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. Firs
