License And Distribution Agreement

EXHIBIT 10.1

LICENSE AND DISTRIBUTION AGREEMENT

THIS LICENSE AND DISTRIBUTION AGREEMENT (the " Agreement" ) is made and dated as of this 8th day of August, 2006 (the " Effective Date" ) by and among BIOLASE Technology, Inc., a Delaware corporation (the " Company" ) and Henry Schein, Inc., a Delaware corporation (the " Distributor" ) with reference to the following facts:

A. The Company is engaged in the business of manufacturing, distributing, marketing, and selling various dental laser systems including, without limitation, the following product lines: Waterlase MD, Waterlase YSGG, **** , LaserSmile and DioLase Plus. The term " Products" as used herein shall mean (i) Waterlase MD, Waterlase YSGG, **** , LaserSmile and DioLase Plus (the " Systems" ) and any accessories and consumables therefor, (ii) any replacements, new models, updated versions, or the next generation of such Systems as well as any accessories and consumables therefor, but specifically excluding the future **** (" Replacements" ), and (iii) any Future Products or **** Products which Distributor elects to have added to this Agreement as Products pursuant to Section 1.2 hereof. In addition, the **** is not yet available and shall only become part of the Products when the Company makes such systems available to Distributor. B. Distributor wishes to distribute and sell certain of the Products to practicing licensed dentists and to practices, clinics or governmental, quasi governmental or similar entities (including, without limitation, prisons, hospitals, schools, educational institutes and Indian reservations) consisting of one or more licensed dentists (collectively, " Customers" ) located within the continental United States of America, Alaska, and Hawaii (excluding however territories and possessions of the United States of America) and Canada (collectively, the " Territory" ), on the terms and conditions contained herein. In the event that Distributor elects to have **** Products as Products under this Agreement pursuant to Section 1.2 hereof, then the term " Customers" as used in this Agreement with respect to the distribution of **** Products shall be deemed to solely refer to **** Customers.

C. Distributor also wishes to sell to Customers located within the Territory training, educational and repair services associated with the Products and extended service contracts applicable to the Products and to perform all fulfillment services related to the sale and servicing of the Products and provision of the foregoing services, including, without limitation, receipt and processing of customer purchase orders, product warehousing, customer shipping, customer installation, customer billing and collection, and customer training (all of the foregoing collectively, the " Distributor Services" ), on the terms and conditions contained herein.

D. In addition, the parties wish to allocate between themselves certain responsibilities related to the distribution of the Products and the sale of Distributor Services, including order

**** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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fulfillment, Product installation, customer billing and collection, Product repair and servicing, training, education, and marketing, all on the terms and conditions contained herein.

E. In respect of such allocation, the Company as an independent contractor wishes to provide to Distributor certain of the Distributor Services as set forth in Section 5 of this Agreement (collectively, the " Company Services" ).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1 APPOINTMENT & IMPLEMENTATION

1.1 Appointment of Distributor, Products, and Territory . The Company hereby appoints Distributor, and Distributor hereby accepts such appointment, as the exclusive distributor to Customers within the Territory for the sale of the Products; provided, however, during the period between the Effective Date and the Launch Date (as that term is hereinafter defined) the Company may sell the Products directly to Customers within the Territory. The parties may from time to time by written agreement executed by both parties include additional areas within the definition of Territory. Except as otherwise set forth herein, the Company agrees not to appoint any other person to act as its distributor of the Products to Customers within the Territory during the " Term" (as hereinafter defined) of this Agreement. Nothing in this Agreement shall limit the rights of the Company to develop, manufacture, sell, promote, market, purchase, solicit orders, distribute or enter into any other dealings with third parties with regard to (i) any products outside of the Territory, (ii) any product ( other than the " Products" as defined above) within the Territory, or (iii) any sales of any Products to any third party within the Territory (other than any sales to third parties where the end users are intended to be " Customers" (as defined above) within the Territory). Distributor agrees that it shall not directly or indirectly sell or distribute any of the Products to a Customer or destination outside of the Territory or to any other person or entity who Distributor knows, or has reason to know, intends to directly or indirectly sell the Products to an end user who is not a Customer intending to use the Products in the Territory. The Company shall be responsible for determining the timing and appropriateness of phasing in and out of new and old Products and transition issues related thereto. 1.2 Additional Products . Distributor shall have the right of first refusal to add as additional " Products" hereunder (i) any future dental products, and accessories and consumables therefor (other than Replacements), developed by the Company during the Term that are intended for sale to Customers (" Future Products" ) and (ii) dental laser systems, and accessories and consumables therefor, intended for use in the **** market within the Territory provided that granting such right to Distributor would not violate any contractual obligation that the Company may have to any third party (the " **** Products" ). If at any time during the Term the Company proposes to sell or have sold to Customers in the Territory any Future Products or any **** Products (for the purpose of **** Products the term " Customers" shall be deemed to be practicing licensed **** and to practices or clinics consisting of one or more licensed **** ,

**** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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herein " **** Customers" ), then the Company shall give Distributor written notice of the Company' s intention to sell such Future Products to Customers in the Territory or **** Products to **** Customers and the proposed applicable list price and discounts, minimum purchase requirements and other significant terms applicable to such Future Products or **** Products. The Company shall endeavor, on a good faith basis, to have such proposed terms be as good as the terms that the Company would intend to offer to a third party; provided that the parties acknowledge the process of subsequent negotiations with third parties may ultimately result in variations, modifications and improvements to such terms. Distributor shall have an option for a period of **** days from receipt of such notice to elect by written notice to the Company to have such Future Products or **** Products, as applicable, added as Products under this Agreement. If Distributor fails to give the Company written notice as above required, then the Future Products or **** Products, as applicable, shall not be Products hereunder and the Company shall be free to offer distribution rights to the Future Products or **** Products, as applicable, to Customers within the Territory to one or more third parties and/or to distribute the Future Products to Customers or **** Products to **** Customers, as applicable within the Territory itself or through its Affiliates. The Company' s future **** , and any successor to the **** , will become a Product under this Agreement and will remain a Product so long as Distributor meets the mutually agreed upon terms and conditions for the **** , including minimum purchase requirements. Any breach of this Agreement specifically with respect to the **** will only affect Distributor' s rights with respect to the **** Product.

1.3 License Fee . Concurrently with the execution of this Agreement Distributor shall pay to the Company the sum of Five Million Dollars (US$ 5,000,000) as a license fee (" Initial License Fee" ). Such Initial License Fee shall be deemed fully earned upon receipt and non refundable (except as provided in Sections 1.5 and 2.3 below).

1.4 Appointment of the Company . Distributor hereby appoints the Company, and the Company hereby accepts such appointment, as the exclusive provider to Distributor within the Territory of the Company Services. The Company may, upon terms and conditions mutually agreeable to Distributor and the Company, discontinue providing any or all of the Company Services or make whatever changes to the Company Services as the parties mutually agree are necessary, desirable or appropriate. Except as otherwise provided in Section 5 hereof, Distributor agrees not to appoint any other person to provide the Company Services to Customers on behalf of Distributor and not to itself provide the Company Services to Customers during the Term. 1.5 Licensing . Distributor acknowledges that the Company may from time to time grant to the Company' s competitors licenses to the Company' s intellectual property rights in the market for dental laser systems in which the **** is either **** or **** (the " **** Market" ) with respect to the sale of products to Customers in the Territory (" Product Intellectual Property Licenses" ). In the event that during the Term the Company (i) grants Product Intellectual Property Licenses to any third party (each an " Additional **** Licensee" ) other than the Present **** Licensees (as hereinafter defined) and (ii) each of the following events occur: (A) the " Period

**** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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Sales Criteria" is met where the combined sales in a Period of the Present **** Licensees and any Additional **** Licensees into the United States portion of the **** Market (" Combined Licensee Sales" ) exceeds **** of the aggregate combined sales for the Period of the Company, the Present **** Licensees and any Additional **** Licensees into the United States portion of the **** Market (" Period Sales" ) and (B) Distributor achieves less than **** of the Minimum Purchase Requirements (as hereinafter defined) in the Period in which the Period Sales Criteria is met, THEN (X) the Minimum Purchase Requirements for that Period shall be reduced based upon the Market Share Loss Formula (as determined below) and (Y) the Company shall refund to Distributor a portion of the Initial License Fee or the Additional License Fee, as applicable, based upon the Market Share Refund Formula (as determined below). Such amount shall be paid within **** days of the Period end date. The term " Present **** Licensees" shall be deemed to include any subsidiary, Affiliate, successor and assign of the following groups of companies: **** , **** , and **** (including, without limitation, **** , **** and **** ). For purposes of determining the Period Sales Criteria, Period sales of the Company, the Present **** Licensees and any Additional **** Licensees into the United States portion of the **** Market shall be determined solely from the Company' s books and records with respect to such sales and shall be valued at estimated end-user purchase prices. The term " Affiliate" as used herein with respect to any entity, shall mean an entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with the entity specified (with " control" meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise). The term " Period" as used herein shall mean one of the Periods set forth in Exhibit A hereto, as applicable. The reduction in the Minimum Purchase Requirements for a particular Period based on the " Market Share Loss Formula" shall be determined as follows: (i) **** , TIMES (ii) **** , and TIMES (iii) **** , LESS the greater of (x) **** , or (y) **** . For an example of the calculation of the Market Share Loss Formula see Exhibit A. The refund to Distributor of a portion of the Initial License Fee or the Additional License Fee, as applicable, based upon the " Market Share Refund Formula" shall be determined as follows: (i) the **** (as defined in Exhibit A) **** , TIMES (ii) **** , LESS the greater of (x) **** , or (y) **** . For an example of the calculation of the Market Share Refund Formula see Exhibit A.

1.6 Implementation . During the period (the " Pre-Launch Period" ) between the Effective Date and September 1, 2006 (the " Launch Date" ) the parties will use commercially reasonable efforts to transition certain distribution functions and services to Distributor and to determine certain mutual implementation functions, as Distributor and Company may from time to time mutually agree. As a result, to the extent the Company during the Pre-Launch Period performs Distributor Services (as hereinafter defined) otherwise to be performed by Distributor pursuant to this Agreement, such services shall be performed without charge to Distributor and shall be performed on behalf of and for the credit of Distributor.

**** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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The parties further agree in the event that (i) prior to the Effective Date the Company either (A) obtained a signed order for Products from a Customer within the Territory, or (B) provided such Customer with a valid quotation for such Products (collectively, " Quoted Customers" ), AND (ii) such Products are not shipped to such Quoted Customer prior to the Launch Date, THEN upon the Launch Date such order or quotation shall be deemed to be an order or quotation of Distributor and any shipment of such Products on or after the Launch Date to such Quoted Customer shall be for the account of Distributor and shall be deemed to be a sale of Products pursuant to the terms of this Agreement. In addition and notwithstanding the provisions of Section 2.4 hereof, so long as such orders are shipped within the month of September 2006, the Company shall sell to Distributor the Products required to fulfill such orders or quotations to Quoted Customers at a Distributor Purchase Price equal to the lesser of (i) **** or (ii) **** . Following the Effective Date the Company shall provide to Distributor a list of Quoted Customers.

In the event that during the Pre-Launch Period: (i) the Company obtains a signed order, on a BIOLASE order form, for a System from a Customer within the Territory, (ii) such Customer is not a Quoted Customer, (iii) the Products to fulfill such order are shipped to such non-Quoted Customer prior to the Launch Date, and (iv) Distributor can reasonably demonstrate it assisted in obtaining such sale (such order a " Participating Order" ) THEN the Company shall pay to Distributor in respect of such sale an amount equal to **** of the following: (A) **** , LESS (B) **** . Such payment to Distributor shall become due following receipt by the Company of full payment for the System by the Customer.

SECTION 2 ORDERING, SHIPPING & PRICING

2.1 Placement of Orders . Distributor shall place orders for Products in writing to the Company. Each order shall specify the quantity of Products which Distributor wishes to purchase and the date(s) requested for delivery. The parties may deliver and exchange form or custom purchase orders, invoices, and acknowledgments. Such documents may or may not include language regarding terms and conditions other than as set forth in this Agreement. In either event, it is hereby expressly agreed that such documents shall be delivered solely for the purpose of establishing the quantity of the Product ordered, shipping destination, and timing, and for the convenience of order entry, and no terms or conditions therein contained relating to quantity, shipping destination, or timing, which are inconsistent with the terms of this Agreement shall have any effect whatsoever, and no terms or conditions contained in any such documents relating to any subject other than quantity, shipping destination, or timing, shall have any force or effect whatsoever, notwithstanding any provisions contained therein to the contrary.

2.2 Acceptance and Filling of Orders . The Company will use its commercially reasonable efforts to fill the accepted orders as promptly as practicable. In all cases, the Company will use commercially reasonable efforts to advise Distributor of any inability to make full and timely delivery of Products which Distributor has previously ordered. For all shipments of Products, Distributor shall pay all transportation charges, including freight and insurance costs from the FOB Point to its warehouse. Possession of and title to all Products ordered hereunder shall be deemed to pass to Distributor upon delivery to the common carrier at the FOB Point.

**** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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Distributor shall thereupon assume all risk of loss or damage with respect to such Products save and except to the extent of the warranties set forth in Sections 4.1 and 4.2 hereof. For the purposes of this Agreement the " FOB Point" shall be Irvine, California unless and until the Company notifies Distributor of another FOB Point. 2.3 Minimum Purchase Requirements . At the end of the eighteen (18) month period following the Launch Date (the " First Review Period" ) and at the end of the eighteen (18) month period following the First Extension Date (as hereinafter defined) (the " Second Review Period" ), if applicable, the Company shall evaluate Distributor' s purchase of Products under this Agreement. If Distributor fails to satisfy the Minimum Purchase Requirements (" Minimum Purchase Requirements" ) as set forth on Exhibit A hereto for either the First Review Period (subject to adjustment as provided in the following paragraph) or the Second Review Period, the Company shall have the option (the " Buy Back Option" ), in its sole and absolute discretion: (i) to reduce the Term of the Agreement to a period of **** from the date which is **** after receipt by Distributor of the Company' s notice of exercise of the Buy Back Option (" Buy Back Effective Date" ) and to remove the provisions of this Agreement set forth on Exhibit A (the " Excluded Terms" ), (ii) to designate one or more additional distributors for sales of any or all of the Products to Customers within any part or all of the Territory and/or to distribute itself or through any of its Affiliates any or all of the Products to Customers within any part or all of the Territory, (iii) to reduce to **** the Distributor Discount on any Systems with a Distributor Discount exceeding **** and to reduce the Distributor Discount on any Products other than Systems to **** , and (iv) to cease the payment of any and all System Purchase Incentives except for any System Purchase Incentives that were earned during the applicable Review Period. Notwithstanding the foregoing, Company shall not be permitted to exercise the Buy Back Option if at the completion of either the First Review Period or the Second Review Period there exists a material uncured breach of any material provision of this Agreement on the part of the Company.

For the sole purpose of calculating the Company' s right to exercise the Buy Back Option with respect to the First Review Period only: (i) the Minimum Purchase Requirements for the months of September and October, 2006 shall be Aggregate Purchases of Systems (as defined in Exhibit A) in the amount of $ **** (the " September/October Target Amount" ), and (ii) notwithstanding the provisions of Exhibit A, in the event that Distributor would otherwise have failed to satisfy the Minimum Purchase Requirements for the First Review Period, then the Minimum Purchase Requirements for the First Review Period shall be reduced by an amount equal to the LESSER of (A) $ **** , or (B) the September/October Target Amount LESS all final invoiced shipments of Systems to Customers by Distributor and final invoiced shipments of Systems to Customers by Company solely relating to Participating Orders, all recalculated at Distributor Purchase Price, from the Effective Date through October 31, 2006. If as a result of the foregoing reduction Distributor shall still have failed to satisfy the Minimum Purchase Requirements for the First Review Period then the Company shall have the right to exercise the Buy Back Option as provided in the preceding paragraph.

In the event of exercise of the Buy Back Option, on the Buy Back Effective Date this Agreement shall become a non-exclusive distribution agreement, the Excluded Terms shall be deemed removed

**** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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and the Agreement (as revised) shall continue in full force and effect for the remainder of the Term (as reduced above). Written notice of the Company' s intent to exercise the Buy Back Option with respect to the First Review Period or the Second Review Period must be provided to Distributor within **** after the end of that particular Review Period. In the event that the Company exercises the Buy Back Option then it shall repay to Distributor on the Buy Back Effective Date portions of the Initial License Fee or the Additional License Fee (as hereinafter defined), as follows: (i) in the event of exercise is with respect to the First Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Initial License Fee shall be repaid to Distributor, or (ii) in the event of exercise is with respect to the Second Review Period then a Two Million Five Hundred Thousand Dollar (US$ 2,500,000) portion of the Additional License Fee shall be repaid to Distributor. There shall be no repayment to Distributor of any portion of the Initial License Fee or the Additional License Fee if the exercise of the Buy Back Option is not exercised, except as set forth in Section 1.5. The provisions of this Section 2.3 shall be the Company' s sole and exclusive remedy for the failure of Distributor to satisfy the Minimum Purchase Requirements for either the First Review Period or the Second Review Period.

2.4 Purchase Price . Distributor shall pay the Company for all Products which Distributor purchases and for all Company Services except to the extent such Company Services are expressly stated in Section 5 to be provided without charge (" Purchased Services" ) at the Company' s then applicable Distributor Purchase Price for such Products and Purchased Services as set forth in Exhibit A, unless the parties mutually agree in writing otherwise or unless the Distributor Discount is reduced pursuant to Section 2.3 ; provided further, however, the Distributor Purchase Price for such Products and Purchased Services shall not be increased more than **** per calendar year during the Term.

2.5 Invoicing and Payments . Upon shipment of Products, the Company shall issue an invoice to Distributor in respect of such Products. Upon completion of particular Purchased Services the Company shall issue an invoice to the Distributor in respect of such Purchased Services. Distributor shall pay the Company for all such invoices net **** from the date of issuance of the invoice to Distributor or on such other terms and conditions as may be agreed to in writing from time to time by the Company and Distributor. All payments shall be in U.S. Dollars and must be made by electronic funds transfer to the Company' s account as the Company directs from time to time. If Distributor fails to pay on the date due for any Products or Purchased Services invoiced to Distributor, the Company, in its sole and absolute discretion may (i) charge Distributor a late fee of **** per annum on the past-due balance, or the highest rate then permitted by law, whichever is less; and/or terminate this Agreement pursuant to the provisions of Section 8.4.1.1 hereof.

2.6 Taxes . Prices quoted by the Company do not include sales, use, excise, customs, export, import, commodity or similar taxes. Distributor shall promptly pay all such taxes imposed by reason of the sale to it of any Products or the provision of any services to it hereunder. Distributor agrees to provide the Company on request with reasonable proof of payment by Distributor of such taxes. Distributor further agrees to provide the Company on request with a copy of any applicable tax exemption certificate or resale permit. Any personal property taxes assessable on the Products after delivery to the common carrier shall be borne by Distributor. **** Certain confidential information contained in this document, marked with four asterisks, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


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2.7 System Purchase Incentives . Commencing in the Period beginning **** , Distributor shall be entitled to receive System Purchase Incentives using the applicable System Purchase Incentive Percentage determined from the table in Exhibit A. To be entitled to receive System Purchase Incentives in a Period, Aggregate Purchases of Systems (defined in Exhibit A) in the previous Period, less System Purchase Incentives earned in such Period, must have equaled or exceeded an amount that is **** greater than the Minimum Purchase Requirement for such previous Period. Such System Purchase Incentive Percentage will be determined as of the beginning of each Period commencing **** , based upon the amount of Aggregate Purchases of Systems made in the previous Period. System Purchase Incentives will be calculated on a monthly basis by multiplying the System Purchase Incentive Percentage TIMES the Aggregate Purchases of Systems, excluding the DioLasePlus Systems, for each month during the qualifying Period. All System Purchase Incentive payments shall be in U.S. Dollars and will be made by electronic funds transfer to the Distributor' s account as the Distributor directs from time to time. System Purchase Incentive payments shall be paid within **** days of the end of each month in which earned.

SECTION 3 COMPLIANCE WITH LAWS AND RELABELING

3.1 Compliance with Laws, Regulations and Licenses . Each party (including its directors, officers, employees, agents and others acting on its behalf) represents and warrants to the other party that it is legally qualified in the Territory to perform its obligations as contemplated by this Agreement. Each party shall comply with all applicable existing and future foreign, federal, state and local laws and governmental regulations and laws or regulations (" Applicable Laws" ) of any jurisdiction of applicable authority relative to each party fulfilling its obligations under this Agreement, including, without limitation, those relating to the importation of the Products, sale of the Products to Customers within the Territory, and issuance of foreign exchange in connection therewith, and shall not, directly or indirectly, make any payments in violation thereof. In addition, each party will comply with all U.S. Food and Drug Administration (" FDA" ) rules, regulations and requirements relating to the sale of the Products, including, without limitation, all FDA Good Manufacturing Practices (GMP) requirements relating to the storage, handling, and distribution of the Produc ...