EXHIBIT 2.1 CONFIDENTIAL TREATMENT

EXHIBIT 2.1

 

CONFIDENTIAL TREATMENT

 

CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND IS NOTED WITH “[CONFIDENTIAL TREATMENT REQUESTED].” AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

LICENSE AGREEMENT

 

This License Agreement (this “Agreement”) is entered by and between SurgiLight, Inc., a Florida corporation (“SurgiLight”), and Biolase Technology, Inc., a Delaware corporation (“Biolase”), as of February 3, 2005 together referred to as the Parties.

 

RECITALS

 

WHEREAS, Biolase desires to obtain a license to certain patents owned or licensed by SurgiLight in the field of presbyopia and certain ophthalmology patents on the terms and conditions set forth herein; and

 

WHEREAS, SurgiLight desires to grant a license to certain patents owned or licensed by SurgiLight to Biolase on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants made by each party herein, and other good and valuable consideration, the receipt and sufficiency is hereby acknowledged by each party, the parties hereby agree as follows:

 

AGREEMENT

 

For purposes of this Agreement, the following terms shall have their respective definitions set forth below and the following terms, conditions, representations and agreements are hereby incorporated into this Agreement:

 

“Licensed Patents” shall mean those patents listed in Appendix B.

 

“Presbyopia Field of Use” shall mean laser treatment of presbyopia, including any inherent and/or coincident, related procedures and benefits.

 

“Ophthalmology Field of Use” shall mean the medical specialty encompassing the anatomy, functions, pathology and treatment of the eye.

 

“Ophthalmic Other Patents” shall mean patents owned by or licensed to Surgilight covering subject matter concerning the use of Er:YAG or mid-infrared lasers within the Ophthalmology Field of Use but not within the Presbyopia Field of Use for the treatment of ophthalmic conditions other than Presbyopia, such as [CONFIDENTIAL TREATMENT REQUESTED]. Appendix C lists such Ophthalmic Other Patents for the anterior segment (“Anterior Segment Patents,” Appendix C-1) and refractive (“Refractive Patents, “ Appendix C-2).

“Patents” means (i) those patents and patent applications listed on Appendix A and (ii) those patents licensed to SurgiLight from PLS Liquidating, LLC, in the Ophthalmology Field of Use (listed in Appendix B), including any foreign counterparts, or patent applications claiming priority thereto, including any continuations, continuations-in-part, or division thereof, or any substitute applications therefor or equivalent thereof, and any patent issuing thereon, including any reissue, reexamination or extension thereof and any confirmation, patent or registration patent or patent of addition based on such patent. SurgiLight acknowledges that the Patents contained in Appendices A and B represent all patents as to which SurgiLight has rights in the Presbyopia Field of Use as of the date of this Agreement and Appendix A contains all patents owned by SurgiLight in the Presbyopia Field of Use, except as disclosed in Appendix F (Schedule of Exceptions).

 

“Patent License Limitation” means that those patents licensed for the Ophthalmic Field of Use (i.e. those patents listed in Appendix B) may only be used by Biolase or its Subsidiaries to practice (i) in the Presbyopia Field of Use or (ii) in the Ophthalmic Field of Use to the extent that Biolase does not infringe outside of the Presbyopia Field of Use any of the SurgiLight’s (x) Ophthalmic Other Patents which are not licensed under this agreement or (y) any current or future ophthalmic method patents owned or licensed by SurgiLight not in the Presbyopia Field of Use. If Biolase, does infringe Ophthalmic Other Patents outside of the Presbyopia Field of Use (explicitly excluding those patents listed in Appendix A and B), SurgiLight shall have the right to enforce the Patents in the Field of Ophthalmology as listed in Appendix B against Biolase for such infringing conduct in addition to the infringed Ophthalmic Other Patents.

 

If SurgiLight, in good faith and with legal standing, determines that Biolase may be infringing a SurgiLight patent not licensed to Biolase, it shall notify Biolase of such potential infringement in writing. The parties agree to negotiate in good faith to resolve this dispute. Biolase may elect, at its sole discretion, to exercise its option to license such asserted Surgilight patent or patents on terms consistent with those of Section 10. Otherwise Biolase and SurgiLight agree to enter third party binding mediation to resolve this dispute The Parties further agree that in the event the mediator determines infringement, Biolase will exercise its option consistent with the terms of Section 10, paying SurgiLight the agreed upon license fees and royalty. For the avoidance of doubt, Surgilight shall not assert any of it’s intellectual property rights against Biolase or its Subsidiaries for any and all claims with respect to Surgilight’s intellectual property rights for any conduct of Biolase or its Subsidiaries within the Presbyopia Field of Use. For the avoidance of doubt, the Parties agree that the mere cutting or manipulating of ocular tissue does not constitute infringement of Ophthalmic Other Patents, unless it infringes an Ophthalmic Other Patent not licensed by this Agreement or any ophthalmic method patent owned or licensed by SurgiLight.

 

“Subsidiary” shall mean any entity which directly or indirectly owns or controls, or is controlled by, or is under common control with the Party. The term “control” shall mean the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting shares of the entity or the right to receive fifty percent (50%) or more of the profits or earnings of the entity.

 

1. Licenses. SurgiLight hereby grants to Biolase and Biolase Subsidiaries:

 

a. For a period of [CONFIDENTIAL TREATMENT REQUESTED] from the date of this Agreement (i) a co-exclusive, [CONFIDENTIAL TREATMENT REQUESTED] license to the

 

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Patents set forth in Appendix A in the Presbyopia Field of Use and (ii) a non-exclusive, [CONFIDENTIAL TREATMENT REQUESTED] sub-license to the Patents set forth in Appendix B in the Ophthalmology Field of Use subject to the Patent License Limitation and the limitations set forth in the definition thereof; provided that “co-exclusive” as used herein shall mean exclusive with respect to all third parties other than Surgilight and its Subsidiaries; further provided, however, that commencing on the date that is three (3) years after the date of this Agreement, SurgiLight may sublicense the patents listed in Appendix A to a third party for the purposes of research and development so long as such third party cannot commercialize a product until after five years from the date of this Agreement subject to the terms set forth below (“Co-Exclusive License”). Surgilight agrees to request and consider in good faith any objection Biolase may have as to the entity and nature of such research licensee, including consideration of any alternative recommended by Biolase, prior to granting any such research and development sub-license.

 

b. For a period commencing [CONFIDENTIAL TREATMENT REQUESTED] from the date of this Agreement and immediately upon the termination of the Co-Exclusive License and continuing until the last of the patents listed in Appendices A and B expire, a non-exclusive, worldwide license to the Patents subject to the terms set forth below (“Non-Exclusive License”).

 

2. Payments. The Co-Exclusive License and the Non-Exclusive License (collectively, the “Licenses”) are granted in consideration of payments from Biolase to SurgiLight of Two Million Dollars in the aggregate as set forth below and the royalty payments set forth in Section 4 hereof. The following payments (subject to adjustment as further provided in this Section 2) from Biolase to SurgiLight are due and payable upon satisfaction of the following conditions:

 

a. [CONFIDENTIAL TREATMENT REQUESTED], Seventy-Five Thousand Dollars ($75,000), the receipt and sufficiency of which are hereby acknowledged.

 

b. Upon delivery to Biolase of a written agreement [CONFIDENTIAL TREATMENT REQUESTED]within one week following the date of this Agreement, One Hundred Seventy-Five Thousand Dollars ($175,000).

 

c. One month from the date of this Agreement and if the conditions in Section 2a and b have been satisfied and the Ruling and Opinion (as defined below) has been obtained indicating that there is no consolidation requirement under FIN 46R with respect the transactions contemplated by this Agreement, One Million Five Hundred Fifty Thousand Dollars ($1,550,000).

 

d. One Hundred Thousand Dollars ($100,000), to be paid one (1) year from the date of this Agreement.

 

e. Twenty-Five Thousand Dollars ($25,000), to be paid on the anniversary of the execution of this Agreement each of the four (4) years beginning in 2007, for an aggregate dollar amount of One Hundred Thousand Dollars ($100,000).

 

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No payments are due under Section 2b or 2c unless and until the conditions set forth therein are satisfied. SurgiLight shall exercise commercially reasonable efforts to obtain the agreement and releases set forth in Section 2b and the ruling from the Securities Exchange Commission (SEC) referred to below. Biolase shall exercise commercially reasonable efforts to obtain the opinion described below from its auditors regarding the proper accounting for the transactions. In the event that the conditions set forth in Sections 2b and 2c are not satisfied in full by February 28, 2005 then Biolase shall by written notice to SurgiLight elect to (i) terminate this Agreement or (ii) waive the delivery of the foregoing agreement, releases and Ruling and Opinion (to the extent not obtained). In the event Biolase elects to waive such delivery then any payments set forth in Section 2b and 2c that remain unpaid shall thereupon become due and payable and all other payments required pursuant to Section 2 shall be made on the dates set forth therein. In the event Biolase elects to terminate this Agreement as above provided then any payments made to SurgiLight pursuant to this Section 2 shall be retained by Surgilight and no further payments shall be due to SurgiLight pursuant to this Agreement. In the event Biolase fails to make the payments under Section 2.b or 2.c in the time provided therein, then SurgiLight’s sole and exclusive remedy shall be to elect to terminate this Agreement (provided, that prior to such termination, SurgiLight has given Biolase written notice of such failure and provided Biolase not less than fifteen (15) days to cure such failure). Except as provided in Section 14, nothing in this Agreement shall limit SurgiLight from defending its Patents against Biolase should this Agreement be terminated. Upon termination of this Agreement by SurgiLight pursuant to the preceding sentence, Biolase shall forfeit any payments already made to SurgiLight. Such termination shall be SurgiLight’s sole remedy in the event of default of any payment required pursuant to Section 2.b or 2.c. [CONFIDENTIAL TREATMENT REQUESTED] In the event that Bankruptcy Proceedings are commenced, SurgiLight agrees to immediately seek a bankruptcy court order, in form and content reasonably acceptable to Biolase, approving the assumption of the Agreement (and any other agreement contemplated hereby). Neither SurgiLight or Biolase shall challenge or assert any claim against this Agreement or the Licenses granted herein in Bankruptcy Proceedings (provided, however, Surgilight shall have the right to assert a claim for payments due pursuant to this Agreement) and Biolase agrees that it shall not object to a SurgiLight bankruptcy plan that includes assumption of this Agreement, and not bid to acquire the assets of SurgiLight in any Bankruptcy Proceedings filed within one year of the date of this Agreement, unless, Biolase is required to do so to protect its licensing rights under this Agreement. For avoidance of doubt, the parties specifically acknowledge that the Right of First Refusal in Section 9 shall not apply in any Bankruptcy Proceedings filed within one year of the date of this Agreement.

 

Notwithstanding any other clause of this Agreement, after the payment under Section 2.c. has been made, the Licenses shall not be terminated or cancelled for any reason after the payment under Section 2.c. if Biolase fails to make any subsequent payment, then Surgilight does have monetary recourse for the monies due.

 

Furthermore, SurgiLight has requested a written ruling from the Securities Exchange Commission (SEC), and Biolase has requested a written opinion from Biolase’s auditors regarding proper accounting for the transactions contemplated by this Agreement according to FIN 46R (collectively, the “Ruling and Opinion”). If according to the Ruling and Opinion, FIN 46R would require Biolase to consolidate SurgiLight’s financials, Biolase and SurgiLight will mutually agree to adjust the payments called for in Sections 2c, to require Biolase pay the maximum amount payable to SurgiLight at the earliest date possible which avoids consolidation.

 

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3. Co-exclusive License. The Licenses permit both SurgiLight and Biolase and their respective Subsidiaries to sell or distribute through dealers or sell direct to end-users, without requirement for any additional license to the Patents, any product which is made by, made for (by a contract manufacturer), used by, designed by, or sold by such Party or its Subsidiaries. The Co-exclusive License will exclude certain foreign countries in the jurisdictions listed in Appendix D until the earlier of the date set forth for such jurisdiction on Appendix D or the expiration or termination of current exclusive distribution agreements signed by SurgiLight in such jurisdiction, at which time such exclusion to Biolase’s license rights shall be eliminated in such countries. For the avoidance of doubt, SurgiLight shall have the right to continue to license dealers for distribution on a non-exclusive basis of any product which is made by, made for (by a contract manufacturer), used by, designed by or sold by SurgiLight or its Subsidiaries. Both Parties agree that they may contract with multiple foreign and regional U.S. distributors, but will contract with no more than one U.S. national distributor, with respect to products in the Presbyopia Field of Use.

 

4. Non-exclusive License and Royalty Payments. The Parties agree that a reasonable minimum royalty rate for the Presbyopia Field of Use is 5% on worldwide sales. [CONFIDENTIAL TREATMENT REQUESTED] Biolase and SurgiLight shall maintain complete and accurate books and records at their respective principal office during the term of the Licenses and for a period of two (2) years thereafter. Either party shall have the right to engage an independent accounting firm to audit at their own expense, and upon reasonable notice to the other party and no more than once each calendar year, such records of the other party, related to the amounts due or believed to be due under this Section 4; provided that, as a condition for such audit right, each party and its representatives shall agree to maintain (and to cause its officers, employees, consultants and advisors to maintain) in confidence all confidential information relating to the other party disclosed to such person as part of such audit. Each party shall be responsible for its costs in conducting such audit, unless an audit reveals an underpayment of 10% or more in any twelve (12) month period, in which case the audited party shall pay for the costs of such audit.

 

5. Confidentiality. This Agreement and its terms shall be maintained in confidence by each of the parties, except to the extent that disclosure of this Agreement, or the terms or provisions herein, is required pursuant to the rules or regulations of the U.S. Securities and Exchange Commission, or otherwise pursuant to court order or directive of law or as mutually agreed upon by the parties.

 

6. Transfer of Technology. SurgiLight has disclosed to Biolase summaries of its current clinical data with respect to the Presbyopia Field of Use, including, without limitation, any issues raised during clinical trials regarding safety or preliminary efficacy of the technology incorporating the patents listed in Appendix A for the purpose of furthering the progress of the clinical trials and protecting patient safety. For a period of thirty days, SurgiLight will continue to disclose similar data in its possession regarding safety or preliminary efficacy of the technology incorporating the patents listed in Appendix A, and respond to any questions from Biolase or its representatives regarding the data.

 

7. Use of Patents. Without limiting its rights to the Patents in any way, Biolase acknowledges and confirms that it intends to use the Patents for the development of a crystal (Er, Cr: YSGG) laser system; provided, however, Biolase shall be free to develop any

 

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product within the Presbyopia Field of Use or the Ophthalmology Field of Use at its own discretion.

 

8. Patent Prosecution and Defense.

 

a. Biolase and SurgiLight shall share equally in all costs associated with the prosecution and maintenance of the Patents; provided, however, that in the event that SurgiLight elects not to proceed with the prosecution of any of the Patents, SurgiLight shall allow Biolase to continue and control prosecution and maintenance of such patent or patent application at its expense. In such case, SurgiLight shall continue to own such patent or patent application and be obligated to pay Biolase its prosecution and maintenance costs. Biolase would have a lien on that patent until they are repaid.

 

b. Biolase shall be entitled to participate in the assertion and defense of the Patents in any infringement or other legal action (an “Action”); provided, however, (i) that Biolase shall only be obligated to pay up to twenty-five percent (25%) of such enforcement costs and (ii) if Biolase does not elect to participate in a significant enforcement action with respect to a Patent that is material then Biolase shall forfeit its rights to receive royalties with respect to such infringing party for its infringement of such Patent. If Biolase provides notice to SurgiLight that a third party is infringing any of the Patents in the Presbyopia Field of Use and SurgiLight decides not to take legal action against such third party, Biolase shall have the right, at its sole discretion to legally enforce such patent. If Biolase prevails in such enforcement, it shall be entitled to seventy-five percent (75%) of any net revenues, including, but not limited to, damages, license fees and royalties (wherein such revenues are net of Biolase’s enforcement costs). SurgiLight shall be entitled to the remaining twenty-five percent (25%) of such revenues.

 

c. [CONFIDENTIAL TREATMENT REQUESTED].

 

d. The parties acknowledge and agree that either Biolase or SurgiLight may file new patent applications which are neither a Patent nor an Ophthalmic Other Patent, and the parties further agree that the other party shall have no rights in such new patent applications under this Agreement.

 

9. First Right of Refusal. Biolase shall have a first right of refusal with respect to the acquisition of all the Patents or SurgiLight product line incorporating such Patents for the Presbyopia Field of Use (collectively, the “SurgiLight Products”). In the event that SurgiLight receives an offer to purchase the Patents or the SurgiLight Products and SurgiLight in its sole discretion determines to accept such offer, SurgiLight will notify Biolase of such offer and the terms of such offer in writing within five (5) days of receipt of such offer and determination to accept such offer. Biolase shall then have thirty (30) days to exercise its right of first refusal to purchase the Patents and/or SurgiLight Products at the same price and on the same terms as contained in such offer (the “Offer Terms”). In the event that Biolase elects not to exercise its rights under this Section 9 to purchase the Patents and/or SurgiLight Products, SurgiLight may sell the Patents and/or SurgiLight Products to the offering party on the Offer

 

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