EXHIBIT 10.35
LOAN AGREEMENT BETWEEN
EXCIMER VISION LEASING L.P.
AND BRITESMILE, INC.
Loan Agreement, dated March 1, 2001, between Excimer Vision Leasing
L.P., a Delaware limited partnership ("EVL"), and BriteSmile, Inc., a Utah
corporation ("BriteSmile").
W I T N E S S E T H:
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WHEREAS, BriteSmile wishes to borrow $2,500,000 from EVL, and EVL
wishes to lend $2,500,000 to BriteSmile on the terms and conditions set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
bound hereby, do hereby agree as follows.
1. Definition. Capitalized terms not otherwise defined herein shall
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have their respective meanings as set forth in Section 12.
2. The Loan. Subject to the terms and provisions of this Agreement,
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EVL agrees to lend the principal amount of $2,500,000 to BriteSmile on March 12,
2001 (the "Loan"). BriteSmile will execute and deliver to EVL a promissory note
(a "Note") substantially in the form of Exhibit A hereto to evidence the Loan.
3. Payments on Account of the Loan.
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(a) Composition of Payments. The payments to be made by
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BriteSmile to EVL on account of the Loan will be comprised of Fixed Payments,
Variable Payments and the Final Payment.
(b) Fixed Payments. The Fixed Payments to be made by BriteSmile
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to EVL shall be made at a rate equal to $150,000 per year payable in the amount
of $10,416.60 on April 1, 2001 and thereafter in equal monthly increments of
$12,500 each on the first day of each month during the term of the Loan up to
and including May 1, 2006. A final Fixed Payment of $3,750.00 shall be due and
payable on the Maturity Date.
(c) Variable Payments. The amount of Variable Payments to be
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made by BriteSmile to EVL shall be an amount equal to $25.00 for each BriteSmile
Procedure performed at the Existing Centers from March 1, 2001 to the Maturity
Date. Variable Payments shall be made on the 40/th/ day following the end of
each month up to and including the month in which the Maturity Date occurs based
on the number of BriteSmile Procedures performed at the Existing Centers during
such month, except that any Variable Payments due with respect to any period
prior to the date on which the Maturity Date occurs shall be made on the
Maturity Date.
(d) Final Payment. In the event that the aggregate amount of
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those Variable Payments which are deemed to be payments of principal under
subsection 3(g) hereof and which are actually made up to and including the
Maturity Date is less than $2,500,000, then BriteSmile shall pay EVL an amount
(the "Final Payment") equal to the excess of $2,500,000 over such aggregate
amount of Variable Payments. The Final Payment shall be made on the Maturity
Date and shall be deemed to be a payment of principal.
(e) Method of Payment. Fixed Payments, Variable Payments and the
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Final Payment shall be payable on the date due by wire transfer, electronic
direct deposit or such other method as EVL shall designate without any further
notice at EVL's address set forth below or at such other place as EVL shall
designate in writing. Payments shall be paid free and clear of all claims,
demands or setoffs of any nature whatsoever.
(f) Other Charges. BriteSmile's obligation to pay all amounts
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payable by BriteSmile hereunder shall be absolute and unconditional and shall
not be subject to any abatement, reduction, set-off, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever, and that such
payments shall be and continue to be payable by BriteSmile in all events.
BriteSmile shall pay when due or reimburse and indemnify and hold EVL harmless
(on a net after-tax basis) from and against all taxes, fees or other charges
(collectively, the "Other Charges") of any nature whatsoever now or hereafter
imposed or assessed during the term hereof against EVL by any federal, state,
county, or local governmental authority upon or with respect to Payments
hereunder (excepting only federal, state and local taxes based on or measured by
the net income of EVL which may be due and payable by EVL or any partner of EVL,
in accordance with law). Subject to payment (or other provision for payment
acceptable to EVL) by BriteSmile of any Other Charges due, BriteSmile shall be
permitted to contest, dispute, protest and file for refunds of any Other
Charges, and EVL shall reasonably cooperate with any such contest, dispute,
protest or application for refund.
(g) Allocations. The following principles shall apply for
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purposes of determining what portion of the Payments shall be deemed to be
payments of interest and payments of principal. Fixed Payments shall be deemed
to be payments of interest. The first $416,667 of any Variable Payments due with
respect to the period from March 1, 2001 to December 31, 2001 and the first
$500,000 of Variable Payments due with respect to any calendar year thereafter
shall be deemed to be payments of principal. Any excess of Variable Payments
over $416,667 made with respect to the period ending December 31, 2001 and over
$500,000 made with respect to any year beginning after December 31, 2001 shall
be deemed to be payments of interest. The Final Payment shall be deemed to be a
payment of principal.
4. Additional Provisions Relating to Calculation of Variable
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Payments.
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(a) Existing Systems. It is intended that the Variable Payments
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be computed with reference to BriteSmile Procedures performed on the actual
number of BriteSmile Systems that are installed in the Existing Centers from
time to time. It is recognized that the number of BriteSmile Systems in Existing
Centers from time to time may be greater or less than the 127 BriteSmile Systems
located in the Existing Centers on the date hereof and that the number of
BriteSmile Procedures included in the calculation of the Variable Payments may
be affected if BriteSmile Systems are added to or removed from Existing Centers.
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(b) Surrogate Systems. If, however, the actual number of
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BriteSmile Systems installed at Existing Centers declines to below 127 during
any period, and if any BriteSmile Systems are installed at a New Center during
such period, then EVL may elect to include the BriteSmile Procedures performed
on some or all of the New Systems (the "Surrogate Systems") in the calculation
of Variable Payments due provided that the maximum number of such Surrogate
Systems that may be designated at any time shall not exceed the difference
between 127 and the number of BriteSmile Systems in the Existing Centers at such
time.
(c) Best Efforts. BriteSmile shall use reasonable commercial
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efforts to ensure that all BriteSmile Systems that are designated as Surrogate
Systems from time to time and are used throughout their respective periods of
designation as such so that the Variable Payments due with respect to each
Surrogate System can achieve its maximum potential.
(d) No Right to Income from Centers. The parties acknowledge
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that BriteSmile only manages the dental practices conducted at the Centers and
that it does not have any partnership or other equity or ownership interest in
such practices. The parties further acknowledge that BriteSmile receives a
management fee for its services in managing the Center and has no right to share
in any item of revenue received by the Centers. Accordingly, it is expressly
acknowledged that the Variable Payments do not represent any division between
BriteSmile and EVL of revenue earned by any Center. It is agreed that the use of
BriteSmile Procedures performed at the Centers as a method to calculate Variable
Payments represents no more than a convenient method to determine the timing and
amount of payments of principal and contingent interest due hereunder and is not
intended as a means to share in BriteSmile's management fees for operating the
Centers.
5. No Prepayment. BriteSmile may not prepay all or any part of the
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Note at any time.
6. Other Indebtedness. The indebtedness represented by this Note is
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intended to be pari passu with the indebtedness represented by the Promissory
Notes issued pursuant to the Securities Purchase Agreement, dated August 3,
2000, between BriteSmile and the Purchasers named therein.
7. Covenants. BriteSmile covenants and agrees with EVL that until
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the Loan evidenced hereby has been paid in full, unless EVL shall otherwise
consent in writing:
(a) BriteSmile shall do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its existence.
(b) BriteSmile shall deliver to EVL any such financial
statements, notices, projections and other information that EVL may reasonably
request. EVL shall treat any such information which is not publicly available as
confidential and shall not disclose any such confidential information to any
third party or use any such confidential information for any purpose other than
in connection with this Agreement.
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(c) BriteSmile agrees to, at its sole cost and expense, continue
to manage the operations of at least ten Centers in substantially the same
manner as the operations of the Centers are conducted on the date hereof.
(d) The proceeds of the Loan evidenced hereby shall be used by
BriteSmile for general working capital purposes.
(e) BriteSmile shall not, directly or indirectly, by operation
of law, or otherwise, merge with, consolidate with, or otherwise combine with
any person, unless this Agreement and the Note is assumed by such person
pursuant to such merger, consolidation or other combination.
8. Assignment or Grant of Security Interest by EVL. BriteSmile
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confirms that EVL may sell and assign its rights and obligations under this
Agreement to an assignee (the "Assignee") or grant a security interest in this
Agreement to a security assignee (the "Secured Party"). BriteSmile agrees it
will cooperate with EVL to facilitate each such assignment and grant of a
security interest. Notwithstanding the foregoing, without BriteSmile 's consent,
no Assignee or Secured Party may be engaged directly or indirectly in the
business of whitening teeth at the time that any assignment or the grant of any
security interest occurs.
9. Concerning Defaults.
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(a) Events of Default. The occurrence of any one or more of the
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following events ("Events of Default") shall constitute a default hereunder:
(i) default by BriteSmile in the payment of any Payment
or other amount payable by BriteSmile to EVL hereunder, as and when the same
becomes due and payable and such default continues for a period of five days;
(ii) default by BriteSmile in the performance or
observance of any other covenant, term or condition hereof or the inaccuracy in
any material respect of any representation or warranty made by BriteSmile herein
or in any document or certificate furnished to EVL in connection herewith, which
default or inaccuracy shall continue for a period of ten days after notice to
BriteSmile thereof;
(iii) the making of an assignment by BriteSmile for the
benefit of its creditors or the admission by BriteSmile in writing of its
inability to pay its debts as they become due, or the insolvency of BriteSmile ,
or the filing by BriteSmile of a voluntary petition in bankruptcy, or the
adjudication of BriteSmile as a bankrupt, or the filing by BriteSmile of any
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
present or future statute, law or regulation, or the filing of any answer by
BriteSmile admitting or the failure by BriteSmile to deny, the material
allegations of a petition filed against it for any such relief, or the seeking
or consenting of BriteSmile to, or acquiescence by BriteSmile in, the
appointment of any trustee, receiver or liquidator of BriteSmile or of all or
any substantial portion of the properties of BriteSmile , or the inability of
BriteSmile to pay its debts when due, or the commission by BriteSmile of any act
of bankruptcy as defined in the Federal Bankruptcy Act, as amended; or
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(iv) the failure by BriteSmile, within sixty days after the
commencement of any proceeding against BriteSmile seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, that will cause
BriteSmile to default under the events stipulated above in Section 11(b),
subsections (i), (ii), or (iii), to obtain dismissal of such proceeding or,
within 60 days after the appointment, without the consent or acquiescence of
BriteSmile , of any trustee, receiver or liquidator of BriteSmile or of all or
any substantial part of the properties of BriteSmile , to vacate such
appointment.
(b) Remedies of EVL Upon an Event of Default. Upon the
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occurrence of any one or more Events of Default, EVL, at its option, may
exercise any and all rights, assert any and all claims and pursue any and all
remedies to which EVL may be entitled by law and may
(i) accelerate the maturity of this Loan and declare all
amounts due hereunder including, but not limited to, the Final Payment, to be
immediately due and payable; and
(ii) proceed by appropriate court action to enforce
performance by BriteSmile of the applicable terms hereof and recover from
BriteSmile any and all damages and expenses, including attorneys' fees, which
EVL shall have sustained by reason of BriteSmile's default hereunder or on
account of EVL's enforcement of its remedies hereunder.
(c) BriteSmile shall reimburse EVL for all costs and expenses
incurred in connection with the enforcement of any right or remedy hereunder,
including attorneys' fees. Except as set forth in this Section and to the extent
permitted by applicable law, BriteSmile hereby waives any rights now or
hereafter conferred by statute or otherwise which may limit or modify any of
EVL's rights or remedies.
10. Reports; Representations and Warranties of BriteSmile.
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(a) Reports. At such times as EVL may reasonably request,
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BriteSmile shall provide a written statement of the address of each Center where
a BriteSmile System is installed or stored. In addition, together with each
payment of Variable Rent, BriteSmile shall provide a written report to EVL, in a
format reasonably acceptable to EVL and BriteSmile, indicating the BriteSmile
Procedures performed with respect to which Variable Rent is due. EVL shall have
the right throughout the term of this Agreement, upon at least 30 days' written
notice, at EVL's expense, to examine BriteSmile 's records, once per calendar
year for purposes of confirming compliance with this Agreement.
(b) Representations and Warranties. BriteSmile represents and
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warrants to EVL as follows:
(i) This Agreement and the Note have each been duly
authorized and have each been validly executed and delivered by BriteSmile and
is a valid and binding Agreement of BriteSmile.
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(ii) Neither this Agreement nor the Note violate or
conflict with BriteSmile 's certificate of incorporation or by-laws or any law,
rule or regulation or agreement to which it is subject and by which its assets
are bound.
11. Usury. Anything in this Agreement or the Note to the contrary
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notwithstanding, if due to any circumstances whatsoever, fulfillment of any
provision of Agreement or the Note shall involve transcending the limit of
validity prescribed by the usury laws of the State of New York or the laws of
any other jurisdiction which might be applicable hereto, then ipso facto the
obligation to be fulfilled under Agreement or the Note shall be reduced to the
limit of such validity so that in no event shall exaction be possible under
Agreement or the Note in excess of the limit of such validity, but such
obligation shall be fulfilled to the limit of such validity and if under any
circumstances whatsoever interest in excess of the limit of such validity will
have been paid by BriteSmile in connection with the loan evidenced by Agreement
or the Note, such excess shall be applied by the holder hereof to the unpaid
principal balance of this Agreement or the Note or refunded to BriteSmile, the
manner of handling such excess to be at the election of the holder hereof so
that under no circumstances shall interest on the loan evidenced by Agreement or
the Note exceed the maximum rate allowed by the State of New York or such other
applicable jurisdiction.
12. Definitions.
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Assignee has the meaning specified in Section 10.
BriteSmile Procedure means a teeth whitening procedure performed with
a BriteSmile System.
BriteSmile System means any model of BriteSmile's proprietary teeth
whitening system.
Centers means a center or office managed directly or indirectly by
BriteSmile which is primarily dedicated to the provision of teeth whitening
services and procedures using BriteSmile Systems that are similar in operation
to those BriteSmile Centers now located, among other places, in Walnut Creek,
LaJolla, Irvine, Palo Alto and Beverly Hills, California; Honolulu, Hawaii;
Boston, Massachusetts; Atlanta, Georgia; Denver, Colorado; Chicago, Illinois;
New York, New York; Boca Raton, Florida and Phoenix, Arizona. A Center does not
include an Associated Center as that term is defined in the Amended and Restated
Agreement between the parties hereto dated February 28, 2001.
Event of Default has the meaning set forth in Section 9(a).
Existing Center means a Center identified by location in the
definition of Center.
Final Payment means a Payment in the amount described in Section 3(d).
Fixed Payment means a Payment described in Section 3(b).
Maturity Date means May 10, 2006, or if the obligation under this
Agreement or the Note are accelerated, the date to which such obligations are
accelerated.
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New Center means a Center other than an Existing Center.
Other Charges has the meaning set forth in Section 3(f).
Payment means a Fixed Payment, Variable Payment and/or the Final
Payment.
Secured Party has the meaning set forth in Section 8.
Surrogate System has the meaning set forth in Section 4(b).
Variable Payment means a Payment described in Section 3(c).
13. Governing Law. This Agreement shall be governed, construed and
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enforced for all purposes under and in accordance with the laws of the State of
New York. BriteSmile acknowledges that this Agreement is a transaction which in
the aggregate exceeds $1,000,000 and agrees that the United States District
Court for the Southern District of New York and/or the Supreme Court of the
State of New York, County of New York shall have exclusive jurisdiction for any
legal or equitable claims arising out of or in connection with this lease. The
parties further agree that each court shall have personal jurisdiction over the
parties and venue shall be appropriate in each court.
14. Miscellaneous Provisions. This Agreement may not be altered,
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modified, terminated or discharged, except by a writing signed by the party
against whom such alteration, modification, termination or discharge is sought.
No omission or delay by EVL at any time to enforce any right or remedy reserved
to it, or to require performance of any of the terms hereof by BriteSmile ,
shall be a waiver of any such right or remedy to which EVL is entitled, nor
shall it in any way affect the right of EVL to enforce such provisions
thereafter. This Agreement shall be binding upon, and shall inure to the
benefit of EVL, BriteSmile and their respective successors, legal
representatives and assigns. All agreements, representations and warranties of
BriteSmile contained in this Agreement or in any document delivered pursuant
hereto or in connection herewith shall be for the benefit of EVL and any
Assignee or Secured Party, as the case may be, and shall survive the execution,
delivery, expiration or other termination of this Agreement. Any notice,
request or other communication to either party by the other as provided for
herein shall be given in writing and only shall be deemed received upon (i) the
earlier of receipt or three days after mailing or sending if mailed, postage
prepaid by regular mail, or sent, by means of an overnight air courier service,
or (ii) upon verbal communication of receipt, if transmitted by facsimile, to
EVL (to the attention of "Agreement Administrator") or BriteSmile , as the case
may be, at the address or facsimile number, as applicable, for such party set
forth below or at such changed address as may be subsequently submitted by
written notice of either party. In the event any one or more of the provisions
of this Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions hereof shall be unimpaired, and the
invalid, illegal or unenforceable provision shall be deemed replaced by a valid,
legal and enforceable provision that comes closest to the intention of the
parties underlying the invalid, illegal or unenforceable provision. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date set forth above.
EXCIMER VISION LEASING L.P.
By: CAP America Limited, its General
Partner
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: Director
Address:
000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
BRITESMILE, INC.
By: /s/Xxxx Xxxx
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Name:
Title:
Address:
000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
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EXHIBIT A
PROMISSORY NOTE
$2,500,000 (US) March 12, 2001
BriteSmile, Inc., a Utah corporation (the "Borrower"), for value
received, hereby unconditionally promises to pay to the order of Excimer Vision
Leasing L.P., a Delaware limited partnership (the "Lender"), the principal sum
of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS and NO CENTS ($2,500,000.00).
Interest shall accrue on the unpaid balance of this Note from the date
hereof as provided in that certain Loan Agreement, dated March 1, 2001 (the
"Loan Agreement"), between Borrower and Lender. Interest and principal shall be
payable as provided in the Loan Agreement.
Both the principal hereof and interest hereon are payable in legal
tender of the United States at the place specified in the Loan Agreement.
1. Prepayments. The Borrower may not prepay all or any portion of
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this Note at any time.
2. Xxxxx of Default. If any of the events of default described in
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the Loan Agreement shall occur, Lender shall have the rights set forth in the
Loan Agreement.
3. Other Provisions. All provisions of the Loan Agreement relating
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to the terms of the Note are incorporated herein by reference and made a part
hereof. To the extent that any such provisions conflict with the provisions
hereof, the provisions of the Loan Agreement shall prevail.
4. Waiver. The parties hereto waive presentment for payment, notice
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of non-payment, demand, protest, notice of protest, notice of dishonor and
diligence in enforcing payment.
5. Governing Law. This Note and all the transactions hereunder shall
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be governed by, and interpreted and enforced in accordance with, the laws of the
State of New York.
6. No Waiver. No course of dealing between the Borrower and the
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Lender or any delay on the part of the Borrower or the Lender in exercising any
rights hereunder shall operate as a waiver of any rights of the Borrower or the
Lender, except to the extent expressly waived in writing by the Borrower or the
Lender.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered on its behalf by its duly authorized officer as of the day and
year first above written.
BRITESMILE, INC.
By_________________________________
Name:
Title:
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