EXHIBIT 10.5
DISTRIBUTION AND SUPPLY AGREEMENT
This Distribution and Supply Agreement (this “Agreement”) is entered into as of
September 23, 2010 with an effective date as of August 30, 2010 (the “Effective
Date”) by and between Biolase Technology, Inc. and its subsidiaries
(collectively, “Biolase”) and Henry Schein, Inc. and its subsidiaries
(collectively, “HSI”).
WHEREAS, Biolase and HSI are parties to that certain License and Distribution
Agreement dated as of August 8, 2006, as amended on April 1, 2007, February 29,
2008, April 7, 2008, December 23, 2008, February 27, 2009, September 10, 2009,
January 31, 2010, February 16, 2010, March 9, 2010 and August 13, 2010 (the
“Original Agreement”), pursuant to which HSI was an exclusive distributor of
Biolase products in the United States and Canada;
WHEREAS, the parties desire to enter into this Agreement, pursuant to which,
among other things, (a) Biolase will have the right to sell Products in all
territories, except in certain territories where HSI will have the exclusive
right to sell Products (as defined below), (b) Biolase will retain distribution
rights in territories where it has existing exclusive distribution relationships
(referred to herein as the “Biolase Retained Territories”), and HSI shall have
no distribution rights in the Biolase Retained Territories, and (c) HSI will
have (i) exclusive rights in certain territories specified herein,
(ii) non-exclusive rights in North America (as defined below), and
(iii) non-exclusive rights in all other territories which are not Biolase
Retained Territories, in each case to distribute the Products subject to the
terms and conditions set forth herein;
WHEREAS, contemporaneously with the entry into this Agreement, HSI will deliver
to Biolase new purchase orders for **** of Products (of which **** will be for
**** and **** will be for Products (other than consumables, parts, training or
warranties)) and **** for consumable Products, in each case on the terms and
conditions set forth herein; and
WHEREAS, in connection with the entry into this Agreement, Biolase and HSI have
agreed to amend, restate and supersede the Original Agreement, such that neither
party shall have any rights, remedies or obligations thereunder, other than as
set forth herein.
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Termination. Subject to Section 4.4, effective as of the Effective Date, the
Original Agreement (and all outstanding purchase orders provided thereunder or
otherwise) shall hereby, automatically and without any further action by any of
the parties, be terminated and be of no further force and effect and no party
thereto shall have any rights, remedies or obligations thereunder. It is agreed
and understood that the terms of this Agreement shall apply to all Products and
services purchased or distributed by HSI prior to the Effective Date.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

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2. Appointment and Term.
2.1. Subject to the terms and conditions of this Agreement, Biolase hereby
appoints HSI as its exclusive distributor, in the territories listed on
Schedule 2.1 (collectively, “HSI Exclusive Territories”), of the products listed
on Exhibit A and **** (collectively, “Products”) and HSI hereby accepts such
appointment. During the Exclusivity Negotiation Period (as defined below), the
parties will use their best efforts to agree upon commercially reasonable
performance criteria for each HSI Exclusive Territory, to become effective no
earlier than the expiration of the Exclusivity Negotiation Period. If the
parties are not able to agree to such performance criteria for any HSI Exclusive
Territory despite their best effort to do so prior to the expiration of the
applicable Exclusivity Negotiation Period, or if HSI does not satisfy such
performance criteria in any HSI Exclusive Territory, then such HSI Exclusive
Territory will become an HSI Non-Exclusive Territory (as defined below) under
this Agreement. “Exclusivity Negotiation Period” means ****.
2.2. Subject to the terms and conditions of this Agreement, Biolase hereby
appoints HSI as its non-exclusive distributor of the Products in North America
and those other territories that are not (i) Biolase Retained Territories or
(ii) HSI Exclusive Territories (collectively, the “HSI Non-Exclusive
Territories” and together with the HSI Exclusive Territories, the “HSI
Distribution Territory”), and HSI hereby accepts such appointment. Except for
North America, HSI’s right to distribute Products in any Non-Exclusive Territory
is subject to the right of Biolase to appoint an exclusive distributor in such
territory pursuant to Section 2.4(ii) below. “North America” means,
collectively, the United States and its territories and possessions, Puerto Rico
and Canada. For the avoidance of doubt, the parties acknowledge and agree that
Puerto Rico is, as of the date hereof, an HSI Exclusive Territory, and
notwithstanding its inclusion in the term North America, will not be an HSI
Non-Exclusive Territory unless and until it becomes an HSI Non-Exclusive
Territory pursuant to Section 2.1.
2.3. Subsidiaries of HSI may, at the direction of HSI, exercise any of the
rights, or assume any of the duties, of HSI hereunder, provided that HSI shall
be responsible for the performance of, and the adherence to this Agreement by,
any such subsidiaries. In addition, outside of North America, and subject to
applicable regulatory requirements, HSI shall have the right to appoint third
party sub-distributors, agents or resellers, provided that, HSI shall be
responsible to ensure that any such sub-distributors, agents and resellers agree
to adhere to the performance requirements and other terms and conditions
consistent with this Agreement. Within North America, and subject to applicable
regulatory requirements, HSI shall have the right to appoint Authorized Agents
(as defined below), subject to written approval from Biolase (which approval
shall not be unreasonably withheld, conditioned or delayed), provided that, HSI
shall be responsible to ensure that any such Authorized Agents agree to adhere
to the performance requirements and other terms and conditions consistent with
this Agreement. No Authorized Agent appointed by HSI pursuant to this
Section 2.3 shall have the right to sell Products in Biolase Retained
Territories. For the purposes of this Agreement, “Authorized Agent” means a
third party (including a sub-distributor, agent or reseller) engaged by HSI that
satisfies the following criteria: ****. HSI agrees to use its commercially
reasonable efforts to enforce its rights and remedies against any Authorized
Agent who breaches its obligations under clause (i) above.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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2.4. The rights granted to HSI in this Section 2 above are subject to the
restrictions in the following subsections 2.4(i), 2.4(ii) and 2.4(iii).
(i) HSI shall not have the right to distribute any Products in territories that
are, as of the date hereof, the subject of an exclusive distribution agreement
between Biolase and any third party distributor entered into prior to the date
hereof (any such territory, a “Biolase Retained Territory,” and each such
distribution agreement, a “Biolase Retained Territory Distribution Agreement”).
A list of each of the Biolase Retained Territory Distribution Agreements, and
the Biolase Retained Territories associated therewith, are set forth on
Schedule 2.4 hereto. Biolase hereby represents and warrants to HSI that Schedule
2.4 sets forth a true, complete and correct list of all of the Biolase Retained
Territory Distribution Agreements to which Biolase is a party. For purposes of
clarification, HSI shall not have any right to distribute Products in any of the
Biolase Retained Territories; provided, however, that (a) if Biolase does not
deliver to HSI, within sixty (60) days of the Effective Date, a written
confirmation signed by Biolase and each third party distributor in each of the
territories marked on Schedule 2.4 with an asterisk that such distributor is an
exclusive distributor within such territory, then each such territory shall
automatically become an HSI Non-Exclusive Territory under this Agreement, and
(b) if at any time during the Term Biolase grants distribution rights in any
Biolase Retained Territory to more than one distributor, then such Biolase
Retained Territory shall automatically become an HSI Non-Exclusive Territory
under this Agreement, with or without notice to HSI, but Biolase agrees to give
prompt written notice to HSI of such event.
(ii) Biolase shall ****. If, after **** (the “Non-Exclusivity Date”), Biolase
desires to **** Biolase may ****, subject to the following conditions: ****. If
HSI notifies Biolase ****. If HSI does not so notify Biolase ****, then Biolase
****. Upon the occurrence of a ****, the ****shall not apply in ****. Each party
agrees that this Section 2.4(ii) and the terms set forth herein are confidential
and may not be disclosed by either party. “****” means . “****” means ****. This
Section 2.4(ii) shall ****.
(iii) At the request of HSI, Biolase shall promptly deliver to HSI’s outside
counsel (as directed by HSI), on a confidential basis, a **** with the terms of
this Agreement.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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2.5. Notwithstanding the foregoing, ****
2.6. The initial term of this Agreement shall be from the date hereof through
**** (the “Initial Term”), which shall thereafter automatically renew for
successive one year terms (“Renewal Terms”) unless either party gives written
notice to the other of its intent not to renew this Agreement **** Initial Term
or a Renewal Term, as applicable, or unless otherwise terminated in accordance
with this Agreement. Notwithstanding the foregoing, HSI’s distribution rights in
all territories other than North America shall terminate on ****. The Initial
Term and all Renewal Terms are collectively referred to as the “Term”.
3. Pricing.
3.1. Subject to Section 3.3, Biolase agrees ****. All prices are expressed in
U.S. dollars and are exclusive of any sales or excise taxes. Biolase may
decrease the prices for the Products at any time and will promptly notify HSI of
any price decrease. ****.
3.2. If and when Biolase ****) (the “****”), Biolase shall ****. Biolase shall
****.
3.3. Notwithstanding anything in this Agreement to the contrary, Biolase shall
at all times during the Term provide the Products to HSI at ****.
3.4. ****.
(i) If at any time during the Term the **** such ****, provided, however, that
(i) the **** shall not **** in the aggregate and (ii) Biolase may **** for any
Applicable Quarter by **** in the form of ****.
(ii) ****
(iii) For purposes of this Agreement, (i) “****” shall mean, as to ****. If the
parties are not able to agree on ****, Biolase and HSI shall promptly **** and
to determine the ****, which determination shall be final and binding on Biolase
and HSI.
(iv) **** following the **** of Biolase during the Term (each such ****, the
“Applicable ****”), each party shall deliver to the other party a notice
containing the **** for such Applicable **** (“****”). If either party objects
to **** by delivering written notice of such objection ****, then Biolase and
HSI shall use their reasonable, good faith efforts to resolve such dispute ****.
If a resolution is reached, such resolution shall be in writing, signed by
Biolase and HSI, shall be final and binding on Biolase and HSI, and shall
conclusively determine ****. If no resolution can be reached ****, Biolase and
HSI shall promptly select an independent accounting firm that has no preexisting
relationship with either Biolase or HSI (the “Accounting Firm”) to arbitrate the
dispute, to review the **** and to determine the **** in accordance with the
terms and conditions of this Agreement (with instructions to such Accounting
Firm that the determination shall be made ****), which determination shall be
final and binding on Biolase and HSI.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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3.5. Upon ****, each party shall provide to the other party’s attorney and/or
accountants access to such books and records during regular business hours as
may reasonably be required to verify ****, provided that any person
participating in**** shall (to the extent such person is not otherwise bound to
protect the confidentiality of such books and records by applicable codes of
conduct or professional responsibility) agree to keep confidential all
information disclosed in connection therewith, and provided further that, ****
the business of the party providing access. In connection with this Section 3.5,
neither party shall be required to **** to the other party’s attorney or
accountants.
4. Orders; Shipping and Payment Terms; Prepayments.
4.1. HSI shall order Products from Biolase by submitting a purchase order
indicating the desired quantity and delivery location. Biolase shall promptly
acknowledge HSI’s purchase orders and inform HSI of scheduled delivery dates,
and if applicable, back order status.
4.2. All shipments of Products (including drop shipments directly from Biolase
to HSI’s customers) shall be shipped by Biolase, FOB Biolase’s manufacturing
facility, with risk of loss and title to the Products (except for warranty
claims) to pass to HSI (or HSI’s customers in the case of drop shipments) upon
delivery by Biolase to the shipping carrier at its facility.
4.3. Amounts payable under purchase orders shall be due and payable ****.
Notwithstanding the foregoing, Biolase may, at its option, require amounts
payable under a purchase order to be due and payable ****, in which case the
amounts payable under such purchase order shall be subject to a ****. Biolase’s
option shall be exercised by delivery of a written notice to HSI on or prior to
the date the applicable invoice is issued. All payments shall be made in U.S.
dollars. No invoice may be issued prior to Biolase’s shipment of the Products
ordered.
4.4. Existing Pre-Paid Advances; New Pre-Paid Advance.
(i) The parties agree that this Agreement (i) amends and restates in its
entirety each of (x) the letter agreement dated February 16, 2010 (as amended or
otherwise modified prior to the date hereof, the “February Letter”), between the
HSI and Biolase, and (y) the letter agreement and March 9, 2010 (as amended or
otherwise modified prior to the date hereof, the “March Letter”), between the
HSI and Biolase (collectively, the February Letter and the March Letter are
referred to as the “Existing Agreements”), and (ii) continues the obligations of
Biolase thereunder. The Existing Agreements shall no longer be in effect other
than as modified herein. This Agreement does not constitute a novation.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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(ii) HSI and Biolase hereby acknowledge and agree that ****.
(iii) Subject to the terms and conditions of this Agreement, HSI agrees to ****.
(iv) If (i) Biolase fails to deliver Products in accordance with this Agreement
under the **** Purchase Order on or prior to the delivery date(s) set forth
below in Section 4.5 (or ****), and ****, or (ii) any Event of Default (as
defined in the Amended and Restated Security Agreement, defined below) occurs,
then the outstanding balance under the Total Advances shall be refunded by
Biolase to HSI, which payment shall be immediately due and payable to HSI in
cash without any action or notice required by HSI.
4.5. Subject to Section 10.1, Biolase agrees to deliver Products as soon as
commercially practicable after receipt of a purchase order from HSI, but in no
event later than the date set forth on such purchase order. On the date hereof,
HSI will deliver purchase orders to Biolase as follows (the “Effective Date
Purchase Orders”): (i) ****. The satisfaction and fulfillment of the Effective
Date Purchase Orders are subject to the terms and conditions set forth in the
Amended and Restated Security Agreement, dated as of the date hereof, between
HSI and Biolase (the “Amended and Restated Security Agreement”). ****.
4.6. All Products shall have standard warranties for **** . ****.
5. Product Discontinuance. Biolase agrees to notify HSI **** Biolase intends to
discontinue the distribution or sale of any Products, and ****. Notwithstanding
its receipt of such notice, HSI may continue to sell such discontinued Products
until its inventory is depleted.
6. Purchase Modification. HSI may modify, without charge, any of the **** of
Products (other than consumables, parts, training and warranties) to be
delivered by Biolase prior to **** under the **** Purchase Order for other
Products (other than consumables, parts, training or warranties), by providing
Biolase with notice of such modification electronically, by facsimile or by mail
on or prior to ****.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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7. Support of Products.
7.1. Biolase and its distributors **** will provide HSI and HSI’s existing and
future end-user customers (including the ****) (the “Customers”), with such
technical support, educational programs, product literature, training, upgrades
(including without limitation, software upgrades, and any upgrades or
modifications to HSI inventory intended to be sold by HSI in any HSI
Distribution Territory which HSI determines is reasonably necessary in order to
sell such Product in any such HSI Distribution Territory, including
reconfiguring software and adding documentation for such HSI Distribution
Territory), replacement parts and Product warranties on the Products, including
without limitation, those services set forth on Schedule 7.1 (“Support
Services”) as is necessary for HSI and its Customers to effectively market, sell
and use, as applicable, the Products. Notwithstanding the foregoing, with
respect to its obligation to provide Support Services for the ****, Biolase
shall not be required to provide Support Services to any party other than HSI or
its Customers. Biolase shall, at HSI’s request, upgrade any Products in HSI’s
inventory to make it saleable, and will charge HSI ****; provided that, if ****,
then Biolase ****. Such Support Services shall be provided by Biolase to HSI and
its Customers ****.
7.2. Biolase shall use ****, any **** which HSI, in its reasonable discretion,
**** (“****”). Biolase hereby covenants and agrees that it will **** for ****
prior to ****.
7.3. On or prior to ****, HSI will provide Biolase with a preliminary marketing
plan prepared in good faith, in such detail and with such assumptions as HSI
reasonably believes are necessary for such plan to be meaningful. The parties
expressly acknowledge that delivery of such plan does not impose any further or
new obligations on, nor grant any further rights to, HSI and the failure by HSI
to successfully carry out the marketing plan, or any changes made thereto by
HSI, shall not be a breach of this Agreement.
8. Termination.
8.1. A party may terminate this Agreement, effective immediately upon delivery
to the other party of written notice to such effect, in any of the following
circumstances:
(i) the other party dissolves, ceases doing business, or sells or transfers all
or substantially all of its assets;
(ii) the other party (A) makes an assignment for the benefit of its creditors,
(B) institutes a proceeding as a debtor under any law relating to insolvency or
bankruptcy, (C) fails to have discharged within 45 days any involuntary
proceedings brought against it under any insolvency or bankruptcy law,
(D) becomes insolvent or (E) generally does not pay its debts as they become
due;
(iii) the other party commits theft or embezzlement or obtains funds or property
under false pretenses; or
(iv) the other party fails to remedy any breach or default in the performance of
the terms of this Agreement (but only if such breach or default is capable of
remedy) within **** after its receipt of a written notice of such breach or
default; provided, however, that, with respect to any breach or default of ****,
such cure period shall be **** (but only if such breach or default is capable of
remedy).

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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8.2. Biolase shall honor all orders for Product that HSI placed prior to the
effective date of termination or expiration of this Agreement. Termination shall
not affect the rights or obligations of either party accrued as of the effective
date of such termination or that may arise subsequently with respect to
transactions initiated or completed prior to the effective date of such
termination. The confidentiality and indemnification provisions of this
Agreement shall survive the termination or expiration of this Agreement. In
addition, in the event of termination or expiration of this Agreement, HSI shall
have the right to sell any remaining Products delivered to HSI.
9. Treatment of Confidential Information; Nondisparage.
9.1. Neither party will use (except to undertake the activities contemplated by
this Agreement), publish or otherwise disclose any information related to the
other party that is acquired by such party in connection with the performance of
this Agreement unless required by law, regulation or legal process. During the
Term and for a ****, neither party will disclose, reveal or use any Confidential
Information concerning the other party or its respective clients, affiliates or
business partners without the prior written consent of the disclosing party;
provided, however, that the confidentiality obligations hereunder shall survive
indefinitely with respect to, if applicable, customer lists and customer
identifying data of HSI. HSI and Biolase each agrees it shall not knowingly
utilize any material Confidential Information of the other party to encourage,
assist, or induce its employees or any third party to negatively interfere with
or impede each party’s respective sales efforts. A violation of this Section 9.1
shall constitute a breach of this Agreement.
9.2. “Confidential Information” means all data and information of any type or
form (whether visual, written, oral, electronic, photographic or otherwise) of a
proprietary or confidential nature and not generally known to the public that is
disclosed (either intentionally or unintentionally) by a party hereto or one of
its affiliates or representatives to the other party hereto or one of its
affiliates or representatives, regardless of whether such information is marked
or indicated as being confidential. Confidential Information includes, but is
not limited to, all information of a financial, business, marketing,
organizational, legal or technological nature, including patents, copyrights,
proprietary software, computer algorithms, trade secrets, inventions and other
intellectual property, financial statements and other financial data, customer
and supplier lists, marketing plans, sales projections and forecasts, cost
information, product designs, engineering and technical data, models, prototypes
and other information relating to business practices, current and future
acquisitions, research and development, manufacturing, production, operations
and the like. Confidential Information also includes information of or relating
to third parties that is disclosed by the disclosing party to the receiving
party. Confidential Information shall not, however, include any information
that, as shown by competent proof, (i) is publicly known or generally available
in the public domain prior to the time of disclosure by the disclosing party to
the receiving party, (ii) becomes publicly known or generally available in the
public domain after disclosure by the disclosing party to the receiving party
through no action or inaction of the receiving party, (iii) is already in the
possession of the receiving party at the time of disclosure by the disclosing
party as shown by the receiving party’s written records existing immediately
prior to the time of such disclosure, (iv) is obtained by the receiving party
from a third party that may lawfully disclose such information without breaching
any obligation of confidentiality applicable to such third party or (v) is
independently developed by the receiving party without use of or reference to
the disclosing party’s Confidential Information, as shown by the receiving
party’s independent contemporaneous written records.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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9.3. All Confidential Information provided hereunder will be and remain the
property of the disclosing party and, upon termination of this Agreement, will
be promptly returned to the disclosing party or destroyed upon the disclosing
party’s written request.
9.4. HSI covenants and agrees that HSI and its subsidiaries, Affiliates, agents,
and employees (the “HSI Parties”) shall not ****, directly or indirectly, say or
do anything disparaging about, or take any action injurious to the business
interests or reputation of Biolase or its subsidiaries, Affiliates, agents, and
employees (the “Biolase Parties”), including, without limitation, any
disparagement of any of their products or services. HSI covenants and agrees
that the HSI Parties shall not **** encourage, assist or induce others to say or
do anything disparaging about, or take any action injurious to the business
interests or reputation of the Biolase Parties, including, without limitation,
any disparagement of any of their products or services. Biolase covenants and
agrees that the Biolase Parties shall not ****, directly or indirectly, say or
do anything disparaging about, or take any action injurious to the business
interests or reputation of the HSI Parties, including, without limitation, any
disparagement of any of their products or services. Biolase covenants and agrees
that the Biolase Parties shall not during the Term encourage, assist or induce
others to say or do anything disparaging about, or take any action injurious to
the business interests or reputation of the HSI Parties, including, without
limitation, any disparagement of any of their products or services.
9.5. During ****, HSI and Biolase each agree to use commercially reasonable best
efforts (a) not to solicit for employment, (b) not to hire for employment, and
(c) not to engage as an independent contractor or consultant, any employee of
the other party who acted in such capacity during the Term of this Agreement
and, as to a particular HSI or Biolase employee whose employment is **** (and
including any former employees of Biolase as may be agreed to in writing by
HSI), **** of such employee’s service with HSI or Biolase, as the case may be.
During the Term, Biolase agrees to promptly notify HSI in writing, but in any
event, **** the separation of service of any Biolase employee, and HSI’s
obligations hereunder shall relate only to those Biolase employees as to whom
HSI received such written notice. The notice required from Biolase pursuant to
this Section 9.5 shall be delivered **** by e-mail addressed to ****, or such
other person(s) as HSI may designate from time to time, shall clearly state that
such notice is being delivered pursuant to this Section 9.5 of this Agreement
and shall be followed by a confirmation copy sent to HSI within 5 days of such
email notification by certified mail to the addresses set forth in Section 12.6.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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10. ****.
10.1. Biolase’s obligation to supply Products to third parties shall at all
times be subject to the condition that Biolase is able to **** and any ****
(collectively, “****”). In the event that Biolase is at any time during the Term
**** pursuant to the terms of this Agreement for any reason whatsoever, Biolase
shall use its commercially reasonable efforts to **** such **** as soon as such
****; provided, however, that (i) ****.
10.2. Pursuant to the terms and conditions of this Agreement, during the Term,
HSI may make available financial services offered or arranged by HSI or its
affiliates to HSI prospective purchasers of Products in connection with the sale
of Products or otherwise (“HSI Financial Services”). Nothing herein shall be
construed as limiting HSI’s or its affiliates’ rights to provide HSI Financial
Services for or on behalf of any other person, and nothing herein shall be
construed as limiting Biolase’s rights to offer or provide to its customers
financial services of any other person.
10.3. ****
11. Prospective Customers.
11.1. If at any time HSI provides Biolase information about a prospective sale
by HSI, including in connection with a request for Biolase assistance in
connection with prospective sales of Products, Biolase shall not, directly or
indirectly, encourage any such prospective customer of HSI to purchase or
otherwise acquire any Products from any third party (other than HSI), including,
without limitation, directly from Biolase or any of its affiliates, rather than
purchasing such Products from HSI.
11.2. Biolase shall not solicit any Customer for the sale of any ****, or sell
any **** to any Customer, for **** each of (a) **** and (b) the ****. For
purposes of this Section 11.2, “****” means ***** with respect to any Product.
11.3. If at any time Biolase would like to request HSI’s assistance in
connection with a prospective sale of Products, Biolase shall ****, or ****, and
such request shall clearly state that it is being delivered pursuant to this
Section 11.3 of this Agreement. If, and only if, HSI agrees in writing to
provide such assistance, then Biolase may provide information about the
prospective customer in order to permit HSI to provide such assistance and HSI
shall not, directly or indirectly, encourage any such prospective customer of
Biolase to purchase or otherwise acquire any Products from any third party
(other than Biolase), including, without limitation, directly from HSI or any of
its affiliates, rather than purchasing such Products from Biolase. For the
purposes of clarification, Biolase shall not provide ****, or ****.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

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12. Other Matters.
12.1. Representations and Warranties of Biolase. Biolase hereby represents and
warrants to HSI that (i) it is the exclusive legal and beneficial owner, free
and clear of any liens, encumbrances, or claims of third parties (other than the
existing security interests in favor of MidCap Financial, LLC and HSI), of all
right, title and interest in and to the Products and all intellectual property
rights incorporated therein or used in connection with the manufacture,
marketing or sale of such Products (“Intellectual Property Rights”), (ii) it has
the right to permit HSI’s, HSI’s affiliates and/or HSI’S customer’s use of the
Intellectual Property Rights, (iii) it is the exclusive legal and beneficial
owner of the trademarks, service marks, names, and designs owned by Supplier
(the “Marks”) and used in connection with the Products, free and clear of any
liens, encumbrances, or claims of third parties (other than the existing
security interests in favor of MidCap Financial, LLC and HSI), and has the right
to license the Marks to HSI as provided in this Agreement, (iv) HSI’s use of the
Marks in accordance with this Agreement does not, and is not reasonably likely
to, infringe or violate the trademark or trade dress rights of any third party
in the HSI Distribution Territory, (v) the Products do not, in whole or in part,
infringe upon, violate or misappropriate the rights of any person or entity,
including, but not limited to, any patents, copyrights, trademark rights, trade
secrets or any other proprietary rights, (vi) except as disclosed in Biolase’s
filings with U.S. Securities and Exchange Commission there is no claim, action,
litigation, proceeding or investigation before any court or administrative
agency pending or threatened against or with respect to the Products, (vii)
except as set forth on Schedule 12.1, Biolase has not received any third party
cease or desist notification, licensing notice, or patent notification with
respect to the Products, (viii) nothing contained in any marketing, advertising
or educational materials produced by or for the Biolase in connection with
marketing, advertising or educating persons concerning the Products infringes,
violates or misappropriates any intellectual property right of any third party
(for the sake of clarity, it is specified that this representation and warranty
also applies to materials produced by HSI at the direction of the Biolase), and
(ix) the distribution by HSI of the Products in the packaging provided by or
approved by the Biolase, as contemplated by this Agreement shall not infringe or
violate the trademark or trade dress rights of any third party in the HSI
Distribution Territory.
12.2. Continuing Guaranty. The parties shall be subject to the terms of the
Continuing Guaranty and Indemnification set forth on Exhibit B, which is hereby
incorporated herein and made a part hereof. In the event of a conflict between
the terms and conditions set forth in this Agreement and the terms and
conditions set forth on Exhibit B, the terms and conditions set forth on
Exhibit B shall control.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

11

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12.3. HSI represents and warrants that it is acting on behalf of itself and no
other third parties in connection with the negotiation and execution of this
Agreement.
12.4. LIMITATION OF LIABILITY. EXCEPT IN CONNECTION WITH A PARTY’S WILFUL
MISCONDUCT OR GROSS NEGLIGENCE, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
INDIRECT, INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES INCLUDING, BUT
NOT LIMITED TO, LOST PROFITS AND LOSS OF GOODWILL, ARISING FROM OR RELATING TO
ANY BREACH OF THIS AGREEMENT (OR ANY DUTY OF COMMON LAW, AND WHETHER OR NOT
OCCASIONED BY THE NEGLIGENCE OF A PARTY OR ITS AFFILIATES), REGARDLESS OF ANY
NOTICE OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED THAT NOTHING IN THIS SECTION
IS INTENDED TO, OR DOES, LIMIT (A) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF
EITHER PARTY SET FORTH HEREIN OR (B) EITHER PARTY’S RIGHT TO CLAIM DIRECT
DAMAGES FROM THE OTHER PARTY.
12.5. For purposes of clarification, subject to warranty claims, HSI does not
have any right to return or exchange of any products purchased by it under this
Agreement. Upon reasonable request by Biolase, HSI shall provide, addressed to
Biolase (or addressed to Biolase’s independent auditors) a written confirmation
of the immediately preceding sentence, signed by an appropriate officer of HSI.
12.6. Notices. Except as otherwise provided, all notices given under this
Agreement shall be in writing and shall be deemed to have been duly given upon
receipt if delivered by hand or facsimile transmission with receipt confirmed,
three days after mailing by certified or registered mail, and one day after
sending by overnight courier, to the parties’ respective address indicated on
the signature page of this Agreement or such other address as a party specifies
in writing to the other party. All notices given to HSI under this Agreement
shall be sent with a copy to Henry Schein, Inc., 135 Duryea Road, Melville, New
York 11747, Attn: General Counsel, Fax (631) 843-5660. All notices given to
Biolase under this Agreement shall be sent with a copy to Biolase Technology,
Inc., 4 Cromwell, Irvine, California 92618, Attn: General Counsel, Fax (949)
340-7379.
12.7. No Joint Venture. Nothing in this Agreement shall be construed to create,
constitute, give effect to or otherwise imply a joint venture, partnership,
agency or employment relationship of any kind between the parties.
12.8. Compliance with Government Contracting Requirements. Biolase and HSI will
work together in good faith to identify mutually beneficial opportunities (as
determined in HSI’s sole discretion) to utilize the services of minority-owned
businesses in connection with HSI’s pursuit of federal, state and local
government contracts. Biolase shall comply with laws, regulations and orders
related to government contracting, including without limitation with respect to
minority owned and disadvantaged businesses (including pursuant to 48 CFR
Sections 52.219-8 and 52.219-9), and equal employment opportunity and
affirmative action. Biolase and any Biolase representative performing this
Agreement have not been debarred, suspended or excluded, and are not subject to
any proposed debarment, suspension or exclusion, from participation in the
Medicare or Medicaid programs or any other government program, and have not been
convicted of, or have charges pending regarding, any offenses which may lead to
such debarment, suspension or exclusion. Biolase shall promptly inform HSI if it
becomes aware that the provisions of this paragraph become inaccurate in a
material way during the term.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

12

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12.9. Trademarks. Biolase grants to HSI the limited right to use Biolase’s
trademarks relating to the Products in connection with the marketing of the
Products during the Term and for a period of during any such period thereafter
in which HSI has rights to sell Products.
12.10. Assignment. This Agreement may not be assigned by either party without
the other party’s prior written consent.
12.11. Governing Law. This Agreement shall be governed by the laws of the State
of New York, without reference to conflict of laws principles; provided,
however, that the Federal Arbitration Act of the United States shall govern
issues as to arbitrability. Except as otherwise provided herein, if a dispute
arises in connection with or relating to this Agreement and the parties are
unable to resolve it **** through direct negotiations, the dispute shall be
referred to final and binding arbitration to be held in Chicago, Illinois,
U.S.A. in accordance with the rules of the American Arbitration Association then
in effect, by a panel of three arbitrators, with one arbitrator to be selected
by each party and the third to be chosen by the two arbitrators selected by the
parties; provided, however, if Biolase becomes a debtor in a bankruptcy or
similar insolvency proceeding, the judge presiding over such proceeding shall
have discretion to hear and determine all disputes arising under this Agreement.
The arbitrators shall make the final determination as to any discovery disputes
between the parties and may impose sanctions in their discretion to enforce
compliance with discovery obligations. The award of the arbitrator(s) shall be
final and binding upon the parties hereto and may be enforced by any court of
competent jurisdiction. Each party shall bear their own attorneys’ fees, costs
and necessary disbursements incurred in connection with said arbitration;
provided, however, the successful party prevailing in any such arbitration shall
be entitled to recover from the unsuccessful party the successfully party’s
share of the costs and charges of the arbitrators. Notwithstanding the
provisions of this Section, the parties may, in addition to any other remedies
available to it under this Agreement, bring an action in any court of competent
jurisdiction for injunctive relief pending the settlement or arbitration of the
dispute and may have entered an appropriate temporary restraining order or
preliminary injunction without being required to post bond or other security or
to offer proof of monetary damages. The inclusion of this provision shall not be
construed to deny appropriate equitable relief in arbitration in any other
situation in which the circumstances justify such relief.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

13

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12.12. Remedies. Due to the fact that the disclosing party could not be
adequately compensated by money damages in the event of the receiving party’s
breach of any of the confidentiality provisions of this Agreement, the
disclosing party shall be entitled, in addition to any other right or available
remedy, to an injunction or other equitable relief restraining such breach or
any threatened breach.
12.13. Entire Agreement; Amendments. This Agreement, including the exhibits
attached hereto, each of which is incorporated herein by reference in its
entirety, constitutes the entire agreement between Biolase and HSI. All prior or
contemporaneous agreements, proposals, understandings and communications between
or involving Biolase and HSI, whether oral or written, including without
limitation, the Original Agreement, are superseded by this Agreement. The terms
contained in this Agreement shall supersede any conflicting terms contained in
any purchase order, invoice or other document used or submitted by either party
in connection with the purchase of Products covered by this Agreement. This
Agreement may not be amended, nor any obligation waived, except by a writing
signed by both parties.
12.14. No Waiver. No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
12.15. Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, then this Agreement,
including all of the remaining unaffected terms, shall remain in full force and
effect as if such invalid or unenforceable term had never been included.
12.16. No Publicity. Neither party shall originate any publicity, press releases
or other public announcement relating to any relationship between the parties,
this Agreement or the performance hereof without the other party’s prior written
consent; provided, however, that either party may, without such consent, make
any press release or other public announcement as required by law.
12.17. Section Headings. The headings contained in this Agreement are for
convenience of reference only and are not intended to have any substantive
significance in interpreting this Agreement.
12.18. Facsimile; Counterparts. This Agreement may be executed by facsimile
signature and in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

14

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Signatures on next page

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

15

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

                  Henry Schein, Inc.       Biolase Technology, Inc.
 
               
By:
  /s/ Mark E. Mlotek       By:   /s/ Federico Pignatelli
 
               
 
  Name: Mark E. Mlotek           Name: Federico Pignatelli
 
  Title:   Executive Vice President           Title:   Chairman and interim CEO
 
                Address for Notices:       Address for Notices:
 
               
 
  135 Duryea Road           4 Cromwell
 
  Melville, New York 11747           Irvine, California 92618
 
  Fax: (631) 843-5660           Fax: (949) 340-7379
 
  Attn: General Counsel           Attn: General Counsel

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

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

 

EXHIBIT A
****

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

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

 

EXHIBIT B
CONTINUING GUARANTY AND INDEMNIFICATION
Biolase Technology, Inc. on behalf of itself and its affiliates (collectively
referred to as “BIOLASE”) hereby guarantees that each article constituting or
being part of any shipment or delivery now or hereafter made to Henry Schein,
Inc. or any affiliate thereof (collectively, the “PRODUCTS”) (collectively,
“HSI”) will: (i) at the time of each shipment or delivery be in compliance with
all applicable federal, national, supranational, state, provincial, local or
similar statute, law, ordinance, regulation, rule, code, order, requirement or
rule of law (including common law) (hereinafter referred to as “Legal
Requirements”), in each region in which HSI will distribute the Products; and
(ii) not be adulterated or misbranded within the meaning of the U.S Federal
Food, Drug and Cosmetic Act (the “Act”), or within the meaning of any Legal
Requirements, nor will any PRODUCT be an article which may not, under the
provisions of Sections 405, 505 or 512 of the Act, be introduced into interstate
commerce. BIOLASE hereby guarantees that it has proper legal title to the
PRODUCTS and that the PRODUCTS are merchantable and fit for their intended
purpose.
BIOLASE, at its own expense, shall defend, indemnify and hold HSI harmless for
and against any and all liabilities, losses, damages (including, actual,
punitive, enhanced and exemplary damages), claims (including product liability
claims), costs and expenses (including defense costs and reasonable attorneys’
fees and expenses), interest, awards, judgments and penalties (including
reasonable attorneys’ fees and expenses) suffered or incurred by HSI arising or
resulting from:

  i.  
any claim of trademark, trade dress, trade secret, copyright, patent or other
intellectual property infringement or misappropriation, including any claim for
willful infringement against HSI, arising out of HSI’s distribution of the
PRODUCTS (except where HSI has supplied the trademark which is the basis for the
claim);

  ii.  
any claim for false advertising, unfair competition, and/or Lanham Act violation
arising out of HSI’s distribution of the PRODUCTS (except where HSI has supplied
the materials which are the basis for the claim);
    iii.  
any alleged or actual use or misuse of the PRODUCTS (other than by HSI);

  iv.  
any breach by BIOLASE of any obligation to HSI, including those contained in
related agreements in respect of distribution, if any;

  v.  
any negligent or willful action or omission of BIOLASE or any of its agents,
employees, representatives, successors or assigns in connection with the
manufacture, development, sale, distribution, storage or dispensing of the
PRODUCTS (except to the extent HSI has made any material modifications to any
PRODUCTS in violation of any applicable warranty); or

  vi.  
any action for the recall or seizure of the PRODUCTS.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

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

 

In the event that any claim concerning the PRODUCTS is threatened or brought
against HSI, HSI shall have the right to select counsel to defend against such
claim with all reasonable attorneys’ fees and expenses to be borne and paid by
BIOLASE, provided that (i) HSI shall identify the counsel it intends to use to
defend against such claim within a reasonable time, (ii) counsel selected by HSI
is experienced in the relevant area of law (e.g., trademark, copyright, patent
etc.) relating to the claim at issue, and (iii) the attorneys’ fees for which
Biolase is responsible for are those rates normally charged for similar work by
attorneys of like skill in the area (for example, as set forth in the most
recent Economic Survey of the American Intellectual Property Law Association).
Nothing herein shall affect Biolase’s obligation to indemnify and hold harmless
HSI as set forth above.
In the event that any claim is threatened or brought against the PRODUCTS,
Biolase shall promptly notify HSI of such claim(s) in writing. Biolase shall
consult with HSI to the fullest extent possible in the defense of the claim(s)
and shall not take any substantive action in defense of the claim without HSI’s
approval.
BIOLASE agrees to maintain comprehensive “occurrence” general liability
insurance, including “occurrence” product liability, contractual liability
insurance and advertising injury coverage, with minimum limits of liability of
**** and to deliver to HSI a certificate thereof with HSI named as an additional
insured thereon. Such insurance must insure against all products contemplated
under this Agreement. Insurance coverage must be procured from an insurance
company bearing an AM Best Rating of no less than **** or a S&P Rating of no
less than ****.
BIOLASE will provide notice to HSI of any regulatory action related to its
operations and BIOLASE shall be responsible, if required by Legal Requirements,
for notifying the appropriate federal, state and local authorities of any
customer complaints or other occurrences regarding the PRODUCTS, evaluating all
complaints and responding to HSI in writing on the resolution of any complaints
from HSI for its customers.
If BIOLASE private labels any PRODUCT for HSI, BIOLASE agrees: (a) to make no
changes in the PRODUCT, labeling or packaging of the PRODUCT without HSI’s prior
written approval; and (b) to allow representatives of HSI to enter and inspect
BIOLASE’S facilities during normal business hours and, upon reasonable request,
to supply HSI with proper documentation for HSI to determine BIOLASE’s adherence
to quality assurance and regulatory compliance standards.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

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

 

This Agreement shall be continuing and shall be binding upon BIOLASE and his or
its successors and assigns and shall inure to the benefit of HSI, its successors
and assigns and to the benefit of its officers, directors, agents and employees.
This Agreement shall supersede any and all prior agreements or understandings
between HSI and BIOLASE regarding the subject matter hereof. Neither party shall
provide any compensation or other benefit to employees of the other party
without the prior written consent of such other party, and each party agrees to
promptly disclose to the other party any financial relationships between itself
and any employee of the other party which may give rise to a conflict of
interest between such employee and such other party and neither party shall
represent to any customer or potential customer that they are providing any such
compensation or other benefit, unless the parties otherwise agree in writing. No
right, express or implied, is granted to BIOLASE hereunder to use in any manner
any name, trade name, trademark or service mark of HSI. This Agreement contains
proprietary information and may not be disclosed without prior written approval
from HSI. Any amendments or modifications to this Agreement must be in writing
and executed by authorized representatives of both parties. This Agreement shall
be governed by the laws of the State of New York. This Agreement shall cover all
PRODUCTS and shall survive the termination of any distribution agreement or
arrangement between BIOLASE and HSI.

      ****  
Certain confidential information contained in this document, marked with four
asterisk, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.