Exhibit 10.4

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF SECTION 5 BELOW, MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW, OR SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION CAN BE MADE IN COMPLIANCE WITH
RULE 144 OF THE ACT, OR IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

Company:

 

Invuity, Inc., a Delaware corporation

Number of Shares:

 

15,930 (Subject to adjustment as hereinafter provided)

Class of Stock:

 

Common Stock

Warrant Price:

 

$8.37 per share (Subject to adjustment as hereinafter provided in Section 2
hereof)

Issue Date:

 

September 26, 2017

Expiration Date:

 

The earlier to occur of (i) the expiration of this Warrant pursuant to
Section 1.6 hereof or (ii) the 10th anniversary after the Issue Date

Credit Facilities:

 

This Warrant is issued in connection with the Credit and Security Agreement
(Term Loan), dated as of March 10, 2017, among the Company, MIDCAP FINANCIAL
TRUST, a Delaware statutory trust, as Agent and the Lenders from time to time
party thereto (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”).

 

THIS WARRANT TO PURCHASE STOCK (this “Warrant”) CERTIFIES THAT, for good and
valuable consideration, including without limitation the mutual promises
contained in the Credit Agreement (defined above), Apollo Investment Corporation
(together with any registered holder from time to time of this Warrant or any
holder of the Shares (as defined below) issuable or issued upon the exercise or
conversion of this Warrant, “Holder”) is entitled to purchase the number of
fully paid and nonassessable shares of the class and series of capital stock of
the Company at the Warrant Price, all as set forth above or herein below and as
adjusted pursuant to the terms of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant.  As used herein,
“Share” or “Shares” shall refer to either (i) the shares of stock issuable upon
the exercise or conversion of this Warrant and any shares of capital stock into
which such shares may be converted or exchanged, or (ii) the authorized or
issued and outstanding shares of capital stock of the Company which are of the
same class and series as the shares of stock issuable upon the exercise or
conversion of this Warrant, in either case as the specific provisions of this
Warrant or the context may require.

 

ARTICLE 1.                           EXERCISE.

 

1.1                               Method of Exercise.  Holder may at any time
and from time to time prior to the Expiration Date exercise this Warrant, in
whole or in part, but not for fewer than ten thousand (10,000) Shares at a time
(or such lesser number of Shares which may then constitute the maximum number
purchasable hereunder), by delivering a duly completed and executed Notice of
Exercise in substantially the form attached as Appendix 1 to the principal
office of the

 

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Company.  Unless Holder is exercising the conversion right set forth in
Section 1.2, Holder shall also deliver to the Company a certified check, bank
draft, wire transfer (to an account designated by the Company), or other form of
payment acceptable to the Company for the aggregate Warrant Price for the Shares
being purchased.

 

1.2                               Conversion Right.  In lieu of exercising this
Warrant as specified in Section 1.1, Holder may at any time prior to the
Expiration Date convert this Warrant, in whole or in part, but not for fewer
than ten thousand (10,000) Shares at a time (or such lesser number of Shares
which may then constitute the maximum number purchasable hereunder), into a
number of Shares determined by dividing (a) the aggregate Fair Market Value of
the number of Shares or the securities otherwise issuable upon exercise of this
Warrant with respect to which Holder elects to convert this Warrant minus the
aggregate Warrant Price of such Shares by (b) the Fair Market Value of one
Share, and by delivering a duly completed and executed Notice of Exercise in
substantially the form attached as Appendix 1 to the principal office of the
Company.  The “Fair Market Value” of a Share shall be determined pursuant to
Section 1.3.

 

1.3                               Fair Market Value.  If the Company’s common
stock is traded on a nationally recognized securities exchange, inter-dealer
quotation system or over-the-counter market (a “Trading Market”) and the Shares
are common stock, the Fair Market Value of each Share shall be the closing price
of a Share reported for the business day immediately before Holder delivers its
Notice of Exercise to the Company.  In the event of an exercise in connection
with an Acquisition, the Fair Market Value of a Share shall be the value to be
received per Share by all holders of such Shares in such transaction.  In any
other instance, the Fair Market Value of a Share shall be as the Board of
Directors of the Company shall determine in its reasonable good faith judgment.

 

1.4                               Delivery of Certificate and New Warrant. 
Promptly after Holder exercises or converts this Warrant pursuant to Section 1.1
or 1.2, respectively, and, if applicable, the Company receives payment of the
aggregate Warrant Price, the Company shall promptly deliver to Holder
certificates for the Shares acquired and, if this Warrant has not been fully
exercised or converted and has not expired, a new Warrant of like tenor
representing the Shares not so acquired.  This Warrant shall be deemed to have
been exercised and such certificates deemed issued, and Holder shall become the
holder of record of the Shares for all purposes, as of the date of Holder’s
delivery of the exercise notice pursuant to Section 1.1 or 1.2 and payment of
the Warrant Price, if applicable.  If an exercise or conversion is to be made in
connection with an Acquisition, such exercise may at the election of Holder be
conditioned upon the consummation of such transaction, in which case such
exercise shall not be deemed to be effective until immediately prior to the
consummation of such transaction.

 

1.5                               Replacement of Warrants.  On receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, in the case of loss, theft or destruction, on
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation on surrender and cancellation of this
Warrant, the Company shall, at the expense of Holder, execute and deliver, in
lieu of this Warrant, a new warrant of like tenor.

 

1.6                               Treatment of Warrant Upon Acquisition of
Company.

 

1.6.1                     “Acquisition”.  For the purpose of this Warrant,
“Acquisition” means (a) any sale, exclusive license, or other disposition of all
or substantially all of the assets of the Company, or (b) any reorganization,
consolidation, share exchange, take-over bid, plan of

 

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arrangement or merger of or involving the Company with, by or into another
person or entity, or sale of outstanding securities of the Company by the
holders thereof, in each case where the holders of the Company’s securities
before the transaction beneficially own less than fifty percent (50%) of the
outstanding voting securities of the successor, acquiring or surviving person or
entity after the transaction.

 

1.6.2                     Treatment of Warrant Upon Acquisition.

 

A)                                   Upon the written request of the Company,
Holder agrees that, in the event of an Acquisition that (i) is not described in
Section 1.6.1(a), (ii) in which the sole consideration is cash, and (iii) in
connection with or as a result of which all holders of the Shares are receiving
or have the right to receive solely cash in the same proportions in respect of
all of their Shares, then either (a) Holder shall exercise its conversion or
purchase right under this Warrant and such exercise will be deemed effective
immediately prior to the consummation of such Acquisition, or (b) if Holder
elects not to exercise or convert the Warrant, this Warrant will expire upon the
consummation of such Acquisition, subject to Section 5.8.  The Company shall
provide Holder with written notice of its request relating to the foregoing
(together with such reasonable information as Holder may reasonably request in
connection with such contemplated Acquisition giving rise to such notice), which
notice is to be delivered to Holder not less than ten (10) business days prior
to the closing of the proposed Acquisition.

 

B)                                   Upon the written request of the Company,
Holder agrees that, in the event of an Acquisition that is described in
Section 1.6.1(a) and is an “arms’-length” transaction with a third party that is
not an Affiliate (as defined below) of the Company (a “True Asset Sale”), Holder
may (a) exercise its conversion or purchase right under this Warrant and such
exercise will be deemed effective immediately prior to the consummation of such
True Asset Sale or (b) permit this Warrant to continue (unless exercised in the
interim) until the earlier of the Expiration Date or the dissolution and/or
liquidation of the Company following the closing of any such True Asset Sale,
subject to Section 5.8.  The Company shall provide Holder with written notice of
its request relating to the foregoing (together with such reasonable information
as Holder may request in connection with such contemplated Acquisition giving
rise to such notice), which notice is to be delivered to Holder not less than
ten (10) business days prior to the closing of the proposed True Asset Sale.

 

C)                                   Upon the written request of the Company,
Holder agrees that, in the event of an Acquisition (i) in which the
consideration is a combination of cash and equity securities of the acquirer
listed for trading on a U.S. national securities exchange and which may be
freely resold pursuant to a resale registration statement or under Rule 144 of
the Act without any restriction or limitation (including without limitation
volume and manner of sale restrictions), (ii) in connection with or as a result
of which all holders of the Shares are receiving or have the right to receive
solely cash and/or such securities in the same proportions in respect of all of
their Shares, and (iii) on the record date for which the Fair Market Value of
one Share (or other securities issuable upon exercise of this Warrant) is
greater than the Warrant Price, Holder may (a) exercise its conversion or
purchase right under this Warrant and such exercise will be deemed effective
immediately prior to the consummation of such Acquisition or (b) if Holder
elects not to exercise or convert the Warrant, this Warrant will expire upon the
consummation of such Acquisition, subject to Section 5.8.  The Company shall
provide Holder with written notice of its request relating to the foregoing
(together with such reasonable information at Holder may reasonably request in
connection with such contemplated Acquisition giving rise to such notice), which
notice is to be delivered to Holder not less than ten (10) business days prior
to the closing of the proposed Acquisition.

 

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D)                                   Upon the closing of any Acquisition other
than those particularly described in subsections (A), (B) and (C) above, the
successor, surviving or acquiring entity shall assume in writing the obligations
of this Warrant, including agreements to deliver to Holder in exchange for this
Warrant a written instrument issued by the successor, surviving or acquiring
entity pursuant to which this Warrant shall thereafter be exercisable for the
kind, amount and value of securities, cash, and property as would have been
payable for the Shares issuable upon exercise of the unexercised portion of this
Warrant had such Shares been outstanding on the record date for the Acquisition
and subsequent closing.  The Warrant Price and/or number of Shares shall be
adjusted accordingly.

 

E)                                    Conditional Exercise.  Notwithstanding any
other provision hereof, if an exercise or conversion of this Warrant is to be
made in connection with an Acquisition, such exercise may at the election of
Holder be conditioned upon the consummation of such transaction, in which case
such exercise or conversion shall not be deemed to be effective until
immediately prior to the consummation of such transaction.

 

As used herein “Affiliate” shall mean any person or entity that owns or controls
directly or indirectly ten percent (10%) or more of the voting securities of the
Company, any person or entity that controls, is controlled by or is under common
control with any such person or entity, and each of such person’s or entity’s
officers, directors, members, managers, joint venturers or partners, as
applicable (whether as a result of the ownership of voting securities, by
contract or otherwise).

 

ARTICLE 2.                           ADJUSTMENTS TO THE SHARES.

 

2.1                               Stock Dividends, Subdivisions and
Combinations.  If the Company declares or pays a dividend on the Shares payable
in common stock or other securities, then upon exercise of this Warrant, for
each Share acquired, Holder shall receive, without cost to Holder, the total
number and kind of securities to which Holder would have been entitled had
Holder owned the Shares of record as of the date the dividend occurred.  If the
Company subdivides the Shares by reclassification, stock split, split-up or
otherwise into a greater number of shares or takes any other action which
increases the number of shares of any class or series of capital stock into
which the Shares are convertible, the number of Shares purchasable hereunder
shall be proportionately increased and the Warrant Price shall be
proportionately decreased.  If the outstanding Shares are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Price shall be proportionately increased and the number of Shares
purchasable hereunder shall be proportionately decreased.

 

2.2                               Reclassification, Exchange, Combination or
Substitution. Upon any reclassification, exchange, combination, substitution,
reorganization, merger, consolidation or other event that results in a change of
the number and/or class of the underlying securities as to which purchase rights
under this Warrant exist, Holder shall be entitled to receive, upon exercise or
conversion of this Warrant, the number, amount and kind of securities, money and
property that Holder would have ultimately received upon the completion of such
reclassification, exchange, combination, substitution, reorganization, merger,
consolidation or other event if this Warrant had been exercised immediately
before such reclassification, exchange, combination, substitution,
reorganization, merger, consolidation or other event.  Such an event shall
include any automatic conversion of the outstanding or issuable securities of
the Company of the same class or series as the Shares to common stock pursuant
to the terms of the Company’s Amended and Restated Certificate of Incorporation,
as amended (the “Certificate”).  The Company or its successor shall promptly
issue to Holder an amendment to

 

4

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this Warrant setting forth the number and kind of such new securities or other
property issuable upon exercise or conversion of this Warrant as a result of
such reclassification, exchange, combination, substitution, reorganization,
merger, consolidation or other event that results in a change of the number
and/or class of securities issuable upon exercise or conversion of this
Warrant.  The amendment to this Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section 2 including, without limitation, adjustments to the Warrant
Price and to the number of securities or property issuable upon exercise of the
amended Warrant.  The provisions of this Section 2.2 shall similarly apply to
successive reclassifications, exchanges, combinations, substitutions,
reorganizations, mergers, consolidations or other events.

 

2.3                               [Reserved].

 

2.4                               [Reserved].

 

2.5                               Fractional Shares.  No fractional Shares shall
be issuable upon exercise or conversion of this Warrant and the number of Shares
to be issued shall be rounded down to the nearest whole Share.  If a fractional
share interest arises upon any exercise or conversion of the Warrant, the
Company shall eliminate such fractional share interest by paying Holder the
amount computed by multiplying the fractional interest by the Fair Market Value
of a full Share.

 

2.6                               Certificate as to Adjustments.  Upon each
adjustment of the Warrant Price or the kind or number of securities issuable
under this Warrant pursuant to this Section 2, the Company shall promptly notify
Holder in writing, and, at the Company’s expense, promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Executive
Officer, Corporate Secretary or a senior financial officer setting forth such
adjustment and the facts upon which such adjustment is based.  The Company
shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price and the number and kind of securities issuable under this Warrant
in effect upon the date thereof and the series of adjustments leading to such
Warrant Price and such number and kind of securities.

 

ARTICLE 3.                           REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE COMPANY.

 

3.1                               Representations and Warranties.  The Company
represents and warrants and covenants to Holder as follows:

 

(a)                                 The Company has all requisite legal and
corporate power and authority, and has taken all corporate action on the part of
itself, its officers, directors and stockholders necessary, to execute, issue
and deliver this Warrant, to issue the Shares issuable upon exercise or
conversion of this Warrant and the securities issuable upon conversion of the
Shares, and to carry out and perform its obligations under this Warrant, and
this Warrant constitutes the legally binding and valid obligation of the Company
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors’ rights, or to principles
of equity.

 

(b)                                 This Warrant has been validly issued and is
free of restrictions on transfer other than restrictions on transfer set forth
herein and under applicable state and federal securities laws.  All Shares which
may be issued upon the exercise of the purchase or conversion right represented
by this Warrant, and all securities, if any, issuable upon conversion of the
Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and

 

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nonassessable, and free of any liens and encumbrances (including preemptive or
other similar rights) except for restrictions on transfer provided for herein or
under applicable federal and state securities laws.

 

(c)                                  The execution, delivery, and performance of
this Warrant will not result in a violation of, be in conflict with, or
constitute a default under, with or without the passage of time or giving of
notice, any provision of the Certificate, the Company’s by-laws, any provision
of any judgment, decree, or order to which the Company is a party, by which it
is bound, or to which any of its material assets are subject, any contract,
obligation, or commitment to which the Company is a party or by which it is
bound, or any statute, rule, or governmental regulation applicable to the
Company, or the creation of any lien, charge, or encumbrance upon any assets of
the Company.

 

(d)                                 Company has filed with the Securities and
Exchange Commission (the “SEC”) complete and accurate copies, as amended or
supplemented, of its (a) Annual Report on Form 10-K for the fiscal year ended
December 31, 2015, and (b) all other reports filed by Company under Section 13
or subsections (a) or (c) of Section 14 of the Securities Exchange Act of 1934
(as amended, the “Exchange Act”) with the SEC since December 31, 2015 (such
reports are collectively referred to herein as the “Company Reports”).  The
Company Reports constitute all of the documents required to be filed by Company
under Section 13 or subsections (a) or (c) of Section 14 of the Exchange Act
with the SEC from December 31, 2015 through the date of this Warrant.  The
Company Reports complied in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder when filed.  As of their
respective dates, the Company Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

3.2                               Notice of Certain Events; Information. If the
Company proposes at any time (a) to declare any dividend or distribution upon
any of its stock, whether in cash, property, stock, or other securities and
whether or not a regular cash dividend; (b) to effect any reclassification or
recapitalization of any of its stock; (c) to merge or consolidate with or into
any other corporation, or sell, lease, license, or convey all or substantially
all of its assets, (d) to approve or participate in any Acquisition, (e) to
liquidate, dissolve or wind up or approve or consummate any Liquidation Event
(as defined in the Certificate), or (f) to take any action or to effect any
transaction which requires the Company to provide notice to other holders of the
Shares, then, in connection with each such event, the Company shall give Holder:
(1) at least ten (10) business days prior written notice of the date on which a
record will be taken for such dividend or distribution (and specifying the date
on which the holders of stock will be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (a) above; and
(2) in the case of the matters referred to in (b), (c), (d), (e) or (f) above,
at least ten (10) business days prior written notice of the date when the same
will take place (and, if applicable, specifying the date on which the holders of
stock will be entitled to exchange their common stock for securities or other
property deliverable upon the occurrence of such event).  Failure to give such
notice, or any defect therein, shall not affect the legality or validity of any
such action.

 

ARTICLE 4.                           REPRESENTATIONS AND WARRANTIES OF HOLDER. 
Holder represents and warrants to the Company as follows:

 

4.1                               Purchase for Own Account.  This Warrant and
the securities to be acquired upon exercise of this Warrant by Holder will be
acquired for investment for Holder’s

 

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account, not as a nominee or agent, and not with a view to the public resale or
distribution within the meaning of the Act and Holder has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption or any transfer contemplated by or permitted under
Section 3.3.  Holder also represents that Holder has not been formed for the
specific purpose of acquiring this Warrant or the Shares.

 

4.2                               Disclosure of Information.  Holder has
received or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the
acquisition of this Warrant and its underlying securities.  Holder further has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of this Warrant and its
underlying securities and to obtain additional information (to the extent the
Company possessed such information or could acquire it without unreasonable
effort or expense) necessary to verify any information furnished to Holder or to
which Holder has access.

 

4.3                               Investment Experience.  Holder understands
that the purchase of this Warrant and its underlying securities involves
substantial risk.  Holder has experience as an investor in securities of
companies in the development stage and acknowledges that Holder can bear the
economic risk of Holder’s investment in this Warrant and its underlying
securities and has such knowledge and experience in financial or business
matters that Holder is capable of evaluating the merits and risks of its
investment in this Warrant and its underlying securities and/or has a
preexisting personal or business relationship with the Company and certain of
its officers, directors or controlling persons of a nature and duration that
enables Holder to be aware of the character, business acumen and financial
circumstances of such persons.

 

4.4                               Accredited Investor Status.  Holder is an
“accredited investor” within the meaning of Regulation D promulgated under the
Act.

 

4.5                               The Act.  Holder understands that this Warrant
and the Shares issuable upon exercise or conversion hereof have not been
registered under the Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Holder’s
investment intent as expressed herein.  Holder understands that this Warrant and
the Shares issued upon any exercise or conversion hereof must be held
indefinitely unless subsequently registered under the Act and qualified under
applicable state securities laws, or unless exemption from such registration and
qualification are otherwise available.

 

ARTICLE 5.                           MISCELLANEOUS.

 

5.1                               Term.  This Warrant is exercisable in whole or
in part at any time and from time to time on or before the Expiration Date.  The
conditions under which the Warrant shall automatically convert on the Expiration
Date are set forth in Section 5.8 below.

 

5.2                               Legends.

 

(a)                                 This Warrant and the Shares (and the
securities issuable, directly or indirectly, upon conversion of the Shares, if
any) shall be imprinted with a legend in substantially the following form:

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED

 

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(THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT PURSUANT TO THE
PROVISIONS OF SECTION 5, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER SAID ACT AND APPLICABLE STATE
SECURITIES LAW, OR UNLESS SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
CAN BE MADE IN COMPLIANCE WITH RULE 144 OF THE ACT, OR UNLESS, IN THE OPINION OF
LEGAL COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.

 

(b)                                 Notwithstanding the foregoing, neither this
Warrant nor any certificate or instrument evidencing this Warrant or the Shares
shall bear, and the Company hereby agrees to remove, within ten (10) days of any
written request (together with such evidence or documentation described in the
following provisions) by Holder, pursuant to the following provisions of this
Section 5.2(b), or not to affix, as applicable, any restrictive or other legend,
notice or provision restricting the sale or transfer of this Warrant or the
Shares, in each case provided that Holder has provided reasonable evidence to
the Company (including any customary broker’s or transferring stockholder’s
letters but expressly excluding an opinion of counsel other than with respect to
clause (D) below) that: (A) a transfer of this Warrant or the Shares, as
applicable, has been made pursuant to SEC Rule 144 (assuming the transferor is
not an “affiliate” (as defined in SEC Rule 144) of the Company); (B) the Warrant
or the Shares, as applicable, are then eligible for transfer pursuant to SEC
Rule 144; (C) a transfer of this Warrant or the Shares has been made for no
consideration to an affiliate of Holder or any assignee or purchaser of Holder’s
or its affiliate’s rights under the Credit Agreement or any interest or
participation therein or has otherwise been made to any affiliate of Holder who
is an “accredited investor” as defined in Regulation D promulgated under the
Act, and that is otherwise in compliance with all applicable securities laws; or
(D) in connection with any other sale or transfer, provided that upon the
request of the Company, such Holder provides the Company with an opinion of
counsel to such Holder, in a reasonably acceptable form to the Company, to the
effect that either such sale or transfer may be made without registration under
the applicable requirements of the Act or that such a legend, notice or
provision is not required by, and is not required in order to establish
compliance with any provisions of, the Act. For all purposes of Section 1.4, the
Company shall not be deemed to have delivered to Holder Shares unless and until
the Company shall have fully complied with all of the terms and conditions of
this Section 5.2(b) (if removal has been requested by Holder in compliance with
this Section 5.2(b)).

 

5.3                               Compliance with Securities Laws on Transfer. 
This Warrant and the Shares issuable upon exercise of this Warrant (and the
securities issuable, directly or indirectly, upon conversion of the Shares, if
any) may not be transferred or assigned in whole or in part without compliance
with applicable federal and state securities laws by the transferor and the
transferee (including, without limitation, the delivery of investment
representation letters and, subject to Section 5.2(b), legal opinions reasonably
satisfactory to the Company, as reasonably requested by the Company).  The
Company shall not require Holder to provide an opinion of counsel if the
transfer is to an affiliate of Holder or any assignee or purchaser of Holder’s
or its affiliate’s rights under the Credit Agreement or any interest or
participation therein.  Additionally, the Company shall also not require an
opinion of counsel if there is no material question as to the availability of
Rule 144.

 

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5.4                               Transfer Procedure.  Subject to the provisions
of Section 5.3 and upon and effective immediately as of providing Company with
written notice substantially in the form attached as Appendix 2, Holder and any
permitted transferee may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant (or the Shares issuable directly or
indirectly, upon conversion of the Shares, if any) to any transferee, provided,
however, in connection with any such transfer, Holder or such transferee will
give the Company notice of the portion of the Warrant being transferred with the
name, address and taxpayer identification number of the transferee and, in the
case of transfer to a transferee who is not an affiliate of the Holder, Holder
or such transferee promptly thereafter surrenders this Warrant to the Company
for reissuance to the transferee(s) (and Holder if applicable).  The Company may
refuse to transfer this Warrant or the Shares to any person who directly
competes with the Company, unless, in either case, the stock of the Company is
publicly traded.

 

5.5                               Notices.  All notices, requests, documents and
other communications (collectively, “Notices”) from the Company to Holder, or
vice versa, shall be in writing and deemed validly delivered effective as of the
earliest to occur of (a) when actually received, (b) when transmitted by
facsimile or electronic mail (PDF), (c) the first business day after mailing by
first-class registered or certified mail, postage prepaid, or after deposit with
a reputable overnight courier with all charges paid, in each case other than
actual receipt at such mailing, facsimile or electronic mail address as may have
been furnished to the Company or Holder, as the case may be.  As used in this
Warrant, “business days” shall refer to all days other than any Saturday, Sunday
or day on which the Company’s primary depository bank is closed.  All notices to
Holder shall be addressed as follows until the Company receives notice of a
change of address in connection with a transfer or otherwise:

 

Apollo Investment Corporation

9 West 57th Street, 37th Floor

New York, New York 10019

Attn: Howard Widra

E-mail: hwidra@apolloLP.com

 

With a copy to:

 

Apollo Investment Corporation

730 Fifth Avenue, 11th Floor

New York, New York 10019

Attn: Sheriff Ibrahim, Jonathan Krain

Facsimile: 602-680-4108

E-mail: RealEstateOps@apolloLP.com,

16026804108@tls.ldsprod.com

 

Notice to the Company shall be addressed as follows until Holder receives notice
of a change in address:

 

Invuity, Inc.

444 De Haro Street

San Francisco, CA 94107

Attention:

Fax:

E-Mail:

 

9

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With a copy to:

 

Wilson Sonsini Goodrich & Rosati, P.C.

650 Page Mill Road

Palo Alto, California 94304

Attention: Allison Spinner

Fax 650-493-6811

Email: aspinner@wsgr.com

 

5.6                               Amendment and Waiver.  Except as expressly
provided herein, neither this Warrant nor any term hereof may be modified,
amended or terminated other than by a written instrument referencing this
Warrant and signed by the Company and the Holder; provided, that this Warrant
and any term hereof may be either retroactively or prospectively waived or
discharged by an instrument in writing signed by the party against which
enforcement of such waiver or discharge is sought.

 

5.7                               Attorneys’ Fees.  In the event of any dispute
between the parties concerning the terms and provisions of this Warrant, the
party prevailing in such dispute in a final non-appealable judgment shall be
entitled to collect from the other party all costs incurred in such dispute,
including reasonable attorneys’ fees.

 

5.8                               Automatic Conversion upon Expiration.  Unless
Holder notifies the Company in writing to the contrary prior to such automatic
conversion, in the event that, upon the earliest to occur of the Expiration Date
or any expiration, involuntary termination or cancellation of this Warrant,
including with respect to Section 1.6.2, the Fair Market Value of one Share as
determined in accordance with Section 1.3 above is greater than the Warrant
Price in effect on such date, then this Warrant shall automatically be deemed as
of immediately before such date to have been converted pursuant to Section 1.2
above as to all Shares for which it shall not previously have been exercised or
converted, and the Company shall promptly deliver a certificate representing the
Shares issued upon such conversion to the Holder.

 

5.9                               Taxes and Expenses. The Company shall pay all
of its expenses in connection with, and all issuance, transfer, stamp and other
similar incidental taxes imposed by any taxing authority in the United States
with respect to, the exercise of this Warrant or the issue or delivery of Shares
hereunder; provided, however, that, in no event shall the Company be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of any certificate in a name other than that of Holder, and
the Company shall not be required to issue or deliver any such certificate
unless and until the person or persons requesting the issue thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid or is not payable.

 

5.10                        Counterparts.  This Warrant may be executed in
counterparts, all of which together shall constitute one and the same agreement.

 

5.11                        Governing Law.  This Warrant shall be governed by
and construed in accordance with the laws of the State of New York, in each case
(except to the extent the General Corporation Law of the State of Delaware
applies) without giving effect to its principles regarding conflicts of law
(other than Section 5-1401 of the General Obligations Law).

 

10

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5.12                        Headings.  The various headings in this Warrant are
inserted for convenience only and shall not affect the meaning or interpretation
of this Warrant or any provisions hereof.

 

5.13                        Severability.  In the event any one or more of the
provisions of this Warrant shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant shall be unimpaired, and
the invalid, illegal or unenforceable provision shall be replaced by a mutually
acceptable valid, legal and enforceable provision.

 

[Balance of Page Intentionally Left Blank]

 

11

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“COMPANY”

 

 

 

INVUITY, INC.

 

 

 

By:

/s/ James Mackaness

 

 

 

 

Name:

James Mackaness

 

 

(Print)

 

 

 

 

Title:

CFO

 

 

--------------------------------------------------------------------------------

 

“HOLDER”

 

 

 

APOLLO INVESTMENT CORPORATION

 

 

 

By: Apollo Investment Management, L.P., as Advisor

 

 

 

By: ACC Management, LLC, as its General Partner

 

 

 

By:

/s/ Tanner Powell

 

 

 

 

Name:

Tanner Powell

 

 

 

 

Title:

Authorized Signatory

 

 

--------------------------------------------------------------------------------

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                      Holder elects to purchase              
shares of the Common Stock of Invuity, Inc. pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price of the shares in
full.

 

[or]

 

1.                                      Holder elects to convert the attached
Warrant into Shares/cash [strike one] in the manner specified in the Warrant. 
This conversion is exercised for                           of the Shares covered
by the Warrant.

 

[Strike paragraph that does not apply.]

 

2.                                      Please issue a certificate or
certificates representing the shares in the name specified below:

 

 

 

 

 

Holder’s Name

 

 

 

 

(Address)

 

3.                                      By its execution below and for the
benefit of the Company, Holder hereby restates each of the representations and
warranties in Section 4 of the Warrant as the date hereof.

 

 

HOLDER:

 

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

(Date):

 

 

--------------------------------------------------------------------------------

 

APPENDIX 2

 

ASSIGNMENT

 

For value received, APOLLO INVESTMENT CORPORATION hereby sells, assigns and
transfers unto

 

Name:

 

Address:

 

Tax ID:

 

that certain Warrant to Purchase Stock issued by Invuity, Inc. (the “Company”),
on [             ] (the “Warrant”) together with all rights, title and interest
therein.

 

 

APOLLO INVESTMENT CORPORATION

 

 

 

By: Apollo Investment Management, L.P., as Advisor

 

 

 

By: ACC Management, LLC, as its General Partner

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

--------------------------------------------------------------------------------

 

By its execution below, and for the benefit of the Company,                    
makes each of the representations and warranties set forth in Section 4 of the
Warrant and agrees to all other provisions of the Warrant as of the date hereof.

 

 

[NAME OF TRANSFEREE]

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

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