CONFIDENTIAL SETTLEMENT AGREEMENT AND GENERAL MUTUAL RELEASE

A.

NLT filed a Complaint on August 20, 2008, in the United States District Court for the Southern District of Indiana (“Court”), Civil Action No.: 08-CV-1123 (the “Lawsuit”), and an Amended Complaint, filed December 23, 2008, alleging, among other things, that Biolase made false statements to dentists concerning NLT’s sale of used Biolase dental lasers (“Lasers”), and refused to sell laser tips and other parts to dentists if they did business with NLT.

B.

Biolase filed Counterclaims on September 12, 2008, and Amended Counterclaims on February 19, 2009, alleging, among other things, that NLT infringed Biolase’s copyright and trademark rights, made false and misleading statements on its website, and sold and serviced modified Lasers originally manufactured by Biolase without necessary pre-market approvals by the United States Food & Drug Administration (“FDA”).

C.

Biolase denies the allegations set forth in the Complaint and Amended Complaint, and NLT denies the allegations set forth in the Counterclaims and Amended Counterclaims.

D.

NLT filed a motion for a preliminary injunction on October 21, 2008, seeking, among other things, to enjoin Biolase from refusing to sell laser tips and other parts to dentists that do business with NLT, or making threats to that effect.

E.

Biolase filed a cross motion for a preliminary injunction on November 24, 2008, seeking, among other things, to enjoin NLT from infringing Biolase trademarks, making certain statements on its website, and selling modified Biolase Lasers.

F.

The Parties’ respective motions for preliminary injunction have been fully briefed and an evidentiary hearing has been scheduled for March 23, 2009. The Court has not yet ruled on either motion.

G.

NLT and Biolase mutually now wish to resolve, settle, release, and compromise all claims, potential claims, defenses and counterclaims that they may have against each other.

1.1.

The term “NLT” means National Laser Technology, Inc., the plaintiff in the Lawsuit, and includes its affiliates, parents, subsidiaries, owners, successors, employees, officers, directors, agents, representatives, attorneys and assigns. NLT also means AMD Lasers, LLC and includes its affiliates, parents, subsidiaries, owners, successors, employees, officers, directors, agents, representatives, attorneys and assigns.

1.2.

The term “Biolase” means Biolase Technology, Inc., the defendant in the Lawsuit, and includes its affiliates, parents, subsidiaries, owners, successors, employees, officers, directors, agents, representatives, attorneys and assigns.

1.3.

The term PPS Module means the modification that NLT made to Biolase Waterlase lasers that enabled the dentist to program different variable pulses. NLT did not seek pre-market approval from the FDA for this modification prior to marketing it to its customers.

For and in consideration of the mutual promises set forth herein, Biolase will pay, or be responsible to cause its insurance carrier Hartford Fire Insurance Company to pay, to NLT the sum of SIX HUNDRED FIFTY THREE THOUSAND DOLLARS ($653,000) within 9 days of the execution of this Settlement Agreement (the “Payment”).

3.1.

NLT agrees that it cannot sell, market or distribute any Biolase Laser or parts that NLT has modified without first obtaining pre-market approval from the FDA, which NLT has not done to date.

3.2.

Accordingly, NLT will never, directly or indirectly, market or sell any Biolase Laser parts except for those Biolase Laser parts that are currently in NLT’s inventory which may be sold to distributors or anyone other than an end-user dentist.

(a)

the Detail Kit, plastic replacement case, Quiet Fan Kit, and PPS Module described in the Supplemental Declaration of Alan Miller (filed in the Lawsuit at Dkt. #59-2); and

(b)

any other upgrade, repair, change or modification.

4.1.

NLT agrees that it cannot service any Biolase Lasers without complying with applicable FDA regulations, which NLT has not done to date.

4.2.

For a period of ten (10) years after execution of this Agreement, NLT agrees not to compete with Biolase by servicing any Biolase Laser or entering into any contract to service any Biolase Laser without the prior written permission of Biolase. Thereafter, NLT agrees that it will not service any Biolase Lasers without first complying with applicable FDA regulations, including 21 C.F.R. Part 820.

4.3.

Further, Biolase shall assume all of NLT’s contracts currently in effect to service any Biolase Laser, and shall provide the same level of service as required by such contracts.

5.1.

NLT agrees to not publish or use on its website any photograph of any Biolase product in which Biolase has a copyright interest.

5.2.

NLT agrees not to use the terms “AMD Waterlase,” “AMDLase” or similar marks (e.g., using “Waterlase” or the suffix “Lase”) in the marketing or sale of any product. This paragraph shall not prevent NLT from using the mark “AMD Laser” or “AMD Lasers.”

5.3.

NLT and Biolase agree to abide by Google’s published trademark policy. NLT and Biolase further agrees not to use any of the other party’s trademarks as part of Google AdWords, or any similar program with Google or other search companies.

6.1.

The Parties agree not to make any untrue statements (oral, written, electronic, or otherwise) concerning the other Party or the other Party’s products or employees, directly or indirectly. Each Party shall instruct its employees, officers, and directors to abide by this agreement.

6.2.

Without limitation to the above paragraph, Biolase shall not, unless based on reliable infor