EXHIBIT 10.27
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AGREEMENT AND PLAN OF REORGANIZATION
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This Agreement and Plan of Reorganization (this "Agreement") is made
and entered into this 2nd day of July, 1998, by and among BioLase Technology,
Inc., a Delaware corporation ("BioLase"), Laser Skin Toner, Inc., a Missouri
corporation ("LSTI") and the principal shareholders of LSTI whose names are set
forth on the signature page hereto (each a "Principal Shareholder" and
collectively the "Principal Shareholders").
RECITALS
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A. LSTI is an early development stage company engaged in the
business (the "Business") of the development of a proprietary non-invasive,
laser-based technology providing laser treatment in the field of aesthetic "skin
rejuvenation" as it now exists and as it may exist in the future, including but
not limited to wrinkle reduction, reduction of rhytides, increased skin tone,
promotion of new skin collagen formation and the reduction of striae (the "Field
of Use").
B. BioLase proposes to acquire the assets of LSTI utilized in the
Business, which represent substantially all of the assets of LSTI, with a view
towards completing development of and commercializing such technology.
C. BioLase and LSTI desire that LSTI transfer to BioLase all or
substantially all of the Assets (as hereinafter defined), in exchange for shares
of the voting common stock ("Common Stock"), par value $.001 per share, of
BioLase (the "Reorganization") pursuant to the terms of this Agreement in a
transaction qualifying as a tax-free reorganization with the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "IRC"). LSTI
intends to liquidate prior to December 31, 1998.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing recitals and
the representations, warranties and covenants herein set forth, LSTI and BioLase
hereby agree as follows:
ARTICLE I
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Reorganization
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1.1 Conveyance of Assets. On the terms and subject to the conditions
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set forth in this Agreement, LSTI hereby conveys, transfers, assigns, sells and
delivers to BioLase all of the following assets, properties and rights of LSTI
utilized in the Business, which (except for those assets listed on Schedule 1.1
hereto which are not included in the Assets (the "Excluded Assets")), represent
all of the assets, properties and rights of
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LSTI utilized in the Business and substantially all of the assets of LSTI (the
"Assets"):
(a) All raw materials, prototype systems (whether completed or in
process), parts, supplies and other similar items of LSTI which exist on the
Closing Date (as hereinafter defined);
(b) Original documents or copies of all records and accounts,
correspondence, production records, employment records and any confidential
information which has been reduced to writing in any way relating to or arising
out of the Business;
(c) All rights of LSTI under express or implied warranties from the
suppliers of LSTI with respect to the Assets;
(d) All of LSTI's right, title and interest in and to any written or
oral contract, agreement, license or other commitment, or bid or proposal which
could result in such, relating to the Business to which LSTI is a party on the
Closing Date or by which any of the Assets is then subject (collectively, the
"Commitments");
(e) All of the machinery and equipment, including without limitation
computers and peripheral equipment, owned by, leased to or to otherwise used by
LSTI on the Closing Date;
(f) All of LSTI's right, title and interest in and to all intellectual
property rights owned by LSTI, including without limitation each application for
clearance from the Food and Drug Administration ("FDA") to market medical
devices, patent application, trademark application, trade name, trademark or
trade name registration (in any such case, whether registered or to be
registered in the United States of America or elsewhere) applied for, issued to
or owned by LSTI, and each process, invention, trade secret, trade name,
computer program, software and formula owned by, leased to or otherwise used by
LSTI as of the Closing Date;
(g) The Business and all goodwill related thereto; and
(h) All other assets and properties of LSTI which exist on the Closing
Date, whether tangible or intangible, real or personal, except the Excluded
Assets.
1.2 Stock Consideration. As consideration for the transfer of the Assets,
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BioLase shall issue in the name of LSTI an aggregate of One Million Six Hundred
Thousand (1,600,000) shares of Common Stock (the "Shares"). One Million Four
Hundred Seventeen Thousand One Hundred Twenty (1,417,120) shares of the Shares
so issued shall be issued in the name of and delivered to LSTI at the Closing.
The remaining One Hundred Eighty-Two Thousand Eight Hundred Eighty (182,880)
shares of the Shares so issued (the "Performance Shares") shall be issued in the
name of
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LSTI but the certificates representing the Performance Shares shall be retained
by BioLase until the release thereof is required pursuant to the provisions of
Section 1.3 hereof, at which time such Performance Shares shall be released to
LSTI, or the shareholders of LSTI (the "Shareholders") if the liquidation of
LSTI has been completed.
1.3 Performance Shares. The SkinToner system, which is described more
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fully on Schedule 1.3 hereto, is a set of components including a laser (a
"Unit") designed for use in dermatological and plastic surgery.
BioLase shall release and deliver to LSTI or, if LSTI has been
liquidated at the time of such delivery, to the Shareholders' Representative (as
defined in Section 7.5 hereof), certificates representing one-third (1/3rd) of
the Performance Shares upon the shipment by BioLase or others deriving rights
through BioLase to manufacture or sell Units ("Associates") to commercial
customers (including distributors) of an aggregate of sixty (60) Units during
the twelve (12) month period commencing with the shipment of the eleventh (11th)
Unit by BioLase or an Associate to a commercial customer (the "Calculation
Period"); shall release and deliver to LSTI or the Shareholder Representative,
as the case may be, certificates representing an additional one-third (1/3rd) of
the Performance Shares upon the shipment by BioLase or Associates to commercial
customers of an aggregate of eighty (80) Units during such Calculation Period;
and shall release and deliver to LSTI or the Shareholder Representative, as the
case may be, certificates representing the final one-third (1/3rd) of the
Performance Shares upon the shipment by BioLase or Associates to commercial
customers of an aggregate of one hundred (100) Units during such Calculation
Period. Any Performance Shares to which LSTI or the Shareholders, as the case
may be, are not entitled by the end of such Calculation Period may be canceled
by BioLase. The Performance Shares shall be delivered to LSTI or the
Shareholder Representative, as the case may be, within forty-five (45) days
after the end of the calendar quarter(s) within the Calculation Period in which
the 60th, 80th and 100th Units are shipped as provided above, and shall be
accompanied by a written report of BioLase certifying the number of Units
shipped during such calendar quarter. The Shareholder Representative and his
representatives shall have the right to audit those books and records of BioLase
relating to the sale of Units to confirm the accuracy of BioLase's
certifications and reports.
1.4 Liabilities Assumed by BioLase. As further consideration for the
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transfer of the Assets, BioLase hereby assumes and agrees to pay and thereafter
shall pay when due and discharge and indemnify LSTI and hold LSTI harmless with
respect to the following liabilities (the "Assumed Liabilities"): (i) the
reasonable fees and disbursements of counsel for LSTI incurred subsequent to
April 6, 1998 through the Closing Date in
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connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby, provided that the
aggregate amount of fees and disbursements of counsel assumed and to be paid by
BioLase pursuant to this Section 1.4 shall not exceed Fifteen Thousand Dollars
($15,000); and (ii) the Commitments, provided each such Commitment is either a
Contract listed on Schedule 3.13 or is an agreement for the purchase or sale by
LSTI of goods, materials, supplies or services in the ordinary course of
business involving less than Five Thousand Dollars ($5,000) in consideration in
each such case and less than Fifty Thousand Dollars ($50,000) in the aggregate.
1.5 Liabilities Not Assumed by BioLase. BioLase is not assuming, nothing
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contained in this Agreement shall be deemed to have caused BioLase to assume,
and LSTI hereby agrees to indemnify BioLase against and hold it harmless with
respect to any and all liabilities of LSTI to any individual, partnership,
corporation, limited liability company, joint venture, trust or other person or
entity (each, a "Person"), other than the Assumed Liabilities. The liabilities
not assumed by BioLase hereunder include, without limitation:
(a) Any liability of LSTI the existence of which constitutes a breach
of any covenant, agreement, representation or warranty of LSTI contained in this
Agreement;
(b) Any liability of LSTI or any of its shareholders for any domestic
or foreign federal, state or local income or franchise taxes, state or local
property taxes, sales or use taxes or other taxes of any kind or description;
and
(c) Any liability of LSTI for fees and disbursements of counsel for
LSTI (i) incurred subsequent to April 6, 1998 and prior to the Closing Date in
connection with the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby in excess of Fifteen
Thousand Dollars ($15,000) or (ii) incurred prior to April 7, 1998.
1.6 Closing. The Closing of the Reorganization contemplated by this
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Agreement (the "Closing") shall occur at the offices of BioLase, 000 Xxxxx
Xxxxxxxx, Xxx Xxxxxxxx, Xxxxxxxxxx 00000, commencing at 10:00 a.m., on July 2,
1998, unless the parties hereto agree in writing upon a different time, date or
place. The date on which the Closing occurs shall be the "Closing Date".
ARTICLE II
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Representations and Warranties of BioLase
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BioLase hereby represents and warrants to LSTI that:
2.1 Organization and Corporate Authority. BioLase is duly organized,
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validly existing and in good standing under the laws
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of the State of Delaware and has all requisite corporate power and authority to
enter into this Agreement, to consummate the transactions contemplated hereby,
and to conduct the business currently being carried on by BioLase. This
Agreement has been duly executed and delivered by BioLase, has been effectively
authorized by all necessary action, corporate or otherwise, on the part of
BioLase and constitutes legal, valid and binding obligations of BioLase
enforceable against BioLase in accordance with the terms hereof.
2.2 Agreement Not in Breach of Other Instruments. The execution and
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delivery of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, or conflict
with: (i) any agreement or other instrument or obligation to which BioLase is a
party or by which it or any of its properties or assets may be bound or
affected; (ii) the Certificate of Incorporation and Bylaws of BioLase; (iii) any
judgment, decree, order or award of any court, governmental body or arbitrator
by which BioLase is bound; and (iv) any law, rule or regulation applicable to
either BioLase or any of its properties or assets.
2.3 Regulatory Approvals. All consents, approvals, authorizations
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and other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by BioLase in order to permit the consummation of the
transactions contemplated by this Agreement have been, or prior to the Closing
Date will be, obtained and satisfied.
2.4 Financial Statements. The consolidated balance sheets of BioLase
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as of December 31, 1997 and 1996 and the related statements of income and cash
flows for the fiscal years then ended, including the notes thereto
(collectively, the "BioLase Annual Financial Statements"), are set forth in
BioLase's Annual Report on Form 10-K for the year ended December 31, 1997 (the
"Form 10-K") and the condensed consolidated balance sheet of BioLase as of March
31, 1998 and the condensed consolidated statements of income and cash flows for
the fiscal quarters ended March 31, 1998 and 1997, including the notes thereto
(collectively, the "BioLase Interim Financial Statements"), are set forth in
BioLase's Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1998 (the "Form 10-Q") as filed with the Securities and Exchange Commission (the
"SEC").
The BioLase Annual Financial Statements and BioLase Interim
Financial Statements (i) were prepared in accordance with the books and records
of BioLase and generally accepted accounting principles consistently applied and
all relevant information requested by the preparers thereof was provided in
connection with the preparation thereof; (ii) fairly present BioLase's financial
condition and the results of its operations as of the dates thereof and for the
periods covered
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thereby; (iii) contain and reflect all necessary adjustments and accruals for a
fair presentation of its financial condition and the results of its operations
for the periods covered by said financial statements, subject in the case of the
BioLase Interim Financial Statements to normal year-end adjustments; and (iv)
with respect to contracts and commitments for the sale of goods or the provision
of services by BioLase, reflect all reasonably anticipated material losses and
costs and expenses in excess of expected receipts.
BioLase (i) keeps books, records and accounts that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of
assets of such entity and (ii) maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (A) transactions are
executed in accordance with management's general or specific authorization, (B)
transactions are recorded as would permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets, (C) access to assets is permitted only in accordance
with management's general or specific authorizations and (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
2.5 Capitalization. The authorized capital stock of BioLase consists
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of 50,000,000 shares of Common Stock and 1,000,000 shares of preferred stock,
par value $.001 per share ("Preferred Stock"). As of April 13, 1998, BioLase
had (a) issued and outstanding 13,478,587 shares of Common Stock, all of which
are fully paid and non-assessable, and (b) no shares of Preferred Stock were
outstanding. As of April 13, 1998, BioLase had reserved for issuance (w) an
aggregate of 2,409,536 shares of Common Stock upon possible exercise of
outstanding stock options and warrants, (x) an aggregate of 466,899 shares of
Common Stock for possible exercise of options or awards, as the case may be,
that may be granted pursuant to the Company's existing stock option plans and
stock compensation plans, (y) an aggregate of 2,070,000 shares of Common Stock
for possible issuance in connection with the possible sale of certain units each
consisting of 10,000 shares of Common Stock and warrants to purchase up to 5,000
shares of Common Stock, and (z) an aggregate of 65,000 shares of Common Stock
upon possible issuance of stock purchase warrants to and exercise of such
warrants by the placement agents acting in connection with the proposed sale of
such units. On May 15, 1998, BioLase closed the above-referenced private
placement of units and issued an aggregate of 1,330,000 shares of Common Stock
and warrants to purchase an aggregate of 729,000 shares of Common Stock.
All of the Shares (including the Performance Shares) issuable to
the Shareholders hereunder will, when issued in accordance with this Agreement
and upon receipt by BioLase of the
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consideration contemplated herein, be duly authorized, validly issued, fully
paid and non-assessable.
2.6 Exchange Act Reports. BioLase has furnished to LSTI copies of
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(i) the Form 10-K, (ii) the Form 10-Q and (iii) BioLase's proxy statement dated
April 20, 1998 for its Annual Meeting of Stockholders held on May 19, 1998
(collectively, the "BioLase SEC Reports"). BioLase has also furnished to LSTI
copies of BioLase's Private Placement Memorandum dated April 21, 1998 (the
"PPM"). As of the respective dates thereof, the BioLase SEC Reports complied in
all material respects with the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations promulgated
by the SEC thereunder applicable to the BioLase SEC Reports. As of their
respective dates, the BioLase SEC Reports and the PPM did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Except as disclosed in the BioLase SEC Reports or the PPM, since
March 31, 1998 there have not been any events, conditions, transactions,
commitments disputes or other circumstances (financial or otherwise) of any
character (whether or not in the ordinary course of business) which individually
or in the aggregate have had a material adverse effect upon BioLase. Since March
31, 1998, BioLase has conducted its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted.
During the twelve months preceding the date hereof, BioLase has
filed all reports required by the Exchange Act to be filed by BioLase with the
SEC.
2.7 No Brokerage Fees. No broker, finder or person acting in a
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similar capacity has acted for BioLase in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder or person acting in a
similar capacity is entitled to any brokerage or finder's fees or other
commission in respect of such transactions based in any way on agreements,
arrangements or understandings made by or on behalf of BioLase.
2.8 Tax Matters.
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(a) BioLase does not own, directly or indirectly, nor has it
owned during the past five years, directly or indirectly, any capital stock of
LSTI.
(b) BioLase currently has no plan or intention to reacquire any
of its stock issued in the transaction contemplated hereby.
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(c) BioLase currently has no plan or intention to sell or
otherwise dispose of any of the assets of LSTI acquired in the transaction
contemplated hereby, except for dispositions made in the ordinary course of
business or transfers described in IRC Section 368(a)(2)(C).
(d) Following the transaction contemplated hereby, BioLase will
continue the historic business of LSTI or use a significant portion of LSTI's
historic business assets in a business.
(e) Except as provided in Section 1.4 of this Agreement,
BioLase, LSTI and the Shareholders will pay their respective expenses, if any,
incurred in connection with the transaction contemplated hereby.
(f) There is no intercorporate indebtedness existing between
BioLase and LSTI that was issued, acquired or will be settled at a discount.
2.9 Other Information. The information concerning BioLase set forth
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in this Agreement, the BioLase SEC Reports and the PPM does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated herein or therein or necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they are
made, not false or misleading. Copies of all documents heretofore or hereafter
delivered or made available to BioLase pursuant hereto were or will be complete
and accurate copies of such documents.
ARTICLE III
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Representations and Warranties Regarding LSTI
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LSTI hereby represents and warrants to BioLase that:
3.1 Organization and Corporate Authority. LSTI is duly organized,
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validly existing and in good standing under the laws of the State of Missouri
and has all requisite corporate power and authority to enter into this
Agreement, to consummate the transactions contemplated hereby, and to conduct
the business currently being carried on by LSTI. This Agreement has been duly
executed and delivered by LSTI, has been effectively authorized by all necessary
action, corporate or otherwise, on the part of LSTI and constitutes legal, valid
and binding obligations of LSTI enforceable against LSTI in accordance with the
terms hereof.
3.2 Agreement Not in Breach of Other Instruments. The execution and
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delivery of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, or conflict
with: (i) any agreement or other instrument or obligation to which LSTI
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is a party or by which it or any of its properties or assets may be bound or
affected; (ii) the Articles of Incorporation and Bylaws of LSTI; (iii) any
judgment, decree, order or award of any court, governmental body or arbitrator
by which LSTI is bound; and (iv) any law, rule or regulation applicable to
either LSTI or any of its properties or assets.
3.3 Regulatory Approvals. All consents, approvals, authorizations
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and other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by LSTI in order to permit the consummation of the
Reorganization have been, or prior to the Closing Date will be, obtained and
satisfied.
3.4 Financial Statements. Included in Schedule 3.4 are the audited
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balance sheets of LSTI as of December 31, 1997 and 1996 and the related audited
profit and loss statements for the years then ended (collectively, the "Annual
Financial Statements"), and the audited balance sheet of LSTI as of March 31,
1998 and the related audited profit and loss statement for the three month
period then ended (collectively, the "Interim Financial Statements").
Except as set forth in Schedule 3.4 hereto, the Annual Financial
Statements and Interim Financial Statements (i) were prepared in accordance with
the books and records of LSTI and generally accepted accounting principles; (ii)
in all material respects fairly present LSTI's financial condition and the
results of its operations as of the dates thereof and for the periods covered
thereby; (iii) contain and reflect all necessary adjustments and accruals for a
fair presentation of its financial condition and the results of its operations
for the periods covered by said financial statements; and (iv) with respect to
contracts and commitments for the sale of goods or the provision of services by
LSTI, reflect all reasonably anticipated material losses and costs and expenses
in excess of expected receipts.
LSTI (i) keeps books, records and accounts that, in reasonable
detail, accurately and fairly reflect in all material respects the transactions
and dispositions of assets of such entity.
3.5 Absence of Certain Changes. Since March 31, 1998 (the "Balance
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Sheet Date"), except as set forth in Schedule 3.5 there has not been (i) any
dividend or other distribution by LSTI to its stockholders, or any transfer of
assets of any kind whatsoever not in the ordinary course of business; (ii) any
transaction not in the ordinary course of business; (iii) any material adverse
change in the results of operations, condition (financial or otherwise), assets,
liabilities (whether absolute, accrued, contingent or otherwise) or Business of
LSTI; (iv) any damage, destruction or loss, whether or not covered by insurance,
which has had or may have a material and adverse effect on any of the Assets or
the Business of LSTI; (v) any sale or transfer of
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any of LSTI's assets, except sales in the ordinary course of business of
immaterial amounts of tangible personal property not required in LSTI's
Business; (vi) any mortgage, pledge or subjection to lien, charge or encumbrance
of any kind, except liens for taxes not due, of any of LSTI's assets; (vii) any
amendment, modification or termination of any contract or agreement to which
LSTI is a party which has had or may have a material and adverse affect on any
of the Assets or the Business or prospects of LSTI; or (viii) any other event or
condition of any character which has had or may have a material and adverse
effect on the Assets or the condition (financial or otherwise) or Business of
LSTI.
3.6 Real Property and Leaseholds. LSTI neither owns nor leases any
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real property nor holds any other interest in real property.
3.7 Tangible Personal Property. There is listed on Schedule 3.7 (i)
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a description of each item of tangible personal property owned by or in the
possession of LSTI on the Balance Sheet Date or on the date hereof having on
such date either a depreciated book value or estimated fair market value per
unit in excess of Five Thousand Dollars ($5,000) (collectively, the
"Personalty"); and (ii) a description of the owner of, and any agreement
relating to the use of, each item of personal property used but not owned by
LSTI and the circumstances under which such property is used. Except as
indicated in Schedules 1.1 or 3.7:
(a) LSTI has good and marketable title to each item of tangible
personal property owned by LSTI free and clear of all liens, leases,
encumbrances, claims under bailment and storage agreements, conditional sales
contracts and security interests, except for liens, if any, for personal
property taxes not yet due;
(b) No officer, director, stockholder or other person
controlling, controlled by or under common control with LSTI (an "Affiliate")
owns directly or indirectly, in whole or in part, any of the items of tangible
personal property owned or used by LSTI;
(c) Each item of tangible personal property used but not owned by
LSTI is in such condition that upon the return of such property to its owner in
its present condition at the end of the relevant lease term or as otherwise
contemplated by the applicable agreement between LSTI and the owner or lessor
thereof the obligations of LSTI to such owner or lessor will be discharged;
(d) Neither LSTI nor, to LSTI's Knowledge (which for purposes of
this Agreement shall mean the actual knowledge of Xxxxx X. Xxxxxx or Xxxxxxx X.
X'Xxxxxxx, Xx., M.D.), any other party thereto is in default with respect to any
material term or
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condition of any agreement relating to the use of the tangible personal property
used but not owned by LSTI, nor to LSTI's Knowledge has any event occurred which
through the passage of time or the giving of notice, or both, would constitute a
default thereunder by LSTI or, to LSTI's Knowledge, any other party thereto, or
would cause the acceleration of any obligation of LSTI or the creation of a lien
or encumbrance upon any asset of LSTI;
(e) Each item of tangible personal property is in operating
condition and is fit for its intended use; and
(f) LSTI owns or otherwise has the right to use all of the
tangible personal property now used by it in the operation of its Business or
the use of which is necessary for the performance of any Commitment.
3.8 Intangible Personal Property. There is listed on Schedule 3.8
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(i) a description of the items of intangible personal property owned by, or used
in the Business on the date hereof, including, but not limited to, applications
for clearances from the FDA to market medical devices, patent applications,
trade names, trademark applications, trade name and trademark registrations,
applications for any of the foregoing and software (collectively the
"Intangibles" and individually an "Intangible"); and (ii) a true and complete
list of all licenses or similar agreements or arrangements to which LSTI is a
party either as licensee or licensor for each Intangible. Except as indicated
in Schedules 1.1, 3.8, 3.13 or 3.17:
(a) LSTI is the owner of all right, title and interest in and to,
or otherwise has the right to use, each Intangible free and clear of all liens,
security interests, encumbrances and other adverse claims;
(b) No Affiliate owns directly or indirectly, in whole or in
part, any of the Intangibles;
(c) All Intangibles required to be registered have been properly
registered, all pending registrations and applications have been properly made
and filed and all annuity, maintenance, renewal and other fees relating to
registrations and applications are current;
(d) Neither Xxxxx X. Xxxxxx nor Xxxxxxx X. X'Xxxxxxx, Xx., M.D.
has actual knowledge of (i) any reason why the Intangibles would be deemed to be
invalid, unenforceable or not in good standing, or (ii) any equitable defenses
to enforcement of LSTI's rights in the Intangibles based on any act or omission
of LSTI;
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(e) No actions or other judicial or adversary proceedings
concerning any Intangible have been initiated, and, to LSTI's Knowledge, no such
action or proceeding is threatened;
(f) To LSTI's Knowledge (i) LSTI has the right and authority to
use the Intangibles in the Business, and (ii) such use does not conflict with,
infringe upon or violate any rights of any other Person; and
(g) There are no outstanding disputes or other disagreements with
respect to any Intangibles or licenses or similar agreements or arrangements
related thereto described in Schedule 3.8, and to LSTI's Knowledge, no such
disputes or disagreements are threatened.
3.9 Labor and Employment. LSTI does not now have and has never in
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the past had any employees. LSTI obtains such services as it requires from
consultants and others providing contract services, and all such service
providers are independent contractors or employees of independent contractors.
LSTI does not have and is not a party to or otherwise obligated under any (i)
collective bargaining agreement or other labor agreement; (ii) employment,
commission, profit sharing, deferred compensation, bonus, pension, retainer,
consulting, retirement, health, welfare, or incentive plan or contract; (iii)
any "fringe benefits" plan or agreement; (iv) other remuneration arrangement
with any officers, employees, consultants, agents or others providing services
to LSTI; or (v) any "pension benefit plans" as defined by Section 3(2) of the
Employee Retirement Income Security Act, as amended. LSTI has complied in all
material respects with all applicable laws, rules and regulations relating to
the employment of labor, including those relating to wages, hours, and the
payment and withholding of taxes and other sums as required by appropriate
governmental authorities.
No unfair labor practice complaint or charge of discrimination or
sexual harassment is pending against LSTI before any governmental agency; and
all reasonably anticipated obligations of LSTI, whether arising by operation of
law, contract, past custom or otherwise, for any form of compensation or
remuneration payable to anyone in respect of services rendered to or for the
benefit of LSTI prior to the date hereof have been paid or accrued.
3.10 Tax Returns. Except as disclosed in Schedule 3.10:
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(a) Within the times (including extensions granted) and in the
manners prescribed by law, LSTI has filed all federal, state and local tax
returns and all tax returns for other governing bodies having jurisdiction to
levy Taxes (as hereinafter defined) upon it. LSTI has paid in full or set up
reserves in respect of all Taxes for the periods covered by such tax returns.
LSTI has no liability for Taxes. LSTI has not and
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as a result of the transactions contemplated herein will not make or incur any
obligation to make any "parachute payment" as defined under Section 28OG of the
Internal Revenue Code of 1986, as amended (the "IRC").
(b) LSTI has not waived or extended any applicable statute of
limitations relating to the assessment of Taxes;
(c) No income or other tax returns filed by LSTI pursuant to the
laws or regulations of any Federal, state, local or other tax authority have
been examined or audited by the Internal Revenue Service (the "IRS") or other
appropriate authority since the formation of LSTI.
(d) All amounts for Taxes that are required to be collected or
withheld by LSTI have been duly collected or withheld. All such amounts that
are required to be remitted to any taxing authority have been duly remitted; and
(e) LSTI is not a party to nor bound by any Tax sharing or
similar agreement or arrangement with any Person, or any closing or other
settlement agreement with the IRS or other appropriate authority.
The terms "Tax" or "Taxes", as used in this Agreement, shall
mean: federal, state, municipal, local or foreign taxes, assessments, additions
to tax, interest, penalties, deficiencies, duties, fines, fees and other
governmental charges or impositions of each and every kind, whether measured by
properties, assets, wages, payroll, purchases, value added, payments, sales,
use, business, capital stock, surplus or income arising from or in connection
with the business of LSTI or its properties or assets through the Closing Date.
3.11 Litigation.
----------
(a) There is no action, suit, claim, inquiry, investigation or
other proceeding (collectively "Proceedings") to which LSTI is a party (either
as a plaintiff or defendant) pending before any court or governmental agency,
authority or body or arbitrator; to LSTI's knowledge, there are no Proceedings
threatened against LSTI; and to LSTI's Knowledge, there is no basis for any such
Proceedings;
(b) Neither LSTI nor any Affiliate of LSTI is permanently or
temporarily enjoined by any order, judgment or decree of any court or any
governmental agency, authority or body from engaging in or continuing any
conduct or practice in connection with the Business or Assets; and
(c) There is not in existence on the date hereof any order,
judgment or decree of any court or other tribunal or other
-13-
agency enjoining or requiring LSTI to take any action of any kind with respect
to its Business or the Assets.
3.12 Powers of Attorney and Suretyships. Except as disclosed on
----------------------------------
Schedule 3.12, LSTI has neither general or special powers of attorney
outstanding (whether as grantor or grantee thereof) nor any obligation or
liability (whether actual, accrued, accruing, contingent or otherwise) as
guarantor, surety, co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation of any person, corporation, partnership, joint
venture, association, organization or other entity, except as endorser of checks
endorsed in the ordinary course of business.
3.13 Contracts. Schedule 3.13 sets forth a true and correct list of
---------
each contract, agreement, license, or other instrument or undertaking by which
LSTI is obligated, or bid or proposal which could result in such, whether
written or oral, including all Commitments to which LSTI is a party or by which
any of the Assets is bound, except agreements for the purchase or sale by LSTI
of goods, materials, supplies or services in the ordinary course of business
involving less than Five Thousand Dollars ($5,000) in consideration in each such
case and Fifty Thousand Dollars ($50,000) in the aggregate (all such items so
required to be listed on Schedule 3.13 are referred to collectively as the
"Contracts"). True and complete copies of each of the Contracts, or where they
are oral, true and complete written summaries thereof, have been delivered to
BioLase by LSTI. Except as set forth in Schedule 3.13:
(a) Each of the Contracts is a valid and binding agreement of
LSTI and to LSTI's Knowledge all other parties thereto;
(b) LSTI has fulfilled all material obligations required pursuant
to each Contract to have been performed by it prior to the date hereof, and LSTI
has no reason to believe that LSTI will not be able to fulfill, when due, all of
its obligations under the Contracts which remain to be performed after the date
hereof;
(c) There has not occurred any material default under any of the
Contracts on the part of LSTI or to LSTI's Knowledge any other party thereto,
nor to LSTI's Knowledge has any event occurred which with the giving of notice
or the lapse of time, or both, would constitute any material default on the part
of LSTI or any other party under any of the Contracts;
(d) LSTI is not restricted by any Contract from carrying on its
Business anywhere in the world; and
(e) Upon consummation of the Reorganization and the other
transactions contemplated by this Agreement, each of the Contracts will remain
in full force and effect, with BioLase
-14-
substituted for LSTI with respect to the performance of those Contracts assumed
by BioLase.
3.14 Compliance with Law. The conduct of LSTI's Business on the date
-------------------
hereof does not violate any federal, state, local or foreign laws, statutes,
ordinances, rules, regulations, decrees, orders, permits or other similar items
in force on the date hereof (including, but not limited to, any of the foregoing
relating to employment discrimination, environmental protection or
conservation), the enforcement of which would materially and adversely affect
the Business or Assets of LSTI, and LSTI has not received any notice of any such
violation.
3.15 No Undisclosed Liabilities. Except as disclosed on Schedules to
--------------------------
this Agreement and except as reflected or reserved against on the Balance Sheet
Date balance sheet included in Schedule 3.4, LSTI has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due (including, without limitation, any liability
for Taxes and interest, penalties and other charges payable with respect to any
such liability or obligation), other than liabilities and obligations incurred
in the ordinary course of business.
3.16 Other Information. The information concerning LSTI set forth in
-----------------
this Agreement and the Schedules attached hereto does not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated herein or therein or necessary to make the statements and
facts contained herein or therein, in light of the circumstances in which they
are made, not false or misleading. Copies of all documents heretofore or
hereafter delivered or made available to BioLase pursuant hereto were or will be
complete and accurate copies of such documents.
3.17 Dealings with Affiliates. Except as set forth on Schedule 3.17,
------------------------
no Affiliate now has or since January 1, 1997 has had, either directly or
indirectly:
(a) An equity or debt interest in any corporation, partnership,
joint venture, association, organization or other person or entity which
furnishes or sells or during such period furnished or sold services or products
to LSTI, or purchases or during such period purchased from LSTI any goods or
services, or otherwise does or during such period did business with LSTI;
(b) A beneficial interest in any Contract or other commitment or
agreement to which LSTI is or was a party or under which it is or was obligated
or bound or to which any of its properties may be or may have been subject; or
(c) Any interest (other than an interest representing less than
one percent of the outstanding capital stock of a
-15-
company having securities registered under the Exchange Act) in any corporation,
limited liability company, partnership or other entity have a business that is
in any way competitive with the business of LSTI.
3.18 Acquisition of Shares. LSTI is an "accredited investor", as defined
---------------------
in Rule 501 of Regulation D, because all of the Shareholders are accredited
investors. LSTI is acquiring the Shares for LSTI's own account and not for the
account or benefit of any other Person other than the Shareholders. The Shares
are being acquired by LSTI for investment and not with a view to the
distribution or resale thereof, except as permitted by the Securities Act of
1933 and other applicable securities laws.
By reason of the business and financial experience of LSTI, its
Affiliates and the persons LSTI has retained to advise it with respect to the
transactions contemplated by this Agreement, none of whom are directly or
indirectly affiliated with or compensated by BioLase, LSTI has such knowledge,
sophistication and experience in business and financial matters to enable LSTI
to evaluate the merits and risks of the acquisition of Shares.
LSTI has carefully reviewed and considered the BioLase SEC Reports and
the PPM Memorandum, receipt of which is hereby acknowledged and understands and
has evaluated the risks of an acquisition of Shares, including without
limitation the risks set forth in the Memorandum under "Risk Factors". Except
as indicated on Schedule 3.18 or in the next sentence, LSTI has relied on no
information supplied by or on behalf of the Company other than the information
contained in the BioLase SEC Reports and the PPM. LSTI confirms that it has
been given the opportunity to ask questions of BioLase and its management
concerning BioLase and the Shares, and LSTI has received satisfactory written
responses to all such questions, if any.
ARTICLE IV
----------
Certain Covenants and Agreements
--------------------------------
4.1 Registration. BioLase hereby agrees that in the event it is
------------
determined by the Internal Revenue Service that the transactions contemplated by
this Agreement do not qualify as a tax-free reorganization under Section 368(a)
of the IRC, it will within sixty (60) days after the written request of
Shareholders holding a majority of the Shares ("Majority Shareholders")
following such a determination prepare and file and thereafter prosecute
diligently to effectiveness a registration statement under the Securities Act of
1933, as amended (the "Securities Act") in order to provide LSTI with a current
prospectus meeting the requirements of the Securities Act and covering the
resale of no less than one-half (1/2) of the Shares held by the Shareholders at
the time such registration statement is filed.
-16-
In addition, in the event it is determined that any of the Shareholders may not
avail themselves of the provisions of Rule 144 promulgated under the Securities
Act generally available to holders of restricted securities in order to resell
Shares (for reasons other than their status as "affiliates" under Rule 144),
BioLase hereby agrees it will within sixty (60) days after the written request
of the Majority Shareholders (which request may not be made during the ten
months immediately following the Closing Date) following such a determination
prepare and file and thereafter prosecute diligently to effectiveness a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") in order to provide the Shareholders with a current prospectus
meeting the requirements of the Securities Act and covering the resale of all
Shares held by such Shareholders at the time such registration statement is
filed.
No registration statement need be filed pursuant to this Section 4.7
and Shares need not be included within the coverage of any such registration
statement that is filed to the extent each Shareholder is then able pursuant to
the provisions of Rule 144 under the Securities Act to immediately offer and
sell Shares which BioLase would otherwise be required to register pursuant to
the provisions of this Section 4.1.
LSTI and the Shareholders shall cooperate fully with BioLase in the
preparation of any such registration statement and shall respond promptly and
accurately to all reasonable requests from BioLase for information for inclusion
in or otherwise related to such registration statement.
In connection with the registration of Shares pursuant to this Section
4.1, BioLase shall indemnify LSTI, its Affiliates and the Shareholders against
all losses, claims, damages, expenses and liabilities caused by or arising out
of any untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus (as amended or supplemented)
relating to such registration statement, or caused by any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they are made, unless such statement or omission was made in reliance upon
and in conformity with information furnished to BioLase by LSTI or any
Shareholder, respectively, specifically for use therein. LSTI and each of the
Shareholders shall indemnify BioLase and its officers, directors, stockholders
and other persons controlling, controlled by or under common control with
BioLase with respect to losses, claims, damages, expenses and liabilities caused
by any untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus (as amended or supplemented)
relating to such registration statement, or caused by any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not
-17-
misleading in light of the circumstances under which they are made to the extent
such statement or omission was made in reliance upon and in conformity with
information furnished by such Shareholder to BioLase specifically for use in
such registration statement or prospectus.
If the indemnification provided for in this Section 4.1 is unavailable
to an indemnified party in respect to any losses, claims, damages, liabilities
or expenses referred to herein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect their
relative fault in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses. The relative fault shall
be determined by reference to, among other things, who supplied the information
to which the untrue or alleged untrue statement of material facts or the
omission or alleged omission to state a material fact relates and the parties'
relative intent, knowledge, access to information and opportunity to correct
such statement or omission.
All expenses of any registration referred to in this Section 4.1,
except fees and disbursements of counsel for and other advisors to LSTI or the
Shareholders, underwriting or brokerage commissions or discounts in connection
with sales by LSTI or the Shareholders and any transfer or other taxes
applicable to the transfer of Shares by LSTI or the Shareholders, shall be borne
by BioLase.
4.2 Exploitation of Assets. Subject to its commercial judgment which it
----------------------
shall exercise in good faith, BioLase shall use its best efforts to exploit the
Assets, develop the Unit, the related products described on Schedule 1.3 and the
Business, and market the Unit and the related products in a manner that does not
subvert the opportunity of LSTI or the Shareholders to obtain the release and
delivery of Performance Shares pursuant to Section 1.3 hereof, including (but
not limited to) the diligent prosecution of any applications for necessary
clearances from the FDA to market the Unit as a medical device.
4.3 SEC Reports. So long as any of the Shares are subject to the
-----------
limitations imposed by Rule 144 promulgated under the Securities Act other than
the provisions of Rule 144(k), BioLase will timely file all reports it is
required to file pursuant to the provisions of the Securities Exchange Act of
1934, as amended.
4.4 Restrictions on Shares. LSTI acknowledges and agrees that the Shares
----------------------
shall be issued without registration under the Securities Act of 1933, as
amended (the "Securities Act") and shall be "restricted securities" as defined
in Rule 144
-18-
promulgated under the Securities Act. LSTI will only offer or resell the Shares
in compliance with the provisions of all applicable securities laws and
regulations. LSTI will offer or resell the Shares only if the Shares are
registered under the Securities Act or an exemption from such registration is
available (in which latter case BioLase shall have received an opinion of
counsel, in form and substance reasonably satisfactory to BioLase and its
counsel, to such effect). Unless such registration has been effected or such an
exemption is available, BioLase shall not permit the transfer of the Shares.
LSTI understands and agrees that BioLase may take such reasonable
steps as it deems appropriate to ensure compliance with the offer, resale and
other restrictions on transfer contained in this Agreement or arising under
applicable securities laws, including instituting "stop transfer" instructions
with respect to the Shares and endorsing restrictive legends, such as the
following, on certificates representing the Shares:
"The securities represented by this Certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act") and are "restricted securities" as that term is
defined in Rule 144 under the Securities Act. The securities may not
be offered for sale, sold or otherwise transferred except pursuant to
an effective registration statement under the Securities Act or
pursuant to an exemption from registration under the Securities Act,
the availability of which is to be established to the satisfaction of
the Issuer."
LSTI further agrees that LSTI will not transfer the Shares to any
Person under circumstances in which such Shares remain restricted securities, as
defined in Rule 144 issued under the Securities Act, in the hands of such
transferee without first obtaining for the benefit of BioLase and transmitting
to BioLase the written representation and undertaking (in form reasonably
satisfactory to BioLase) of such transferee (i) representing that the matters
set forth in Section 3.18 are, with such exceptions as may be reasonably
acceptable to BioLase, are true and correct with respect to the transferee and
(ii) undertaking to observe the obligations of LSTI pursuant to this Section
4.4.
BioLase and LSTI understand that LSTI intends to liquidate prior to
December 31, 1998, and that LSTI currently intends to distribute to the
Shareholders any Shares that it has received on or prior to such date. At the
time of such distribution, LSTI will obtain from each Shareholder, as a
condition to such distribution, a written certification that such
-19-
Shareholder is an "accredited investor" as defined in Rule 501 of Regulation D,
as well as the written representations and undertakings described in the
previous paragraphs of this Section 4.4.
4.5 Right of First Refusal; Advisory Board. Within and no later than ten
--------------------------------------
(10) days from the date of this Agreement, Xxxxxx and BioLase will endeavor to
negotiate in good faith a definitive agreement with respect to an ongoing
relationship including, but not limited to, BioLase's right of first refusal as
to technology developed by Xxxxxx with potential applications in aesthetics and
cutaneous surgery. As soon as possible after the execution of this Agreement,
BioLase shall create an Advisory Board, and may appoint Xxxxxx as the Chairman
thereof.
ARTICLE V
---------
Closing Actions
---------------
At the Closing, all of the following actions shall be considered to occur
-------------------------------------------------------------------------
simultaneously:
----------------
5.1 Transfer of Assets. BioLase shall acquire from LSTI good and
------------------
marketable title to the Assets, representing all or substantially all of the
assets of LSTI.
5.2 Issuance of Shares. BioLase shall issue the Shares in the name of
------------------
LSTI and shall deliver a portion of the Shares to LSTI in accordance with
Section 1.2 hereof.
5.3 Election to Board. Xxxxxxx X. X'Xxxxxxx, Xx., M.D., shall be elected
-----------------
as a Director of BioLase, with such election effective upon the Closing.
5.4 Delivery of Opinions. Biolase and LSTI shall have been furnished at
--------------------
the Closing with an opinion of counsel to the other party, dated the Closing
Date, addressed to and reasonably satisfactory to the receiving party and its
counsel, substantially in the forms of Exhibits A and B, respectively, hereto.
Such opinions shall also cover such other matters incident to the transactions
contemplated by this Agreement as the receiving party may reasonably request.
Any opinion may expressly rely as to matters of fact upon certificates furnished
by officers of the party whose counsel renders such opinion.
5.5 Delivery of Other Documents by LSTI. LSTI shall have delivered to
-----------------------------------
BioLase the following:
(a) A Xxxx of Sale in the form of Exhibit C hereto; and
-20-
(b) Written certification from each Shareholder of such Shareholder's
status as an "accredited investor" under the Securities Act.
ARTICLE VI
----------
Indemnification
---------------
6.1 By LSTI and the Principal Shareholders. LSTI and the Principal
--------------------------------------
Shareholders shall indemnify and hold harmless BioLase in respect of any and all
claims, losses, damages, liabilities and expenses (including, without
limitation, settlement costs and any legal or other expenses for investigating,
defending or preparing to defend any actions, investigations or other
proceedings or threatened actions, investigations or other proceedings),
reasonably incurred by BioLase in connection with, arising out of or as a result
of any (a) breach of any representation or warranty made by LSTI in this
Agreement, or (b) breach by LSTI of any of its covenants and other obligations
contained in this Agreement.
6.2 By BioLase. BioLase shall indemnify and hold harmless LSTI and the
----------
Shareholders in respect of any and all claims, losses, damages, liabilities and
expenses (including, without limitation, settlement costs and any legal or other
expenses for investigating, defending or preparing to defend any actions,
investigations or other proceedings or threatened actions, investigations or
other proceedings), reasonably incurred by LSTI and the Shareholders in
connection with, arising out of or as a result of any (a) breach of any
representation or warranty made by BioLase in this Agreement, or (b) breach by
BioLase of any of its covenants and other obligations contained in this
Agreement.
6.3 Claims for Indemnification. Whenever any claim shall arise for
--------------------------
indemnification under this Article VI, the party asserting the claim (the
"Indemnitee") shall promptly notify the party against whom or which the claim is
being asserted (the "Indemnitor") of the claim and, to the extent known, the
facts constituting the basis for such claim. In the event of any claim for
indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, such notice shall specify, if known, the
amount or an estimate of the amount of the liability arising therefrom.
Indemnitee shall not settle or compromise any claim by a third party for which
Indemnitee is entitled to indemnification hereunder without the prior written
consent (not to be unreasonably withheld) of Indemnitor, unless suit in respect
of such claim shall have been instituted against Indemnitee and Indemnitor shall
not have taken control of such suit after notification thereof or Indemnitor
shall not be entitled to take control thereof pursuant to Section 9.4 of this
Agreement.
-21-
6.4 Defense by Indemnitor.
---------------------
(a) In connection with any claim which may give rise to indemnity
hereunder resulting from or arising out of any claim or legal proceeding by a
person other than an Indemnitee (a "Third Party Claim"), the Indemnitor, at the
sole cost and expense of Indemnitor, may, upon written notice to Indemnitee,
assume the defense of any such Third Party Claim if Indemnitor (i) provides
evidence reasonably satisfactory to Indemnitee of Indemnitor's economic ability
to provide such indemnification and (ii) unconditionally acknowledges to
Indemnitee his or its obligation to indemnify Indemnitee pursuant hereto in
respect of such Third Party Claim. If Indemnitor assumes the defense of any
such Third Party Claim, Indemnitor shall select counsel reasonably acceptable to
Indemnitee to conduct the defense of such Third Party Claim and, at the sole
cost and expense of Indemnitor, shall take all steps necessary in the defense or
settlement thereof. Indemnitor shall not consent to a settlement of, or the
entry of any judgment arising from, any such Third Party Claim without the prior
written consent of Indemnitee (which consent shall not be unreasonably withheld
or delayed). Indemnitee shall be entitled to participate in (but not control)
the defense of any such action, with its own counsel and at its own expense.
(b) If Indemnitor does not assume the defense of any such Third Party
Claim in accordance with the terms hereof, or if either of the conditions set
forth above in Subsection 6.4(a) is or becomes unsatisfied, the Indemnitee may
assume and actively and diligently conduct the defense of the Third Party Claim,
and such assumption shall not release the Indemnitor from any indemnification
obligation under this Section 6.4 with respect to such Third Party Claim, and
the Indemnitor may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, and the Indemnitee will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without (i) the prior written consent of the Indemnitor
(such consent not to be unreasonably withheld) and (ii) obtaining a release of
the Indemnitor from such Third Party Claim.
6.5 Attorney's Fees. In the event of any action or proceeding brought
---------------
by any party against any other party in order to enforce any claim for
indemnification arising out of this Agreement, the prevailing party shall be
entitled to recover its reasonable attorney's fees incurred in such action or
proceeding, including any appeal, with the amount of such fees to be determined
by a judge of the court sitting without a jury.
6.6 Form of Indemnification. LSTI and the Principal Shareholders may
-----------------------
satisfy any indemnification obligations to BioLase arising under Section 6.1
(but not under Section 6.5)
-22-
hereof by delivering to BioLase Shares valued for such purposes at $3.75 per
Share.
6.7 Limitations on Remedies and Liability. Neither LSTI or the Principal
-------------------------------------
Shareholders, on the one hand, nor BioLase, on the other hand, as indemnifying
party, shall be liable for indemnification obligations under Sections 6.1 and
6.2 hereof, respectively, (i) unless and until the aggregate amounts for which
they or it, respectively, would be liable exceed Fifty Thousand Dollars
($50,000) (and then only for such excess) (the "Basket"), or (ii) in excess of
an aggregate amount of Three Million Dollars ($3,000,000) (the "Cap"); provided,
however, that (x) the Basket shall not apply to indemnification obligations due
to or arising out of BioLase's breach of its obligations under Sections 1.2,
1.3, 1.4 (as to legal fees and disbursements only), 4.1 or 4.3 or to either
party's breach of Section 6.5, except that if BioLase uses its best efforts to
fulfill its obligations under Sections 4.1 or 4.3 and despite such efforts
indemnification obligations arise out of BioLase's breach thereof, then the
Basket applicable to such indemnification obligations shall be the lesser of
Twenty-Five Thousand Dollars ($25,000) and the then unused balance of the Basket
and (y) any claims for indemnification due to or arising out of BioLase's breach
of Sections 1.2, 1.3, 4.1 or 4.3, or either party's breach of Section 6.5
hereof, shall not be subject to the Cap. The Principal Shareholders' liability
for indemnification hereunder shall be several, and not joint, each Principal
Shareholder shall only be responsible for one-third of each liability of LSTI
and the Principal Shareholders for indemnification hereunder, and each Principal
Shareholder's total liability for indemnification under Section 6.1 shall not
exceed One Million Dollars ($1,000,000). The provisions of this Article VI
shall provide the exclusive remedy for any breach of any representation or
warranty, or breach of any covenant or other obligation, contained in this
Agreement; provided, however that anything in this Section 6.7 to the contrary
notwithstanding, this Section 6.7 shall not apply to, and there shall be no
limitations on, the separate indemnification obligations set forth in Section
4.1 in connection with the registration of Shares.
6.8 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made in this Agreement shall survive the Closing and any
investigation at any time made by or on behalf of a party hereto.
Notwithstanding the foregoing, all representations and warranties made herein
(other than the representations and warranties made in Sections 2.8 and 3.10
hereof) shall expire on March 31, 2000 and all claims for indemnification must
be brought on or before said date. The representations made in Section 3.10
hereof shall expire upon the expiration of the applicable statute of limitations
with respect to any claims that may be asserted against LSTI and its
-23-
successors in interest in the event the matters are inaccurately set forth in
Section 3.10.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
7.1 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed given when (i) delivered
personally, (ii) three (3) days after being mailed by certified or registered
mail, postage prepaid, return receipt requested, or (iii) one day after being
dispatched by an overnight courier of national reputation promising next day
delivery addressed as follows:
If to LSTI, Laser Skin Toner, Inc.
the Share- 000 Xxxxxx Xxxx
holders' Repre- Xxxxx, Xxxxxxxxxxxx 00000
sentative or the Attention: Xxxxx X. Xxxxxx, Ph.D.
Principal President
Shareholders:
with copies to: Xxxxxxx X. X'Xxxxxxx, Xx., M.D.
000 Xxx Xxxxxxxx Xxxx
Xxxx & Xxxxxxx, Xxxxxxxx 00000
and
Blank Rome Xxxxxxx & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxxxxx, Esq.
If to BioLase: BioLase Technology, Inc.
000 Xxxxx Xxxxxxxx
Xxx Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
with copy to: Xxxxx Xxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Any party may change the address to which notices, requests, demands and other
communications hereunder for such party shall be directed by providing notice of
such address change to the other parties hereto in the manner aforesaid.
7.2 Assignability and Parties in Interest. This Agreement shall not be
-------------------------------------
transferable or assignable by any of the parties except by operation of law.
This Agreement shall inure to the
-24-
benefit of and be binding upon the parties hereto and their respective
successors.
7.3 Governing Law. This Agreement shall be governed by, and construed and
-------------
enforced in accordance with, the laws of the State of California applicable to
contracts executed and wholly performed within such state. The parties submit
exclusively to the jurisdiction of the state and federal courts located in
Commonwealth of Pennsylvania for the purpose of deciding all questions, disputes
or causes, including questions of breach of any material provision of this
Agreement or default of any material obligation imposed on either party by this
Agreement, whether the relief sought is injunctive relief or otherwise, which
may arise under this Agreement. The Shareholder Representative is hereby
designated as the agent of LSTI, the Principal Shareholders and their respective
successors and assigns to accept service of process for any actions commenced
under or to enforce this Agreement, provided that a copy of any such process
shall be delivered to LSTI, the Principal Shareholders or their respective
successors or assigns in accordance with the notice provisions of this
Agreement.
7.4 Counterparts. This Agreement may be executed simultaneously in one or
------------
more counterparts, each of which shall be deemed an original, but all of which
shall constitute but one and the same instrument.
7.5 Shareholders' Representative. Xxxxx X. Xxxxxx acting singly, or such
----------------------------
other Person as shall succeed him pursuant to this Section 7.5, has been
designated as the representative of the Shareholders (the "Shareholders'
Representative") to act for and represent the Shareholders with respect to all
matters arising out of this Agreement and in those other matters with respect to
which this Agreement specifies that the Shareholders' Representative shall so
act, as well as matters which require notice to be given to, or consent be
obtained from, the Shareholders under this Agreement. In the event of the death
or incapacity of Xxxxx X. Xxxxxx, Xxxxxxx X. X'Xxxxxxx, Xx., M.D. shall succeed
Xxxxx X. Xxxxxx as the Shareholders' Representative. In the event of the death
or incapacity of Xxxxxxx X. X'Xxxxxxx, Xx., M.D., a Person designated by a
majority in interest of the Shareholders shall succeed Xxxxxxx X. X'Xxxxxxx,
Xx., M.D. as the Shareholders' Representative.
7.6 Public Announcements. The parties hereto agree that they will not
--------------------
make any disclosures about the existence or contents of this Agreement or the
transactions contemplated herein without prior written approval of the other
parties except as may be otherwise necessary to comply with applicable law, in
which case the parties shall consult about the contents of the disclosure to the
extent with legal requirements; provided, however, that the parties hereto may,
on a confidential basis,
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advise their respective agents, accountants, attorneys and prospective lenders.
7.7 Complete Agreement. This Agreement, the Exhibits hereto and the
------------------
Schedules hereto delivered pursuant to this Agreement and such other agreements
and other documents as are contemplated hereby contain the entire agreement
between the parties hereto with respect to the transactions contemplated herein
and, except as provided herein, supersede all previous oral and written and all
contemporaneous oral negotiations, commitments, writings and understandings.
7.8 Modifications, Amendments and Waivers. This Agreement may not be
-------------------------------------
modified or amended, and no provision or benefit hereof may be waived, except in
a written document executed by the party against whom enforcement is sought.
7.9 Interpretation. The headings contained in this Agreement are for
--------------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
7.10 Severability. Any provision of this Agreement which is invalid,
------------
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
7.11 Further Assurances. Each party hereto shall do and perform or cause
------------------
to be done and performed all such further acts and things and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be signed as of the date first above written.
BioLase Technology, Inc.
By:/s/ Xxxxxxxx Xxxxxxxxxx
-----------------------
Title: Chairman of the Board
----------------------
By:/s/ Xxxxxx X. XxXxxxx
---------------------
Title: CEO
----
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Laser Skin Toner, Inc.
By:/s/ Xxxxxxx X. X'Xxxxxxx
------------------------
Title: Chairman of the Board
----------------------
By:/s/ Xxxxx X. Xxxxxx
-------------------
Title: President and CEO
------------------
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Principal Shareholders:
/s/ Xxxxx X. Xxxxxx
----------------------
XXXXX X. XXXXXX
/s/ Xxxxxxx X. X'Xxxxxxx Xx., M.D.
----------------------------------
XXXXXXX X. X'XXXXXXX, XX., M.D.
/s/ Xxxxxx Xxxxxxxx
-----------------------
XXXXXX XXXXXXXX
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SCHEDULES
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Schedule 1.1 Excluded Assets
Schedule 1.3 SkinToner System
Schedule 3.4 Financial Statements
Schedule 3.5 Certain Changes
Schedule 3.7 Tangible Personal Property
Schedule 3.8 Intangible Personal Property
Schedule 3.10 Taxes
Schedule 3.12 Powers of Attorney
Schedule 3.13 Contracts
Schedule 3.17 Affiliate Transactions
Schedule 3.18 Materials Relied Upon
EXHIBITS
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Exhibit A Opinions of LSTI's Counsel (Section 5.5)
Exhibit B Opinion of BioLase's Counsel (Section 5.5)
Exhibit C Xxxx of Sale
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