintain or
otherwise be involved in the activities specified in this Section 8.3(a)(i) with
respect to any Palomar Patents, Palomar shall use commercially reasonable
efforts to cause such Third Party licensor to take the actions specified by this
Section 8.3(a)(i) in a manner consistent with the agreement(s) by which such
Third Party retains such rights, but Palomar shall not be deemed to be in breach
of its obligations under that Section if, after using such commercially
reasonable efforts, it is unable to comply with such obligations because of
actions taken or not taken by such Third Party licensor. To the extent that
Palomar owes such Third Party licensor for any Patent Costs arising from such
patenting activities, including MGH for the MGH Patents, those Patent Costs
shall be treated as being incurred by the party that is controlling such
activities for purposes of allocating Patent Costs under this Section 8.3(a)(i),
and to the extent that Gillette is responsible for any such Patent Costs under
Section 8.3(a)(i)(3), Gillette shall reimburse Palomar within forty-five (45)
days of its receipt of an invoice therefor. For example and without limitation,
the MGH Patents are examples of such other Palomar Patents and the corresponding
agreement(s) are the MGH Agreements.

                                (ii)   After the Gillette Exclusive License
Period. After the Gillette Exclusive License Period, Palomar shall have the sole
right, and sole responsibility for all Patent Costs incurred by Palomar, to
prepare, file, prosecute and maintain the Palomar Patents throughout the world,
and Gillette shall have no rights with respect thereto.

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                (b)   Gillette Patents. Gillette shall have the sole right, and
sole responsibility for all Patent Costs incurred by Gillette, to prepare, file,
prosecute and maintain the Gillette Patents (including the Gillette Licensed
Patents) throughout the world, and Palomar shall have no rights with respect
thereto. During the Exclusivity Period, Palomar shall, at Gillette’s reasonable
request and sole expense, assist and cooperate in the preparation, filing,
registration and prosecution of any application, amendment, registration,
submission, response or correspondence with respect to any Gillette Patents that
cover or claim any Female Product or Manufacturing Process with respect thereto.

                (c)   Joint Patents.

                                (i)   In General. Palomar shall have the first
right (but not the obligation) to prepare, file, prosecute and maintain the
Joint Patents throughout the world. If Palomar elects not to prepare, file,
prosecute or maintain any Joint Patents in a particular country, then Palomar
shall give Gillette written notice of such election at least sixty (60) days
before any right would be forfeited if no action were taken, and Gillette shall
thereafter have the right (but not the obligation) to prepare, file, prosecute
or maintain such Joint Patent in such country. If Gillette elects to prepare,
file, prosecute or maintain such Joint Patent in such country, then Gillette
shall promptly notify Palomar in writing of such election. Gillette shall be
responsible for all Patent Costs incurred by the parties for preparing, filing,
prosecuting and maintaining the Joint Patents throughout the world (including
any Patent Costs paid by Palomar to MGH arising from such activities involving
MGH Joint Patents, which is addressed further in Section 8.3(c)(iii), with
Gillette reimbursing Palomar for such Patent Costs within forty-five (45) of its
receipt of an invoice therefor); provided, however, that, subject to Section
6.6(b), Gillette shall have the right to offset fifty percent (50%) of such
Patent Costs only (i) against royalties payable by Gillette to Palomar pursuant
to this Agreement, which offset shall not exceed in any Calendar Quarter
royalties in the amount of one percent (1%) of Net Sales, and (ii) against TTPs
payable by Gillette to Palomar pursuant to this Agreement, which offset shall
not exceed in any Calendar Quarter TTPs in the amount of one percent (1%) of Net
Sales (and which offsets shall be applied first to amounts attributable to
royalties and second to amounts attributable to TTPs). Subject to Section
6.6(b), offsets not exhausted in any Calendar Quarter shall be carried into
future Calendar Quarters. Notwithstanding the above, either party may, upon
prior written notice to the other party, in the case of Palomar, decline to have
credits or offsets taken for up to fifty percent (50%) of, and in the case of
Gillette, decline to pay all of, the Patent Costs for any Joint Patent(s) in a
particular country or particular countries, which notice shall apply only with
respect to Patent Costs incurred after the date of delivery of such notice. The
declining party shall assign to the other party all of such party’s rights,
titles and interests in and to any such Joint Patent(s) (including any right to
claim priority thereto) in the relevant country or countries whereupon such
Joint Patent(s) shall become solely owned by the other party but shall remain
subject to any license grants to the declining party by the other party
hereunder.

                                (ii)   Cooperation. Each party shall cooperate
fully in the other party’s preparation, filing, prosecution, and maintenance of
the Joint Patents in accordance with this Section 8.3(c)(ii) (and in any other
proceedings before a patent official or office with respect thereto). Such
cooperation includes, without limitation, (A) promptly executing all papers and
instruments or requiring employees to execute such papers and instruments as
reasonable and appropriate so as to enable such party to prepare, file,
prosecute, and maintain the Joint Patents

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in any country; and (B) promptly informing the other party of matters that may
affect the preparation, filing, prosecution, or maintenance of any such Joint
Patent, including provision of a copy of any official correspondence received by
such party from a patent office in any country with respect to Joint Patents. In
addition, with respect to any Joint Patents, for so long as such patent remains
jointly owned, the party having prosecution responsibility therefor agrees to
provide the other party a reasonable opportunity to review and comment on any
proposed submission to a patent office at least thirty (30) days prior to making
such submission (unless such patent office allows less than sixty (60) days for
the party having prosecution responsibility to make a submission, in which case
the party shall provide the other party an opportunity to review and comment on
any proposed submission to such patent office at least ten (10) days prior to
making such submission). If the other party fails to provide comments within
fifteen (15) days after receiving such draft submission (or, in the event the
patent office allows less than sixty (60) days for the responsible party to make
such submission, to provide comments within five (5) days after receiving such
draft submission), the submission shall be deemed approved. If, however, the
other party timely provides comments with respect to such draft submission, the
responsible party agrees to reasonably consider such comments.

                                (iii)   MGH Joint Patents. With respect to the
MGH Joint Patents, because MGH has or will have rights to prepare, file,
prosecute or maintain or otherwise be involved in the activities specified in
this Section 8.3(c) for MGH Joint Patents, Palomar shall use commercially
reasonable efforts to cause MGH to take the actions specified by this
Section 8.3(c) in a manner consistent with the MGH Agreements, but Palomar shall
not be deemed to be in breach of its obligations under this Section 8.3(c) if,
after using such commercially reasonable efforts, it is unable to comply with
such obligations because of actions taken or not taken by MGH. To the extent
that Palomar owes MGH for any Patent Costs arising from such patenting
activities, those Patent Costs shall be treated as being incurred by the party
that is controlling such activities for purposes of allocating Patent Costs
under this Section 8,3(c), and to the extent that Gillette is responsible for
any Patent Costs under Section 8.3(c)(i), Gillette shall reimburse Palomar for
the Patents Costs Palomar owes MGH as provided therein.

        8.4 ENFORCEMENT OF PATENTS.

                (a)   Rights and Procedures for Certain Infringement of Palomar
Patents During the Gillette Exclusive License Period. For any infringement of
one or more Palomar Patents that occurs during the Gillette Exclusive License
Period, the following provisions of this Section 8.4(a) shall apply.

                                (i)   If either party determines that any
Palomar Patent is being or was infringed by a Third Party’s activities during
the Gillette Exclusive License Period and that such infringement falls (in whole
or in part) within the scope of the Gillette Exclusive Licenses, it shall notify
the other party in writing and provide it with any evidence of such infringement
that is reasonably available.

                                (ii)   Gillette shall have the first right (but
not the obligation) to remove any infringement referred to in Section 8.4(a)(i)
with respect to any Palomar Patent by appropriate steps, including filing an
infringement suit or taking other similar action. In the

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event that Gillette takes such steps to remove any such infringement, including
by filing an infringement action, Gillette shall be responsible for the costs
and expenses relating thereto; provided, however, that, subject to
Section 6.6(b), Gillette shall have the right to offset fifty percent (50%) of
the total costs and expenses only (A) against royalties payable by Gillette to
Palomar pursuant to this Agreement, which offset shall not exceed in any
Calendar Quarter royalties in the amount of one percent (1%) of Net Sales, and
(B) against TTPs payable by Gillette to Palomar pursuant to this Agreement,
which offset shall not exceed in any Calendar Quarter TTPs in the amount of one
percent (1%) of Net Sales (and which offsets shall be applied first to amounts
attributable to such royalties and second to amounts attributable to TTPs).
Subject to Section 6.6(b), offsets not exhausted in any Calendar Quarter shall
be carried into future Calendar Quarters.

                                (iii)   In the event that Gillette fails within
ninety (90) days following notice of any infringement referred to in Section
8.4(a)(i) to remove such infringement or file an infringement lawsuit, Palomar
shall have the right (but not the obligation) to do so at Palomar’s sole
expense.

                                (iv)   The party other than the party enforcing
the applicable Palomar Patent pursuant to this Section 8.4(a) (A) shall provide
reasonable assistance to the party enforcing such patent, including providing
access to relevant non-privileged documents and other evidence, making its
employees available at reasonable business hours and for reasonable periods of
time, and joining the action to the extent necessary to allow the enforcing
party to maintain the action, (B) provided that in the case of Gillette as the
non-enforcing party, Gillette may recover its reasonable out-of-pocket costs and
expenses pursuant to Section 8.4(e) and (C) provided that in the case of Palomar
as the non-enforcing party, Gillette shall pay Palomar’s reasonable
out-of-pocket expenses and shall have right to off-set the full amount of them
according to the procedure set forth in the proviso to the second to last full
sentence and the last full sentence of Section 8.4(a)(ii) with the phrase “fifty
percent (50%) of the total costs and expenses” therein to be read to refer
instead to all of such reasonable out-of-pocket expenses for such purposes. The
other party shall have the right to participate or otherwise be involved in any
suit prosecuted by the enforcing party at such other party’s sole cost and
expense, which cost and expense may be recovered by such other party as provided
in Section 8.3(e). If the other party elects to so participate or be involved,
the enforcing party shall provide the other party and its counsel with an
opportunity to consult with the enforcing party and its counsel regarding the
prosecution of such suit (including reviewing the contents of any non-privileged
correspondence, legal papers or other documents related thereto), and the
enforcing party shall accede to reasonable requests of the other party regarding
such enforcement.

                                (v)   To the extent that a Third Party licensor
has retained any right to enforce or otherwise be involved in the activities
specified in this Section 8.4(a) for any Palomar Patents, Palomar shall use
commercially reasonable efforts to cause such Third Party licensor to take the
actions specified by this Section 8.4(a) in a manner consistent with the
agreement(s) by which such Third Party retains such rights, but Palomar shall
not be deemed to be in breach of its obligations under Section 8.4(a) if, after
using such commercially reasonable efforts, it is unable to comply with such
obligations because of actions taken or not taken by such Third Party licensor.
For example and without limitation, the MGH Patents are such Palomar Patents and
the corresponding agreement(s) are the MGH Agreements.

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                (b)   Rights and Procedures for Certain Infringement of Joint
Patents.

                                (i)   Joint Patents Exclusively Licensed to
Gillette under Section 4.1(a)(i). For any infringement of one or more Joint
Patents that are subject to the license contained in Section 4.1(a)(i) and that
occurs during the Gillette Exclusive License Period, the following provisions of
this Section 8.4(b)(i) shall apply: If either party determines that any Joint
Patent is being or was infringed by a Third Party’s activities during the
Gillette Exclusive License Period and such infringement falls (in whole or in
part) within the scope of such license grant, it shall notify the other party in
writing and provide it with any evidence of such infringement that is reasonably
available. To the extent that any such infringement falls within the scope of
the Gillette Exclusive Licenses, and only to such extent, Gillette, at
Gillette’s sole expense, shall have the right (but not the obligation) to remove
any such infringement with respect to any Joint Patent (but no other
infringement with respect to any Joint Patent) by appropriate steps, including
filing an infringement suit or taking other similar action. In the event that
Gillette fails within ninety (90) days following notice of such infringement to
remove such infringement or file an infringement lawsuit, Palomar shall have the
right (but not the obligation) to do so at Palomar’s sole expense; provided,
however, that if Gillette has commenced negotiations with an alleged infringer
for discontinuance of such infringement within such ninety (90) day period,
Gillette shall have an additional ninety (90) days to conclude its negotiations
before Palomar may bring suit for such infringement. The party not enforcing the
applicable Joint Patent (A) shall provide reasonable assistance to the other
party, including providing access to relevant non-privileged documents and other
evidence, making its employees available at reasonable business hours, and
joining the action to the extent necessary to allow the enforcing party to
maintain the action, and (B) provided that in the case of Gillette as the
non-enforcing party, Gillette may recover its reasonable out-of-pocket costs and
expenses pursuant to Section 8.4(e) and (C) provided that in the case of Palomar
as the non-enforcing party, Gillette shall pay Palomar’s reasonable
out-of-pocket expenses and shall have right to off-set the full amount of them
according to the procedure set forth in the proviso to the second to last full
sentence and the last full sentence of Section 8.4(a)(ii) with the phrase “fifty
percent (50%) of the total costs and expenses” to be read to refer instead to
all of such reasonable out-of-pocket expenses for such purposes. The other party
shall have the right to participate or otherwise be involved in any suit
prosecuted by the enforcing party at such other party’s sole cost and expense,
which cost and expense may be recovered by such other party as provided in
Section 8.4(e). If the other party elects to so participate or be involved, the
enforcing party shall provide the other party and its counsel with an
opportunity to consult with the enforcing party and its counsel regarding the
prosecution of such suit (including reviewing the contents of any non-privileged
correspondence, legal papers or other documents related thereto), and the
enforcing party shall accede to reasonable requests of the other party regarding
such enforcement.

                                (ii)   Joint Patents Exclusively Licensed to
Gillette under Section 4.1(a)(iii). Pursuant to this Agreement, Palomar has
granted to Gillette a certain exclusive license with respect to Joint Patents
under Section 4.1(a)(iii). If Palomar determines that any Joint Patent is being
or was infringed by a Third Party’s activities and such infringement falls (in
whole or in part) within the scope of such license grant, Palomar shall notify
Gillette in writing and provide it with any evidence of such infringement that
is reasonably available. To the extent that any infringement falls within the
scope of such license grant, and only to such

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extent, Gillette shall have the exclusive right (but not the obligation), at its
sole expense, to attempt to remove such infringement (but no other infringement
with respect to any Joint Patent), including filing an infringement suit or
taking other similar action, and Palomar shall have no right of enforcement with
respect thereto. Palomar shall provide reasonable assistance to Gillette,
including providing access to relevant non-privileged documents and other
evidence, making its employees available at reasonable business hours, and
joining the action to the extent necessary to allow Gillette to maintain the
action; provided that Gillette shall reimburse Palomar for any reasonable
out-of-pocket costs and expenses incurred by Palomar to provide such reasonable
assistance. Palomar shall have the right to participate or otherwise be involved
in any suit prosecuted by Gillette at Palomar’s sole cost and expense, which
cost and expense may be recovered by Palomar from recoveries made by Gillette on
a pro rata basis with Gillette’s reasonable cost and expense related to such
suit. If Palomar elects to so participate or be involved, Gillette shall provide
Palomar and its counsel with an opportunity to consult with Gillette and its
counsel regarding the prosecution of such suit (including reviewing the contents
of any non-privileged correspondence, legal papers or other documents related
thereto).

                                (iii)   Joint Patents Exclusively Licensed to
Palomar. Pursuant to this Agreement, Gillette has granted to Palomar certain
exclusive license(s) with respect to Joint Patents, which are in effect as of
the Effective Date or shall become effective upon certain termination events.
Those exclusive license grants are contained in Sections 4.2(d), 10.7(b)(v),
10.7(c)(v), 10.7(d)(v) and 10.8(a)(v) (the “Palomar Exclusive Licenses”). The
following provisions of this Section 8.4(b)(iii) shall apply to the enforcement
of the Joint Patents during the period that any one or more of the Palomar
Exclusive Licenses are in effect (the “Palomar Exclusive License Period”). If
Gillette determines that any Joint Patent is being or was infringed by a Third
Party’s activities during the Palomar Exclusive License Period for any Palomar
Exclusive License and such infringement falls (in whole or in part) within the
scope of such Palomar Exclusive License, Gillette shall notify Palomar in
writing and provide it with any evidence of such infringement that is reasonably
available. Palomar shall have the first right (but not the obligation), at its
sole expense, to attempt to remove such infringement, including filing an
infringement suit or taking other similar action. In the event that Palomar
fails within ninety (90) days following notice of such infringement to remove
such infringement or file an infringement lawsuit, Gillette shall have the right
(but not the obligation) to do so at Gillette’s sole expense if Gillette
reasonably concludes that such infringement is materially affecting Gillette’s
commercialization of the Female Product(s); provided, however, that if Palomar
has commenced negotiations with an alleged infringer for discontinuance of such
infringement within such ninety (90) day period, Palomar shall have an
additional ninety (90) days to conclude its negotiations before Gillette may
bring suit for such infringement. The party not enforcing the applicable Joint
Patents (A) shall provide reasonable assistance to the other party, including
providing access to relevant non-privileged documents and other evidence, making
its employees available at reasonable business hours, and joining the action to
the extent necessary to allow the enforcing party to maintain the action. In the
event that Gillette is the enforcing party, it shall reimburse Palomar for
Palomar’s reasonable out-of-pocket costs and expenses incurred by Palomar in
connection with providing such assistance to Gillette. The party not enforcing
the applicable Joint Patent(s) shall have the right to participate or otherwise
be involved in any suit prosecuted by the enforcing party at such other party’s
sole cost and expense, which cost and expense may be recovered by such other
party as provided in Section 8.4(e). If such party elects to so participate or
be involved, the enforcing party shall provide such party and its counsel with

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an opportunity to consult with the enforcing party and its counsel regarding the
prosecution of such suit (including reviewing the contents of any non-privileged
correspondence, legal papers or other documents related thereto).

                (c)   Rights and Procedures for Certain Infringement of Both
Joint Patents and Palomar Patents During the Gillette Exclusive License Period.
In the event of any infringement by a Third Party of both a Palomar Patent(s)
and a Joint Patent(s), which infringement would otherwise be subject to both
Sections 8.4(a) and 8.4(b)(i) because such infringement occurred during the
Gillette Exclusive License Period and falls (in whole or in part) within the
scope of the Gillette Exclusive Licenses, the parties shall meet to discuss how
to proceed with respect to such infringement, but only to the extent that such
infringement falls within the scope of the Gillette Exclusive Licenses. If with
respect to such infringement either party elects to enforce either the relevant
Palomar Patent(s) or Joint Patent(s) under Section or, respectively, such
enforcement shall be consistent with the terms of those Sections.

                (d)   MGH Joint Patents. With respect to the MGH Joint Patents,
because MGH has or will have retained rights to enforce or otherwise be involved
in the activities specified in Section 8.4(b), 8.4(c) and 8.4(g)(i) for MGH
Joint Patents, Palomar shall use commercially reasonable efforts to cause MGH to
take the actions specified by those Sections in a manner consistent with the MGH
Agreements, but Palomar shall not be deemed to be in breach of its obligations
under those Sections if, after using such commercially reasonable efforts, it is
unable to comply with such obligations because of actions taken or not taken by
MGH.

                (e)   Certain Recoveries; Costs and Expenses. Any amounts
recovered by either party pursuant to Section 8.4(a), 8.4(b) or 8.4(c), whether
by settlement or judgment or otherwise, shall be used to reimburse the parties
for their reasonable costs and expenses (whether directly incurred or offsetable
against a party) in making such recovery (which amounts shall be allocated pro
rata if insufficient to cover the totality of such costs and expenses, and in
the case in which Gillette is responsible for such costs and expenses subject to
a right of offset under those Sections, to the extent that Gillette has offset
any such costs or expenses as expressly permitted therein, subject to any other
credits, offset or other reductions available to Gillette in accordance with the
terms of this Agreement, Gillette shall pay Palomar the aggregate offset amounts
within forty-five (45) days of Gillette receiving such amounts), with any
remainder being allocated between the parties based on the economic interests of
the parties under this Agreement; provided, however, that in the case of
enforcement of a Joint Patent, infringement of which falls partly outside of the
fields exclusively licensed to Gillette, Gillette shall not retain any portion
of such recovery relating to damages outside such fields.

Notwithstanding the foregoing, the remainder shall be allocated in all events so
that Palomar receives an amount at least equal to the amount owed by Palomar to
MGH as a result of the enforcement of such MGH Patents or MGH Joint Patents or
to such Third Party licensor as a result of the enforcement of such Palomar
Patents so that Palomar does not incur any liability as a result of the license
of such MGH Patents, MGH Joint Patents and such Palomar Patents.

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                (f)   Settlement. Except with the consent of the other party,
which shall not be unreasonably withheld, neither party shall consent to entry
of any judgment or enter into any settlement with respect to any infringement
identified in Sections 8.4(a), 8.4(b), 8.4(c) or 8.4(g)(ii) that would result in
injunctive or other relief being imposed against the other party or would have a
material adverse affect on the other party’s business.

                (g)   Retained Rights for Certain Palomar Patents, Gillette
Patents and Joint Patents.

                                (i)   Palomar Patents and Gillette Patents.
Except as otherwise provided by the provisions of Section 8.4(a), 8.4(b) or
8.4(c), each party shall retain the sole right to enforce its Patents (e.g., in
the case of Palomar, Palomar Patents, and in the case of Gillette, Gillette
Patents) against all infringers at its sole cost and expense.

                                (ii)   Joint Patents. In the event of any
infringement of any Joint Patent that is not addressed by either
Section 8.4(b)(i), 8.4(b)(ii) or 8.4(b)(iii), the parties shall meet to discuss
how to proceed with respect to such infringement. For avoidance of doubt, it is
understood that any infringement of any Joint Patent that is subject to those
Sections shall not be subject to this Section 8.4(g)(ii) even in the event that
the party(ies) having rights to enforce any such Joint Patent under those
Sections declines to do so. If the parties are not able to agree on a course of
action, either party may assert such Joint Patent and initiate an action with
respect to such infringement, at its sole expense with no obligation to share
any resulting recovery, provided that such party has given the other party the
opportunity to join in such assertion and action and to share equally in any
expenses and recoveries in connection therewith. The party not enforcing such
Joint Patent shall provide reasonable assistance to the other party, at such
other party’s expense, including providing access to relevant non-privileged
documents and other evidence, making its employees available at reasonable
business hours, and joining the action to the extent necessary to allow the
enforcing party to maintain the action, provided that in the event that the
non-enforcing party has not agreed to join in such assertion and action in
accordance with the immediately preceding sentence, the enforcing party shall
reimburse the non-enforcing party for any reasonable out-of-pocket costs and
expenses incurred by the non-enforcing party to provide such reasonable
assistance. In no event shall this Section 8.4(g)(ii) be construed or applied in
any way to limit the ability of either party to practice or (sub)license any
Joint Patent; provided, however, that once a party has commenced an action for
infringement against a Third Party, the other party shall not grant to such
Third Party a license under any Joint Patent that may nullify the action for any
such infringement, with the understanding that the foregoing proviso shall not
apply to a Third Party Collaboration entered into by either party after the
commencement of such action but for which substantial good faith negotiations
had occurred before such commencement. With respect to the MGH Joint Patents,
because MGH has retained rights to enforce or otherwise be involved in the
activities specified in this Section 8.4(g)(ii) for MGH Joint Patents, Palomar
shall use commercially reasonable efforts to cause MGH to take the actions
specified by this Section 8.4(g)(ii) in a manner consistent with the MGH
Agreements, but Palomar shall not be deemed to be in breach of its obligations
under those Sections if, after using such commercially reasonable efforts, it is
unable to comply with such obligations because of actions taken or not taken by
MGH.

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        8.5 INFRINGEMENT OF THIRD PARTY RIGHTS.

                (a)   Third Party Licenses. If (x) Gillette reasonably
concludes, after consultation with Palomar and with an independent patent
attorney reasonably acceptable to the parties, that one or more Patents have
issued to a Third Party in any country such that Gillette cannot Exploit the
Female Product(s) in such country without infringing such Patent or (y) as a
result of any claim made against Gillette or sublicensees alleging that the
Exploitation of the Female Product(s) by Gillette or any of its sublicensees
infringes or misappropriates any Patent or any other intellectual property right
of a Third Party in any country, a judgment is entered by a court of competent
jurisdiction from which no appeal is taken within the time permitted for appeal,
such that Gillette cannot Exploit the Female Product(s) in such country without
infringing the Patent or other proprietary rights of such Third Party, then, in
either case, Gillette shall have the right (but not the obligation) to negotiate
and obtain a license from such Third Party as necessary for Gillette and its
sublicensees to Exploit the Female Product(s) in such country. In the event that
Gillette determines that a license from such Third Party is not commercially
viable for Gillette and elects not to obtain a license from such Third Party,
Gillette shall have no obligation to commercialize the Female Product(s) in such
country(ies). Notwithstanding the foregoing, prior to Gillette’s entering into
any such license with a Third Party, with respect to which license Gillette
shall seek a right to offset royalties owed by Gillette to Palomar hereunder,
Gillette shall confer with Palomar to discuss in good faith whether any
design-around or other solutions are reasonably available to Gillette with
respect to the allegedly infringing technology, provided that Gillette shall
retain discretion as to whether to seek such license.

                (b)   Costs of Third Party License. In the event that Gillette
obtains a license from such Third Party with respect to the Exploitation of
Female Product(s) pursuant to Section 8.5(a), the royalties and other payments
due from Gillette to such Third Party shall be allocated between the parties
based on the intellectual property interests in the Female Product(s) or
Manufacturing Processes relating thereto that is alleged to infringe the Third
Party’s patents, as follows:

                                (i)   In the event that the alleged infringement
results solely or predominantly from Information or Inventions contained in such
Female Product or Manufacturing Process that are Controlled by Gillette (other
than as a result of this Agreement), Gillette shall be solely responsible for
the royalties and other payments owed to such Third Party pursuant to such
license, subject to Gillette’s right to adjust the royalty and TTP amounts owed
by Gillette to Palomar pursuant to Section 6.1(h).

                                (ii)   In the event that the alleged
infringement results solely or predominantly from Information or Inventions
contained in such Female Product or Manufacturing Process that are Controlled by
Palomar (other than as a result of this Agreement) pursuant to rights under any
Core Palomar Patent, Palomar shall be responsible for two-thirds and Gillette
shall be responsible for one-third of the royalties and other payments owed to
such Third Party pursuant to such license, subject to the last paragraph of this
Section 8.5(b).

                                (iii)   In the event that the alleged
infringement results solely or predominantly from Information or Inventions
contained in such Female Product or

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Manufacturing Process that are Controlled by Palomar (other than as a result of
this Agreement) pursuant to rights under any Non-Core Palomar Patent, Gillette
shall be solely responsible for the royalties and other payments owed to such
Third Party pursuant to such license, subject to Gillette’s right to adjust the
royalty and TTP amounts owed by Gillette to Palomar pursuant to Section 6.1(h).

                                (iv)   In the event that the alleged
infringement results solely or predominantly from Information or Inventions
contained in such Female Product or Manufacturing Process that are jointly-owned
by Palomar and Gillette, Gillette shall be solely responsible for the royalties
and other payments owed to such Third Party pursuant to such license, subject to
Gillette’s right to adjust the royalty and TTP amounts owed by Gillette to
Palomar pursuant to Section 6.1(h).

All payments to the Third Party pursuant to any such license shall be made by
Gillette to such Third Party and, in the case of clause (ii) above, and subject
to Section 6.6(b), Gillette’s only right of recovery with respect to Palomar’s
two-thirds share of such payments shall be to offset Palomar’s share of such
payments, on a country-by-country basis, only (A) against royalties payable by
Gillette to Palomar pursuant to this Agreement, which offset shall not exceed in
any Calendar Quarter royalties in the amount of one percent (1%) of Net Sales in
each such country, and (B) against TTPs payable by Gillette to Palomar pursuant
to this Agreement, which offset shall not exceed in any Calendar Quarter TTPs in
the amount of one percent (1%) of Net Sales in each such country (and which
offsets shall be applied first to amounts attributable to such royalties and
second to amounts attributable to TTPs). Offsets not exhausted in any Calendar
Quarter may be carried into future Calendar Quarters, subject to the foregoing
sentence.

                (c)   Third Party Litigation.

                                (i)   In General. In the event that a Third
Party institutes a patent, trade secret or other infringement suit against a
party during the Exclusivity Period, alleging that the Exploitation of the
Female Product infringes one or more patents, trade secrets or other
intellectual property rights held by such Third Party (an “Infringement Suit”),
then Gillette shall have the first right, but not the obligation, to assume
direction and control of the defense of claims arising therefrom. If Gillette
determines not to assume such direction and control, Palomar shall have the
right, but not the obligation, to defend against such claims. The party
controlling the defense of an Infringement Suit shall have the right to
compromise or settle any action or claims asserted against it by the Third
Party; provided, however, that such controlling party shall consult with the
other party before comprising or settling any such action or claim (which
consultation shall include, without limitation, discussing in good faith whether
any design-around or other solutions are reasonably available with respect to
the allegedly infringing technology), and provided further that, such
controlling party shall not compromise or settle, without the other party’s
prior written consent, (a) actions or claims asserted against the other party,
or (b) in the event that such compromise or settlement would result in
injunctive relief being imposed against the other party.

                                (ii)   Costs, Damages and Settlements. In the
event that either party assumes control of any Infringement Suit described in
Section 8.5(c)(i), all costs and expenses incurred by such party in connection
with the defense of such action, any damage

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awards against either or both parties, and any settlements entered into by such
party, if any, based on a claim that the Exploitation of the Female Product
infringes one or more patents, trade secrets or other intellectual property
rights held by such Third Party, shall be allocated as follows:

                                        (1)   In the event that the alleged
infringement results solely or predominantly from Information or Inventions
contained in such Female Product or Manufacturing Process that are Controlled by
Palomar (other than as a result of this Agreement) pursuant to rights under any
Core Palomar Patent, Palomar shall be responsible for two-thirds and Gillette
shall be responsible for one-third of the costs and expenses incurred by the
controlling party in connection with the action, and of the damage awards and
settlements, if any, owed to such Third Party; provided, however, that all such
amounts shall be paid by Gillette in the first instance and, subject to Section
6.6(b), Gillette’s only right of recovery with respect to Palomar’s two-thirds
share of such amounts shall be to offset Palomar’s share of such amounts only
(i) against royalties payable by Gillette to Palomar pursuant to this Agreement,
which offset shall not exceed in any Calendar Quarter royalties in the amount of
one percent (1%) of Net Sales in each such country, and (ii) against TTPs
payable by Gillette to Palomar pursuant to this Agreement, which offset shall
not exceed in any Calendar Quarter TTPs in the amount of one percent (1%) of Net
Sales in each such country (and which offsets shall be applied first to amounts
attributable to such royalties and second to amounts attributable to TTPs).
Offsets not exhausted in any Calendar Quarter may be carried into future
Calendar Quarters, subject to the foregoing sentence.

                                        (2)   In the event that the alleged
infringement results solely or predominantly from Information or Inventions
contained in such Female Product or Manufacturing Process that are Controlled by
Palomar (other than as a result of this Agreement) pursuant to rights under any
Non-Core Palomar Patent, by Gillette, or jointly by the parties, Gillette shall
be solely responsible for all the costs and expenses incurred by the parties in
connection with the action, and the damage awards and settlements, if any, owed
to such Third Party.

                                (iii)   Other Actions and Costs. Except as
provided in Sections 8.5(c)(i) and 8.5(c)(ii), each party shall have the right
to control any infringement action brought against it by a Third Party, and each
party shall bear its own costs and expenses and liabilities in connection with
any such infringement action.

                                (iv)   Cooperation. With respect to the defense
of an Infringement Suit, the non-controlling party shall provide reasonable
assistance to the controlling party, including providing access to relevant
non-privileged documents and other evidence, and making its employees available
at reasonable business hours; provided that the controlling party shall
reimburse the non-controlling party for any reasonable out-of-pocket costs and
expenses incurred by the non-controlling party to provide such reasonable
assistance, which out-of-pocket costs and expenses shall be subject to the
allocation of costs provided for in Section 8.5(c)(ii).

                (d)   Retained Rights. Nothing in this Section 8.5 shall prevent
either party, at its own expense, from obtaining any license or other rights
from Third Parties it deems appropriate in order to permit the full and
unhindered exercise of its rights under this Agreement.

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        8.6 Patent Marking. Each party shall mark, and shall cause all their
agents and (sub)licensees to mark, all Products made, used or sold under the
terms of this Agreement, or their containers, in accordance with all applicable
United States patent-marking laws with respect any United States Patents
licensed to such party by the other party under this Agreement.

ARTICLE IX
CONFIDENTIALITY AND NONDISCLOSURE

        9.1 CONFIDENTIALITY OBLIGATIONS.

                (a)   General Obligations. Except as provided herein, the
parties agree that, during the term of this Agreement and for five (5) years
after this Agreement’s expiration or termination pursuant to ARTICLE X, each
party shall hold in strict confidence and shall not publish or otherwise
disclose, directly or indirectly, to any Third Party (other than their employees
legal counsel, consultants, auditors and advisors who, except in the case of
legal counsel, are bound in writing by confidentiality obligations no less
restrictive than those set forth herein, collectively, “Permitted Confidants”)
any Confidential Information of the other party. During such period, a party
shall not use for any purpose, directly or indirectly, Confidential Information
of the other party or its or sublicensees furnished or otherwise made known to
it, except as permitted hereunder. Access to the disclosing party’s Confidential
Information shall be restricted to Permitted Confidants of the receiving party,
who, in each case, need to have access to carry out a permitted use. The
Confidential Information, and all copies of part or all thereof, shall be and
remain the exclusive property of the disclosing party, and the receiving party
shall acquire only such rights as are expressly set forth in this Agreement and
only for as long as such rights are in effect. Each party shall promptly report
to the other any conduct relating to the other party’s Confidential Information
inconsistent with the provisions of this ARTICLE IX, and take such action as may
be reasonably necessary and legally permissible to terminate such conduct. Each
party agrees to reproduce and include the other party’s proprietary rights
notices or reasonable equivalents on any item that contains the other party’s
Confidential Information. Subject to Sections 9.1(b) and 9.1(c), each party
shall be free to disclose its own Confidential Information in its sole
discretion.

                (b)   Palomar Obligations. Palomar recognizes that upon
Gillette’s entry into this Agreement, Gillette has an interest in Palomar’s
retention in confidence of certain information Controlled by Palomar.
Accordingly, during the Exclusivity Period, Palomar shall, and shall cause its
officers, directors, employees and agents to, keep confidential, and not publish
or otherwise disclose to Third Parties (other than Permitted Confidants), and
not use directly or indirectly for any purpose, any information that solely and
directly relates to the Female Product Technology, the Palomar U.S. Regulatory
Documentation, or the development, sales or marketing plans for the Female
Product Technology, in each case only to the extent applicable in the Exclusive
Field (the “Palomar Controlled Information”), except to the extent (i) the
Palomar Controlled Information is in the public domain through no fault of
Palomar or any of its officers, directors, employees and agents (because such
Palomar Controlled Information entered the public domain prior to the Effective
Date or otherwise), (ii) such disclosure or use would be permitted under
Section 9.2 if such information were Confidential Information of Gillette, (iii)
such disclosure or use is otherwise expressly permitted by the terms of this
Agreement or is reasonably necessary for the performance of this Agreement or
for the exercise of Palomar’s

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rights expressly granted by this Agreement, or (iv) compliance with any of the
restrictions contained in this Section 9.1(b) would violate or otherwise
conflict with any Third Party obligations of Palomar. For clarification, the
disclosure by Palomar to Gillette or by Gillette to Palomar of Palomar
Controlled Information shall not cause such information to cease to be subject
to the confidentiality provisions of this Section 9.1(b). All restrictions with
respect to Palomar Controlled Information contained in this Section 9.1(b) shall
not apply to the use directly or indirectly for any purpose, or disclosure or
publication, of any Palomar Controlled Information that has applicability
outside of the Exclusive Field, notwithstanding the fact that the Palomar
Controlled Information has applicability in the Exclusive Field.

                (c)   Gillette Obligations. Gillette recognizes that upon
Palomar’s entry into this Agreement, Palomar has an interest in Gillette’s
retention in confidence of certain information concerning Joint Technology for
which Gillette granted Palomar an exclusive license pursuant to Section 4.2(d).
Accordingly, during the term of this Agreement, Gillette shall, and shall cause
its officers, directors, employees and agents to, keep confidential, and not
publish or otherwise disclose to Third Parties (other than Permitted
Confidents), and not use directly or indirectly for any purpose, any information
concerning Joint Technology that solely and directly relates to Light-Based
Products outside the Field (the “Gillette Controlled Information”), except to
the extent (i) the Gillette Controlled Information is in the public domain
through no fault of Gillette or any of their respective officers, directors,
employees and agents (because such Gillette Controlled Information entered the
public domain prior to the Effective Date or otherwise), (ii) such disclosure or
use would be permitted under Section 9.2 if such information were Confidential
Information of Palomar, (iii) such disclosure or use is otherwise expressly
permitted by the terms of this Agreement or is reasonably necessary for the
performance of this Agreement or for the exercise of Gillette’s rights expressly
granted by this Agreement, or (iv) compliance with any of the restrictions
contained in this Section 9.1(c) would violate or otherwise conflict with any
Third Party obligations of Gillette. For clarification, the disclosure by
Gillette to Palomar or by Palomar to Gillette of Gillette Controlled Information
shall not cause such information to cease to be subject to the confidentiality
provisions of this Section 9.1(c). All restrictions with respect to Gillette
Controlled Information contained in this Section 9.1(c) shall not apply to the
use directly or indirectly for any purpose, or disclosure or publication, of any
Gillette Controlled Information that has applicability in the Field,
notwithstanding the fact that the Gillette Controlled Information has
applicability outside the Field.

        9.2 Permitted Disclosures.  Each party may disclose Confidential
Information to the extent that such disclosure is:

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

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Confidential Information disclosed in response to such court or governmental
order shall be limited to that information which is legally required to be
disclosed in response to such court or governmental order;

                (b)   Otherwise required by Applicable Law as reasonably
determined by counsel to the receiving party;

                (c)   Made by the receiving party as may be reasonably necessary
or useful in connection with preparing, filing, prosecuting, maintaining,
enforcing and defending Joint Technology;

                (d)   Made by the receiving party as may be reasonably necessary
or useful to prosecute and/or defend litigation, Disputes or other disputes
between the parties;

                (e)   Made by the receiving party to the Regulatory Authorities
as required in connection with any filing, application or request for Regulatory
Approval; provided, however, that reasonable measures shall be taken to assure
confidential treatment of such information; or

                (f)   Made by the receiving party or its sublicensees to Third
Parties as may be necessary or useful in connection with permitted
subcontracting and (sub)licensing transactions (including for purposes of
Manufacturing), provided that such Third Parties are bound by confidentiality
obligations no less restrictive than those set forth herein.

        9.3 CONFIDENTIAL INFORMATION.

                (a)   Defined. “Confidential Information” of a party shall mean
all information and know-how and any tangible embodiments thereof provided by or
on behalf of such party to the other party either in connection with the
discussions and negotiations pertaining to this Agreement or in the course of
performing this Agreement, including data; knowledge; practices; processes;
ideas; research plans; engineering designs and drawings; research data;
manufacturing processes and techniques; scientific, manufacturing, marketing and
business plans; and financial and personnel matters relating to the disclosing
party or to its present or future products, sales, suppliers, customers,
employees, investors or business but excluding the actual terms included in this
Agreement. For the avoidance of doubt, (i) Confidential Information of each
party shall include any and all information provided by one party to the other
directly relating to Female Products, (ii) Confidential Information of both
parties shall include all Joint Inventions until such time as the parties
decline to pursue patent protection on them, (iii) Gillette Confidential
Information shall include all Gillette Technology, and (iv) Palomar Confidential
Information shall include (1) Palomar Technology, and (2) as provided in
Section 8.1(c), all Joint Inventions and Joint Technology related thereto solely
owned by Palomar until such time (if any) that Palomar assigns an interest in
them to Gillette.

                (b)   Exclusions. Notwithstanding the foregoing, information or
know-how of a party shall not be deemed Confidential Information with respect to
a receiving party for purposes of this Agreement if such information or
know-how:

                                (i)   was already known to the receiving party,
other than under

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an obligation of confidentiality or non-use, at the time of disclosure to, or,
with respect to know-how, discovery or development by, such receiving party;

                                (ii)   was generally available or known, or was
otherwise part of the public domain, at the time of its disclosure to, or, with
respect to know-how, discovery or development by, such receiving party;

                                (iii)   became generally available or known, or
otherwise became part of the public domain, after its disclosure to, or, with
respect to know-how, discovery or development by, such receiving party through
no fault of a party other than the party that Controls such information and
know-how;

                                (iv)   was disclosed to such receiving party,
other than under an obligation of confidentiality or non-use, by a Third Party
who had no obligation to the party that Controls such information and know-how
not to disclose such information or know-how to others; or

                                (v)   was independently discovered or developed
by such receiving party, as evidenced by their written records, without the use
of Confidential Information belonging to the party that Controls such
information and know-how.

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

        9.4 Use of Name. Except as expressly permitted by Section 9.5, neither
party shall use the name or any other insignia, symbol, trademark, trade name or
logotype of the other party (or any abbreviation or adaptation thereof) in any
publication, press release, promotional material or other form of publicity
without the prior written approval of such other party in each instance. Subject
to Section 9.5, the restrictions imposed by this Section shall not prohibit
either party from making any disclosure identifying the other party that is
required by Applicable Law.

        9.5 Press Releases and SEC Filings. Palomar shall have the right, within
two (2) business days of Palomar’s acceptance of the Offer from Gillette of this
Agreement pursuant to Section 10.1(b), to issue a press release in a form to be
mutually agreed by the parties in writing in advance of such issuance
(the “First Press Release”). Gillette understands and agrees that Palomar shall
submit this Agreement to the SEC and Palomar agrees to submit to the SEC, and
consult with Gillette with respect to the preparation and submission of, a
confidential treatment request for the Exhibits attached hereto. Except as
otherwise mutually agreed in advance in writing by the parties, neither party
shall issue a press release nor make any other public disclosure of the
activities conducted by the parties pursuant hereto without the prior approval
of such press release or public disclosure by the other party hereto. Each party
shall submit any such press release or public disclosure to the other party, and
such other party shall

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have two (2) business days to review and approve any such press release or
public disclosure, which approval shall not be unreasonably withheld. If such
other party does not respond within such two (2) business day period, the press
release or public disclosure shall be deemed approved. If a party obtains the
approval of the other party to make a public disclosure pursuant to this
Section 9.5 in connection with a press release, or a filing with or other
submission to the United States Securities and Exchange Commission (the “SEC”)
or other regulatory authority, or if such press release, filing or submission is
otherwise approved pursuant to the preceding sentence of this Section 9.5, the
party that has obtained (or is deemed to have obtained) approval to make a
disclosure shall be permitted to make subsequent public disclosures containing
statements that are substantially similar to the statements contained in such
previously permitted disclosures, without seeking the prior approval of the
other party with respect to such subsequent disclosures; provided, however, that
in the event that any such subsequent public disclosure is to be made other than
in a filing or submission to the SEC, prior approval shall be required if such
subsequent disclosure will occur not more than thirty (30) days after the
initial disclosure was approved (or deemed approved, as the case may be). Except
to the extent otherwise provided in the preceding sentence, if a public
disclosure is required by Applicable Law, as reasonably determined by counsel to
the party seeking to make a disclosure, including in a filing with or other
submission to the SEC, and (a) such party has provided copies of the disclosure
to the other party as far in advance of such filing or other disclosure as is
reasonably practicable under the circumstances, (b) such party has promptly
notified the other party in writing of such requirement and any respective
timing constraints, and (c) such party has given the other party a reasonable
time under the circumstances from the date of notice by such party of the
required disclosure to comment upon, request confidential treatment or approve
such disclosure, then such party shall have the right to make such public
disclosure at the time and in the manner reasonably determined by its counsel to
be required by Applicable Law. Notwithstanding anything to the contrary herein,
it is hereby understood and agreed that if in each case set forth in this
Section 9.5, the other party provides comments within the respective time
periods or constraints specified herein or within the respective notice, the
party seeking to make such disclosure or its counsel, as the case may be, shall
in good faith (i) consider incorporating such comments and (ii) use reasonable
efforts to incorporate such comments, limit disclosure or obtain confidential
treatment to the extent reasonably requested by the other party.

        9.6 Equitable Relief. Each party acknowledges and agrees that breach of
any of the terms of this ARTICLE IX would cause irreparable harm and damage to
the other and that such damage may not be ascertainable in money damages and
that as a result thereof the non-breaching party would be entitled to seek from
a court as is contemplated by Section 13.3 equitable or injunctive relief
restraining any breach or future violation of the terms contained herein by the
breaching party without the necessity of proving actual damages or posting bond.
Such right to equitable relief is in addition to whatever remedies either party
may be entitled to as a matter of law or equity, including money damages, which
other remedies are subject to the provisions of this Agreement concerning the
resolution of Disputes.

        9.7 Termination. Upon termination of this Agreement for any reason, each
receiving party shall (i) return to the disclosing party all Confidential
Information provided in writing by the disclosing party to the receiving party,
and (ii) destroy copies of memoranda and notes prepared by the receiving party
or any of its employees or agents that contain Confidential Information of the
disclosing party; provided, however, that the receiving party may retain

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copies of such Confidential Information in which such party has a proprietary or
licensed interest that survives termination; provided, further, that the terms
of clause (i) and clause (ii) of this Section 9.7 shall not apply with respect
to any Confidential Information contained in reports to a party’s board of
directors or executive committees (or to the extent reference is made thereto in
board minutes or similar documents). Notwithstanding the foregoing, the
receiving party and its legal counsel may each retain a copy of such
Confidential Information and memoranda and notes to be used only in exercising
the receiving party’s rights and performing the receiving party’s obligations
under this Agreement, including in the case of a dispute concerning this
Agreement. The return of any Confidential Information will not relieve the
receiving party of any of its obligations hereunder.

        9.8 Termination of Prior Non-Disclosure Agreement. This Agreement
supersedes the Non-Disclosure Agreement between the parties dated April 24,
2001, as amended effective as of April 9, 2002 and May 6, 2002 and January 21,
2003 (the “Non-Disclosure Agreement”), but only insofar as such Confidentiality
Agreement relates to the subject matter of this Agreement. All Confidential
Information (as defined in the Non-Disclosure Agreement) exchanged between the
parties under the Non-Disclosure Agreement relating to the subject matter of
this Agreement shall be deemed Confidential Information hereunder and shall be
subject to the terms of this Agreement.

        9.9 Publication. With respect to any right of publication in favor of
MGH under any MGH Agreement (and only to the extent of MGH’s rights under any
MGH Agreement), in the event that MGH seeks to publish or present any Joint
Technology pursuant to rights granted to it in such agreement(s), the following
procedures shall govern: Promptly upon receipt of notice from MGH that it
desires to make any such presentation or publication, Palomar shall provide to
Gillette the opportunity to review any proposed abstracts, manuscripts or
presentations (including information to be presented verbally) that contains any
Joint Technology at least thirty (30) days prior to the intended submission of
such abstract or manuscript for publication, or at least seven (7) days prior to
the intended delivery of such presentation. Palomar agrees that, upon written
request from Gillette that any such abstract or manuscript for publication not
be submitted, or any such proposed presentation not be made, until Gillette is
given a reasonable period of time not to exceed thirty (30) days to seek Patent
protection for any material in such publication or presentation which it
believes is patentable to the extent that Gillette is entitled to seek Patent
protection for such material under this Agreement. Any publications of a Party
under this Section 9.9 shall be subject to the confidentiality obligations of
this ARTICLE IX. In all other respects, except as required by Applicable Law,
neither party shall have the right to publish or present (or to permit its
(sub)licensees, subcontractors, employees or agents to publish or present) any
Joint Technology, except with the prior written consent of the other party.

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ARTICLE X
TERM AND TERMINATION

        10.1 TERM.

                (a)   Subject to Section 10.1(b), this Agreement shall commence
and take effect on the Effective Date and shall continue in effect until
terminated in accordance with this ARTICLE X.

                (b)   This Agreement shall be executed by Gillette but not
Palomar as of the date first written above, and Gillette shall Deliver two
originals of the executed version of this Agreement to Palomar. Upon such
execution and Delivery by Gillette, this Agreement shall constitute a binding
and irrevocable offer by Gillette (the “Offer”) for a period of six (6) days
after Palomar’s receipt of those two executed originals (the “Offer Period”).
Palomar shall have the right, in its sole discretion, to accept the Offer during
the Offer Period by executing the two originals Delivered by Gillette and
Delivering to Gillette one of the fully executed originals and retaining the
other, provided that Palomar not make any changes or alterations to the Offer
represented by this Agreement in any way. If Palomar so accepts the Offer within
the Offer Period, then this Agreement shall become effective as provided in
Section 10.1(a) and shall be a binding contract upon both of the parties. If
Palomar either (i) notifies Gillette in writing that it rejects the Offer during
the Offer Period, or (ii) fails to accept the Offer during the Offer Period as
provided above, then the Offer shall terminate and neither Party shall have any
further obligation with respect to the Offer, this Agreement or otherwise
(except with respect to the Non-Disclosure Agreement, which shall survive in
full such termination). For purposes of this Section 10.1(b), “Deliver” and its
correlatives shall mean the act of one party providing an original of this
Agreement to the other party by either: (i) sending such document to the other
party by a nationally recognized overnight courier as provided in Section 14.5
for delivery on the next business day, or (ii) actual receipt of an original of
such document.

        10.2 Unilateral Termination of Exclusivity Period by Gillette. Gillette
shall have the right in its sole discretion to terminate the Exclusivity Period
by providing ten (10) days prior written notice to Palomar.

        10.3 TERMINATION OF THIS AGREEMENT BY EITHER PARTY FOR MATERIAL BREACH.

                (a)   Material Breach. Material failure by a party to comply
with any of its material obligations contained herein shall entitle the party
not in default to give to the party in default notice specifying the nature of
the default and requiring the defaulting party to cure such default. If such
default is not cured within thirty (30) days, or in the case of breach of any
obligation to pay monies hereunder, ten (10) business days (the “Cure Period”)
after the receipt of such notice (or, if such default cannot be cured within the
Cure Period, if the party in default does not commence actions to cure such
default within the Cure Period and thereafter diligently continue such actions),
the party not in default shall be entitled, without prejudice to any of its
other rights conferred on it by this Agreement, and in addition to any other
remedies available to it by law or in equity, to terminate this Agreement in its
entirety effective upon written notice to the defaulting party; provided,
however, that any right to terminate under this Section 10.3, shall be stayed in
the event that, during any Cure Period, the party alleged to have been in
default shall

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have initiated dispute resolution in accordance with Section 13.1 with respect
to the alleged default, which stay shall last so long as the initiating party
diligently and in good faith cooperates in the prompt resolution of such dispute
resolution proceedings.

                (b)   No Challenge. In the event that Gillette, during a period
when there is in effect a license grant from Palomar to Gillette under the
Palomar Patents pursuant to this Agreement, asserts a claim in any judicial or
governmental forum seeking a judgment or other decision that any of the Patent
claims of the Palomar Patents is invalid or unenforceable, if it is determined
by a judicial or other governmental authority that no such Patent claims with
respect to which Gillette made such assertions are invalid or unenforceable,
from and after the date of such determination, the royalty rate payable by
Gillette with respect to such license shall double until the date of the earlier
to occur of (i) five (5) years from the date of such determination, or (ii) a
period that corresponds to the total number of days that lapsed between the date
on which such claim is asserted by Gillette in such forum until the date on
which such judicial or governmental determination becomes final and
unappealable. In the event that Palomar, during a period when there is in effect
a license grant from Gillette to Palomar under the Gillette Licensed Patents
pursuant to this Agreement, asserts a claim in any judicial or governmental
forum seeking a judgment or other decision that any of the Patent claims of the
Gillette Licensed Patents is invalid or unenforceable, if it is determined by a
judicial or other governmental authority that no such Patent claims with respect
to which Palomar made such assertions are invalid or unenforceable, from and
after the date of such determination, the royalty rate payable by Palomar with
respect to such license shall double until the date of the earlier to occur of
(x) five (5) years from the date of such determination, or (y) a period that
corresponds to the total number of days that lapsed between the date on which
such claim is asserted by Palomar in such forum until the date on which such
judicial or governmental determination becomes final and unappealable.

        10.4 UNILATERAL TERMINATION OF THIS AGREEMENT BY GILLETTE.

                (a)   Termination by Gillette Within Twelve Months of the
Effective Date. At any time within twelve (12) months after the Effective Date,
Gillette shall have the right in its sole discretion to terminate this Agreement
in its entirety by providing ten (10) days’ prior written notice to Palomar.

                (b)   Termination by Gillette Upon Determination That the First
Female Product Requires PMA. Gillette shall have the right, in its sole
discretion, to terminate this Agreement in its entirety by providing ten (10)
days’ prior written notice to Palomar within thirty (30) days of the FDA
determining that the First Female Product is a PMA Product.

                (c)   Termination by Gillette for Palomar’s Failure to Obtain
Regulatory Approval in the United States Within FDA Approval Period. Within
thirty (30) days of the end of the applicable FDA Approval Period, Gillette
shall have the right in its sole discretion to terminate this Agreement in its
entirety by providing ten (10) days’ prior written notice to Palomar in the
event that Palomar fails to obtain Regulatory Approval in the United States for
the First Female Product within the applicable FDA Approval Period. For
avoidance of doubt, in the event that Gillette does not terminate this Agreement
in such an event, then notwithstanding the extent to which Gillette continues to
commit resources to the activities contemplated by this

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Agreement, Palomar shall have the right to continue its efforts, at its sole
cost and expense, to obtain Regulatory Approval in the United States for the
First Female Product and Gillette shall reasonably cooperate in those efforts
through the R&D Committee as originally contemplated by this Agreement.

                (d)   Termination By Gillette at the First Decision Point or the
Second Decision Point. At any time on or before thirty (30) days after the First
Decision Point or the Second Decision Point, Gillette shall have the right in
its sole discretion to terminate this Agreement in its entirety by providing ten
(10) days’ prior written notice to Palomar.

        10.5 Unilateral Termination of this Agreement by Palomar for Gillette’s
Breach of Diligence Obligations. Palomar shall have the right in its sole
discretion to terminate this Agreement in its entirety by providing ten (10)
days’ prior written notice to Gillette in the event that Gillette fails to
satisfy its obligations pursuant to Section 2.1(b)(i), 2.1(b)(ii) or
2.1(b)(iii), and in the case of either Section 2.1(b)(i) or 2.1(b)(ii), Gillette
further fails to make a payment to Palomar in accordance with the proviso
contained in each such Section.

        10.6 Consequences of Termination of Exclusivity Period. In the event
that Gillette terminates the Exclusivity Period pursuant to Section 10.2, as of
the effective date of such termination, the following terms and conditions shall
apply.

                                (i)   The covenants and other rights granted by
Palomar in Sections 5.2 and 5.3(a), the covenants and other rights granted by
Gillette in 5.3(b), and Sections 1.7, 5.4 and 9.1(b) shall terminate.

                                (ii)   The licenses granted by Palomar to
Gillette in Section 4.1(a)(i) and 4.1(a)(ii) shall convert to non-exclusive
licenses and the word “exclusive” wherever it appears in Sections 4.1(a)(i) and
4.1(a)(ii) shall be deemed from and after such date to be replaced with the word
“non-exclusive”; provided, that the licenses contained in Sections 4.1(a)(i) and
4.1(a)(ii) shall be deemed to cover only those Female Products Launched by
Gillette prior to the effective date of the termination of the Exclusivity
Period, and any Improvements thereto.

                                (iii)   The Male Option granted by Palomar to
Gillette in Section 5.1 and the covenant granted by Palomar to Gillette in
Section 5.2(b) shall terminate; provided, that, in the event that Gillette has,
prior to such date, exercised the Male Option, Gillette’s rights pursuant to
Section 5.1(c) shall survive and Gillette’s rights with respect to Palomar Male
Technology and Palomar’s interest in the Joint Technology in the Male Field
shall be governed by the terms of the Male Collaboration Agreement entered into
(or to be entered into) between the parties pursuant to such Section.

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                                (iv)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, non-exclusive, royalty-bearing, right and
license, with the right to grant sublicenses (through multiple tiers of
sublicensing), under all of Gillette’s right, title and interest in and to the
Gillette Licensed Patents to Exploit in the Female Field only those Female
Products (including prototypes of such products) or Manufacturing Processes for
Female Products (including in each instance Improvements thereto), all of which
products or processes are developed or under development by or for Gillette
(optionally with Palomar hereunder and/or with one or more Third Parties) at the
time of termination of the Exclusivity Period, and any Palomar Improvements
thereto (but not any new or other products), which license grant shall become
effective as of the effective date of such termination and shall be subject to
the payment obligations of Palomar pursuant to Section 6.3.

                                (v)   Gillette shall have no further obligation
to make payments to Palomar pursuant to Section 6.1(g).

                                (vi)   In the event that, prior to such date,
Palomar has not provided to Gillette an Opportunity Notice in accordance with
the terms and conditions of Section 5.1(b), Gillette’s obligations, if any,
pursuant to Section 6.2(a)(i) or 6.2(a)(ii) to make a payment to Palomar in
connection with the Launch of an Other Independent Product in the Male Field,
and Gillette’s obligations, if any, pursuant to Section 6.2(b)(ii) to pay to
Palomar TTPs with respect to Net Sales of Other Independent Product(s) in the
Male Field, shall be reduced by fifty percent (50%); provided, however, that the
fifty percent (50%) reduction provided in this Section 10.6(vi) shall not be
applicable in the event that, (A) within sixty (60) days after the date on which
Gillette delivers to Palomar the termination notice pursuant to Section 10.2,
Palomar provides to Gillette a Male Product Opportunity in accordance with the
terms of Sections 5.1(b) (with such 60-day period being subject to a reasonable
extension not to exceed thirty (30) days for Palomar to provide the Evaluation
Materials required by the Opportunity Notice in the event that Gillette notifies
Palomar that Gillette reasonably believes that it has not received all the
Evaluation Materials as contemplated by Section 5.1(b)(ii)), or (B) the
termination of the Exclusivity Period by Gillette becomes effective on or before
the second (2nd) anniversary of the Effective Date.

                                (vii)   Except as set forth in this
Section 10.6, in all other respects the provisions of this Agreement shall
survive the termination of the Exclusivity Period by Gillette pursuant to
Section 10.2.

        10.7 CONSEQUENCES OF TERMINATION OF AGREEMENT BY GILLETTE.

                (a)   Termination by Gillette Within Twelve Months of the
Effective Date. In the event that Gillette terminates this Agreement pursuant to
Section 10.4(a), as of the effective date of such termination, the following
terms and conditions shall apply.

                                (i)   The covenants and other rights granted by
Palomar in Sections 5.2 and 5.3(a), the covenants and other rights granted by
Gillette in 5.3(b), and Sections 1.7, 5.4 and 9.1(b) shall terminate.

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                                (ii)  The licenses granted by Palomar to
Gillette in Sections 4.1(a)(i) and 4.1(a)(ii) shall terminate.

                                (iii)   The Male Option granted by Palomar to
Gillette in Section 5.1 and the covenant granted by Palomar to Gillette in
Section 5.2(b) shall terminate; provided, that, in the event that Gillette has,
prior to such date, exercised the Male Option, Gillette’s rights pursuant to
Section 5.1(c) shall survive and Gillette’s rights with respect to Palomar Male
Technology and Palomar’s interest in the Joint Technology in the Male Field
shall be governed by the terms of the Male Collaboration Agreement entered into
(or to be entered into) between the parties pursuant to such Section.

                                (iv)   Except in the case of any payment
obligations of Gillette pursuant to Sections 6.1(a) and 6.1(b), all payment
obligations of Gillette, if any, pursuant to Sections 6.1 and 6.2 shall
terminate.

                                (v)   As provided in Section 8.1(c)(i),
(1) there shall no be assignment by Palomar to Gillette of any interest in any
(A) Joint Inventions first conceived or reduced to practice during the
Restricted Access Period, and (B) all relevant Joint Technology, (2) all of such
Joint Inventions and Joint Technology shall remain solely owned by Palomar and
shall no longer be treated hereunder as Joint Inventions or Joint Technology,
and (3) Palomar shall not be required to disclose any such Joint Inventions or
Joint Technology to Gillette.

                                (vi)   Except as set forth in this
Section 10.7(a), the terms and conditions of ARTICLE IV, ARTICLE V and ARTICLE
VI (in addition to the provisions listed in Section 10.10(b)) shall survive
termination of this Agreement by Gillette pursuant to Section 10.4(a).

                (b)   Termination by Gillette Upon Determination That First
Female Product Requires PMA. In the event that Gillette terminates this
Agreement pursuant to Section 10.4(b), as of the effective date of such
termination, the following terms and conditions shall apply.

                                (i)   The covenants and other rights granted by
Palomar in Sections 5.2 and 5.3(a), the covenants and other rights granted by
Gillette in 5.3(b), and Sections 1.7, 5.4 and 9.1(b) shall terminate.

                                (ii)   The licenses granted by Palomar to
Gillette in Sections 4.1(a)(i) and 4.1(a)(ii) shall terminate.

                                (iii)   The Male Option granted to Gillette by
Palomar in Section 5.1 and the covenant granted by Palomar to Gillette in
Section 5.2(b) shall terminate; provided, that, in the event that Gillette has,
prior to such date, exercised the Male Option, Gillette’s rights pursuant to
Section 5.1(c) shall survive and Gillette’s rights with respect to Palomar Male
Technology and Palomar’s interest in the Joint Technology in the Male Field
shall be governed by the terms of the Male Collaboration Agreement entered into
(or to be entered into) between the parties pursuant to such Section.

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                                (iv)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, non-exclusive, royalty-bearing, right and
license, with the right to grant sublicenses (through multiple tiers of
sublicensing), under all of Gillette’s right, title and interest in and to the
Gillette Licensed Patents to Exploit in the Female Field only those Female
Products (including prototypes of such products) or Manufacturing Processes for
Female Products(including in each instance Improvements thereto), all of which
products or processes are developed or under development by or for Gillette
(optionally with Palomar hereunder and/or with one or more Third Parties) at the
time of termination of this Agreement, and any Palomar Improvements thereto (but
not any new or other products), which license grant shall become effective as of
the effective date of such termination and shall be subject to the payment
obligations of Palomar pursuant to Section 6.3.

                                (v)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, exclusive (including with regard to
Gillette), royalty-free, right and license, with the right to grant sublicenses
(through multiple tiers of sublicensing), under all of Gillette’s right, title
and interest in and to the Joint Technology to Exploit in the Female Field only
those Female Products (including prototypes of such products) or Manufacturing
Processes for Female Products (including in each instance Improvements thereto),
all of which products or processes are developed or under development by or for
Gillette (optionally with Palomar hereunder and/or with one or more Third
Parties) at the time of termination of this Agreement, and any Palomar
Improvements thereto (but not any new or other products), which license grant
shall become effective as of the effective date of such termination. As of the
effective date of such termination and thereafter, Gillette shall not practice
or use, or grant licenses or other rights under, Joint Technology for the
purpose of Exploitation of such Female Products, provided that, subject to
Section 4.2(d) and the other terms and conditions of this Agreement, the
foregoing restrictions shall not prevent Gillette from conducting any activity,
or exercising or granting any licenses or other rights, with respect to the
Joint Technology that has as its goal or intent Exploitation of products or
systems, other than such Female Products or Palomar Improvements thereto, in the
Female Field, or products or systems outside of the Female Field.

                                (vi)   Except in the case of any payment
obligations of Gillette pursuant to Sections 6.1(a) and 6.1(b), all payment
obligations of Gillette, if any, pursuant to Section 6.1 shall terminate.

                                (vii)   Except as set forth in this
Section 10.7(b), the terms and conditions of ARTICLE IV, ARTICLE V and ARTICLE
VI (in addition to the provisions listed in Section 10.10(b)) shall survive
termination of this Agreement by Gillette pursuant to Section 10.4(b).

                (c)   Termination by Gillette for Palomar’s Failure to Obtain
Regulatory Approval in the United States Within FDA Approval Period. In the
event that Gillette terminates this Agreement pursuant to Section 10.4(c), as of
the effective date of such termination, the following terms and conditions shall
apply.

                                (i)   The covenants and other rights granted by
Palomar in Sections 5.2 and 5.3(a), the covenants and other rights granted by
Gillette in 5.3(b), and Sections 1.7, 5.4 and 9.1(b) shall terminate.

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                                (ii)   The licenses granted by Palomar to
Gillette in Sections 4.1(a)(i) and 4.1(a)(ii) shall terminate.

                                (iii)   The Male Option granted by Palomar to
Gillette in Section 5.1 and the covenant granted by Palomar to Gillette in
Section 5.2(b) shall survive for a period of two (2) years after the effective
date of such termination, whereupon the Male Option shall immediately terminate,
provided, that, in the event that Gillette has, prior to the termination of the
Male Option, exercised the Male Option, Gillette’s rights pursuant to
Section 5.1(c) shall survive and Gillette’s rights with respect to Palomar Male
Technology and Palomar’s interest in the Joint Technology in the Male Field
shall be governed by the terms of the Male Collaboration Agreement entered into
(or to be entered into) between the parties pursuant to such Section.

                                (iv)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, non-exclusive, royalty-bearing, right and
license, with the right to grant sublicenses (through multiple tiers of
sublicensing), under all of Gillette’s right, title and interest in and to the
Gillette Licensed Patents to Exploit in the Female Field only those Female
Products (including prototypes of such products) or Manufacturing Processes for
Female Products (including in each instance Improvements thereto), all of which
products or processes are developed or under development by or for Gillette
(optionally with Palomar hereunder and/or with one or more Third Parties) at the
time of termination of this Agreement, and any Palomar Improvements thereto (but
not any new or other products), which license grant shall become effective as of
the effective date of such termination and shall be subject to the payment
obligations of Palomar pursuant to Section 6.3.

                                (v)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, exclusive (including with regard to
Gillette), royalty-free, right and license, with the right to grant sublicenses
(through multiple tiers of sublicensing), under all of Gillette’s right, title
and interest in and to the Joint Technology to Exploit in the Female Field only
those Female Products (including prototypes of such products) or Manufacturing
Processes for Female Products (including in each instance Improvements thereto),
all of which products or processes are developed or under development by or for
Gillette (optionally with Palomar hereunder and/or with one or more Third
Parties) at the time of termination of this Agreement, and any Palomar
Improvements thereto (but not any new or other products), which license grant
shall become effective as of the effective date of such termination. As of the
effective date of such termination and thereafter, Gillette shall not practice
or use, or grant licenses or other rights under Joint Technology for the purpose
of Exploitation of such Female Products in the Female Field; provided that,
subject to Section 4.2(d) and the other terms and conditions of this Agreement,
the foregoing restrictions shall not prevent Gillette from conducting any
activity, or exercising or granting any licenses or other rights, with respect
to the Joint Technology that has as its goal or intent Exploitation of products
or systems, other than such Female Products or Palomar Improvements thereto, in
the Female Field, or products or systems outside the Female Field.

                                (vi)   Except in the case of any payment
obligation of Gillette pursuant to Sections 6.1(a) and 6.1(b), Gillette’s
payment obligations pursuant to Section 6.1 shall terminate.

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                                (vii)   Gillette obligations, if any, to make
payments to Palomar pursuant to Section 6.2(a)(i) or 6.2(a)(ii) on account of a
Launch of a Gillette Joint Independent Product in the Field, as applicable, and
Gillette’s obligations, if any, pursuant to Section 6.2(b)(i) to pay to Palomar
TTPs with respect to Net Sales of a Gillette Joint Independent Product in the
Field, shall terminate; provided, however, in the event that, subsequent to such
termination, Gillette exercises the Male Option, Gillette’s obligations, if any,
to make payments to Palomar pursuant to such Sections shall be reinstated from
and after the date of the Option Exercise Notice with respect to Gillette Joint
Independent Products in the Male Field only.

                                (viii)   Gillette’s obligations, if any,
pursuant to Section 6.2(a)(i) or 6.2(a)(ii) to make a payment to Palomar in
connection with the Launch of an Other Independent Product in the Field, and
Gillette’s obligations, if any, pursuant to Section 6.2(b)(ii) to pay to Palomar
TTPs with respect to Net Sales of an Other Independent Product in the Field,
shall terminate; provided, however, in the event that, subsequent to such
termination, Gillette exercises the Male Option, Gillette’s obligations, if any,
to make payments to Palomar pursuant to such Sections shall be reinstated from
and after the date of the Option Exercise Notice with respect to Other
Independent Products in the Male Field only.

                                (ix)   Except as set forth in this
Section 10.7(c), the terms and conditions of ARTICLE IV, ARTICLE V and ARTICLE
VI (in addition to the provisions listed in Section 10.10(b)) shall survive
termination of this Agreement by Gillette pursuant to Section 10.4(c).

                (d)   Termination By Gillette at the First Decision Point or the
Second Decision Point. In the event that Gillette terminates this Agreement
pursuant to Section 10.4(d), as of the effective date of such termination, the
following terms and conditions shall apply.

                                (i)   The covenants and other rights granted by
Palomar in Sections 5.2 and 5.3(a), the covenants and other rights granted by
Gillette in 5.3(b), and Sections 1.7, 5.4 and 9.1(b) shall terminate.

                                (ii)   The licenses granted by Palomar to
Gillette in Sections 4.1(a)(i) and 4.1(a)(ii) shall terminate.

                                (iii)   The Male Option granted by Palomar to
Gillette in Section 5.1 and the covenant granted by Palomar to Gillette in
Section 5.2(b) shall terminate; provided, that, in the event that Gillette has,
prior to such date, exercised the Male Option, Gillette’s rights pursuant to
Section 5.1(c) shall survive and Gillette’s rights with respect to Palomar Male
Technology and Palomar’s interest in the Joint Technology in the Male Field
shall be governed by the terms of the Male Collaboration Agreement entered into
(or to be entered into) between the parties pursuant to such Section.

                                (iv)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, non-exclusive, royalty-bearing, right and
license, with the right to grant sublicenses (through multiple tiers of
sublicensing), under all of Gillette’s right, title and interest in and to the
Gillette Licensed Patents to Exploit in the Female Field only those Female
Products (including prototypes of such products) or Manufacturing Processes for
Female Products

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(including in each instance Improvements thereto), all of which products or
processes are developed or under development by or for Gillette (optionally with
Palomar hereunder and/or with one or more Third Parties) at the time of
termination of this Agreement, and any Palomar Improvements thereto (but not any
new or other products), which license grant shall become effective as of the
effective date of such termination and shall be subject to the payment
obligations of Palomar pursuant to Section 6.3.

                                (v)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, exclusive (including with regard to
Gillette), royalty-free, right and license, with the right to grant sublicenses
(through multiple tiers of sublicensing), under all of Gillette’s right, title
and interest in and to the Joint Technology to Exploit in the Female Field only
those Female Products (including prototypes of such products) or Manufacturing
Processes for Female Products (including in each instance Improvements thereto),
all of which products or processes are developed or under development by or for
Gillette (optionally with Palomar hereunder and/or with one or more Third
Parties) at the time of termination of this Agreement, and any Palomar
Improvements thereto (but not any new or other products), which license grant
shall become effective as of the effective date of such termination. As of the
effective date of such termination and thereafter, Gillette shall not practice
or use, or grant licenses or other rights under Joint Technology for the purpose
of Exploitation of such Female Products in the Female Field; provided that,
subject to Section 4.2(d) and the other terms and conditions of this Agreement,
the foregoing restrictions shall not prevent Gillette from conducting any
activity, or exercising or granting any licenses or other rights, with respect
to the Joint Technology that has as its goal or intent Exploitation of products
or systems, other than such Female Products or Palomar Improvements thereto, in
the Female Field, or products or systems outside the Female Field.

                                (vi)   Except in the case of any payment
obligations of Gillette pursuant to Sections 6.1(a) and 6.1(b), all payment
obligations of Gillette, if any, pursuant to Section 6.1 shall terminate.

                                (vii)     Except as set forth in this
Section 10.7(d), the terms and conditions of ARTICLE IV, ARTICLE V and ARTICLE
VI (in addition to the provisions listed in Section 10.10(b)) shall survive
termination of this Agreement by Gillette pursuant to Section 10.4(d).

                (e)   Termination By Gillette for Palomar’s Material Breach. In
the event that Gillette terminates this Agreement pursuant to Section 10.3 or
10.11, as of the effective date of such termination, the following terms and
conditions shall apply.

                                (i)   The covenants granted by Palomar to
Gillette in Section 5.2 and all the terms and conditions of Sections 1.7 and
9.1(b) shall terminate. For five (5) years after the effective date of such
termination, Palomar shall not compete, or grant to a Third Party a license
under Palomar-Controlled intellectual property with the intention of enabling
such Third Party to compete, with Gillette in the Field; provided, however, that
in the event that, prior to Gillette’s termination of this Agreement pursuant to
Section 10.3, Palomar has offered to Gillette a Male Product Opportunity
pursuant to Section 5.1(b), and Gillette elected or otherwise failed to exercise
the Male Option pursuant to Section 5.1(b)(iv), Palomar’s obligation as provided
in this sentence shall apply only with respect to the Female Field, and
references in this

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Section 10.7(e)(i) to the “Field” shall be deemed to be references to the
“Female Field.” The restriction contained in this Section 10.7(e)(i) shall not
prevent Palomar from conducting any activity, or exercising or granting any
rights or licenses, that has as its goal or intent Exploitation of products or
systems outside of the Field, notwithstanding the possibility that any such
products or systems may have applications in the Field.

                                (ii)   The Male Option granted by Palomar to
Gillette in Section 5.1 and the covenant granted by Palomar to Gillette in
Section 5.2(b) shall terminate; provided, that, in the event that Gillette has,
prior to such date, exercised the Male Option, Gillette’s rights pursuant to
Section 5.1(c) shall survive and Gillette’s rights with respect to Palomar Male
Technology and Palomar’s interest in the Joint Technology in the Male Field
shall be governed by the terms of the separate agreement entered into (or to be
entered into) between the parties pursuant to such Section.

                                (iii)   Except in the case of payment
obligations of Gillette pursuant to Section 6.1(b) and 6.1(g), which shall
terminate, all payment obligations of Gillette contained in Section 6.1 shall
survive termination of this Agreement by Gillette pursuant to Section 10.3.

                                (iv)   Gillette’s obligations, if any, to make
payments to Palomar pursuant to Section 6.2(a)(i) or 6.2(a)(ii) on account of a
Launch of a Gillette Joint Independent Product in the Field, as applicable, and
pursuant to Sections 6.2(b)(i) and 6.2(c) to pay to Palomar TTPs and royalties
on account of Net Sales of a Gillette Joint Independent Product in the Field, as
applicable, shall terminate; provided, however in the event that Gillette’s
Exploitation of a Gillette Joint Independent Product triggers a payment
obligation by Palomar to MGH under an MGH Agreement, Gillette’s obligations, if
any, pursuant to Section 6.2(c) shall not terminate but rather Gillette’s
obligation shall be reduced to one percent (1%) of Net Sales and shall apply
only if and to the extent that Palomar has a corresponding payment obligation to
MGH under an MGH Agreement.

                                (v)   Gillette’s obligations, if any, pursuant
to Section 6.2(a)(i) or 6.2(a)(ii) to make a payment to Palomar in connection
with the Launch of an Other Independent Product in the Field, and Gillette’s
obligations, if any, pursuant to Section 6.2(b)(ii) to pay to Palomar TTPs with
respect to Net Sales of an Other Independent Product in the Field, shall
terminate.

                                (vi)   Except as set forth in this
Section 10.7(e), the terms and conditions of ARTICLE IV, ARTICLE V and ARTICLE
VI (in addition to the provisions listed in Section 10.10(b)) shall survive
termination of this Agreement by Gillette pursuant to Section 10.3.

                (f)   Rights Cumulative. The rights and remedies in Section 10.7
shall be cumulative and in addition to any other rights or remedies that may be
available to Gillette.

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        10.8 Consequences of Termination of Agreement by Palomar.

                (a)   In the event that Palomar terminates this Agreement
pursuant to Section 10.3, 10.5 or 10.11, as of the effective date of such
termination, the following terms and conditions shall apply.

                                (i)   The covenants and other rights granted by
Palomar in Sections 5.2 and 5.3(a), the covenants and other rights granted by
Gillette in 5.3(b), and Sections 1.7, 5.4 and 9.1(b) shall terminate.

                                (ii)   The licenses granted by Palomar to
Gillette in Sections 4.1(a)(i) and 4.1(a)(ii) shall terminate.

                                (iii)   The Male Option granted to Gillette in
Section 5.1 and the covenant granted by Palomar to Gillette in Section 5.2(b)
shall terminate; provided, that, in the event that Gillette has, prior to such
date, exercised the Male Option, Gillette’s rights pursuant to Section 5.1(c)
shall survive and Gillette’s rights with respect to Palomar Male Technology and
Palomar’s interest in the Joint Technology in the Male Field shall be governed
by the terms of the Male Collaboration Agreement entered into (or to be entered
into) between the parties pursuant to such Section.

                                (iv)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, non-exclusive, royalty-bearing, right and
license, with the right to grant sublicenses (through multiple tiers of
sublicensing), under all of Gillette’s right, title and interest in and to the
Gillette Licensed Patents to Exploit in the Female Field only those Female
Products (including prototypes of such products) or Manufacturing Processes for
Female Products (including in each instance Improvements thereto), all of which
products or processes are developed or under development by or for Gillette
(optionally with Palomar hereunder and/or with one or more Third Parties) at the
time of termination of this Agreement, and any Palomar Improvements thereto (but
not any new or other products), which license grant shall become effective as of
the effective date of such termination and shall be subject to the payment
obligations of Palomar pursuant to Section 6.3.

                                (v)   Gillette hereby grants to Palomar a
worldwide, perpetual, irrevocable, exclusive (including with regard to
Gillette), royalty-free, right and license, with the right to grant sublicenses
(through multiple tiers of sublicensing), under all of Gillette’s right, title
and interest in and to the Joint Technology to Exploit in the Field only those
Female Products (including prototypes of such products) or Manufacturing
Processes for Female Products (including in each instance Improvements thereto),
all of which products or processes are developed or under development by or for
Gillette (optionally with Palomar hereunder and/or with one or more Third
Parties) at the time of termination of this Agreement, and any Palomar
Improvements thereto (but not any new or other products), which license grant
shall become effective as of the effective date of such termination. As of the
effective date of such termination and thereafter, Gillette shall not practice
or use, or grant licenses or other rights under, Joint Technology for the
purpose of Exploitation of such Female Products in the Female Field, provided
that, subject to Section 4.2(d) and the other terms and conditions of this
Agreement, the foregoing restrictions shall not prevent Gillette from conducting
any activity, or exercising or

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granting any licenses or other rights, with respect to the Joint Technology that
has as its goal or intent Exploitation of products or systems, other than such
Female Products or Palomar Improvements thereto, in the Female Field, or
products or systems outside of the Female Field.

                                (vi)   Gillette’s payment obligations pursuant
to Section 6.1 shall terminate.

                                (vii)   Except as set forth in this
Section 10.8, the terms and conditions of ARTICLE IV, ARTICLE V and ARTICLE VI
(in addition to the provisions listed in Section 10.10(b)) shall survive
termination of this Agreement by Gillette pursuant to Section 10.3 or 10.5.

                (b)   Rights Cumulative. The rights and remedies of Palomar in
this Section 10.8 shall be cumulative and in addition to any other rights or
remedies that may be available to Palomar.

        10.9 Notice of Certain Sublicense Grants. In the event that Palomar
grants to a Third Party a sublicense under the license granted by Gillette to
Palomar in Sections 10.6(iv), 10.7(b)(iv), 10.7(c)(iv), 10.7(d)(iv), or
10.8(a)(iv), Palomar shall promptly provide to Gillette written notice of such
grant and the identity of the Third Party, together with copies of those
provisions of such Agreement that relate directly to the Gillette Licensed
Patents (e.g., license grant provisions, intellectual property provisions
relating to patent prosecution and enforcement rights).

        10.10 ACCRUED RIGHTS; SURVIVING OBLIGATIONS.

                (a)   Accrued Rights. Termination or expiration of this
Agreement for any reason shall be without prejudice to any rights that shall
have accrued to the benefit of a party prior to such termination or expiration.
Such termination or expiration shall not relieve a party from obligations that
are expressly indicated to survive the termination or expiration of this
Agreement.

                (b)   Survival. Subject to and without limiting anything
contained in Sections 10.6, 10.7 and 10.8 of this Agreement, Sections 1.2(b),
1.3(b)(iv), 1.5, 2.1(a)(iii), 10.1(b), 10.6, 10.7, 10.8, 10.9, 10.11, 14.2,
14.3, 14.4, 14.5, 14.6, 14.8, 14.9, 14.12 and this Section 10.10, and Articles
VIII, IX and XIII of this Agreement shall survive the termination or expiration
of this Agreement for any reason.

                (c)   Work-in-Progress. Upon termination of this Agreement by
Palomar pursuant to Section 10.3, Gillette shall be entitled, during the
following ninety (90) days, to finish any work-in-progress and to sell any
inventory of the Female Products that remains on hand as of the date of the
termination, so long as Gillette pays Palomar all amounts applicable to said
subsequent sales in accordance with the terms and conditions set forth in this
Agreement.

        10.11 Termination Upon Insolvency. Either party may terminate this
Agreement if, at any time, the other party shall file in any court or agency
pursuant to any statute or regulation of any state, country or jurisdiction, a
petition in bankruptcy or insolvency or for reorganization or for an arrangement
or for the appointment of a receiver or trustee of that party

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or of its assets, or if the other party shall be served with an involuntary
petition against it, filed in any insolvency proceeding, and such petition shall
not be dismissed within sixty (60) days after the filing thereof, or if the
other party shall propose or be a party to any dissolution or liquidation, or if
the other party shall make an assignment for the benefit of its creditors.

        10.12 Rights in Bankruptcy. All rights and licenses granted under or
pursuant to this Agreement by Gillette or Palomar are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, licenses of rights to “intellectual property” as defined under Section 101
of the United States Bankruptcy Code. The parties agree that the parties, as
licensees of such rights under this Agreement, shall retain and may fully
exercise all of their rights and elections under the United States Bankruptcy
Code. The parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against either party under the United States
Bankruptcy Code, the party hereto that is not a party to such proceeding shall
be entitled to a complete duplicate of (or complete access to, as appropriate)
any such intellectual property and all embodiments of such intellectual
property, which, if not already in the non-subject party’s possession, shall be
promptly delivered to it (a) upon any such commencement of a bankruptcy
proceeding upon the non-subject party’s written request therefor, unless the
party subject to such proceeding elects to continue to perform all of its
obligations under this Agreement or (b) if not delivered under clause (a) above,
following the rejection of this Agreement by or on behalf of the party subject
to such proceeding upon written request therefor by the non-subject party.

ARTICLE XI
INDEMNITY

        11.1 Indemnification of Gillette. Palomar shall indemnify The Gillette
Company and its Affiliates and their respective directors, officers, employees
and agents, and defend and save each of them harmless, from and against any and
all losses, damages, liabilities, bodily injury, death or property damage, costs
and expenses (including reasonable attorneys’ and professionals fees and
expenses) in connection with any and all suits, investigations, claims or
demands (collectively, “Losses”), but only to the extent based on or arising
from a suit, investigation, claim or demand made by a Third Party (a “Third
Party Claim”), and arising from or occurring as a result of (a) the Exploitation
by Palomar or any of its agents or sublicensees of any Female Product or any
other product pursuant to a license granted by Gillette to Palomar in this
Agreement, or any materials for making or using the same, or any actual or
alleged violation of Applicable Law resulting therefrom, (b) a breach by Palomar
of this Agreement, or (c) the gross negligence or willful misconduct on the part
of Palomar in performing its obligations under this Agreement, except for those
Losses for which Gillette has an obligation to indemnify Palomar pursuant to
Section 11.2, as to which Losses each party shall indemnify the other to the
extent of their respective liability for the Losses; provided, however, that
Palomar shall not be obligated to indemnify Gillette for any Losses that arise
as a result of gross negligence or willful misconduct on the part of The
Gillette Company, its Affiliates and their respective directors, officers,
employees and agents. The foregoing indemnification obligation of Palomar shall
include, without limitation, Losses based on or arising out of (1) any
representation, warranty or agreement that is made by Palomar to any Third Party
with respect to any product described in clause (a)

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above, (2) actual or asserted violations of any Applicable Law attributable to
any product described in clause (a) above, or (3) any claim that any product
described in clause (a) above is defective (whether in design, materials,
workmanship or otherwise) or that otherwise relates to any attribute, condition
or failure of any such product, including any claim of product liability
(whether brought in tort, warranty, strict liability or other form of action) or
negligence.

        11.2 Indemnification of Palomar. Gillette shall indemnify Palomar
Medical Technologies, Inc., and its Affiliates and their respective directors,
officers, employees and agents, and defend and save each of them harmless, from
and against any and all Losses, but only to the extent based on or arising from
a Third Party Claim, arising from or occurring as a result of (a) the
Exploitation of any Female Product or other product by Gillette or any of its
agents or sublicensees pursuant to a license granted by Palomar to Gillette in
this Agreement, or any materials for making or using the same, or any actual or
alleged violation of Applicable Law resulting therefrom, (b) a breach by
Gillette of this Agreement, (c) the wrongful exercise by Gillette of any Third
Party beneficiary rights provided for in Section 5.3(a)(ii)(3), or (d) the gross
negligence or willful misconduct on the part of Gillette in performing its
obligations under this Agreement, except for those Losses for which Palomar has
an obligation to indemnify Gillette pursuant to Section 11.1, as to which Losses
each party shall indemnify the other to the extent of their respective liability
for the Losses; provided, however, that Gillette shall not be obligated to
indemnify Palomar for any Losses that arise as a result of gross negligence or
willful misconduct on the part of Palomar Medical Technologies, Inc., its
Affiliates and their respective directors, officers, employees and agents. The
foregoing indemnification obligation of Gillette shall include, without
limitation, Losses based on or arising out of (1) any representation, warranty
or agreement that is made by Gillette to any Third Party with respect to any
Female Product, (2) actual or asserted violations of any Applicable Law
attributable to any Female Product, or (3) any claim that any Female Product is
defective (whether in design, materials, workmanship or otherwise) or that
otherwise relates to any attribute, condition or failure of any such Female
Product, including any claim of product liability (whether brought in tort,
warranty, strict liability or other form of action) or negligence.

11.3 INDEMNIFICATION PROCEDURE.

                (a)   Notice of Third Party Claim. The indemnified party shall
give the indemnifying party prompt written notice (an “Indemnification Claim
Notice”) of any Third Party Claim upon which such indemnified party intends to
base a request for indemnification under Section 11.1 or 11.2, but in no event
shall the indemnifying party be liable for any Losses that directly result from
any delay in providing such notice. Each Indemnification Claim Notice must
contain a description of the Third Party Claim and the nature and amount of such
Loss (to the extent that the nature and amount of such Loss is known at such
time). The indemnified party shall furnish promptly to the indemnifying party
copies of all papers and official documents received in respect of any Losses.
All Third Party Claims in respect of a party, its Affiliates or their respective
directors, officers, employees and agents shall be made solely by such party to
this Agreement (the “Indemnified Party”).

                (b)   Control of Defense. At its option, the indemnifying party
may assume the defense of any Third Party Claim by giving written notice to the
Indemnified Party within thirty (30) days after the indemnifying party’s receipt
of an Indemnification Claim Notice. Upon assuming the defense of a Third Party
Claim, the indemnifying party may appoint as lead counsel in the defense of the
Third Party Claim legal counsel selected by the indemnifying party,

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provided that such counsel for the indemnifying party shall be subject to the
reasonable approval of the Indemnified Party. In the event the indemnifying
party assumes the defense of a Third Party Claim, the Indemnified Party shall
immediately deliver to the indemnifying party all original notices and documents
(including court papers) received by any indemnified party in connection with
the Third Party Claim.

                (c)   Right to Participate in Defense. Without limiting
Section 11.3(b), any indemnified party shall be entitled to participate in, but
not control, the defense of such Third Party Claim and to employ counsel of its
choice for such purpose; provided, however, that such employment shall be at the
Indemnified Party’s own expense unless (A) the employment thereof has been
specifically authorized by the indemnifying party in writing, (B) the
indemnifying party has failed to assume the defense and employ counsel in
accordance with Section 11.3(b) (in which case the Indemnified Party shall
control the defense), or (C) the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
party and the Indemnified Party in the defense of such Third Party Claim, in
which case the indemnifying party shall pay the reasonable fees and expenses of
one law firm serving as counsel for the Indemnified Party, which law firm shall
be subject to reasonable approval by the indemnifying party.

                (d)   Settlement. With respect to any Losses relating solely to
the payment of money damages in connection with a Third Party Claim and that
will not result in the Indemnified Party’s becoming subject to injunctive or
other relief or otherwise adversely and materially affect the business of the
Indemnified Party in any manner, the indemnifying party shall have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the indemnifying party, in its
sole discretion, shall deem appropriate. With respect to all other Losses in
connection with Third Party Claims, where the indemnifying party has assumed the
defense of the Third Party Claim in accordance with Section 11.3(b), the
indemnifying party shall have authority to consent to the entry of any judgment,
enter into any settlement or otherwise dispose of such Loss provided (i) it
obtains the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld), and (ii) include as an unconditional term thereof
the giving by the Third Party to such Indemnified Party of a release from all
liability in respect to such Third Party Claim. The indemnifying party shall not
be liable for any settlement or other disposition of a Loss by an Indemnified
Party that is reached without the written consent of the indemnifying party,
unless the indemnifying party has failed to assume the defense and employ
counsel in accordance with Section 11.3(b). In the event that (i) an Indemnified
Party seeks indemnification from the indemnifying party under this ARTICLE XI
for a Third Party Claim, and (ii) the indemnifying party shall have acknowledged
in writing the obligation to indemnify the Indemnified Party hereunder with
respect thereto, no Indemnified Party shall admit any liability with respect to,
or settle, compromise or discharge, such Third Party Claim without the prior
written consent of the indemnifying party.

                (e)   Cooperation. In the event that an indemnifying party
chooses to defend or prosecute any Third Party Claim, the Indemnified Party
shall, and shall cause each other indemnified party to, cooperate with the
indemnifying party in the defense or prosecution thereof and shall furnish such
records, information and testimony, provide such witnesses and attend such
conferences, discovery proceedings, hearings, trials and appeals as the
indemnifying

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party may reasonably request in connection therewith. Such cooperation shall
include access during normal business hours afforded to the indemnifying party
to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making
indemnified parties and other employees and agents available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder, and the indemnifying party shall reimburse the
Indemnified Party for all its reasonable out-of-pocket costs and expenses in
connection therewith.

                (f)   Expenses. Except as provided above, the costs and
expenses, including fees and disbursements of counsel, incurred by the
Indemnified Party in connection with any claim shall be reimbursed on a Calendar
Quarter basis by the indemnifying party, without prejudice to the indemnifying
party’s right to contest the Indemnified Party’s right to indemnification.

11.4 LIMITATION ON DAMAGES AND LIABILITY.

                (a)   LIMITATION ON DAMAGES. SUBJECT TO SECTIONS 11.1 AND 11.2,
AND EXCEPT IN CIRCUMSTANCES OF GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT,
NEITHER GILLETTE NOR PALOMAR SHALL BE LIABLE FOR SPECIAL, INDIRECT, PUNITIVE,
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING FOR LOST PROFITS, DEVELOPMENT
COMPLETION OR ROYALTIES), WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT,
STRICT LIABILITY OR OTHERWISE, ARISING OUT OF (i) THE EXPLOITATION OF ANY
PRODUCT DEVELOPED, MANUFACTURED, SOLD OR MARKETED HEREUNDER, (ii) ANY BREACH OF
OR FAILURE TO PERFORM ANY OF THE PROVISIONS OF THIS AGREEMENT, (iii) OR
OTHERWISE RELATING TO THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN INFORMED OR
SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES.

                (b)   DISCLAIMER.

                                (i)   EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, (1) GILLETTE HEREBY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER
WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, WITH RESPECT TO THE GILLETTE TECHNOLOGY,
JOINT TECHNOLOGY, GILLETTE CONFIDENTIAL INFORMATION, INCLUDING ANY WARRANTY OF
QUALITY, TITLE, NONINFRINGEMENT, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE, AND (2) WITHOUT LIMITING THE FOREGOING, GILLETTE
EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION (A) AS TO
THE VALIDITY OR SCOPE OF ANY OF THE INTELLECTUAL PROPERTY RIGHTS LICENSED
HEREUNDER, (B) THAT ANY FEMALE PRODUCTS, ANY OTHER PRODUCTS OR ANY ACTIVITIES OF
THE PARTIES CONTEMPLATED BY THIS AGREEMENT, SHALL BE FREE FROM INFRINGEMENT,
MISAPPROPRIATION OR MISUSE OF ANY THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, OR
(C) AS TO THE QUALITY OR PERFORMANCE OF ANY INFORMATION AND INVENTIONS OR FEMALE
PRODUCTS OR ANY OTHER PRODUCTS.

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                                (ii)   EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, (1) PALOMAR HEREBY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER
WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, WITH RESPECT TO THE PALOMAR TECHNOLOGY,
PALOMAR MALE TECHNOLOGY, JOINT TECHNOLOGY, PALOMAR CONFIDENTIAL INFORMATION,
INCLUDING ANY WARRANTY OF QUALITY, TITLE, NONINFRINGEMENT, PERFORMANCE,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE, AND (2) WITHOUT
LIMITING THE FOREGOING, PALOMAR EXPRESSLY DISCLAIMS ANY EXPRESS OR IMPLIED
WARRANTY OR REPRESENTATION (A) AS TO THE VALIDITY OR SCOPE OF ANY OF THE
INTELLECTUAL PROPERTY RIGHTS LICENSED HEREUNDER, (B) THAT ANY FEMALE PRODUCTS,
ANY OTHER PRODUCTS OR ANY ACTIVITIES OF THE PARTIES CONTEMPLATED BY THIS
AGREEMENT, SHALL BE FREE FROM INFRINGEMENT, MISAPPROPRIATION OR MISUSE OF ANY
THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, OR (C) AS TO THE QUALITY OR
PERFORMANCE OF ANY INFORMATION AND INVENTIONS OR FEMALE PRODUCTS OR ANY OTHER
PRODUCTS.

        11.5 Insurance. Each party agrees to maintain during the term of this
Agreement such insurance coverage as is commercially reasonable, taking into to
consideration the activities and other circumstances of such party. If at any
time Palomar sells or distributes any Female Products, products subject to a
payment obligations specified in Section 6.3, and other products that use,
embody, are Manufactured using, practice an invention claimed by, comprise or
are comprised of, in whole or in part, Joint Technology, in each case optionally
with one or more Third Parties, Gillette shall have the right to request that
Palomar increase the scope and extent of its coverage and to the extent that
such request(s) is commercially reasonable, Palomar shall comply with such
request and obtain such additional coverage.

ARTICLE XII
REPRESENTATIONS, WARRANTIES AND COVENANTS

        12.1 Representations, Warranties and Covenants. Except as otherwise
disclosed in the Disclosure Schedules for each party attached hereto as
Schedule 12.1 (each, the  “Disclosure Schedule”), each party hereby represents,
warrants and covenants to the other party as of the Effective Date as follows:

                (a)   Such party (i) has the power and authority and the legal
right to enter into this Agreement and perform its obligations hereunder, and
(ii) has taken all necessary action on its part required to authorize the
execution and delivery of this Agreement and the performance of its obligations
hereunder. This Agreement has been duly executed and delivered on behalf of such
party and constitutes a legal, valid and binding obligation of such party and is
enforceable against it in accordance with its terms subject to the effects of
bankruptcy, insolvency or other laws of general application affecting the
enforcement of creditor rights and judicial principles affecting the
availability of specific performance and general principles of equity, whether
enforceability is considered a proceeding at law or equity.

                (b)   Such party is not aware of any pending or threatened
litigation (and has not received any communication) that alleges that such
party’s activities related to this

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Agreement have violated, or that by conducting the activities as contemplated
herein such party would violate, any of the intellectual property rights of any
Third Party.

                (c)   All necessary consents, approvals and authorizations of
all regulatory and governmental authorities and other Persons required to be
obtained by such party in connection with the execution and delivery of this
Agreement and the performance of its obligations hereunder have been obtained.

                (d)   The execution and delivery of this Agreement and the
performance of such party’s obligations hereunder (i) do not conflict with or
violate any requirement of applicable law or regulation or any provision of the
articles of incorporation, bylaws, limited partnership agreement or any similar
instrument of such party, as applicable, in any material way, and (ii) do not
conflict with, violate, or breach or constitute a default or require any consent
under, any contractual obligation or court or administrative order by which such
party is bound, in any material way.

        12.2 Additional Representations, Warranties and Covenants of Gillette.
Except as otherwise disclosed in Gillette’s Disclosure Schedule, Gillette
represents, warrants and covenants to Palomar that:

                (a)   As of the Effective Date, Gillette is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
has full corporate power and authority and the legal right to own and operate
its property and assets and to carry on its business as it is now being
conducted and as it is contemplated to be conducted by this Agreement.

                (b)   Gillette will use its Commercially Reasonable Efforts to
conduct and complete the R&D Activities required to be performed by Gillette
pursuant to the R&D Plan or this Agreement, in accordance with good laboratory,
clinical and Manufacturing practices and Applicable Law.

                (c)   As of the Effective Date, Gillette is not debarred or
subject to debarment and Gillette will not use in any capacity, in connection
with the services to be performed under this Agreement, any Person who has been
debarred pursuant to Section 306 of the FFDCA, or who is the subject of a
conviction described in such section. Gillette agrees to inform Palomar in
writing immediately if it or any Person who is performing services hereunder is
debarred or is the subject of a conviction described in Section 306, or if any
action, suit, claim, investigation or legal or administrative proceeding is
pending or, to Gillette’s knowledge, is threatened, relating to the debarment or
conviction of Gillette or any Person performing services hereunder.

                (d)   At no time shall Gillette (i) assign, transfer, convey or
otherwise encumber any right, title or interest in or to the Joint Technology,
(ii) grant any license or other right, title or interest in or to the Joint
Technology in any manner, or (iii) agree to or otherwise become bound by any
covenant not to sue for any infringement, misuse or other action or inaction
with respect to the Joint Technology, in each case that is inconsistent with the
grants, assignments and other rights reserved to Palomar under this Agreement.

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                (e)   Gillette shall obtain from each of its sublicensees,
employees and agents who are performing the R&D Activities rights to any and all
Joint Technology, such that Palomar shall, by virtue of this Agreement, receive
from Gillette the licenses and other rights granted to Palomar hereunder.

                (f)   The Gillette Company shall cause its Affiliates to (i)
take all actions required by the terms of this Agreement to be taken by The
Gillette Company’s Affiliates, and all other actions necessary for Gillette to
perform its obligation and provide to Palomar the rights provided hereunder, and
(ii) to refrain from taking any and all actions which such Affiliates are
prohibited from taking by the terms of this Agreement.

                (g)   Based on information known to Gillette as of the Effective
Date, Gillette has not reached a definitive conclusion that there are Patents
owned or controlled by Third Parties (other than those licensed by Palomar to
Gillette hereunder) that could reasonably be expected to give rise to a payment
obligation of Palomar under Section 8.5(b)(ii) with reference to Section 8.5(a),
assuming for the purposes of this Section that the Female Product referred to in
Section 8.5(a) is the First Female Product described in the Initial R&D Plan.

                (h)   During the Exclusivity Period and for a period of one (1)
year thereafter, Gillette shall not, without the express, written consent of
Palomar in its sole discretion, solicit the services of or hire the Person who
is the Vice President of Research of Palomar as of the Effective Date if at the
time of such solicitation or hire such Person is an employee of Palomar or was
an employee of Palomar within the six (6) months preceding such solicitation or
hire.

                (i)   During the Exclusivity Period and for a period of one (1)
year thereafter, Gillette shall not, without Palomar’s prior written consent,
enter into any agreement with, or otherwise engage, Massachusetts General
Hospital or the Laser Center of St. Petersburg Institute of Fine Mechanics and
Optics with the goal or intent of having such Person perform activities for the
Exploitation of Light-Based Hair Management Products in the Field.

                (j)   For purposes of Section 12.1(b) and this Section 12.2,
“known to” or “knowledge” of Gillette shall refer to the knowledge of Stephan P.
Williams, Assistant Patent Counsel of Gillette, as of the Effective Date.

        12.3 Additional Representations, Warranties and Covenants of Palomar.
Except as otherwise disclosed in  Palomar’s Disclosure Schedule, Palomar
represents, warrants and covenants to Gillette that:

                (a)   As of the Effective Date, Palomar is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
has full corporate power and authority and the legal right to own and operate
its property and assets and to carry on its business as it is now being
conducted and as it is contemplated to be conducted by this Agreement.

                (b)   All material (i) Regulatory Documentation, (ii) data and
information concerning clinical studies or pre-clinical studies for the First
Female Product, and (iii) data and information concerning the safety and
efficacy of the First Female Product, that has been

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provided by Palomar to Gillette as of the Effective Date is true, correct, and
complete in all material respects as of the date it was provided to Gillette.

                (c)   As of the Effective Date, Palomar does not have any
knowledge of any scientific or technical facts or circumstances that would
materially and adversely affect the safety, efficacy or other scientific
potential of the Palomar Technology in the Field.

                (d)   Palomar will use its Commercially Reasonable Efforts to
conduct and complete the R&D Activities required to be performed by Palomar
pursuant to the R&D Plan or this Agreement, in accordance with good laboratory,
clinical and Manufacturing practices and Applicable Law. As of the Effective
Date, Palomar has employed (and, with respect to the R&D Activities, will
employ) Persons with appropriate education, knowledge and experience to conduct
and to oversee the conduct of the pre-clinical and clinical studies with respect
to the Female Product(s). As of the Effective Date, Palomar does not have
knowledge of anything that could materially and adversely affect the acceptance,
or the subsequent approval, by the U.S. Regulatory Authority for the U.S.
Regulatory Approval of the First Female Product.

                (e)   As of the Effective Date, Palomar is not debarred and is
not subject to debarment and Palomar will not use in any capacity, in connection
with the services to be performed under this Agreement, any Person who has been
debarred pursuant to Section 306 of the FFDCA, or who is the subject of a
conviction described in such section. Palomar agrees to inform Gillette in
writing immediately if it or any Person who is performing services hereunder is
debarred or is the subject of a conviction described in Section 306, or if any
action, suit, claim, investigation or legal or administrative proceeding is
pending or, to Palomar’s knowledge, is threatened, relating to the debarment or
conviction of Palomar or any Person performing services hereunder.

                (f)   As of the Effective Date, Palomar is the sole and
exclusive owner of all right, title and interest in and to the Patents listed on
Schedule 12.3(f)(i) (the “Owned Palomar Patents”), and such rights are not
subject to any encumbrance, lien or claim of ownership by any Third Party. With
respect to the Field, as of the Effective Date, Palomar is the sole and
exclusive licensee of and Controls all right, title and interest in and to the
Patents listed on Schedule 12.3(f)(ii) (the “Licensed Palomar Patents”) and,
except as provided in Schedule 12.3(f)(ii), such rights are not subject to any
encumbrance, lien or claim of ownership by any Third Party. True, complete and
correct copies of all license agreements pursuant to which any right, title or
interest in or to any Palomar Patents or Joint Patents are granted to Palomar by
a Third Party, as amended as of the Effective Date (the “In-License
Agreements”), have been provided to Gillette and are listed on Schedule
12.3(f)(iii). The Owned Palomar Patents and the Licensed Palomar Patents
constitute all of the Palomar Patents as of the Effective Date. During the term
of this Agreement, Palomar shall not encumber or diminish the rights granted to
Gillette hereunder with respect to the Palomar Patents, including by not (i)
committing any acts or permitting the occurrence of any omissions that would
cause the breach or termination of any In-License Agreement, or (ii) amending or
otherwise modifying, or permitting to be amended or modified, any In-License
Agreement. Palomar shall promptly provide Gillette with notice of any written
notice of alleged, threatened, or actual breach of any In-License Agreement by
any party to such agreement. As of the Effective Date, neither Palomar nor, to
their knowledge, any Third Party, is in breach of any In-License Agreement.

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                (g)   As of the Effective Date, except in the case of
intellectual property in-licensed by Palomar from MGH, Gillette’s Exploitation
of the Palomar Technology in the Field (or products or systems that use, embody,
are Manufactured using, practice an invention claimed by, comprise or are
comprised of, Palomar Technology in the Field) shall not trigger any payment
obligation by Palomar to any Third Party.

                (h)   To Palomar’s knowledge, the Palomar Patents existing as of
the Effective Date are not invalid or unenforceable, in whole or in part. To
Palomar’s knowledge, the conception and reduction to practice of the Palomar
Patents existing as of the Effective Date have not constituted or involved the
misappropriation of trade secrets or other rights or property of any Third
Party. There are no claims, judgments or settlements against or amounts with
respect thereto owed by Palomar relating to the Palomar Patents. No claim has
been made and no litigation has been commenced or threatened by any Person
alleging that (i) the Palomar Patents are invalid or unenforceable in any
respect or (ii) products and services covered by claims of the Palomar Patents
infringes any Third Party Patents. To Palomar’s knowledge, as of the Effective
Date, Gillette’s worldwide Exploitation of the First Female Product pursuant to
the exercise of the licenses granted by Palomar to Gillette in this Agreement
will not infringe any Third Party Patents (other than Palomar Patents).

                (i)   Except for the license grants and assignment contained in
this Agreement, and with the acknowledgment that MGH holds certain rights to the
MGH Patents under the MGH Agreements, as of the Effective Date, Palomar has not
(i) assigned, transferred, conveyed or otherwise encumbered any of its right,
title or interest in or to the Palomar U.S. Regulatory Documentation, the
Palomar Patents or the Palomar Know-How in the Field, (ii) granted any license
or other right, title or interest in or to the Palomar U.S. Regulatory
Documentation, the Palomar Patents or the Palomar Know-How in any manner for use
in the Field, or (iii) agreed to or is otherwise bound by any covenant not to
sue for any infringement, misuse or otherwise with respect to the Palomar U.S.
Regulatory Documentation, the Palomar Patents or the Palomar Know-How for use in
the Field.

                (j)   At no time shall Palomar (i) assign, transfer, convey or
otherwise encumber any right, title or interest in or to the Joint Technology,
(ii) grant any license or other right, title or interest in or to the Joint
Technology in any manner, or (iii) agree to or otherwise become bound by any
covenant not to sue for any infringement, misuse or other action or inaction
with respect to the Joint Technology, in each case that is inconsistent with the
grants, assignments and other rights reserved to Gillette under this Agreement.

                (k)   Palomar shall obtain from each of its sublicensees,
employees and agents who are performing the R&D Activities rights to any and all
Palomar Technology and Joint Technology, such that Gillette shall, by virtue of
this Agreement, receive from Palomar the licenses and other rights in and to the
Palomar Technology and Joint Technology (including equal undivided ownership
interests in Joint Technology) that are granted by Palomar to Gillette
hereunder, except with respect to the MGH Agreements as described in
Section 8.1(c)(ii)(2).

                (l)   To Palomar’s knowledge, there is no actual infringement by
a Third Party of the Palomar Patents as of the Effective Date.

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                (m)   Palomar Medical Technologies, Inc. shall cause its
Affiliates to (i) take all actions required by the terms of this Agreement to be
taken by its Affiliates, and all other actions necessary for Palomar to perform
its obligation and provide to Gillette the rights provided hereunder, and (ii)
to refrain from taking any and all actions which such Affiliates are prohibited
from taking by the terms of this Agreement.

                (n)   During the Exclusivity Period and for a period of one (1)
year thereafter, Palomar shall not, without the express, written consent of
Gillette in its sole discretion, solicit the services of or hire the Person who
is the Director of Emerging Technology Ventures as of the Effective Date or the
Person who is the Director of Dermatologics as of the Effective Date, in each
case if at the time of such solicitation or hire such Person is an employee of
Gillette or was an employee of Gillette within the six (6) months preceding such
solicitation or hire.

                (o)   For purposes of Section 12.1(b) and this Section 12.3,
“known to” or “knowledge” of Palomar shall refer to the knowledge of the
individuals in the positions of President, Chief Financial Officer, General
Counsel and Vice-President of Research as of the Effective Date.

ARTICLE XIII
DISPUTE RESOLUTION

        13.1 IN GENERAL.

                (a)   Except as provided in Section 13.2, if a dispute arises
between the parties in connection with or relating to this Agreement or any
document or instrument delivered in connection herewith (a “Dispute”), the
parties shall use the following procedures to resolve such Dispute(s).

                                (i)   A meeting shall be held between the
parties within ten (10) days after either party gives written notice of a
Dispute to the other party (the “Dispute Notice”). The meeting shall be attended
by a representative of each party having decision-making authority regarding the
Dispute (subject to Board of Directors or equivalent approval, if required), who
shall attempt in good faith to negotiate a resolution of the Dispute.

                                (ii)   In the event that such representatives
are unable to resolve the dispute within thirty (30) days of such meeting,
either party may, by written notice to the other, invoke the following
mediation: the parties shall try in good faith to resolve such dispute by
mediation administered by the Center for Public Resources (“CPR”) in accordance
with the then current CPR Model Procedure for Mediation of Business Disputes,
provided that specific provisions of this Section 13.1(a)(ii) shall override
inconsistent provisions of such CPR Model Procedure. The mediator shall be
selected from the CPR Panel of Neutrals and the location of the mediation shall
be in Boston, Massachusetts. If the parties cannot agree upon the selection of
the mediator, then CPR shall appoint the mediator. The parties shall attempt to
resolve such dispute through mediation until one of the following occurs:
(i) the parties reach a written settlement; (ii) the mediator notifies the
parties in writing that they have reached an impasse; (iii) the parties agree in
writing that they have reached an impasse; or (iv) the parties have not

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reached a settlement within forty-five (45) days of the initiation of the
mediation. All aspects of any such mediation, including any resolution or
decision relating thereto, shall be confidential and all participants, including
the mediator, shall be bound by judicially enforceable obligations of strict
confidentiality except to the extent the parties agree in writing to waive in
whole or part such confidentiality.

                                (iii)   If the parties have not succeeded in
negotiating a written resolution of the Dispute after following the procedures
specified in Sections 13.1(a)(i) and 13.1(a)(ii), either party may exercise any
and all of its judicial rights and remedies to resolve the Dispute.

                (b)   The parties agree that all applicable statutes of
limitation and time-based defenses (such as estoppel and laches) shall be tolled
while the procedures set forth in this 13.1 are pending, and the parties shall
cooperate in taking any and all actions necessary to achieve such a result.

        13.2 Disputes Regarding Gillette’s Rights in the Male Field. In the
event that the parties are not able to agree on the terms and conditions to be
included in a definitive agreement between the parties concerning the Male Field
as provided in Section 5.1, the following procedures shall apply:

                (a)   At the request of either party, the parties shall promptly
negotiate in good faith jointly to appoint a mutually acceptable neutral Person
not affiliated with either party (the “Neutral”). If the parties are not able to
agree on an acceptable Neutral within thirty (30) days after such request, the
CPR Institute for Dispute Resolution shall be responsible for selecting a
qualified, disinterested and conflict-free Neutral within fifteen (15) days of
being approached by either party. The Neutral selected pursuant to this
Section 13.2(a) shall be a Person who has at least fifteen (15) years of
business experience with one or more pharmaceutical, biotechnology or medical
device companies, and shall have had significant experience negotiating
licensing agreements in the pharmaceutical or medical device industries. The
Neutral shall conduct an arbitration (the “ADR”) in accordance with the terms
and conditions of this Section 13.2 and the fees and costs of the Neutral and
the CPR Institute for Dispute Resolution shall be shared equally by the parties.

                (b)   Within sixty (60) days after such matter is referred to
ADR, each party shall provide the Neutral with proposed terms and conditions to
be included in the Male Collaboration Agreement, including proposed financial
terms and conditions (the “Terms and Conditions”), together with a written
memorandum in support of such proposed Terms and Conditions, including where
possible an analysis of the market potential of the Subject Male Product, as
well as any documentary evidence in support thereof and the Neutral shall
provide the proposed terms and conditions to the other party after it receives
the proposed terms and conditions from both parties.

                (c)   Within thirty (30) days after a party submits its proposed
Terms and Conditions, the other party shall have the right to respond thereto
(but neither party may change its proposed Terms and Conditions). The response
and any material in support thereof shall be provided to the Neutral and the
other party.

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                (d)   The Neutral shall have the right to meet with the parties
as necessary to inform the Neutral's determination.     Within fifteen (15) days
of the receipt by the Neutral of both parties’ responses, the Neutral shall
select the Terms and Conditions proposed by one of the parties that as a whole
is the most fair and reasonable to the parties in light of the totality of the
circumstances. The Neutral must select the Terms and Conditions proposed by one
or the other of the parties; the Neutral may not combine or otherwise modify the
parties’ proposals.

                (e)   The parties shall cooperate in good faith to enter into a
Male Collaboration Agreement that contains such Terms and Conditions no later
than thirty (30) days of the date of the Neutral’s written notice of its
determination.

                (f)   In the event that the parties are unable to reach
agreement on the form of the Male Collaboration Agreement within thirty (30)
days of the date of the Neutral’s written notice of its determination, each
party shall submit to the Neutral such party’s proposed version of such
definitive agreement (which version shall contain the Terms and Conditions
selected by the Neutral). The Neutral shall, within thirty (30) days of such
date, select the form of definitive agreement proposed by one of the parties
that as a whole is the most fair and reasonable to the parties in light of the
totality of the circumstances. The parties shall execute the form of definitive
agreement selected by the Neutral not later than five (5) business days
following the selection by the Neutral of the form of definitive agreement and
such agreement shall be legal, valid and binding and enforceable against the
parties.

        13.3 Interim Relief. Notwithstanding anything herein to the contrary,
nothing in this ARTICLE XIII shall preclude either party from seeking interim or
provisional relief, including a temporary restraining order, preliminary
injunction or other interim equitable relief concerning a Dispute, either prior
to or during the ADR, if necessary to protect the interests of such party. This
Section 13.3 shall be specifically enforceable.

ARTICLE XIV
MISCELLANEOUS

        14.1 Force Majeure. Neither party shall be held liable or responsible to
the other party or be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the non-performing party, including fires, floods, earthquakes,
embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be
declared or not), acts of terrorism, insurrections, riots, civil commotion,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority. The non-performing party shall
notify the other party of such force majeure within ten (10) days after such
occurrence by giving written notice to the other party stating the nature of the
event, its anticipated duration, and any action being taken to avoid or minimize
its effect.

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the suspension of performance shall be of no greater scope and no longer
duration than is necessary and the non-performing party shall use Commercially
Reasonable Efforts to remedy its inability to perform; provided, however, that
in the event the suspension of performance continues for one-hundred and eighty
(180) days after the date of the occurrence, and such failure to perform would
constitute a material breach of this Agreement in the absence of such force
majeure, the performing party may terminate this Agreement pursuant to
Section 10.3 by written notice to the other party.

        14.2 ASSIGNMENT.

                (a)   Without the prior written consent of the other party
hereto, neither party shall sell, transfer, assign, delegate, pledge or
otherwise dispose of, whether voluntarily, involuntarily, by operation of law or
otherwise, this Agreement or any of its rights or duties hereunder; provided,
however, that either party may, without such consent, and upon written notice to
the other party, assign this Agreement and its rights and obligations hereunder
to an Affiliate, to the purchaser of all or substantially all of its assets or
business to which this Agreement relates, or to its successor entity or acquirer
(the “Acquiring Party”) in the event of a merger, consolidation or change in
control of such party. Any attempted assignment or delegation in violation of
the preceding sentence shall be void and of no effect. All validly assigned and
delegated rights and obligations of the parties hereunder shall be binding upon
and inure to the benefit of and be enforceable by and against the successors and
permitted assigns of Gillette or Palomar, as the case may be. In the event
either party seeks and obtains the other party’s consent to assign or delegate
its rights or obligations to another party, the assignee or transferee shall
assume all obligations of its assignor or transferor under this Agreement.

                (b)   Subject to Section 14.2(c), in the event of any permitted
assignment by either party to an Acquiring Party pursuant to Section 14.2(a),
(i) no Information and Inventions or Patents or other intellectual property
rights of any Acquiring Party or its Affiliates in such assignment shall be
deemed “Controlled” for any purpose hereunder if such Information and
Inventions, Patents or other intellectual property rights were not so Controlled
by such party prior to such assignment, and (ii) any contractual restrictions on
the Technology, Patents and other intellectual property rights and other assets
of the acquired party shall be binding on the acquiring entity as a whole, and
(iii) any contractual restrictions on the acquired party’s business activities
hereunder shall apply only to the division or entity of the Acquiring Party into
which the acquired party is merged, or into which the acquired party’s assets
are transferred.

                (c)   Notwithstanding anything contained in Section 14.2(b) to
the contrary, in the event of any permitted assignment by either party to an
Acquiring Party, the party assigning its rights and obligations hereunder shall
include in the agreement providing for such assignment terms and conditions that
(i) require the Acquiring Party to restrict access to any Technology for use in
the Field, or other Confidential Information, in each case that is the subject
of the license or other rights granted by or to the acquired party in this
Agreement, to only those scientific, technical or other personnel employed by or
assigned to the division or entity of the Acquiring Party into which the
acquired party is merged, or into which the acquired party’s assets are
transferred, and (ii) prohibit the Acquiring Party from using or accessing in
connection with other research, development or commercialization projects and
activities in the Field any such Technology or Confidential Information, in each
case to the extent that such

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access or use would constitute a violation of any contractual restriction in
this Agreement if the acquired party’s rights and interests in and to such
Technology or Confidential Information had not been assigned to the Acquiring
Party.

                (d)   Prior to or during the R&D Period, in the event of any
permitted assignment by Palomar to an Acquiring Party, for a period of thirty
(30) days after Palomar and the Acquiring Party enter into the definitive
agreement for such permitted assignment, Gillette shall have the right, upon ten
(10) days prior written notice to Palomar (and such Acquiring Party), which
notice must be provided within such thirty-day period, to withdraw from R&D
Activities and to pursue independently the research, development and
commercialization of any Female Product, subject to the following terms and
conditions:

                                (i)   the Second Decision Point shall be deemed
to be the date occurring x months after the Effective Date, where “x” is the sum
of 42 months and the number of months of slippage in the R&D Plan as of the date
of such notice (as determined by reference to the schedule set forth in the
Initial R&D Plan);

                                (ii)   Gillette shall pay Palomar three million
dollars (US $3,000,000), in the manner provided in Section 6.9, upon such
withdrawal, which payment shall be fully creditable against the Second
Development Completion Payment Date;

                                (iii)   the license grants to Palomar set forth
in Sections 4.2(a) and 4.2(b) shall be automatically terminated, and the license
grant to Palomar set forth in Section 4.2(c) shall be subject to termination, in
the sole discretion of Gillette, upon five (5) days’ prior written notice to
Palomar; and

                                (iv)   not earlier than the later to occur of
the second anniversary of the Effective Date and the first anniversary of such
permitted assignment, Gillette in its sole discretion may, upon thirty (30)
days’ prior written notice to Palomar, cause Palomar to disclose to Gillette all
Information and Inventions relating to or comprising the most commercially
promising Male Product that is in Palomar’s Control and that Palomar has,
directly or indirectly, conceived or developed as of the date of such notice,
including any information set forth in Section 5.1(b)(ii) with respect to such
Male Product Opportunity that is in Palomar’s Control; provided, however, that
such disclosure by Palomar shall trigger the Option Exercise Period for purposes
of Section 5.1(b)(iv), notwithstanding the fact that Palomar may not have
conducted the testing described in Section 5.1(b)(i) with respect to such Male
Product Opportunity; and provided, further, that in the event that Gillette
shall exercise the Male Option with respect thereto, then the Male Collaboration
Agreement to be entered into between the parties shall provide for all future
research and development activities with respect to such Male Product
Opportunity to be conducted solely by Gillette and shall reflect the changes to
the deal structure in the Female Field effected by this Section 14.2(d).

From and after the date of such withdrawal by Gillette, Gillette shall have no
obligation to make any further R&D Payment to Palomar or the Acquiring Party,
and Gillette shall have the right to seek and obtain Regulatory Approval in the
United States for the Female Product(s) under development by the parties at the
time of Gillette’s withdrawal from the R&D Activities and

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shall have a right to reference and otherwise use any Palomar U.S. Regulatory
Documentation in connection therewith.

        14.3 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party under this Agreement will not be materially
and adversely affected thereby, (a) such provision shall be fully severable, (b)
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never compromised a part hereof, (c) the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and reasonably acceptable
to the parties herein. To the fullest extent permitted by applicable law, each
party hereby waives any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.

        14.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts, without reference
to the rules of conflict of laws thereof, provided that any dispute relating to
the scope, validity, enforceability or infringement of any Patent or other
intellectual property rights shall be governed by, and construed and enforced in
accordance with, the substantive laws of the jurisdiction in which such Patent
Rights or other right applies.

        14.5 Notices. All notices or other communications that are required or
permitted hereunder shall be in writing and delivered personally, sent by
facsimile (and promptly confirmed by personal delivery, registered or certified
mail or overnight courier as provided herein), sent by nationally-recognized
overnight courier or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:

If to Palomar, to: Palomar Medical Technologies, Inc. 82 Cambridge Street
Burlington, MA 01803 Attention: President & General Counsel Facsimile: (781)
993-2300       with a copy to:       Foley Hoag LLP 155 Seaport Boulevard
Boston, Massachusetts 02210-2600 Attention: David A. Broadwin Facsimile: (617)
832-7000

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If to Gillette, to: The Gillette Company 4800 Prudential Tower Building Boston,
Massachusetts 02199 Attn: President, Global Business Management - Grooming
Facsimile: (617) 421-8525       with copies to:       The Gillette Company 4800
Prudential Tower Building Boston, Massachusetts 02199 Attn: Senior Vice
President and General Counsel Facsimile: (617) 421-7874       Covington &
Burling One Front Street San Francisco, California 94111 Attention: Jim Snipes
Facsimile: (415) 591-6091      

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered or sent by facsimile on a business day, (ii) on the
business day after dispatch, if sent by nationally-recognized overnight courier,
and (iii) on the third business day following the date of mailing, if sent by
mail. It is understood and agreed that this Section 14.5 is not intended to
govern the day-to-day business communications necessary between the parties in
performing their duties, in due course, under the terms of this Agreement.

        14.6 Export Control. Notwithstanding anything else herein, neither party
shall directly or indirectly export or re-export any Female Product, Joint
Technology, Palomar Technology, Palomar Male Technology, Gillette Technology or
Confidential Information of the other party, or any direct product of any of the
foregoing, outside the United States, without complying with all applicable U.S.
and foreign export control and other laws and regulations (including providing
the other party any required assurance regarding export and re-export).

        14.7 Entire Agreement; Modifications. Other than the Non-Disclosure
Agreement, which is addressed in Section 9.8, this Agreement sets forth and
constitutes the entire agreement and understanding between the parties with
respect to the subject matter hereof and all prior agreements, understandings,
promises and representations, whether written or oral, with respect thereto are
superseded hereby. Each party confirms that it is not relying on any
representations or warranties of the other party except as specifically set
forth herein. No amendment, modification, release or discharge hereof shall be
binding upon the parties unless in writing and duly executed by authorized
representatives of both parties.

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        14.8 Relationship of the Parties. It is expressly agreed that Palomar,
on the one hand, and Gillette, on the other hand, shall be independent
contractors and that the relationship between the two parties shall not
constitute a partnership, joint venture or agency. Neither Palomar, on the one
hand, nor Gillette, on the other hand, shall have the authority to make any
statements, representations or commitments of any kind, or to take any action,
which shall be binding on the other, without the prior written consent of the
other party to do so and no such statements, representations or commitments
shall be construed so as to require either party to expend either funds or
efforts or commit resources in excess of those expressly contemplated by this
Agreement. All persons employed by a party shall be employees of such party and
not of the other party and all costs and obligations incurred by reason of any
such employment shall be for the account and expense of such party.

        14.9 Equitable Relief. Each party acknowledges and agrees that the
restrictions set forth in Sections 2.1(a)(iii), 5.2, 5.3, 5.4, 10.7(e)(i),
12.2(h), 12.2(i) and 12.3(n), and Articles VIII and IX of this Agreement are
reasonable and necessary to protect the legitimate interests of the other party
and that neither party would have entered into this Agreement in the absence of
such restrictions, and that any violation or threatened violation by a party of
any such provision will result in irreparable injury to the other party. Each
party also acknowledges and agrees that in the event of a violation or
threatened violation of any such provision, the other party shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
irreparable injury or actual damages and without the necessity of having to post
a bond, as well as to an equitable accounting of all earnings, profits and other
benefits arising from any such violation. The rights provided in the immediately
preceding sentence shall be cumulative and in addition to any other rights or
remedies that may be available to such other party. Nothing in this Section 14.9
is intended, or should be construed, to limit either party’s right to
preliminary and permanent injunctive relief or any other remedy for a breach of
any other provision of this Agreement.

        14.10 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. The waiver by
either party hereto of any right hereunder or of the failure to perform or of a
breach by the other party shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by said other party whether of a
similar nature or otherwise.

        14.11 Counterparts. This Agreement may be executed in two (2) or more
counterparts, and by different parties on separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

        14.12 No Benefit to Third Parties. Except as otherwise expressly
provided in Sections 5.3 and 5.4, the representations, warranties, covenants and
agreements set forth in this Agreement are for the sole benefit of the parties
hereto and their successors and permitted assigns, and they shall not be
construed as conferring any rights on any other Persons.

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        14.13 Further Assurance. Each party shall duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including the filing of such
assignments, agreements, documents and instruments, as may be necessary or as
the other party may reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes hereof, or to better
assure and confirm unto such other party its rights and remedies under this
Agreement.

        14.14 Transaction Costs. Each party shall bear its own costs, including
attorneys' fees, in connection with negotiating and entering into this
Agreement.

        14.15 English Language. This Agreement shall be written and executed in
the English language. Any translation into any other language shall not be an
official version thereof, and in the event of any conflict in interpretation
between the English version and such translation, the English version shall
control.

        14.16 References. Unless otherwise specified, (a) references in this
Agreement to any Article, Section, Schedule or Exhibit shall mean references to
such Article, Section, Schedule or Exhibit of this Agreement, (b) references in
any section to any clause are references to such clause of such section, (c)
references to any agreement, instrument or other document in this Agreement
refer to such agreement, instrument or other document as originally executed or,
if subsequently varied, replaced or supplemented from time to time, as so
varied, replaced or supplemented and in effect at the relevant time of reference
thereto, and (d) references to Sections include subsections, which are part of
the related Section (e.g., a section numbered “Section 1.1(d)” would be part of
“Section 1.1" and references to “Section 1.1” would also refer to material
contained in the subsection described as “Section 1.1(d)”).

        14.17 Construction. Except where the context otherwise requires,
wherever used, the singular shall include the plural, the plural the singular,
the use of any gender shall be applicable to all genders and the word “or” is
used in the inclusive sense. The captions of this Agreement are for convenience
of reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision contained in this
Agreement. The term “including” as used herein shall mean including, without
limiting the generality of any description preceding such term. The language of
this Agreement shall be deemed to be the language mutually chosen by the parties
and no rule of strict construction shall be applied against either party hereto.

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

THE GILLETTE COMPANY   PALOMAR MEDICAL TECHNOLOGIES, INC.                      
  By: /s/ Peter Klein

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By: /s/ Joseph P. Caruso

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Name:  Peter Klein Name:  Joseph P. Caruso Title:  Senior Vice President of
Strategy and Business Development Title:  Chief Executive Officer and President
     

[Counterpart Signature Page to Development and License Agreement]

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Appendix A

DEFINITIONS

        This Appendix to the Development and License Agreement (the “Agreement”)
entered into as of February 14, 2003, by and between Gillette and Palomar
provides agreed upon definitions applicable to the parties for purposes of the
Agreement.

        The contents of this Appendix A are hereby incorporated into the
Agreement and are governed by the terms and conditions of the Agreement,
including the confidentiality provisions set forth therein. The following
capitalized terms, whether used in the singular or the plural and correlatives
thereof, shall have the following meanings as used in the Agreement:

        “510(k)   Notification” shall mean a 510(k) Notification within the
meaning of FFDCA, and the regulations promulgated thereunder, necessary to
market a Female Product in the United States.

        “510(k)   Product” shall mean a Female Product, the sale of which
requires a 510(k) Notification but not a PMA.

        “Accessory Product” shall mean a Female Accessory Product or a
Light-Based Accessory Product, as the case may be.

        “Affiliate” shall mean, with respect to a Person, any corporation or
other business entity that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with such
Person. For purposes of this definition, “control” and, with correlative
meanings, the terms “controlled by” and “under common control with” shall mean
(a) the possession, directly or indirectly, of the power to direct the
management or policies of a business entity, whether through the ownership of
voting securities, by contract relating to voting rights or corporate
governance, or otherwise, or (b) the ownership, directly or indirectly, of at
least fifty percent (50%) of the voting securities or other ownership interest
of a business 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 will be established by direct or indirect
ownership of the maximum ownership percentage that may, under such local law, be
owned by foreign interests.

        “Applicable Law” shall mean the applicable laws, rules, regulations,
including any rules, regulations, guidelines, or other requirements of the
Regulatory Authorities, that may be in effect from time to time in the
Territory.

        “Calendar Quarter” shall mean each period of three consecutive calendar
months ending on March 31, June 30, September 30 and December 31.

        “Calendar Year” shall mean each successive period of twelve months
commencing on January 1 and ending on December 31.

        “Clinical Trials” shall mean, with respect to a Female Product, the
clinical trials required by the FDA for Regulatory Approval of such product in
the United States, or equivalent

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trials required by Regulatory Authorities for Regulatory Approval of such
product in a Major Market.

        “Commercial Assessment Period” shall mean the period commencing on the
First Development Completion Payment Date and terminating on the Commercial
Assessment Period Termination Date.

        “Commercial Assessment Period Termination Date” shall mean the later of
(a) the first (1st) anniversary of the end of the R&D Program, or (b) in the
event that Gillette elects to have Palomar Manufacture the CUT Female Product
for use in CUTs pursuant to Section 3.1, two hundred and forty (240) days after
the date of delivery by Palomar to Gillette of the total number CUT Female
Product units required to be delivered by Palomar in accordance with ARTICLE III
(subject to adjustments to such period pursuant to Section 3.1(d)).

        “Commercially Reasonable Efforts” shall mean, with respect to the
research, development, Manufacture or commercialization of Female Product(s),
efforts and resources comparable to those used in the medical device industry
for a product of similar commercial potential at a similar stage in its
lifecycle, taking into consideration its safety and efficacy, its cost to
develop, the competitiveness of alternative products, its proprietary position,
the likelihood of regulatory approval, its profitability, and all other relevant
factors. Commercially Reasonable Efforts shall be determined on a
market-by-market basis for each Female Product.

        “Consumable” shall mean a product, or a part or component of a product
(including the container, canister, apparatus or device for holding,
administering or delivering such product), which product, part or component
thereof (a) is intended to be depleted by consumer use (e.g., coolants),
(b) requires periodic replacement (e.g., containers for holding, delivering or
administering any coolants, etc., or with respect to a Light-Based Hair
Management Product, portions of such product that may be replaced depending on
the design, such as the radiation source), or (c) replacement parts for any
Light-Based Hair Management Product.

        “Consumer Field” shall mean products or systems intended for or marketed
to consumers for personal use. For the avoidance of doubt, the “Consumer Field”
shall exclude (i) products or systems in the Professional Field, and (ii)
products or systems developed for and sold or distributed to governmental
entities for treatment of medical conditions in military personnel.

        “Consumer Use Tests” or “CUTs” shall mean one or more tests conducted by
or on behalf of Gillette to determine consumer preferences with respect to a
Female Product, including the features or function thereof.

        “Control” shall mean, with respect to any item of Information and
Invention, Patent or other intellectual property right, possession of the right,
whether directly or indirectly, and whether by ownership, license or otherwise,
to assign, or grant a license, sublicense or other right to or under, such
Information and Invention, Patent or other right as provided for herein without
violating the terms of any agreement or other arrangement with any Third Party.

        “Controlled Information” shall mean the Palomar Controlled Information
or Gillette Controlled Information, as the case may be.

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        “Core Palomar Patents” shall mean those Palomar Patents listed on
Schedule A-1 hereto, and any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates, and any
international or foreign equivalent of any such Patent, but excluding any
continuation-in-part of any MGH Patents.

        “Costs” shall mean, with respect to certain activities, all costs
actually incurred by a party (or any of its subcontractors) in connection with
the performance of those activities during a period, and overhead calculated in
accordance with the methodology exemplified on Schedule A-2 hereto. For any
activity related to the research, development and/or commercialization of Female
Products, “Costs” may include the costs of (a) research and development,
(b) studies on clinical aspects conducted internally or externally,
(c) preparing, submitting, reviewing or developing data or information for the
purpose of submission to a governmental authority to obtain, maintain or expand
Regulatory Approvals, (d) consultants necessary for the purpose of obtaining,
maintaining or expanding Regulatory Approvals and handling those regulatory
affairs, (e) regulatory and validation activities for Manufacturing plant and
product, (f) Manufacturing Process and other process development, process
improvement and scale-up and recovery costs, and (g) data management,
statistical designs and studies, document preparation, and other administration
expenses associated with the activities in question (including expenses
associated with the clinical testing program or post-marketing studies required
to maintain Regulatory Approvals).

        “CUT Product Specifications” shall mean the written specifications and
quality control testing procedures for the Female Product(s), as finally
determined by Gillette in accordance with the terms of this Agreement.

        “Europe” shall mean the European Union as it may be constituted from
time to time.

        “Exclusive Field” shall mean (i) until the Male Option Termination Date
(if any), the Field, and (ii) after the Male Option Termination Date (if any),
the Female Field (and not the Male Field). For avoidance of doubt, if the Male
Option Termination Date does not occur, then the Exclusive Field shall be the
Field.

        “Exclusivity Period” shall mean the period commencing on the Effective
Date and ending on the earliest date on which (a) Gillette terminates such
period pursuant to Section 10.2, (b) Gillette terminates this Agreement pursuant
to Section 10.4(a), 10.4(b), 10.4(c), 10.4(d) or 10.3, or (c) Palomar terminates
this Agreement pursuant to Section 10.3 or 10.5.

        “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.

        “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.

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        “FDA” shall mean the United States Food and Drug Administration and any
successor agency thereto.

        “FDA Approval Period” shall mean a period of (a) thirty-nine (39) months
after the Effective Date, in the case of a 510(k) Product, or (b) fifty-one (51)
months after the Effective Date, in the case of a PMA Product, provided that in
the event that any delay in Regulatory Approval is caused by Gillette, there
shall be a corresponding extension of the FDA Approval Period.

        “Female Accessory Product” shall mean (a) any apparatus, component,
accessory, disposable or Consumable which is (i) designed specifically for, (ii)
intended or marketed for sale or sold for use with, and (iii) physically
integrated in or physically attached to, a Female Product, or (b) any Female
Product Lotion. By way of example, and without limitation, a “Female Accessory
Product” shall include any such apparatus, component, accessory, disposable, or
Consumable comprising (i) a canister that is designed to dispense coolant and
attaches to an apparatus comprising a Female Product, or (ii) a replaceable head
for dispensing Optical Radiation from a Female Product, and shall not include
any lotions or gels other than the Female Product Lotion.

        “Female Field” shall mean any product or system, which is intended or
marketed for female Hair Management in the Consumer Field.

        “Female Product” shall mean (a) a Light-Based Hair Management Product
intended for use in or marketed in the Female Field, which either (i) is
developed in whole or in part by Palomar or Gillette in connection with R&D
Activities, Additional Activities, or Commercial Assessment Period Additional
Activities or (ii) uses, embodies, is Manufactured using, practices an invention
claimed by, comprises or is comprised of, in whole or in part, Palomar
Technology or Joint Technology, (b) all Female Accessory Products with respect
thereto, and (c)  an Improvement to any of the foregoing. For the avoidance of
doubt, “Female Product” shall exclude any (a) power sources, or (b) razors,
blades, electric shavers or similar devices (even if any such power source,
razor, blade, electric shaver or similar device may be used with, or is
recommended to improve the efficacy of, a Light-Based Hair Management Product),
except to the extent that any such power source, razor, blade, electric shaver
or similar device is (1) not marketed and sold for uses independent of
Light-Based Hair Management Products, (2) is physically integrated in or
physically attached to a Light-Based Hair Management Product, and (3) is
specifically designed for and sold for use with, a Light-Based Hair Management
Product.

        “Female Product Lotion” shall mean any lotion, gel, cream, powder or
similar formulation that is (a) designed specifically for use with, (b) approved
by the FDA for use with, and (c) essential for the functionality of, a Female
Product.

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        “Female Product Technology” shall mean the Female Product(s), the
Manufacturing Processes and any Improvements to the foregoing that, during the
term of this Agreement, are Controlled by Palomar, but excluding any Information
and Inventions (a) to the extent claimed by one or more claims of any Joint
Patents, or (b) that otherwise constitute Joint Inventions.

        “FFDCA” shall mean the United States Federal Food, Drug, and Cosmetic
Act, 21 U.S.C. § 301 et seq. as amended.

        “Field” shall mean the Female Field and the Male Field, collectively.

        “First Commercial Sale” shall mean the first sale or distribution of any
Product by Gillette or any of its sublicensees that gives rise to Net Sales
under this Agreement.

        “First Decision Point” shall mean the later to occur of (a) nine hundred
and forty-two (942) days after the Effective Date, in the event that Palomar
delivers to Gillette the Initial Prototypes on or before the Commencement Date,
or (b) the sum of (i) the number of days after the Commencement Date until
Palomar delivers to Gillette the Initial Prototypes and (ii) nine-hundred and
forty-two (942) days, in the event that Palomar delivers to Gillette the Initial
Prototypes after the Commencement Date.

        “First Development Completion Payment Date” shall mean (a) the First
Decision Point, in the event that Palomar has obtained Regulatory Approval in
the United States with respect to the First Female Product at least ten (10)
days prior to the First Decision Point, or (b) thirty (30) days after the date
on which Regulatory Approval in the United States is obtained by Palomar with
respect to the First Female Product, in the event that Palomar has not obtained
Regulatory Approval in the United States with respect to the First Female
Product at least ten (10) days prior to the First Decision Point.

        “First Female Product” shall mean the Light-Based Hair Management
Product intended for use in the Female Field (a) developed in whole or in part
by Palomar or Gillette pursuant to the Initial R&D Plan, and (b) comprising an
apparatus for delivering Optical Radiation to areas of the skin, for which a
party seeks Regulatory Approval in the United States in accordance with the
terms of this Agreement.

        “GAAP” shall mean United States generally accepted accounting
principles, consistently applied.

        “Gillette Confidential Information” shall mean Confidential Information
of Gillette.

        “Gillette Improvement” shall mean an Improvement to a Female Product or
a Manufacturing Process for a Female Product, which Improvement is first
conceived or reduced to practice by or on behalf of Gillette after the date on
which the Exclusivity Period or this Agreement is terminated, as applicable.

        “Gillette Joint Independent Product” shall mean an Independent Product
Exploited by or on behalf of Gillette, optionally with one or more Third
Parties, in the Field, which uses, embodies, is Manufactured using, practices an
invention claimed by, comprises or is comprised of Joint Technology.

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        “Gillette Know-How” shall mean all Information and Inventions that (a)
Gillette Controls (other than pursuant to this Agreement) as of the Effective
Date or at any time during the term of this Agreement that are necessary or
useful for, or otherwise related to, the Exploitation of Light-Based Hair
Management Products in the Female Field and that are not generally known, and
(b) that Gillette discloses and makes available to Palomar for use in connection
with the R&D Activities, Additional Activities or Commercial Assessment Period
Additional Activities, but excluding (i) any Information and Inventions to the
extent claimed by one or more of the Gillette Patents or Joint Patents, and (ii)
any Joint Know-How.

        “Gillette Licensed Patents” shall mean those Gillette Patents that (a)
are Controlled (other than pursuant to this Agreement) by Gillette and (b) claim
Information and Invention(s) that are conceived prior to or during the term of
the Agreement and are incorporated in Female Products (including prototypes of
such products) or Manufacturing Processes for Female Products, which products or
processes are developed or under development by Gillette (by subcontract, with
Palomar hereunder or with one or more Third Parties) at the time of termination
of the Exclusivity Period or termination of this Agreement, as applicable and
pursuant to ARTICLE X, but only with respect to such claims and no other claims
of such patents; provided, however, that “Gillette Licensed Patents” shall
exclude Patent claims to the extent that they claim razors, blades, electric
shavers or similar devices, products or parts thereof.

        “Gillette Patents” shall mean all Patents that (a) Gillette Controls
(other than pursuant to this Agreement), as of the Effective Date or at any time
during the term of this Agreement, that in each case are necessary or useful
for, or otherwise related to, the Exploitation of any Light-Based Hair
Management Product in the Female Field and (b) Patents that claim Information or
Inventions that Gillette discloses and makes available to Palomar for use in
connection with the R&D Activities, Additional Activities or Commercial
Assessment Period Additional Activities; but excluding the Joint Patents.

        “Gillette Regulatory Documentation” shall mean all Regulatory
Documentation developed by Gillette.

        “Gillette Technology” shall mean the Gillette Patents and the Gillette
Know-How, collectively.

        “Good Manufacturing Practices” shall mean the current good manufacturing
practices applicable from time to time to the Manufacturing of any Female
Product pursuant to Applicable Law.

        “Hair Management” shall mean (a) the removal of human hair shafts or
changes in the associated structures, and (b) any other reduction of human hair
growth, shaft diameter or pigmentation.

        “IDE” shall mean an investigational device exemption as defined in the
regulations promulgated by the FDA for the authorization to commence human
clinical trials, and its equivalent in other countries or regulatory
jurisdictions in the Territory.

        “Improvement” shall mean any modification, variation or revision to a
product, system or technology or any discovery, technology, device, process or
formulation related to such

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product, system or technology, whether or not patented or patentable or
otherwise protectable by intellectual property rights, including any enhancement
in the efficiency, operation, Manufacture (including any Manufacturing Process),
ingredients, preparation, presentation, formulation, means of delivery, powering
or operating or packaging of such product, system or technology, any discovery
or development of any new or expanded uses for such product, system or
technology, or any discovery or development that improves the stability, safety
or efficacy of such product, system or technology or reduces cost of operation
or Manufacture.

        “Independent Accessory Product” shall mean (a) any apparatus, component,
accessory, disposable or Consumable which is (i) designed specifically for, (ii)
intended or marketed for sale or sold for use with, and (iii) physically
integrated in or physically attached to, a Gillette Joint Independent Product,
or (b) any Independent Product Lotion and shall not include any lotions or gels
other than the Independent Product Lotion.

        “Independent Product” shall mean any Light-Based Hair Management Product
that is not a Female Product and that is intended or marketed for use in the
Field, and all Improvements thereto.

        “Independent Product Lotion” shall mean any lotion, gel, cream, powder
or similar formulation that is (a) designed specifically for use with, (b)
approved by the FDA for use with, and (c) essential for the functionality of, a
Gillette Joint Independent Product.

        “Information and Inventions” shall mean all technical, scientific and
other know-how and information, trade secrets, knowledge, technology, means,
methods, processes, practices, formulas, instructions, skills, techniques,
procedures, experiences, ideas, technical assistance, designs, drawings,
assembly procedures, computer programs, apparatuses, specifications, data,
results and other material, pre-clinical and clinical trial results,
Manufacturing procedures, test procedures and purification and isolation
techniques, (whether or not confidential, proprietary, patented or patentable or
otherwise protectable) in written, electronic or any other form now known or
hereafter developed, and all Improvements, whether to the foregoing or
otherwise, and other discoveries, developments and inventions (whether or not
confidential, proprietary, patented or patentable or otherwise protectable).

        “Initial Prototypes” shall mean the six (6) Prototypes that Palomar is
required pursuant to the R&D Plan to deliver to Gillette at or near the
beginning of the R&D Period.

        “Joint Inventions” shall mean any and all Information and Inventions
that are (a) first conceived or reduced to practice jointly (as determined under
U.S. patent law) by or on behalf of representatives, employees, agents or
research partners of Palomar and representatives, employees, agents or research
partners of Gillette during the term of the Agreement, either together or
jointly (as determined under U.S. patent law) with a Third Party(ies), (b) first
conceived or reduced to practice by or on behalf of representatives, employees,
agents or research partners of Gillette, either alone or jointly (as determined
under U.S. patent law) with Third Party(ies) during the term of the Agreement in
connection with activities arising from, or performed pursuant to, the R&D Plan,
or in the course of performing Additional Activities or Commercial Assessment
Period Additional Activities, or (c) first conceived or reduced to practice by
or on behalf of representatives, employees, agents or research partners of
Palomar,

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either alone or jointly (as determined under U.S. patent law) with a Third
Party(ies) during the term of the Agreement in connection with activities
arising from, or performed pursuant to, the R&D Plan, or in the course of
performing Additional Activities or Commercial Assessment Period Additional
Activities.

        “Joint Know-How” shall mean all Information and Inventions included in
the Joint Inventions that are not generally known, but excluding any Information
and Inventions to the extent claimed by a Joint Patent.

        “Joint Patents” shall mean any Patents to the extent one or more claims
of such Patents claim any Joint Inventions.

        “Joint Technology” shall mean the Joint Patents and the Joint Know-How,
collectively.

        “Launch” shall mean, with respect to a product or system, the date on
which the First Commercial Sale of such product or system occurs.

        “Light-Based Accessory Product” shall mean any apparatus, component,
accessory, disposable or Consumable (a) which (i) is designed specifically for,
(ii) is intended or marketed for sale or sold for use with, and (iii) is
physically integrated in or physically attached to, a Light-Based Product ; or
(b) any Light-Based Lotion.

        “Light-Based Lotion” shall mean any lotion, gel, cream, powder or
similar formulation that is (a) designed specifically for use with, (b) approved
by the FDA for use with, and (c) essential for the functionality of, a
Light-Based Product.

        “Light-Based Product” shall mean a process, product or system that
achieves one or more of the following effects with the use of Optical Radiation:
(i) Hair Management outside the Field, (ii) the treatment or prevention of
cellulite, cosmetic anti-aging skin applications (including wrinkle reduction,
improvement in skin tone, texture and elasticity, and removal of pigmented and
vascular lesions), (iii) body recontouring, (iv) the removal, treatment or
prevention of warts, subcutaneous fat, acne, tattoos, scars, birth marks, oily
skin, odor, moles and blemishes, and (v) any other improvement of skin
condition, appearance, tone or texture other than in connection with Hair
Management in the Field; provided, however, that as used in Sections 5.3(a) and
5.3(b) and 5.4, “Light-Based Product” shall include, without limitation, all
processes, products or systems that use Optical Radiation to achieve Hair
Management, and all Light-Based Accessory Products.

        “Light-Based Hair Management Product” shall mean (a) a process, product
or system, which product or system comprises an apparatus for delivering Optical
Radiation, and which is intended or marketed for Hair Management in the Consumer
Field, and (b) any (i) apparatus, component, accessory, disposable or Consumable
which is (1) designed specifically for, (2) intended or marketed for sale or
sold for use with, and (3) physically integrated in or physically attached to,
such a process, product or system, or (ii) any lotion, gel, cream, powder or
similar formulation that is (1) designed specifically for use with, (2) approved
by the FDA for use with, and (3) essential for the functionality of, such
process, product or system. Such product or systems may include other mechanisms
for Hair Management (e.g., chemical, mechanical, magnetic, acoustic, radio
frequency, temperature, or electrical) to the extent that such

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mechanisms are designed specifically for, intended or marketed for sale or sold
for use with, and physically integrated in or physically attached to such
product or system. For the avoidance of doubt, “Light-Based Hair Management
Products” shall exclude any (a) power sources, or (b) razors, blades, electric
shavers or similar devices (even if use of any such power source, razor, blade,
electric shaver or similar device may be used with, or use thereof, is
recommended to improve the efficacy of a Light-Based Hair Management Product),
except to the extent that any such power source, razor, blade, electric shaver
or similar device is (1) not marketed and sold for uses independent of such
product or system, (2) is physically integrated in or physically attached to
such product or system, and (3) is specifically designed for and sold for use
with, such product or system.

         “Major Market” shall mean each of the United States, Canada, Europe and
Japan.

        “Male Field” shall mean any product or system, which is intended or
marketed for male Hair Management in the Consumer Field.

        “Male Option Termination Date” shall mean (i) in the event that Gillette
does not exercise the Male Option when a Male Product Opportunity is offered by
Palomar to Gillette, the date on which the Male Option terminates pursuant to
Section 5.1(b)(v), or (ii) in the event that Gillette exercises the Male Option
pursuant to Section 5.1(b)(iv), the first date on which the Male Collaboration
Agreement becomes effective.

        “Manufacture” and “Manufacturing” 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.

        “Manufacturing Process” shall mean any process or step thereof that is
necessary or useful for Manufacturing any Light-Based Hair Management Product
and any Improvement thereto.

        “Marketing Authorization” shall mean, with respect to a Female Product,
a 510(k) Notification or a PMA, whichever (if any) is required by Applicable
Law.

        “MGH” shall mean Massachusetts General Hospital.

        “MGH Agreements” shall mean (a) that certain License Agreement by and
between Palomar and MGH, dated August 18, 1995, (b) that certain Clinical Trial
Agreement by and between Palomar and MGH, dated August 18, 1995, and (c) that
certain Joint Patent Agreement by and between Palomar and MGH, dated January 1,
2000, in each case 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
inconsistent with the terms of this Agreement.

        “MGH Patents” shall mean (a) as of the Effective Date, all Patents in
existence and to which Palomar has received or is entitled to receive a license
from MGH under the MGH Agreements, and (b) all claims contained in a Patent that
makes a priority claim to any of the Patents that are identified in clause (a)
above, provided any such priority claim has an earliest priority date based
solely on the Patents that are identified in clause (a) above. Without

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limitation to the foregoing, “MGH Patents” shall include the Patents listed on
Schedule A-3 hereto.

        “MGH Valid Claim” shall mean a claim contained in a pending application
for a MGH Patent or MGH Joint Patent in such country 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 in such country.

        “Net Sales” shall mean, for any period, the gross amount invoiced by
Gillette and its agents and (sub)licensees from or on account of the sale or
distribution of Product(s) to bona fide unrelated Third Parties (the “Invoiced
Sales”), less deductions actually taken for: (a) normal and customary trade,
quantity and cash discounts and sales returns and allowances, including (i)
those actually granted on account of price adjustments, billing errors, rejected
goods, damaged goods, returns and rebates; (ii) allowances and rebates paid to
distributors; and (iii) chargebacks; (b) freight, postage, shipping and
insurance expenses to the extent that such items are actually incurred in
shipping such Products to such Third Parties and included in the gross amount
invoiced; (c) customs and excise duties and other duties related to the sales to
the extent that such items are actually incurred and included in the gross
amount invoiced; (d) sales and other taxes and duties directly related to and
actually incurred for the sale or delivery of Product(s) (but not including
taxes assessed against the income derived from such sale); (e) distribution
expenses to the extent that such items are included in the gross amount
invoiced; (f) any other similar and customary deductions that are consistent
with GAAP in effect from time to time, or in the case of non-United States
sales, other applicable accounting standards; and (g) any such invoiced amounts
that are not collected by Gillette or its (sub)licensees. Any of the deductions
listed above that involves a payment by Gillette and its agents and
(sub)licensees shall be taken as a deduction in the Calendar Quarter in which
the payment is accrued by such entity. Deductions pursuant to subsection (g)
above shall be taken in the Calendar Quarter in which such sales are no longer
recorded as a receivable.

        For purposes of calculating Net Sales, sales between or among The
Gillette Company and its Affiliates or their agents or (sub)licensees shall be
excluded from the computation of Net Sales, but sales by The Gillette Company or
its Affiliates or their licensees or sublicensees to Third Parties shall be
included in the computation of Net Sales. No deduction shall be made for any
item of cost incurred by Gillette, its agents or (sub)licensees in preparing,
manufacturing, shipping, distributing or selling Products except as expressly
permitted in the foregoing paragraph.

        Such amounts shall be determined from the books and records of the
entity that invoiced the Third Party, maintained in accordance with GAAP in
effect from time to time consistently applied. To the extent Gillette or its
agents or (sub)licensees receive consideration other than or in addition to cash
with respect to the sales, promotion, or distribution of Products, Net Sales
shall include the fair market value of such additional consideration.

        In the event that a Product is sold in any country in the form of a
combination product containing one or more products, devices, components,
Accessories or Consumables that are not Products (“Non-Product Components”), Net
Sales of such combination product will be adjusted by multiplying actual Net
Sales of such combination product in such country calculated pursuant

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to the first paragraph of this Section by the fraction A/(A+B), where A is the
average invoice price in such country of the Product(s), if sold separately in
such country, and B is the average invoice price in such country of the
Non-Product Components. If, in a specific country, the Non-Product Components in
the combination product are not sold separately in such country, Net Sales shall
be adjusted by multiplying actual Net Sales of such combination product
calculated pursuant to the first paragraph of this Section by the fraction A/C,
where A is the average invoice price in such country of the Product(s)and C is
the invoice price in such country of such combination product. If, in a specific
country, a Product(s) is not sold separately, Net Sales shall be calculated by
multiplying actual Net Sales of such combination product calculated pursuant to
the first paragraph of this Section by the fraction (C-B)/C, where B is the
average invoice price in such country of the Non-Product Components in the
combination product and C is the invoice price in such country of the
combination product. If, in a specific country, both a Product(s) and the
Non-Product Components, are not sold separately, a market price for such Product
and such Non-Product Components shall be negotiated by the parties in good faith
based upon the costs, overhead and profit as are then incurred for such
combination product and all similar products, devices, systems, components,
Accessories or Consumables then being made and marketed by Gillette and having
an ascertainable market price.

        “Non-Core Palomar Patents” shall mean all Palomar Patents other than
Core Palomar Patents.

        “Non-Light-Based Product” shall mean a process, product or system that
achieves one or more of the following effects without the use of Optical
Radiation: (a) Hair Management, (b) the treatment or prevention of cellulite,
cosmetic anti-aging skin applications (including wrinkle reduction, improvement
in skin tone, texture and elasticity, and removal of pigmented and vascular
lesions), (c) body recontouring, (d) the removal, treatment or prevention of
warts, subcutaneous fat, acne, tattoos, scars, birth marks, oily skin, odor,
moles and blemishes, and (e) any other improvement of skin condition,
appearance, tone or texture.

        “Optical Radiation” shall mean optical radiation that is intended to
have or has a therapeutic function.

        “Other Independent Product” shall mean an Independent Product intended
for use in or marketed in the Field (a) that is not a Gillette Joint Independent
Product, and (b) that is Launched by or on behalf of Gillette, optionally with
one or more Third Parties, during the Exclusivity Period or within seven (7)
years after the first to occur of the termination of (i) the Exclusivity Period,
or (ii) this Agreement.

        “Palomar Confidential Information” shall mean Confidential Information
of Palomar.

        “Palomar Know-How” shall mean all Information and Inventions in the
Control (other than pursuant to this Agreement) of Palomar as of the Effective
Date or at any time during the term of this Agreement that are necessary or
useful for, or otherwise related to, the Exploitation of Light-Based Hair
Management Products in the Female Field and that are not generally known, but
excluding (a) any Information and Inventions to the extent claimed by one or
more of the Palomar Patents or Joint Patents, and (b) any Joint Know-How.
Palomar Know-How shall include, subject to the preceding exclusion, all
clinical, safety, Manufacturing and quality control

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data and information Controlled by Palomar and related to the Female Product
Technology.

        “Palomar Improvement” shall mean an Improvement to a Female Product or a
Manufacturing Process for a Female Product, which Improvement is first conceived
or reduced to practice by or on behalf of Palomar after the date on which the
Exclusivity Period or this Agreement is terminated, as applicable. For the
avoidance of doubt, Palomar Improvements shall exclude any Gillette
Improvements.

        “Palomar Male Know-How” shall mean all Information and Inventions in the
Control (other than pursuant to this Agreement) of Palomar as of the Effective
Date or at any time during the term of this Agreement that are necessary or
useful for, or otherwise related to, the Exploitation of Light-Based Hair
Management Products in the Male Field and that are not generally known, but
excluding (a) any Information and Inventions to the extent claimed by one or
more of the Palomar Patents or Joint Patents, and (b) any Joint Know-How.
Palomar Know-How shall include, subject to the preceding exclusion, all
clinical, safety, Manufacturing and quality control data and information
Controlled by Palomar and related to the Male Field.

        “Palomar Male Patents” shall mean (a) the MGH Patents, and (b) all of
the Patents that Palomar Controls (other than pursuant to this Agreement), as of
the Effective Date and at any time during the term of this Agreement, that in
each case are necessary or useful for, or otherwise related to, the Exploitation
of any Light-Based Hair Management Product in the Male Field, but excluding the
Joint Patents. The “Palomar Male Patents” shall include all Patents listed in
Schedule 12.3(f), and any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates, and any
international or foreign equivalent of any Patent, but excluding any
continuation-in-part of any MGH Patents.

        “Palomar Male Technology” shall mean the Palomar Male Patents and the
Palomar Male Know-How, collectively.

        “Palomar Patents” shall mean (a) the MGH Patents, and (b) all of the
Patents that Palomar Controls (other than pursuant to this Agreement), as of the
Effective Date and at any time during the term of this Agreement, that in each
case are necessary or useful for, or otherwise related to, the Exploitation of
any Light-Based Hair Management Product in the Female Field, or that contain a
claim covering any Female Product Technology, but excluding the Joint Patents.
The “Palomar Patents” shall include all Patents listed in Schedule 12.3(f), and
any substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates, and any international or foreign
equivalent of any Patent, but excluding any continuation-in-part of any
MGH Patents.

        “Palomar Technology” shall mean the Palomar Patents and the Palomar
Know-How, collectively.

        “Patents” shall mean (a) all patents and patent applications and any
patents issuing therefrom worldwide, (b) any substitutions, divisions,
continuations, continuations-in-part, reissues, renewals, registrations,
confirmations, re-examinations, extensions, supplementary

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protection certificates, term extensions (under applicable patent law or other
Applicable Law), certificates of invention and the like, and any provisional
applications, of any such patents or patent application, and (c) any foreign or
international equivalent of any of the foregoing.

        “Patent Costs” shall mean the fees and expenses paid to outside legal
counsel and other Third Parties (including Third Party licensors of Patents,
such as MGH for the Palomar Patents), allocated in-house costs of legal counsel,
and filing and maintenance expenses, incurred in connection with preparing,
filing, prosecuting and maintaining Patents, including costs of patent
interference, re-examination, reissue, opposition or similar proceedings
relating thereto.

        “PCT” shall mean the Patent Cooperation Treaty, opened for signature
June 19, 1970, 28 U.S.T. 7645.

        “Person” shall mean an individual, sole proprietorship, general
partnership, limited partnership, limited liability partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, cooperative, joint venture or other similar entity
or organization, including a government or political subdivision, department or
agency of a government, and the heirs, executors, administrators, legal
representatives, successors and assigns of such Person as the context may
require.

        “PMA Product” shall mean a product, the sale of which requires the
filing with and approval by the FDA of a PMA.

        “Premarket Approval” or “PMA” shall mean a premarket approval as defined
in the FFDCA, and the regulations promulgated thereunder, necessary to market a
Female Product in the United States.

        “Product” shall mean a Female Product, Gillette Joint Independent
Product, Other Independent Product, or any product or system Exploited by
Palomar pursuant to any license under the Gillette Licensed Patents that is
granted by Gillette to Palomar in this Agreement, as the case may be.

        “Product Specifications” shall mean the written specifications for the
design and Manufacture of a product or system.

        “Professional Field” shall mean products or systems intended or marketed
for sale to doctors, health care providers or other commercial service providers
for use on or with patients or customers (and not for resale to any Person).

        “Prototypes” shall mean one or more prototypes of the Female Product
Manufactured or made by or on behalf of either party during the R&D Period for
the purposes of evaluating, testing or improving such product pursuant to the
R&D Plan and this Agreement, which in the case of any such unit delivered by
Palomar to Gillette shall have been Manufactured or made pursuant to the
then-current Product Specifications.

        “Regulatory Approval” shall mean, on a country-by-country basis, the
right with respect to a

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Female Product to sell or distribute such product or system for female Hair Man
agement in the Consumer Field. In the case of the United States, sale or
distribution of a Female Product may require a determination by the FDA of
substantial equivalence (within the meaning of 21 C.F.R. § 807.100) following
the filing with the FDA of a 510(k) Notification, or in the event that a PMA is
required, the approval by the FDA of such PMA, and in the case of any other
country or territory, any necessary international or foreign approvals.

        “Regulatory Authority” shall mean any applicable supra-national,
federal, national, regional, state, provincial or local regulatory agencies,
departments, bureaus, commissions, councils or other government entities
regulating or otherwise exercising authority with respect to the Exploitation of
the Female Product Technology in the Territory.

        “Regulatory Documentation” shall mean all applications, registrations,
licenses, authorizations and approvals (including all Regulatory Approvals), all
correspondence submitted to or received from Regulatory Authorities (including
minutes and official contact reports relating to any communications with any
Regulatory Authority) and all supporting documents and all clinical studies and
tests, relating to any Female Product Technology, and all data contained in any
of the foregoing, including all IDEs, 510K Notifications, PMA Notifications,
Marketing Authorizations, advertising and promotion documents, adverse event
files, complaint files and Manufacturing records.

        “Restricted Access Period” shall mean the period commencing on the
Commencement Date and ending on the date of the later to occur of (a) three
hundred and sixty five (365) days after such date, in the event that Palomar
delivers to Gillette the Initial Prototypes on or before the Commencement Date,
or (b) the sum of (i) the number of days after the Commencement Date until
Palomar delivers to Gillette the Initial Prototypes and (ii) three hundred and
sixty five (365) days, in the event that Palomar delivers to Gillette the
Initial Prototypes after the Commencement Date.

        “R&D” shall mean research and development.

        “R&D Activities” shall mean those tests, studies and other activities
set forth in, or required in order to obtain the information set forth in, the
R&D Plan and such other tests, studies and other activities as may be specified
from time to time by the R&D Committee with respect to the subject Female
Product.

        “R&D Program” shall mean the program of R&D Activities carried out by
the parties pursuant to the R&D Plan.

        “Safety and Efficacy Standards” shall mean, with respect to a Subject
Male Product, (a) a demonstrated safety performance at least as safe as the
prototype Female Product presented by Palomar to Gillette on May 6 and 7, 2002,
and (b) a resulting hair growth clearance period longer than the period
resulting from shaving with a conventional blade device, in each case as
evidenced by studies at least as stringent as those provided by Palomar to
Gillette on May 6 and 7, 2002.

        “Second Decision Point” shall mean thirty (30) days after the Commercial
Assessment Period Termination Date.

        “Second Development Completion Payment Date” shall mean the date of the
Second Decision Point.

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        “Territory” shall mean the entire world.

        “Third Party” shall mean any Person other than The Gillette Company,
Palomar Medical Technologies, Inc. and their respective Affiliates or
individuals who are their employees or agents when acting in that capacity.

        “Third Party Collaboration” shall mean, in the case of either Gillette
or Palomar, a collaboration with a Third Party with respect to a product, system
or other technology with respect to which Gillette or Palomar, as the case may
be, has material co-development obligations or co-promotion rights or
co-marketing rights.

        “Trademark” shall include any word, name, symbol, color, designation or
device or any combination thereof, including any trademark, trade dress, brand
mark, trade name, brand name, logo or business symbol.

        “TTP” shall mean a technology transfer payment.

        “Valid Claim” shall mean (i) for all Patents, with respect to a
particular country, a claim of an issued and unexpired Patent in such country
that has not been revoked or held permanently unenforceable or invalid by a
decision of a court or governmental agency of competent jurisdiction from which
no appeal can be taken or has been taken within the time allowed for appeal, and
has not been abandoned, disclaimed, denied or admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise in such country, and
(ii) for all MGH Patents and MGH Joint Patents but no other Patents, with
respect to a particular country, an MGH Valid Claim.

        Terms Defined Elsewhere in this Agreement. The following terms, whether
used in the singular or the plural and correlatives thereof, are defined in the
applicable Sections of this Agreement.

Defined Term Section "Acquiring Party"   Section 14.2 "ADR"   Section 13.2(a)
"Advanced CUT Female Product Costs"   Section 3.2 "Additional Activities"  
Section 1.8(a) "Additional Light-Based Hair Management Product"   Section 1.7
"Additional Product Report"   Section 1.7 "Agreement"   Preamble "Annual
Exclusivity Collaboration Payment"   Section 6.1(g) "Annual Exclusivity
Collaboration Period"   Section 6.1(g) "Authorized Overruns"   Section
1.8(a)(i)(2) "Commencement Date"   Section 1.1(c)

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Defined Term Section "Commercial Assessment Period Additional Activities"  
Section 2.2(a) "Confidential Information"   Section 9.3(a) "Cure Period"  
Section 10.3 "CUT Female Product"   Section 3.1(a) "CUT Product Specifications"
  Section 3.1(b) "Delivery Date"   Section 3.1(c) "Development Completion
Payments"   Section 6.1(d)(i) "Disclosure Schedule"   Section 12.1 "Dispute"  
Section 13.1 "Dispute Notice"   Section 12.3(a)(i) "Effective Date"   Preamble
"Estimate"   Section 1.8(a)(2) "Evaluation Materials"   Section 5.1(b)(ii)
"Exclusivity Payment Date"   Section 6.1(g) "Failure to Launch Payments"  
Section 2.1(b)(ii) "Female Product Payment Rate"   Section 6.1(h) "First
Development Completion Payment"   Section 6.1(d)(i) "First Press Release"  
Section 9.5 "Gillette"   Preamble "Gillette Controlled Information"   Section
9.1(c) "Gillette Exclusive Licenses"   Section 8.3(a)(i) "Gillette Exclusive
License Period"   Section 8.3(a)(i) Gillette License Agreement   Section
5.3(b)(i) Gillette Licensee   Section 5.3(b)(i) "Indemnification Claim Notice"  
Section 11.3(a) "Indemnified Party"   Section 11.3(a) "Independent Product
Payment Rate"   Section 6.4 "Infringement Suit"   Section 8.5(c)(i) "Initial
Gillette Specifications"   Section 5.4(a)(i)(1) "Initial R&D Plan"   Section
1.1(a) "In-License Agreement"   Section 12.3(f) "Invoiced Sales"   Definition of
"Net Sales" "Launch Decision"   Section 2.3 "Licensed Palomar Patents"   Section
12.3(f) "Female Product Payment Rate"   Section 6.1(h) "Palomar"   Preamble
"Losses"   Section 11.1 "Male Collaboration Agreement"   Section 5.1(c) "Male
Option"   Section 5.1(a) "Male Product"   Section 5.1(a) "Male Product
Opportunity"   Section 5.1(b) "Manufacturing Cost"   Section 3.2 "Manufacturing
Fee"   Section 3.2

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Defined Term Section "MGH Joint Invention"   Section 8.1(c)(ii)(2) "MGH Joint
Know-How"   Section 8.1(c)(ii)(2) "MGH Joint Patents"   Section 8.1(c)(ii)(2)
"MGH Joint Technology"   Section 8.1(c)(ii)(2) "Neutral"   Section 13.2(a)
"Non-Disclosure Agreement"   Section 9.8 "Non-Product Components"   Definition
of Net Sales "Offer"   Section 10.1(b) "Offer Period"   Section 10.1(b)
"Opportunity Notice"   Section 5.1(b) "Opportunity Notice Effective Date"  
Section 5.1(b)(iii) "Option Exercise Notice"   Section 5.1(b)(iv) "Option
Exercise Period"   Section 5.1(b)(iv) "Overrun"   Section 1.8(a)(2) "Owned
Palomar Patents"   Section 12.3(f) "Palomar Controlled Information"   Section
9.1(b) "Palomar Exclusive Licenses"   Section 8.4(b)(iii) "Palomar Exclusive
License Period"   Section 8.4(b)(iii) "Palomar Key Personnel"   Section 1.1(d)
"Palomar License Agreement"   Section 5.3(a)(i) "Palomar Licensee"   Section
5.3(a)(i) "Palomar Marks"   Section 2.1(a)(iii)(2) "Palomar Medical
Technologies, Inc."   Preamble "Palomar U.S. Regulatory Documentation"   Section
1.2(e) "Permitted Confidants"   Section 9.1(a) "Product/Service Payment Rate"  
Section 6.5 "R&D Advance Payment"   Section 6.1(b) "R&D Payments"   Section
6.1(a) "R&D Committee"   Section 1.4(a) "R&D Committee Chair"   Section 1.4(c)
"R&D Committee Leader"   Section 1.4(b) "R&D Leader"   Section 1.1(d) "R&D
Period"   Section 1.1(c) "R&D Plan"   Section 1.1(a) "R&D Plan Subcontracted
Activities"   Section 1.1(e) "SEC"   Section 9.5 "Second Development Completion
Payment"   Section 6.1(d)(i) "Subject Male Product"   Section 5.1(b)(1)
"Supplemental R&D Plan"   Section 1.7 "Supplemental R&D Payments"   Section 1.7
"Ten-Day Notice"   Section 3.1(a) "Terms and Conditions"   Section 13.2(b) "The
Gillette Company"   Preamble "Third Party Claim"   Section 11.1

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Defined Term Section "Total CUT Supply"   Section 3.1(c)

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Exhibit A

R&D Plan

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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

Schedule 1.1(d)

Key Personnel

Percent of Time Name and Title Responsibilities Committed to Project

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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Schedule 12.1

Disclosure Schedule

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

12.3(h) and (l)

        Palomar Medical Technologies, Inc. v. Lumenis, Ltd., Lumenis, Inc. ESC
Medical Systems, Inc., and ESC/Sharplan Laser Industries Ltd., Trial Court,
Superior Court Dept., Commonwealth of Massachusetts, Civ. Act. No. 02-4565,
filed October 29, 2002.

        Lumenis, Inc., v. Palomar Medical Technologies, Inc. and The General
Hospital Corporation, United States District Court, Northern District of
California, Civ. Act. No. 02-5176, filed October 24, 2002.

        Palomar Medical Technologies, Inc. and The General Hospital Corporation
v. Altus Medical, Inc. v. Palomar Medical Technologies, Inc. and The General
Hospital Corporation, United States District Court, District of Massachusetts,
Civ. Act. No. 02-10258-RWZ.

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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Schedule 12.3(f)

Palomar Patents

12.3(f)(i): Owned Palomar Patents

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

12.3(f)(ii): Licensed Palomar Patents

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

12.3(f)(iii): In-License Agreements

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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Schedule A-1

Core Palomar Patents

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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Schedule A-2

Costs

**This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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

Schedule A-3

MGH Patents

** This material has been omitted pursuant to a request for confidential
treatment and has been filed separately with the SEC. An aggregate of 17 pages
were omitted pursuant to a request for confidential treatment and filed
separately with the SEC.

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DEVELOPMENT AND LICENSE AGREEMENT

BETWEEN

THE GILLETTE COMPANY

AND

PALOMAR MEDICAL TECHNOLOGIES, INC.

EFFECTIVE AS OF FEBRUARY 14, 2003