Exhibit 10.3

 

WAWER AND BUSINESS FINANCING MODIFICATION AGREEMENT

(First Amendment to Business Financing Agreement)

 

This Waiver and Business Financing Modification Agreement (this "Modification
Agreement'') is entered into as of August 13, 2018, by and between Biolase,
Inc., a Delaware corporation ("Parent''), BL Acquisition Corp., a Delaware
corporation (''BL Acquisition''), and BL Acquisition II Inc., a Delaware
corporation (''BL Acquisition II'' and together with Parent and BL Acquisition,
individually and collectively, jointly and severally, "Borrower") and Western
Alliance Banlc, an Arizona corporation ("Lender").

 

 

1.

DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, among
other documents, a Business Financing Agreement, dated March 6, 2018, by and
between Borrower and Lender, as the same may be amended from time to time (the
"Business Financing Agreement''). Capitaliz.ed tenns used without definition
herein shall have the meanings assigned to them in the Business Financing
Agreement.

 

 

Hereinafter, all indebtedness owing by Borrower to Lender shall be referred to
as the "Indebtedness" and the Business Financing Agreement and any and all other
documents executed by Borrower in favor of Lender shall be referred to as the
"Existing Documents."

 

2.DESCRIPTION OF EXISTING DEFAULTS. Borrower is currently in default of the
Business Financing Agreement for (a) failing to comply with the covenant set
forth in Section 4.15 of the Business Financing Agreement as a result of
Borrower's failure to transition all of its depository and operating accounts
and investment accounts to Lender within 90 days of the Closing Date, and (b)
failing to comply with the covenant set forth in Section 4.18 of the Business
Financing Agreement as a result of Borrower's failure to complete the Subsidiary
Dissolution within 90 days of the Closing Date (collectively, the "Existing
Defaults"). Borrower has requested that Lender waive its rights and remedies
against Borrower, limited specifically to the Existing Defaults. Although Lender
is under no obligation to do so, Lender is willing to not exercise its rights
and remedies against Borrower related to the specific Existing Defaults on the
terms and conditions set forth in this Modification Agreement, so long as
Borrower complies with the terms, covenants and conditions set forth in this
Modification Agreement.

 

3.WAIVER OF COVENANT DEFAULTS. Lender hereby waives Borrower's Existing Defaults
under the Business Financing Agreement. Lender's waiver of Borrower's compliance
of these covenants shall apply only to the foregoing periods. Accordingly,
hereinafter, Borrower shall be in compliance with these covenants, as amended
hereby. Lender's agreement to waive the Existing Defaults (1) in no way shall be
deemed an agreement by Lender to waive Borrower's compliance with the
above•described covenants as of all other dates, (2) shall not limit or impair
Lender's right to demand strict perfonnance of these covenants as of all other
dates, and (3) shall not limit or impair Lender's right to demand strict
perfonnance of all other covenants as of any date.

 

4.

DESCRIPTION OF CHANGEINTERMS.

 

A.

Modifications to Business Financing Agreement:

 

i.Section 1.1: Advances. Section 1.1 is amended by adding the following to the
end thereof:

 

Notwithstanding anything in this Agreement to the contrary, on or about the
First Amendment Date, Lender shall make an Advance to Borrower in an amount
equal to $1,500,000 (the "First Amendment Advance"). Within 45 days after the
First Amendment Date, Borrower shall (a) repay the First Amendment Advance in
full, together with all accrued unpaid interest thereon, and (b) execute and
deliver to Lender such documents, in form and substance satisfactory to Lender,
as Lender requests to transfer this Agreement, and all of Borrower's Obligations
hereunder, to Lender's Capital Finance Division (the "Loan Transfer"). For
clarification,

 

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1835011.3

 

 

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Borrower's failure to satisfy both clauses (a) and (b) in the prior sentence
within the 45-day period shall be deemed an immediate Event of Default
hereunder. During such 45-day period, no additional Advances shall be available
hereunder.

 

ii.Section 1.3: Due Diligence. Section 1.3 is amended by adding the following
sentence to the end thereof

 

Borrower acknowledges that such an audit shall be completed prior to the Loan
Transfer and in no event later than October 12, 2018.

 

 

m.

Section 1.4: Collections. Section l.4(a)(i) is amended in its entirety and
replaced with the following:

 

 

(i)immediately notify, transfer and deliver to Lender all domestic Collections
Borrower receives for deposit into the Domestic Collection Account and all
foreign Collections Borrower receives for deposit into the EXIM Collection
Account,

 

iv.Section 1.4; Coliections. Section 1.4(a)(iii) is amended by inserting the
word "applicable" immediately prior to the phrase "Collection Account''.

v.Section I.4: Collections. The fourth sentence of Section l.4(a) is amended by
inserting the word "applicable" immediately prior to each instance of the phrase
"Collection Account".

 

vi.Section 1.4: Collections. The first sentence of Section l.4(b) is amended by
deleting the phrase "Collection Account" and replacing it with "Collection
Accounts".

 

vii.Section 4.15. Section 4.15 is amended by deleting the phrase "Within 90 days
of the Closing Date" and replacing it with "By no later than August 31, 2018,".

 

V111.Section 4.18. Section 4.18 is amended by deleting the phrase "Within 90
days of the Closing Date" and replacing it with "By no later than August 31,
2018".

 

 

ix.

Section 12,1: Definitions. The following term and its definition set forth in
Section 12.1 of the Business Financing Agreement are amended in their entirety
and replaced with the following:

 

 

"Collection Account" means either the Domestic Collection Account or the EXIM
Collection Account

 

 

x.

Section 12.1: Definitions. The following terms and their respective definitions
are added to Section 12.1 of the Business Financing Agreement, in appropriate
alphabetical order, as follows:

 

 

"Domestic Collection Account" means the deposit account maintained with Lender
which, pursuant to the Lockbox Agreement, all domestic Collections received in
the Lockbox are to be deposited, and as to which Borrower has no right to
withdrawal funds.

 

"EXIM Collection Account" means the deposit account maintained with Lender
which, pursuant to the Lockbox Agreement, all foreign Collections received in
the Lockbox are to be deposited, and as to which Borrower has no right to
withdrawal funds,

 

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1835011.3

 

 

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"First Amendment Ad vance" has the meaning set forth in Section I.I. "First
Amendment Date" is August 13, 2018.

"Loan Transfer" has the meaning set forth in Section 1.1.

 

 

5.

CONSISTENT CHANGES. The Existing Docwnents are each hereby amended wherever
necessary to reflect the changes described above.

 

 

 

6.

PAYMENT OF DOCUMENTATION EXPENSES. Borrower shall pay to Lender all of Lender's
out-of-pocket expenses incurred in connection with the amendment and
modification of the Business Financing Agreement {the "Modification Expenses").

 

 

7.NO DEFENSES OF BORROWER/GENERAL RELEASE. Borrower agrees that, as of this
date, it has no defenses against the obligations to pay any amounts under the
Indebtedness. Borrower ("Releasing Party") acknowledges that Lender would not
enter into this Modification Agreement without Releasing Party's assurance that
it has no claims against Lender or any of Lender's officers, directors,
employees or agents. Except for the obligations arising hereafter under this
Modification Agreement, Releasing Party releases Lender, and each of Lender's
and entity's officers, directors and employees from any known or unknown claims
that Releasing Party now has against Lender of any nature, including any claims
that Releasing J>arty, its successors, counsel, and advisors may in the future
discover they would have now had if they had known facts not now known to them,
whether founded in contract, in tort or pursuant to any other theory of
liability, including but not limited to any claims arising out of or related to
the Agreement or the transactions contemplated thereby. Releasing Party waives
the provisions of California Civil Code section 1542, which states:

 

A GENERAL RELEASE DOES NOT EXIBND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

The provisions, waivers and releases set forth in this section are binding upon
Releasing Party and its shareholders, agents, employees, assigns and successors
in interest. The provisions, waivers and releases of this section shall inure to
the benefit of Lender and its agents, employees, officers, directors, assigns
and successors in interest. The provisions of this section shall survive payment
in full of the Obligations, full performance of all the tenns of this
Modification Agreement and the Agreement, and/or Lender's actions to exercise
any remedy available under the Agreement or otherwise.

 

 

8.

CONTINUING VALIDITY. Borrower understands and agrees that in modifying the
existing Indebtedness and waiving the Existing Defaults, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in the
Existing Documents. Except as expressly modified pursuant to this Modification
Agreement, the terms of the Existing Documents remain unchanged and in full
force and effect. Lender's agreement to modifications to the existing
Indebtedness and to waive the Existing Defaults pursuant to this Modification
Agreement in no way shall obligate Lender to make any future forbearances,
waivers or modifications to the Indebtedness. Nothing in this Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Lender and Borrower to retain as liable parties all makers and
endorsers of Existing Documents, unless the party is expressly released by
Lender in writing. No maker, endorser, or guarantor will be released by virtue
of this Modification Agreement. The terms of this paragraph apply not only to
this Modification Agreement, but also to any subsequent business financing
modification agreements.

 

 

9.CONDITIONS. The effectiveness of this Modification Agreement is conditioned
upon (a) the due execution and delivery to Lender by Borrower of a term sheet,
in form and substance satisfactory to Lender,

 

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1835011.3

 

 

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for the transfer of the loan facility to Lender's Capital Finance Division, and
(b) payment of the Modification Expenses.

 

10.NOTICE OF FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND
AGREES THAT: (A) THIS WRITfEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES, (B) THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES, AND
(C) THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE PARTIES.

 

11.COUNTERSIGNATURE. This Modification Agreement shall become effective only
when executed by Lender and Borrower.

 

[Signature Page Follows]

 

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1835011.3

 

 

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[gw5cq30dtn5h000001.jpg]BORROWER:

 

BIOLASE, INC.

[gw5cq30dtn5h000002.jpg]

 

 

BL ACQUISmON CORP.

 

Name: i\   -e....e.et re

 

By. b- -

Title:c".- C-f o

BL ACQUISITION II INC.

[gw5cq30dtn5h000003.jpg]

 

[Signature Page to Waiver and

Business Financing Modification Agreement (181 Amendment)]

 

 

1835011.3

 

 

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