-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B4HJetNw9cq4UGx0SvGpxgaBflwkhnIpFrF+/qB/nqtubmNRnOsX87KPmaDaKSLD 38LaHZRc6zdgKNKS/1PTpw== 0001047469-98-015352.txt : 19980417 0001047469-98-015352.hdr.sgml : 19980417 ACCESSION NUMBER: 0001047469-98-015352 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19980416 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LASER PHOTONICS INC CENTRAL INDEX KEY: 0000711665 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 592058100 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-11635 FILM NUMBER: 98595537 BUSINESS ADDRESS: STREET 1: 12351 RESEARCH PWY CITY: ORLANDO STATE: FL ZIP: 32826 BUSINESS PHONE: 4072814103 MAIL ADDRESS: STREET 1: 12351 RESEARCH PARKWAY CITY: ORLANDO STATE: FL ZIP: 32826 10-K/A 1 10-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT NO. 2 TO (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1996 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NOT FEE REQUIRED] For the transition period from _______________ to ______________ Commission file number: 0-11635 LASER PHOTONICS, INC. ------------------------------------------------------- (Name of small business issuer specified in its charter) Delaware 59-2058100 - -------------------------------- ------------------- (State or other jurisdiction (I.R.S Employer of incorporation or organization Identification No.) 6865 Flanders Drive, Suite G. San Diego, California 92121 ------------------------------------------------------------ (Address of principal executive offices, including zip code) 619-455-7030 ----------------------------------------------- (Issuer's telephone number, including area code) 12351 Research Parkway, Orlando, Florida 32826 - (407) 281-4103 ----------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Securities registered under Section 12(b) of the Exchange Act: Name of each exchange Title of each class on which registered ------------------- --------------------- None None Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.01 par value per share ------------------------------------------------ (Title of Class) The undesigned registrant hereby amends the following items, financial statements, exhibits or other portions of the Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996, as set forth in the pages attached hereto: 1. ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)(3) Exhibits 10.5-10.7. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)(3) EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-K. 10.5 Master Technology Agreement between the Company and Baxter Healthcare Corporation, dated July 28, 1997** 10.6 License Agreement between the Company and Baxter Healthcare Corporation, dated August 19, 1998** 10.7 Manufacturing Agreement between the Company and Baxter Healthcare Corporation, dated August 19, 1997** - ------------------------- ** These exhibits are the subject of a currently pending request for Confidential Treatment with the Securities and Exchange Commission. 2 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: April 15, 1998 LASER PHOTONICS, INC. BY: /s/ Raymond A. Hartman ------------------------------------- Raymond A. Hartman President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated below. LASER PHOTONICS, INC. Dated: April 15, 1998 BY: /s/ Raymond A. Hartman ------------------------------------- Raymond A. Hartman President, Chief Executive Officer and Director Dated: April 15, 1998 BY: /s/ Chaim Markheim ------------------------------------- Chaim Markheim Director, Chief Operating Officer and Chief Financial Officer(Principal Financial Officer and Principal Accounting Officer) Dated: April 15, 1998 BY: /s/ Steven A. Qualls ------------------------------------- Steven A. Qualls Director and Executive Vice President Dated: April 15, 1998 BY: /s/ Alan R. Novak ------------------------------------- Alan R. Novak Director Dated: April 15, 1998 BY: /s/ John J. McAtee, Jr. ------------------------------------- John J. McAtee, Jr. Director 3 EX-10.5 2 MASTER TECHNOLOGY AGREEMENT MASTER TECHNOLOGY AGREEMENT This Master Technology Agreement ("the Agreement") is made and entered into as of July 28, 1997, by and between Baxter Healthcare Corporation, a corporation organized under the laws of the State of Delaware ("Baxter") and AccuLase, Inc., a corporation organized under the laws of the State of California ("AccuLase"). RECITALS A. AccuLase is the owner of certain technology, patents and technical know-how related to an excimer laser and laser delivery system for use in, among other things, transmyocardial laser revascularization. B. Simultaneously with the Closing of this Agreement, Baxter and AccuLase will enter into that certain License Agreement, dated as of the Closing date (the "License Agreement"), pursuant to which AccuLase shall grant an exclusive license to Baxter of technology, patents, technical know-how and products, among other things, related to transmyocardial laser revascularization. C. Baxter wishes to license from AccuLase the rights to develop, manufacture, market and sell AccuLase's laser and laser delivery system for cardiovascular and vascular applications upon the terms and conditions contained in the License Agreement and herein. D. Simultaneously with the Closing of this Agreement, Baxter and AccuLase will enter into that certain Manufacturing Agreement (the "Manufacturing Agreement") dated as of the Closing date, pursuant to which AccuLase shall manufacture those excimer laser products defined therein. E. Baxter wishes to purchase, and AccuLase desires to manufacture excimer laser products pursuant to the terms and conditions defined in the Manufacturing Agreement and herein. F. Baxter and AccuLase desire to make certain representations, warranties and other agreements in connection with this Agreement. G. Baxter and AccuLase acknowledge and agree that the intended use and value of the technical know-how, intellectual property, patents, and products acquired, purchased and/or licensed under this Agreement, the License Agreement and the Manufacturing Agreement are uncertain as a result of the recent and continuing development of the field of transmyocardial revascularization and the parties further acknowledge that based on the foregoing, the consideration paid for the performance of AccuLase's obligations herein, in the License Agreement and in the Manufacturing Agreement is adequate, sufficient and fair consideration. NOW, THEREFORE, in consideration of the covenants and representations set forth herein, the above recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINED TERMS. For the purposes of this Agreement, the following terms shall have the definitions ascribed to them: "AccuLase Certificate of Incorporation" shall have the meaning given it in Section 4.1. "AccuLase Confidential Information" shall have the meaning given it in Section 4.11 (g). "AccuLase Financial Statements" shall have the meaning given it in Section 4.4. "Affiliate" shall mean (i) any Person directly or indirectly controlling, controlled by, or under common control with AccuLase or (ii) any Person that owns or controls twenty percent (20%) or more of any class of equity securities of AccuLase or any of its subsidiaries or Affiliates. For the purposes of this definition, "control" (including with correlative meanings, the terms "controlling," "controlled by," and "under common control with"), as applied to any Person means the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Claim" shall have the meaning given it in Section 8.2. "Closing" shall mean the consummation of the transactions contemplated hereby at the time, date and place specified in Section 7.1 hereof. "Confidentiality Agreement" shall mean that certain Confidentiality Agreement, dated April 25, 1997, between Baxter and AccuLase. "End User" shall mean any Person that orders a product who is a healthcare provider or employs or is otherwise affiliated with healthcare providers. "End User Price" shall mean the actual sales price (exclusive of taxes, insurance and freight) received by Baxter from an End User of a product. 2 "IDE" shall have the meaning given it in Section 2.3. "Intellectual Property" shall mean, without restriction or limitation, the list of patents identified in Schedule 4.11, the intellectual property rights licensed to Baxter by AccuLase pursuant to the terms of the License Agreement referred to in Section 2.2 and any and all devices, processes (including without limitation processes of using devices or of manufacturing such devices), compositions of matter, computer software, chemical formulations, ideas, developments or inventions, whether patentable or unpatentable, and any and all written materials or other works which may be subject to copyright, which are conceived and/or reduced to practice relating to the Intellectual Property. "Licensed Patent" shall mean the United States or foreign patents and patent applications (including any continuation, continuation in part, divisional, reissue or reexamination patent applications thereof and patents issuing therefrom) listed in Schedule 4.11 hereto. "Material Adverse Effect" shall mean any event, change or effect that is materially adverse to the condition (financial or otherwise), properties, assets (including intangible assets), liabilities, business, operations or results of operations of such entity. "New Developments" shall have the meaning given it in Section 2.10. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization. "Promissory Note" shall mean the promissory note for $100,000 issued by AccuLase and payable to Baxter, dated as of July 7, 1997, and any advances Baxter makes to AccuLase subsequent to July 7, 1997. "Transferred Assets" shall mean the two AccuLase lasers identified by serial numbers 004 and 005. ARTICLE II PROPERTY TRANSFER, LICENSE GRANT, CONSIDERATION, AND OTHER AGREEMENTS 2.1 TRANSFER OF ASSETS. At the Closing, AccuLase agrees (a) to transfer all of its right, title and interest in and to the Transferred Assets to Baxter by executing and delivering the Assignment of Transferred Property in the form attached as Exhibit A. Baxter shall be responsible for preparing and, as necessary, filing and/or recording such forms and documents as are reasonably necessary to transfer the Transferred Assets to Baxter, and shall bear all costs and expenses in connection therewith. 3 2.2 LICENSE OF CARDIOVASCULAR RIGHTS. At the Closing, AccuLase agrees to license the Intellectual Property for cardiovascular and vascular applications to Baxter by executing and delivering the form of License Agreement attached as Exhibit B. 2.3 TRANSFER OF IDE. At the Closing, AccuLase agrees to assign all of its rights, title and interest in and to its Investigational Device Exemption for the excimer laser system (the "IDE") to Baxter by executing and delivering the Assignment of Investigational Device Exemption in the form attached as Exhibit C. In connection with the clinical studies set forth in the IDE: (a) Baxter agrees to use reasonable commercial efforts to expediently and competently complete the clinical studies; and (b) AccuLase agrees, at AccuLase's expense, to maintain and service the lasers which are currently used in the IDE until such time as the two new commercial lasers referred to in Section 2.6 (c) are delivered to Baxter. 2.4 MANUFACTURING AGREEMENT. At the Closing, the parties agree to execute and deliver the Manufacturing Agreement in the form attached as Exhibit D and AccuLase agrees to manufacture the Product (as defined in the Manufacturing Agreement) upon the terms and conditions contained therein. 2.5 SECURITY AGREEMENT; INTERCREDITOR AGREEMENT. At the Closing, and in order to secure AccuLase's performance of this Agreement, the License Agreement, the Manufacturing Agreement, and the obligations of AccuLase arising hereunder and thereunder, AccuLase agrees to execute and deliver to Baxter the form of Security Agreement attached as Exhibit E. At the Closing, AccuLase agrees to execute and deliver to Baxter the form of Intercreditor Agreement attached as Exhibit G. 2.6 CASH CONSIDERATION PAID BY BAXTER. In consideration for the transactions contemplated by the provisions of this Article II, Baxter agrees to pay AccuLase $1,550,000, in cash, at the following times: (a) $700,000 at Closing, provided, however, any and all advances made by Baxter to AccuLase and due under the Promissory Note shall be credited against such amount; (b) $250,000 three (3) months after Closing; and (c) $600,000 upon delivery of two (2) units of the new commercial excimer laser referred to in Section 2.7 below which are manufactured in accordance with the terms and conditions of the Manufacturing Agreement, provided, however, $250,000 of such funds (or such lesser amount as AccuLase and Mr. Hartman may thereafter jointly advise Baxter in a written notice) shall be paid jointly to AccuLase and Mr. Raymond A. Hartman. 2.7 DEVELOPMENT OF NEW LASER. AccuLase agrees to undertake the development of a new commercial excimer laser for Baxter; AccuLase represents such new commercial laser is expected to be available within four months of the Closing. In consideration of the payments by Baxter referred to in Section 2.6, AccuLase hereby 4 grants to Baxter an exclusive license pursuant to the terms of the License Agreement defined in Section 2.2 covering the use of any and all new technology so developed, in the making and sale of such new commercial laser. At Baxter's discretion, Baxter may request AccuLase obtain CE mark designation of the new commercial laser and, if so requested by Baxter, Baxter agrees to pay AccuLase $100,000 upon issuance of the CE mark. 2.8 CONFIDENTIALITY. Except as required by law, neither party shall disclose to third parties or use except as expressly permitted hereunder any information or items it receives from the other party during the course of this Agreement or the term of this Agreement. This restriction shall not apply to information which: (a) Is already publicly known; (b) Becomes publicly known without a breach of this Agreement; (c) Is disclosed to others without restrictions by the party who discloses the information; or (d) Is independently developed by employees or consultants of the receiving party without access to the other parties' confidential information. 2.9 PUBLICITY. Except as required by law, neither party shall issue any publicity about this Agreement or the parties' performance under this Agreement without the prior written comment of the other. 2.10 ADDITIONAL OBLIGATIONS OF BAXTER AND ACCULASE. In the event Baxter determines that new or additional intellectual or other property rights exist or could exist in the Licensed Technology for cardiovascular and vascular applications (the "New Developments"), all such rights shall be automatically encompassed within the license to be granted by AccuLase to Baxter at the Closing pursuant to the License Agreement. Baxter shall bear all costs and expenses in connection with preparing, filing, recording and prosecuting all such intellectual or other property rights for such New Developments and AccuLase agrees to actively assist Baxter and, as appropriate, cause its inventors and/or employees to actively assist Baxter by executing or delivering such documents as are reasonably necessary for Baxter to prepare, file, record or prosecute all such intellectual or other property rights. 2.11 USE OF CASH RECEIPTS BY ACCULASE. AccuLase agrees that the funds received by AccuLase pursuant to Section 2.6 (a) hereof shall be used for, and shall pay in full, all vendors of AccuLase who are current creditors of AccuLase existing at Closing except for obligations to Affiliates. 2.12 NON-COMPETE. AccuLase agrees that neither it nor any of its Affiliates shall, for a period equal to the earlier of (a) five (5) years after Closing or (b) the date on 5 which this Agreement terminates pursuant to Section 8.1 hereof, engage in any business worldwide which develops, manufactures, supplies or distributes laser products for cardiovascular or vascular applications. 2.13 PERCUTANEOUS DELIVERY SYSTEM. At any time, Baxter may undertake one or more programs to develop the percutaneous delivery of excimer laser systems for cardiovascular and vascular applications. AccuLase is hereby granted the option, but not the obligation, to share twenty-five percent (25%), but not less than twenty-five percent (25%), of the costs of such development program(s) at such times and in such manner as Baxter may reasonably determine from time to time. In the event AccuLase chooses to proceed to co-fund such percutaneous development program(s) with Baxter, AccuLase shall be entitled to a royalty equal to ten percent (10%) of the End User Price for each product to which such development program applies, subject to such other terms and conditions to which the parties may agree in such development agreement. 2.14 FINANCIAL STATEMENTS. AccuLase will deliver to Baxter, not later than 45 days after the Closing, AccuLase's financial statements (balance sheet and profit and loss statement, statement of stockholders' equity and statement of changes in financial position) at December 31, 1996 and for the fiscal year then ended and its reviewed financial statements (balance sheet and profit and loss statement) at and for the six-month period ended June 30, 1997. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BAXTER Baxter represents and warrants to AccuLase as follows: 3.1 ORGANIZATION, STANDING AND POWER. Baxter is a corporation duly organized, validly existing and in good standing under the laws of Delaware. 3.2 AUTHORITY. Baxter has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Baxter. This Agreement has been duly executed and delivered by Baxter and constitutes the valid and binding obligation of Baxter enforceable against Baxter in accordance with its terms. 3.3 BROKERS AND FINDERS' FEES. Baxter has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or investment bankers' fees or any similar charges in connection with this Agreement or any transaction contemplated hereby. 6 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ACCULASE AccuLase represents and warrants to Baxter as follows: 4.1 ORGANIZATION, STANDING AND POWER. AccuLase is a corporation duly organized, validly existing and in good standing under the laws of California. AccuLase has the corporate power to own its properties and to carry on its business as now being conducted. AccuLase has delivered a true and correct copy of its Certificate of Incorporation as amended (the "AccuLase Certificate of Incorporation"), and bylaws, as amended or other charter documents, as applicable, of AccuLase to Baxter. AccuLase is not in violation of any of the provisions of the AccuLase Certificate of Incorporation or its bylaws or equivalent organizational documents. 4.2 AUTHORITY. AccuLase has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of AccuLase. This Agreement has been duly executed and delivered by AccuLase and constitutes the valid and binding obligation of AccuLase enforceable against AccuLase in accordance with its terms. No consent, approval, order, authorization of, or registration, declaration or filing with any governmental entity or any court is required by or with respect to AccuLase in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 4.3 CAPITAL STRUCTURE. The authorized capital stock of AccuLase consists of 10,000,000 shares of common stock, no par value, of which there were issued and outstanding immediately prior to the transactions contemplated hereby 7,085,723 shares. Such shares of AccuLase common stock are owned of record as set forth in Schedule 4.3. There are no other outstanding shares of capital stock or voting securities and no outstanding commitments to issue any shares of capital or voting securities. 4.4 FINANCIAL STATEMENTS. Subject to the provisions of Section 2.14 hereof, AccuLase will have delivered to Baxter AccuLase's financial statements (balance sheet and profit and loss statement, statement of stockholders equity and statement of changes in financial position) at December 31, 1996, and for the fiscal year then ended and its reviewed financial statements of (balance sheet and profit and loss statement) at and for the six-month period ended June 30, 1997 (collectively the "AccuLase Financial Statements"). To the best knowledge of AccuLase's officers, the AccuLase Financial Statements are complete and correct in all material respects. 4.5 ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, AccuLase has conducted its business in the ordinary course consistent with past practice and there has not occurred: 7 (a) any acquisition, sale, mortgage, pledge or transfer of the Transferred Assets; (b) any material change in accounting methods or practices by AccuLase; (c) any indebtedness incurred by AccuLase except for indebtedness evidenced by the Promissory Note; (d) any loan made or agreed to be made by AccuLase, nor has AccuLase become liable or agreed to become liable as a guarantor with respect to any loan; or (e) any negotiation or agreement by AccuLase to do any of the things described in the preceding clauses (a) through (d) (other than negotiations with Baxter and its representatives regarding the transactions contemplated by this Agreement). 4.6 SUBSIDIARIES. AccuLase does not presently own or control, directly or indirectly, an interest in any other corporation, association or business entity. 4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in Schedule 4.7, AccuLase has no material obligations or liabilities of any nature (matured or unmatured, fixed or contingent) other than (a) those set forth or adequately provided for in the AccuLase Financial Statements and (b) those incurred in connection with the execution of this Agreement. 4.8 MATERIAL CONTRACTS. Except as set forth in Schedule 4.8, all contracts, agreements and instruments to which AccuLase is a party which comprise any part of the Technology are in full force and effect in all material respects. With respect to any and all such contracts: (a) AccuLase has no notice that any party to any such contract intends to cancel, withdraw, modify, or amend such contract; and (b) AccuLase is not in material default or breach and no event has occurred or will occur by reason of the transactions contemplated in this Agreement which would constitute a default or breach, where such default or breach would entitle another party to this Agreement to accelerate or terminate AccuLase's rights or otherwise impose a material penalty or forfeiture thereunder (whether with or without notice, lapse of time or the happening or occurrence of any other event). 4.9 LITIGATION. Except as set forth in Schedule 4.9, there is no private or governmental judgment, decree, order, action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic or, to the knowledge of AccuLase, threatened against AccuLase or any of its properties or any of its officers or directors (in their capacities as such) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect on AccuLase. 8 4.10 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no material agreement, judgment, injunction, order or decree binding upon AccuLase which has the effect of prohibiting or materially impairing any current or future ability of AccuLase to fulfill its obligations under this Agreement or the Manufacturing Agreement. 4.11 RIGHTS TO TRANSFERRED ASSETS. (a) AccuLase owns, or is licensed or otherwise possesses legally enforceable rights to use, all Transferred Assets free and clear of all liens, encumbrances and rights of third parties. (b) Schedule 4.11 lists (i) Intellectual Property, including all patents and patent applications and all registered and unregistered trademarks, trade names and service marks, registered and unregistered copyrights, and maskworks, which AccuLase considers to be material to its excimer laser business, including the jurisdictions in which each such intangible right has been issued or registered or in which any application for such issuance and registration has been filed, (ii) all material licenses, sublicenses and other agreements as to which AccuLase is a party and pursuant to which any person is authorized to use any of the Transferred Assets, and (iii) all material licenses, sublicenses and other agreements as to which AccuLase is a party and pursuant to which AccuLase is authorized to use any third party patents, trademarks or copyrights, including software which are incorporated in, are, or form a part of any Transferred Assets. (c) To the knowledge of AccuLase, there is no material unauthorized use, disclosure, infringement or misappropriation of any of the Intellectual Property by any third party, including any employee or former employee of AccuLase. AccuLase has not entered into any agreement to indemnify any other person against any charge of infringement of any intellectual property, other than indemnification provisions contained in purchase orders arising in the ordinary course of business. (d) AccuLase is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any license, sublicense or other agreement relating to the Intellectual Property. (e) To AccuLase's knowledge, all patents, registered trademarks, service marks and copyrights held by AccuLase are valid and subsisting. AccuLase (i) has not been sued in any suit, action or proceeding which involves a claim of infringement of any patents, trademarks, service marks, copyrights or violation of any trade secret or other proprietary right of any third party; (ii) has no knowledge that the manufacturing, marketing, licensing or sale of products using the Intellectual Property infringes any patent, trademark, service mark, copyright, trade secret or other proprietary right of any third party, which such infringement would have a Material Adverse Effect on AccuLase; and (iii) has not brought any action, suit or proceeding for infringement of the Intellectual Property or breach of any license or agreement involving the Intellectual Property against any third party. 9 (f) AccuLase has secured valid written assignments from all consultants and employees who contributed to the creation or development of the Intellectual Property of the rights to such contributions that AccuLase does not already own by operation of law. (g) AccuLase has taken all reasonable and appropriate steps to protect and preserve the confidentiality of all of the Intellectual Property not otherwise protected by patents, or patent applications or copyright (the" AccuLase Confidential Information"). To the knowledge of AccuLase, all use, disclosure or appropriation of AccuLase Confidential Information by or to a third party has been pursuant to the terms of a written agreement between AccuLase and such third party. To the knowledge of AccuLase, all use, disclosure or appropriation of AccuLase Confidential Information not owned by AccuLase has been pursuant to the terms of a written agreement between AccuLase and the owner of such AccuLase Confidential Information, or is otherwise lawful. 4.12 INSURANCE. AccuLase has policies of insurance and bonds of the type and in amounts customarily carried by persons conducting businesses or owning assets similar to those of AccuLase as identified in Schedule 4.12. There is no material claim pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. 4.13 BROKERS' AND FINDERS' FEES. AccuLase has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or investment bankers' fees or any similar charges in connection with this Agreement or any transaction contemplated hereby. 4.14 COMPLETE COPIES OF MATERIALS. AccuLase has delivered or made available to Baxter true and complete copies of each document evidencing the Intellectual Property and the Transferred Assets. 4.15 BOARD APPROVAL. The Board of Directors of AccuLase has approved this Agreement. ARTICLE V CONDITIONS PRECEDENT TO BAXTER'S OBLIGATIONS The performance of Baxter under this Agreement is subject, at the election of Baxter, to the fulfillment of each of the following conditions by AccuLase on or before the Closing: 5.1 CONTINUATION AND TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of AccuLase contained in this Agreement or in any certificate, document or other Agreement delivered to Baxter pursuant hereto shall be true 10 and correct in all material respects on the date hereof and shall be deemed to have been made again at the Closing and shall then also be true and correct in all material respects. 5.2 OPINION OF COUNSEL. Baxter shall have been furnished with an opinion of Donald G. Davis, Esq., counsel for AccuLase, in the form attached hereto as Exhibit F-1 and the letter from Paul Couchot, Esq. in the form attached hereto as Exhibit F-2. 5.3 BANKRUPTCY COURT APPROVAL. The United States Bankruptcy Court in the matter of IN RE HELIONETICS, INC. shall have approved the subordination by Helionetics of its security interest in AccuLase's assets to a new security interest to be granted by AccuLase to Baxter as contemplated by this Agreement. 5.4 INTERCREDITOR AGREEMENT. Baxter shall have received the Intercreditor Agreement, duly executed and delivered by Helionetics, Inc. ARTICLE VI CONDITIONS PRECEDENT TO ACCULASE'S OBLIGATIONS The performance of the obligations of AccuLase under this Agreement is subject, at the election of AccuLase, to the fulfillment of each of the following conditions on or before the Closing: 6.1 CONTINUATION AND TRUTH OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of Baxter contained in this Agreement or in any certificate, document or other Agreement delivered to AccuLase pursuant hereto shall be true and correct in all material respects on the date hereof and shall be deemed to have been made again at the Closing and shall then also be true and correct in all material respects. SECTION VII CLOSING 7.1 TIME AND PLACE OF CLOSING. The Closing of the transactions contemplated by this Agreement shall be held at Baxter Healthcare Corporation, 17221 Red Hill Avenue, Irvine, California 92614 at 10:00 a.m. on the business day immediately following the date on which the letter from Paul Couchot, Esq. (as referred to in Section 5.2 hereof) may be delivered to Baxter, or at such other place or date as may be fixed by mutual agreement of Baxter and AccuLase. 7.2 DOCUMENTS TO BE DELIVERED BY BAXTER AT THE CLOSING. At the Closing, Baxter shall deliver to AccuLase the following: (a) The License Agreement referred to in Section 2.2; 11 (b) The Manufacturing Agreement referred to in Section 2.4; and (c) That portion of the cash consideration due at Closing referred to in Section 2.6. 7.3 DOCUMENTS TO BE DELIVERED BY ACCULASE AT THE CLOSING. At the Closing, AccuLase shall deliver to Baxter the following: (a) The Assignment of Transferred Property referred to in Section 2.1; (b) The License Agreement referred to in Section 2.2; (c) The Assignment of Investigational Device Exemption referred to in Section 2.3; (d) The Manufacturing Agreement referred to in Section 2.4; (e) The Security Agreement referred to in Section 2.5; and (f) The Intercreditor Agreement referred to in Section 2.5. 7.4 FURTHER ASSURANCES. Each party hereto, at the reasonable request of the other party hereto, shall execute and deliver such other instruments and to perform such other acts and things as may be reasonably necessary or desirable for effecting completely the consummation of this Agreement and the transactions contemplated hereby. ARTICLE VIII TERMINATION, INDEMNITY AND OFFSETS 8.1 TERMINATION BY BAXTER. Baxter shall have the right at any time, in its sole discretion and without payment or penalty of any kind, to terminate this Agreement, but only provided it concurrently terminates both the License Agreement and the Manufacturing Agreement, and any obligations hereunder and thereunder, provided five (5) days prior written notice is given to AccuLase. 8.2 INDEMNITY AND OFFSET. (a) Subject to the provisions of Section 8.2 (b), AccuLase agrees to defend and hold Baxter harmless from and against any cost, expense, claim, cause of action (whether actual or threatened) or any other liability resulting from the Intellectual Property or Licensed Products (as such term is defined in the License Agreement) infringing any third party patent or other intellectual property claim or right relating to lasers (a "Claim"), provided that Baxter promptly notifies AccuLase of any such Claim of which it is aware, 12 reasonably assists AccuLase (at AccuLase's expense) in defending such Claim, and provides AccuLase with the opportunity to assume sole control over any litigation and/or settlement relating to such Claim. In any such Claim, Baxter may retain its own counsel (at Baxter's expense ) to assist in the defense of any such Claim and to counsel Baxter with respect to its strategy in such Claim. (b) For the purposes of Sections 8.2 (a) and 8.2 (c) only, and consistent with the parties' desires that Claims which relate specifically to transmyocardial laser revascularization shall be borne seventy-five percent (75%) by Baxter and twenty-five percent (25%) by AccuLase, the parties agree that (i) a Claim which relates specifically to transmyocardial laser revascularization shall be borne seventy-five percent (75%) by Baxter and twenty-five percent (25%) by AccuLase, and (ii) Baxter shall have the opportunity to assume sole control over any litigation and/or settlement relating to such Claim notwithstanding any contrary provision in Section 8.2 (a) hereof. (c) Baxter may withhold from, reserve against and/or offset against any and all amounts due or to become due (or estimated to be due or to become due) to AccuLase whether pursuant to the terms of this Agreement or otherwise, any and all amounts as may be reasonably necessary or expected to be incurred by Baxter in connection with the full and final resolution of any Claim. ARTICLE IX GENERAL PROVISIONS 9.1 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with confirmation of receipt) to the parties at the following address (or at such other address for a party as shall be specified by like notice): (a) if to Baxter, to: Baxter Healthcare Corporation 17221 Red Hill Avenue, m/s 98 Irvine, California 92614 Attention: Vice President, Business Development Facsimile No.: (714) 474-6445 Telephone No.: (714) 474-6424 13 (b) if to AccuLase, to: 6865 Flanders Drive, Suite G San Diego, CA 92121 Attention: Mr. Raymond A. Hartman President and Chief Executive Officer Facsimile No.: (619) 455-0946 Telephone No.: (619) 455-7030 with a copy to: Donald G. Davis, Esq. 833 Via Del Monte, Suite 100 Palos Verdes Estates, CA 90274 Facsimile No.: (310) 373-5410 Telephone No.: (310) 378-8968 9.2 INTERPRETATION. When a reference is made in this Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement unless otherwise indicated. The words "include, " "includes" and "including" when used herein shall be deemed in each case to be followed by the words, "without limitation." The phrase "made available" in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available. The phrases "the date of this Agreement", "the date hereof", and terms of similar import, unless the context otherwise requires, shall be deemed to refer to date of Closing. 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. 9.3 COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same Agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 9.4 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This Agreement and the documents and instruments and other Agreements specifically referred to herein or delivered pursuant hereto, including the Exhibits and the Schedules: (a) Constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, except for the Confidentiality Agreement, which shall continue in full force and effect, and shall survive any termination of this Agreement or the Closing, in accordance with its terms; 14 (b) Are not intended to confer upon any other person any rights or remedies hereunder, except as set forth in Section 2.6 (c); and (c) Shall not be assigned by operation of law or otherwise except as otherwise specifically provided; however, Baxter may assign its rights or delegate its duties hereunder to its affiliates, or in connection with a transfer of substantially all of its transmyocardial laser business. 9.5 SEVERABILITY. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision. 9.6 AMENDMENT. This Agreement may not be altered or amended except by writing signed by the parties hereto. 9.7 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a part of any one remedy will not preclude the exercise of any other remedy. 9.8 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California (without regard to its principles of conflicts of law). 9.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 9.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in this Agreement shall survive for three (3) years following the Closing. 15 9.11 EXPENSES. All costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement will be paid by the party incurring such expenses. 9.12 ATTORNEYS' FEES. In the event of any dispute arising under the terms of this Agreement (including the breach thereof), the prevailing party in such action shall be entitled to recover its attorneys' fees and costs in addition to such other relief as may be awarded by a court or by an arbitrator. 16 IN WITNESS WHEREOF, Baxter and AccuLase have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized all as of the date first written above. Baxter Healthcare Corporation, a corporation By: /s/ John H. Kehl, Jr. --------------------------------------------- John H. Kehl, Jr. Vice President, Business Development AccuLase, Inc., a corporation By: /s/ Raymond A. Hartman ---------------------------------------------- Raymond A. Hartman President and Chief Executive Officer ATTACHMENTS: Schedule 4.3 Capital Structure of AccuLase Schedule 4.7 Certain Liabilities Schedule 4.8 Material Contracts Schedule 4.9 Litigation Schedule 4.11 Intellectual Property Schedule 4.12 Insurance EXHIBITS: A - Assignment of Transferred Property B - License Agreement C - Assignment of Investigational Device Exemption D - Manufacturing Agreement E - Security Agreement F-1 - AccuLase Legal Opinion F-2 - Helionetics' Counsel's Letter G - Intercreditor Agreement 17 EX-10.6 3 EX-10.6 LICENSE AGREEMENT This License Agreement (this "Agreement") is made effective as of August 19, 1997 (the "Effective Date") by and between Baxter Healthcare Corporation, a Delaware corporation ("Baxter"), and AccuLase, Inc., a California corporation ("AccuLase"). RECITALS WHEREAS, AccuLase is the owner of technical know-how, patents and patent applications relating to the use of lasers to treat cardiovascular or vascular disease, as defined below; and WHEREAS, Baxter and AccuLase are entering into the Master Technology Agreement of even date (the "Master Technology Agreement") whereby, among other things, AccuLase is agreeing to license certain technology and intellectual property relating to excimer lasers to Baxter; and WHEREAS, Baxter and AccuLase are entering into the Manufacturing Agreement of even date (the "Manufacturing Agreement") whereby, among other things, AccuLase is agreeing to manufacture excimer lasers utilizing Technical Know-How (as hereinafter defined) upon the terms and conditions contained therein. WHEREAS, Baxter desires to acquire and AccuLase desires to grant to Baxter an exclusive license in and to the Technical Know-How, patents and patent applications for use in the treatment of cardiovascular or vascular disease. WHEREAS, Baxter and AccuLase acknowledge and agree that the intended use and future value of the licensed Technical Know-How (as hereinafter defined), the Licensed Patents (as hereinafter defined) and the Licensed Products (as hereinafter defined) are uncertain as a result of the recent and continuing development of the field of transmyocardial revascularization and the parties further acknowledge that based on the foregoing, the consideration paid for AccuLase's performance of its obligations as set forth herein is adequate, sufficient and fair consideration. NOW, THEREFORE, in consideration of the covenants and representations set forth herein, the above recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: EXHIBIT B ARTICLE I DEFINITIONS Defined terms in this Agreement have and bear the meanings established for such terms in the succeeding paragraphs of this Article I. 1.1 "ACCULASE INVENTIONS" shall mean those Inventions or Discoveries determined to have been conceived and/or reduced to practice pursuant to standard patent law and regulation practice solely by AccuLase employees, consultants, agents, representatives or others obligated to assign their rights to such Inventions or Discoveries to AccuLase. For the purposes of this section only unpatentable Inventions and Discoveries shall be treated as if patentable under the relevant patent law and regulation practice. 1.2 "AFFILIATE" in respect of any one of Baxter and AccuLase as used herein shall mean any person or entity controlling, controlled by or under common control with Baxter or with AccuLase as the case may be. 1.3 "BAXTER INVENTIONS" shall mean those Inventions or Discoveries determined to have been conceived and/or reduced to practice pursuant to standard patent law and regulation practice solely by Baxter employees, consultants, agents, representatives or others obligated to assign their rights to such Inventions or Discoveries to Baxter. For the purposes of this section only unpatentable Inventions and Discoveries shall be treated as if patentable under the relevant patent law and regulation practice. 1.4 "DISPOSABLES" shall mean one or more products intended for single use which comprise part of the Product. 1.5 "EFFECTIVE DATE" shall mean the date referred to in the introductory clause of this Agreement. 1.6 "END USER" shall mean any person (including business entities) that orders a Product who is a healthcare provider or employs or is otherwise affiliated with healthcare providers. 1.7 "END USER PRICE" shall mean the actual sales price (exclusive of taxes, insurance and freight) received by Baxter from an End User of the Product. 1.8 "FIELD OF TECHNOLOGY" shall mean the use of lasers to treat cardiovascular or vascular disease. 1.9 "IMPROVEMENT(s)" shall mean any modification or further development of any of the Licensed Products, or any modification of or further development of a product or 2 process described in Patents, or any new Invention or Discovery, technical data, designs, devices, plans, specifications, methods, processes, systems, clinical data and any other information or documentation, whether patentable or not, falling within the Field of Technology. 1.10 "INVENTIONS" OR "DISCOVERIES" shall mean, without restriction or limitation, any and all devices, processes (including without limitation processes of using devices or of manufacturing such devices and standard operating procedures (SOP's) and other laboratory procedures), compositions of matter, computer software, chemical formulations or compositions or products whether patentable or unpatentable, and any and all written materials or other works that may be subject to copyright, conceived or reduced to practice prior to or during the term of this Agreement and for 90 days thereafter, and which relate to the Field of Technology. 1.11 "JOINT INVENTIONS" shall mean those Inventions or Discoveries determined to have been conceived and/or reduced to practice pursuant to standard patent law and regulation practice by AccuLase and Baxter employees, consultants, agents, representatives or others obligated to assign their rights to such Inventions or Discoveries to AccuLase or Baxter. For the purposes of this section only unpatentable Inventions and Discoveries shall be treated as if patentable under the relevant patent law and regulation practice. 1.12 "LICENSED PATENTS" shall mean any United States or foreign patents and patent applications (including any continuation, continuation-in-part, divisional, reissue or reexamination patent applications thereof and patents issuing therefrom) relating to AccuLase Inventions and/or Joint Inventions, or other Inventions or Improvements relating to the Field of Technology in which AccuLase has a present interest, or hereafter acquires an interest, including but not limited to the patents and patent applications listed in Exhibit A. 1.13 "LICENSED PRODUCTS" shall mean Patented Licensed Products and Unpatented Licensed Products and shall include single use, disposable products as well as the related laser hardware. 1.14 "PATENTED LICENSED PRODUCTS" shall mean any product made, used, or sold by Baxter which comes within one or more claims of a Valid and Enforceable Patent. 1.15 "TECHNICAL KNOW-HOW" shall mean Inventions or Discoveries, technical data, designs, devices, plans, specifications, methods, processes, systems, clinical data and any other information or documentation, whether patentable or not, falling within the Field of Technology which is in the possession of or acquired hereinafter by AccuLase including but not limited to any new Inventions or Discoveries derived from AccuLase's development of the new excimer laser pursuant to Section 2.7 of the Master Technology Agreement. 3 Technical Know-How shall not include any information, and/or documentation which was previously known by Baxter or which is publicly known. 1.16 "UNPATENTED LICENSED PRODUCTS" shall mean any product made, used, or sold by Baxter which utilizes Technical-Know-How, but which does not come within one or more claims of a Valid and Enforceable Patent. 1.17 "VALID AND ENFORCEABLE PATENT" shall mean a Licensed Patent that has issued in the United States or has been published in another country so as to create an enforceable right and that has not (i) expired or been abandoned, or (ii) been finally adjudicated or determined to be invalid or unenforceable by a court of competent jurisdiction. ARTICLE II GRANT OF LICENSE 2.1 LICENSE GRANT. In consideration for the payments made by Baxter pursuant to Section 2.2 below, AccuLase hereby grants to Baxter an exclusive, worldwide right and license, including the right to grant sublicenses, under the Technical Know-How, Licensed Patents and Improvements to practice methods and to manufacture, have manufactured, import, use, offer to sell, sell and otherwise dispose of Licensed Products within the Field of Technology. 2.2 ROYALTY. During the term of this Agreement, Baxter shall pay AccuLase a royalty equal to ten percent (10%) of (a) the End User Price for each Disposable or (b) if the Disposable is sold on a "per procedure" basis, the imputed price of the Disposable based on the worldwide average sales price of such Disposable not sold on a "per procedure" basis, calculated quarterly for such Disposables, adjusted to amortize and recapture over a 36-month period Baxter's cost of the Product (as such term is defined in the Manufacturing Agreement). Disposables may be manufactured by Baxter or be manufactured by others for Baxter. The parties further agree that in the event Baxter grants a sublicense to a third party pursuant to its rights under Section 2.1 above, the royalties payable to AccuLase in connection with such sublicense shall be calculated in accordance with the foregoing terms notwithstanding whether the Baxter and any such sublicensee agree to different royalty terms. 4 ARTICLE III DISCLOSURE 3.1 INITIAL TRANSFER OF INFORMATION. Within two (2) months after the Effective Date of this Agreement, AccuLase shall furnish to Baxter all Technical-Know-How and Inventions in the possession of AccuLase on the Effective Date of this Agreement which are necessary to practice the License under Article II of this Agreement. The manner in which said Know-How and Inventions shall be furnished shall be agreed to between the parties. 3.2 CONTINUOUS DISCLOSURE OBLIGATIONS OF ACCULASE. In addition to other obligations of AccuLase set forth in this Agreement, AccuLase agrees to the following continuous obligations: (a) Throughout the term of this Agreement, AccuLase shall promptly notify and promptly furnish to Baxter all Technical Know-How and AccuLase Inventions developed or acquired by AccuLase, subsequent to the date of this Agreement, which are necessary to practice the License granted by AccuLase under this Agreement; and (b) Throughout the term of this Agreement, AccuLase shall promptly disclose to Baxter the existence of all Improvements discovered by, granted to, or developed by AccuLase together with a precise description and demonstration of the nature and manner of applying and utilizing the improvements. 3.3 CONTINUOUS DISCLOSURE OBLIGATIONS OF BAXTER. In addition to other obligations of Baxter set forth in this Agreement, Baxter agrees to the following continuous obligations: (a) Baxter shall promptly provide written notice to AccuLase of all sublicensing agreements executed into by and between Baxter and any third-party. Baxter shall state in such notice the name of the sublicensee, the scope of the sublicense, the payment terms of the sublicense and the term of the sublicense. (b) Baxter shall provide AccuLase (upon Baxter receiving the prior written request of AccuLase) with copies of all necessary documentation and records in its possession in order for AccuLase to verify that the amount of royalties paid to AccuLase hereunder comply with the terms set forth in Section 2.2 above. The parties hereto agree that (i) all costs and expenses incurred by both Baxter and AccuLase in connection with such request and verification shall be borne, in full, by AccuLase and (ii) the right granted to AccuLase under this Section 3.3(b) may be exercised by AccuLase only one time during each six (6) month period that this Agreement is in effect. 5 ARTICLE IV CONFIDENTIALITY 4.1 CONFIDENTIALITY. Baxter and AccuLase realize that some information received by one party from the other pursuant to this Agreement will be confidential. It is therefore agreed that any information received by one party from the other which is in writing, or reduced to writing or other tangible medium within ninety (90) days of the date of disclosure, and clearly designated as "Confidential," shall not be disclosed by the receiving party to any third party and shall not be used by the receiving party for purposes other than those contemplated by this Agreement, for a period of five (5) years from the date of disclosure. However, nothing in this Agreement shall prevent the receiving party from disclosing any such information: (a) which is or becomes publicly known through no fault of the receiving party; (b) which the receiving party rightfully had in its possession prior to the disclosure to the receiving party, as evidenced by written documentation; (c) which the receiving party lawfully obtained without restriction from a third party with no secrecy or confidentiality obligation to the disclosing party; (d) which is independently developed by the receiving party, as evidenced by written documentation; or (e) which is approved in writing by the disclosing party for disclosure by the receiving party. 4.2 NON-DISCLOSURE. Baxter and AccuLase agree not to disclose to third parties the terms of this Agreement except as required by law. ARTICLE V REPRESENTATIONS AND WARRANTIES 5.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Baxter and AccuLase each represent and warrant to the other that they have full power and authority to enter into this Agreement and carry out the transactions contemplated hereby and that all necessary corporate action has been duly taken in this regard. 6 5.2 ACCULASE REPRESENTATIONS. AccuLase represents and warrants that it is the sole and exclusive owner of the entire right, title, and interest in and to AccuLase's Technical Know-How and AccuLase's Inventions and that apart from Baxter's interest it is the sole and exclusive owner of the entire right, title, and interest in and to Joint Inventions, and that it has the right to grant the rights and license hereby granted to Baxter. ARTICLE VI TERM AND TERMINATION 6.1 TERM OF THE AGREEMENT. Unless sooner terminated pursuant to Section 8.1 of the Master Technology Agreement, this Agreement shall remain in full force and effect until expiration of the last to expire Licensed Patent. 6.2 MILESTONES OF PERFORMANCE. Upon sixty (60) days prior written notice to Baxter by AccuLase, and subject to Baxter's right to cure any obligation of performance which AccuLase has provided Baxter with written demand to perform such obligation, AccuLase may terminate this Agreement if Baxter has failed to meet any obligation in this Section 6.2: (a) Baxter shall either continue the protocol set forth in the IDE being transferred to Baxter pursuant to the Master Technology Agreement or, in the event Baxter elects to suspend said protocol, (i) Baxter shall promptly give AccuLase written notice of such suspension of work and (ii) Baxter shall use commercially reasonable efforts to initiate a new protocol and apply for a new investigational device exemption within ninety (90) days thereafter. (b) At Baxter's sole discretion and based upon clinical outcomes, Baxter may pursue new protocols and apply for any one or more investigational device exemptions. (c) Baxter shall commence reasonable marketing efforts outside the United States of the Licensed Product within a reasonable time, based upon clinical outcomes. (d) Baxter agrees to purchase the required quantity of Products (as defined in the Manufacturing Agreement) pursuant to Section 2 (b) of the Manufacturing Agreement upon terms and conditions contained therein. (e) Baxter agrees to purchase the required quantity of Products (as defined in the Manufacturing Agreement) pursuant to Section 2 (c) of the Manufacturing Agreement upon the terms and conditions contained therein. 7 ARTICLE VII PATENTING AND MAINTENANCE 7.1 PATENT PROSECUTION BY ACCULASE. Baxter agrees to assume the expense of filing and prosecuting patent applications for Licensed Patents on AccuLase Inventions and Joint Inventions of its choice in the countries of its choice, and the expense of maintaining the Licensed Patents on AccuLase Inventions and Joint Inventions of its choice in the countries of its choice. AccuLase shall have the right to review and comment on all such patent applications and Licensed Patents, and any documents relating to the prosecution thereof, and agrees to provide full assistance in their preparation and prosecution. If Baxter chooses not to file, prosecute, or maintain any of such patent applications or Licensed Patents, AccuLase shall have the right to do so at its own expense. 7.2. COOPERATION IN PATENT PROSECUTION. Each party agrees to make available to the other party, data, records, samples or the like in its possession or under its control which are required for the preparation, prosecution, maintenance or defense of any Licensed Patent, and that it will sign oaths, affidavits or other documents as may be required for the preparation, prosecution, maintenance or defense of such Licensed Patents. ARTICLE VIII INDEMNIFICATION 8.1 INFRINGEMENT INDEMNIFICATION. AccuLase reconfirms and agrees to the indemnification and other obligations set forth in Section 8.2 of the Master Technology Agreement. ARTICLE IX MISCELLANEOUS 9.1 FORCE MAJEURE. If either party fails to fulfill its obligations hereunder, including, but not limited to, royalty obligations, when such failure is due to an act of God, or other action such as fire, flood, civil commotion, riot, war (declared and undeclared), revolution, action by government including delays in obtaining government approvals, embargoes, then said failure shall be excused for the duration of said event. 9.2 GOVERNING LAW AND ATTORNEYS' FEES. This Agreement shall be interpreted in accordance with the laws of the State of California. In the event of any dispute arising 8 under the terms of this Agreement (including the breach thereof), the prevailing party in such action shall be entitled to recover its attorneys' fees and costs in addition to such other relief as may be awarded by a court or by an arbitrator. 9.3 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with confirmation of receipt) to the parties at the following address (or at such other address for a party as shall be specified by like notice): (a) If to Baxter to: Baxter Healthcare Corporation 17221 Red Hill Avenue, m/s 98 Irvine, California 92614 Attention: Vice President, Business Development Facsimile No.: (714) 474-6445 Telephone No.: (714) 474-6424 (b) If to AccuLase to: 6865 Flanders Drive, Suite G San Diego, CA 92121 Attention: Mr. Raymond A. Hartman President and Chief Executive Officer Facsimile No.: (619) 455-0946 Telephone No.: (619) 455-7030 with a copy to: Donald G. Davis, Esq. 833 Via Del Monte, Suite 100 Palos Verdes Estates, CA 90274 Facsimile No.: (310) 373-5410 Telephone No.: (310) 378-8968 9.4 COMPLETE AGREEMENT. This Agreement including the other documents referred to herein which form a part hereof represents the entire agreement between the parties hereto with respect to the subject matter hereof. There are no understandings, representations or warranties of any kind except as expressly set forth herein. 9 9.5 SEVERABILITY. If any of the provisions of this Agreement are held void or unenforceable, the remaining provisions shall nevertheless be effective, the intent being to effectuate this Agreement to the fullest extent possible. 9.6 MODIFICATION. Any modification of this Agreement shall be in writing and shall be signed by both AccuLase and Baxter. Any attempt to modify this Agreement orally or in writing not executed by all parties hereto shall be void. 9.7 CONFIDENTIALITY. The parties agree that the terms of this Agreement are confidential and each party shall use the same degree of care to prevent disclosure of the terms of this Agreement to third parties as it uses to protect its own confidential information of similar nature. Any advertising or publicity concerning this Agreement, including press releases, which mentions the other party by name shall be agreed upon by both parties in writing prior to any release. 9.8 COUNTERPARTS. This Agreement may be executed in one or more counterparts all of which shall be considered one and the same Agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. It is understood that all parties need not sign the same counterpart. 9.9 SECURITY INTEREST. AccuLase's performance of this Agreement and the obligations of AccuLase arising hereunder shall be secured by that certain Security Agreement, dated as of the date hereof, as described in Section 2.5 of the Master Technology Agreement, upon the terms and conditions herein and therein. ** The remainder of this page has been intentionally left blank. 10 IN WITNESS THEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written. Baxter Healthcare Corporation, a corporation By: /s/ John H. Kehl, Jr. ----------------------------------------- Name: /s/ John H. Kehl, Jr. ---------------------------- Its: /s/ Vice President, Business Development Cardiovascular Group -------------------------------------- AccuLase, Inc., a corporation By: /s/ Raymond A. Hartman ----------------------------------------- Name: /s/ Raymond A. Hartman ---------------------------- Its: /s/ President & CEO ----------------------------- ATTACHMENTS: Exhibit A - Licensed Patents 11 EX-10.7 4 EX-10.7 EXHIBIT D MANUFACTURING AGREEMENT This Manufacturing Agreement ("this Agreement") is made and entered into as of August 19, 1997 by and between Baxter Healthcare Corporation, Inc., a corporation organized under the laws of the State of Delaware ("Baxter") and AccuLase, Inc., a corporation organized under the laws of the State of California ("AccuLase"). RECITALS A. AccuLase and Baxter have entered into that certain Master Technology Agreement, dated as of July 28, 1997 (the "Master Technology Agreement"), pursuant to which, among other things, AccuLase has agreed to manufacture the Product (as defined herein). B. AccuLase and Baxter are entering into the License Agreement, dated as of the date hereof (the "License Agreement"), simultaneously with the execution and delivery of this Agreement, pursuant to which, among other things, AccuLase agrees to license certain technical know-how, patents and products related to the Product (as hereinafter defined). C. AccuLase and Baxter wish to describe the terms and conditions by which AccuLase manufactures the excimer laser for Baxter, Baxter retains rights to manufacture the laser in the event AccuLase is unwilling or unable to manufacture lasers and Baxter pays certain royalties to AccuLase on certain products manufactured by Baxter. D. Baxter and AccuLase acknowledge and agree that the intended use and future value of the Product are uncertain as a result of the recent and continuing development of the field of transmyocardial revascularization and the parties further acknowledge that based on the foregoing, the consideration paid for AccuLase's performance of its obligations set forth herein is adequate, sufficient and fair consideration. AGREEMENT NOW, THEREFORE, in consideration of the covenants and representations contained herein, the above recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. DEFINED TERMS. For the purposes of this Agreement, the following terms shall have the definitions ascribed to them: "Engineering Change" shall have the definition given it in Section 4 (c). "Product" shall mean the excimer laser system having the specifications attached as Exhibit A, solely for use for cardiovascular and vascular disease. "Technology" shall mean the Specifications and the other proprietary information referred to herein. "Specifications" shall mean the drawings, schematics and detailed specifications set forth in the Exhibit A, solely for the use of cardiovascular and vascular disease. 2. MANUFACTURING RIGHTS, ORDERS, PRICES AND PAYMENTS. (a) In consideration for the payments made by Baxter pursuant to Section 2.6 of the Master Technology Agreement, AccuLase agrees to manufacture the Product for the exclusive use of Baxter in accordance with all of the terms and conditions set forth within this Agreement, at the following prices: (i) $ [*] per laser for the first eight (8) lasers, (ii) After the first eight (8) lasers have been purchased by Baxter and subject to Section 2(a)(iii) below, the following prices shall apply:
Price [*] Per Unit ------- ------------ [*] $75,000 [*] $[*] [*] $[*] [*] $45,000
(iii) Prices for Product shall be adjusted annually after three (3) years, based upon changes in costs of materials (but not overhead or profit margin). (iv) Unless otherwise specified or required by law, all prices will be quoted and billed exclusive of federal, state or local excise, sales or other similar taxes. Such taxes, when applicable, will appear as additional items on invoices. (v) AccuLase shall be ready and able to timely supply all quantities of the Product ordered by Baxter. 2 (vi) Terms of payment are net thirty (30) days from receipt of the Product at Baxter's designated destination. (b) Baxter agrees to purchase a minimum of eight units of the Product from AccuLase, pursuant to the terms and conditions stated herein, within 12 months of the date of receipt of the two units of the Product referred to in Section 2.6 (c) of the Master Technology Agreement. (c) Baxter agrees to purchase a minimum of twenty units of the Product from AccuLase, pursuant to the terms and conditions state herein, in the second 12 month period following the date of receipt of the two units referred to in Section 2.6 (c) of the Master Technology Agreement. (d) In addition to and subsequent to the purchases set forth in subparagraphs (b) and (c) of this Section 2, Baxter agrees to purchase units of the Product as it deems necessary for Baxter's operations from AccuLase throughout the term of this Agreement, and AccuLase agrees to manufacture the Product to fill such purchase orders as defined in this subparagraph (d). (e) Baxter shall issue purchase orders for the Product not less than ninety (90) days prior to anticipated delivery dates. Baxter agrees to use reasonable commercial efforts to give AccuLase ninety (90) days' notice should schedule or quantity revisions become necessary. AccuLase shall acknowledge promptly each subsequent Baxter purchase order in writing and confirm delivery dates to destinations specified by Baxter. All sales of Product shall be subject to the terms and conditions of this Agreement and, to the extent they specify quantities, destinations and delivery dates, to Baxter's purchase orders. If there is any conflict or difference in interpretation between any Baxter purchase order and this Agreement, the terms and conditions of this Agreement shall supersede those of such purchase order. AccuLase shall not be liable for failure or delay in filling Baxter orders because of any cause beyond the control of and occurring without the fault of AccuLase; provided, however, that AccuLase (i) shall in all circumstances be considered to control its relationships with its suppliers and its internal allocation of manufacturing capacity, and (ii) shall notify Baxter promptly of anticipated delays and shall use its reasonable commercial efforts to fill such orders as soon as possible. Without limiting its other available remedies, Baxter may cancel any order, in whole or in part, which is delayed more than 60 days. (f) In the event that Baxter reasonably determines that AccuLase is unwilling or unable to produce the Product in compliance with all the terms of this Agreement or one or more purchase orders subsequently issued to AccuLase, (i) Baxter may terminate AccuLase's manufacturing rights under this Agreement without payment or penalty to AccuLase, and (ii) Baxter may either manufacture the Product directly or have the Product manufactured for Baxter without payment or penalty to AccuLase. 3 (g) AccuLase shall ship the Product F.O.B. AccuLase's San Diego, California, plant via mutually agreed upon carriers. Normal cost of shipping shall be prepaid by AccuLase and added to AccuLase's invoice to Baxter. AccuLase shall ship Product by air freight if necessary to meet confirmed delivery dates or to replace Product recalled or otherwise found by Baxter to not conform to the Specifications and warranties, and AccuLase shall bear the expense of the excess cost of air freight over normal shipping charges. 3. TERM AND TERMINATION. (a) Unless sooner terminated pursuant to Section 8.1 of the Master Technology Agreement, this Agreement shall remain in full force and effect until expiration of the last to expire the Licensed Patent (as defined in the License Agreement). 4. PRODUCT CHANGES. (a) AccuLase shall make available to Baxter all developments or enhancements to the Product or to other products that accomplish the same or similar functions as the Product, provided that AccuLase shall not be required to make available any development, enhancements, or other products which use proprietary information of third parties. If Baxter agrees in writing to accept such development, enhancement, or other product, it shall be added as an amendment to the Specifications in a timely manner. (b) AccuLase shall notify Baxter in advance and in writing of any proposed change by AccuLase in the following aspects of the Product or its components: (i) the composition, specifications, or source of any part, material, component or assembly; (ii) the method of manufacture, assembly, or testing; (iii) the specific subcontractors utilized by AccuLase; (iv) site of manufacture; or (v) labeling. AccuLase shall not depart from or make any change to the Specifications or the Product design or performance without prior written consent of Baxter. (c) Should Baxter want to make any change to the mechanical or electrical design or Specifications which would affect the schedule, performance, reliability, availability, appearance, dimensions, or safety of the Product, or AccuLase's costs of manufacture, testing, labeling, or packaging ("Engineering Change"), Baxter shall give AccuLase notice of the proposed Engineering Change. AccuLase shall respond by giving Baxter a written evaluation of the Engineering Change stating AccuLase's price increase or decrease, if any, to implement the Engineering Change. If the parties agree to the Engineering Change, both parties shall execute an amendment to the Specifications and, if a price change is applicable, an amendment to the prices stated in Section 2 of this Agreement. If the parties do not agree to the Engineering Change, Baxter may have the Product manufactured by an alternative manufacturer in accordance with Section 2 (f) hereof. 4 (d) By execution of the License Agreement, AccuLase hereby grants to Baxter an exclusive license to all developments, enhancements and improvements of the Product and to all discoveries, inventions, enhancements and improvements of any and all technical know-how and intellectual property used in the development of the Product, pursuant to the terms of the License Agreement, and as further defined therein. 5. TRADEMARKS, LABELING, PATENTS, AND EXCLUSIVITY. (a) As part of the Product and included in the prices set forth in this Agreement, AccuLase, at its expense, shall produce and provide all artwork, labeling, product inserts, and packaging for the Product as provided in the Specifications. All such artwork, labels, inserts, and packaging and any use of any trademark, trade name or logo owned or used by Baxter must be approved in advance in writing by Baxter. If a trademark, trade-name or logo owned or used by Baxter or its parent corporation is used in connection with the Product, the labeling shall state "Distributed by Baxter Healthcare Corporation". AccuLase shall obtain prior written authorization from Baxter for all changes to the artwork, labels, inserts or packaging for the Product. Each use of a trademark, trade name or logo owned or used by Baxter on or in connection with the Product shall inure to the benefit of Baxter and its parent company. Should any such use vest in AccuLase any rights in a trademark, trade name or logo used by Baxter, AccuLase shall transfer such rights to Baxter or its designee upon request of Baxter. Except as provided in this Agreement, AccuLase shall not use any trademark, trade name or logo used or claimed by Baxter or any confusingly similar trademark, trade name or logo during or after the term of this Agreement. (b) AccuLase shall manufacture and sell the Products exclusively for and to Baxter unless an exception is expressly authorized by Baxter in a writing signed by Baxter. AccuLase acknowledges that the Product is protected by one or more patents and that this Agreement does not give AccuLase any right, permission, or license to manufacture or sell the Product or any patented invention which is a part of the Product except as authorized by Baxter within this Agreement. AccuLase shall not design, sell, develop, or manufacture any other excimer laser system for cardiovascular applications other than the Product for any entity other than Baxter at any time during the term of this Agreement unless an exception is expressly authorized by Baxter in a writing signed by Baxter. 6. MANUFACTURE AND QUALITY CONTROL. (a) For each shipment of Product, AccuLase shall conform to the requirements set forth in Baxter's Supplier Quality Standard attached hereto as Exhibit B and any other incoming quality standards which are agreed to by the parties. (b) All Product shall meet the Specifications. All product shall be manufactured in accordance with Good Manufacturing Practices for Medical Devices established by the United States Food and Drug Administration ("FDA") as provided in 21 U.S.C. 360j (f) and as promulgated by regulations in 21 CFR 820. Product shall be subjected to quality control inspection by AccuLase in accordance with Baxter's quality control standards and the 5 quality control system to be developed by AccuLase prior to production of any Product. AccuLase shall permit Baxter to review periodically AccuLase's production and quality control procedures and records and to visit AccuLase's facilities at reasonable times with a representative of AccuLase present in order to assure satisfaction of the requirements of this Agreement. (c) Baxter may inspect or audit the product for integrity and adherence to the Specifications. If any of the Product fails to meet AccuLase's warranties or to conform to the Specifications, Baxter may return such lot at AccuLase's expense for repair. If any customer of Baxter rejects or returns Product to Baxter as a result of Product performance problems covered under AccuLase's guaranty or warranty, Baxter shall notify AccuLase in writing within 30 days. AccuLase shall repair or replace such Product or credit Baxter for the purchase price of such Product. If AccuLase so requests, Baxter will return any such Product to AccuLase at AccuLase's expense. (d) AccuLase shall manufacture Product in such a manner that in the event of a recall, the Product can be traced by serial number to a production run. (e) In the event that Baxter receives any serious complaint regarding the Product (i.e., that it is likely to cause death or serious injury), Baxter shall notify AccuLase by facsimile within two (2) business days. In the event that Baxter receives any other complaint regarding the Product, Baxter shall notify AccuLase by first class mail within five (5) business days. In the event that AccuLase receives any complaint regarding the Product, but in no event later than 48 hours after receipt, AccuLase shall notify Baxter by facsimile, telephone, and first class mail within 48 hours after AccuLase's receipt of the complaint, in order to permit Baxter to comply with FDA regulatory requirements. Baxter will make an evaluation of each complaint it receives and will conduct all follow-up and communication which it deems appropriate to comply with regulatory requirements. (f) In the event that AccuLase becomes aware of any quality problem that may render the Product unsafe for human use, misbranded, or adulterated, AccuLase shall notify Baxter immediately by facsimile, telephone, and first class mail and shall take corrective action as directed by Baxter. (g) AccuLase represents that it is and will remain in compliance with all applicable federal, state, and local laws, regulations, and orders. AccuLase shall execute, on request of Baxter, contractor certification forms certifying compliance with certain laws, regulations, and orders. (h) In the event of any inspection of AccuLase's facilities by a federal, state or local regulatory agency which inspection yields information or report which is material to the manufacture, inspection, storage, or other handling of the Product by AccuLase, AccuLase shall immediately notify Baxter in writing and by telephone of such information or report. 6 (i) AccuLase represents that it now has FDA and ISO 9002 certifications. AccuLase shall maintain those certifications throughout the term of this Agreement. (j) Within thirty (30) days after execution of this Agreement, AccuLase shall provide Baxter with a written list of the names and addresses of all of the direct suppliers of parts and all subcontractors whom AccuLase will be using in the manufacture, inspection, and testing of the Product. 7. GUARANTEE, WARRANTIES, AND INDEMNIFICATIONS. (a) The Product is hereby guaranteed by AccuLase, as of the date of shipment or delivery, to be on such date not adulterated or misbranded within the meaning of the United States Federal Food, Drug and Cosmetics Act (the "Act") and any similar federal, state, or local laws or regulations, and not an article which may not, under the provisions of the Act, be introduced into interstate commerce. (b) ACCULASE WARRANTS THAT IT POSSESSES GOOD AND MARKETABLE TITLE TO THE PRODUCT SOLD TO BAXTER AND THAT THE PRODUCT IS IN COMPLIANCE WITH THE SPECIFICATIONS AND IS MANUFACTURED IN ACCORDANCE WITH GOOD MANUFACTURING PRACTICES. ACCULASE WARRANTS THAT NO CHANGES WILL BE MADE IN THE SPECIFICATIONS WITHOUT BAXTER'S PRIOR WRITTEN APPROVAL. AccuLase hereby indemnifies and agrees to defend and to hold Baxter, its successors, affiliates, assigns, customers, and users of the Product harmless from and against all claims, liabilities, losses and expenses arising out of or in connection with the use of any Product or allegedly caused by any Product, to the extent resulting from AccuLase's negligence or the Product's failure to meet the Specifications or warranties. (c) AccuLase further warrants for a period of one (1) year from the date of delivery to Baxter's customer or eighteen (18) months from the date of shipment by AccuLase, whichever is less, that the product is free from defects in workmanship, materials and handling. AccuLase shall repair or replace, at AccuLase's option and free of charge, any Product with any defect in workmanship or materials which is returned to AccuLase's factory packaged, insured, and freight pre-paid within the warranty period. AccuLase shall return the Product, repaired or replaced, to the shipper packaged, insured, and with freight pre-paid by AccuLase at AccuLase's expense. This warranty shall not apply to: (i) Any modification or alteration of the Product made by anyone other than AccuLase after shipment by AccuLase; (ii) Any defect, loss, or damage resulting from theft, loss, fire, misuse, abuse, vandalism, negligence, acts of God, power failures or surges, alterations, modifications, or failure to following installation, operations, and maintenance instructions; and 7 (iii) Any other equipment, supplies, software, or data used with the Product. (d) Baxter hereby indemnifies and agrees to defend and to hold AccuLase , and its successors, affiliates and assigns harmless from and against all claims, liabilities, losses and expenses, but not consequential damages, to AccuLase arising out of for injury to any person or damage to property or in connection with the use of any Product or any misrepresentation by Baxter concerning any of the characteristics, proper manner of usage or the performance of the Product, except to the extent resulting from the Product's failure to meet the Specifications or AccuLase's warranties. Baxter shall not be liable for any loss incurred by AccuLase, including any consequential damages suffered by AccuLase, whether or not such damages are foreseeable or Baxter is given notice of them. 8. INSURANCE. AccuLase shall obtain and keep in force during the term of this Agreement general comprehensive liability insurance covering each occurrence of bodily injury and property damage in an amount of not less than $3,000,000 combined single limit with special endorsements providing coverage for: (i) Product and Completed Operations Liability; and (ii) Blanket Broad Form Contractual Liability. The insurance policy shall be endorsed to provide for written notification to Baxter by the insurer not less than 30 days prior to cancellation, expiration or modification. A certificate of insurance evidencing compliance with this Section 8 and referencing this Agreement shall be furnished to Baxter by AccuLase within 60 days of this Agreement's effective date and thereafter within 60 days after each renewal or replacement of the policy or change in the information contained on the certificate of insurance. 9. PRODUCT RECALL. In the event that Baxter or AccuLase recalls, either during or after the expiration or other termination of this Agreement, any of the Product sold or distributed by Baxter because the Product is believed to violate any provision of applicable law or fails to conform to the Specifications or AccuLase's warranty, AccuLase shall bear all costs and expenses of such recall, including, without limitation, expenses or obligations to third parties, the cost of notifying customers and costs associated with the shipment of recalled Product from customers to Baxter or AccuLase. This obligation shall survive the expiration or other termination of this Agreement. Baxter shall maintain complete and accurate records, for such periods as may be required by applicable law, of all the Product sold by it. The parties will cooperate fully with each other in effecting any recall of the Product, including communications with any purchasers or users. If Baxter or AccuLase elects any repair or replacement of the Product as part of a recall, AccuLase shall complete the repair or replacement of all recalled Product within 60 days of the announcement of the recall. 8 10. LICENSE AND RESTRICTED USE OF TECHNOLOGY. (a) AccuLase acknowledges Baxter's exclusive license of the Technology for cardiovascular and vascular applications, and agrees that AccuLase will do nothing inconsistent with such license. Throughout the term of this Agreement, Baxter agrees to allow AccuLase access to the Technology solely for the purpose of manufacturing the Product. AccuLase shall not reproduce, duplicate, copy or otherwise disclose, distribute, or disseminate the Technology in any form except to the extent consistent with this Agreement or otherwise approved by Baxter. (b) AccuLase shall keep confidential and shall not disclose to anyone, other than suppliers as needed by AccuLase in the manufacture of the Product, the Specifications, the Product quantities, forecasts, or shipping destinations specified by Baxter, or Baxter's customer data, such as the names, addresses, telephone numbers, or quantities of Products owned or held by Baxter's customers. (c) Other than concerning warranty-covered repairs or replacements as provided by this Agreement, AccuLase shall not communicate with any user of the Product concerning the Product, including, but not limited to, any offer of an extended warranty, maintenance or repair services, Product enhancements, Product use, maintenance, or repair training, or the availability of associated or competitive products or services. 11. ACCULASE'S EMPLOYEES. Disclosure and access to the Technology shall be restricted to those of AccuLase's employees who are required to use the Technology in the course of their employment, for purposes consistent with this Agreement. 12. SUBLICENSES. AccuLase shall not grant sublicenses to use the Technology or any part thereof in any manner to any third party, without Baxter's prior written consent. 13. RETURN OF TECHNOLOGY. Within thirty (30) days following a termination of this Agreement, or upon notification by Baxter that Baxter is terminating AccuLase's manufacturing rights under this Agreement, AccuLase shall at its expense promptly cause to be delivered to Baxter all documents related to the Technology including, without limitation, all drawings, blueprints, manuals, design and specification documents, lists, documentation, source or object codes, tapes, disks, or other storage media, letters, notes, notebooks, reports, flow charts, and all other materials in its possession or under its control related to the Technology. 14. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or mailed by registered or certified mail (return receipt requested) or sent via facsimile (with confirmation of receipt) to the parties at the following address (or at such other address for a party as shall be specified by like notice): 9 (a) if to Baxter, to: Baxter Healthcare Corporation 17221 Red Hill Avenue, m/s 98 Irvine, California 92614 Attention: Vice President, Business Development Facsimile No.: (714) 474-6445 Telephone No.: (714) 474-6424 (b) if to AccuLase, to: 6865 Flanders Drive, Suite G San Diego, CA 92121 Attention: Mr. Raymond A. Hartman President and Chief Executive Officer Facsimile No.: (619) 455-0946 Telephone No.: (619) 455-7030 with a copy to: Donald G. Davis, Esq. 833 Via Del Monte, Suite 100 Palos Verdes Estates, CA 90274 Facsimile No.: (310) 373-5410 Telephone No.: (310) 378-8968 15. INTERPRETATION. When a reference is made in this Agreement to exhibits, such reference shall be to an exhibit to this Agreement unless otherwise indicated. The words "include, " "includes" and "including" when used herein shall be deemed in each case to be followed by the words, "without limitation." The phrase "made available" in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available. The phrases "the date of this Agreement", "the date hereof", and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date referred to in the introductory paragraph of this Agreement. 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. 16. COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same Agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 10 17. ENTIRE AGREEMENT; RESTRICTIONS ON ASSIGNABILITY. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto constitute the entire Agreement among the parties with respect to the subject matter hereof and supersede all prior Agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. AccuLase may not assign its rights, duties or obligations under this Agreement without the prior written consent of Baxter. 18. SEVERABILITY. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision. 19. AMENDMENT. This Agreement may not be altered or amended except by writing signed by the parties hereto. 20. REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a part of any one remedy will not preclude the exercise of any other remedy. 21. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California (without regard to its principles of conflicts of law). 22. RULES OF CONSTRUCTION. The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 23. EXPENSES. All costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement will be paid by the party incurring such expenses. 24. ATTORNEYS' FEES. In the event of any dispute arising under the terms of this Agreement (including the breach thereof), the prevailing party in such action shall be entitled to its attorneys' fees and costs in addition to such other relief as may be awarded by a court or by an arbitrator. 11 25. SECURITY INTEREST. AccuLase's performance of this Agreement and the obligations of AccuLase arising hereunder shall be secured by that certain Security Agreement, dated as of the date hereof, as described in Section 2.5 of the Master Technology Agreement, upon the terms and conditions contained therein. ** The remainder of this page has been intentionally left blank ** 12 IN WITNESS WHEREOF, Baxter and AccuLase have caused this Agreement to be executed and delivered by their respective officers thereunto duly authorized all as of the date first written above. Baxter Healthcare Corporation, a corporation By: /s/ John H. Kehl, Jr. ------------------------------------- Name: /s/ John H. Kehl, Jr. ------------------------------ Its: /s/ Vice President, Business Development Cardiovascular Group ------------------------------- AccuLase, Inc., a corporation By: /s/ Raymond A. Hartman ------------------------------------- Name: /s/ Raymond A. Hartman ------------------------------ Its: /s/ President & CEO ------------------------------- ATTACHMENTS: Exhibit A - Excimer Laser Product Specifications Exhibit B - Baxter Supplier Quality Standards writing and by telepone of such information or report as well as the results of such insepction. -----END PRIVACY-ENHANCED MESSAGE-----