Exhibit 10.7





Exhibit 10.7




WAIVER AND AMENDMENT NO. 1 TO LOAN AND

SECURITY AGREEEMNT




This Waiver and Amendment No. 1 to Loan and Security Agreement (this “Amendment”) is entered
into as of September 23, 2010 by and among MIDCAP FUNDING III, LLC, a Delaware limited liability
company (as successor to MidCap Financial, LLC), with an office located at 7735 Old Georgetown
Road, Suite 400, Bethesda, Maryland 20814 (“MidCap”), as collateral agent (“Agent”), and as a
“Lender”, SILICON VALLEY BANK, a California corporation and with a loan production office located
at 5820 Canoga Avenue, Suite 210, Woodland Hills, California 91367 (“SVB”), as a “Lender” (MidCap
and SVB in their capacities as “Lenders” are referred to herein each as a “Lender” and
collectively as the “Lenders”), and BIOLASE TECHNOLOGY, INC., a Delaware corporation (“Borrower”).



1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Lender, Borrower is indebted to Lender pursuant to a
certain loan arrangement, evidenced by, among other documents, instruments and agreements, the
following (collectively, together with all other documents, instruments and agreements evidencing
or securing the Obligations, the “Loan Documents”): (i) the Loan and Security Agreement dated as of
May 27, 2010 by and among Agent, the Lenders and Borrower (the “Loan Agreement”); (ii) the Secured
Promissory Note in the original principal amount of $2,100,000 dated May 27, 2010 made by Borrower
payable to MidCap; (iii) the Secured Promissory Note in the original principal amount of $900,000
dated May 27, 2010 made by Borrower payable to SVB; (iv) the Intellectual Property Security
Agreement dated as of May 27, 2010 by and among Borrower, Agent and the Lenders (the “Intellectual
Property Security Agreement”); (v) the Unconditional Guaranty dated as of May 27, 2010 made by BL
ACQUISITION CORP., a Delaware corporation (“BL Acquisition”) and BL ACQUISITION II, INC.,
a Delaware corporation (“BL Acquisition II” and individually and collectively, jointly and
severally with BL Acquisition, the “Guarantor”) in favor of Agent and the Lenders; and (vi) the
Security Agreement dated as of May 27, 2010 made by the Guarantor in favor of Agent and the Lenders
(the “Security Agreement”). Capitalized terms used but not otherwise defined herein shall have the
same meaning as in the Loan Agreement.



Reference is also made to the Forbearance Agreement, dated as of August 16, 2010, by and among
Agent, the Lenders and Borrower (the “Forbearance Agreement”). Pursuant to the terms of the
Forbearance Agreement, the Lenders have agreed to forbear during the Forbearance Period (as defined
in the Forbearance Agreement), and have so forbeared to and including the date hereof, from
exercising its rights and remedies in respect of the Events of Default arising due to Borrower’s
failure to comply with the financial covenant contained in Section 6.11(a) of the Loan Agreement on
the Testing Date occurring on July 1, 2010 (the “July Event of Default”). In addition, Borrower has
informed Agent and the Lenders that Borrower does not expect to comply with the financial covenant
contained in Section 6.11(a) of the Loan Agreement on the Testing Date occurring on October 1, 2010
(the “October Event of Default” and collectively with the July Event of Default, the “Existing
Defaults”) .



2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreement, the Intellectual Property Security Agreement and the Security
Agreement.



3. DESCRIPTION OF CHANGE IN TERMS.




A. Modifications to Loan Agreement.




1. The Loan Agreement shall be amended by deleting the
following, appearing as Section 2.2(b) thereof:




“(b) Interest Payments and Repayment. Commencing on the first
(1st) Payment Date following the Funding Date of Term A
Loan, and continuing on the Payment Date of each successive month
thereafter through and including the Maturity Date, Borrower shall
make monthly payments of interest to Agent, for payment to each
Lender in accordance with its respective Pro Rata Share, in arrears,
and calculated as set forth
in Section 2.3. Commencing on the Amortization Date, and
continuing on the Payment Date of each successive month thereafter
through and including the Maturity Date, Borrower shall make
consecutive monthly payments of principal to Agent, for payment to
each Lender in accordance with its respective Pro Rata Share, as
calculated by Agent based upon: (1) the amount of such Lender’s Term
Loans, (2) the effective rate of interest, as determined in
Section 2.3, and (3) a straight-line amortization schedule ending on
the Maturity Date. All unpaid principal and accrued interest with
respect to the Term Loans is due and payable in full on the Maturity
Date. The Term Loans may be prepaid only in accordance with Sections
2.2(c) and 2.2(d).”


 












 






and inserting in lieu thereof the following:




“(b) Interest Payments and Repayment. Commencing on the first
(1st) Payment Date following the Funding Date of Term A
Loan, and continuing on the Payment Date of each successive month
thereafter through and including the Maturity Date, Borrower shall
make monthly payments of interest to Agent, for payment to each
Lender in accordance with its respective Pro Rata Share, in arrears,
and calculated as set forth in Section 2.3. Commencing on the
Amortization Date, and continuing on the Payment Date of each
successive month thereafter through and including the Maturity Date,
Borrower shall make consecutive monthly payments of principal to
Agent, for payment to each Lender in accordance with its respective
Pro Rata Share, as calculated by Agent based upon: (1) the amount of
such Lender’s Term Loans, (2) the effective rate of interest, as
determined in Section 2.3, and (3) a straight-line amortization
schedule ending on the Maturity Date (provided that for the Payment
Dates occurring on April 1, 2011 through and including December 1,
2011, the aggregate principal amortization of Term A Loan shall be
$125,000 per month and allocated to each Lender in accordance with
its respective Pro Rata Share). All unpaid principal and accrued
interest with respect to the Term Loans is due and payable in full on
the Maturity Date. The Term Loans may be prepaid only in accordance
with Sections 2.2(c) and 2.2(d).”




2. The Loan Agreement shall be amended by adding the following
sentence at the end of Section 2.2(d) thereof:




“Notwithstanding the foregoing, Borrower shall be permitted to
optionally prepay all or any portion of the Term A Loans on or before
March 31, 2011, provided Borrower (i) provides written notice to
Agent of its election to prepay the Term A Loans at least five (5)
days prior to such prepayment, and (ii) pays to Agent, for payment to
each Lender in accordance with its respective Pro Rata Share, on the
date of such prepayment, an amount equal to the sum of (A) the
principal amount of the Term A Loans being prepaid, plus accrued
interest thereon, (B) the
Final Payment in respect of the principal amount of the Term A
Loans being prepaid, and (C) all other sums that shall have become
due and payable, including Lenders’ Expenses (but not including any
Prepayment Fee in respect of the principal amount of the Term A Loans
being prepaid). The provisions of the foregoing sentence shall not
apply to any prepayment of the Term A Loans upon the acceleration of
the Term A Loans.”


 


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3. The Loan Agreement shall be amended by adding the following
new clauses (f) and (g) to Section 6.2 thereof:




“(f) Deliver to Agent and the Lenders on the first Business Day
of each week, (i) a prospective cash flow forecast for the thirteen
(13) week period commencing on such day and (ii) a report detailing
the unit sales performance of Borrower and its Subsidiaries in the
week preceding such day.




(g) Deliver to Agent and the Lenders on or before December 31 of
each year, annual sales projections on a month-by-month basis for the
succeeding calendar year (the “Annual Projections”).”




4. The Loan Agreement shall be amended by adding the following
new section, appearing as Section 6.15 thereof:




“6.15 Subsequent Financing Event. Borrower shall close
the Required Equity Financing on or before March 31, 2011. Borrower
shall remit to Agent all proceeds of each Subsequent Equity Event for
application to the repayment of the Term A Loans in accordance with
Section 2.2(d) immediately upon receipt of such proceeds by Borrower.
In addition, in the event the (i) the Required Equity Financing does
not close on or before March 31, 2011 or (ii) the Required Equity
Financing closes on or before March 31, 2011 and results in the
receipt by Borrower of aggregate net cash proceeds of less than
$5,000,000, on or before April 5, 2011, Borrower shall issue, execute
and deliver to each Lender additional stock purchase warrants (the
“Additional Warrants”), in substantially the same form as the stock
purchase warrants issued by Borrower to the Lenders of the Effective
Date (the “Existing Warrants”). The Additional Warrants shall have
terms and conditions substantially identical to the Existing Warrants
and shall have a term of five (5) years from date of issuance,
representing in the aggregate (such aggregate to be allocated among
the Lenders proportionally in the same proportions as the Existing
Warrants) the right to purchase such number of shares of Borrower’s
common stock (calculated as of the business day immediately prior to
the date of issuance) as shall equal to the Applicable Percentage (as
defined below) of Borrower’s then-total issued and outstanding common
stock  determined on a fully-diluted, as-exercised, as-converted
basis, at an exercise price per share equal to the lowest
closing price per share of Borrower’s common stock reported on
the NASDAQ Capital Market reported for the twenty (20) trading days
immediately preceding the date of issuance. “Applicable Percentage”
shall mean (i) two and one-half percent (2.50%) if the Required
Equity Financing does not close on or before March 31, 2011 or (ii)
one and one-half percent (1.50%) if the Required Equity Financing
closes on or before March 31, 2011 and results in the receipt by
Borrower of aggregate net cash proceeds equal to or greater than
$3,000,000 but less than $5,000,000.”


 


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5. The Loan Agreement shall be amended by deleting the “.” at
the end of Section 8.13 and replacing it with “;” and adding the
following new section, appearing as Section 8.14 thereof:




“8.14 Monthly Unit Sales. Commencing with the month
ending October 31, 2010 and continuing on the last day of each month
thereafter, Borrower shall fail to achieve monthly unit sales for any
two consecutive months (tested as of the last day of each month) of
at least 80% of the unit sales projected for such months (i) with
respect to October, November and December, 2010, as set forth in
Borrower’s business plan attached hereto as Exhibit E and (ii)
thereafter, as set forth in Borrower’s Annual Projections as approved
by Agent and the Lenders.”




6. The Loan Agreement shall be amended by deleting the
following, appearing as Section 8.2(a) thereof:




“(a) Borrower fails or neglects to perform any obligation in
Sections 6.1(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.10, or 6.11 or violates
any covenant in Section 7; or”




and inserting in lieu thereof the following:




“(a) Borrower fails or neglects to perform any obligation in
Sections 6.1(c), 6.2, 6.4, 6.5, 6.6, 6.7, 6.10, 6.11, 6.15 or 6.16 or
violates any covenant in Section 7; or”




7. The Loan Agreement shall be amended by deleting the
following, appearing as Section 8.12 thereof:




“Lien Priority. Except as permitted by Agent, any Lien
created hereunder or by any other Loan Document shall at any time
fail to constitute a valid and perfected Lien on all of the
Collateral purported to be secured thereby, subject to no prior or
equal Lien; or”


 


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and inserting in lieu thereof the following:




“Lien Priority. Except as permitted by Agent, any Lien
created hereunder or by any other Loan Document shall at any time
fail to constitute a valid and perfected Lien on all of the
Collateral purported to be secured thereby, subject to no prior or
equal Lien (other than Liens in favor of Henry Schein, Inc. provided
that such Liens (i) secure only the obligations of Borrower pursuant
to the Schein Distribution Agreement as in effect on the Loan
Modification Agreement and (ii) are subject to an Intercreditor
Agreement, by and among Agent, the Lenders and Henry Schein, Inc. in
form and substance acceptable to Agent and the Lenders); or”




8. The Loan Agreement shall be amended by deleting the
following definitions appearing in Section 13.1 thereof:




““Amortization Date” is December 1, 2010.




“Payment Date” is the first calendar day of each calendar month.




“Permitted Liens” are:




(a) Liens existing on the Effective Date and shown on the
Perfection Certificate or arising under this Agreement and the other
Loan Documents;




(b) Liens for taxes, fees, assessments or other government
charges or levies, either not delinquent or being contested in good
faith and for which Borrower maintains adequate reserves on its
Books, provided that no notice of any such Lien has been filed or
recorded under the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations adopted thereunder;




(c) purchase money Liens (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment
securing no more than One Hundred Thousand Dollars ($100,000) in the
aggregate amount outstanding, or (ii) existing on Equipment when
acquired, if the Lien is confined to the property and
improvements and the proceeds of the Equipment; and




(d) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described in (a) and (c) above,
but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the
principal amount of the Indebtedness may not increase.”




and inserting in lieu thereof the following:




““Amortization Date” is October 1, 2010.


 


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“Payment Date” is the first calendar day of each calendar month;
provided that the Payment Date in each month during the period
commencing on October 1, 2010 through and including March 1, 2011
shall be the 10th calendar day of the month.




“Permitted Liens” are:




(a) Liens arising under this Agreement and the other Loan
Documents;




(b) Liens for taxes, fees, assessments or other government
charges or levies, either not delinquent or being contested in good
faith and for which Borrower maintains adequate reserves on its
Books, provided that no notice of any such Lien has been filed or
recorded under the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations adopted thereunder;




(c) purchase money Liens (i) on Equipment acquired or held by
Borrower incurred for financing the acquisition of the Equipment
securing no more than One Hundred Thousand Dollars ($100,000) in the
aggregate amount outstanding, or (ii) existing on Equipment when
acquired, if the Lien is confined to the property and
improvements and the proceeds of the Equipment;




(d) Liens incurred in the extension, renewal or refinancing of
the indebtedness secured by Liens described in (a) and (c) above,
but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the
principal amount of the Indebtedness may not increase; and




(e) Liens in favor of Henry Schein, Inc. granted pursuant to
that certain Amended and Restated Security Agreement dated as of
September
 _____, 2010 by and between Borrower and Henry Schein, Inc.
provided that such Liens (i) secure only the obligations of Borrower
pursuant to the Schein Distribution Agreement as in effect on the
Loan Modification Agreement and (ii) are subject to an Intercreditor
Agreement, by and among Agent, the Lenders and Henry Schein, Inc. in
form and substance acceptable to Agent and the Lenders.”




9. The Loan Agreement shall be further amended by adding the
following, definitions in Section 13.1 thereof in alphabetical order:




“Loan Modification Date” means September
 _____, 2010.”




“Required Equity Financing” means the receipt by Borrower, on or
after the Loan Modification Date, of aggregate net cash proceeds of
not less than $3,000,000 from one or more Subsequent Equity Events
and application of 100% such net proceeds to the prepayment of
the Term A Loans in accordance with Section 2.2(d).”


 


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“Schein Distribution Agreement” means the Distribution and
Supply Agreement dated as of September
 _____, 2010 by and between
Borrower and Henry Schein, Inc.




“Schein Security Agreement” means the Amended and Restated
Security Agreement dated as of September
 _____, 2010 by and between
Borrower and Henry Schein, Inc.




“Subsequent Equity Event” means the receipt by Borrower, on or
after the Loan Modification Date, of net cash proceeds from an equity
or subordinated convertible debt financing and/or licensing or joint
venture or corporate collaboration transaction.”



4. WAIVER. Borrower acknowledges the Existing Defaults. In consideration of and in
reliance upon the representations, warranties and covenants of Borrower herein and in the Loan
Documents, the Lenders hereby waive the Existing Defaults under the Loan Agreement. The Lenders’
agreement to waive the Existing Defaults as set forth in this Amendment in no way shall obligate
the Lenders to waive or forbear in the future or otherwise make any future modifications to the
Loan Documents or the Obligations.



5. REPRESENTATION AND WARRANTIES. To induce Agent and the Lenders to enter into this
Amendment, Borrower hereby represents and warrants to Agent and the Lenders as follows: immediately
after giving effect to the waiver in Section 4 of this Amendment (a) the representations and
warranties of Borrower contained in the Loan Documents are true, accurate and complete in all
material respects as of the date hereof (except to the extent such representations and warranties
relate to an earlier date, in which case they are true and correct as of such date), and (b) no
Event of Default has occurred and is continuing and (b) Borrower has the power and authority to
execute and deliver this Amendment. Borrower understands and agrees that in entering into this
Amendment, Agent and the Lenders is relying upon Borrower’s representations, warranties, and
agreements, as set forth in the Loan Documents and herein.



6. CONSISTENT CHANGES. The Loan Documents are hereby amended wherever necessary to reflect
the changes described above.



7. RATIFICATION OF LOAN DOCUMENTS; ACKNOWLEDGEMENT OF OBLIGATIONS. Borrower hereby (a)
ratifies, confirms, and reaffirms each of the terms and conditions of the Loan Documents, (b)
acknowledges and agrees that except as previously amended in writing and as specifically modified
by this Amendment, all terms and conditions of the Loan Documents shall remain in full force and
effect, and (c) ratifies, confirms and reaffirms all terms and conditions of all security or other
collateral granted to Agent and the Lenders, and confirms that the indebtedness secured thereby
includes, without limitation, the Obligations. Nothing in this Amendment shall constitute a
satisfaction of the Obligations. It is the intention of Agent, the Lenders and Borrower to retain
as liable parties all makers of Loan Documents, unless the party is expressly released by Agent and
the Lenders in writing. No maker will be released by virtue of this Amendment. Borrower
acknowledges and agrees that the Term B Loan Draw Period never commenced and that the Lenders have
no obligation to make any Term B Loan available to Borrower.



8. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no
offsets, defenses, claims, or counterclaims against Agent or any Lender with respect to the Loan
Documents, the Obligations, or otherwise, and that if Borrower now has, or ever did have, any
offsets, defenses, claims, or
counterclaims against Agent or any Lender, whether known or unknown, at law or in equity, all of
them are hereby expressly WAIVED and Borrower hereby RELEASES Agent and each Lender from any
liability thereunder.


 


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9. WAIVER OF JURY TRIAL. Borrower hereby makes the following waiver knowingly, voluntarily,
and intentionally, and understand that Agent and the Lenders, in entering into this Amendment, are
expressly relying on such waiver: BORROWER HEREBY IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT TO
A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH BORROWER, ANY GUARANTOR, AGENT, OR ANY
LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY IS INITIATED BY OR AGAINST LENDER OR
IN WHICH LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT OF, OR IS IN
RESPECT OF, ANY RELATIONSHIP AMONG BORROWER, ANY GUARANTOR, AGENT AND ANY LENDER. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR AGENT AND THE LENDERS TO ENTER INTO THIS AMENDMENT.



10. FEES AND EXPENSES. In consideration of the execution and delivery by the Lenders of
this Amendment, Borrower shall pay the Lenders an amendment fee of $60,000 to be paid to the
Lenders in accordance with their respective Pro Rata Shares, which amendment fee is due and payable
on the earliest to occur of (i) prepayment in full of the Term A Loan under Section 2.2(d) of the
Loan Agreement, (ii) the acceleration of Term A Loan or (iii) the Maturity Date. In addition,
Borrower shall reimburse Agent and the Lenders on demand for any and all unreimbursed costs,
expenses, and costs of collection (including reasonable attorneys’ fees and expenses) heretofore
and hereafter incurred by Agent or any Lender in connection with the protection, preservation, and
enforcement by Agent or any Lender of Agent’s or any Lender’s rights and remedies under the Loan
Documents, including, without limitation, the negotiation and preparation of this Amendment.



11. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only upon
(i) execution and delivery by Borrower and Henry Schein, Inc. of the Schein Distribution Agreement
and the Schein Security Agreement on or before the Loan Modification Date, (ii) receipt by Agent
and the Lenders of a fully executed Intercreditor Agreement with Henry Schein, Inc. in form and
substance acceptable to Agent and the Lenders, (iii) receipt by Agent and the Lenders of evidence
satisfactory to Agent and the Lenders that Borrower has received net cash proceeds of not less than
$3,000,000 from Henry Schein, Inc. in connection with the execution and delivery of the Schein
Distribution Agreement, (iv) receipt by the Lenders of amendments to their respective Warrants in
form and substance acceptable to the Lenders, and (v) execution of this Amendment by Agent, the
Lenders and Borrower. It is the intention of the parties hereto that this Amendment may be
executed in any number of counterparts (including by facsimile or e-mail transmission of an adobe
file format document (also known as a PDF file)), and by the different parties hereto on the same
or separate counterparts, each of which shall be deemed to be an original instrument but all of
which together shall constitute one and the same agreement.



[The remainder of this page is intentionally left blank]



 


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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the Loan Modification Date.



	 	 	 	 	 
	 	BORROWER:



BIOLASE TECHNOLOGY, INC.

 	 
	 	By:  	/s/ Federico Pignatelli
 	 
	 	 	Name:  	Federico Pignatelli 	 
	 	 	Title:  	Chairman and interim Chief Executive Officer 	 



	 	 	 	 	 
	 	AGENT:



MIDCAP FUNDING III, LLC, as Agent

 	 
	 	By:  	/s/ Luis Viera
 	 
	 	 	Name:  	Luis Viera 	 
	 	 	Title:  	Managing Director 	 



	 	 	 	 	 
	 	LENDERS:



MIDCAP FUNDING III, LLC, as a Lender

 	 
	 	By:  	/s/ Luis Viera
 	 
	 	 	Name:  	Luis Viera 	 
	 	 	Title:  	Managing Director 	 



	 	 	 	 	 
	 	SILICON VALLEY BANK, as a Lender

 	 
	 	By:  	/s/ Marla Johnson
 	 
	 	 	Name:  	Marla Johnson 	 
	 	 	Title:  	Senior Advisor 	 


 


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ASSENT BY GUARANTOR:




For good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the undersigned Guarantor: (i)
hereby acknowledges and assents to the terms and conditions of the
foregoing Amendment; (ii) as and to the extent specified in the
foregoing Amendment, hereby joins with the Borrower in making the
representations, warranties, covenants, and agreements specified
therein as being applicable to the Guarantor by its assent hereunder;
(iii) hereby represents and warrants to the Lenders that the
execution and delivery of its assent hereunder and of the
instruments, documents, and agreements required by the Guarantor
under the Amendment and contemplated thereby have been determined by
the Guarantor: (x) to be in the best corporate interest of the
Guarantor, (y) to constitute the reasonably equivalent value with
respect to the benefit derived by the Guarantor therefrom, and (z) to
be the free and voluntary act of the Guarantor for such valid
consideration; and (iv) hereby submits to the jurisdiction of all
federal and state courts situated in the State of Maryland with
respect to all matters relating in any way to this Amendment and/or
the other Loan Documents.



	 	 	 	 	 
	 	GUARANTORS:



BL ACQUISITION CORP.

 	 
	 	By:  	/s/ Federico Pignatelli
 	 
	 	 	Name:  	Federico Pignatelli 	 
	 	 	Title:  	Chief Executive Officer 	 



	 	 	 	 	 
	 	BL ACQUISITION II, INC.

 	 
	 	By:  	/s/ Federico Pignatelli
 	 
	 	 	Name:  	Federico Pignatelli 	 
	 	 	Title:  	Chief Executive Officer 	 




 


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