PATENT LICENSE AGREEMENT

         This  Agreement by and between  Palomar  Medical  Technologies,  Inc. a
corporation  organized  and  existing  under the laws of the  State of  Delaware
having  its  principal   place  of  business  at  489  Groton  Road,   Westford,
Massachusetts 01886 (hereinafter  designated "LICENSEE") and Patlex Corporation,
a  corporation  organized  and existing  under the laws of the  Commonwealth  of
Pennsylvania,  having its principal place of business at 250 Cotorro Court,  Las
Cruces, New Mexico 88005 (hereinafter designated "PATLEX").

         WHEREAS, Gordon Gould, an individual residing at P.O. Box 112, Route 1,
Kinsale,  Virginia,  22488 (hereinafter  designated "GOULD") is the owner, along
with  PATLEX,  of various  patents in the United  States and Canada  relating to
lasers and laser systems. Such patents are listed in Exhibit "A" annexed hereto;
and

        WHEREAS,  GOULD has  granted  to PATLEX the  exclusive  right to license
others under any and all of the aforesaid GOULD patents; and

        WHEREAS,  LICENSEE  desires to obtain a license  from  PATLEX  under the
aforesaid GOULD patents; and

        WHEREAS,  it is  the  intention  of  the  parties  that  this  Agreement
prescribe the rights and  obligations  among the parties and GOULD regarding all
patents  issued to or  partially  owned by GOULD  relating  to lasers  and laser
systems and which are licensable by PATLEX; and

                                       1
<PAGE>

        WHEREAS,  PATLEX desires to license  LICENSEE under the aforesaid  GOULD
patents; 

NOW, THEREFORE, PATLEX and LICENSEE agree as follows:

ARTICLE I - DEFINITIONS

        For the purposes of this  Agreement,  the terms specified shall have the
meanings as defined below:

         A.       "Subsidiary"

                  Subsidiary shall mean a corporation,  company or other entity,
                  foreign or  domestic,  at least fifty  percent  (50%) of whose
                  outstanding  shares or securities  (representing  the right to
                  vote  for  the  election  of   directors  or  other   managing
                  authority)  are,  now or  hereafter,  owned or  controlled  by
                  LICENSEE.  Whenever the term LICENSEE is used  throughout this
                  Agreement,  it is intended to include Subsidiaries of LICENSEE
                  unless  such  inclusion   would  be   inappropriate   to  this
                  Agreement.  A complete list of LICENSEE's  Subsidiaries  as of
                  the  Effective  Date of this  Agreement  is annexed  hereto as
                  Exhibit "B."

         B.       "Licensed Patents"

                  Licensed  Patents  shall mean the patents set forth in Exhibit
                  "A," and all  reissues  and  renewals  thereof.  It shall  not
                  include  other  inventions of GOULD or PATLEX or patents based
                  on applications filed subsequent to the Effective Date of this
                  Agreement  and not  relating  back to a  patent  set  forth in
                  Exhibit "A."

                                       2
<PAGE>

         C.       "Low Power Laser Tube"

                  Low Power Laser Tube shall mean a sealed gas-filled laser tube
                  having  an  output  power  of one (1)  Watt or  less,  with or
                  without optical  elements at the ends thereof,  which is not a
                  staple   article  or  commodity   of  commerce   suitable  for
                  substantial  noninfringing  use  but  is  especially  made  or
                  especially  adapted for use in a gas discharge  laser or laser
                  system  and  which is sold or leased  other  than as part of a
                  laser or laser system.

         D.       "High Power Laser Tube"

                  High Power  Laser Tube  shall mean a sealed  gas-filled  laser
                  tube  other  than a Low  Power  Laser  Tube,  with or  without
                  optical  elements at the ends  thereof,  which is not a staple
                  article or  commodity  of commerce  suitable  for  substantial
                  noninfringing use but is especially made or especially adapted
                  for use in a gas discharge  laser or laser system and which is
                  sold or leased other than as part of a laser or laser system.

         E.       "Licensed Laser"

                  Licensed  Laser  shall  mean  the  royalty  base  items of all
                  lasers,  laser  systems  and Low and High  Power  Laser  Tubes
                  manufactured,  used, leased or sold by LICENSEE which infringe
                  (see 35 U.S.C. 271) any one or more of the valid claims of any
                  Licensed  Patent and upon which the requisite  royalties  have
                  accrued as a royalty under this Agreement.

                                       3
<PAGE>

         F.       "Excluded Uses"

                  Excluded  Uses shall mean any and all uses of Licensed  Lasers
                  for the  manufacture  or  mastering  of laser  discs,  compact
                  discs, laser memories, or similar products on which a laser or
                  laser system is used to record sound, visual matter, or data.

         G.       "Net Selling Price"

                  Net  Selling  Price  shall  mean the  price at which  LICENSEE
                  invoices  the  sale  or  lease  of  Licensed   Lasers  to  its
                  customers, less any reasonable charges for packing,  shipping,
                  installation,  import  duties,  brokerage,  and  use or  sales
                  taxes. It is further  understood and agreed that in respect of
                  inter-company  sales  between  the  LICENSEE  and its  related
                  companies, the Net Selling Price shall mean the price at which
                  the  LICENSEE  ordinarily  sells  to  its  distributors  under
                  similar  circumstances.  In such event no royalty shall accrue
                  or be  payable in  respect  of any  subsequent  resale of such
                  equipment to a third party.

         H.       "Effective Date"

                  The Effective Date of this Agreement shall be January 1, 1992.

                                       4
<PAGE>


ARTICLE II - PATENT RIGHTS GRANTED

         A.       Licenses and Immunities

                  1.       Lasers and Laser Systems

                           PATLEX  hereby  grants to  LICENSEE a  non-exclusive,
                           worldwide license to make, use, lease, or sell lasers
                           and laser  systems  which  would  infringe  any valid
                           claim  of one or more of the  Licensed  Patents  upon
                           which  royalties  are accrued  under this  Agreement,
                           provided  such lasers and laser  systems are not used
                           or  intended  for use in  Excluded  Uses.  All of the
                           Licenses Patents are covered by this Agreement at the
                           specific   request  of  LICENSEE  in   preference  to
                           licensing  less than all of the patents  which PATLEX
                           was willing to do.

                           This Agreement does not apply to, nor require royalty
                           payments for, components of lasers and laser systems,
                           which  components are staple  articles or commodities
                           of commerce  suitable for  substantial  noninfringing
                           use, when such  components are sold by LICENSEE other
                           than as part of a laser or laser system.

                  2.       Low Power Laser Tubes

                           (a)  License

                                PATLEX    hereby    grants   to    LICENSEE    a
                                non-exclusive,   worldwide  license  under  U.S.
                                Patent No. 4,704,583 to make, use, lease or sell

                                       5
<PAGE>

                                Low Power Laser Tubes which would  infringe  any
                                valid  claim  of  U.S.   Patent  No.   4,704,583
                                provided:

                                i) such Low  Power  Laser  Tubes are not used or
                                intended for use in Excluded Uses, and
                                
                                ii) LICENSEE's  customer  either resells the Low
                                Power  Laser Tube as part of a Larger  System or
                                uses it for its own  internal  use. For purposes
                                of this Article II,  Section A,  subsection 2, a
                                "Larger System" shall mean a system  including a
                                Low Power  Laser  Tube,  in which at least fifty
                                percent (50%) of the selling price of the system
                                is  attributable  to other  than  the Low  Power
                                Laser Tube and associated power supply.

                                PATLEX hereby  covenants not to sue customers of
                                LICENSEE  under U.S.  Patent No.  4,704,583  for
                                using Low Power Laser Tubes  licensed under this
                                Article II,  Section A,  subsection  (2)(a) upon
                                which the requisite royalties are accrued.


                                       6
<PAGE>

                           (b)  Immunity

                                LICENSEE is hereby granted an immunity from suit
                                under the  Licensed  Patents  with regard to the
                                sale of a Low Power Laser Tube to a customer who
                                resells   said  Low  Power  Laser  Tube  without
                                incorporating  the same into a Larger System. In
                                such circumstances, PATLEX reserves the right to
                                pursue  LICENSEE's  customer for royalties under
                                the  Licensed  Patents  on said Low Power  Laser
                                Tube and all equipment  added thereto.  However,
                                LICENSEE  may, at its  discretion,  pay PATLEX a
                                fee equal to the  amount  set  forth in  Article
                                III, Section B, subsection (2), and such payment
                                shall relieve the customer of any  obligation to
                                pay a royalty to PATLEX for said Low Power Laser
                                Tube.  

                3.      High Power  Laser Tubes  LICENSEE  is hereby  granted an
                        immunity  from suit  under  the  Licensed  Patents  with
                        regard to the sale of High Power Laser  Tubes.  LICENSEE
                        shall pay  PATLEX a fee equal to the amount set forth in
                        Article III, Section B, subsection (2) for such immunity
                        and such payment  shall relieve  LICENSEE's  customer of
                        any  obligation to pay a royalty to PATLEX for said High
                        Power Laser Tube. PATLEX expressly reserves the right to
                        pursue  LICENSEE's  customer  for  royalties  under  the

                                       7
<PAGE>


                        Licensed  Patents  on any  equipment  added to said High
                        Power  Laser  Tube that  taken  together  with such tube
                        would infringe any valid claim of a Licensed Patent.  

        B.      Customer Use

                PATLEX  hereby  covenants  not to sue  customers of LICENSEE for
                using lasers and laser  systems sold or leased by LICENSEE  upon
                which the requisite  royalties are accrued  provided such lasers
                and laser systems are not used in Excluded  Uses.  This covenant
                does not extend to  customers  who  incorporate  such lasers and
                laser systems into new systems,  the use of which infringes U.S.
                Patent No. 4,161,436,  and who sell such new systems.

        C.      Release of Past Infringement:

                (1)     Optically  Pumped  Lasers -

                        U.S.  Patent  No.  4,053,854  Payment  of the  requisite
                        royalties  by LICENSEE  under  Article  III,  Section A,
                        subsection (1) hereof shall be in full settlement of any
                        claim  of  infringement  liability  arising  under  U.S.
                        Patent No.  4,0453,845  incurred  prior to the Effective
                        Date of this Agreement.

                (2)     Use Patent - 

                        U.S.  Patent  No.  4,161,436  Payment  of the  requisite
                        royalties  by LICENSEE  under  Article  III,  Section A,
                        subsection (1) 



                                       8
<PAGE>

                        hereof  shall  be in full  settlement  of any  claim  of
                        infringement  liability  arising  under U.S.  Patent No.
                        4,161,436  incurred  prior to the Effective Date of this
                        Agreement  and shall  release  customers of the LICENSEE
                        for the use of Licensed  Lasers leased or purchased from
                        LICENSEE prior to the Effective Date hereof,  the use of
                        which would infringe any valid claim of U.S.  Patent No.
                        4,161,436.  PATLEX will not sue any customer of LICENSEE
                        for the use of Licensed Lasers  purchased or leased from
                        the  LICENSEE,  provided that such uses are not Excluded
                        Uses.   The  aforesaid   covenant  does  not  extend  to
                        customers  who  incorporate  Licensed  Lasers  into  new
                        systems  the use of which  infringes  any valid claim of
                        U.S. Patent No. 4,161,436 and sell such new systems. 

                (3)     Other Patents

                        Except as provided in Article II, Section C, subsections
                        (1) and (2) LICENSEE  represents that it has not sold or
                        leased  any  lasers  or  laser   systems  prior  to  the
                        Effective Date of this Agreement,  the manufacture,  use
                        or sale of which would  infringe any valid claim of U.S.
                        Patent No. 3,388,314;  3,562,662;  3,576,500; 3,586,998;
                        4,704,583 or 4,746,201 or Canadian  Patent No.  907,110.
                        Accordingly,  no release for past  infringement of these
                        seven (7)  patents is  

                                       9
<PAGE>

                        provided and no payment for past  infringement  of these
                        seven (7) patents is required.

ARTICLE III - ROYALTY PAYMENTS

        A.      Past Infringement

                U.S. Patent NO. 4,053,845 
                U.S. Patent No. 4,161,436

                Within  thirty  (30) days of the  execution  of this  Agreement,
                LICENSEE  shall pay to  PATLEX  the sum of Nine  Thousand  Eight
                Hundred  Dollars  ($9,800.00).  This sum is  equivalent  to five
                percent  (5%) of the Net Selling  Price of all  Licensed  Lasers
                sold or  leased by  LICENSEE,  the  manufacture,  sue or sale of
                which  would  infringe  any  valid  claim  of  U.S.  Patent  No.
                4,053,845 or 4,161,436.

        B.      Future Royalty Payments

                (1)     Optically Pumped Lasers -

                        U.S. Patent No. 4,053,845

                        LICENSEE  shall pay to PATLEX a royalty of five  percent
                        (5%) of the Net Selling  Price for all  Licensed  Lasers
                        sold or leased by LICENSEE  from the  Effective  Date of
                        this  Agreement  to the  expiration  of U.S.  Patent NO.
                        4,053,845,  the manufacture,  use or sale of which would
                        infringe any valid claim of U.S. Patent No. 4,053,845.


                                       10
<PAGE>


                (2)     Gas Discharge Lasers -

                        U.S. Patent No. 4,704,583

                        LICENSEE  shall pay to PATLEX a royalty of five  percent
                        (5%) of the Net Selling  Price for all  Licensed  Lasers
                        sold or leased by LICENSEE  from the  Effective  Date of
                        this  Agreement  to  the   expiration  of  U.S.   Patent
                        4,704,583,  the manufacture,  use or sale of which would
                        infringe any valid claim of U.S.  Patent No.  4,704,583.

                (3)     Use Patent -

                        U.S. Patent No. 4,161,436

                        (a)  LICENSEE  shall  pay to  PATLEX a  royalty  of five
                        percent  (55%) of the Net Selling Price for all Licensed
                        Lasers  sold or leased by  LICENSEE  from the  Effective
                        Date of this  Agreement to the  expiration  date of U.S.
                        Patent NO.  4,161,436,  the use of which would  infringe
                        any  valid  claim  of U.S.  Patent  No.  4,161,436. 

                        (b) LICENSEE  shall have the right to use lasers,  laser
                        systems  and Low and High Power  Laser Tubes for its own
                        internal use provided such lasers, laser systems and Low
                        and High  Power  Laser  Tubes are not used for  Excluded
                        Uses and are  manufactured  by LICENSEE or are purchased
                        from a vendor who is licensed by PATLEX under all of the


                                       11
<PAGE>

                        Licensed Patents applicable thereto and, if manufactured
                        by LICENSEE,  LICENSEE pays the  requisite  royalties or
                        fees based upon the equivalent Net Selling Price thereon
                        and, if purchased from a licensed vendor,  said licensed
                        vendor paid the requisite  royalties or fees thereon. If
                        LICENSEE purchases a laser, laser system, or Low or High
                        Power Laser Tube for its  internal use from a vendor not
                        licensed  y  PATLEX,  LICENSEE  shall  pay to  PATLEX  a
                        royalty of six  percent  (6%) of the  purchase  price of
                        said  laser,  laser  system or Low or High  Power  Laser
                        Tube.  

                (4)     Brewster's Angle Window -

                        U.S. Patent No. 4,746,201

                        LICENSEE  shall  pay to  PATLEX a  royalty  of three and
                        one-half  percent 3 1/2%) of the Net  Selling  Price for
                        all Licensed  Lasers sold or leased by LICENSEE from the
                        Effective Date of this Agreement to the expiration  date
                        of U.S. Patent No.  4,746,201,  the manufacture,  use or
                        sale of which  would  infringe  any valid  claim of U.S.
                        Patent No.  4,746,201. 

                (5)     Other Patents

                        No  additional  royalty  shall  accrue for any  Licensed
                        Laser sold or leased by LICENSEE,  the manufacture,  use
                        or sale of which would  infringe 

                                       12
<PAGE>

                        any valid claim of any patent  listed in Exhibit "A" and
                        not  described  heretofore  in Article  III,  Section B,
                        subsections  (1)  to  (4)  hereof.   

                (6)     Foreign Sales
                       
                        Notwithstanding  the royalty  rates set forth in Article
                        III,  Section  B, if the sale or  lease of any  Licensed
                        Laser is directly to an end user in a country other than
                        the United  States or to a  distributor  who warrants in
                        writing  to  LICENSEE  that the end user is in a country
                        other  than the United  States,  then the  royalty  rate
                        shall be reduced to two percent  (2%) of the Net Selling
                        Price for said sale or lease. 

        C.      Multiple Patents

                In the  event  that  the  manufacture,  lease,  sale or use of a
                Licensed Laser by LICENSEE  infringes a valid claim or more than
                one Licensed Patent, then the royalty payable to PATLEX shall be
                computed  in  accordance  with the  greatest  of the  applicable
                royalty  rates,  if they are  different,  with  regard  to those
                portions of the  Licensed  Laser  wherein  the royalty  bases as
                defined herein overlap. With regard to the remaining portions of
                the Licensed Laser, the individual royalty rates still apply. 

        D.      When Accrued

                Royalties as aforesaid  shall accrue  hereunder when income from
                the  lease of  Licensed  Lasers  shall  have  



                                       13
<PAGE>

                been received or invoiced by LICENSEE,  whichever is sooner, and
                when the sale of  Licensed  Lasers  shall have been  invoiced by
                LICENSEE to its  customers or if invoices  are not issued,  when
                Licensed Lasers shall have been shipped by LICENSEE.

        E.      Trial  Shipments  

                With respect to Licensed Lasers shipped to customers under lease
                or on a trial basis, LICENSEE shall have six (6) months from the
                date of such shipment to designate  each such  transaction  as a
                sale  or  lease,  unless  fifty  percent  (50%)  or  more of the
                purchase  price  shall have been paid to LICENSEE in which event
                the transaction shall be deemed a sale. 

        F.      Resale

          
      LICENSEE  shall  have the right to acquire  and  resell  lasers,
                laser systems,  and Low and High Power Laser Tubes  manufactured
                by others. If the laser, laser system or Low or High Power Laser
                Tube is acquired  from a vendor who is licensed by PATLEX  under
                all of the  patents in Exhibit "A"  applicable  thereto and pays
                the  requisite  royalties or fees to PATLEX,  then LICENSEE need
                not pay royalties  hereunder for the laser, laser system, or Low
                or High  Power  Laser  Tube so  acquired  with  respect to which
                royalties or fees have been previously paid.  LICENSEE shall pay
                all applicable  royalties  required under Article III, Section B
                hereof for whatever  additional  royalty base 

                                       14
<PAGE>

                items are combined with said so acquired  laser or laser system.
                Where LICENSEE combines  additional royalty base items with such
                a Low or High Power Laser Tube,  LICENSEE' payment of additional
                royalties  for  the  additional  royalty  base  items  shall  be
                determined  in  accordance  with the  provisions  of Article II,
                Section A,  subsections 2 and 3. 

        G.      Adjustments

                LICENSEE  shall  have the  right  to  adjust  royalties  payable
                hereunder for returns, bona fide price reductions and allowances
                of  Licensed  Lasers  sold or  leased by  LICENSEE  on which the
                requisite  royalties  or fees  shall  previously  have been paid
                hereunder.  

        H.      Calculations

                Subject  to  provisions   specifically  herein  set  forth,  all
                calculations  and  procedures  related tot he  determination  of
                royalties and fees payable hereunder shall be in accordance with
                recognized  standards of good accounting  practice  consistently
                applied.

ARTICLE IV - ROYALTY BASE

        For purposes of paying and/or computing royalties and fees hereunder the
following shall apply:

        A.      Optically Pumped Lasers

                U.S. Patent No. 4,053,845

                The royalty base shall include the lasing medium,  and means for
                containing  the same where  applicable,  a 

                                       15
<PAGE>

                bright pumping light source (save that if such light source is a
                gas discharge  laser the  appropriate  royalty  called for under
                Article III, Section B, subsection (2) hereof shall apply),  and
                means  (including  power  supply,  lamp and optical  system) for
                activating and using same, together with at least any and all of
                the following functionally combined components:

                (1)     means for  mounting  the  lasing  medium  and the bright
                        pumping  light  source to enable the desired  functional
                        relationship, for example including base and housing;

                (2)     means that enable the  optically  pumped  medium to emit
                        light  in  a  wave  train  that  has  a  sharply  rising
                        intensity  with an  intensity  rise  time  of less  than
                        approximately 10-7 seconds;  

                (3)     means for conveying the  stimulating  light beam through
                        the amplification  region including mirrors employed for
                        this purpose;  and 

                (4)     means  integral  with the  apparatus of this Article IV,
                        Section A hereof such as meters, shutters,  controls and
                        cooling system.

        B.      Gas  Discharge  Lasers - 

                U.S. Patent No. 4,704,583

                The royalty base shall  include the lasing medium if supplied by
                the LICENSEE, including means for containing the same and means,
                including power supply,  for activating  same,  together with at


                                       16
<PAGE>

                least  any  and  all  of  the  following  functionally  combined
                components:  

                (1)     means  for  producing  an  electrical  discharge  in the
                        lasing medium and for delivering a gas discharge mixture
                        to the  discharge  region at partial and total  pressure
                        such that a  population  inversion  is  initiated in the
                        lasing medium;

                (2)     means for conveying the  stimulating  light beam through
                        the amplification  region including mirrors employed for
                        this purpose;

                (3)     means for  mounting  the lasing  medium  and  electrical
                        discharge   producing   means  to  enable  the   desired
                        functional relationship,  for example including base and
                        housing; and

                (4)     means  integral  with the  apparatus of this Article IV,
                        Section B hereof such as meters, shutters,  controls and
                        cooling systems.


        C.      Use Patent -

                U.S. Patent No. 4,161,436

                The royalty base shall include all  assemblies,  sub-assemblies,
                components,  and portions thereof  necessary to produce coherent
                light,  to  transport  such  light  to a  particular  point on a
                workpiece,  and to control the physical parameters of such light
                in such a way as to make it efficient in performing its intended
                end use.

                                       17
<PAGE>

        D.      Brewster's Angle -

                U.S. Patent No. 4, 746,201

                The royalty base shall include: a source of light rays including
                means to contain and energize  said source;  means for directing
                certain  unpolarized  light  rays from said  source to  multiply
                traverse a predetermined path; an optical element having a first
                surface;   and  means  for  mounting  said  optical  element  to
                intersect said unpolarized light rays with a line  perpendicular
                to said first  surface  inclined to said path  substantially  at
                Brewster's  Angle thereby passing one polarization of said light
                rays  and  reflecting  some  of the  light  rays  of  the  other
                polarization upon each traversal of said predetermined  path. 

        E.      Other Patents

                The  royalty  base  shall  include  any  laser  or part  thereof
                conforming  to any valid claim  contained  in any of the patents
                cited in Exhibit  "A" not  described  in Sections A through D of
                this Article.

ARTICLE V - MARKING

        LICENSEE  shall  mark  in  appropriate  locations  all  Licensed  Lasers
manufactured  and the packages and containers in which such Licensed  Lasers are
sold,  leased or shipped,  and all  advertisements,  literature and  promotional
material in which such  Licensed  lasers  shall be mentioned  or  described,  as
follows: "Licensed by PATLEX Corporation Under U.S. Patent

                                       18
<PAGE>

No(s).  _______." Here LICENSEE shall insert the appropriate  U.S. Patent No. or
Nos.  applicable  to the equipment so marked,  with the exception  that LICENSEE
shall not be required to include U.S. Patent No. 4,161,436 in its marking.  Said
marking requirement may from time to time be altered by PATLEX as the applicable
patent law and practice may require.

ARTICLE VI - DURATION OF AGREEMENT

        A.      Expiration

                This Agreement shall continue in full force and effect until the
                expiration  of the  last of the  Licensed  Patents  unless  this
                Agreement is sooner terminated as herein provided.

        B.      Termination

                If  either  party  to  this  Agreement  should  default  in  the
                performance of any of the terms of this  Agreement  (including a
                breach of this Agreement which can be cured), the non-defaulting
                party may terminate this  Agreement by providing  written notice
                of termination to the defaulting party and the termination shall
                be  effective  thirty  (30)  days from said  notice  unless  the
                defaulting  party cures such default within said thirty (30) day
                period. Should LICENSEE terminate this Agreement, said notice of
                termination   shall  be   accompanied  by  a  statement  of  all
                royalty-based   activities   performed   by  LICENSEE  on  which
                royalties  or fees  are due  hereunder  for such  period  as had
                elapsed 

                                       19
<PAGE>

                since the last report under the Licensed patents. Said statement
                shall be accompanied by payment of all monies  reported as being
                due.

ARTICLE VII - RECORDS AND REPORTING

        A.      Within  thirty  (30)  days  after  the  close  of each  calendar
                quarter,  LICENSEE  shall  deliver to PATLEX a statement  of all
                royalty-based   activities   performed   by  LICENSEE  on  which
                royalties or fees are due hereunder  for such calendar  quarter,
                and each such  statement  shall  generally be in accord with the
                sample royalty reports annexed hereto as Exhibit "C" and "D" and
                shall  also  contain  such  other   information  as  PATLEX  may
                reasonably require.

        B.      Simultaneously  with the delivery of each statement covering any
                calendar  quarter,  LICENSEE  shall  pay to  PATLEX  all  monies
                reported as being due. In the event the monies due are not paid,
                interest  at the rate of one and  one-half  percent (1 1/2%) per
                month shall be  assessed  on all  amounts due and unpaid.  It is
                expressly  understood  by  LICENSEE  that it is a breach of this
                Agreement  not to pay all monies  reported  as being due.  It is
                expressly  understood that PATLEX, by accepting  interest on all
                unpaid amounts,  does not waive any rights, powers or privileges
                under this  Agreement.  

        C.      LICENSEE  shall keep at its principal  place of business  accrue
                and  complete  records  of  all  Licensed  Lasers  manufactured,
                leased,  sold,  used or otherwise  delivered to other parties by
                LICENSEE  and of all details in  connection  with the  aforesaid
                activities  necessary  to enable  LICENSEE  to comply  with this
                Agreement.  PATLEX  shall  have the  right,  upon ten (10)  days
                written notice and during  regular  business  hours,  and at the
                expense of PATLEX, and not more than once in each calendar year,
                to have an independent  auditor,  audit at the place of business
                of  LICENSEE  or  other  place  agreeable  to the  parties,  the
                aforesaid  records,  and to report  compliance or non-compliance
                with the payment,  record  maintenance  and all other  reporting
                requirements herein.

        D.      Audit

                If an audit shall  reveal that in each of two  successive  years
                the  LICENSEE  has made an error of 10% or more in its  favor in
                any payment due to PATLEX,  the  LICENSEE  shall be obligated to
                pay the audit fee in respect of such audits.

ARTICLE VIII - WAIVER

        A.      Waiver in Writing

                During the life of this Agreement, neither party shall be deemed
                to  have  waived  any  right,  power  or  privilege  under  this
                Agreement or any provision thereof unless 

                                       20
<PAGE>

                such  waiver  shall  have  been duly  executed  in  writing  and
                acknowledged by the party to be charged with such waiver.  B. No
                Implied  Waiver  The  failure of PATLEX to act or  exercise  its
                rights  hereunder  upon  the  breach  of  any of  the  terms  or
                conditions hereof by LICENSEE shall not be construed as a waiver
                of such  breach,  nor shall it  prevent  PATLEX  from  hereafter
                enforcing  strict  compliance  with any and all of the terms and
                conditions herein set forth.

ARTICLE IX - TRANSFERABILITY

        Notwithstanding anything herein to the contrary, this Agreement, and all
of the rights, licenses and obligations contained herein, may not be transferred
without  permission  in  writing  by  PATLEX,  which  permission  shall  not  be
unreasonably withheld.

ARTICLE X - ACQUISITION

        If LICENSEE  shall acquire in whole or in part the laser  business of an
unlicensed third party engaged in the manufacture, lease, sale or use of lasers,
laser systems,  or Low or High Power Laser Tubes,  neither the  acquisition  nor
this  Agreement   shall   extinguish  the  third  party's   liability  for  past
infringement,  but the same shall be  assumed by  LICENSEE. 

        If LICENSEE  shall  acquire in whole or in part the laser  business of a
third party which was previously  licensed by PATLEX 

                                       21
<PAGE>

under the  Licensed  Patents  applicable  to such laser  business and said third
party has made all required  royalty and fee payments to PATLEX,  then  LICENSEE
shall have no liability for acts of said party covered by said previous  license
and the terms of this Agreement  shall apply to all further  transactions of the
laser business so acquired.

ARTICLE XI - COMMUNICATIONS

        Any payment,  notice or other communication required by, or permitted to
be made by or given to, either party pursuant to this Agreement shall be sent to
such party by registered, certified or express mail, postage prepaid, or prepaid
courier  service,  addressed to such party at its address set forth below, or to
such other  addresses as such party shall  designate by written  notice given to
the other party, and shall be deemed to have been made, given or provided on the
date of mailing. The addresses are as follows:

                  PATLEX:  for royalty statements and payments -

                                    Patlex Corporation
                                    Chief Financial Officer
                                    250 Cotorro Court
                                    Las Cruces, New Mexico  88005

                                    for all other correspondence -
                                    General Counsel
                                    Patlex Corporation
                                    250 Cotorro Court
                                    Las Cruces, New Mexico  88005

                  Palomar Medical Technologies, Inc.:

                                    Mr. Paul DeVos, President
                                    Palomar Medical Technologies, Inc.
                                    489 Groton Road
                                    Westford, MA  01886


                                       22
<PAGE>

ARTICLE XII - MOST FAVORED LICENSEE

        If  subsequent  to  the  Effective  Date  of  this   Agreement   another
manufacturer  of  lasers,  laser  systems,  or Low or  High  Power  Laser  Tubes
similarly  situated to LICENSEE is granted a license by PATLEX which provides to
said another  manufacturer a combined  royalty rate and royalty base  materially
more favorable to said another  manufacturer with respect to any of the Licensed
Patents than that provided herein to LICENSEE for lasers,  laser systems and Low
or High Power Laser  Tubes sold or leased in the United  States,  then  LICENSEE
may,  at its  option,  adopt the  subsequent  license in its  entirety,  mutatis
mutandis,  as of the effective  date of such  subsequent  license.  PATLEX shall
notify  LICENSEE  of  any  such  subsequent  license  and  provide  LICENSEE  an
opportunity to exercise the option provided herein.

ARTICLE XIII - GOVERNMENT SALES 

        No  royalty  or fee shall  accrue or be  payable  in respect of sales or
leases of lasers, laser systems, or Low or High Power Laser Tubes authorized and
consented  to by the  Government  of the  United  States or its  agencies.  This
provisions  shall not inhibit PATLEX from seeking such  compensation  as the law
permits from the Government of the United States or its agencies  arising out of
such  sales or  leases.  

        Since  the  parties  recognize  that  LICENSEE  may have  difficulty  in
determining  when sales to certain  entities may constitute  sales to the United
States  government  which are excludable  from the payment of royalties and fees
under this 

Article XIII,  PATLEX agrees that lasers,  laser  systems,  or Low or High Power
Laser Tubes sold by LICENSEE will be  excludable  under this Article XIII if any
of the following conditions are met: 

        A.      If the sale is made directly to the U.S. Government or an agency
                or research facility thereof;

        B.      If the sale is made to a U.S.  government  contractor  who lists
                the contract number under which the sale is made on the purchase
                order;

        C.      If the sale is made to a U.S. government contractor who provides
                a  written  statement  that the sale is under a U.S.  government
                contract  which  provides   authorization  and  consent  to  the
                contractor's purchase and use of the equipment; and

        D.      If the sale is made to a  University  which  provides  a written
                statement  that the  equipment  has  been  purchased  with  U.S.
                government  funds  under a grant  requiring  the  purchase  of a
                laser,  laser system or Low or High Power Laser Tube such as the
                one  supplied by  LICENSEE.  

        If, however, a court of competent  jurisdiction from which no appeal can
be or has been taken,  shall  determine that the Government of the United States
is not liable for the purchase,  use or lease of such lasers,  laser systems, or
Low or High Power  Laser Tubes by reason of the  failure or  inapplicability  of
said  authorization and consent,  or a determination  that the Government of the
United States is not a real party in interest or for any other reason indicating
that the LICENSEE is the appropriate party from which a royalty or fee should be
sought,  PATLEX shall 

                                       23
<PAGE>

notify  LICENSEE  accordingly  and with the next  quarterly  report and  payment
required  under Article VII hereof,  LICENSEE shall include a full statement and
payment as required.

ARTICLE XIV - REPRESENTATIONS

        PATLEX and GOULD  represent that PATLEX has the full rights and power to
grant the licenses and releases set forth in this Agreement,  and that there are
no outstanding  agreements,  assignments or encumbrances  inconsistent  with the
provisions of this Agreement.  PATLEX and GOULD further represent that there are
no patent  applications  pending in any Patent  Office in the world  relating to
lasers,  laser  systems,  or Low or High Power  Laser  Tubes  which are fully or
partially owned by GOULD and which are licensable by PATLEX.  PATLEX  represents
that it has the exclusive right to license others under the Licensed patents and
to  collect  royalties  and fees  under the  Licensed  Patents  on behalf of all
entities entitled to receipt of the same. PATLEX makes no other  representation,
express or  implied,  nor does  PATLEX  assume any  liability  in respect of any
infringement  of  patents or other  rights of third  parties  due to  LICENSEE's
operation under the license herein granted.

ARTICLE XV - HEADINGS

        The  headings of the several  articles  and  sections  are  inserted for
convenience  of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.

                                       24
<PAGE>

         GORDON GOULD  acknowledges that he has read,  approves and accepts this
Agreement between LICENSEE and PATLEX CORPORATION as set forth above,  including
the patent rights granted herein.

                                                 GORDON GOULD



Date: February 13, 1992                     By:         /s/
                                                -------------------------
                                                Gordon Gould

         IN WITNESS WHEREOF,  the parties hereto affix their respective hands as
of the date indicate:

                                                PATLEX CORPORATION

Date:    February 12, 1992                  By:        /s/
                                                -------------------------
                                                J. Henry Muetterties



                                              PALOMAR MEDICAL TECHNOLOGIES, INC.




Date:    February 7, 1992                  By:       /s/
                                               -------------------------
                                               Paul DeVos



                                       25
<PAGE>


                                   EXHIBIT "A"
                                   -----------


Expired U.S. Patents
--------------------


U.S. Patent No. 3,388,314 (expired June 11, 1985)
                  "Apparatus for Generating Radiation of Frequencies
                  Higher than those of Light"

U.S. Patent No. 3,526,662 (expired February 9, 1988)
                  "Laser Utilizing Collision Depopulation"

U.S. Patent No. 3,576,500 (expired April 27, 1988)
                  "Low Lever Laser with Cyclic Excitation and
                  Relaxation"

U.S. Patent No. 3,586,998 (expired June 22, 1988)
                  "Pulsed Laser with Output Control"



Unexpired U.S. Patents:
----------------------


U.S. Patent No. 4,053,845 (expires October 11, 1994)
                  "Optically Pumped Laser Amplifier"

U.S. Patent No. 4,161,436 (expires July 17, 1996)
                  "Method of Energizing a Material"

U.S. Patent No. 4,704,583 (expires November 3, 2004)
                  "Light Amplifier Employing Collisions to Produce
                  a Population Inversion"

U.S. Patent No. 4,746,201 (expires May 24, 2005)
                  "Polarizing Apparatus Employing an Optical Element
                  Inclined at Brewster's Angle"


Expired Canadian Patent:
-----------------------


Canadian Patent No. 907,110 (expired August 8, 1989)
                  "Light Generating and Amplifying Apparatus"

<PAGE>


                                   EXHIBIT "B"


                          LIST LICENSEE'S SUBSIDIARIES



                                      None

<PAGE>


                                   EXHIBIT "C"



Royalty Report of Palomar Medical Technologies, Inc.

         For Period From              to
                         -----------     -------------


Lasers and Laser Systems



                                          Type --
                                *Total    Gas, Use,  Domestic
Product     # Units   Total     Royalty    Optical-    or     Royalty
Model-Type    Sold  Sales Price  Base $    Pumped     Export  Rate %  Due $
----------  ------- ----------- -------   --------- --------- ------- -----































        *       If a  different  royalty  rate  applies to portions of a sale or
                group of sales,  please  separate the royalty base of such sales
                according to the different royalty rates.

<PAGE>

                                   EXHIBIT "D"
                                   -----------

              Royalty Report of Palomar medical Technologies, Inc.

                               For Period From to

Sealed Gas-Filled Laser Tubes
-----------------------------



                                                     
                                         *Total    Domestic
Product     Power   # Units             Royalty         or   Royalty
Model-Type  Output   Sold    Customer    Base $      Export    Rate %  Due $
----------  ------- -------- --------   ---------  ---------  -------  -----









<PAGE>