Document:

Exhibit 10.1

Exhibit 10.1

LICENSE AGREEMENT

This LICENSE AGREEMENT supersedes the license agreement having an effective date of the 24th day of
January, 2007 (the “FIRST EFFECTIVE DATE”), between BIOLASE TECHNOLOGY, Inc. (hereinafter along
with its AFFILIATES, referred to as “BIOLASE”), located at 4 Cromwell, Irvine, California 92618 and
The Procter & Gamble Company (hereinafter along with its AFFILIATES, referred to as “P&G”) located
at One Procter & Gamble Plaza, Cincinnati, Ohio 45202. The license agreement having the FIRST
EFFECTIVE DATE is referred to hereafter as “PREVIOUS AGREEMENT” and this LICENSE AGREEMENT is
referred to hereafter as “SECOND AGREEMENT”. P&G and BIOLASE may each be referred to as a “PARTY”
and collectively as the “PARTIES”. The SECOND AGREEMENT shall supersede the PREVIOUS AGREEMENT.

Whereas, P&G is engaged in the business of developing, manufacturing, marketing, distributing,
selling and supporting a range of consumer products;

Whereas, BIOLASE is the owner or has certain rights in certain patents and technology as is more
particularly set out in Exhibit A; and further, as is more particularly set out in Exhibit C;

Whereas, P&G and BIOLASE entered into a Letter Agreement (the “LETTER”) dated June 28th,
2006 setting forth the general terms and conditions for the PREVIOUS AGREEMENT;

Whereas, P&G wishes to obtain, and BIOLASE is willing to grant to P&G, an exclusive license to the
BIOLASE IP (as defined in Section 1.2) and BIOLASE TECHNOLOGY (as defined in Section 1.5) according
to the terms and conditions of the SECOND AGREEMENT;

Whereas, BIOLASE will retain certain rights to the BIOLASE PATENTS and BIOLASE TECHNOLOGY according
to the terms and conditions of the SECOND AGREEMENT;

Whereas, P&G is the owner or has certain rights in certain patents and technology as is more
particularly set out in Exhibit F;

Whereas, BIOLASE wishes to obtain, and P&G is willing to grant to BIOLASE, an exclusive license to
the P&G IP (defined in section 1.14) according to the terms and conditions of this SECOND
AGREEMENT;

Whereas P&G will retain certain rights to the P&G IP according to the terms and conditions of this
SECOND AGREEMENT; and

Whereas the PARTIES mutually agree to terminate the PREVIOUS AGREEMENT subject to the surviving
provisions thereof.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

 

 

Now, therefore, in consideration of the foregoing and other mutual promises hereinafter set forth
and for other good and valuable consideration, the PARTIES hereto agree as follows:

	1.	 	DEFINITIONS

	 	1.1	 	“AFFILIATE” means any corporation, limited liability company or other legal
entity which directly or indirectly controls, is controlled by, or is under common
control with P&G or BIOLASE, including any successor or assign of such an entity.
“CONTROL”, with respect to an AFFILIATE, shall mean the direct or indirect ownership of
at least fifty percent (50%) of (i) the income, (ii) the outstanding shares on a fully
diluted basis or other voting rights of the subject entity to elect directors, or if
not meeting the preceding, any entity owned or controlled by or owning or controlling
at the maximum control or ownership right permitted in the country where such entity
exists, or (iii) such other arrangement as constitutes the direct or indirect ability
to direct the management, affairs or actions of such entity.

	 	1.2	 	“BIOLASE INTELLECTUAL PROPERTY” (BIOLASE IP) means all present and future:
inventions, whether or not patentable; BIOLASE PATENTS; copyrights; trade secrets; and
any other rights or information or materials within the P&G FIELDS OF USE, whether
confidential or not, owned by BIOLASE or in which BIOLASE has a transferable or
LICENSABLE INTEREST.

	 	1.3	 	“BIOLASE PATENTS” means those present and future patents and patent
applications within the P&G FIELDS OF USE or within the BIOLASE TECHNOLOGY or the
BIOLASE RETAINED FIELD to the extent permitted under Section 2.4 of this AGREEMENT,
including but not limited to: i) the patents listed in Exhibits A and C, and any
parent applications, continuations, continuations-in-part, divisionals, re-exams,
reissues thereof, ii) any subsequent patents or patent applications having
applicability in the P&G FIELDS OF USE in which BIOLASE has ownership or has a
transferable or LICENSABLE INTEREST, and iii) any foreign equivalents of the foregoing

	 	1.4	 	“BIOLASE RETAINED FIELD” means any and all fields of use and products which are
(a) currently, meaning as of the EFFECTIVE DATE, marketed by BIOLASE; and (b) other
fields of use and products intended to be used primarily in ****. BIOLASE shall also
retain all rights to the BIOLASE IP and BIOLASE TECHNOLOGY that are outside the P&G
FIELDS OF USE. BIOLASE shall also retain all rights to products that revert to BIOLASE
as provided herein.

The BIOLASE RETAINED FIELD also includes any and all fields of use which are
primarily administered by ****.

The BIOLASE RETAINED FIELD also includes products, methods, applications and
services directly or indirectly using ****.

The BIOLASE RETAINED FIELD is applicable to products and methods ****. For the
avoidance of doubt, products, methods, applications and services within the PRIMARY
P&G FIELD OF USE that relate to “(ii)”, “(iii)”, “(iv)”, “(v)”, “(vi)”, and “(vii)”
herein are not part of the BIOLASE RETAINED FIELD and are specifically included in
the PRIMARY P&G FIELD OF USE.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

2

 

For the avoidance of doubt, the BIOLASE RETAINED FIELD includes the Waterlase,
the Waterlase MD, the DioLase Plus, the LaserSmile, the Oculase, all related
consumables, accessories and related products, methods and all future generations and
product line extensions of the aforementioned products.

The BIOLASE RETAINED FIELD specifically excludes the PRIMARY P&G FIELD OF USE,
as defined below and specifically excludes BIOLASE PRODUCT as defined below.

	 	1.5	 	“BIOLASE TECHNOLOGY” means any present or future information or materials,
whether confidential or not, in the possession of BIOLASE, including know-how,
developments, concepts, technical knowledge, expertise, skill, practice, analytical
methodology, clinical data, manufacturing knowledge, drawings, specifications,
processes, techniques, samples, specimens, prototypes, designs, research and
development results, safety and efficacy data, and other technical and scientific
information reasonably useful or helpful to P&G for the development and marketing of
product(s) within the P&G FIELDS OF USE.

	 	1.6	 	“IMPROVEMENTS” shall mean any and all technology or intellectual property
rights in and to any update, modification, customization, translation, upgrade,
improvement, enhancement and/or derivative work whether or not developed under a JDA or
SERVICES agreement between the PARTIES.

	 	1.7	 	“LICENSABLE INTEREST” shall mean any licensable interest, whether or not
royalty-bearing, that exists prior to the EFFECTIVE DATE, or that is licensed by
BIOLASE from any third party after the EFFECTIVE DATE.

	 	1.8	 	“NET OUTSIDE SALES” (NOS) means gross sales to customers (i.e., list price
multiplied by total units shipped) less all insurance, duties and sales or value added
tax actually paid and less all consumer and trade discounts and allowances, including,
without limitation, quantity discounts, returns, listing fees, free goods, contests and
offers, cash discounts and all other payments to consumers and trade. All deductions to
sales will be specific to sales activity for the product.

	 	1.9	 	“P&G PRODUCT” shall mean any method, system, product, device or machine (or
component thereof), accessory, consumable, composition, compound, ingredient,
application, formulation, material, or combinations thereof in the P&G FIELDS OF USE,
or within the BIOLASE RETAINED FIELD to the extent permitted under Section 2.4 of this
SECOND AGREEMENT, and which, but for the right and license granted herein, would
infringe or cause the inducement of an infringement or contribute to or induce the
infringement of one or more valid and enforceable claims of one or more BIOLASE PATENTS
irrespective of the country of grant or pendency; and/or uses any or all of BIOLASE IP.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

3

 

For
the avoidance of doubt, any accessory, component, consumable, or ****
composition that would contribute to or induce the infringement of one or more valid
and enforceable claims of a BIOLASE PATENT shall be considered a P&G PRODUCT
hereunder. For example, if a valid and enforceable
granted BIOLASE PATENT claim reads upon the combination of ****, both
**** are P&G PRODUCTS hereunder to
the extent the **** induces or contributes to the infringement of the granted, valid and
enforceable BIOLASE PATENT claim. For example, if a valid and enforceable granted
BIOLASE PATENT claim reads upon ****, both are P&G PRODUCTS hereunder.

However, if the valid and enforceable granted BIOLASE PATENT claim reads upon
the ****,
then **** is not a P&G PRODUCT. Further, if **** may be sold or used
with **** is still not a P&G PRODUCT. For example, if the
valid and enforceable granted BIOLASE PATENT claim reads upon ****, then **** is not
a P&G PRODUCT. Further, if **** may be sold or used with the ****, the **** is still not a P&G PRODUCT.

	 	1.10	 	“P&G FIELDS OF USE” means, being applicable to ****, including the PRIMARY P&G
FIELD OF USE, and applications relating to or associated with ****. The P&G FIELDS OF
USE excludes the BIOLASE RETAINED FIELD. The P&G FIELDS OF USE also excludes the ****,
unless P&G exercises its option to add the ****to the PRIMARY P&G FIELD OF USE.

	 	1.11	 	“PRIMARY P&G FIELD OF USE” means ****. The PRIMARY P&G FIELD OF USE
specifically excludes the BIOLASE RETAINED FIELD.

	 	1.12	 	“QUARTER” means any one of the following four (4) time periods within a
calendar year: i) January, February, and March (“JFM”); ii) April, May, and June
(“AMJ”); iii) July, August and September (“JAS”); and iv) October, November, and
December (“OND”).

	 
	 	1.13	 	“BIOLASE FIELD OF USE” means ****.

	 	1.14	 	“P&G INTELLECTUAL PROPERTY” (P&G IP) means P&G PATENTS; trade secrets; clinical
results; know how relevant to **** which is owned by P&G and available to license to BIOLASE.

	 	1.15	 	“P&G PATENTS” means (1) those patents and patent applications listed in Exhibit
F, (2) any continuations, continuations-in-part, divisionals, re-exams, reissues
thereof, and (3) any foreign equivalents of the foregoing.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

4

 

	 	1.16	 	“P&G RETAINED FIELD” means any and all ****. P&G will also retain all rights
to P&G IP outside the BIOLASE FIELD OF USE.

	 	1.17	 	“BIOLASE PRODUCT” shall mean any method; system; product; device; machine (or
component thereof); accessory; consumable; composition (e.g. rinse, dentifrice);
compound; ingredient; application; formulation; material; or combinations thereof in
the BIOLASE FIELD OF USE, and which, but for the right and license granted herein,
would infringe or cause the inducement of an infringement or contribute to the
infringement of one or more valid and enforceable claims of one or more P&G PATENTS
irrespective of the country of grant or pendency; and/or uses any or all of P&G IP.
For avoidance of doubt, BIOLASE PRODUCT shall include the following: ****. For the
avoidance of doubt, ****.

	 	1.18	 	“PREVIOUS AGREEMENT” means the AGREEMENT entered into between the PARTIES
having an effective date of January 24, 2007.

	 	1.19	 	“FIRST EFFECTIVE DATE” means the effective date of the PREVIOUS AGREEMENT, i.e.
January 24, 2007.

	 	1.20	 	“PREVIOUSLY PAID QUARTERLY PAYMENTS” means the **** ($****) by P&G to BIOLASE
per section 4.1 of the PREVIOUS AGREEMENT.

	 	1.21	 	“LARGE SCALE COMMERCIAL DISTRIBUTION” means distribution of a P&G PRODUCT or a
BIOLASE PRODUCT that is offered for sale on a scale relatively consistent to other new
products launched by the respective company.

	2.	 	LICENSE GRANTS

	 	2.1	 	License Grant to P&G. BIOLASE hereby grants to P&G an exclusive (even as to
BIOLASE), worldwide, transferable, right and license under all BIOLASE IP and BIOLASE
TECHNOLOGY within the P&G FIELDS OF USE, with rights to sub-license, to make and have
made, use, import, export, sell, have sold, and offer for sale P&G PRODUCTS anywhere in
the world.

	 	2.2	 	Conversion to Non-Exclusive License. P&G may, in its sole discretion, convert,
at **** from the FIRST EFFECTIVE DATE of the PREVIOUS AGREEMENT, its exclusive
license(s) under this SECOND AGREEMENT to non-exclusive license(s).

	 	2.2.1	 	In the event the exclusive license is converted to a
non-exclusive license under any of the provisions of this SECOND AGREEMENT, the
royalty rates shall remain as agreed to herein (at ****). However, if BIOLASE
enters into a nonexclusive license with a third party at more favorable terms
than that granted to P&G, BIOLASE will offer the same terms to P&G, which P&G
may accept at its sole discretion. For example, if BIOLASE grants a third party
rights at a lower royalty rate than that applicable to P&G, P&G will be offered
the opportunity to convert its
royalty rate to the lower royalty rate granted to such third party, with such
lower rate to take effect upon execution of such third party agreement.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

5

 

	 	2.2.2	 	P&G’s option to take exclusive control of prosecution and
litigation of BIOLASE PATENTS under 6.1 and 7.3-7.7 will terminate in the event
that the exclusive license is converted to a non-exclusive license.

	 	2.2.3	 	Should the license from BIOLASE to P&G revert to a non-exclusive
license, BIOLASE will notify P&G in writing of the commencement of any third
party discussions and/or negotiations regarding BIOLASE IP. Upon receipt of
notification from BIOLASE, P&G will have **** to resume exclusivity payments as
described in section 4.2.1. If P&G resumes payments as described in section
4.2.1, then the license from BIOLASE to P&G of BIOLASE IP will revert from
non-exclusive to an exclusive license.

	 	2.3	 	P&G hereby grants to BIOLASE an exclusive (even as to P&G), worldwide,
non-transferable, revocable, right and license under P&G IP within the BIOLASE FIELD OF
USE, with rights to make and have made, use, import, export, sell, and offer for sale
BIOLASE PRODUCTS anywhere in the world.

	 	2.4	 	Unless otherwise agreed to in writing between the PARTIES, if, three years have
lapsed from the EFFECTIVE DATE of this SECOND AGREEMENT, and BIOLASE has not
implemented a LARGE SCALE COMMERCIAL DISTRIBUTION of a BIOLASE PRODUCT, then the
exclusive license to P&G IP will revert to a non-exclusive license.

	 	2.5	 	No Other Licenses Granted to BIOLASE. The licenses granted BIOLASE under this
SECOND AGREEMENT are limited to those specifically set forth in Section 2.3. Nothing
in this SECOND AGREEMENT will be construed to grant BIOLASE any rights or licenses to
any other patent, technical information, know-how, or other intellectual property of
P&G. All rights not specifically granted to BIOLASE are reserved by P&G.

	 	2.6	 	No Other Licenses Granted to P&G. The licenses granted P&G under this SECOND
AGREEMENT are limited to those specifically set forth in Section 2.1. Nothing in this
SECOND AGREEMENT will be construed to grant P&G any rights or licenses to any other
patent, technical information, know-how, or other intellectual property of BIOLASE.
All rights not specifically granted to P&G are reserved by BIOLASE.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

6

 

	3.	 	TECHNOLOGY TRANSFER

	 	3.1	 	Licensed BIOLASE TECHNOLOGY and BIOLASE IP Related to the PRIMARY P&G FIELD OF
USE. Upon reasonable written (including electronically) request by P&G, BIOLASE will
share or transfer to P&G, relevant aspects of the BIOLASE TECHNOLOGY and BIOLASE IP
licensed to
P&G in the PRIMARY P&G FIELD OF USE, including, the patent applications for the
BIOLASE PATENTS in Exhibit A and related patent prosecution information, including
conception and reduction to practice information, and will reasonably make available
to P&G for consultation those BIOLASE employees with substantive knowledge regarding
the application of BIOLASE TECHNOLOGY and BIOLASE IP in the PRIMARY P&G FIELD OF USE;
provided, however, that BIOLASE will not be required to provide more than **** of
such consultation time per quarter to P&G and no more than **** in four ****
consecutive calendar quarters. P&G and BIOLASE will appoint technical and patent
liaisons who will serve as designated points of contact to develop and coordinate a
timely process that is not overly burdensome for BIOLASE to effectuate said sharing
of BIOLASE TECHNOLOGY and BIOLASE IP in the event P&G provides BIOLASE with a
reasonable written request hereunder.

	 	3.1.1	 	In the event that such consultation leads P&G to determine that
direct involvement of BIOLASE employees and R&D resources will be beneficial to
the development of products using the BIOLASE TECHNOLOGY, P&G and BIOLASE may
also enter into a joint development agreement (“JDA”), or other agreement,
pursuant to which BIOLASE will provide P&G with the specified testing, research,
development, prototyping, production, manufacturing services or other assistance
requested by P&G, to test, develop, produce and manufacture prototype P&G
PRODUCTS and such other products using the BIOLASE TECHNOLOGY as P&G may request
(“SERVICES”).

As applicable, the PARTIES will meet at least annually to review progress on
specific development projects within the P&G FIELDS OF USE.

	 	3.2	 	Licensed BIOLASE TECHNOLOGY and BIOLASE IP in P&G FIELDS OF USE (excluding the
PRIMARY P&G FIELD OF USE). Upon reasonable written request from P&G, BIOLASE will
share the information reasonably necessary for P&G to determine whether P&G has an
interest in developing and commercializing a BIOLASE TECHNOLOGY or BIOLASE IP within
the P&G FIELDS OF USE (excluding the PRIMARY P&G FIELD OF USE). Should P&G have an
interest in evaluating or commercializing BIOLASE TECHNOLOGY or BIOLASE IP disclosed
under this Section 3.2, BIOLASE shall disclose information to P&G which is reasonably
related to P&G’s interest (including development and manufacturing information), within
a commercially reasonable period of time of P&G’s request to BIOLASE.

	 	3.3	 	Licensed P&G IP in the BIOLASE FIELD OF USE. P&G shall share or transfer to
BIOLASE, relevant aspects of the P&G IP licensed to BIOLASE in the BIOLASE FIELD OF
USE. P&G will reasonably make available to BIOLASE not more than **** with substantive
knowledge regarding the application of P&G IP in the BIOLASE FIELD OF USE. P&G will
provide the information in a one time workshop format which will be at least one day
but not more than
**** and will not be more than **** in total. Said one time workshop will occur
within **** of the SIGNING DATE of this SECOND AGREEMENT. P&G and BIOLASE
agree to negotiate in good faith a request made by BIOLASE to P&G for additional
transferring or sharing related to this section 3.3. For the purposes of clarity P&G
is not obligated to provide the requested additional assistance and may ultimately
refuse to provide such additional assistance.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

7

 

	4.	 	PAYMENTS

	 	4.1	 	Milestone Payments for First P&G Product and Second P&G Product

	 	4.1.1	 	First Product Shipment Payment. P&G shall pay BIOLASE a product
launch milestone payment in the amount of **** ($****) on the terms and subject
to the conditions set forth here below (the “FIRST PRODUCT SHIPMENT PAYMENT”).

	 	4.1.1.1	 	The FIRST PRODUCT SHIPMENT PAYMENT shall be due ****.

	 	4.1.1.2	 	Payments made under this Section 4.1.1 are non-refundable except as
otherwise provided herein. For the sake of clarity, BIOLASE will be
entitled to only one FIRST PRODUCT SHIPMENT PAYMENT and under no
circumstance will there be another FIRST PRODUCT SHIPMENT PAYMENT.

	 	4.1.2.	 	Second Product Shipment Payment. P&G shall pay BIOLASE a second product
launch milestone payment in the amount of **** ($****) on the terms and subject
to the conditions set forth here below (the “SECOND PRODUCT SHIPMENT PAYMENT”).

	 	4.1.2.1	 	The SECOND PRODUCT SHIPMENT PAYMENT shall be due ****.

	 
	 	4.1.2.2	 	The SECOND PRODUCT SHIPMENT PAYMENT will be treated as prepaid
royalties to be deducted from any subsequent ROYALTY PAYMENTS owed under
this SECOND AGREEMENT. The second P&G PRODUCT will not include cosmetic
changes or minor improvements (refreshes) which do not fundamentally
change the benefit delivered by the first P&G PRODUCT. The second P&G
PRODUCT is one that is largely unique and different from the first P&G
PRODUCT. For the avoidance of doubt, some non-limiting examples of a P&G
PRODUCT that does not differ significantly from the first P&G PRODUCT are
P&G PRODUCTS that incorporate only packaging changes; artwork changes;
bonus packs; marketing promotions; changes to the size, color or shape of
the P&G PRODUCT; the addition or elimination of minor excipients, and
combinations thereof. Payments made under this Section 4.1.2 are
non-refundable except as otherwise provided herein. For the sake of
clarity, BIOLASE shall be entitled to only one SECOND PRODUCT SHIPMENT
PAYMENT and under no circumstance will there be another SECOND PRODUCT
SHIPMENT PAYMENT. For the sake of clarity and to serve as an example,
if a first P&G PRODUCT ****. Further, if a first P&G PRODUCT ****.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

8

 

	 	4.1.3.	 	For the sake of clarity, in no circumstance will there be a third product
shipment payment.

	 	4.2	 	Quarterly Payments: P&G will allow BIOLASE to remove a sum of **** ($****)
per QUARTER, hereafter “P&G QUARTERLY PAYMENTS” from the PREVIOUSLY PAID QUARTERLY
PAYMENTS.

	 	4.2.1	 	Upon the conclusion of **** after the EFFECTIVE DATE of this
SECOND AGREEMENT, the exclusive license granted to P&G by BIOLASE under section
2.1 shall revert to a non-exclusive license unless P&G pays to BIOLASE a
QUARTERLY payment of **** ($****).

	 	4.2.2.	 	Because the EFFECTIVE DATE of this SECOND AGREEMENT is retroactive to January
1, 2009, BIOLASE will have the option to remove **** P&G QUARTERLY PAYMENTS from
the PREVIOUSLY PAID QUARTERLY PAYMENTS within **** of this SECOND AGREEMENT.
Again for clarity, the P&G QUARTERLY PAYMENTS shall be deducted from the prepaid
royalties of the PREVIOUSLY PAID QUARTERLY PAYMENTS made by P&G to BIOLASE.

	 	4.3	 	In consideration for the license to P&G IP, BIOLASE will make royalty payments
(the “BIOLASE ROYALTY PAYMENTS”) to P&G based on **** of BIOLASE PRODUCTS. The
BIOLASE ROYALTY PAYMENTS shall be equal to ****.

	 	4.4	 	Royalty Payments on Product Sales

	 	4.4.1	 	A PARTY will make royalty payments (the “ROYALTY PAYMENTS”) to
the other PARTY based on ****of such P&G PRODUCTS or BIOLASE PRODUCTS. The
ROYALTY PAYMENT shall be equal to the ****.

	 	4.4.2	 	The royalty rate shall be **** if the P&G PRODUCT is in a ****
product category where P&G currently markets products **** (see D for a
non-exhaustive list). For the avoidance of doubt, a **** shall be considered a
product category where **** and shall be only subject to a **** royalty in the
event a royalty is applicable. The royalty rate shall be **** if the P&G
PRODUCT is in a product category where ****. The **** shall not trigger a ****
royalty. Further, using **** will not trigger a **** royalty. For the
avoidance of doubt, ****, then a ****or ****
that **** would be considered a product in a category where ****.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

9

 

	 	4.4.3	 	The royalty rate shall be **** for BIOLASE PRODUCTS.

	 	4.4.4	 	The amount of ROYALTY PAYMENTS due shall be calculated on a ****
basis from the date of **** of P&G PRODUCT or BIOLASE PRODUCT in such country.
ROYALTY PAYMENTS will only be due for sales in those countries where (1)
commercial sale of a P&G PRODUCT (as defined in Section 1.9) is covered by one
or more **** claims; or (2) commercial sale of a BIOLASE PRODUCT (as defined in
Section 1.17) occurs. ROYALTY PAYMENTS will be paid on a QUARTERLY basis and
will be due on the **** of the subject QUARTER. A PARTY may elect to combine
ROYALTY PAYMENTS into a single payment mechanism (e.g., a single wire transfer).

	 	4.4.5	 	If a P&G PRODUCT is launched after the expiration of **** from
the EFFECTIVE DATE of this SECOND AGREEMENT, **** will be applied as pre-paid
royalties from the PREVIOUSLY PAID QUARTERLY PAYMENTS.

	 	4.4.6	 	If a P&G PRODUCT is launched before the expiration of **** from
the EFFECTIVE DATE of this SECOND AGREEMENT, the amount of money remaining in
the PREVIOUSLY PAID QUARTERLY PAYMENTS to be applied as pre-paid royalties will
be ****.

	 	4.5	 	P&G Sublicenses to Third Parties

	 	4.5.1	 	Sublicenses Comprising Only BIOLASE PATENTS. To the extent that
P&G would have owed ROYALTY PAYMENTS for a P&G PRODUCT under this SECOND
AGREEMENT, sub-licenses (comprising only BIOLASE PATENTS) from P&G to third
parties will bear the same royalty rate as if P&G had made the sale. Thus, P&G
agrees that the net effect of the sub-license (comprising only BIOLASE PATENTS)
to third parties will not deprive BIOLASE of ROYALTY PAYMENTS.

	 	4.5.2	 	Sublicenses Comprising BIOLASE PATENTS and P&G Intellectual
Property. In the event P&G enters any agreement with a third party that
includes P&G intellectual property and a grant under BIOLASE PATENTS as part of
that agreement, wherein said grant to such third party to sell products under
BIOLASE PATENTS and said sale would have been subject to ROYALTY PAYMENTS by P&G
to BIOLASE if P&G were selling such products, P&G and BIOLASE will mutually
agree to ****, and P&G will pay **** to BIOLASE. For example, if P&G elected to
license a third party rights under both BIOLASE PATENTS and P&G intellectual
property, and **** obligated the third party to pay P&G **** to maintain such
license then BIOLASE would receive a ****.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

10

 

	 	4.5.2.1	 	The ****under this Section 4.5.2.1 will be ****. It is foreseeable
that BIOLASE, only as applicable to this Section 4.5.2.1 may receive
**** compensation, according to ****, for BIOLASE PATENTS than they
otherwise would have under this SECOND AGREEMENT. In no event,
however, will the **** owed to BIOLASE exceed the equivalent of a
****ROYALTY PAYMENT, as would otherwise be applicable under this SECOND
AGREEMENT.

	 	4.6	 	BIOLASE’s right to have made

	 	4.6.1	 	If BIOLASE requires the use of a third party(ies) to have
BIOLASE PRODUCTS made, BIOLASE will establish a confidentiality agreement with
the third party(ies).

	 	4.6.1.1	 	The confidentiality agreement of section 4.6.1 will be at least as
restrictive as the confidentiality requirements of this SECOND AGREEMENT,
including the obligation of confidentiality beyond the termination of
this SECOND AGREEMENT and/or the confidentiality agreement of section
4.6.1; and

	 	4.6.1.2	 	said confidentiality agreement will explicitly name P&G as an intended
third-party beneficiary with all legal rights associated thereto to
enforce said confidentiality agreement.

	 	4.7	 	A PARTY will deliver to the other PARTY a written report of all NOS of P&G
PRODUCTS or BIOLASE PRODUCTS by country, in all countries where royalty payments are
due on P&G PRODUCTS or BIOLASE PRODUCTS sold, the applicable royalty rate, the amount
of earned royalty, and the calculation of the ROYALTY PAYMENT due to the P&G or BIOLASE
after deduction of the current total amount of payments hereunder that ****. Said
royalty report will be delivered by P&G or BIOLASE within **** of the last day of the
QUARTER in which they are earned.

	 	4.8	 	P&G and BIOLASE will keep accurate and complete records for P&G PRODUCTS or
BIOLASE PRODUCTS marketed pursuant to this SECOND AGREEMENT of: (i) its calculation of
NOS for P&G PRODUCTS or BIOLASE PRODUCTS (as defined herein); and (ii) all royalties
paid and payable hereunder (hereinafter such reports will collectively be referred to
as “SALES AND ROYALTY RECORDS”). Such SALES AND ROYALTY RECORDS will be kept with
sufficient detail to enable an independent auditor to verify such figures and to
calculate NOS and total royalties paid and payable hereunder and will be retained for
the TERM and for at least **** subsequent to expiration of the TERM or termination.

	 	4.9	 	All payments due to P&G or BIOLASE under this Article will be made in U.S.
Dollars via wire transfer to an account designated by P&G or BIOLASE. The sending
PARTY will notify the receiving PARTY as indicated below prior to sending any such wire
transfers.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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

 

	 	4.10	 	Any SALES AND ROYALTY RECORD(S) and notification of any wire transfer(s) by P&G
will be delivered to: BIOLASE TECHNOLOGY, Inc., 4 Cromwell, Irvine CA 92618, attention
Richard Harrison, Chief Financial Officer and Secretary, or to his designee or
successor.

	 	4.11	 	Any SALES AND ROYALTY RECORD(S) and notification of any wire transfer(s) by
BIOLASE will be delivered to: The Procter and Gamble Company, One Procter & Gamble
Plaza, Cincinnati, Ohio 45202, attention Meg McCann.

	 	4.12	 	At any time prior to the expiration of **** following the end of any calendar
year, a PARTY will have the right to audit the other PARTY’s SALES AND ROYALTY RECORDS
relative to this SECOND AGREEMENT, said auditor being independent, having no past
relationship with either PARTY. The purpose of such audit will be to verify the
calculation of gross sales for such year, NOS for such year and the royalties paid and
payable hereunder for such year. A PARTY will provide at least **** advance written
notice before each such audit. The audited PARTY will cooperate in such audit by
allowing the other PARTY access (during audited PARTY’s normal business hours at the
locations where such SALES AND ROYALTY RECORDS are kept) solely to the audited PARTY’s
SALES AND ROYALTY RECORDS. Upon request by audited PARTY, the auditor may be required,
as a condition of being granted access to PARTY’s SALES AND ROYALTY RECORDS hereunder,
to agree to maintain any information reviewed (including, but not limited to the
AUDITOR’S REPORTS (defined in Section 4.13) submitted to the PARTIES pursuant to 4.13
below) in confidence. Notwithstanding anything herein to the contrary, a PARTY may only
cause an audit once in any calendar year and only once with respect to each calendar
year.

	 	4.13	 	At the conclusion of the auditor’s audit pursuant to Section 4.12 above, the
auditor will submit a written report (herein “AUDITOR’S REPORT”) to the PARTIES setting
forth the auditor’s findings with respect to the correct gross sales, NOS and total
royalties paid and payable for the quarter(s) in question. If the AUDITOR’S REPORT
results in findings as to gross sales, NOS or royalties which are different from those
originally reported or paid by the audited PARTY, then the AUDITOR’S REPORT will
include a reconciliation of the original figures with those found to be correct by the
auditor and the source of such difference(s). The AUDITOR’S REPORT and its content will
be treated as confidential pursuant to Section 12. If there is no challenge to the
AUDITOR’S REPORT within **** after receipt of the report by the audited PARTY, and the
AUDITOR’S REPORT shows an underpayment of royalties, then the audited PARTY will pay to
the other PARTY within **** of expiration of the thirty day challenge period an amount
sufficient to remedy the amount of any under reporting or underpayment of royalties
found by the auditor plus interest calculated at the then current prime rate from the
date such payment is due. If the AUDITOR’S REPORT shows an overpayment of royalties,
such overpayment will be creditable against any future royalties payable in subsequent
royalty
periods. The cost and expense of any audit conducted hereunder will be borne by the
PARTY requesting the audit unless the AUDITOR’S REPORT finds an error in requesting
PARTY’s favor of at least **** of the royalties originally paid by the audited PARTY,
in which case the audited PARTY will bear such cost and expense, subject to the
outcome of the audit dispute resolution process specified in following section.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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

 

	 	4.14	 	The PARTIES agree to work together with the auditor in good faith to resolve
any disputes arising out of or relating to the numbers verified and the results
reported in an AUDITOR’S REPORT in a timely, professional and non-adversarial manner.
If the PARTIES and the auditor cannot so resolve a dispute, then either PARTY may
submit such dispute for binding arbitration (hereinafter referred to as “ROYALTY
ARBITRATION”) to a panel of three (3) arbitrators. Such ROYALTY ARBITRATION will be
conducted in Cincinnati, Ohio, if brought by BIOLASE and in Irvine, California if
brought by P&G. The arbitrators will be selected and the arbitration will be conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association except that the only issue for arbitration in the ROYALTY ARBITRATION will
be the accuracy of the reporting and calculation of the values for gross sales, NOS,
and royalties paid and payable hereunder. The arbitrators will not have power to add
to, subtract from or modify any of the terms or conditions of this SECOND AGREEMENT.
Any award rendered in such arbitration may be enforced by either PARTY in the courts of
the State of New York, to whose jurisdiction each PARTY hereby irrevocably consents and
submits for such purpose. Each PARTY will bear its own expense associated with the
ROYALTY ARBITRATION. The losing party will bear the cost of the arbitration itself and
will also be required to pay the other party’s attorneys’ fees associated with the
ROYALTY ARBITRATION. In the event that the outcome of the arbitration is such that
there is not a clear losing party, then the PARTIES agree to share the costs for the
arbitration in a manner consistent with the decision of the arbitrators.

	 	4.15	 	Withholding by P&G. If a law or regulation of any country in which P&G
PRODUCTS are sold requires withholding of taxes of any type, levies or other charges
with respect to any amounts payable hereunder to BIOLASE, P&G will promptly pay such
tax, levy or charge for and on behalf of BIOLASE to the proper governmental authority,
and will promptly furnish BIOLASE with receipt of such payment. P&G will have the right
to deduct any such tax, levy or charge actually paid from payment due BIOLASE or be
promptly reimbursed by BIOLASE if no further payments are due BIOLASE. P&G agrees to
assist BIOLASE in claiming exemption from such deductions or withholdings under double
taxation or similar agreement or treaty from time to time in force and will use
reasonable efforts to minimize the amount required to be so withheld or deducted.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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

 

	 	4.16	 	Withholding by BIOLASE. If a law or regulation of any country in which BIOLASE
PRODUCTS are sold requires withholding of taxes of any type, levies
or other charges with respect to any amounts payable hereunder to P&G, BIOLASE will
promptly pay such tax, levy or charge for and on behalf of P&G to the proper
governmental authority, and will promptly furnish P&G with receipt of such payment.
BIOLASE will have the right to deduct any such tax, levy or charge actually paid from
payment due P&G or be promptly reimbursed by P&G if no further payments are due P&G.
BIOLASE agrees to assist P&G in claiming exemption from such deductions or
withholdings under double taxation or similar agreement or treaty from time to time
in force and will use reasonable efforts to minimize the amount required to be so
withheld or deducted.

	 	4.17	 	Payment Due Dates. Any payment due under this SECOND AGREEMENT will be paid
within **** of its due date. In the event the payor does not make the payment in full
by the **** after the due date, the payee will be entitled to interest in the amount of
**** on any unpaid amount, from **** following the due date until such time as the
payor pays the payee the amount owed.

	 	4.18	 	No more than **** after the launch of a BIOLASE PRODUCT, BIOLASE will provide
to P&G consumer learnings, understandings, consumer feedback, sales data, and the like.
BIOLASE and P&G may, but are not required to, work on said consumer learnings,
understanding, consumer feedback, sales data, and the like jointly and again at ****.

	5.	 	INTELLECTUAL PROPERTY OWNERSHIP

	 	5.1	 	Background Intellectual Property. All IP developed, conceived or reduced to
practice prior to the EFFECTIVE DATE of this SECOND AGREEMENT will continue to be owned
by the respective PARTY that developed, conceived or reduced it to practice.

	 	5.2	 	Ownership by P&G. P&G will continue to own P&G IP, and, except as set forth
herein in section 2.3, no other rights or licenses to the P&G IP will be granted to
BIOLASE.

	 	5.3	 	All IMPROVEMENTS made solely by P&G (P&G IMPROVEMENTS) will be owned and
retained by P&G, including IMPROVEMENTS to BIOLASE TECHNOLOGY invented or developed
solely by P&G. Further, IMPROVEMENTS made solely by P&G, including patent applications
comprising only such IMPROVEMENTS, are not subject to this SECOND AGREEMENT.

	 	5.4	 	Ownership by BIOLASE. BIOLASE will continue to own BIOLASE TECHNOLOGY and
BIOLASE IP and, except as set forth herein, no other rights or licenses to the BIOLASE
TECHNOLOGY or BIOLASE IP will be granted to P&G, and BIOLASE will own any IMPROVEMENTS
that BIOLASE solely develops (BIOLASE IMPROVEMENTS), conceives or reduces to practice.
Where the BIOLASE IMPROVEMENTS are to the BIOLASE PATENTS, such BIOLASE IMPROVEMENTS
will be licensed to P&G in accordance with the terms of this SECOND AGREEMENT.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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

 

	 	5.5	 	Joint Ownership. The PARTIES will jointly own any IP that is jointly
conceived under this SECOND AGREEMENT.

	 	5.6	 	Pursuant to Section 3.1.1 above, the PARTIES may agree to enter into a JDA or
SERVICES agreement. Terms and conditions for a JDA or SERVICES agreement will be agreed
to at the time P&G and BIOLASE mutually agree to enter into such an arrangement.

	6.	 	PREPARATION AND PROSECUTION OF PATENT APPLICATIONS AND PATENT COSTS

	 	6.1	 	Licensed BIOLASE PATENTS of Exhibit A. From the FIRST EFFECTIVE DATE of the
PREVIOUS AGREEMENT and written notification from P&G, P&G will have the right, but not
the obligation, to take control of the BIOLASE PATENTS listed in Exhibit A and patent
applications comprising BIOLASE IMPROVEMENTS in the PRIMARY P&G FIELD OF USE and
P&G/BIOLASE joint IMPROVEMENTS in the PRIMARY P&G FIELD OF USE. P&G’s right to take
control as discussed above in this Section 6.1 will mean to have sole responsibility
and decision making authority for the preparation, filing (including the filing of
continuations, continuations-in-part, divisionals, reissues, and reexaminations),
prosecution, and maintenance of the BIOLASE PATENTS listed in Exhibit A. P&G will pay
all costs and expenses associated with said control in the event and to the extent P&G
exercises its right to take control of one or more BIOLASE PATENTS hereunder. BIOLASE
will cooperate with P&G, including giving P&G power of attorney and changing the
correspondence address to P&G’s address.

	 	6.1.1	 	In the event that P&G takes control of a BIOLASE PATENT and
decides not to prosecute or maintain said BIOLASE PATENT in any particular
country (including the United States), BIOLASE may take back control of that
patent or application in which event BIOLASE will be responsible for all costs
and expenses associated with the said BIOLASE PATENT, including costs and
expenses associated with the prosecution and maintenance of said patent.

	 	6.1.1.1	 	In the event P&G elects not to prosecute or maintain a BIOLASE PATENT
that P&G has taken control of, P&G will provide BIOLASE with at least
**** advance written notice of such decision. P&G’s written notice will
be done in a good faith manner which reasonably provides BIOLASE with at
**** to continue with prosecution or maintenance of that BIOLASE PATENT.
In the event that BIOLASE takes control of a BIOLASE PATENT under
Sections 6.1.1, such change in control will have no effect on P&G’s
payment obligations under Section 4 and said BIOLASE PATENT will continue
to be licensed to P&G pursuant to the license grant of Section 2.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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

 

	 	6.1.1.2	 	P&G will only be responsible for the costs and expenses incurred
from the time of control of a BIOLASE PATENT is taken by P&G to the
sooner of (a) **** or (b) the **** from the time of notice to BIOLASE
that P&G will not continue to prosecute or maintain particular BIOLASE
PATENT(S).

	 	6.1.2	 	It is P&G’s intention to achieve broad patent rights with the
BIOLASE PATENTS it controls. It is further P&G’s intention to prosecute BIOLASE
PATENTS in a way that protects P&G products. Both PARTIES realize that it is
unforeseeable whether BIOLASE PATENTS may read upon future P&G products.
BIOLASE may file divisionals, continuations and continuations-in-part in an
attempt to issue claims which read on a product from the PRIMARY P&G FIELD OF
USE. BIOLASE will have control and be responsible for all costs associated with
any filings made by BIOLASE under this Section 6.1.2. Any filings made by
BIOLASE under this Section 6.1.2 will be subject to the license granted to P&G
under Section 2 of this AGREEMENT.

	 	6.1.3	 	For the applications or patents which P&G controls or has taken
control of under this SECOND AGREEMENT, P&G will notify BIOLASE of all written
and oral communications to and from any patent office(s) (including, filings,
official actions, responses to official actions, etc.) in the same manner
outlined by Section 7.1.2 and BIOLASE will have the right to provide P&G with
comments on matters relevant to all fields outside of the PRIMARY P&G FIELD OF
USE and P&G will consider in good faith said BIOLASE comment(s) in the same
manner outlined by Section 7.1.1.

	 	6.1.4	 	Interferences, oppositions, and similar proceedings. For
BIOLASE PATENTS controlled by P&G, P&G also may, in its sole discretion, elect
to undertake or defend any interference, reexamination, opposition or similar
procedure with respect to said BIOLASE PATENTS. P&G will be responsible for all
costs and expenses associated with said proceedings. If P&G does not elect to
undertake or defend any interference, reexamination, opposition or similar
procedure, BIOLASE may elect to do so at BIOLASE’s expense.

	 	6.1.5	 	P&G is the owner of other light based intellectual property. It
is P&G’s intention to achieve broad patent rights with regard to the other light
based intellectual property as well as the P&G PATENTS. BIOLASE acknowledges:
(1) the existence of the other light based intellectual property owned by P&G;
(2) the other light based intellectual property is excluded from this SECOND
AGREEMENT; and (3) that it is unforeseeable whether the other light based
intellectual property may read upon future BIOLASE PRODUCTS. Said other light
based intellectual property is not and will not become subject to the SECOND
AGREEMENT.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

16

 

	7.	 	Licensed BIOLASE PATENTS Related to the P&G FIELD OF USE.

	 	7.1	 	BIOLASE will provide to P&G a written update, at least ****, starting from the
EFFECTIVE DATE of this SECOND AGREEMENT, of the BIOLASE PATENTS in Exhibits A and
Exhibit C (if any consumer product categories in the P&G FIELDS OF USE remain after one
(1) year from the FIRST EFFECTIVE DATE of the PREVIOUS AGREEMENT or if P&G accepts any
BIOLASE RETAINED FIELD CATEGORIES offered by BIOLASE)

	 	7.1.1	 	For all BIOLASE PATENTS in Exhibits A or C under the control of
BIOLASE, P&G will have the ability to provide BIOLASE with comments relevant to
the P&G FIELD OF USE and these comments will be considered in good faith by
BIOLASE. P&G comments may include, but are not limited to, claim and
specification amendments, submission of prior art, claim additions and
deletions, and arguments responsive to official communications from a patent
office related thereto.

	 	7.1.2	 	For BIOLASE PATENTS in Exhibits A or C under the control of
BIOLASE, copies of official written communications from a patent office will be
provided to P&G as soon as reasonably possible, but in no event greater than
**** after receipt by BIOLASE. Additionally, all papers prepared by BIOLASE for
filing in a patent office will be provided to P&G within a reasonable period of
time to allow for P&G comment and incorporation thereof by BIOLASE, as
applicable. Each PARTY will be responsible for its own attorney’s fees and
other costs incurred in reviewing filings and official communications, and
making, reviewing, discussing, and incorporating comments. Copies of official
written communications to a patent office will be provided to P&G as soon as
reasonably possible, but in no event greater than **** after submission by
BIOLASE

	 	7.1.3	 	In the event that BIOLASE decides not to prosecute or maintain a
BIOLASE PATENT in Exhibit A or Exhibit C in any particular country (including
the United States), P&G may take control of that particular application or
patent and elect to pay all costs and expenses associated with control,
including prosecution and maintenance of the BIOLASE PATENTS. BIOLASE will
provide P&G with at least **** advanced written notice of such decision not to
prosecute or maintain a BIOLASE PATENT in Exhibits A or C as applicable.
BIOLASE’s written notice will be done in a good faith manner which provides P&G
with at least **** to continue with prosecution or maintenance of that BIOLASE
PATENT. P&G may discontinue its prosecution or maintenance of a BIOLASE PATENT
under this Section 7.1.3 at any time acting in its sole discretion.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

17

 

	 	7.1.4	 	Interferences, oppositions, and similar proceedings. For
BIOLASE
PATENTS of Exhibit A that remain controlled by BIOLASE, BIOLASE will notify
P&G of all written and oral communications to and from any patent office(s)
concerning any reexamination, reissuance, interference, opposition or similar
proceedings in the same manner outlined by Section 7.1.3 and P&G will have the
right to comment on matters relevant to the PRIMARY P&G FIELD OF USE and
BIOLASE will consider in good faith said P&G comment(s) in the same manner
outlined by Section 7.1.1.

	 	7.2	 	Cooperation. P&G and BIOLASE agree to fully cooperate regarding the execution
of any documents necessary or desirable to prepare, prosecute, or maintain any patents
under Section 7.

	8.	 	INFRINGEMENT BY THIRD PARTIES

	 	8.1	 	Notification. Both BIOLASE and P&G agree to notify each other in writing
should either PARTY become aware of a possible infringement of the BIOLASE PATENTS
and/or P&G PATENTS that relate to the P&G FIELDS OF USE or the BIOLASE FIELD OF USE,
respectively.

	 	8.2	 	Third Party Infringement in P&G FIELDS OF USE (excluding the P&G PRIMARY FIELD
OF USE).

	 	8.2.1	 	If P&G provides BIOLASE with evidence of infringement of one of
the BIOLASE PATENTS listed in or to be listed in Exhibit C in the P&G FIELDS OF
USE other than the P&G PRIMARY FIELD OF USE, and if P&G has initiated
development, then P&G may by written notice request BIOLASE to take steps to
terminate the infringement. If BIOLASE does not, within **** of receipt of such
notice, take appropriate action against the alleged infringement, then:

	 	8.2.1.1	 	Upon written notice to BIOLASE, P&G will have the right, but not the
obligation, as exclusive licensee to institute such action in its own
name as it deems appropriate to terminate said infringement through
negotiation, litigation, and/or alternative dispute resolution at P&G’s
expense. As exclusive licensee, P&G will have the power at its expense
to institute, prosecute and settle, including by granting the infringing
party a sublicense, suits for infringement of the BIOLASE PATENTS listed
in or to be listed in Exhibit C under this Section 8.2.1.1 after said
**** period, and if required by law, BIOLASE will join as a party
plaintiff in such suits at P&G’s expense.

	 	8.2.1.2	 	P&G will have the right to select and control counsel in any action
initiated by P&G under Section 8.2.1.1.

	 	8.2.2	 	Any recovery awarded or received in connection with any
negotiation, settlement or suit under this Section 8.2. in excess of litigation
costs will belong solely to P&G except as provided under Section 4.5.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

18

 

	 	8.3.	 	Third Party Infringement in PRIMARY P&G FIELD OF USE.

	 	8.3.1	 	As exclusive licensee in the PRIMARY P&G FIELD OF USE, P&G will
have sole decision making authority regarding enforcement of the BIOLASE PATENTS
listed or belonging in Exhibit A. P&G will have the right, but not the
obligation, to file, prosecute and settle any such claims at its sole
discretion. P&G will retain any proceeds paid by a third party as a result of
the enforcement of the BIOLASE PATENTS within the PRIMARY P&G FIELD OF USE
except as provided under Section 4.5. BIOLASE agrees to cooperate with P&G with
the enforcement of any claim within the PRIMARY P&G FIELDS OF USE and agrees to
join, at P&G’s expense, any such action as a party plaintiff to the extent
required by law.

	 	8.3.1.1	 	P&G agrees that it will use reasonable efforts to consult with BIOLASE
prior to the initiation of any action by P&G under Section 8.3.1. For
the avoidance of doubt, said consultation under this Section 8.3.1.1 will
not impair P&G’s right to, in its sole discretion, institute an action in
its own name under Section 8.3.1 to terminate an infringement in the
PRIMARY P&G FIELD OF USE.

	 	8.3.1.2	 	P&G will have the right to control and to select counsel in any action
initiated by P&G under Section 8.3.1.

	 	8.3.1.3	 	Any recovery awarded or received in connection with any negotiation,
settlement, or suit under this Section 8.3.1 in excess of litigation
costs will belong solely to P&G except as provided under Section 4.5.

	 	8.4	 	Third Party Infringement in BIOLASE RETAINED FIELD. BIOLASE will have sole
control and discretion regarding how to proceed in the event that a third party is
infringing one of the BIOLASE PATENTS in the BIOLASE RETAINED FIELD and any recovery or
settlement awarded or received in connection with such action will be solely retained
by BIOLASE.

	 	8.5	 	Third Party Infringement in the BIOLASE FIELD OF USE. P&G will have the
right, but not the obligation, to institute any action as it deems appropriate to
terminate the infringement or misappropriation of P&G PATENTS through negotiation,
litigation and/or alternative dispute resolution means, at its sole discretion and at
its sole cost.

	 	8.6	 	Prosecution of Third Party Infringement in Other Party’s FIELD OF USE.

	 	8.6.1	 	To the extent that P&G is permitted to exploit a specific
Product application in the BIOLASE RETAINED FIELD pursuant to Section 2.4 and a
third party is infringing one of the BIOLASE PATENTS in connection with such
Product application, such infringement will be
treated as if it had taken place in P&G FIELDS OF USE (excluding the PRIMARY
P&G FIELD OF USE) in accordance with Section 8.2.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

19

 

	 	8.7.	 	Declaratory Judgments.

	 	8.7.1	 	If (1) a declaratory judgment action alleging invalidity,
unenforceability and/or non-infringement of any of the BIOLASE PATENTS is
brought against P&G; (2) a declaratory judgment action alleging invalidity,
unenforceability and/or non-infringement of any of the BIOLASE PATENTS is
brought against BIOLASE for a BIOLASE PATENT under which P&G is paying BIOLASE a
royalty; (3) a declaratory judgment action alleging invalidity, unenforceability
and/or non-infringement of any P&G PATENTS is brought against BIOLASE; or (4) a
declaratory judgment action alleging invalidity, unenforceability and/or
non-infringement of any P&G PATENTS is brought against P&G, P&G may elect, in
its sole discretion, to have sole control of the action, including, but not
limited to, selection and control of counsel and the defense and settlement of
the action, and if P&G so elects it will bear all the costs of the action and
will defend against such declaratory judgment action. P&G will keep BIOLASE
reasonably informed of the progress of the legal action. P&G may not agree to
invalidity, unenforceability, or non-infringement of a BIOLASE PATENT or any
claim thereof without BIOLASE’S prior written consent, which may not be
unreasonably withheld.

	 	8.7.2	 	Except as set forth in Section 8.7.1, if a declaratory judgment
action alleging invalidity, unenforceability or non-infringement of any of the
BIOLASE PATENTS is brought against BIOLASE, BIOLASE will have sole control of
the action, including, but not limited to, selection and control of counsel and
the defense and settlement of the action.

	 	8.7.3	 	Except as set forth in Section 8.7.1, if a declaratory judgment
action alleging invalidity, unenforceability or non-infringement of any of the
BIOLASE PATENTS is brought against both PARTIES, BIOLASE will have sole control
of the action, including, but not limited to, selection and control of counsel
and the defense and settlement of the action.

	 	8.8	 	Cooperation. Each PARTY will fully cooperate with the other PARTY, at said
other PARTY’S expense, in support of any action initiated by said other PARTY under
Section 8, including using commercially reasonable efforts to have its employees
testify when requested and to make available relevant records, papers, information,
samples, specimens, and the like.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

20

 

	 	8.9	 	P&G as non-exclusive licensee. If BIOLASE elects not to institute such action
to terminate third party infringement under section 8.2 or 8.3, or fails to do so
within such 6 months of receiving P&G’s notice of infringement under section 8.1, then
P&G may bring suit against the third party infringer in P&G’s own name, and/or in
BIOLASE’s own name if necessary; provided, that P&G
provides written notice to BIOLASE that such infringement is causing or will cause
substantial harm to P&G’s sale of P&G PRODUCT. P&G will indemnify BIOLASE against
any liability resulting from such P&G enforcement against a third party infringer,
provided however, that P&G will not indemnify BIOLASE against any liability directly
resulting from the actions of BIOLASE’s counsel or BIOLASE’s employees or agents.
BIOLASE will have the right to participate in any such suit brought by P&G at
BIOLASE’s own expense and by counsel of BIOLASE’s own selection. Upon request by
P&G, BIOLASE will provide reasonable cooperation in the prosecution of any such suit
and will provide P&G with all available evidence supporting such infringement. P&G
will reimburse BIOLASE for all BIOLASE’s reasonable expenses related to such
cooperation; such expenses maybe direct out of pocket expenses and/or, internal
expenses; internal expenses will be billed at BIOLASE’s internal rate. Any costs or
damages recovered as a result of such enforcement action will be shared between the
PARTIES 50:50, following deduction of P&G’s reasonable expenses and legal fees
directly connected to the enforcement action.

	9.	 	ALLEGED INFRINGEMENT BY THE PARTIES

	 	9.1	 	Alleged Infringement by a PARTY.

	 	9.1.1	 	If a PARTY, any of its AFFILIATES or sublicensees, distributors
or other customers are approached by or sued by a third party concerning an
allegation of patent infringement for the development, manufacture, use,
distribution or sale of a P&G PRODUCT or a BIOLASE PRODUCT, the alleged
infringing PARTY will promptly, within reason, notify the other PARTY upon its
receiving written notice of such allegation. The alleged infringing PARTY will
be entitled to solely control all aspects of the defense or mitigation of any
such allegations, including but not limited to, selection and control of
counsel, negotiation, litigation strategy development and execution, and
settlement.

	 	9.1.2	 	In the event P&G is a party to a legal action pursuant to
Section 9.1.1, BIOLASE will fully cooperate with and supply all assistance
reasonably requested by P&G, including by using commercially reasonable efforts
to have its employees testify when requested and to make available relevant
records, papers, information, samples, specimens, and the like. P&G will bear
the reasonable expenses incurred by BIOLASE in providing assistance and
cooperation as requested by P&G pursuant to this Section 9.1.2.

	 	9.1.3	 	The alleged infringing PARTY will keep the other PARTY
reasonably informed of the progress of the legal action, and the other PARTY
will be entitled to be represented by counsel in connection with such legal
action at its own expense.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

21

 

	 	9.1.4	 	The alleged infringing PARTY will have the sole right to settle
any claims under this Section 9.1.

	 	9.1.5	 	In the event the alleged infringing PARTY settles any claim
under Section 9.1.4., the alleged infringing PARTY agrees that it will not take
any action that would (i) compromise any of the other PARTY’s assets, including
but not limited to the BIOLASE PATENTS, BIOLASE IP, BIOLASE TECHNOLOGY, P&G
PATENTS, P&G IP or (ii) obligate the other PARTY to a third party in any way.
For the avoidance of doubt, nothing in this Section 9.1.5 will be interpreted to
reduce, diminish, or extinguish any rights granted to P&G under this SECOND
AGREEMENT.

	10.	 	REPRESENTATIONS AND WARRANTIES

	 	10.1	 	Of Both PARTIES. Each PARTY represents and warrants to the other PARTY that,
as of the EFFECTIVE DATE of this SECOND AGREEMENT:

	 	10.1.1	 	The execution, delivery and performance of this SECOND AGREEMENT and the
consummation by the warranting PARTY of the transactions contemplated hereby
have been duly authorized by all necessary corporate action of the warranting
PARTY, as appropriate.

	 	10.1.2	 	This SECOND AGREEMENT has been duly executed and delivered by the warranting
PARTY, and constitutes a valid and legally binding obligation of the warranting
PARTY enforceable against such PARTY in accordance with its terms, subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to the general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).

	 	10.1.3	 	The warranting PARTY has not and will not enter into any third party
agreement, the terms and conditions of which, would be inconsistent or in
derogation with any of the terms and conditions hereof.

	 	10.1.4	 	The warranting PARTY is duly organized and validly existing under the laws of
the jurisdiction of its organization, and has full power, authority and legal
right to execute, deliver and perform this SECOND AGREEMENT, and has taken all
necessary action to authorize the execution, delivery and performance of this
SECOND AGREEMENT.

	 	10.1.5	 	The warranting PARTY is not subject to any judgment, order, injunction, decree
or award of any court, administrative agency or governmental body that would or
might interfere with its performance of any of its material obligations
hereunder.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

22

 

	 	10.2	 	Of BIOLASE. BIOLASE hereby covenants, represents, and warrants to P&G, that to
BIOLASE’s knowledge:

	 	10.2.1	 	There are no claims, liens, mortgages, licenses, commitments, obligations, or
encumbrances of any kind concerning the BIOLASE IP that would affect the ability
of BIOLASE to grant the rights and perform the obligations contemplated by this
SECOND AGREEMENT.

	 	10.2.2	 	Any granted, or allowed claims, of the BIOLASE PATENTS are valid and
enforceable and there are no actions or prior art that would affect the validity
or enforceability of any granted, or allowed claims, of the BIOLASE PATENTS,
including, but not limited to, any reexamination requests, opposition
proceedings, certificates of correction, or reissuance requests. BIOLASE’s
knowledge applies to all agents and employees of BIOLASE, as well as, agents and
attorneys preparing and prosecuting BIOLASE PATENTS (not including P&G agents
and P&G attorneys).

	 	10.2.3	 	BIOLASE owns all right, title, and interest in the BIOLASE IP.

	 	10.2.4	 	BIOLASE has made a reasonable effort to populate Exhibits A and C, such that
attached Exhibits A and C of this SECOND AGREEMENT contain a true and complete
list of all of the BIOLASE PATENTS, including BIOLASE PATENTS that BIOLASE has a
LICENSABLE INTEREST or transferable interest in. It is understood that, despite
a reasonable effort to populate Exhibits A and C. Exhibits A or C may not be a
true and complete list of all BIOLASE PATENTS. However, upon realization of any
error, correction will be made within a reasonable period.

	 	10.2.5	 	BIOLASE PATENTS and BIOLASE TECHNOLOGY related thereto, listed in attached
Exhibits A and C are not subject to any contractual obligations in the P&G
FIELDS OF USE, including existing or expectant licenses.

	 	10.2.6	 	As of the EFFECTIVE DATE, BIOLASE does not, directly or indirectly, make,
presently have made, use, import, export, sell, presently have sold, or offer
for sale, anywhere in the world, ****.

	 	10.3	 	BIOLASE hereby covenants, represents, and warrants to P&G, throughout the term
of this SECOND AGREEMENT, BIOLASE will, as far as it is reasonably practicable to do
so, cause its employees who are employed to do research, development, or other
inventive work, to disclose to it inventions within the scope of this SECOND AGREEMENT
and to assign to BIOLASE rights in such inventions such that P&G will receive, by
virtue of this SECOND AGREEMENT, the license(s) agreed to be granted to it, it being
understood that if due care and diligence are used, any inadvertent failure to comply
with this Section 10.3 will not constitute a breach of this SECOND AGREEMENT.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

23

 

	 	10.4.	 	EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NOTHING
CONTAINED IN THIS AGREEMENT WILL BE CONSTRUED AS:

	 	10.4.1	 	A WARRANTY OR REPRESENTATION BY EITHER PARTY AS TO THE VALIDITY,
ENFORCEABILITY, OR SCOPE OF ANY PATENT;

	 	10.4.2	 	A WARRANTY OR REPRESENTATION THAT ANY MANUFACTURE, SALE, OFFER FOR SALE,
LEASE, IMPORT, USE OR OTHER DISPOSITION OF ANY PRODUCTS HEREUNDER WILL BE FREE
FROM INFRINGEMENT OF PATENT, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES;

	 	10.4.3	 	A WARRANTY OR REPRESENTATION BY EITHER PARTY WITH RESPECT TO THEIR ENFORCEMENT
OF ANY PATENT INCLUDING THE PROSECUTION, DEFENSE OR CONDUCT OF ANY ACTION OR
SUIT CONCERNING INFRINGEMENT OF ANY SUCH PATENT.

	 	10.4.4	 	A WARRANTY OR REPRESENTATION THAT ANY FORMULATIONS, CLAIMS, DEVICES,
INSTRUCTIONS, LABELING, ADVERTISING, AND/OR PACKAGING HAS THE APPROVAL OF THE
UNITED STATES FOOD AND DRUG ADMINISTRATION OR APPROVAL BY ANY OTHER
JURISDICTION.

	 	10.5	 	Of P&G. P&G hereby covenants, represents, and warrants to BIOLASE, that to
P&G’s knowledge:

	 	10.5.1	 	There are no claims, liens, mortgages, licenses, commitments, obligations, or
encumbrances of any kind concerning the P&G IP that would affect the ability of
P&G to grant the rights and perform the obligations contemplated by this SECOND
AGREEMENT.

	 	10.6	 	No Other Representations and Warranties. Neither PARTY makes any
representations or warranties other than as expressly set forth in this Section 10.

	11.	 	TERM AND TERMINATION

	 	11.1	 	TERM. Unless otherwise terminated as provided herein, the SECOND AGREEMENT will
be effective up to and including the date of expiration of the last to expire BIOLASE
PATENTS and/or P&G PATENTS in Exhibits A, C, and F.

	 	11.2	 	Termination

	 	11.2.1	 	Termination for an Uncured Material Breach. Failure by either PARTY to comply
with any of the material obligations contained in this SECOND AGREEMENT (the
“BREACHING PARTY”) will entitle the other PARTY (the “NON-BREACHING PARTY”) to
give to the BREACHING PARTY notice, pursuant to Section 13.1, specifying the
nature of the breach and requiring it to cure such breach. In the event the
PARTIES are unable to resolve the matter, the PARTIES may enter an
arbitration, pursuant to Section 13.2. In the event that the BREACHING PARTY
is found, pursuant to Section 13.2, to have committed a MATERIAL BREACH and
said MATERIAL BREACH becomes an UNCURED MATERIAL BREACH, the NON-BREACHING
PARTY may terminate this SECOND AGREEMENT.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

24

 

	 	11.2.2	 	Termination by Mutual Consent. This SECOND AGREEMENT may be terminated by
mutual written consent of the PARTIES and rights hereunder divided as the
PARTIES agree in writing.

	 	11.2.3	 	Termination in Event of Change in Control of BIOLASE. Pursuant to Section
11.4 below, P&G may terminate this SECOND AGREEMENT in the event of a CHANGE IN
CONTROL of BIOLASE.

	 	11.2.4	 	Termination in Event of license of third party to BIOLASE IP. P&G will have
the right to terminate this SECOND AGREEMENT or to revoke the license granted to
BIOLASE under section 2.3, in the event that BIOLASE licenses BIOLASE IP in the
P&G PRIMARY FIELD OF USE and/or the P&G RETAINED FIELD to a third party.

	 	11.3	 	Certain Effects of Termination.

	 	11.3.1	 	Termination by BIOLASE for P&G Uncured Material Breach. Effective upon a
termination by BIOLASE in accordance with Section 11.2.1 above, the following
will occur:

	 	11.3.1.1	 	Except for Section 11.3.1.3, P&G’s licenses under the BIOLASE PATENTS
and BIOLASE TECHNOLOGY will automatically be deemed to have terminated
and all rights thereunder will automatically be deemed to have reverted
to BIOLASE; and BIOLASE’s licenses under the P&G PATENTS and P&G IP will
automatically be deemed to have terminated and all rights thereunder will
automatically be deemed to have reverted to P&G.

	 	11.3.1.2	 	P&G will destroy all copies of BIOLASE CONFIDENTIAL INFORMATION
provided by BIOLASE to P&G hereunder. Notwithstanding the foregoing, and
provided P&G fulfills its obligations specified in this SECOND AGREEMENT
with respect to such materials, P&G’s counsel may continue to retain
solely for archival purposes a single copy of BIOLASE’s CONFIDENTIAL
INFORMATION and any other materials provided by BIOLASE; and BIOLASE will
destroy all copies of P&G CONFIDENTIAL INFORMATION.

	 	11.3.1.3	 	P&G will retain a non-exclusive, worldwide license to import, offer
for sale, or sell any remaining P&G PRODUCTS that
had been manufactured up to the date of termination of this SECOND
AGREEMENT. This non-exclusive license will automatically terminate
upon **** or within ****, whichever is sooner. P&G will owe
BIOLASE a royalty under Section 4.3 for the sales of said P&G
PRODUCTS under this Section 11.3.1.3.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

25

 

	 	11.3.2	 	Termination by P&G for Uncured Material Breach by BIOLASE. If P&G terminates
this SECOND AGREEMENT for a MATERIAL BREACH in accordance with Section 11.2.1
above, BIOLASE, at P&G’s request, will refund all prior payments received by
BIOLASE from P&G, insofar as they specifically pertain to the UNCURED MATERIAL
BREACH for the term including the **** preceding and up to the time of the
UNCURED MATERIAL BREACH. Said refund will include, but is not limited to FIRST
or SECOND PRODUCT SHIPMENT PAYMENT(S), PREVIOUSLY PAID QUARTERLY PAYMENTS, P&G
QUARTERLY PAYMENTS, ROYALTY PAYMENTS, and any PAYMENT made under the LETTER. If
P&G elects to receive a refund of prior payments and the PARTIES are unable to
agree on the amount to be refunded with respect to an UNCURED MATERIAL BREACH,
either PARTY will submit such dispute to be settled by arbitration in accordance
with Section 13. However, if BIOLASE commits an UNCURED MATERIAL BREACH, P&G
may alternatively elect to retain its exclusive license(s) without the
obligation to pay FIRST or SECOND PRODUCT SHIPMENT PAYMENT(S), P&G QUARTERLY
PAYMENTS, ROYALTY PAYMENTS, or any other monies whatsoever, however, if P&G
retains its exclusive license(s), it will not be entitled to a refund of monies
previously paid. Additionally, where BIOLASE commits an UNCURED MATERIAL
BREACH, P&G may revoke the license given to BIOLASE under Section 2.3, thereby
terminating this SECOND AGREEMENT.

	 	11.4	 	Change in Control of BIOLASE. BIOLASE will promptly notify P&G of any CHANGE
IN CONTROL as the term is defined in 11.4.2, of BIOLASE or a BIOLASE AFFILIATE that is
primarily responsible for undertaking the obligations under this SECOND AGREEMENT. If
the CHANGE IN CONTROL event involves a direct competitor to P&G in the P&G PRIMARY
FIELD OF USE, P&G will no longer have any obligation to share or to disclose
information to BIOLASE regarding the development of products; P&G’s ability to convert
to a non-exclusive license pursuant to 2.2 will no longer be subject to any time
limitation on when such conversion can occur and BIOLASE will also take all actions
necessary to prevent disclosure of P&G CONFIDENTIAL INFORMATION to the party involved
in the CHANGE IN CONTROL event, excepting information provided to BIOLASE pursuant to
Section 4.4. Further upon a CHANGE IN CONTROL event involving a direct competitor to
P&G in the P&G PRIMARY FIELD OF USE, P&G may elect to terminate, modify or
continue under this SECOND AGREEMENT as defined in this Section 11.4.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

26

 

	 	11.4.1	 	If the CHANGE IN CONTROL event involves a direct competitor to P&G in the P&G
PRIMARY FIELD OF USE, P&G may elect, without consequence, as provided below:

	(i)	 	P&G may elect to terminate any research, development or manufacturing activity that BIOLASE
may have been conducting for P&G under this SECOND AGREEMENT or a separate agreement relating
to P&G IP or BIOLASE TECHNOLOGY.

	(ii)	 	P&G may elect to continue under this SECOND AGREEMENT, including any research, development or
manufacturing activity that BIOLASE may have been conducting for P&G under this SECOND
AGREEMENT or a separate agreement related to this SECOND AGREEMENT, in which case P&G may
request in writing that BIOLASE or the parent of the entity acquiring control of BIOLASE
agree to commit in writing, within sixty (60) days after receipt of such request, to continue
to perform the specified BIOLASE activity, to otherwise agree to be bound by the provisions of
this SECOND AGREEMENT, and to agree to commit in writing to duly and timely pay, perform and
discharge all of the obligations of BIOLASE under this SECOND AGREEMENT.

	(iii)	 	P&G may elect to terminate this SECOND AGREEMENT and a determination pursuant to Exhibit E
will be made of the PURCHASE PRICE of the BIOLASE PATENTS licensed to P&G in the PRIMARY P&G
FIELD OF USE under this SECOND AGREEMENT, which patents are listed on Exhibit A, and within
fifteen (15) days following such PURCHASE PRICE determination P&G will make the further
election, in writing, either to (a) purchase BIOLASE PATENTS, or (b) rescind its election to
purchase BIOLASE PATENTS. If P&G elects to purchase the BIOLASE PATENTS, the SECOND AGREEMENT
will terminate except for certain surviving obligations. P&G will be obligated to grant back
limited rights to BIOLASE under the acquired BIOLASE PATENTS if such patents cover products
outside the P&G FIELD OF USE.

	 	11.4.2	 	Change in Control. For purposes of this SECOND AGREEMENT, a “CHANGE IN
CONTROL” of BIOLASE will be deemed to have occurred in the event of (i) a
merger, combination, reorganization or consolidation of BIOLASE with or into
another corporation with respect to which less than a majority of the
outstanding voting power of the surviving or consolidated corporation is held by
shareholders of BIOLASE immediately prior to such event, (ii) the sale of all or
substantially all of the properties and assets of BIOLASE and its subsidiaries,
or (iii) the accumulation or acquisition by any individual, firm, corporation,
or entity (other than any profit sharing or other employee benefit plan of
BIOLASE or any Affiliate, or any employee or group of employees or former
officers an/or directors of BIOLASE or its Affiliates) of beneficial ownership,
directly or indirectly, of securities of BIOLASE representing more than fifty
percent (50%) of the combined voting power of BIOLASE’s then outstanding voting
securities.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

27

 

	 	11.5	 	Right of First Negotiation. If BIOLASE elects to seek a buyer for any BIOLASE
PATENT set out in Exhibit A licensed hereunder to P&G, P&G will have **** right of
first negotiation with respect to a potential purchase by P&G of such BIOLASE PATENT.
In the event the PARTIES do not enter into a binding agreement with respect to such
purchase within the **** or in the event BIOLASE receives a binding unsolicited
offer, BIOLASE will have sole discretion to pursue offers and sale to other parties.
It is understood that BIOLASE may license, or may have licensed, other parties in
fields outside of fields licensed to P&G under this SECOND AGREEMENT, and that
BIOLASE PATENTS may be so encumbered when first offered to P&G under this Section
11.5.

	 	11.6	 	Termination Not Sole Remedy. Termination is not the sole remedy under this
SECOND AGREEMENT and, whether or not termination is affected, all other remedies will
remain available except as agreed to otherwise herein.

	 	11.7	 	Survival of Certain Obligations. Section 12 will survive any termination, in
whole or in part, of this SECOND AGREEMENT. The termination of this SECOND AGREEMENT
will not relieve either PARTY of any liability it may have to the other PARTY arising
out of or relating to acts or omissions occurring prior to termination.

	 	11.8	 	The signing date “SIGNING DATE” of this SECOND AGREEMENT will be on the day of
execution of the last to sign this SECOND AGREEMENT.

	12.	 	CONFIDENTIALITY

	 	12.1	 	During the term of this SECOND AGREEMENT, both PARTIES may be exposed to
certain information of the other PARTY, not generally known to the public and related
to this SECOND AGREEMENT, which has been identified by the disclosing PARTY (the
“DISCLOSING PARTY”) at the time of disclosure as being confidential by means of an
appropriate marking, or, if disclosed orally or visually, will be confirmed in writing
as confidential within **** of the oral or visual disclosure (collectively the
“CONFIDENTIAL INFORMATION”). The PARTY receiving the CONFIDENTIAL INFORMATION (the
“RECEIVING PARTY”) will keep the DISCLOSING PARTY’s CONFIDENTIAL INFORMATION in
confidence for a period of **** from disclosure, using measures no less protective than
the RECEIVING PARTY takes to protect its own CONFIDENTIAL INFORMATION of like nature,
which in no event will be less than a reasonable standard of care.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

28

 

	 	12.2	 	Exceptions. The obligations in Section 12.1 will not preclude the RECEIVING
PARTY from using or disclosing the same or similar information which may be the same as
the DISCLOSING PARTY’s CONFIDENTIAL INFORMATION to the extent that such same or similar
information (i) was or later becomes, through no act or omission on the part of the
RECEIVING PARTY, generally available to or available to the public; (ii) was rightfully
in the possession of the RECEIVING PARTY at the time of disclosure by the DISCLOSING
PARTY, as
established by relevant documentary evidence, without restriction as to use or
disclosure; (iii) is hereafter acquired by the RECEIVING PARTY from a third party
who, in providing such information, does not breach an obligation or confidence of
the DISCLOSING PARTY and provides such information without restriction as to use or
disclosure; or (vi) is independently conceived, created, or developed by the
RECEIVING PARTY without use of or access to the DISCLOSING PARTY’s CONFIDENTIAL
INFORMATION, as established by relevant documentary evidence. The provisions of
Section 12 will not restrict a PARTY from disclosing the other PARTY’s CONFIDENTIAL
INFORMATION to the extent required by any law or regulation; provided that the PARTY
required to make such a disclosure uses reasonable efforts to give the other PARTY
reasonable advance notice of such required disclosure in order to enable the other
PARTY to prevent or limit such disclosure.

	 	12.3	 	Trade Secrets. If the DISCLOSING PARTY provides to the RECEIVING PARTY
CONFIDENTIAL INFORMATION which includes a trade secret, the CONFIDENTIAL INFORMATION
limited to the trade secret shall be kept confidential by the RECEIVING PARTY
perpetually unless the trade secret falls under one of the exceptions of section 12.2.

	 	12.3.1	 	Any CONFIDENTIAL INFORMATION provided by the DISCLOSING PARTY to the RECEIVING
PARTY which is a trade secret shall be marked conspicuously as such.
Additionally, the RECEIVING PARTY will be put on notice by the DISCLOSING PARTY
prior to the disclosure of a trade secret.

	13.	 	DISPUTE RESOLUTION

	 	13.1	 	Notice and Negotiation. In the event of any dispute or disagreement arising
out of this SECOND AGREEMENT, the PARTIES will attempt to resolve the matter by
submitting it for resolution to the President or Chief Executive Officer of BIOLASE and
the appropriate Vice President or General Manager of Research and Development of P&G.
If these representatives are unable to resolve such dispute to the satisfaction of both
BIOLASE and P&G within **** after the date on which the dispute was submitted to such
representative(s), the dispute will be subject to the process described in Section 13.2
below.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

29

 

	 	13.2	 	Arbitration. P&G and BIOLASE will attempt to settle any claim, controversy or
deadlock through consultation and negotiation in good faith and a spirit of mutual
cooperation pursuant to Section 13.1 above. If such attempt fails, the PARTIES agree
to submit to binding arbitration that will be governed by the rules and procedures of
the American Arbitration Association, with the requirement that the decision being
issued by a written decision and opinion signed by an independent three-person panel.
Such arbitration will take place in the State of New York. Judgment upon the award of
the arbitrator may be entered in any court having jurisdiction thereof. In the event
the arbitration
involves a claimed material breach of the SECOND AGREEMENT, the alleged breach will
become a MATERIAL BREACH upon a decision by the arbitration panel that a material
breach has occurred. A breaching PARTY will have **** to cure a MATERIAL BREACH as
outlined in the written decision and opinion of the three-person panel of this
Section 13.2. If the MATERIAL BREACH is not cured within ****, it will become an
UNCURED MATERIAL BREACH. If the binding arbitration involves a patent issue, at least
a majority of the arbiters, in addition to other certifications and/or
qualifications, will be licensed patent attorneys.

	 	13.2.1	 	Any payment required under the terms of Sections 13.2 will be made in USD to
the bank designated by the PARTY to be paid hereunder.

	14.	 	INDEMNIFICATION

	 	14.1	 	By P&G. From and after the EFFECTIVE DATE of this SECOND AGREEMENT, P&G will
indemnify, defend and hold harmless BIOLASE and its AFFILIATES and their respective
directors, officers, shareholders, partners, attorneys, accountants, and employees and
any agents of the foregoing and any heirs, executors, successors and assigns of any of
the foregoing (the “BIOLASE INDEMNIFIED PARTIES”) from, against and in respect of any
damages, losses, charges, obligations, liabilities, actions, interest, penalties and
reasonable costs and expenses (including, without limitation, reasonable attorneys’ and
experts’ fees and expenses incurred to enforce successfully the terms of this SECOND
AGREEMENT, “BIOLASE LOSSES AND EXPENSES”)) imposed on, sustained, incurred or suffered
by any of the BIOLASE INDEMNIFIED PARTIES relating to, arising from or otherwise in
respect of (i) any breach of, or inaccuracy in a representation or warranty of P&G
hereunder, or (ii) a breach of a covenant or other agreement by P&G hereunder, or
(iii) any action brought by a third party against a BIOLASE INDEMNIFIED PARTY arising
from or related to P&G’s manufacturing, sale, marketing, distribution, or other
exploitation of a product covered by the BIOLASE PATENTS and/or the BIOLASE TECHNOLOGY;
provided, however, that P&G will have no obligation to indemnify BIOLASE for any
BIOLASE LOSSES AND EXPENSES for which indemnification is sought if (i) such BIOLASE
LOSSES AND EXPENSES were also caused by, relate to or involve a breach of, or
inaccuracy in, any covenant, obligation, representation or warranty of BIOLASE provided
to P&G in this SECOND AGREEMENT or (ii) such BIOLASE LOSSES AND EXPENSES result from or
arise out of a material action or omission of BIOLASE.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

30

 

	 	14.2	 	By BIOLASE. From and after the EFFECTIVE DATE of this SECOND AGREEMENT,
BIOLASE will indemnify, defend and hold harmless P&G and its AFFILIATES and licensees
and their respective directors, officers, shareholders, partners, attorneys,
accountants, and employees and any agents of the foregoing and any heirs, executors,
successors and assigns of any of the foregoing (the “P&G INDEMNIFIED PARTIES”) from,
against and in respect
of any damages, losses, charges, obligations, liabilities, actions, interest,
penalties and reasonable costs and expenses (including, without limitation,
reasonable attorneys’ and experts’ fees and expenses incurred to enforce successfully
the terms of this SECOND AGREEMENT, “P&G LOSSES AND EXPENSES”)) imposed on,
sustained, incurred or suffered by any of the P&G INDEMNIFIED PARTIES relating to,
arising from or otherwise in respect of (i) any breach of, or inaccuracy in, a
representation or warranty of BIOLASE hereunder, or (ii) a breach of a covenant or
other agreement of BIOLASE hereunder, or (iii) any action brought by a third party
against a P&G INDEMNIFIED PARTY arising from or related to BIOLASE’s manufacturing,
sale, marketing, distribution, or other exploitation of a product covered by the
BIOLASE PATENTS, BIOLASE TECHNOLOGY, and/or P&G IP; provided, however, that BIOLASE
will have no obligation to indemnify P&G for any P&G LOSSES AND EXPENSES for which
indemnification is sought if (i) such P&G LOSSES AND EXPENSES were also caused by,
relate to or involve a breach of, or inaccuracy in, any covenant, obligation,
representation or warranty of P&G provided to BIOLASE in this SECOND AGREEMENT or
(ii) such P&G LOSSES AND EXPENSES result from or arise out of a material action or
omission of P&G.

	 	14.3	 	Third Party Claims. The “INDEMNIFIED PARTIES” will mean the BIOLASE
INDEMNIFIED PARTIES and the P&G INDEMNIFIED PARTIES. If a claim by a third party is
made against an INDEMNIFIED PARTY hereunder, and if such INDEMNIFIED PARTY intends to
seek indemnity with respect thereto under this Section 14, such INDEMNIFIED PARTY will
promptly notify BIOLASE, in the case of a P&G INDEMNIFIED PARTY, or P&G, in the case of
a BIOLASE INDEMNIFIED PARTY (such PARTY to be notified, the “INDEMNIFYING PARTY”) in
writing of such claims setting forth such claims in reasonable detail, provided that
failure of such INDEMNIFIED PARTY to give prompt notice as provided herein will not
relieve the INDEMNIFYING PARTY of any of its obligations hereunder, except to the
extent that the INDEMNIFYING PARTY is materially prejudiced by such failure. The
INDEMNIFYING PARTY will have **** after receipt of such notice to undertake, through
counsel of its own choosing, subject to the reasonable approval of such INDEMNIFIED
PARTY, and at the INDEMNIFYING PARTY’S expense, the settlement or defense thereof, and
the INDEMNIFIED PARTY will cooperate with it in connection therewith; provided,
however, that the INDEMNIFIED PARTY may participate in such settlement or defense
through counsel chosen by such INDEMNIFIED PARTY, provided that the fees and expenses
of such counsel will be borne by such INDEMNIFIED PARTY. If the INDEMNIFYING PARTY
will assume the defense of a claim, it will not settle such claim without the prior
written consent of the INDEMNIFIED PARTY, (a) unless such settlement includes as an
unconditional term thereof the giving by the claimant of a release of the INDEMNIFIED

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

31

 

	 	 	 	PARTY from all liability with respect to such claim or (b) if such settlement involves
the imposition of equitable remedies or the imposition of any material obligations on
such INDEMNIFIED PARTY other than financial obligations for which such INDEMNIFIED
PARTY will be indemnified hereunder. If the INDEMNIFYING PARTY will assume the
defense of a claim, the fees of any separate counsel retained by the INDEMNIFIED
PARTY will be borne by such INDEMNIFIED PARTY unless there exists a conflict between
them as to their respective legal defenses (other than one that is of a monetary
nature), in which case the INDEMNIFIED PARTY will be entitled to retain separate
counsel, the reasonable fees and expenses of which will be reimbursed by the
INDEMNIFYING PARTY. If the INDEMNIFYING PARTY does not notify the INDEMNIFIED PARTY
within **** after the receipt of the INDEMNIFIED PARTY’s notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the INDEMNIFIED
PARTY will have the right to contest, settle or compromise the claim but will not
thereby waive any right to indemnity therefore pursuant to this SECOND AGREEMENT.
The indemnification provisions set forth in this Section 14 are the sole and
exclusive means of recovery of money damages with respect to the matters covered
herein, except for fraud.

	 	14.4	 	Limitation on Losses and Expenses. Notwithstanding anything to the contrary
contained herein, no INDEMNIFYING PARTY hereunder will be liable (including liability
for negligence or other tortious act or omission) for (a) any loss of profit, loss of
contract or loss of goodwill incurred by any INDEMNIFIED PARTY; or (b) any punitive,
indirect or consequential damages incurred by any INDEMNIFIED PARTY pursuant to this
SECOND AGREEMENT (it being understood that any damages described in this Section 14.4
owed by any INDEMNIFIED PARTY to any third party will be considered direct damages, not
subject to this Section 14.4).

	15.	 	MISCELLANEOUS

	 	15.1	 	Certain Injunctive Relief. Due to the important confidentiality concerns of
the PARTIES, and for other reasons, the PARTIES will be irreparably damaged in the
event that the provisions of Sections 4.6.1.1; 4.6.1.2; and 12 are not specifically
enforced. In the event of a breach or threatened breach of the terms, covenants and/or
conditions of either such Section 12 by any of the PARTIES hereto, the other party
will, in addition to any other remedies it may have, be entitled to a temporary or
permanent injunction, without showing any actual damage, and/or a decree for specific
performance, in accordance with the provisions of such Section 12.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

32

 

	 	15.2	 	Noncompete. Subject to Section 15.2.1 and 15.2.2 of this Non-Compete Section
15.2, BIOLASE by itself or through third parties will not directly or indirectly enter
into the research, development, prototyping, testing, manufacture, supply, marketing,
distribution, sale, promotion, or commercialization of any compounds, materials, or
products in the P&G FIELDS OF USE, including the
PRIMARY P&G FIELD OF USE, and the P&G RETAINED FIELD except as provided herein via
the BIOLASE FIELD OF USE by: (i) developing, prototyping, conducting research on,
manufacturing, supplying, marketing, selling or distributing any such products or
products competing with such products to any third party other than P&G; (ii)
licensing any intellectual property to any third party other than P&G for use in
connection with the research, development, prototyping, testing, manufacture, supply,
marketing, distribution, sale, promotion, or commercialization any such compounds,
materials, or products; (iii) consulting with, supplying compounds, materials, or
products to, cooperating with or providing services to, any third party other than
P&G with respect to the research, development, prototyping, testing, manufacture,
supply, marketing, distribution, sale, promotion, or commercialization of any such
compounds, materials, or products; or (iv) investing in any third party other than
P&G, that engages in the research, development, prototyping, testing, manufacture,
supply, marketing, distribution, sale, promotion, or commercialization of such
products, (collectively, the “RESTRICTED BUSINESS”); provided, however, that this
restriction will not apply to BIOLASE directly acquiring a non-controlling ownership
interest of less than fifty percent (50%) of the equity of a public or private
company that engages in a RESTRICTED BUSINESS if BIOLASE acquires such equity stake
in such company primarily in exchange for obtaining rights (either via an outright
assignment or a license) or access to technology owned by such company and that is
unrelated to the RESTRICTED BUSINESS and such company’s market cap does not exceed
**** ($****). In addition, BIOLASE may acquire a less than **** equity stake in any
publicly traded or private company that derives less than **** of its revenues from
the RESTRICTED BUSINESS.

	 	15.2.1	 	The time periods of this Non-Compete Section will apply to and be effective
for/during the time period that P&G has license rights and/or BIOLASE has
license rights, or options thereto (excluding the categories which revert back
to BIOLASE) notwithstanding the time limitations provided in section 15.2.2.
The terms of Sections 15.2 and 15.2.1 will not apply to (i) categories which
have reverted back to BIOLASE from the P&G FIELDS OF USE, (ii) the DENTAL TRAY
Field in the event that P&G does not exercise its option, and (iii) the BIOLASE
RETAINED FIELD.

	 	15.2.2	 	The time periods of section 15.2.1 will not extend beyond three years from the
EFFECTIVE DATE of this SECOND AGREEMENT for the P&G FIELDS OF USE and will not
extend beyond five years from the EFFECTIVE DATE of this SECOND AGREEMENT for
the PRIMARY P&G FIELD OF USE and the P&G RETAINED FIELD.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

33

 

	 	15.3	 	Assignment. This SECOND AGREEMENT and the rights and obligations thereunder,
may not be assigned, whether by operation of law or otherwise, or otherwise transferred
by either PARTY to a third party, except as authorized in
writing by the other PARTY or as expressly set forth in Section 10 with respect to a
BIOLASE CHANGE IN CONTROL, except that either PARTY may assign the rights and
obligations under the SECOND AGREEMENT, in whole or in part, to an AFFILIATE existing
as of the EFFECTIVE DATE, or P&G may assign its rights and obligations under this
SECOND AGREEMENT to a third party in the event P&G divests, transfers, or sells to
that third party a portion or its entire business associated with one or more P&G
PRODUCTS. Any attempted assignment or delegation except as permitted herein will be
null and void. Any assignee of this SECOND AGREEMENT under this Section 15.3 will
covenant to the PARTIES in writing that such assignee agrees to be bound by all the
terms and conditions of this SECOND AGREEMENT applicable to the assignor.

	 	15.4	 	Governing Law; Venue. This SECOND AGREEMENT and the PARTIES’ respective rights
and obligations hereunder will be governed by and construed in accordance with the laws
of the State of New York, without giving effect to that body of laws pertaining to
conflict of laws, whether common law or statutory.

	 	15.5	 	Severability. If one or more of the sections, provisions, paragraphs, words,
clauses, phrases or sentences contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such section, provision, paragraph,
word, clause, phrase or sentence in every other respect and of the remaining sections,
provisions, paragraphs, words, clauses, phrases or sentences hereof will not be in any
way impaired, it being intended that all rights, powers and privileges of the PARTIES
hereto will be enforceable to the fullest extent permitted by law.

	 	15.6	 	Amendments and Waivers. This SECOND AGREEMENT may be amended only by a written
instrument executed by both PARTIES. Any amendment effected in accordance with the
immediately preceding sentence will be binding on all of the PARTIES to this SECOND
AGREEMENT. No failure or delay by any PARTY in exercising any right, power or
privilege hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.

	 	15.7	 	Entire Agreement. This SECOND AGREEMENT, together with any exhibits,
appendixes and attachments hereto, constitutes the complete and exclusive agreement
between the PARTIES regarding the subject matter hereof, and supersedes all previous
written or verbal agreements relating on this subject matter between the PARTIES, and
all previous writings are merged and superseded by this SECOND AGREEMENT, including the
LETTER, and including the Bilateral CDA executed on June 22nd, 2006 by the PARTIES, the
Confidential Disclosure Agreement executed on May 5, 2005 by the PARTIES, and the
Amendment to the Confidential Disclosure Agreement executed on June 5, 2006 by the
PARTIES. This SECOND AGREEMENT may be modified only by a written document signed by
all the PARTIES hereto.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

34

 

	 	15.8	 	Bankruptcy. In the event BIOLASE seeks or is involuntarily placed under the
protection of the bankruptcy laws, Title XI U.S. Code, and the trustee in bankruptcy
rejects this SECOND AGREEMENT, P&G hereby elects, pursuant to Section 365(n), to retain
all rights granted to it under this SECOND AGREEMENT to the extent permitted by law.
In the event P&G seeks or is involuntarily placed under the protection of the
bankruptcy laws, Title XI U.S. Code, and the trustee in bankruptcy rejects this SECOND
AGREEMENT, BIOLASE hereby elects, pursuant to Section 365(n), to retain all rights
granted to it under this SECOND AGREEMENT to the extent permitted by law.

	 	15.9	 	Counterparts. This SECOND AGREEMENT may be executed in one or more
counterparts, and by different PARTIES on separate counterparts, each of which will be
deemed an original and all of which together will constitute one and the same original.

	 	15.10	 	Notices. Any and all notices required or permitted to be given to a PARTY
pursuant to the provisions of this SECOND AGREEMENT will be in writing and will be
effective and deemed to provide such PARTY sufficient notice under this SECOND
AGREEMENT on the earliest of the following: (i) at the time of personal delivery, if
delivery is in person; (ii) at the time of transmission by facsimile, addressed to the
other PARTY at its facsimile number specified herein (or hereafter modified by
subsequent notice to the PARTIES hereto), with confirmation of receipt made by both
telephone and printed confirmation sheet verifying successful transmission of the
facsimile; or (iii) one (1) business day after deposit with an express overnight
courier for United States deliveries, or two (2) business days after such deposit for
deliveries outside of the United States, with proof of delivery from the courier
requested. All notices for delivery outside the United States will be sent by facsimile
or by express courier. Notices by facsimile will be machine verified as received. All
notices not delivered personally or by facsimile will be sent with postage and/or other
charges prepaid and properly addressed to the PARTY to be notified at the address or
facsimile number as follows, or at such other address or facsimile number as such other
PARTY may designate by one of the indicated means of notice herein to the other PARTIES
hereto as follows:

if to P&G:

The Procter & Gamble Company

Two Procter & Gamble Plaza

Cincinnati, Ohio 45202

Attention: Jeffrey D. Weedman

Vice President, External Business Development

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

35

 

With copies to:

Kim Zerby

Associate General Counsel

Global Health Care

Tel : 513-983-4555

Fax : 513-622-3300

Email : zerby.kw@pg.com

if to BIOLASE:

BIOLASE TECHNOLOGY, Inc.

4 Cromwell, Irvine CA 92618

Attention: Richard Harrison

Chief Financial Officer

With copies to:

Charles K. Ruck, Esq.

Latham & Watkins, LLP

650 Town Center Drive, 20th Floor

Costa Mesa, CA 92626-1925

Tel: (714) 540-1235

Fax: (714) 755-8290

Email: charles.ruck@lw.com

	 	15.11	 	Press Releases and Public Disclosure. Any press releases, public
announcements or similar publicity with respect to this SECOND AGREEMENT or the
transactions contemplated hereby (including, without limitation, standard question and
answer responses, scripts for press briefings, and other disclosure) must be approved
by both PARTIES in advance with respect to both timing and content of the disclosure,
provided that nothing herein will prevent either PARTY or their respective AFFILIATES,
upon reasonable notice to the other PARTY, from making public disclosures that are
necessary to comply with the requirements of law or any listing agreement with any
national securities exchange.

	 	15.12	 	Force Majeure. Should either PARTY be prevented from performing its
obligations under this SECOND AGREEMENT by an event of force majeure, such as an
earthquake, typhoon, flood, fire, act of war, act of the public enemy, act of
terrorism, act of God or any other unforeseen event the happening and consequences of
which are unpreventable and unavoidable, the prevented Party will notify the other
PARTY by the most expedient means available (fax, telex or express mail being
acceptable in any event) without any delay, and within fifteen (15) days thereafter
provide detailed information of the events and, if applicable and available, a valid
document for evidence issued by the relevant public notary organization explaining the
reason for its inability to perform or delay in the
performance of all or part of this SECOND AGREEMENT. The PARTIES will discuss in
good faith, taking into account the effects of the force majeure and other unforeseen
events on the performance of the obligations under this SECOND AGREEMENT, whether to
(a) exempt the prevented Party from performing part or all of its obligations under
this SECOND AGREEMENT or (b) delay the performance of the affected obligations under
this SECOND AGREEMENT. In the absence of any such agreement, no PARTY will be
excused from its performance hereunder once the event of force majeure has subsided.

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

36

 

	 	15.13	 	Further Assurances. Except as otherwise specifically agreed to herein, the
PARTIES agree to execute such further documentation and perform such further actions,
including the recordation of such documentation with appropriate authorities, as may be
reasonably requested by the other PARTY hereto to evidence, effectuate and further the
purposes and intents set forth in this SECOND AGREEMENT.

	 	15.14	 	No Third Party Beneficiaries. Except for the rights of the INDEMNIFIED
PARTIES pursuant to Section 14, nothing in this SECOND AGREEMENT, express or implied,
is intended to confer upon any Person, other than the PARTIES hereto or their
respective successors and permitted assigns, any rights, remedies, benefits,
obligations or liabilities of any nature whatsoever under or by reason of this SECOND
AGREEMENT.

	16.	 	PREVIOUS AGREEMENT. The PARTIES mutually agree to TERMINATE the PREVIOUS AGREEMENT with the
execution of this SECOND AGREEMENT, noting that the confidentiality provisions of the PREVIOUS
AGREEMENT survive the termination of the PREVIOUS AGREEMENT.

IN WITNESS WHEREOF, the PARTIES hereto caused this AGREEMENT to be duly executed as of the date
first written above.

BIOLASE TECHNOLOGY, INC.

	 	 	 	 	 	 	 
	By:	 	/s/ David M. Mulder	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David M. Mulder	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	THE PROCTER & GAMBLE COMPANY	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Jeffrey D. Weedman	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Jeffrey D. Weedman	 	 
	 

	 	Title:
	 	Vice President, External Business Development	 	 

 

	 	 	 
	****	 	Certain confidential information contained in this document, marked with four asterisks, 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.

 

37Exhibit 10.2

Exhibit 10.2

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”)
dated as of May 27, 2010 (the “Effective Date”)
among MIDCAP FINANCIAL, LLC, a Delaware limited
liability company, with an office located at 7735
Old Georgetown Road, Suite 400, Bethesda, Maryland
20814 (“MidCap”), as collateral agent (“Agent”),
SILICON VALLEY BANK, a California corporation and
with a loan production office located at 5820
Canoga Avenue, Suite 210, Woodland Hills,
California 91367 (“SVB”), the Lenders listed on
Schedule 1.1 hereof and otherwise party hereto from
time to time (each a “Lender” and collectively, the
“Lenders”) and BIOLASE TECHNOLOGY, INC., a Delaware
corporation (“Borrower”) provides the terms on
which Lenders shall lend to Borrower and Borrower
shall repay Lenders. The parties agree as follows:

1 ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement
shall be construed following GAAP. Calculations
and determinations must be made following GAAP.
Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth in
Section 14. All other terms contained in this
Agreement, unless otherwise indicated, shall have
the meaning provided by the Code to the extent
such terms are defined therein.

2 LOAN AND TERMS OF PAYMENT

2.1 Promise to Pay. Borrower hereby unconditionally promises to pay to Agent, for
payment to each Lender in accordance with its respective Pro Rata Share, the outstanding principal
amount of all Credit Extensions made by the Lenders and accrued and unpaid interest thereon and any
other amounts due hereunder as and when due in accordance with this Agreement.

2.2 Term Loans.

(a) Availability. Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, to make term loans to Borrower in an aggregate amount up to Five Million
Dollars ($5,000,000.00) according to each Lender’s Term Loan Commitment as set forth on Schedule
1.1 hereto. The Term Loans shall be available in two tranches. The first tranche (“Term A Loan”)
shall be in an amount equal to Three Million Dollars ($3,000,000.00) and shall be advanced on the
Effective Date. The second tranche (“Term B Loan”; Term A Loan and Term B Loan are each referred
to herein individually as a “Term Loan” and collectively as the “Term Loans”) shall be made
available by the Lenders during the Term B Loan Draw Period in an amount equal to Two Million
Dollars ($2,000,000.00) in a single advance. In the event Borrower does not request the Term B Loan
during the Term B Loan Draw Period, Lenders may advance the Term B Loan to Borrower within five (5)
Business Days after the end of the Term B Loan Draw Period without such request by Borrower, after
which advance Borrower will be deemed to have received said Term Loan B for all purposes hereafter.
After repayment, no Term Loan may be re-borrowed.

(b) Interest Payments and Repayment. Commencing on the first (1st) Payment Date
following the Funding Date of Term A Loan, and continuing on the Payment Date of each successive
month thereafter through and including the Maturity Date, Borrower shall make monthly payments of
interest to Agent, for payment to each Lender in accordance with its respective Pro Rata Share, in
arrears, and calculated as set forth in Section 2.3. Commencing on the Amortization Date, and
continuing on the Payment Date of each successive month thereafter through and including the
Maturity Date, Borrower shall make consecutive monthly payments of principal to Agent, for payment
to each Lender in accordance with its respective Pro Rata Share, as calculated by Agent based upon:
(1) the amount of such Lender’s Term Loans, (2) the effective rate of interest, as determined in
Section 2.3, and (3) a straight-line amortization schedule ending on the Maturity Date. All
unpaid principal and accrued interest with respect to the Term Loans is due and payable in full on
the Maturity Date. The Term Loans may be prepaid only in accordance with Sections 2.2(c) and
2.2(d).

 

 

 

(c) Mandatory Prepayments. If the Term Loans are accelerated following the occurrence of an
Event of Default, Borrower shall immediately pay to Agent, for payment to each Lender in accordance
with its
respective Pro Rata Share, an amount equal to the sum of: (i) all outstanding principal of the
Term Loans and all other Obligations, plus accrued and unpaid interest thereon, (ii) the Final
Payment, (iii) the Prepayment Fee, plus (iv) all other sums that shall have become due and payable,
including Lenders’ Expenses.

(d) Permitted Prepayment of Loans. Borrower shall have the option to prepay all, but not
less than all, of the Term Loans advanced by the Lenders under this Agreement, provided Borrower
(i) provides written notice to Agent of its election to prepay the Term Loans at least thirty (30)
days prior to such prepayment, and (ii) pays to Agent, for payment to each Lender in accordance
with its respective Pro Rata Share, on the date of such prepayment, an amount equal to the sum of
(A) all outstanding principal of the Term Loans and all other Obligations, plus accrued interest
thereon, (B) the Final Payment, (C) the Prepayment Fee, and (D) all other sums that shall have
become due and payable, including Lenders’ Expenses.

2.3 Payment of Interest on the Credit Extensions.

(a) Computation of Interest. Interest on the Credit Extensions and all fees payable hereunder
shall be computed on the basis of a 360-day year and the actual number of days elapsed in the
period during which such interest accrues. In computing interest on any Credit Extension, the date
of the making of such Credit Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on which it is made, such
day shall be included in computing interest on such Credit Extension.

(b) Interest Rate Determination. Subject to the provisions of Section 2.3(c) below, each
Advance shall bear interest on the outstanding principal amount thereof from the date when made
until paid in full at a rate per annum equal to the (i) the greater of (A) the LIBOR Rate in effect
for the applicable Interest Period or (B) three percent (3.00%), plus (ii) the LIBOR Rate Margin,
adjusted on the first (1st) day of each Interest Period and fixed for the duration of
each such Interest Period. As of each Interest Rate Determination Date, Agent shall determine
(which determination shall, absent manifest error in calculation, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the Advances for which an interest rate is
then being determined for the applicable Interest Period. In the event that Agent shall have
determined (which determination shall be final and conclusive and binding upon all parties hereto),
as of any Interest Rate Determination Date with respect to any Advance, that adequate and fair
means do not exist for ascertaining the interest rate applicable to such Advance on the basis
provided for in the definition of Base LIBOR Rate, then Agent may select a comparable replacement
index and corresponding margin.

(c) Default Rate. Immediately upon the occurrence and during the continuance of an Event of
Default, Obligations shall bear interest at a rate per annum which is five percentage points
(5.00%) above the rate that is otherwise applicable thereto (the “Default Rate”). Payment or
acceptance of the increased interest rate provided in this Section 2.3(c) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or Lenders.

(d) Debit of Accounts. Lenders may debit any of Borrower’s deposit accounts, including the
Designated Deposit Account, for principal and interest payments when due or any other amounts
Borrower owes the Lenders under the Loan Documents when due. These debits shall not constitute a
set-off.

(e) Payments. Payments of principal and/or interest received after 12:00 noon Eastern time
are considered received at the opening of business on the next Business Day. When a payment is due
on a day that is not a Business Day, the payment is due the next Business Day and additional fees
or interest, as applicable, shall continue to accrue until paid. All payments to be made by
Borrower hereunder or under any other Loan Document, including payments of principal and interest
made hereunder and pursuant to any other Loan Document, and all fees, expenses, indemnities and
reimbursements, shall be made without set-off, recoupment or counterclaim, in lawful money of the
United States and in immediately available funds. All payments required under this Agreement are
to be made directly to Agent unless otherwise directed by Agent in writing.

 

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(f) Maximum Lawful Rate. In no event shall the interest charged hereunder, with respect to
the notes (if any) or any other obligations of Borrower under any Loan Documents exceed the maximum
amount permitted under the Laws of the State of Maryland. Notwithstanding anything to the contrary
herein or elsewhere, if
at any time the rate of interest payable hereunder or under any note or other Loan Document
(the “Stated Rate”) would exceed the highest rate of interest permitted under any applicable Law to
be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable shall be equal to the Maximum Lawful Rate; provided,
however, that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate,
Borrower shall, to the extent permitted by Law, continue to pay interest at the Maximum Lawful Rate
until such time as the total interest received is equal to the total interest which would have been
received had the Stated Rate been (but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the Stated Rate unless and until the
Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again
apply. In no event shall the total interest received by any Lender exceed the amount which it
could lawfully have received, had the interest been calculated for the full term hereof at the
Maximum Lawful Rate. If, notwithstanding the prior sentence, any Lender has received interest
hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the
reduction of the principal balance of such Lender’s Term Loan or to other amounts (other than
interest) payable hereunder, and if no such principal or other amounts are then outstanding, such
excess or part thereof remaining shall be paid to Borrower. In computing interest payable with
reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at
a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which
such calculation is made.

2.4 Fees. Borrower shall pay to Agent for the account of Lenders:

(a) Origination Fee. A fully earned, non-refundable origination fee to be shared among the
Lenders pursuant to their respective Commitment Percentages in an amount equal to one-half of one
percent (0.50%) of the aggregate Term Loan Commitments of the Lenders, which origination fee
Lenders have received prior to the Effective Date;

(b) Final Payment. The Final Payment, when due under Section 2.2(c) or 2.2(d), or otherwise
on the Maturity Date, to be shared among the Lenders in accordance with their respective Pro Rata
Shares;

(c) Prepayment Fee. The Prepayment Fee, when due hereunder, to be shared among the Lenders in
accordance with their respective Pro Rata Shares;

(d) Payment Upon Failure to Draw. In the event that the (i) the Equity Event occurs on or
prior to August 31, 2010 and (ii) Term B Loan is not funded by Lenders to Borrower in an amount
equal to the full amount of the Term B Loan Commitment on the date which is ten (10) Business Days
after the closing of the Equity Event, then, on the such date, Borrower shall pay Agent, for the
benefit of the Lenders in accordance with their respective Pro Rata Shares, a fee in an amount
equal to five percent (5.00%) of the unfunded portion of the Term B Loan Commitment; and

(e) Lenders’ Expenses. All Lenders’ Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through and after the
Effective Date, when due (and in the absence of any other due date specified herein, such Lenders’
Expenses shall be due upon demand).

2.5 Additional Costs. If any new Law or regulation increases a Lender’s costs or
reduces its income for any Term Loan, Borrower shall pay the increase in cost or reduction in
income or additional expense; provided, however, that Borrower shall not be liable for any amount
attributable to any period before one hundred eighty (180) days prior to the date such Lender
notifies Borrower of such increased costs. Each Lender agrees that it shall allocate any increased
costs among its customers similarly affected in good faith and in a manner consistent with such
Lender’s customary practice.

 

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2.6 Payments and Taxes. Any and all payments made by Borrower under this Agreement or
any Loan Documents shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges
imposed by any governmental authority (including any interest, additions to tax or penalties
applicable thereto) other than any taxes imposed on or measured by any Lender’s overall net income
and franchise taxes imposed on it (in lieu of net income taxes), by a jurisdiction (or any
political subdivision thereof) as a result of any Lender being organized or resident, conducting
business (other than a business deemed to arise from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, or
otherwise with respect to, this Agreement or any Loan Documents) or having its principal
office in such jurisdiction (“Indemnified Taxes”). If any Indemnified Taxes shall be required by
Law to be withheld or deducted from or in respect of any sum payable under this Agreement or any
Loan Documents to any Lender (w) an additional amount shall be payable as may be necessary so that,
after making all required withholdings or deductions (including withholdings or deductions
applicable to additional sums payable under this Section) such Lender receives an amount equal to
the sum it would have received had no such withholdings or deductions been made, (x) Borrower shall
make such withholdings or deductions, (y) Borrower shall pay the full amount withheld or deducted
to the relevant taxing authority or other authority in accordance with applicable Law and (z)
Borrower shall deliver to such Lender evidence of such payment. Borrower’s obligation hereunder
shall survive the termination of this Agreement.

2.7 Secured Promissory Notes. Each Term Loan shall be evidenced by a Secured
Promissory Note in the form attached as Exhibit D hereto (each a “Secured Promissory Note”), and
shall be repayable as set forth herein. Borrower irrevocably authorizes each Lender to make or
cause to be made, on or about the Funding Date of any Term Loan or at the time of receipt of any
payment of principal on such Lender’s Secured Promissory Note, an appropriate notation on such
Lender’s Secured Promissory Note Record reflecting the making of such Term Loan or (as the case may
be) the receipt of such payment. The outstanding amount of each Term Loan set forth on such
Lender’s Secured Promissory Note Record shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording,
any such amount on such Lender’s Secured Promissory Note Record shall not limit or otherwise affect
the obligations of Borrower hereunder or under any Secured Promissory Note to make payments of
principal of or interest on any Secured Promissory Note when due. Upon receipt of an affidavit of
an officer of a Lender as to the loss, theft, destruction, or mutilation of its Secured Promissory
Note, Borrower shall issue, in lieu thereof, a replacement Secured Promissory Note in the same
principal amount thereof and of like tenor.

3 CONDITIONS OF LOANS

3.1 Conditions Precedent to Initial Credit Extension. Each Lender’s obligation to
make a Term Loan is subject to the condition precedent that Agent shall consent to or shall have
received, in form and substance satisfactory to Agent and Lenders, such documents, and completion
of such other matters, as Agent may reasonably deem necessary or appropriate, including, without
limitation:

(a) duly executed original signatures to the Loan Documents to which Borrower is a party;

(b) [reserved];

(c) duly executed original Secured Promissory Notes in favor of each Lender with a face amount
equal to such Lender’s Term Loan Commitment;

(d) the Operating Documents of Borrower and good standing certificates of Borrower certified
by the Secretary of State of the State of Delaware as of a date no earlier than thirty (30) days
prior to the Effective Date;

(e) good standing certificates dated as of a date no earlier than thirty (30) days prior to
the Effective Date to the effect that Borrower is qualified to transact business in all states in
which the nature of Borrower’s business so requires;

(f) duly executed original signatures to the completed Borrowing Resolutions for Borrower;

(g) certified copies, dated as of a recent date, of financing statement searches, as Agent
shall request, accompanied by written evidence (including any UCC termination statements) that the
Liens indicated in any such financing statements either constitute Permitted Liens or have been or,
in connection with the initial Credit Extension, will be terminated or released;

(h) the Perfection Certificate executed by Borrower;

 

4

 

(i) a landlord’s consent executed in favor of Agent in respect of Borrower’s leased location
in Irvine, California;

(j) a legal opinion of Borrower’s counsel dated as of the Effective Date together with the
duly executed original signatures thereto;

(k) copies of any existing registration rights agreement/investors’ rights agreement or
similar agreements and any amendments thereto;

(l) evidence satisfactory to Agent that the insurance policies required by Section 6.5 hereof
are in full force and effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements in favor of Agent, for the ratable benefit of Lenders;
and

(m) payment of the fees and Lenders’ Expenses then accrued as specified in Section 2.4 hereof.

3.2 Conditions Precedent to all Credit Extensions. The obligation of each Lender to
make each Credit Extension, including the initial Credit Extension, is subject to the following
conditions precedent:

(a) timely receipt by Agent of an executed Payment/Advance Form in the form of Exhibit B
attached hereto;

(b) the representations and warranties in Section 5 shall be true, correct and complete in all
material respects on the date of the Payment/Advance Form and on the Funding Date of each Credit
Extension; provided, however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date, and no
Default or Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 remain true, accurate and complete in all material
respects; provided, however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date; and

(c) in such Lender’s reasonable discretion, there has not been any Material Adverse Change or
any material impairment in the general affairs, management, results of operation, financial
condition or the prospect of repayment of the Obligations, or any material adverse deviation by
Borrower from the most recent business plan of Borrower presented to and accepted by Agent.

3.3 Covenant to Deliver. Borrower agrees to deliver to Agent each item required to be
delivered to Agent under this Agreement as a condition precedent to any Credit Extension. Borrower
expressly agrees that a Credit Extension made prior to the receipt by Agent of any such item shall
not constitute a waiver by the Lenders of Borrower’s obligation to deliver such item, and any such
Credit Extension in the absence of a required item shall be made in Agent’s sole discretion.

3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of a Term Loan set forth in this Agreement, to obtain a Term
Loan, Borrower shall notify Agent (which notice shall be irrevocable) by electronic mail,
facsimile, or telephone by 12:00 noon Eastern time three (3) Business Days prior to the date the
Term Loan is to be made. Together with any such electronic or facsimile notification, Borrower
shall deliver to Agent by electronic mail or facsimile a completed Payment/Advance Form executed by
a Responsible Officer or his or her designee. Upon receipt of a Payment/Advance Form, Agent shall
promptly provide a copy of the same to each Lender. Agent may rely on any telephone notice given
by a person whom Agent reasonably believes is a Responsible Officer or designee.

 

5

 

4 CREATION OF SECURITY INTEREST

4.1 Grant of Security Interest. Borrower hereby grants Agent, for the ratable benefit
of Lenders, to secure the payment and performance in full of all of the Obligations, a continuing
security interest in, and pledges to Agent, for the ratable benefit of the Lenders, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products
thereof. Borrower represents, warrants, and covenants that, upon the execution and delivery of the
a Subordination Agreement by Henry Schein on or prior to the Effective Date, the security interest
granted herein is and shall at all times continue to be a first priority perfected security
interest in the Collateral, subject only to Permitted Liens that may have priority by operation of
applicable Law. If Borrower shall acquire a commercial tort claim (as defined in the Code),
Borrower shall promptly notify Agent in a writing signed by Borrower of the general details thereof
(and further details as may be required by Agent) and grant to Agent, for the ratable benefit of
the Lenders, in such writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to
Agent.

4.2 Authorization to File Financing Statements; Termination of Financing Statements.
Borrower hereby authorizes Agent to file financing statements, without notice to Borrower, with all
appropriate jurisdictions to perfect or protect Agent’s and each Lender’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either Borrower or any
other Person, shall be deemed to violate the rights of Agent and the Lenders under the Code. Such
financing statements may indicate the Collateral as “all assets of Debtor” or words of similar
effect, or as being of an equal or lesser scope, or with greater detail, all in Agent’s discretion
Upon payment in full of (i) all outstanding principal of the Term Loans and all other Obligations,
plus accrued and unpaid interest thereon, (ii) the Final Payment, (iii) the Prepayment Fee, plus
(iv) any and all other sums that shall have become due and payable, including Lenders’ Expenses,
and provided that Lenders have no further obligation or commitment to lend hereunder, Agent and
Lenders shall promptly file termination statements relating to the Collateral.

5 REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows at all times unless expressly provided below:

5.1 Due Organization, Authorization: Power and Authority.

(a) Borrower and each of its Subsidiaries, if any, are duly existing and in good standing, as
Registered Organizations in their respective jurisdictions of formation and are qualified and
licensed to do business and are in good standing in any jurisdiction in which the conduct of their
business or their ownership of property requires that they be qualified except where the failure to
do so could not reasonably be expected to have a material adverse effect on Borrower’s business.
In connection with this Agreement, Borrower has delivered to Agent a completed perfection
certificate signed by Borrower (the “Perfection Certificate”). Borrower represents and warrants
that (a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof; (b) Borrower is an organization of the type and is organized in the
jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately
sets forth Borrower’s organizational identification number or accurately states that Borrower has
none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if
more than one, its chief executive office as well as Borrower’s mailing address (if different than
its chief executive office); (e) Borrower (and each of its predecessors) has not, in the past five
(5) years, changed its jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other information set forth on the
Perfection Certificate pertaining to Borrower and each of its Subsidiaries is accurate and complete
in all material respects (it being understood and agreed that Borrower may from time to time update
certain information in the Perfection Certificate after the Effective Date to the extent permitted
by one or more specific provisions in this Agreement). If Borrower is not now a Registered
Organization but later becomes one, Borrower shall promptly notify Agent of such occurrence and
provide Agent with Borrower’s organizational identification number.

(b) The execution, delivery and performance by Borrower of the Loan Documents to which it is a
party have been duly authorized, and do not (i) conflict with any of Borrower’s organizational
documents, (ii) contravene, conflict with, constitute a default under or violate any material
Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by which Borrower or any
of its Subsidiaries or any of their property or assets may be bound or affected, (iv) require any
action by, filing, registration, or qualification with, or Governmental Approval from, any
Governmental Authority (except such Governmental Approvals which have already been obtained and are
in full force and effect), or (v) constitute an event of default under any material agreement
by which Borrower or any of its Subsidiaries or their respective properties is bound. Borrower is
not in default under any agreement to which it is a party or by which it is bound in which the
default could reasonably be expected to have a material adverse effect on Borrower’s business.

 

6

 

5.2 Collateral.

(a) Borrower has good title to, has rights in, and has the power to transfer each item of the
Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens
except Permitted Liens. Other than the accounts referred to in the last section of Section 6.6(b)
hereof, Borrower has no Deposit Accounts, Securities Accounts, Commodity Accounts or other
investment accounts other than the Collateral Accounts with Comerica Bank and SVB or the other
investment accounts, if any, described in the Perfection Certificate delivered to Agent in
connection herewith with respect of which Borrower has given Agent notice and taken such actions as
are necessary to give Agent for the ratable benefit of all Lenders a perfected security interest
therein. The Accounts are bona fide, existing obligations of the Account Debtors.

(b) On the Effective Date, the Collateral is not in the possession of any third party bailee
(such as a warehouse) except as disclosed in the Perfection Certificate or Schedule 5.2(b), and, as
of the Effective Date, no such third party bailee possesses components of the Collateral in excess
of Twenty-Five Thousand Dollars ($25,000). None of the components of the Collateral shall be
maintained at locations other than as disclosed in the Perfection Certificate on the Effective Date
or as permitted pursuant to Section 7.2. In the event that Borrower, after the Effective Date,
intends to store or otherwise deliver any portion of the Collateral to a bailee in excess of Fifty
Thousand Dollars ($50,000), then Borrower will first receive the written consent of Agent and such
bailee must execute and deliver a bailee agreement in form and substance satisfactory to Agent in
its sole discretion.

(c) All Inventory is in all material respects of good and marketable quality, free from
material defects.

(d) Borrower is the sole owner of its Intellectual Property, except for non-exclusive licenses
granted to its customers in the ordinary course of business and those licenses described in the
Perfection Certificate. Each Patent is valid and enforceable and no part of the Intellectual
Property has been judged invalid or unenforceable, in whole or in part, and, except as set forth on
Schedule 5.2(d), to the best of Borrower’s knowledge, no claim has been made that any part of the
Intellectual Property violates the rights of any third party except to the extent such claim could
not reasonably be expected to have a material adverse effect on Borrower’s business.

(e) Except as noted on the Perfection Certificate, Borrower is not a party to, nor is bound
by, any material license or other agreement with respect to which Borrower is a licensee that (a)
prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest
in such license or agreement or any other property, or (b) for which a default under or termination
of could interfere with Agent’s right to sell any Collateral. Borrower shall provide written
notice to Agent within ten (10) days of entering or becoming bound by any such license or agreement
(other than over-the-counter software that is commercially available to the public). Borrower
shall take such steps as Agent requests to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for (x) all such licenses or agreements to be deemed “Collateral”
and for Agent to have a security interest in it that might otherwise be restricted or prohibited by
Law or by the terms of any such license or agreement, whether now existing or entered into in the
future, and (y) Agent to have the ability in the event of a liquidation of any Collateral to
dispose of such Collateral in accordance with Agent’s rights and remedies under this Agreement and
the other Loan Documents.

(f) All of Borrower’s Material Intellectual Property, including all licenses under which
Borrower is the licensee of any such Material Intellectual Property owned by another Person, are
set forth on Schedule 5.2(f). Such Schedule 5.2(f) indicates in each case the expiration date of
such Material Intellectual Property and whether such Material Intellectual Property (or application
therefor) is owned or licensed by Borrower, and in the case of any such licensed Material
Intellectual Property, lists the name and address of the licensor and the name and date of the
agreement pursuant to which such item of Material Intellectual Property is licensed, the expiration
date of such license and the expiration date of the underlying Material Intellectual Property,
whether or
not such license is an exclusive license and whether there are any purported restrictions in
such license on the ability to Borrower to grant a security interest in and/or to transfer any of
its rights as a licensee under such license.

 

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5.3 Litigation. Except as disclosed in the Perfection Certificate or Schedule 5.3,
there are no actions or proceedings pending or, to the knowledge of the Responsible Officers,
threatened in writing by or against Borrower or any of its Subsidiaries involving more than One
Hundred Thousand Dollars ($100,000.00).

5.4 No Material Deterioration in Financial Condition; Financial Statements. All
consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent
fairly present, in conformity with GAAP, in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations. There has not been any material
deterioration in Borrower’s consolidated financial condition since the date of the most recent
unaudited financial statements and projections submitted to Agent and the Lenders (which as of the
Effective Date were (i) Borrower’s March 31, 2010 unaudited financial statements delivered to
Agent and the Lenders on May 6, 2010, (ii) Borrower’s financial projections delivered to Agent and
the Lenders on April 19, 2010 and (iii) Borrower’s cash balance delivered to Agent and the Lenders
on May 24, 2010).

5.5 Solvency. The fair salable value of Borrower’s assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; Borrower is not left with
unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay
its debts (including trade debts) as they mature.

5.6 Regulatory Compliance.

(a) Borrower is not an “investment company” or a company “controlled” by an “investment
company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of
its important activities in extending credit for margin stock (under Regulations X, T and U of the
Federal Reserve Board of Governors). Borrower has complied in all material respects with the
Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding
company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company”
as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has
not violated any Laws, ordinances or rules, the violation of which could reasonably be expected to
have a material adverse effect on its business. None of Borrower’s or any of its Subsidiaries’
properties or assets has been used by Borrower or any Subsidiary or, to Borrower’s knowledge, by
previous Persons, in disposing, producing, storing, treating, or transporting any hazardous
substance other than in material compliance with applicable Laws. Borrower has obtained all
Required Permits, or has contracted with third parties holding Required Permits, necessary for
compliance with all Laws and all such Required Permits are current. Borrower and each of its
Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all Governmental Authorities that are necessary to continue
their respective businesses as currently conducted.

(b) None of Borrower, its Affiliates or any of their respective agents acting or benefiting in
any capacity in connection with the transactions contemplated by this Agreement is (i) in violation
of any Anti-Terrorism Law, (ii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. Neither Borrower nor, to the
knowledge of Borrower, any of its Affiliates or agents acting or benefiting in any capacity in
connection with the transactions contemplated by this Agreement, (x) conducts any business or
engages in making or receiving any contribution of funds, goods or services to or for the benefit
of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any
property or interest in property blocked pursuant to Executive Order No. 13224, any similar
executive order or other Anti-Terrorism Law.

5.7 Subsidiaries; Investments. Borrower does not own any stock, partnership interest
or other equity securities except for Permitted Investments.

 

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5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all
required tax returns and reports, and Borrower and its Subsidiaries have timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower. Borrower
may defer payment of any contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Agent in writing of the commencement of, and any material development in,
the proceedings, and (c)
posts bonds or takes any other steps required to prevent the governmental authority levying
such contested taxes from obtaining a Lien upon any of the Collateral that is other than a
“Permitted Lien”. Borrower is unaware of any claims or adjustments proposed for any of Borrower’s
prior tax years which could result in additional taxes becoming due and payable by Borrower.
Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred
compensation plans in accordance with their terms, and Borrower has not withdrawn from
participation in, and has not permitted partial or complete termination of, or permitted the
occurrence of any other event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.

5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely
as working capital and to fund its general business requirements and not for personal, family,
household or agricultural purposes.

5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Agent or any Lender, as of the date such
representation, warranty, or other statement was made, taken together with all such written
certificates and written statements given to Agent or any Lender, contains any untrue statement of
a material fact or omits to state a material fact necessary to make the statements contained in the
certificates or statements not misleading (it being recognized that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts
and that actual results during the period or periods covered by such projections and forecasts may
differ from the projected or forecasted results).

5.11 Regulatory Developments.

(a) All Products and all Required Permits are listed on Schedule 5.11 (as updated from time to
time pursuant to Section 6.2(e)), and Borrower has delivered to Agent a copy of all Required
Permits to the extent requested by Agent pursuant to Section 6.2(e);

(b) Without limiting the generality of Section 5.6 above, with respect to any Product being
tested or manufactured by Borrower, Borrower has received, and such Product is the subject of, all
Required Permits needed in connection with the testing or manufacture of such Product as such
testing is currently being conducted by or on behalf of Borrower, and Borrower has not received any
notice from any applicable Governmental Authority, specifically including the FDA, that such
Governmental Authority is conducting an investigation or review of (A) Borrower’s manufacturing
facilities and processes for such Product which have disclosed any material deficiencies or
violations of Laws and/or the Required Permits related to the manufacture of such Product, or (B)
any such Required Permit or that any such Required Permit has been revoked or withdrawn, nor has
any such Governmental Authority issued any order or recommendation stating that the development,
testing and/or manufacturing of such Product by Borrower should cease;

(c) Without limiting the generality of Section 5.6 above, with respect to any Product marketed
or sold by Borrower, Borrower has received, and such Product is the subject of, all Required
Permits needed in connection with the marketing and sales of such Product as currently being
marketed or sold by Borrower, and Borrower has not received any notice from any applicable
Governmental Authority, specifically including the FDA, that such Governmental Authority is
conducting an investigation or review of any such Required Permit or approval or that any such
Required Permit has been revoked or withdrawn, nor has any such Governmental Authority issued any
order or recommendation stating that such marketing or sales of such Product cease or that such
Product be withdrawn from the marketplace;

(d) Without limiting the generality of Section 5.6 above, (i) there have been no adverse
clinical test results which have or could reasonably be expected to cause a Material Adverse
Change, and (ii) there have been no Product recalls or voluntary Product withdrawals from any
market; and

(e) Borrower has not (since the Effective Date) experienced any significant failures in its
manufacturing of any Product such that the amount of such Product successfully manufactured by
Borrower in accordance with all specifications thereof and the required payments related thereto in
any month shall decrease significantly with respect to the quantities of such Product produced in
the prior month.

 

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5.12 Non-Operating Subsidiaries. BL Acquisition and BL Acquisition II (i) do not,
individually or collectively, conduct any activities which are material to the operation of the
business of Borrower, own any material amount of assets or own any assets which are material to the
operation of the business, or maintain any Collateral Accounts and (ii) are not obligated in
respect of any Indebtedness, other than Indebtedness incurred pursuant to the Loan Documents.

6 AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1 Government Compliance.

(a) Maintain its and all its Subsidiaries’ legal existence and good standing in their
respective jurisdictions of formation and maintain qualification in each jurisdiction in which the
failure to so qualify could reasonably be expected to have a material adverse effect on Borrower’s
business or operations. Borrower shall comply, and have each Subsidiary comply, with all Laws,
ordinances and regulations to which it is subject, the noncompliance with which could reasonably be
expected to have a material adverse effect on Borrower’s business.

(b) Obtain and keep in full force and effect, all of the Governmental Approvals necessary for
the performance by Borrower of its obligations under the Loan Documents to which it is a party and
the grant of a security interest to Agent for the ratable benefit of the Lenders, in all of the
Collateral. Borrower shall promptly provide copies of any such obtained Governmental Approvals to
Agent.

(c) In connection with the development, testing, manufacture, marketing or sale of each and
any Product by Borrower, Borrower shall comply fully and completely in all respects with all
Required Permits at all times issued by any Governmental Authority the noncompliance with which
could have a material adverse effect on Borrower’s business, specifically including the FDA, with
respect to such development, testing, manufacture, marketing or sales of such Product by Borrower
as such activities are at any such time being conducted by Borrower.

6.2 Financial Statements, Reports, Certificates.

(a) Deliver to Agent: (i) as soon as available, but no later than thirty (30) days after the
last day of each month, a company prepared consolidated balance sheet and income statement covering
Borrower’s consolidated operations for such month certified by a Responsible Officer and in a form
acceptable to Agent; (ii) as soon as available, but no later than one hundred twenty (120) days
after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified (other than a “going
concern” qualification) opinion on the financial statements from Borrower’s independent certified
public accounting firm acceptable to Agent in its reasonable discretion; (iii) as soon as available
after approval thereof by Borrower’s Board of Directors, but no later than sixty (60) days after
the last day of Borrower’s fiscal year, Borrower’s financial projections for current fiscal year as
approved by Borrower’s Board of Directors; (iv) within five (5) days of delivery, copies of all
statements, reports and notices made available to all of Borrower’s security holders or to any
holders of Subordinated Debt; (v) within five (5) days of filing, all reports on Form 10-K, 10-Q
and 8-K filed with the Securities and Exchange Commission or a link thereto on Borrower’s or
another website on the Internet; (vi) a prompt report of any legal actions pending or threatened
against Borrower or any of its Subsidiaries that could result in damages or costs to Borrower or
any of its Subsidiaries of One Hundred Thousand Dollars ($100,000) or more or could result in a
Material Adverse Change; and (vii) budgets, sales projections, operating plans and other financial
information as reasonably requested in writing by Agent.

(b) Within thirty (30) days after the last day of each month, deliver to Agent with the
monthly financial statements, a duly completed Compliance Certificate signed by a Responsible
Officer.

 

10

 

(c) Keep proper books of record and account in accordance with GAAP in which full, true and
correct entries shall be made of all dealings and transactions in relation to its business and
activities. Borrower shall allow, at the sole cost of Borrower, Agent and Lenders to visit and
inspect any of its properties, to examine and make abstracts or copies from any of its books and
records, to conduct a collateral audit and analysis of its
operations and the Collateral, to verify the amount and age of the accounts, the identity and
credit of the respective account debtors, to review the billing practices of Borrower and to
discuss its respective affairs, finances and accounts with their respective officers, employees and
independent public accountants as often as may reasonably be desired. Notwithstanding the
foregoing, such audits shall be conducted at Borrower’s expense no more often than once every six
(6) months unless a Default or Event of Default has occurred and is continuing.

(d) Deliver to Agent an updated Schedule 5.2(f) promptly upon Borrower’s acquisition or
development of any Material Intellectual Property not already listed on Schedule 5.2(f) and upon
any other material change in Borrower’s Material Intellectual Property from that listed on Schedule
5.2(f).

(e) If after the Effective Date, Borrower determines to manufacture, sell, develop, test or
market any new Product, Borrower shall give written notice to Agent of such new Product following
such Product’s introduction to the general marketplace (which shall include a brief description of
such Product, plus a list of all Required Permits relating to such new Product (and a copy of such
Required Permits if requested by Agent) and/or Borrower’s manufacture, sale, development, testing
or marketing thereof issued or outstanding as of the date of such notice) along with a copy of an
amended and restated Schedule 5.11; and further, provided, that, if Borrower shall at any time
obtain any new or additional Required Permits from the FDA, DEA, or parallel state or local
authorities, or foreign counterparts of the FDA, DEA, or parallel state or local authorities, with
respect to any Product which has previously been disclosed to Agent, Borrower shall promptly give
written notice to Agent of such new or additional Required Permits (along with a copy thereof if
requested by Agent).

6.3 Inventory; Returns. Keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its Account Debtors shall
follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly
notify Agent of all returns, recoveries, disputes and claims that involve more than One Hundred
Thousand Dollars ($100,000).

6.4 Taxes; Pensions. Timely file and require each of its Subsidiaries to timely file,
all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely
file, all foreign, federal, state, and local taxes, assessments, deposits and contributions owed by
Borrower and each of its Subsidiaries, except for deferred payment of any taxes contested pursuant
to the terms of Section 5.8 hereof, and shall deliver to Agent, on demand, appropriate certificates
attesting to such payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their terms.

6.5 Insurance. Keep its business and the Collateral insured for risks and in amounts
standard for companies in Borrower’s industry and location and as Agent may reasonably request.
Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to
Agent. All property policies shall have a lender’s loss payable endorsement showing Agent as
lender loss payee and waive subrogation against Agent, and all liability policies shall show, or
have endorsements showing, Agent, as an additional insured. All policies (or the loss payable and
additional insured endorsements) shall provide that the insurer shall endeavor to give Agent at
least thirty (30) days notice before canceling, amending, or declining to renew its policy. At
Agent’s request, Borrower shall deliver certified copies of policies and evidence of all premium
payments. Proceeds payable under any policy shall, at Agent’s option, be payable to Agent on
behalf of the Lenders on account of the Obligations. If Borrower fails to obtain insurance as
required under this Section 6.5 or to pay any amount or furnish any required proof of payment to
third persons and Agent, Agent may make all or part of such payment or obtain such insurance
policies required in this Section 6.5, and take any action under the policies Agent deems prudent.

6.6 Operating Accounts.

(a) Maintain all of Borrower’s and Guarantor’s Collateral Accounts, operating and investment
accounts with Comerica Bank or SVB, which accounts shall be subject to Control Agreements in favor
of Agent for the ratable benefit of all Lenders; provided, that on and after the date which is
twenty-five (25) days after the Effective Date, Borrower and Guarantor shall (i) maintain their
primary operating accounts with SVB and/or one of its Affiliates and (ii) maintain at least 85% of
their aggregate cash and Cash Equivalents with SVB and/or one of its Affiliates.

 

11

 

(b) Provide Agent five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Comerica Bank and SVB. In
addition, for each Collateral Account that Borrower at any time maintains, Borrower shall cause the
applicable bank or financial institution at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Agent’s Lien in such Collateral Account in accordance with the terms
hereunder, which Control Agreement may not be terminated without prior written consent of Agent.
The provisions of the previous sentence shall not apply to (i) deposit accounts exclusively used
for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of
Borrower’s employees and identified to Agent by Borrower as such and (ii) account(s) maintained
outside of the United States by Borrower, Guarantor or the Foreign Subsidiaries, provided that the
aggregate amount on deposit in all such account(s) shall not at any time exceed $125,000 and the
funds on deposit in such account(s) shall be used exclusively for purposes of funding the
operations of the Foreign Subsidiaries in the ordinary course of business.

6.7 Protection of Intellectual Property Rights. Borrower shall own, or be licensed to
use or otherwise have the right to use, all Material Intellectual Property. All Intellectual
Property of Borrower is and shall be fully protected and/or duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such registrations, filings or issuances,
except where the failure to do so would not reasonably be expected to result in a Material Adverse
Change. Borrower shall not become a party to, nor become bound by, any material license or other
agreement with respect to which Borrower is the licensee that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such license or agreement or
other property. Borrower shall at all times conduct its business without infringement or claim of
infringement of any Intellectual Property rights of others. Borrower shall, to the extent it
determines, in the exercise of its reasonable business judgment, that it is prudent to do the
following: (a) protect, defend and maintain the validity and enforceability of its Intellectual
Property; (b) promptly advise Agent in writing of material infringements of its Intellectual
Property; and (c) not allow any Material Intellectual Property to be abandoned, forfeited or
dedicated to the public without Agent’s prior written consent. If Borrower (i) obtains any patent,
registered trademark or servicemark, registered copyright, registered mask work, or any pending
application for any of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for
any patent or the registration of any trademark or servicemark, then Borrower shall concurrently
provide written notice thereof to Agent and shall execute such intellectual property security
agreements and other documents and take such other actions as Agent shall request in its good faith
business judgment to perfect and maintain a first priority perfected security interest in favor of
Agent, for the ratable benefit of Lenders, in such property. If Borrower decides to register any
copyrights or mask works in the United States Copyright Office, Borrower shall: (x) provide Agent
with at least fifteen (15) days prior written notice of Borrower’s intent to register such
copyrights or mask works together with a copy of the application it intends to file with the United
States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security
agreement and such other documents and take such other actions as Agent may request in its good
faith business judgment to perfect and maintain a first priority perfected security interest in
favor of Agent, for the ratable benefit of the Lenders, in the copyrights or mask works intended to
be registered with the United States Copyright Office; and (z) record such intellectual property
security agreement with the United States Copyright Office contemporaneously with filing the
copyright or mask work application(s) with the United States Copyright Office. Borrower shall
promptly provide to Agent copies of all applications that it files for patents or for the
registration of trademarks, servicemarks, copyrights or mask works, together with evidence of the
recording of the intellectual property security agreement necessary for Agent, for the ratable
benefit of the Lenders, to perfect and maintain a first priority perfected security interest in
such property.

6.8 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Agent, without expense to Agent, Borrower and its
officers, employees and agents and Borrower’s Books, to the extent that Agent may deem them
reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or
against Agent with respect to any Collateral or relating to Borrower.

6.9 Notices of Litigation and Default. Borrower will give prompt written notice to
Agent of any litigation or governmental proceedings pending or threatened (in writing) against
Borrower which would reasonably be expected to have a material adverse effect with respect to
Borrower’s business. Without limiting or contradicting any other more specific provision of this
Agreement, promptly (and in any event within three (3) Business Days) upon Borrower becoming aware
of the existence of any Event of Default or event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default, Borrower shall give written notice to Agent of
such occurrence, which such notice shall include a reasonably detailed description of such Event of
Default or event which, with the giving of notice or passage of time, or both, would constitute an
Event of Default.

 

12

 

6.10 Creation/Acquisition of Subsidiaries. In the event Borrower or any Subsidiary
creates or acquires any Subsidiary, Borrower and such Subsidiary shall promptly notify Agent of the
creation or acquisition of such new Subsidiary and take all such action as may be reasonably
required by Agent to cause each such domestic Subsidiary to become a co-Borrower hereunder or to
guarantee the Obligations of Borrower under the Loan Documents and, in each case, grant a
continuing pledge and security interest in and to the assets of such Subsidiary (substantially as
described on Exhibit A hereto); and Borrower shall grant and pledge to Agent, for the ratable
benefit of the Lenders, a perfected security interest in the stock, units or other evidence of
ownership of each Subsidiary.

6.11 Financial Covenants. Maintain at all times, to be tested as of the last day of
each quarter, unless otherwise noted, on a consolidated basis with respect to Borrower:

(a) EBITDA. Achieve EBITDA, tested at the dates noted below for the periods noted
below of at least the following:

	 	 	 	 	 	 	 
	Testing Date	 	Testing Period	 	Minimum EBITDA	 
	 
	 	 	 	 	 	 
	July 1, 2010
	 	April 1, 2010 through June 30, 2010	 	$	(3,029,518	)
	 
	 	 	 	 	 	 
	October 1, 2010
	 	April 1, 2010 through September 30, 2010	 	$	(3,602,460	)
	 
	 	 	 	 	 	 
	January 1, 2011
	 	April 1, 2010 through December 31, 2010	 	$	(2,534,589	)
	 
	 	 	 	 	 	 
	April 1, 2011
	 	April 1, 2010 through March 31, 2011	 	$	(2,417,369	)
	 
	 	 	 	 	 	 
	July 1, 2011
	 	July 1, 2010 through June 30, 2011	 	$	3,910,734	 
	 
	 	 	 	 	 	 
	October 1, 2011
	 	October 1, 2010 through September 30, 2011	 	$	6,744,096	 
	 
	 	 	 	 	 	 
	January 1, 2012
	 	January 1, 2011 through December 31, 2011	 	$	11,535,318	 
	 
	 	 	 	 	 	 
	April 1, 2012 and the first day of each quarter thereafter
	 	Trailing 12 months	 	85% of projected EBITDA as set forth in EBITDA projections delivered by
Borrower to Agent and Lenders on or before December 1, 2011, which EBITDA shall be approved by Agent and the Lenders in their
discretion

6.12 Further Assurances.

(a) Execute any further instruments and take further action as Agent reasonably requests to
perfect or continue Agent’s Lien in the Collateral or to effect the purposes of this Agreement.

(b) Deliver to Agent, within five (5) days after the same are sent or received, copies of all
material correspondence, reports, documents and other filings with any Governmental Authority that
could reasonably be expected to have a material effect on any of the Governmental Approvals
material to Borrower’s business or otherwise on the operations of Borrower or any of its
Subsidiaries.

 

13

 

6.13 Post-Closing Covenant—Henry Schein Inc. Subordination Agreement. Within thirty
(30) days of the Effective Date, Borrower shall deliver to Agent a Subordination Agreement duly
executed by Henry Schein, Inc. in favor of the Lenders in form and substance satisfactory to Agent
(the “Post-Closing Subordination Covenant”). In the event Borrower fails to satisfy the
Post-Closing Subordination Covenant within such thirty (30) day period (as to which no grace period
shall apply) the LIBOR Rate Margin applicable the Advances shall automatically increase as set
forth in the definition “LIBOR Rate Margin”. Such increase in the LIBOR Rate Margin shall be
Lenders’ sole remedy in respect of the Post-Closing Subordination Covenant (i.e., failure to
satisfy the Post-Closing Subordination Covenant shall not constitute an Event of Default).

6.14 Additional Post-Closing Requirements.

(a) Provide to Agent, within thirty (30) days after the Effective Date (or such later date as
Agent may determine, in its reasonable discretion), with a landlord’s consent in favor of Agent for
the following leased location by the respective landlord thereof, together with the duly executed
original signatures thereto:

(i) 4 Cromwell, Irvine, California; and

(b) Provide to Agent, within twenty-five (25) days after the Effective Date (or such later
date as Agent may determine, in its reasonable discretion) duly executed original signatures to the
Control Agreements from SVB, and such other financial institutions as Agent may require, in its
sole discretion.

7 NEGATIVE COVENANTS

Borrower shall not do any of the following without the prior written consent of Agent and the
Required Lenders:

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its
business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b)
of worn-out or obsolete Equipment; or (c) in connection with Permitted Liens and Permitted
Investments.

7.2 Changes in Business, Management, Ownership, or Business Locations. (a) Engage in
or permit any of its Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b)
liquidate or dissolve; or (c) permit or suffer any Change in Control. Borrower shall not, without
at least thirty (30) days prior written notice to Agent: (1) add any new offices or business
locations, including warehouses (unless such new offices or business locations contain less than
Twenty Five Thousand Dollars ($25,000) in Borrower’s assets or property), (2) change its
jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal
name, or (5) change any organizational number (if any) assigned by its jurisdiction of
organization.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary
may merge or consolidate into another Subsidiary (provided such surviving Subsidiary is a
“co-Borrower” hereunder or has provided a secured guaranty hereunder) or into Borrower provided
Borrower is the surviving legal entity and Borrower’s tangible net worth is not thereby reduced,
and as long as no Event of Default is occurring prior thereto or arises as a result therefrom.

7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit
any Subsidiary to do so, other than Permitted Indebtedness.

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or
assign or convey any right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject
to the first priority security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Agent) with any Person which directly
or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s
Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of
“Permitted Liens” herein.

 

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7.6 Maintenance of Collateral Accounts. Maintain any Collateral Account except
pursuant to the terms of Section 6.6(b) hereof.

7.7 Distributions; Investments. (a) Pay any dividends (other than dividends payable
solely in common stock) or make any distribution or payment on or redeem, retire or purchase any
capital stock (other than repurchases pursuant to the terms of employee stock purchase plans,
employee restricted stock agreements or similar plans), or (b) directly or indirectly make any
Investment other than Permitted Investments, or permit any of its Subsidiaries to do so.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower, except for transactions that are in
the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less
favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated
Person.

7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar agreement to which
such Subordinated Debt is subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof or adversely affect the subordination
thereof to Obligations owed to the Lenders.

7.10 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended or undertake as one of
its important activities extending credit to purchase or carry margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any
Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other Law or regulation, if the violation could
reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of
its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any other event with respect
to, any present pension, profit sharing and deferred compensation plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.

7.11 Compliance with Anti-Terrorism Laws. Agent hereby notifies Borrower that
pursuant to the requirements of Anti-Terrorism Laws, and Agent’s policies and practices, Agent is
required to obtain, verify and record certain information and documentation that identifies
Borrower and its principals, which information includes the name and address of Borrower and its
principals and such other information that will allow Agent to identify such party in accordance
with Anti-Terrorism Laws. Borrower will not, nor will Borrower permit any Subsidiary or Affiliate
to, directly or indirectly, knowingly enter into any documents, instruments, agreements or
contracts with any Person listed on the OFAC Lists. Borrower shall immediately notify Agent if
Borrower has knowledge that Borrower or any Subsidiary or Affiliate is listed on the OFAC Lists or
(a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and
held over on charges involving money laundering or predicate crimes to money laundering. Borrower
will not, nor will Borrower permit any Subsidiary or Affiliate to, directly or indirectly, (i)
conduct any business or engage in any transaction or dealing with any Blocked Person, including,
without limitation, the making or receiving of any contribution of funds, goods or services to or
for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive Order No. 13224,
any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage
in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism
Law.

8 EVENTS OF DEFAULT

Any one of the following shall constitute an event of default (an “Event of Default”) under
this Agreement:

8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest
on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business
Days after such Obligations are due and payable
(which three (3) Business Day grace period
shall not apply to payments due on the
Maturity Date or the date of acceleration
pursuant to Section 9.1 (a) hereof).
During the cure period, the failure to
cure the payment default is not an Event
of Default (but no Credit Extension will
be made during the cure period);

 

15

 

8.2 Covenant Default.

(a) Borrower fails or neglects to perform any obligation in Sections 6.1(c), 6.2, 6.4, 6.5,
6.6, 6.7, 6.10, or 6.11 or violates any covenant in Section 7; or

(b) Borrower or any of its Subsidiaries fails or neglects to perform, keep, or observe any
other term, provision, condition, covenant or agreement contained in this Agreement or any Loan
Documents, and as to any default (other than those specified in this Section 8) under such other
term, provision, condition, covenant or agreement that can be cured, has failed to cure the default
within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by
its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be
cured within such ten (10) day period, and such default is likely to be cured within a reasonable
time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period the failure to cure
the default shall not be deemed an Event of Default (but no Credit Extensions shall be made during
such cure period). Grace periods provided under this Section shall not apply, among other things,
to financial covenants or any other covenants set forth in subsection (a) above;

8.3 Material Adverse Change. A Material Adverse Change occurs;

8.4 Attachment; Levy; Restraint on Business.

(a) (i) The service of process seeking to attach, by trustee or similar process, any funds of
Borrower or of any entity under control of Borrower (including a Subsidiary) on deposit with the
Lenders or any Lender Affiliate, or (ii) a notice of lien, levy, or assessment is filed against any
of Borrower’s assets by any government agency, and the same under subclauses (i) and (ii) hereof
are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through
the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during
any ten (10) day cure period; and

(b) (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes
into possession of a trustee or receiver, or (ii) any court order enjoins, restrains, or prevents
Borrower from conducting any part of its business;

8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as
they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or
(c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within
forty-five (45) days (but no Credit Extensions shall be made while any of the conditions described
in clause (a) exist and/or until any Insolvency Proceeding is dismissed);

8.6 Other Agreements. There is a default in any agreement to which Borrower is a
party with a third party or parties resulting in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Seventy
Five Thousand Dollars ($75,000) or that could have a material adverse effect on Borrower’s
business;

8.7 Judgments. One or more judgments, orders, or decrees for the payment of money in
an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not
covered by independent third-party insurance as to which liability has been accepted by such
insurance carrier) shall be rendered against Borrower and shall remain unsatisfied, unvacated, or
unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction, vacation, or stay of such judgment, order or decree);

8.8 Misrepresentations. Borrower or any Person acting for Borrower makes any
representation, warranty, or other statement now or later in this Agreement, any Loan Document or
in any writing delivered to Agent and/or the Lenders
or to induce Agent and/or the Lenders to enter this Agreement or any Loan Document, and such
representation, warranty, or other statement is incorrect in any material respect when made;

 

16

 

8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar
agreement with Agent or the Lenders, or any creditor that has signed such an agreement with Agent
or the Lenders breaches any terms of such agreement;

8.10 Governmental Approvals. Any Governmental Approval shall have been (a) revoked,
rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course for a
full term or (b) subject to any decision by a Governmental Authority that designates a hearing with
respect to any applications for renewal of any of such Governmental Approval or that could result
in the Governmental Authority taking any of the actions described in clause (a) above, and such
decision or such revocation, rescission, suspension, modification or non-renewal (i) has, or could
reasonably be expected to have, a Material Adverse Change, or (ii) adversely affects the legal
qualifications of Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal
could reasonably be expected to affect the status of or legal qualifications of Borrower or any of
its Subsidiaries to hold any Governmental Approval in any other jurisdiction;

8.11 Criminal Proceeding. The institution by any Governmental Authority of criminal
proceedings against Borrower;

8.12 Lien Priority. Except as permitted by Agent, any Lien created hereunder or by
any other Loan Document shall at any time fail to constitute a valid and perfected Lien on all of
the Collateral purported to be secured thereby, subject to no prior or equal Lien; or

8.13 Withdrawals, Recalls, Adverse Test Results and Other Matters. (a) The
institution of any proceeding by FDA or similar Governmental Authority to order the withdrawal of
any Product or Product category from the market or to enjoin Borrower or any representative of
Borrower from manufacturing, marketing, selling or distributing any Product or Product category,
which, in each case, could cause a Material Adverse Change (b) the institution of any action or
proceeding by any DEA, FDA, or any other Governmental Authority to revoke, suspend, reject,
withdraw, limit, or restrict any Required Permit held by Borrower or any representative of
Borrower, which, in each case, could cause a Material Adverse Change, (c) the commencement of any
enforcement action against Borrower by DEA, FDA, or any other Governmental Authority, (d) the
recall of any Products from the market, the voluntary withdrawal of any Products from the market,
or actions to discontinue the sale of any Products, which, in each case, could cause a Material
Adverse Change, or (e) the occurrence of adverse test results in connection with a Product which
could cause a Material Adverse Change.

9 RIGHTS AND REMEDIES

9.1 Rights and Remedies.

Upon the occurrence and during the continuance of an Event of Default, Agent may, and at the
written direction of any Lender shall, without notice or demand, do any or all of the following:
(i) deliver notice of the Event of Default to Borrower, (ii) by notice to Borrower declare all
Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs
all Obligations shall be immediately due and payable without any action by Agent or the Lenders) or
(iii) by notice to Borrower suspend or terminate the obligations, if any, of the Lenders to
advance money or extend credit for Borrower’s benefit under this Agreement or under any other
agreement between Borrower and Agent and/or the Lenders (but if an Event of Default described in
Section 8.5 occurs all obligations, if any, of the Lenders to advance money or extend credit for
Borrower’s benefit under this Agreement or under any other agreement between Borrower and Agent
and/or the Lenders shall be immediately terminated without any action by Agent or the Lenders).

(b) Without limiting the rights of Agent and the Lenders set forth in Section 9.1(a) above,
upon the occurrence and during the continuance of an Event of Default Agent shall have the right,
at the written direction of the Required Lenders, without notice or demand, to do any or all of the
following:

(i) foreclose upon and/or sell or otherwise liquidate, the Collateral;

 

17

 

(ii) apply to the Obligations any (a) balances and deposits of Borrower that Agent or any
Lender holds or controls, or (b) any amount held or controlled by Agent or any Lender owing to or
for the credit or the account of Borrower; and/or

(iii) commence and prosecute an Insolvency Proceeding or consent to Borrower commencing any
Insolvency Proceeding.

(c) Without limiting the rights of Agent and the Lenders set forth in Sections 9.1(a) and (b)
above, upon the occurrence and during the continuance of an Event of Default Agent shall have the
right, without notice or demand, to do any or all of the following:

(i) settle or adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Agent considers advisable, notify any Person owing Borrower money of Agent’s
security interest in such funds, and verify the amount of such account;

(ii) make any payments and do any acts it considers necessary or reasonable to protect the
Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral
if Agent requests and make it available as Agent designates. Agent may enter premises where the
Collateral is located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. Borrower grants Agent a license to enter and occupy any of
its premises, without charge, to exercise any of Agent’s rights or remedies;

(iii) ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, and/or
advertise for sale, the Collateral. Agent is hereby granted a non-exclusive, royalty-free license
or other right to use, without charge, Borrower’s labels, patents, copyrights, mask works, rights
of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter,
or any similar property as it pertains to the Collateral, in completing production of, advertising
for sale, and selling any Collateral and, in connection with Agent’s exercise of its rights under
this Section 9.1, Borrower’s rights under all licenses and all franchise agreements inure to Agent
for the benefit of the Lenders;

(iv) place a “hold” on any account maintained with Agent or the Lenders and/or deliver a
notice of exclusive control, any entitlement order, or other directions or instructions pursuant to
any Control Agreement or similar agreements providing control of any Collateral;

(v) demand and receive possession of Borrower’s Books; and

(vi) Subject to clauses 9.1(a) and (b), exercise all rights and remedies available to Agent
under the Loan Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).

Notwithstanding any provision of this Section 9.1 to the contrary, upon the occurrence of any Event
of Default, Agent shall have the right to exercise any and all remedies referenced in this Section
9.1 without the written consent of Required Lenders following the occurrence of an Exigent
Circumstance. As used in the immediately preceding sentence, “Exigent Circumstance” means any
event or circumstance that, in the reasonable judgment of Agent, imminently threatens the ability
of Agent to realize upon all or any material portion of the Collateral, such as, without
limitation, fraudulent removal, concealment, or abscondment thereof, destruction or material waste
thereof, or failure of Borrower after reasonable demand to maintain or reinstate adequate casualty
insurance coverage, or which, in the judgment of Agent, could result in a material diminution in
value of the Collateral.

 

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9.2 Power of Attorney. Borrower hereby irrevocably appoints Agent as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse Borrower’s name on any checks or other forms of payment or security; (b)
sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account
Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account
Debtors, for amounts and on terms Agent determines reasonable; (d) make, settle, and adjust all
claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the
Collateral
into the name of Agent or a third party as the Code permits. Borrower hereby appoints Agent
as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or
continue the perfection of Agent’s security interest in the Collateral regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full and Agent and the
Lenders are under no further obligation to make Credit Extensions hereunder. Agent’s foregoing
appointment as Borrower’s attorney in fact, and all of Agent’s rights and powers, coupled with an
interest, are irrevocable until all Obligations have been fully repaid and performed and Agent’s
and the Lenders’ obligation to provide Credit Extensions terminates.

9.3 Protective Payments. If Borrower fails to obtain the insurance called for by
Section 6.5 or fails to pay any premium thereon or fails to pay any other amount which Borrower is
obligated to pay under this Agreement or any other Loan Document, Agent may obtain such insurance
or make such payment, and all amounts so paid by Agent are Lenders’ Expenses and immediately due
and payable, bearing interest at the then highest applicable rate, and secured by the Collateral.
Agent will make reasonable efforts to provide Borrower with notice of Agent obtaining such
insurance at the time it is obtained or within a reasonable time thereafter. No such payments by
Agent are deemed an agreement to make similar payments in the future or Agent’s waiver of any Event
of Default.

9.4 Application of Payments and Proceeds. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of an Event of Default,
(a) Borrower irrevocably waives the right to direct the application of any and all payments at any
time or times thereafter received by Agent from or on behalf of Borrower of all or any part of the
Obligations, and, as between Borrower on the one hand and Agent and the Lenders on the other, Agent
shall have the continuing and exclusive right to apply and to reapply any and all payments received
against the Obligations in such manner as Agent may deem advisable notwithstanding any previous
application by Agent, and (b) the proceeds of any sale of, or other realization upon all or any
part of the Collateral shall be applied: first, to Lenders Expenses; second, to accrued and unpaid
interest on the Obligations (including any interest which, but for the provisions of the United
States Bankruptcy Code, would have accrued on such amounts); third, to the principal amount of the
Obligations outstanding; and fourth, to any other indebtedness or obligations of Borrower owing to
Agent or any Lender under the Loan Documents. Any balance remaining shall be delivered to Borrower
or to whoever may be lawfully entitled to receive such balance or as a court of competent
jurisdiction may direct. In carrying out the foregoing, (x) amounts received shall be applied in
the numerical order provided until exhausted prior to the application to the next succeeding
category, and (y) each of the Persons entitled to receive a payment in any particular category
shall receive an amount equal to its pro rata share of amounts available to be applied pursuant
thereto for such category. Any reference in this Agreement to an allocation between or sharing by
the Lenders of any right, interest or obligation “ratably,” “proportionally” or in similar terms
shall refer to Pro Rata Share unless expressly provided otherwise. Agent, or if applicable, each
Lender, shall promptly remit to the other Lenders such sums as may be necessary to ensure the
ratable repayment of each Lender’s portion of any Term Loan and the ratable distribution of
interest, fees and reimbursements paid or made by Borrower. Notwithstanding the foregoing, a
Lender receiving a scheduled payment shall not be responsible for determining whether the other
Lenders also received their scheduled payment on such date; provided, however, if it is later
determined that a Lender received more than its ratable share of scheduled payments made on any
date or dates, then such Lender shall remit to Agent or other Lenders such sums as may be necessary
to ensure the ratable payment of such scheduled payments, as instructed by Agent. Any payment or
distribution of any kind or character, whether in cash, properties or securities, shall be received
by a Lender in excess of its ratable share, then the portion of such payment or distribution in
excess of such Lender’s ratable share shall be received by such Lender in trust for and shall be
promptly paid over to the other Lender for application to the payments of amounts due on the other
Lender’s claims. To the extent any payment for the account of Borrower is required to be returned
as a voidable transfer or otherwise, the Lenders shall contribute to one another as is necessary to
ensure that such return of payment is on a pro rata basis. If any Lender shall obtain possession
of any Collateral, it shall hold such Collateral for itself and as agent and bailee for Agent and
other Lenders for purposes of perfecting Agent’s security interest therein. Notwithstanding
anything to the contrary herein, any warrants issued to the Lenders by Borrower, the stock issuable
thereunder, any equity securities purchased by Lenders, any amounts paid thereunder, any dividends,
and any other rights in connection therewith shall not be subject to the terms and conditions of
this Agreement. Nothing herein shall affect any Lender’s rights under any such warrants, stock, or
other equity securities to administer, manage, transfer, assign, or exercise such warrants, stock,
or other equity securities for its own account.

 

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9.5 Liability for Collateral. So long as Agent and the Lenders comply with reasonable
banking practices regarding the safekeeping of the Collateral in the possession or under the
control of Agent and the Lenders, Agent and the Lenders shall not be liable or responsible for: (a)
the safekeeping of the Collateral; (b) any loss or damage to the Collateral;
(c) any diminution in the value of the Collateral; or (d) any act or default of any carrier,
warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of
the Collateral.

9.6 No Waiver; Remedies Cumulative. Agent’s failure, at any time or times, to require
strict performance by Borrower of any provision of this Agreement or any other Loan Document shall
not waive, affect, or diminish any right of Agent thereafter to demand strict performance and
compliance herewith or therewith. No waiver hereunder shall be effective unless signed by Agent
and then is only effective for the specific instance and purpose for which it is given. Agent’s
rights and remedies under this Agreement and the other Loan Documents are cumulative. Agent has
all rights and remedies provided under the Code, by Law, or in equity. Agent’s exercise of one
right or remedy is not an election, and Agent’s waiver of any Event of Default is not a continuing
waiver. Agent’s delay in exercising any remedy is not a waiver, election, or acquiescence.

9.7 Demand Waiver. Borrower waives, to the fullest extent permitted by law, demand,
notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment
at maturity, release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Agent on which Borrower is liable.

10 NOTICES

All notices, consents, requests, approvals, demands, or other communication (collectively,
“Communication”) by any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual
receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or
certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when
sent by electronic mail (if an email address is specified herein) or facsimile transmission; (c)
one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or
(d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to
be notified and sent to the address, facsimile number, or email address indicated below. Any of
Agent, Lender or Borrower may change its mailing or electronic mail address or facsimile number by
giving the other party written notice thereof in accordance with the terms of this Section 10.

If to Borrower:

c/o Biolase Technology, Inc.

4 Cromwell

Irvine, California 92618

Attention: David M. Mulder

Chief Executive Officer

If to Agent or Lenders:

MidCap Financial, LLC

7735 Old Georgetown Road, Suite 400

Bethesda, Maryland 20814

Attention: Portfolio Management- Life Sciences

with a copy to:

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attention: John J. Malloy, Esquire

 

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11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

Maryland Law governs the Loan Documents without regard to principles of conflicts of law.
Borrower, Lenders and Agent each submit to the exclusive jurisdiction of the State and Federal
courts in Maryland. NOTWITHSTANDING THE FOREGOING, AGENT AND LENDERS SHALL HAVE THE RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH AGENT
AND LENDERS (IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.1) DEEM NECESSARY OR APPROPRIATE
TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE AGENT’S AND LENDERS’ RIGHTS AGAINST BORROWER
OR ITS PROPERTY. Borrower expressly submits and consents in advance to such jurisdiction in any
action or suit commenced in any such court, and Borrower hereby waives any objection that it may
have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is deemed appropriate by such court.
Borrower hereby waives personal service of the summons, complaints, and other process issued in
such action or suit and agrees that service of such summons, complaints, and other process may be
made by registered or certified mail addressed to Borrower at the address set forth in Section 10
of this Agreement and that service so made shall be deemed completed upon the earlier to occur of
Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage
prepaid.

TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER, AGENT AND LENDERS
EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, THE LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY
AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO
ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

Borrower, Agent and each Lender agree that
each Term Loan (including those made on the
Effective Date) shall be deemed to be made
in, and the transactions contemplated
hereunder and in any other Loan Document
(other than the Warrants) shall be deemed
to have been performed in, the State of
Maryland.

12 GENERAL PROVISIONS

12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this Agreement or any
rights or obligations under it without Agent’s prior written consent (which may be granted or
withheld in Agent’s discretion, subject to Section 12.11). The Lenders have the right, without the
consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in
all or any part of, or any interest in, the Lenders’ obligations, rights, and benefits under this
Agreement and the other Loan Documents provided, however, that any such sale, assignment,
negotiation or grant of a participation by any Lender (other than a sale or assignment to an
Eligible Assignee) of its obligations, rights, and benefits under this Agreement and the other Loan
Documents shall require the prior written consent of the Required Lenders (such approved assignee,
an “Approved Lender”). Borrower and Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned until Agent shall have
received and accepted an effective Assignment Agreement executed, delivered and fully completed by
the applicable parties thereto, and shall have received such other information regarding such
Eligible Assignee or Approved Lender as Agent reasonably shall require.

12.2 Indemnification.

(a) Borrower agrees to indemnify, defend and hold Agent and the Lenders and their respective
directors, officers, employees, agents, attorneys, or any other Person affiliated with or
representing Agent or the Lenders (each, an “Indemnified Person”) harmless against: (a) all
obligations, demands, claims, and liabilities (collectively, “Claims”) asserted by any other party
in connection with the transactions contemplated by the Loan Documents; and (b) all losses or
Lenders’ Expenses incurred, or paid by Indemnified Person from, following, or arising from
transactions between Agent, and/or the Lenders and Borrower (including reasonable attorneys’ fees
and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross
negligence or willful misconduct (collectively, the “Indemnified Liabilities”).

(b) Borrower hereby further indemnifies, defends and holds each Indemnified Person harmless
from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitee), except to the extent
directly caused by such Indemnified Person’s gross negligence or willful misconduct, in connection
with any investigative, response, remedial, administrative or judicial matter or proceeding,
whether or not such Indemnified Person shall be designated a party thereto and including any such
proceeding initiated by or on behalf of Borrower, and the reasonable expenses of investigation by
engineers,
environmental consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by Agent or Lenders) asserting
any right to payment for the transactions contemplated hereby which may be imposed on, incurred by
or asserted against such Indemnified Person as a result of or in connection with the transactions
contemplated hereby and the use or intended use of the proceeds of the loan proceeds.

 

21

 

(c) To the extent that the undertaking set forth in this Section 12.2 may be unenforceable,
Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them.

12.3 Time of Essence. Time is of the essence for the performance of all Obligations
in this Agreement.

12.4 Severability of Provisions. Each provision of this Agreement is severable from
every other provision in determining the enforceability of any provision.

12.5 Correction of Loan Documents. Agent and the Lenders may correct patent errors
and fill in any blanks in this Agreement and the other Loan Documents consistent with the agreement
of the parties.

12.6 Integration. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about
the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.

12.7 Counterparts. This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and delivered, is an
original, and all taken together, constitute one Agreement.

12.8 Survival. All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations which, by their
terms, are to survive the termination of this Agreement) have been satisfied. The obligation of
Borrower in Section 12.2 to indemnify each Lender and Agent shall survive until the statute of
limitations with respect to such claim or cause of action shall have run.

12.9 Confidentiality. In handling any confidential information of Borrower, the
Lenders and Agent shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to the Lenders’ and Agent’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any interest in the
Credit Extensions (provided, however, the Lenders and Agent shall use commercially reasonable
efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by Law, regulation, subpoena, or other order; (d) to regulators or as
otherwise required in connection with an examination or audit; (e) as Agent considers appropriate
in exercising remedies under the Loan Documents; and (f) to third party service providers of the
Lenders and/or Agent so long as such service providers have executed a confidentiality agreement
with the Lenders and Agent with terms no less restrictive than those contained herein. Confidential
information does not include information that either: (i) is in the public domain or in the
Lenders’ and/or Agent’s possession when disclosed to the Lenders and/or Agent, or becomes part of
the public domain after disclosure to the Lenders and/or Agent; or (ii) is disclosed to the Lenders
and/or Agent by a third party, if the Lenders and/or Agent does not know that the third party is
prohibited from disclosing the information. Lenders and/or Agent may use confidential information
for any purpose, including, without limitation, for the development of client databases, reporting
purposes, and market analysis, so long as Lenders and/or Agent do not disclose Borrower’s identity
or the identity of any person associated with Borrower unless otherwise expressly permitted by this
Agreement. The provisions of the immediately preceding sentence shall survive the termination of
this Agreement. The agreements provided under this Section 12.9 supersede all prior agreements,
understanding, representations, warranties, and negotiations between the parties about the subject
matter of this Section 12.9. In respect of confidential information provided by Borrower to Agent
and Lenders hereunder and Borrower’s securities Agent and Lenders agree to comply with applicable
securities laws which prohibit trading in securities based upon material non-public information.

 

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12.10 Right of Set Off. Borrower hereby grants to Agent and to each Lender, a lien,
security interest and right of set off as security for all Obligations to Agent and each Lender
hereunder, whether now existing or hereafter arising upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody, safekeeping or control of
Agent or the Lenders or any entity under the control of Agent or the Lenders (including a Agent
affiliate) or in transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice, Agent or the Lenders may set off the
same or any part thereof and apply the same to any liability or obligation of Borrower even though
unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND
ALL RIGHTS TO REQUIRE AGENT TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.

12.11 Amendments.

(a) No amendment, modification, termination or waiver of any provision of this Agreement or
any other Loan Document, no approval or consent thereunder, or any consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed
by Borrower, Agent and the Required Lenders provided that

(i) no such amendment, waiver or other modification that would have the effect of increasing
or reducing a Lender’s Term Loan Commitment or Commitment Percentage shall be effective as to such
Lender without such Lender’s written consent;

(ii) no such amendment, waiver or modification that would affect the rights and duties of
Agent shall be effective without Agent’s written consent or signature;

(iii) no such amendment, waiver or other modification shall, unless signed by all the Lenders
directly affected thereby, (A) reduce the principal of, rate of interest on or any fees with
respect to any Term Loan or forgive any principal, interest (other than default interest) or fees
(other than late charges) with respect to any Term Loan (B) postpone the date fixed for, or waive,
any payment of principal of any Term Loan or of interest on any Term Loan (other than default
interest) or any fees provided for hereunder (other than late charges or for any termination of any
commitment); (C) change the definition of the term “Required Lenders” or the percentage of Lenders
which shall be required for Lenders to take any action hereunder; (D) release all or substantially
all or any material portion of the Collateral, authorize Borrower to sell or otherwise dispose of
all or substantially all or any material portion of the Collateral or release any Guarantor of all
or any portion of the Obligations or its guaranty obligations with respect thereto, except, in each
case with respect to this clause (D), as otherwise may be expressly permitted under this Agreement
or the other Loan Documents (including in connection with any disposition permitted hereunder); (E)
amend, waive or otherwise modify this Section 12.11 or the definitions of the terms used in this
Section 12.11 insofar as the definitions affect the substance of this Section 12.11; (F) consent to
the assignment, delegation or other transfer by any Borrower or any Guarantor of any of its rights
and obligations under any Loan Document or release Borrower or any Guarantor of its payment
obligations under any Loan Document, except, in each case with respect to this clause (F),
pursuant to a merger or consolidation permitted pursuant to this Agreement; (G) amend any of the
provisions of Section 9.4 or amend any of the definitions Pro Rata Share, Term Loan Commitment,
Commitment Percentage or that provide for the Lenders to receive their Pro Rata Shares of any fees,
payments, setoffs or proceeds of Collateral hereunder; (H) subordinate the Liens granted in favor
of Agent securing the Obligations; or (I) amend any of the provisions of Section 12.10. It is
hereby understood and agreed that all Lenders shall be deemed directly affected by an amendment,
waiver or other modification of the type described in the preceding clauses (C), (D), (E), (F), (G)
and (H) of the preceding sentence;

(iv) the provisions of the foregoing clauses (i), (ii) and (iii) are subject to the provisions
of any interlender or agency agreement among the Lenders and Agent pursuant to which any Lender may
agree to give its consent in connection with any amendment, waiver or modification of the Loan
Documents only in the event of the unanimous agreement of all Lenders.

(b) Other than as expressly provided for in Section 12.11(a)(i)-(iii), Agent may, if requested
by the Required Lenders, from time to time designate covenants in this Agreement less restrictive
by notification to a
representative of the Borrower.

 

23

 

12.12 Publicity. Borrower will not directly or indirectly publish, disclose or
otherwise use in any public disclosure, advertising material, promotional material, press release
or interview, any reference to the name, logo or any trademark of Agent or any Lender or any of
their Affiliates or any reference to this Agreement or the financing evidenced hereby, in any case
except as required by applicable Law, subpoena or judicial or similar order, in which case Borrower
shall endeavor to give Agent prior written notice of such publication or other disclosure. Each
Lender and Borrower hereby authorizes each Lender to publish the name of such Lender and Borrower,
the existence of the financing arrangements referenced under this Agreement, the primary purpose
and/or structure of those arrangements, the amount of credit extended under each facility, the
title and role of each party to this Agreement, and the total amount of the financing evidenced
hereby in any “tombstone”, comparable advertisement or press release which such Lender elects to
submit for publication. In addition, each Lender and Borrower agrees that each Lender may provide
lending industry trade organizations with information necessary and customary for inclusion in
league table measurements after the Effective Date. With respect to any of the foregoing, such
authorization shall be subject to such Lender providing Borrower and the other Lenders with an
opportunity to review and confer with such Lender regarding, and approve, the contents of any such
tombstone, advertisement or information, as applicable, prior to its initial submission for
publication, but subsequent publications of the same tombstone, advertisement or information shall
not require Borrower’s approval.

12.13 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.

13 AGENT

13.1 Appointment and Authorization of Agent. Each Lender hereby irrevocably appoints,
designates and authorizes Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement
or any other Loan Document or otherwise exist against Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

13.2 Delegation of Duties. Agent may execute any of its duties under this Agreement or
any other Loan Document by or through its, or its Affiliates’, agents, employees or
attorneys-in-fact and shall be entitled to obtain and rely upon the advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.

13.3 Liability of Agent. Except as otherwise provided herein, no Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with its duties expressly
set forth herein), or (b) be responsible in any manner to any Lender or participant for any
recital, statement, representation or warranty made by Borrower or any officer thereof, contained
herein or in any other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions of, this Agreement
or any other Loan Document, or to inspect the properties, books or records of Borrower or any
Affiliate thereof.

 

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13.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, communication, signature, resolution, representation, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
electronic mail message, statement or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrower), independent accountants and other
experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action
under any Loan Document unless it shall first receive such advice or concurrence of all Lenders as
it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance
with a request or consent of all Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.

13.5 Notice of Default. Agent shall not be deemed to have knowledge or notice of the
occurrence of any default and/or Event of Default, unless Agent shall have received written notice
from a Lender or Borrower, describing such default or Event of Default. Agent will notify the
Lenders of its receipt of any such notice. Agent shall take such action with respect to an Event of
Default as may be directed in writing by the Required Lenders in accordance with Article 9(a);
provided, however, that while an Event of Default has occurred and is continuing, Agent may (but
shall not be obligated to) take such action, or refrain from taking such action, with respect to
such Event of Default as Agent shall deem advisable or in the best interest of the Lenders,
including without limitation, satisfaction of other security interests, liens or encumbrances on
the Collateral not permitted under the Loan Documents, payment of taxes on behalf of Borrower,
payments to landlords, warehouseman, bailees and other persons in possession of the Collateral and
other actions to protect and safeguard the Collateral, and actions with respect to insurance claims
for casualty events affecting Borrower and/or the Collateral.

13.6 Credit Decision; Disclosure of Information by Agent. Each Lender acknowledges
that no Agent-Related Person has made any representation or warranty to it, and that no act by
Agent hereafter taken, including any consent to and acceptance of any assignment or review of the
affairs of Borrower or any Affiliate thereof, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession. Each Lender
represents to Agent that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made its own appraisal
of, and investigation into, the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower and its respective Subsidiaries, and all applicable bank
or other regulatory Laws relating to the transactions contemplated hereby, and made its own
decision to enter into this Agreement and to extend credit to Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by Agent herein, Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of Borrower or any of its
Affiliates which may come into the possession of any Agent-Related Person.

13.7 Indemnification of Agent. Whether or not the transactions contemplated hereby are
consummated, each Lender shall, severally and pro rata based on its respective Pro Rata Share,
indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so), and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities (which shall not include
legal expenses of Agent incurred in connection with the closing of the transactions contemplated by
this Agreement) incurred by it; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined
in a judgment by a court of competent jurisdiction to have resulted from such Agent-Related
Person’s own gross negligence or willful misconduct; provided, however, that no action taken in
accordance with the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 13.7. Without limitation of the
foregoing, each Lender shall, severally and pro rata based on its respective Pro Rata Share,
reimburse Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including
Lenders’ Expenses incurred after the closing of the transactions contemplated by this Agreement)
incurred by Agent (in its capacity as Agent, and not as a Lender) in connection with the
preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated
by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on
behalf of Borrower. The undertaking in this Section 13.7 shall survive the payment in full of the
Obligations, the termination of this Agreement and the resignation of Agent.

 

25

 

13.8 Agent in its Individual Capacity. With respect to its Credit Extensions, MidCap
shall have the same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not Agent, and the terms “Lender” and “Lenders” include
MidCap in its individual capacity.

13.9 Successor Agent. Agent may resign as Agent upon ten (10) days’ notice to the
Lenders. If Agent resigns under this Agreement, all Lenders shall appoint from among the Lenders
(or the affiliates thereof) a successor Agent for the Lenders, which successor Agent shall (unless
an Event of Default has occurred and is continuing) be subject to the approval of Borrower (which
approval shall not be unreasonably withheld or delayed). If no successor Agent is appointed prior
to the effective date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent from among the Lenders (or the affiliates thereof). Upon the acceptance
of its appointment as successor Agent hereunder, the Person acting as such successor Agent shall
succeed to all the rights, powers and duties of the retiring Agent and the respective term “Agent”
means such successor Agent and the retiring Agent’s appointment, powers and duties in such
capacities shall be terminated without any other further act or deed on its behalf. After any
retiring Agent’s resignation hereunder as Agent, the provisions of this Article 13 and Sections
2.4(d) and 12.2 shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by
the date ten (10) days following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a successor agent as
provided for above.

13.10 Agent May File Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to Borrower, Agent (irrespective of whether the principal of any Loan,
shall then be due and payable as herein expressed or by declaration or otherwise and irrespective
of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Credit Extensions and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have the claims of the
Lenders and Agent (including any claim for the reasonable compensation, expenses, disbursements and
advances of the Lenders and Agent and their respective agents and counsel and all other amounts due
the Lenders and Agent allowed in such judicial proceeding); and

(b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent
and, in the event that Agent shall consent to the making of such payments directly to the Lenders,
to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of Agent and its agents and counsel, and any other amounts due Agent under Section 2.4(d).
To the extent that Agent fails timely to do so, each Lender may file a claim relating to such
Lender’s claim.

13.11 Collateral and Guaranty Matters. The Lenders irrevocably authorize Agent, at its
option and in its discretion, to release any Guarantor and any Lien on any Collateral granted to or
held by Agent under any Loan Document (i) upon the date that all Obligations due hereunder have
been fully and indefeasibly paid in full and no Term Loan Commitments or other obligations of any
Lender to provide funds to Borrower under this Agreement remain outstanding, (ii) that is
transferred or to be transferred as part of or in connection with any Transfer permitted hereunder
or under any other Loan Document, or (iii) as approved in accordance with Section 12.11. Upon
request by Agent at any time, all Lenders will confirm in writing Agent’s authority to release its
interest in particular types or items of Property, pursuant to this Section 13.11.

 

26

 

13.12 Cooperation of Borrower. If necessary, Borrower agrees to (i) execute any
documents (including new Secured Promissory Notes) reasonably required to effectuate and
acknowledge each assignment of a Term Loan Commitment or Loan to an assignee in accordance with
Section 12.1, (ii) make Borrower’s management available to meet with Agent and prospective
participants and assignees of Term Loan Commitments or Credit Extensions and (iii) assist Agent or
the Lenders in the preparation of information relating to the financial affairs of Borrower as any
prospective participant or assignee of a Term Loan Commitment or Term Loan reasonably may request.
Subject to the provisions of Section 12.9 Borrower authorizes each Lender to disclose to any
prospective participant or assignee of a Term Loan Commitment, any and all information in such
Lender’s possession concerning Borrower and its financial affairs which has been delivered to such
Lender by or on behalf of Borrower pursuant to this Agreement, or which has been delivered to such
Lender by or on behalf of Borrower in connection with such Lender’s credit evaluation of Borrower
prior to entering into this Agreement.

14 DEFINITIONS

14.1 Definitions. As used in this Agreement, the following terms have the following
meanings:

“Account” is any “account” as defined in the Code with such additions to such term as may
hereafter be made, and includes, without limitation, all accounts receivable and other sums owing
to Borrower.

“Account Debtor” is any “account debtor” as defined in the Code with such additions to such
term as may hereafter be made.

“Advance” means an advance or disbursement of proceeds to or for the account of Borrower in
respect of a Term Loan.

“Affiliate” of any Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with the Person, and each
of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members.

“Agent” means, MidCap, not in its individual capacity, but solely in its capacity as agent on
behalf of and for the benefit of the Lenders.

“Agent-Related Person” means Agent, together with its Affiliates, and the officers, directors,
employees, agents, advisors, auditors and attorneys-in-fact of such Persons; provided, however,
that no Agent-Related Person shall be an Affiliate of Borrower.

“Agreement” is defined in the preamble hereof.

“Amortization Date” is December 1, 2010.

“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering, including
Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising
or implementing the Bank Secrecy Act, and the Laws administered by OFAC.

“Approved Fund” means any (i) investment company, fund, trust, securitization vehicle or
conduit that is (or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its business or
(ii) any Person (other than a natural person) which temporarily warehouses loans for any Lender or
any entity described in the preceding clause (i) and that, with respect to each of the preceding
clauses (i) and (ii), is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or
(c) a Person (other than a natural person) or an Affiliate of a Person (other than a natural
person) that administers or manages a Lender.

“Approved Lender” has the meaning given it in Section 12.1.

“Assignment Agreement” means an agreement substantially in the form of Exhibit E hereto.

 

27

 

“Base LIBOR Rate” means, for any Interest Period, the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other quotation sources
as it considers appropriate (rounded upwards, if necessary, to the next 1/100%), to be the rate at
which Dollar deposits (for delivery on the first day of such Interest Period or, if such day is not
a Business Day, on the preceding Business Day) in the amount of One Million Dollars ($1,000,000)
are offered to major banks in the London interbank market on or about 11:00 a.m. (New York time)
two (2) Business Days prior to the commencement of such Interest Period, for a term comparable to
such Interest Period, which determination shall be conclusive in the absence of manifest error.

“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on
behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits,
threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224,
or (e) a Person that is named a “specially designated national” or “blocked person” on the most
current list published by OFAC or other similar list.

“Borrower” is defined in the preamble hereof.

“Borrower’s Books” are all Borrower’s books and records including ledgers, federal and state
tax returns, records regarding Borrower’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or storage or any equipment containing
such information.

“Borrowing Resolutions” are, with respect to any Person, those resolutions adopted by such
Person’s Board of Directors and delivered by such Person to Agent approving the Loan Documents to
which such Person is a party and the transactions contemplated thereby, together with a certificate
executed by its secretary on behalf of such Person certifying that (a) such Person has the
authority to execute, deliver, and perform its obligations under each of the Loan Documents to
which it is a party, (b) that attached as Exhibit A to such certificate is a true, correct, and
complete copy of the resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to which it is a party,
(c) the name(s) of the Person(s) authorized to execute the Loan Documents on behalf of such Person,
together with a sample of the true signature(s) of such Person(s), and (d) that Agent and the
Lenders may conclusively rely on such certificate unless and until such Person shall have delivered
to Agent a further certificate canceling or amending such prior certificate.

“Business Day” is any day that is not a Saturday, Sunday or a day on which Agent is closed.

“Cash Equivalents” are (a) marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having maturities of not more than one (1)
year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after
its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., (c) certificates of deposit issued maturing no more than one (1) year
after issue, and (d) money market funds at least ninety-five percent (95%) of the assets of which
constitute Cash Equivalents of the kinds described in clauses (a) through (b) of this definition..
For the avoidance of doubt, the direct purchase by Borrower, co-borrower, or any subsidiary of
Borrower of any Auction Rate Securities, or purchasing participations in, or entering into any type
of swap or other derivative transaction, or otherwise holding or engaging in any ownership interest
in any type of Auction Rate Security by Borrower, co-borrower, or any subsidiary of Borrower shall
be conclusively determined by the Lenders as an ineligible Cash Equivalent, and any such
transaction shall expressly violate each other provision of this agreement governing Permitted
Investments. Notwithstanding the foregoing, Cash Equivalents does not include and each Borrower
and Subsidiary is prohibited from purchasing, purchasing participations in, entering into any type
of swap or other equivalent derivative transaction, or otherwise holding or engaging in any
ownership interest in any type of debt instrument, including, without limitation, any corporate or
municipal bonds with a long-term nominal maturity for which the interest rate is reset through a
dutch auction and more commonly referred to as an auction rate security.

“Change in Control” means any event, transaction, or occurrence as a result of which (a) any
“person” (as such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than
a trustee or other fiduciary holding securities under an employee benefit plan of Borrower, is or
becomes a beneficial owner (within the meaning Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of Borrower, representing twenty-five percent (25%) or more
of the combined voting power of Borrower’s then outstanding securities; or (b) during any period of
twelve consecutive calendar months, individuals who at the beginning of such period constituted the
Board of Directors of Borrower
(together with any new directors whose election by the Board of Directors of Borrower was
approved by a vote of not less than two-thirds of the directors then still in office who either
were directions at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office.

 

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“Claims” are defined in Section 12.2.

“Code” is the Uniform Commercial Code, as the same may, from time to time, be enacted and in
effect in the State of Maryland; provided, that, to the extent that the Code is used to define any
term herein or in any Loan Document and such term is defined differently in different Articles or
Divisions of the Code, the definition of such term contained in Article or Division 9 shall govern;
provided further, that in the event that, by reason of mandatory provisions of Law, any or all of
the attachment, perfection, or priority of, or remedies with respect to, Agent’s Lien on any
Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the
State of Maryland, the term “Code” shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such
provisions.

“Collateral” is any and all properties, rights and assets of Borrower described on Exhibit
A.

“Collateral Account” is any Deposit Account, Securities Account, or Commodity Account.

“Commitment Percentage” is set forth in Schedule 1.1, as amended from time to time.

“Commodity Account” is any “commodity account” as defined in the Code with such additions to
such term as may hereafter be made.

“Communication” is defined in Section 10.

“Compliance Certificate” is that certain certificate in the form attached hereto as
Exhibit C.

“Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the
obligations under any guarantee or other support arrangement.

“Control Agreement” is any control agreement entered into among the depository institution at
which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary
at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Agent
pursuant to which Agent obtains control (within the meaning of the Code) for the benefit of the
Lenders over such Deposit Account, Securities Account, or Commodity Account.

“Credit Extension” is any Term Loan or any other extension of credit by Agent or the Lenders
for Borrower’s benefit.

“DEA” means the Drug Enforcement Administration of the United States of America and any
successor agency thereof.

“Default” is any event which with notice or passage of time or both, would constitute an Event
of Default.

“Default Rate” is defined in Section 2.3(c).

 

29

 

“Deposit Account” is any “deposit account” as defined in the Code with such additions to such
term as may hereafter be made.

“Designated Deposit Account” is the deposit account maintained by Borrower with SVB and
designated as the “Designated Deposit Account” and over which Agent shall be granted control for
the ratable benefit of all Lenders.

“Dollars,” “dollars” and “$” each mean lawful money of the United States.

“Drug Application” means a new drug application, an abbreviated drug application, or a product
license application for any Product, as appropriate, as those terms are defined in the FDCA.

“EBITDA” shall mean with respect to Borrower and its Subsidiaries on a consolidated basis (a)
Net Income, plus (b) Interest Expense, plus (c) to the extent deducted in the calculation of Net
Income, depreciation expense and amortization expense, plus (d) non-cash stack compensation
expense, plus (e) income tax expense.

“Effective Date” is defined in the preamble of this Agreement.

“Eligible Assignee” means (i) a Lender, (ii) an Affiliate of a Lender, (iii) an Approved Fund
and (iv) any commercial bank, savings and loan association or savings bank or any other entity
which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933, as
amended) and which extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance companies, in each case,
which either (A) has a rating of BBB or higher from Standard & Poor’s Rating Group and a rating of
Baa2 or higher from Moody’s Investors Service, Inc. at the date that it becomes a Lender or (B) has
total assets in excess of $5,000,000,000, and in each case of clauses (i) through (iv), which,
through its applicable lending office, is capable of lending to Borrower without the imposition of
any withholding or similar taxes; provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include Borrower, any Guarantor or any of Borrower’s or any Guarantor’s Affiliates or
Subsidiaries. Notwithstanding the foregoing, in connection with assignments by a Lender due to a
forced divestiture at the request of any regulatory agency, the restrictions set forth herein shall
not apply and Eligible Assignee shall mean any Person or party.

“Equipment” is all “equipment” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation all machinery, fixtures, goods, vehicles
(including motor vehicles and trailers), and any interest in any of the foregoing.

“Equity Event” shall mean the receipt by Borrower, after the Effective Date and prior to
August 31, 2010, of unrestricted net cash proceeds of at least Five Million Dollars ($5,000,000.00)
from the closing of the issuance and sale of Borrower’s equity securities.

“ERISA” is the Employee Retirement Income Security Act of 1974, and its regulations.

“Event of Default” is defined in Section 8.

“FDA” means the Food and Drug Administration of the United States of America or any successor
entity thereto.

“FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. Section 301 et
seq. and all regulations promulgated thereunder.

“Final Payment” is a payment (in addition to and not a substitution for the regular monthly
payments of principal plus accrued interest) due on the earlier to occur of (a) the Maturity Date,
or (b) the acceleration of any Term Loan, or (c) the prepayment of a Term Loan pursuant to Section
2.2(c) or (d), equal to the original Term Loan Commitments multiplied by the Final Payment
Percentage.

“Final Payment Percentage” is three percent (3.00%).

 

30

 

“Foreign Subsidiary” shall mean each of the following Subsidiaries of Biolase: (i) Biolase
Europe, GmbH, a company organized under the laws of Germany, (ii) Biolase Spain, S.L., a company
organized under the laws of Spain, (iii) Biolase Australia Pty. Ltd., a company organized under the
laws of Australia, and (iv) Biolase (NZ) Limited, a company organized under the laws of New
Zealand.

“Funding Date” is any date on which a Credit Extension is made to or on account of Borrower
which shall be a Business Day.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other Person as may be approved by a significant segment of the
accounting profession in the United States, which are applicable to the circumstances as of the
date of determination.

“General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable Law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, goodwill, franchise
agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims,
income and other tax refunds, security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind.

“Governmental Approval” is any consent, authorization, approval, order, license, franchise,
permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or
other act by or in respect of, any Governmental Authority.

“Governmental Authority” is any nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other
entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions
of or pertaining to government, any securities exchange and any self-regulatory organization.

“Guarantor” is, individually and collectively, jointly and severally, BL Acquisition Corp., a
Delaware corporation (“BL Acquisition”)and BL Acquisition II, Inc., a Delaware corporation (“BL
Acquisition II”), and any present or future guarantor of the Obligations.

“Guarantor Security Agreement” is the Security Agreement dated as of the Effective Date made
by BL Acquisition and BL Acquisition II in favor of the Agent and the Lenders.

“Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations, and (d) Contingent Obligations.

“Indemnified Liabilities” is defined in Section 12.2.

“Indemnified Person” is defined in Section 12.2.

“Insolvency Proceeding” is any proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency Law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

 

31

 

“Intellectual Property” includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any
patents, patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the same, trademarks,
trade names, service marks, mask works, rights of use of any name, domain names, or any other
similar rights, any applications therefor, whether registered or not, and the goodwill of the
business of Borrower connected with and symbolized thereby, know-how, operating manuals, trade
secret rights, clinical and non-clinical data, rights to unpatented inventions, and any claims for
damage by way of any past, present, or future infringement of any of the foregoing.

“Interest Expense” means for any fiscal period with respect to Borrower and its Subsidiaries
on a consolidated basis, interest expense (whether cash or non-cash) determined in accordance with
GAAP for the relevant period ending on such date, including, in any event, interest expense with
respect to any Credit Extension and other Indebtedness of Borrower and its Subsidiaries, including,
without limitation or duplication, all commissions, discounts, or related amortization and other
fees and charges with respect to letters of credit and bankers’ acceptance financing and the net
costs associated with interest rate swap, cap, and similar arrangements, and the interest portion
of any deferred payment obligation (including leases of all types).

“Interest Period” means the one-month period starting on the first (1st) day of
each month and ending on the last day of such month; provided, however, that the first
(1st) Interest Period for each Advance shall commence on the date that the applicable
Advance is made and end on the last day of such month.

“Interest Rate Determination Date” means the second (2nd) Business Day prior to the
first (1st) day of the related Interest Period.

“Inventory” is all “inventory” as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in process and finished
products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title
representing any of the above.

“Investment” is any beneficial ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital contribution to any Person.

“IP Agreement” is that certain Intellectual Property Security Agreement executed and delivered
by Borrower to Agent dated of even date herewith.

“Laws” means any and all federal, state, provincial, territorial, local and foreign statutes,
laws, judicial decisions, regulations, guidances, guidelines, ordinances, rules, judgments, orders,
decrees, codes, plans, injunctions, permits, concessions, grants, franchises, governmental
agreements and governmental restrictions, whether now or hereafter in effect, which are applicable
to any Borrower in any particular circumstance.

“Lender” is any one of the Lenders.

“Lenders” shall mean the Persons identified on Schedule 1.1 hereto and each assignee that
becomes a party to this Agreement pursuant to Section 12.1.

“Lenders’ Expenses” are all audit fees and expenses, costs, and expenses (including reasonable
attorneys’ fees and expenses) of Lenders and Agent for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without limitation, those
incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred by Agent or
the Lenders in connection with the Loan Documents.

“LIBOR Rate” means for each Interest Period, the rate per annum determined by Agent (rounded
upwards, if necessary, to the next 1/100th%) by dividing (a) the Base LIBOR Rate for such Interest
Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.

 

32

 

“LIBOR Rate Margin” is nine and one quarter percent (9.25%) per annum; provided, however, that
in the event that Borrower fails to satisfy the Post-Closing Covenant, the LIBOR Rate Margin shall
be eleven and one quarter percent (11.25%) per annum, effective as of the thirtieth day after the
Effective Date and thereafter.

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by operation of Law or otherwise
against any property.

“Loan Documents” are, collectively, this Agreement, the Warrant, the Perfection Certificate,
the IP Agreement, the Unconditional Guaranty, the Guaranty Security Agreement, any note, or notes
or guaranties executed by Borrower in connection with the indebtedness governed by this Agreement,
and any other present or future agreement between Borrower and/or for the benefit of the Lenders
and Agent in connection with this Agreement, all as amended, restated, or otherwise modified.

“Material Adverse Change” is (a) a material impairment in the perfection or priority of
Agent’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in
the business, operations, or condition (financial or otherwise) or prospects of Borrower; or (c) a
material impairment of the prospect of repayment of any portion of the Obligations.

“Material Intellectual Property” is all of Borrower’s Intellectual Property that is material
to the condition (financial or other), business or operations of Borrower.

“Maturity Date” is May 1, 2013.

“Net Income” means, as calculated on a consolidated basis for Borrower and its Subsidiaries
for any period as at any date of determination, the net profit (or loss), after provision for
taxes, of Borrower and its Subsidiaries for such period taken as a single accounting period.

“Obligations” are all of Borrower’s obligations to pay when due any debts, principal,
interest, Lenders’ Expenses, the Prepayment Fee, the Final Payment, and other amounts Borrower owes
the Lenders now or later, under this Agreement or the other Loan Documents, including, without
limitation, interest accruing after Insolvency Proceedings begin (whether or not allowed) and
debts, liabilities, or obligations of Borrower assigned to the Lenders and/or Agent, and the
performance of Borrower’s duties under the Loan Documents.

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked Persons List
maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001)
and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the
rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

“Operating Documents” are, for any Person, such Person’s formation documents, as certified
with the Secretary of State of such Person’s state of formation on a date that is no earlier than
30 days prior to the Effective Date, and (a) if such Person is a corporation, its bylaws in current
form, (b) if such Person is a limited liability company, its limited liability company agreement
(or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or
similar agreement), each of the foregoing with all current amendments or modifications thereto.

“Payment/Advance Form” is that certain form attached hereto as Exhibit B.

“Payment Date” is the first calendar day of each calendar month.

“Perfection Certificate” is defined in Section 5.1.

 

33

 

“Permits” means licenses, certificates, accreditations, product clearances or approvals,
provider numbers or provider authorizations, marketing authorizations, other authorizations,
registrations, permits, consents and approvals required in connection with the conduct of
Borrower’s or any Subsidiary’s business or to comply with any applicable Laws,
including, without limitation, drug listings and drug establishment registrations under 21
U.S.C. Section 510, registrations issued by DEA under 21 U.S.C. Section 823 (if applicable to any
Product), and those issued by State governments for the conduct of Borrower’s or any Subsidiary’s
business.

“Permitted Indebtedness” is:

(a) Borrower’s Indebtedness to the Lenders and Agent under this Agreement and the other Loan
Documents;

(b) Indebtedness existing on the Effective Date and shown on the Perfection Certificate;

(c) Subordinated Debt;

(d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business;

(e) Indebtedness secured by Permitted Liens; and

(h) extensions, refinancings, modifications, amendments and restatements of any items of
Permitted Indebtedness (a) through (e) above, provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiary, as the case may be.

“Permitted Investments” are:

(a) Investments shown on the Perfection Certificate and existing on the Effective Date;
provided, however that on and after the Effective Date Borrower’s Investments in
the Foreign Subsidiaries shall be limited to amounts necessary to fund the operations of the
Foreign Subsidiaries in the ordinary course, which amounts shall not exceed $125,000 in the
aggregate in any fiscal year for all Foreign Subsidiaries; and

(b) Investments consisting of Cash Equivalents.

“Permitted Liens” are:

(a) Liens existing on the Effective Date and shown on the Perfection Certificate or arising
under this Agreement and the other Loan Documents;

(b) Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which Borrower maintains adequate reserves on
its Books, provided that no notice of any such Lien has been filed or recorded under the Internal
Revenue Code of 1986, as amended , and the Treasury Regulations adopted thereunder;

(c) purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing
the acquisition of the Equipment securing no more than One Hundred Thousand Dollars ($100,000) in
the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien
is confined to the property and improvements and the proceeds of the Equipment; and

(d) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) and (c) above, but any extension, renewal or replacement Lien must
be limited to the property encumbered by the existing Lien and the principal amount of the
Indebtedness may not increase.

“Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association, corporation, institution, public
benefit corporation, firm, joint stock company, estate, entity or government agency.

 

34

 

“Prepayment Fee” means with respect to any Term Loan subject to prepayment prior to the
Maturity Date, whether by mandatory or voluntary prepayment, acceleration or otherwise, an
additional fee payable to the Lenders in amount equal to:

(i) for a prepayment made on or after the Effective Date through and including the date which
is twelve (12) months after the Effective Date, six percent (6.00%) of the outstanding principal
amount of the Term Loans;

(ii) for a prepayment made after the date which is twelve (12) months after the Effective Date
through and including the date which is twenty-four (24) months after the Effective Date, four
percent (4.00%) of the outstanding principal amount of the Term Loans; and

(ii) for a prepayment made after the date which is twenty-four (24) months after the Effective
Date and prior to the Maturity Date, two percent (2.00%) of the outstanding principal amount of the
Term Loans.

“Pro Rata Share” means, with respect to each Lender, a percentage (expressed as a decimal,
rounded to the ninth decimal place) determined by dividing the amount of Term Loans held by such
Lender by the aggregate amount of all outstanding Term Loans.

“Products” means any products manufactured, sold, developed, tested or marketed by any
Borrower or any of its Subsidiaries, including without limitation, those products set forth on
Schedule 5.11 (as updated from time to time in accordance with Section 6.2(e) above); provided
that, if Borrower shall fail to comply with the obligations under Section 6.2(e) to give notice to
Agent and update Schedule 5.11 prior to manufacturing, selling, developing, testing or marketing
any new Product, any such improperly undisclosed Product shall be deemed to be included in this
definition; and provided, further, that products manufactured by Borrower for unaffiliated third
parties shall not be deemed “Products” hereunder.

“Registered Organization” is any “registered organization” as defined in the Code with such
additions to such term as may hereafter be made

“Required Lenders” means (i) for so long as all of the Persons that are Lenders on the
Effective Date (each an “Original Lender”) have not assigned or transferred any of their interests
in their respective Term Loans, Lenders holding one hundred percent (100%) of the aggregate
outstanding principal balance of the Term Loans, or (ii) at any time from and after any Original
Lender has assigned or transferred any interest in its Term Loans, Lenders holding sixty-six
percent (66%) or more of the aggregate outstanding principal balance of the Term Loans, plus, in
respect of this clause (ii), (A) each Original Lender that has not assigned or transferred any
portion of its respective Term Loans and (B) each assignee of an Original Lender provided such
assignee was assigned or transferred and continues to hold 100% of the assigning Original Lender’s
interest in the Term Loans (in each case in respect of clauses (A) and (B) of this clause (ii),
whether or not such Lender is included within the Lenders holding sixty-six percent (66%) of the
Terms Loans); provided, however, that notwithstanding the foregoing, for purposes of Section 9.1(b)
hereof, “Required Lenders” means (i) for so long as all Original Lenders retain 100% of their
interests in their respective Term Loans, Lenders holding one hundred percent (100%) of the
aggregate outstanding principal balance of the Term Loans, or (ii) at any time from and after any
Original Lender has assigned or transferred any interest in its Term Loans, Lenders holding
sixty-six percent (66%) or more of the aggregate outstanding principal balance of the Term Loans,
plus, in respect of this clause (ii), each Original Lender that has not assigned or transferred any
portion of its respective Term Loan (in each case in respect of this clause (ii), whether or not
such Original Lender is included within the Lenders holding sixty-six percent (66%) of the Term
Loans). For purposes of this definition only, a Lender shall be deemed to include itself, and any
Lender that is an Affiliate or Approved Fund of such Lender.

“Required Permit” means a Permit (a) issued or required under Laws applicable to the business
of Borrower or any of its Subsidiaries or necessary in the manufacturing, importing, exporting,
possession, ownership, warehousing, marketing, promoting, sale, labeling, furnishing, distribution
or delivery of goods or services under Laws applicable to the business of Borrower or any of its
Subsidiaries or any Drug Application (including without limitation, at any point in time, all
licenses, approvals and permits issued by the FDA or any other applicable Governmental Authority
necessary for the testing, manufacture, marketing or sale of any Product by any applicable
Borrower(s) as such activities are being conducted by such Borrower with respect to such Product at
such time), and (b) issued by any Person from which Borrower or any of their Subsidiaries have
received an accreditation.

“Requirement of Law” is as to any Person, the organizational or governing documents of such
Person, and any Law (statutory or common), treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon
such Person or any of its property or to which such Person or any of its property is subject.

 

35

 

“Reserve Percentage” means, on any day, for any Lender, the maximum percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor Governmental Authority) for
determining the reserve requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding (currently referred
to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not required or
directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be
zero.

“Responsible Officer” is any of the President and Chief Executive Officer or Chief Financial
Officer of Borrower.

“Secured Promissory Note” is defined in Section 2.7.

“Secured Promissory Note Record” is a record maintained by each Lender with respect to the
outstanding Obligations and credits made thereto.

“Securities Account” is any “securities account” as defined in the Code with such additions to
such term as may hereafter be made.

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now
or hereafter indebtedness to the Lenders (pursuant to a subordination, intercreditor, or other
similar agreement in form and substance satisfactory to Agent and the Lenders entered into between
Agent, Borrower and the other creditor), on terms acceptable to Agent and the Lenders.

“Subsidiary” means, with respect to any Person, any Person of which more than 50.0% of the
voting stock or other equity interests (in the case of Persons other than corporations) is owned or
controlled, directly or indirectly, by such Person or one or more of Affiliates of such Person.

“Term Loan” or “Term Loans” is defined in Section 2.2(a) hereof.

“Term A Loan” is defined in Section 2.2(b) hereof.

“Term B Loan” is defined in Section 2.2(b) hereof.

“Term B Loan Draw Period” is the period commencing upon the occurrence of the Equity Event and
continuing through the earlier to occur of (i) August 31, 2010, and (ii) an Event of Default.

“Term Loan Commitment” means, for any Lender, the obligation of such Lender to make a Term
Loan, up to the principal amount shown on Schedule 1.1. “Term Loan Commitments” means the
aggregate amount of such commitments of all Lenders.

“Transfer” is defined in Section 7.1.

“Unconditional Guaranty” is the Unconditional Guaranty dated as of the Effective Date made by
BL Acquisition and BL Acquisition II in favor of the Agent and the Lenders.

“Warrants” are those certain Warrants to Purchase Stock dated as of the Effective Date
executed by Borrower in favor of each Lender or such Lender’s Affiliates.

 

36

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
Effective Date.

	 	 	 	 	 	 	 
	BORROWER:	 	 
	 
	 	 	 	 	 	 
	BIOLASE TECHNOLOGY, INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David M. Mulder	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David M. Mulder	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	BL ACQUISITION CORP.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David M. Mulder	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David M. Mulder	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	BL ACQUISITION II, INC.	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ David M. Mulder	 	 
	 	 	 	 	 
	 

	 	Name:
	 	David M. Mulder	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	AGENT:	 	 
	 
	 	 	 	 	 	 
	MIDCAP FINANCIAL, LLC, as Agent	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Josh Groman	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Josh Groman	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	LENDERS:	 	 
	 
	 	 	 	 	 	 
	MIDCAP FINANCIAL, LLC, as a Lender	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Josh Groman	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Josh Groman	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	SILICON VALLEY BANK, as a Lender	 	 
	 
	 	 	 	 	 	 
	By:	 	/s/ Kurt Miklinski	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Kurt Miklinksi	 	 
	 

	 	Title:
	 	Vice President	 	 

[Signature Page to the Loan and Security Agreement]

 

 

 

SCHEDULE 1.1

LENDERS AND COMMITMENTS

	 	 	 	 	 	 	 	 	 
	Lender	 	Term A Loan Commitment	 	 	Commitment Percentage	 
	MidCap Financial, LLC
	 	$	2,100,000	 	 	 	70	%
	Silicon Valley Bank
	 	$	900,000	 	 	 	30	%
	TOTAL TERM A LOANS
	 	$	3,000,000	 	 	 	100	%

	 	 	 	 	 	 	 	 	 
	Lender	 	Term B Loan Commitment	 	 	Commitment Percentage	 
	MidCap Financial, LLC
	 	$	1,400,000	 	 	 	70	%
	Silicon Valley Bank
	 	$	600,000	 	 	 	30	%
	TOTAL TERM B LOANS
	 	$	2,000,000	 	 	 	100	%
	TOTAL TERM LOANS
	 	$	5,000,000	 	 	 	100	%

[Signature Page to the Loan and Security Agreement]

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