EXHIBIT 10.34
AMENDED AND RESTATED
AGREEMENT BETWEEN
EXCIMER VISION LEASING L.P.
AND
BRITESMILE, INC.
Agreement, dated February 28, 2001, between Excimer Vision Leasing
L.P., a Delaware limited partnership ("EVL"), and BriteSmile, Inc., a Utah
corporation ("Prime Lessee/Sublessor").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, EVL is in the business of acquiring equipment and leasing it
on a triple net, operating basis to third parties; and
WHEREAS, Prime Lessee/Sublessor is in the business of developing and
leasing teeth whitening systems which it allows to be used by dental
professionals and other qualified users to perform teeth whitening procedures;
and
WHEREAS, in order to permit Prime Lessee/Sublessor to expand its
business without incurring the capital cost of purchasing its teeth whitening
systems, and Prime Lessee/Sublessor entered into an Agreement, signed as of
December 22, 2000 (the "Original Agreement"), pursuant to which EVL agreed to
purchase 3,000 BriteSmile Systems and to make them available to Prime
Lessee/Sublessor on the terms and conditions set forth therein; and
WHEREAS, EVL and Prime Lessee/Sublessor wish to amend and restate the
Original Agreement to amend and clarify certain provisions.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
bound hereby, do hereby amend and restate the Original Agreement in its entirety
to read as follows.
1. Definition. Capitalized terms not otherwise defined herein shall
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have their meanings as set forth in Section 15.
2. EVL's Purchase of BriteSmile Systems.
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(a) Purchase of Installed BriteSmile 3000 Systems. Effective as
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of December 29, 2000, EVL will purchase from Prime Lessee/Sublessor, and Prime
Lessee/Sublessor will sell to EVL, all of Prime Lessee/Sublessor's right, title
and interest in and to those 1,245 BriteSmile 3000 Systems presently leased by
Prime Lessee/Sublessor to its Associated Centers located in the United States,
all of which Systems are described on the location listings set forth on
Schedule 2(a) hereto. Subject to Sections 2(b) and 2(c), the aggregate purchase
price for all such 1,245 BriteSmile 3000 Systems shall be Five Million
Dollars ($5,000,000). The purchase price shall be inclusive of any sales or use
tax imposed as a result of the sale described in this Section 2(a), and Prime
Lessee/Sublessor shall pay, and indemnify EVL against, any such tax. Such
purchase price shall be paid by EVL to Prime Lessee/Sublessor on December 29,
2000 by wire transfer to an account designated by Prime Lessee/Sublessor against
delivery to EVL of bills of sale and other closing documentation acceptable to
EVL as EVL shall request. Effective January 1, 2001, EVL shall lease such
BriteSmile 3000 System purchased by it hereunder to Prime Lessee/Sublessor
pursuant to the subsequent provisions of this Agreement.
(b) Purchase of Additional BriteSmile 3000 Systems. During
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the Deployment Term, EVL will spend up to an additional $5,000,000 to purchase
755 BriteSmile Systems which, at Prime Lessee/Sublessor's option, can be either
BriteSmile 3000 Systems or BriteSmile 4000 Systems. Such purchases of BriteSmile
3000 and 4000 Systems by EVL shall be made from Prime Lessee/Sublessor or from
the manufacturer(s) thereof as EVL and Prime Lessee/Sublessor shall agree from
time to time. Notwithstanding the foregoing, in no event shall the number of
BriteSmile 3000 Systems purchased by EVL under Section 2(a) and this Section
2(b) exceed 2000. If the aggregate Purchase Price of such 755 BriteSmile Systems
exceeds the $5,000,000 that EVL is committed to expend under this Section 2(b),
Prime Lessee/Sublessor shall pay the difference at EVL's option either to EVL or
to the manufacturer(s) of such Systems. Any such payment by Prime
Lessee/Sublessor shall be deemed a reduction in the purchase price payable by
EVL under Section 2(a) and Section 2(b), and BriteSmile shall obtain no right,
title or interest in any BriteSmile System as a result of making any such
payment. Prime Lessee/Sublessor and EVL will coordinate with each other in
ordering and making payment for such Systems. EVL shall lease each System
purchased by it under this Section 2(b) to Prime Lessee/Sublessor pursuant to
the subsequent provisions of this Agreement.
(c) Purchase of BriteSmile 4000 Systems. In addition to its
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purchase obligation under Section 2(b), during the Deployment Term, EVL will
spend up to $5,000,000 to purchase one thousand (1,000) BriteSmile 4000 Systems
from the manufacturer(s) thereof at the price such manufacturer(s) would
otherwise charge Prime Lessee/Sublessor. If the aggregate Purchase Price of such
1,000 BriteSmile 4000 Systems exceeds the $5,000,000 that EVL is committed to
expend under this Section 2(c), Prime Lessee/Sublessor shall pay the difference
at EVL's option either to EVL or to the manufacturer(s) of such Systems. Any
such payment by Prime Lessee/Sublessor shall be deemed a reduction in the
purchase price payable by EVL under Section 2(a) and Section 2(c) and Prime
Lessee/Sublessor shall obtain no right, title or interest in any BriteSmile
System as a result of making any such payment. Prime Lessee/Sublessor and EVL
will coordinate with each other in ordering and making payment for such Systems.
EVL shall lease each BriteSmile 4000 System purchased by it hereunder to Prime
Lessee/Sublessor pursuant to the subsequent provisions of this Agreement.
(d) Duration of EVL's Purchase Obligations. EVL shall have no
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obligation to purchase any additional BriteSmile Systems under Sections 2(b) or
2(c), (i) after the expiration of the Deployment Term, as the Deployment Term
may be extended by EVL pursuant to Section 2(e) below; (ii) at any time when
Prime Lessee/Sublessor has Excess Undeployed Systems; (iii) at any time when an
Event of Default has occurred and is continuing; and (iv) at any time when Prime
Lessee/Sublessor has not paid any amounts required to be paid by it under
Section 2(b) or 2(c).
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(e) Extension of Deployment Term. EVL may, at its sole
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discretion, elect to extend the duration of the Deployment Term for up to an
additional 18 months beyond the end of the 18/th/ month after the date hereof by
giving written notice of such extension to Prime Lessee/Sublessor at least 30
days prior to the scheduled end of the Deployment Term, in which case the
Deployment Term shall be automatically extended to the earlier (x) time
specified in EVL's notice when the Deployment Term is to end, which time shall
not be later than the end of the 36th month following the date hereof; (y) the
satisfaction by EVL of its obligations under Section 2(b) and 2(c); and (z) the
occurrence of an Event of Default hereunder.
(f) Clarification. For clarification, it is the intent of the
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parties that EVL shall purchase at least 3000 BriteSmile Systems for an
aggregate purchase price of $15,000,000. Such Systems may be such combination of
BriteSmile 3000 and 4000 Systems as Prime Lessee/Sublessor may specify provided
that no more than 2,000 such Systems may be BriteSmile 3000 Systems. In the
event that the $10,000,000 that EVL is committed to spend under Sections 2(b)
and 2(c) is not sufficient to provide for the purchase of the 1,755 Systems to
be purchased thereunder, Prime Lessee/Sublessor shall either purchase the
necessary additional Systems with its own funds and transfer them to EVL without
consideration or Prime Lessee/Sublessor shall reimburse EVL for the amount in
excess of $15,000,000 that EVL expends to acquire all 3000 Systems.
3. Lease by EVL of BriteSmile Systems to Prime Lessee/Sublessor;
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Lease Term.
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(a) Lease. EVL hereby leases to Prime Lessee/Sublessor and Prime
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Lessee/Sublessor hereby leases from EVL each BriteSmile System purchased by EVL
hereunder (each such BriteSmile System being a "Leased System").
(b) Lease Term. Subject to Section 5, the Lease Term of each
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Leased System which is a BriteSmile 3000 System purchased pursuant to Section
2(a) shall begin on January 1, 2001 and shall end five years after the first
date during the Lease Term of such Leased System when Variable Rent is required
to be paid with respect to such Leased System. Subject to Section 5, the Lease
Term of each other Leased System shall begin on the date when EVL purchases such
System pursuant to Section 2(b) or 2(c), and shall end five years after the
first date during the Lease Term of such Leased System when Variable Rent is
required to be paid with respect to such Leased System.
4. Rent.
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(a) Elements of Rent. The Rent payable by Prime Lessee/Sublessor
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to EVL for each Leased System shall be comprised of Fixed Rent, Variable Rent
and Other Charges.
(b) Fixed Rent. The aggregate Fixed Rent for each BriteSmile
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System purchased pursuant to Section 2(a) shall be an amount per annum equal to
$300,000 divided by the number of BriteSmile Systems purchased pursuant to
Section 2(a). The Aggregate Fixed Rent for each BriteSmile System purchased
pursuant to Section 2(b) or 2(c) shall be such amount per annum as is necessary
so that EVL receives a return of 6% per annum on the amount it has
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expended from time to time to purchase Systems under such Sections 2(b) and
2(c). Fixed Rent shall be payable with respect to each Leased System in equal
monthly increments in arrears on the first day of each month; provided that the
first payment of Fixed Rent with respect to each Leased System that is purchased
by EVL pursuant to Section 2(b) or 2(c) shall include Fixed Rent for the period
from the beginning of the Lease Term of such Leased System to the date of the
first payment of Fixed Rent.
(c) Variable Rent. The Variable Rent for each Leased System
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shall be based on the Key Cards delivered for use with respect to the Leased
System. The Variable Rent shall be equal to $125 for each standard 5-Procedure
Key Card that is delivered during the preceding month for use with such Leased
System. An appropriate and proportionate adjustment to the amount of Variable
Rent shall be made in the event that any Key Cards delivered enable more or less
than 5 Procedures to be performed. Such payment of Variable Rent shall be made
on the 40/th/ day following the end of the month in which delivery of such Key
Cards occurred.
(d) Method of Payment. Fixed Rent and Variable Rent shall be
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payable on the date due by wire transfer, electronic direct deposit or such
other method as EVL shall designate without any further notice at EVL's address
set forth below or at such other place as EVL shall designate in writing. Rent
shall be paid free and clear of all claims, demands or setoffs of any nature
whatsoever.
(e) Net Lease, Taxes and Fees. EVL AND PRIME LESSEE/SUBLESSOR
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ACKNOWLEDGE AND AGREE THAT THIS LEASE CONSTITUTES A NET LEASE AND THAT PRIME
LESSEE/SUBLESSOR'S OBLIGATION TO PAY ALL RENT AND ALL OTHER AMOUNTS PAYABLE BY
PRIME LESSEE/SUBLESSOR HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL AND SHALL
NOT BE SUBJECT TO ANY ABATEMENT, REDUCTION, SET-OFF, DEFENSE, COUNTERCLAIM,
INTERRUPTION, DEFERMENT OR RECOUPMENT FOR ANY REASON WHATSOEVER, AND THAT SUCH
PAYMENTS SHALL BE AND CONTINUE TO BE PAYABLE BY PRIME LESSEE/SUBLESSOR IN ALL
EVENTS. Prime Lessee/Sublessor shall pay when due or reimburse and indemnify and
hold EVL harmless (on a net after-tax basis) from and against all taxes, fees or
other charges (collectively, the "Other Charges") of any nature whatsoever now
or hereafter imposed or assessed during the term hereof against EVL, Prime
Lessee/Sublessor or the Leased System by any federal, state, county, or local
governmental authority upon or with respect to the Leased System or upon the
ordering, purchase, sale, ownership, delivery, leasing, possession, use,
operation, return or other disposition thereof or upon the rents, receipts or
earnings arising therefrom (including all sales taxes payable in connection with
the purchase of the Leased System and excepting only federal, state and local
taxes based on or measured by the net income of EVL which may be due and payable
by EVL or any partner of EVL, in accordance with law). Prime Lessee/Sublessor
will reimburse EVL for all such taxes paid by EVL, if EVL elects to pay any such
taxes, within ten days of receipt of EVL's invoice therefor. Subject to payment
(or other provision for payment acceptable to EVL) by Prime Lessee/Sublessor of
any Other Charges due, Prime Lessee/Sublessor shall be permitted to contest,
dispute, protest and file for refunds of any Other Charges, and EVL shall
reasonably cooperate with any such contest, dispute, protest or application for
refund.
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5. Utilization of Leased Systems.
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(a) Priority of Leased Systems During Deployment Term. During
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the Deployment Term, all BriteSmile Systems which Prime Lessee/Sublessor
provides to any Associated Centers in the United States shall be Leased Systems.
(b) Best Efforts. Prime Lessee/Sublessor shall use its best
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efforts to ensure that all Leased Systems are installed in Installation Sites
and are used throughout their respective Lease Terms so that the Variable Rent
due with respect to each Leased System can achieve its maximum potential.
(c) Leased and Non-Leased Systems. If a Non-Leased System is
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installed at the same Installation Site as a Leased System, the Variable Rent
due with respect to the Leased System will be based upon the aggregate number of
Key Cards delivered to operate the Leased System and the Non-Leased System.
(d) Removal of Leased Systems. In the event that a Leased System
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is removed from an Installation Site, Prime Lessee/Sublessor shall relocate such
Leased System as promptly as possible to another Installation Site. Anything in
Section 3 to the contrary, the Lease Term of any Leased System that is removed
from an Installation Site shall be automatically extended by the number of days
during which such System is not installed at an Installation Site and during
which the Variable Rent for such System is not calculated with respect to a
Surrogate System; it being the intention of the parties that the Lease Term of
each Leased System shall continue for a period or periods aggregating five years
during which such System is installed in circumstances where Variable Rent can
be generated.
(e) Surrogate Systems. In the event that a Leased System is
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removed from an Installation Site and is not restored to an Installation Site
within 60 days, then EVL may designate any Non-Leased System installed in an
Associated Center in the United States as a "Surrogate System," and all
BriteSmile Procedures performed on such Surrogate System from and after the end
of such 60-day period until the earlier of (x) the end of the Lease Term for the
Leased System or (y) the date the Leased System is installed in another
Installation Site shall be deemed to be BriteSmile Procedures for purposes of
calculating the Variable Rent due on the Leased System. If a Surrogate System is
subsequently removed from an Installation Site prior to the time that the
applicable Leased System has been restored to an Installation Site, such removal
shall be deemed another removal from operation of the applicable Leased System,
and EVL may designate any Non-Leased System installed in an Associated Center in
the United States as a new Surrogate System for purposes of calculating the
Variable Rent on the applicable Leased System.
6. Exchange of Leased Systems. If the Variable Rent due with respect
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to any Leased System is less than $375 for any calendar quarter beginning with
the fourth calendar quarter after the first calendar quarter when Variable Rent
is due with respect to such Leased System, then EVL, at its option, may exchange
ownership of such Leased System for any Non-Leased System owned by Prime
Lessee/Sublessor that is then installed in an Associated Center in the United
States. EVL shall make any such election within 20 days after the end of the
calendar quarter to which it pertains by giving written notice thereof to Prime
Lessee/Sublessor.
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In the event such election is made, EVL will transfer title (free and clear of
all incumbrances) to the Leased System to Prime Lessee/Sublessor and Prime
Lessee/Sublessor shall transfer title to the Non-Leased System to EVL, and the
Non-Leased System shall thereupon become a Leased System for purposes of this
Agreement. Upon EVL's request, Prime Lessee/Sublessor shall provide EVL with any
information that EVL may reasonably request in order to assess the present and
future productivity of Non-Leased Systems for which EVL may wish to exchange a
Leased System under this Section.
7. Use and Maintenance. Prime Lessee/Sublessor shall at its sole
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expense at all times during the term hereof maintain the Leased Systems in good
operating order, repair, condition and appearance in accordance with the
operation and technical manuals provided by Prime Lessee/Sublessor to its
Centers and Associated Centers. Prime Lessee/Sublessor shall protect the Leased
Systems from deterioration, other than normal wear and tear. Prime
Lessee/Sublessor shall not use the Leased Systems for any purpose other than
that for which they were designed and shall not perform, or permit the
performance of, any dental procedure or indication for which Prime
Lessee/Sublessor shall not have received all necessary approvals or otherwise in
violation of any policy or procedure imposed by Prime Lessee/Sublessor on its
Centers and Associated Centers. Without the prior written consent of EVL, the
Leased Systems shall be used by Prime Lessee/Sublessor only in the United States
and only in the ordinary conduct of its business. Prime Lessee/Sublessor shall
make all adjustments, repairs and replacements to the Leased Systems which are
required in order to comply with Prime Lessee/Sublessor's operating manuals or
which Prime Lessee/Sublessor otherwise makes to BriteSmile Systems owned by it
and licensed to its Centers and Associated Centers and/or which are required in
order to comply with applicable law. Any alteration, addition, improvement,
adjustment, repairs or replacements to the Leased Systems shall without further
action become the property of EVL, free and clear of any lien, charge or other
encumbrance. Prime Lessee/Sublessor will not, without the prior written consent
of EVL, affix or permit the affixation of the Leased Systems to any real
property if, as a result thereof, the Leased Systems will become a fixture under
applicable law. Prime Lessee/Sublessor acknowledges and agrees that EVL shall be
entitled to file such financing statements as it deems appropriate to protect
its interest in the Leased Systems and agrees to execute and deliver all
financing statements and comparable documents reasonably requested by EVL for
such purpose.
8. Installation, Delivery; Purchase Option and Return.
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(a) Installation and Delivery. Prime Lessee/Sublessor hereby
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assumes the full expense of transportation of the Leased Systems which are
purchased pursuant to Section 2(b) and 2(c) from the Manufacturer's Plant and
in-transit insurance to any place where Prime Lessee/Sublessor elects to use or
store such Leased Systems. Prime Lessee/Sublessor further assumes the full
expense of installation of all Leased Systems.
(b) Purchase Option. Upon the termination of the Lease Term of
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each Leased System, Prime Lessee/Sublessor shall have the right, exercisable by
written notice to EVL given at any time prior to 60 days following such
expiration, to purchase the Leased System for its Appraised Value. In the event
that this purchase option is not exercised, BriteSmile shall, from time to time
at EVL's request, sell to EVL, for resale to the Associated Center where the
Leased System is located, such Key Cards, Gels, Procedure Kits and
other
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BriteSmile Materials as are necessary to perform a BriteSmile Procedure with the
Leased System. The price at which such item shall be sold by Prime
Lessee/Sublessor to EVL will be 90% of the average price at which Prime
Lessee/Sublessor was providing such items to the Associated Center during the 6-
months prior to the end of the Lease Term of the Leased System.
(c) Return. Upon termination of this Lease, without Prime
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Lessee/Sublessor having exercised its purchase option in Section 8(b), Prime
Lessee/Sublessor shall, pursuant to EVL's instructions and at Prime
Lessee/Sublessor's expense (including, without limitation, expenses of
transportation and in-transit insurance), return all Leased Systems to EVL, in
the same operating order, repair, condition and appearance as when received
(less normal wear and tear) at such address within the continental United States
as directed by EVL.
9. Risk of Loss and Insurance.
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(a) Risk of Loss. Prime Lessee/Sublessor shall bear the entire
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risk of loss, damage, theft, or destruction of the Leased Systems or any part
thereof, from any and every cause whatsoever, which shall occur prior to the
return of the Leased Systems in accordance with Section 8, and no such loss,
damage, theft or destruction shall relieve Prime Lessee/Sublessor of its
obligation to pay Rent or to comply with any other provision hereof. In the
event of damage to any part of any Leased Systems, Prime Lessee/Sublessor shall
immediately repair such Leased System at Prime Lessee/Sublessor's expense, and
return the Leased System to its previous condition, unless irreparably damaged
in EVL's judgment. If any Leased System is stolen, destroyed or irreparably
damaged from any cause whatsoever (each an "Event of Loss"), Prime
Lessee/Sublessor shall promptly notify EVL of the occurrence of such Event of
Loss, and shall replace the Leased System with a duplicate Leased System in good
condition and working order, and Prime Lessee/Sublessor shall transfer title to
the replacement system to EVL, free and clear of all liens, claims and
encumbrances, which system shall thereupon become a Leased System subject to
this Agreement.
(b) Prime Lessee/Sublessor Insurance Requirements.
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(i) Property Insurance. Prime Lessee/Sublessor will acquire and
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maintain at all times prior to the return of the Leased Systems to EVL in
accordance with Section 8, at Prime Lessee/Sublessor's sole expense,
physical damage insurance providing "all risks" coverage, including flood
and quake coverage, for all Leased Systems, with an insurance company
selected by Prime Lessee/Sublessor, in an initial amount equal to the cost
to EVL of the Leased Systems, which amount shall be adjusted from time to
time, if necessary, to an amount that is no less than the then current
replacement cost of the Leased Systems. The insurance policy will name EVL,
and any Assignee or Secured Party as EVL may request, as an additional
insured. In addition to the foregoing, Prime Lessee/Sublessor shall be
solely responsible for all deductible amounts under the insurance policy
and will pay over such amounts to EVL in the event of any claim under the
insurance policy. As long as no Event of Default exists and no unreimbursed
Event of Loss has occurred hereunder, EVL shall reimburse Prime
Lessee/Sublessor, out of any property insurance proceeds for a Leased
System received by EVL, at such time, and to the extent, that Prime
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Lessee/Sublessor provides satisfactory evidence to EVL that the Leased
System has been repaired and restored to acceptable operating order and
condition or replaced as provided in this Agreement; provided that EVL
shall have the right, but not the obligation, to offset any such amounts
against any deductible amounts owed to EVL by Prime Lessee/Sublessor.
(ii) Liability and Malpractice Insurance. Prime Lessee/Sublessor shall
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at all times prior to the return of the Leased Systems to EVL in accordance
with Section 8 carry and maintain, at Prime Lessee/Sublessor's expense,
public liability insurance with coverage amounts no less than $5,000,000.
Such insurance shall, to the extent permitted by applicable law, name EVL
and, any Assignee or Secured Party as EVL may request, as additional
insured. The insurance required by this Section 9 shall provide at least
thirty days' prior written notice to EVL (and any Assignee and Secured
Party) before any such insurance coverage lapses or is canceled or
materially changed. Prime Lessee/Sublessor shall provide EVL evidence of
insurance coverage at the commencement of this Agreement and annually
thereafter.
10. Title and Assignment.
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(a) Title Generally. Nothing herein shall give Prime Lessee/Sublessor
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any right, title or interest in or to the Leased Systems except the limited
possession and use rights specifically set forth herein. Prime Lessee/Sublessor
shall cause the Leased Systems to be plainly, permanently and conspicuously
marked, by stenciling or by metal tag or plate affixed thereto, indicating EVL's
sole ownership interest in the Leased Systems. Prime Lessee/Sublessor shall hold
the Leased Systems subject and subordinate to the rights of EVL, any Assignee
and any Secured Party and Prime Lessee/Sublessor shall furnish EVL with such
documentation as EVL shall reasonably request with respect thereto. Prime
Lessee/Sublessor shall:
(i) protect and defend EVL's title as well as the interest of any
Assignee and any Secured Party against all persons claiming against or
through Prime Lessee/Sublessor,
(ii) at all times keep the Leased Systems free and clear from any
legal process, liens or encumbrances whatsoever (except any placed thereon
by EVL) and shall give EVL immediate written notice thereof,
(iii) cooperate with EVL, each Assignee and each Secured Party in
protecting and defending the title to the Leased Systems, including joining
as a party in any judicial proceeding, and
(iv) indemnify and hold EVL, each Assignee and each Secured Party
harmless from and against all losses and expenses caused thereby.
(b) No Assignment by Prime Lessee/Sublessor. Without the prior
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written consent of EVL, Prime Lessee/Sublessor may not assign this Agreement or
sublease or license the Leased Systems to any party other than (i) subleases to
its Associated Centers in the ordinary course of Prime Lessee/Sublessor's
business and pursuant to written agreements with
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Associated Centers which, if EVL so requests, expressly acknowledge, in a manner
acceptable to EVL, EVL's ownership of such Leased Systems and (ii) an assignment
of all Leased Systems to any wholly-owned subsidiary of Prime Lessee/Sublessor
together with an assignment of all agreements with Associated Centers
attributable to such Leased Systems.
(c) Assignment or Grant of Security Interest by EVL. Prime
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Lessee/Sublessor confirms that EVL may sell and assign the Leased Systems and
its rights and obligations under this Agreement to an assignee (the "Assignee")
or grant a security interest in the Leased Systems and this Agreement to a
security assignee (the "Secured Party"). Prime Lessee/Sublessor agrees it will
cooperate with EVL to facilitate each such assignment, will execute and deliver,
and authorizes EVL to execute and deliver financing statements and comparable
documents required for such purpose. Notwithstanding the foregoing, without
Prime Lessee/Sublessor's consent, no Assignee or Secured Party may be engaged
directly or indirectly in the business of whitening teeth at the time that any
assignment or the grant of any security interest occurs.
11. Concerning Defaults.
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(a) General. EVL covenants to Prime Lessee/Sublessor that, so
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long as an Event of Default has not occurred hereunder, neither EVL nor any
Assignee or Secured Party of EVL will disturb Prime Lessee/Sublessor's quiet and
peaceful possession of the Leased Systems and Prime Lessee/Sublessor's use
thereof for the purposes set forth herein. Whenever any payment (of Rent or
otherwise) is not made when due from Prime Lessee/Sublessor hereunder, Prime
Lessee/Sublessor shall pay interest on such amount at the lesser of 12% per
annum or the maximum allowable rate of interest permitted by law, from the
original due date to the date of payment.
(b) Events of Default. The occurrence of any one or more of the
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following events ("Events of Default") shall constitute a default hereunder:
(i) default by Prime Lessee/Sublessor in the payment of any
installment of Rent or other amount payable by Prime Lessee/Sublessor
to EVL hereunder, as and when the same becomes due and payable and
such default continues for a period of five days;
(ii) default by Prime Lessee/Sublessor in the performance or
observance of any other term or condition hereof or the inaccuracy in
any material respect of any representation or warranty made by Prime
Lessee/Sublessor herein or in any document or certificate furnished to
EVL in connection herewith, which default or inaccuracy shall continue
for a period of ten days after notice to Prime Lessee/Sublessor
thereof;
(iii) the making of an assignment by Prime Lessee/Sublessor for
the benefit of its creditors or the admission by Prime
Lessee/Sublessor in writing of its inability to pay its debts as they
become due, or the insolvency of Prime Lessee/Sublessor, or the filing
by Prime Lessee/Sublessor of a voluntary petition in bankruptcy, or
the adjudication of Prime Lessee/Sublessor as a bankrupt, or the
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filing by Prime Lessee/Sublessor of any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future statute, law or regulation, or the filing of any answer by
Prime Lessee/Sublessor admitting or the failure by Prime
Lessee/Sublessor to deny, the material allegations of a petition filed
against it for any such relief, or the seeking or consenting of Prime
Lessee/Sublessor to, or acquiescence by Prime Lessee/Sublessor in, the
appointment of any trustee, receiver or liquidator of Prime
Lessee/Sublessor or of all or any substantial portion of the
properties of Prime Lessee/Sublessor, or the inability of Prime
Lessee/Sublessor to pay its debts when due, or the commission by Prime
Lessee/Sublessor of any act of bankruptcy as defined in the Federal
Bankruptcy Act, as amended; or
(iv) the failure by Prime Lessee/Sublessor, within sixty days
after the commencement of any proceeding against Prime
Lessee/Sublessor seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, that will cause Prime
Lessee/Sublessor to default under the events stipulated above in
Section 11(b), subsections (i), (ii), or (iii), to obtain dismissal of
such proceeding or, within 60 days after the appointment, without the
consent or acquiescence of Prime Lessee/Sublessor, of any trustee,
receiver or liquidator of Prime Lessee/Sublessor or of all or any
substantial part of the properties of Prime Lessee/Sublessor, to
vacate such appointment.
(c) Further Remedies of EVL Upon an Event of Default. Upon the
------------------------------------------------
occurrence of any one or more Events of Default, EVL, at its option, may
exercise any and all rights, assert any and all claims and pursue any and all
remedies to which EVL may be entitled by law and may
(i) terminate this Lease;
(ii) proceed by appropriate court action to enforce performance
by Prime Lessee/Sublessor of the applicable terms hereof and recover
from Prime Lessee/Sublessor any and all damages and expenses,
including attorneys' fees, which EVL shall have sustained by reason of
Prime Lessee/Sublessor's default hereunder or on account of EVL's
enforcement of its remedies hereunder; or
(iii) retake immediate possession of the Leased Systems without
process of law and, for such purpose, EVL may enter upon the premises
where any Leased System may be located and may remove the same
therefrom without notice and without being liable to Prime
Lessee/Sublessor therefor.
(d) Prime Lessee/Sublessor shall be liable to EVL for, and EVL
may recover from Prime Lessee/Sublessor, the amount of all expenses of retaking,
storing, repairing and transporting the Leased Systems, including attorneys'
fees. The above remedies, to the extent permitted by law, shall be deemed
cumulative and may be exercised successively or concurrently, any one of which
EVL need not, in its discretion, exercise. Prime
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Lessee/Sublessor shall reimburse EVL for all costs and expenses incurred in
connection with the enforcement of any right or remedy hereunder, including
attorneys' fees. Except as set forth in this Section and to the extent permitted
by applicable law, Prime Lessee/Sublessor hereby waives any rights now or
hereafter conferred by statute or otherwise which may require EVL to sell, lease
or otherwise use the Leased Systems in mitigation of EVL's damage or which may
otherwise limit or modify any of EVL's rights or remedies.
12. System Selection; Warranty Disclaimer; Indemnity.
------------------------------------------------
(a) System Selection. Prime Lessee/Sublessor acknowledges,
----------------
represents and warrants that it has provided all of the technical and
manufacturing specifications for the Leased Systems and expressly disclaims any
reliance upon any statements made by EVL or any partner, employee or agent of
EVL and waives any claim, and the right to assert any such claim in any legal
proceeding, that Prime Lessee/Sublessor may have, or that may arise, against
EVL, or any partner, employee or agent thereof, with respect to any such
statements.
(b) Warranty Disclaimer. EVL has made no representation or
-------------------
warranty regarding the Leased System. PRIME LESSEE/SUBLESSOR ACKNOWLEDGES AND
AGREES THAT EVL IS NOT THE MANUFACTURER OF THE LEASED SYSTEMS, THAT EVL LEASES
THE LEASED SYSTEMS TO PRIME LESSEE/SUBLESSOR "AS IS" AND THAT EVL MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER INCLUDING, WITHOUT
LIMITATION, THE DESIGN OR CONDITION OF THE LEASED SYSTEMS, THEIR MERCHANTABILITY
OR FITNESS OR CAPACITY OR DURABILITY FOR ANY PARTICULAR PURPOSE, THE QUALITY OF
THE MATERIAL OR THE WORKMANSHIP OF THE LEASED SYSTEM OR THAT THE LEASED SYSTEM,
OR ANY PART OR COMPONENT THEREOF, OR PRIME LESSEE/SUBLESSOR'S USE THEREOF, DOES
NOT INFRINGE THE PATENT, COPYRIGHT, TRADEMARK, TRADE SECRET OR OTHER
INTELLECTUAL PROPERTY RIGHT OF ANY PERSON. EVL shall have no liability
whatsoever for the selection, quality, condition, merchantability, suitability,
fitness, operation or performance of the Leased Systems. Without limiting the
generality of the foregoing, EVL shall not be liable to the Prime
Lessee/Sublessor, or any officer, trustee, employee, agent or representative of
Prime Lessee/Sublessor, or to any person with respect to whom a BriteSmile
Procedure is performed, for any liabilities, claims, losses, damages (including
incidental, consequential and punitive damages) or expenses of any kind or
nature (including strict liability in tort) caused, directly or indirectly, by
any Leased System, or any inadequacy thereof for any purpose, or any deficiency
or defect therein, or installation or maintenance thereof, or any repairs,
servicing or adjustments thereto; or any delay in providing or failure to
provide any part thereof, or any interruption or loss of service or use thereof,
or any loss of business, or any damage whatsoever and howsoever caused, it being
understood and acknowledged that EVL has no obligation whatsoever with respect
to the delivery, installation, maintenance, repairs, servicing or adjustments of
the Leased System or any part thereof, or any replacement part thereto.
(c) Indemnity. Prime Lessee/Sublessor agrees to indemnify and
---------
hold EVL, each Assignee and each Secured Party harmless from and against any and
all claims, costs, expenses, damages and liabilities, including attorneys' fees
and costs of defense and investigation, arising out of the selection,
possession, leasing, renting, operation, control, use,
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maintenance, delivery, return or other disposition of the Leased Systems by any
user thereof and any claim arising out of the intentional or negligent act or
omission of Prime Lessee/Sublessor or any other person (excluding EVL, its
agents, officers and directors).
13. Enforcement of Manufacturer's Product Warranty. Prime
----------------------------------------------
Lessee/Sublessor hereby acknowledges that EVL will have a concurrent right with
Prime Lessee/Sublessor to pursue enforcement of any product warranties for
repair, replacement or purchase price refund (the "Subject Warranties") provided
by the manufacturer of the Leased Systems. To this end, Prime Lessee/Sublessor
hereby appoints EVL as its nonexclusive agent for the sole purpose of pursuing
the enforcement of the Subject Warranties on behalf of Prime Lessee/Sublessor.
Prime Lessee/Sublessor acknowledges that EVL will have the full right, but not
the obligation, to act to enforce any of the Subject Warranties. Prime
Lessee/Sublessor also acknowledges and agrees that in the event that any Leased
System manufacturer elects to refund the purchase price for the Leased System
rather than repairing or replacing the Leased System, all of such proceeds shall
be the property of EVL and shall be retained by EVL, if paid directly to EVL, or
paid immediately to EVL by Prime Lessee/Sublessor, if paid to Prime
Lessee/Sublessor.
14. Reports; Tax Certificates; Representations and Warranties of
------------------------------------------------------------
Prime Lessee/Sublessor.
----------------------
(a) Reports. At such times as EVL may reasonably request, Prime
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Lessee/Sublessor shall provide a written statement of the address of each
Installation Site or other location where a Leased System is installed or
stored. In addition, together with each payment of Variable Rent, Prime
Lessee/Sublessor shall provide a written report to EVL, in a format reasonably
acceptable to EVL and Prime Lessee/Sublessor, indicating the Key Card deliveries
made with respect to each Leased System with respect to which Variable Rent is
due. EVL shall have the right throughout the term of this Agreement, upon at
least 30 days' written notice, at EVL's expense, to examine Prime
Lessee/Sublessor's records and the Leased Systems, once per calendar year for
purposes of confirming compliance with this Agreement.
(b) Resale Tax Certification. On or prior to December 29, 2000,
------------------------
EVL and Prime Lessee/Sublessor shall each provide to the other a valid
California Resale Tax Certificate. From time to time during the term hereof each
party, at its expense, shall prepare and file or furnish to the other such other
certificates and documents as may be reasonably requested in connection with
payment, abatement, refund or exemption of or from Other Charges.
(c) Representations, Warranties and Covenants. Prime
-----------------------------------------
Lessee/Sublessor represents, warrants to and agrees with EVL as follows:
(i) This Agreement has been duly authorized and has been validly
executed and delivered by Prime Lessee/Sublessor and is a valid and
binding Agreement of Prime Lessee/Sublessor.
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(ii) This Agreement does not violate or conflict with Prime
Lessee/Sublessor's certificate of incorporation or by-laws or any law,
rule or regulation or agreement to which it is subject and by which
its assets are bound.
(iii) Prime Lessee/Sublessor has with respect to those Systems
that are to be sold pursuant to Section 2(a) and will have with
respect to those Systems to be sold pursuant to Section 2(b) good and
marketable title to all BriteSmile Systems sold and to be sold by
Prime Lessee/Sublessor to EVL hereunder, free and clear of all liens,
claims or encumbrances other than the limited rights of use granted by
Prime Lessee/Sublessor to its Associated Center from time to time in
the ordinary course of Prime Lessee/Sublessor's business.
(iv) Without EVL's consent, Prime Lessee/Sublessor will not
substantially alter the economic basis of its provision of BriteSmile
Systems to Associated Centers from one based on charging for Key Cards
to one based on charging for some other product or service.
15. Definitions.
-----------
"Appraised Value" means the fair market value of the applicable Leased
System as reasonably agreed by EVL and Prime Lessee/Sublessor, or failing such
agreement as reasonably determined by the independent certified public accounts
of Prime Lessee/Sublessor.
"Assignee" has the meaning specified in Section 10.
"Associated Centers" means a dentist practicing general or cosmetic
dentistry or orthodontics who provides teeth whitening services using BriteSmile
Systems pursuant to an agreement with Prime Lessee/Sublessor (but excluding
Centers).
"BriteSmile Procedure" means teeth whitening procedures performed with
a BriteSmile System.
"BriteSmile System" means either a BriteSmile 3000 or BriteSmile 4000
System.
"BriteSmile 3000 System" means Prime Lessee/Sublessor proprietary
teeth whitening system known as the BriteSmile 3000 System.
"BriteSmile 4000 System" means Prime Lessee/Sublessor's proprietary
teeth whitening system which is expected to be introduced in or about March 2001
and is presently known as the BriteSmile 4000 System.
"Centers" means a center or office which is primarily dedicated to the
provision of teeth whitening services and procedures using BriteSmile Systems
that are similar in operation to those Prime Lessee/Sublessor Centers now
located, among other places, in Walnut Creek, LaJolla, Irvine, Palo Alto and
Beverly Hills, California; Honolulu, Hawaii; Boston, Massachusetts and Atlanta.
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"Deployment Term" means the period beginning on the date hereof and
ending on the earlier of (x) the satisfaction by EVL of its obligations under
Sections 2(b) and 2(c); (y) the end of the 18/th/ month following the date
hereof or if extended pursuant to Section 2(c), the date to which the Deployment
Term is so extended and (z) the occurrence of an Event of Default hereunder.
"Event of Default" has the meaning set forth in Section 11
"Event of Loss" has the meaning set forth in Section 9.
"Excess Undeployed Systems" means those BriteSmile Systems in excess
of 50 which are Leased Systems and which are not installed and in operation at
Installation Sites or subject to commitments between Prime Lessee/Sublessor and
an Associated Center that requires them to be installed at Installation Sites.
"Fixed Rent" has the meaning set forth in Section 4.
"Installation Site" means an Associated Center location where a
BriteSmile System is installed for the purpose of providing paid BriteSmile
Procedures pursuant to an agreement with, or authority granted directly and
indirectly from, Prime Lessee/Sublessor.
"Key Card" means an electronic device distributed by Prime
Lessee/Sublessor to Associated Centers to activate the BriteSmile Systems and/or
any other method hereafter utilized by Prime Lessee/Sublessor to activate
BriteSmile Systems.
"Leased System" has the meaning set forth in Section 3.
"Manufacturer's Plant" means the facility where BriteSmile Systems
purchased by EVL pursuant to this Agreement are made available for delivery to
EVL by the manufacturer thereof.
"Non-Leased System" means any light activated teeth whitening system
used by Prime Lessee/Sublessor in the conduct of its business other than a
Leased System.
"Other Charges" has the meaning set forth in Section 4.
"Purchase Price" means the price payable to the manufacturer of
BriteSmile Systems for delivery of such system to EVL (or to Prime
Lessee/Sublessor at EVL's request) F.O.B. the Manufacturer's Plant.
"Rent" has the meaning set forth in Section 4.
"Secured Party" has the meaning set forth in Section 9.
"Variable Rent" has the meaning set forth in Section 4.
16. Governing Law. This Agreement shall be governed, construed and
-------------
enforced for all purposes under and in accordance with the laws of the State of
New York.
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Prime Lessee/Sublessor acknowledges that this Agreement is a transaction which
in the aggregate exceeds $1,000,000 and agrees that the United States District
Court for the Southern District of New York and/or the Supreme Court of the
State of New York, County of New York shall have exclusive jurisdiction for any
legal or equitable claims arising out of or in connection with this lease. The
parties further agree that each court shall have personal jurisdiction over the
parties and venue shall be appropriate in each court.
17. Miscellaneous Provisions. EVL and Prime Lessee/Sublessor
------------------------
acknowledge that there are no agreements or understandings, written or oral,
between EVL and Prime Lessee/Sublessor with respect to the Leased Systems, other
than as set forth herein, and that this Agreement contains the entire agreement
between EVL and Prime Lessee/Sublessor with respect thereto. This Agreement may
not be altered, modified, terminated or discharged, except by a writing signed
by the party against whom such alteration, modification, termination or
discharge is sought. No omission or delay by EVL at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms
hereof by Prime Lessee/Sublessor, shall be a waiver of any such right or remedy
to which EVL is entitled, nor shall it in any way affect the right of EVL to
enforce such provisions thereafter. This Agreement shall be binding upon, and
shall inure to the benefit of EVL, Prime Lessee/Sublessor and their respective
successors, legal representatives and assigns. All agreements, representations
and warranties of Prime Lessee/Sublessor contained in this Agreement or in any
document delivered pursuant hereto or in connection herewith shall be for the
benefit of EVL and any Assignee or Secured Party, as the case may be, and shall
survive the execution, delivery, expiration or other termination of this
Agreement. Any notice, request or other communication to either party by the
other as provided for herein shall be given in writing and only shall be deemed
received upon (i) the earlier of receipt or three days after mailing or sending
if mailed, postage prepaid by regular mail, or sent, by means of an overnight
air courier service, or (ii) upon verbal communication of receipt, if
transmitted by facsimile, to EVL (to the attention of "Agreement Administrator")
or Prime Lessee/Sublessor, as the case may be, at the address or facsimile
number, as applicable, for such party set forth below or at such changed address
as may be subsequently submitted by written notice of either party. In the event
any one or more of the provisions of this Agreement shall for any reason be held
invalid, illegal or unenforceable, the remaining provisions hereof shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be deemed
replaced by a valid, legal and enforceable provision that comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument.
18. Notice of Claim. Prime Lessee/Sublessor shall apprise EVL in
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writing within 30 days of notice of the institution of any negligence claim made
against Prime Lessee/Sublessor arising out of or in connection with its use of
any Leased System.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on February 28, 2001 as of the 22/nd/ day of December, 2000.
EXCIMER VISION LEASING L.P.
By: CAP America Limited, its General
Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Director
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
BRITESMILE, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: CFO
Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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