Document:

biol-ex103_134.htm

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

 
 

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

 
 

 

"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

 
 

 

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

 
 

BORROWER:

 

BIOLASE, INC.

 

 

BL ACQUISmON CORP.

 

Name:  i\   -e....e.et re

 
By. b- -
Title:c".- C-f o

BL ACQUISITION II INC.

 

[Signature Page to Waiver and

Business Financing Modification Agreement (181 Amendment)]

 

 

1835011.3biol-ex104_135.htm

 

Exhibit 10.4

 

BUSINESS FINANCING MODIFICATION AGREEMENT 
(Second Amendment to Business Financing Agreement)

 

This Business Financing Modification Agreement (this “Modification Agreement”) is entered into as of September 27, 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 Bank, 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 has been and may be further amended from time to time (the “Business Financing Agreement”). Capitalized terms 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 CHANGE IN TERMS.

 

	
 
	
A.
	
Modifications to Business Financing Agreement:

 

i.Section 1.1: Advances. The last two sentences of Section 1.1 are amended in their entirety and replaced with the following:

 

By no later than September 28, 2018, Borrower shall either (a) repay the First Amendment Advance in full. together with all accrued unpaid interest thereon, or (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, Borrower's failure to satisfy either clause (a) or (b) in the prior sentence on or prior to September 28, 2018, shall be deemed an immediate Event of Default hereunder.   During such period, no additional Advances shall be available hereunder.

 

ii.Section 1.4: Collections. The first sentence of Section l.4(b) is amended in its entirety and replaced with the following:

 

Lender shall (i) when Borrower's Remaining Months Liquidity is less than six (6), apply the Collections deposited into the Collection Accounts to  the outstanding Account Balance on  a  daily basis, and (ii)  when Borrower's Remaining Months Liquidity is equal to or greater than six (6), transfer all Collections deposited into the Collection Accounts to Borrower's Account on a daily basis; provided that upon the occurrence and during the continuance of any Default, Lender may apply all Collections to the Obligations in such order and manner as Lender may determine.

 

iii.Section 4.14.   Section 4.14(g) and (h) are amended in their entireties and replaced with the following:

 

(g)        Within 5 business days after the 15th and last day of each calendar month (or within 5 business days after the last day of each calendar month when Borrower's Remaining  Months Liquidity  is equal  to or greater  than nine (9)), and with each request for an Advance (when submitted with a request for an Advance, these must be dated within 3 business days of such Advance), (i) a roll forward domestic  borrowing base certificate, in form and substance satisfactory to Lender, setting forth Domestic Eligible Receivables and Receivable Amounts thereof  as  of  the  last  day  of  the  preceding  reporting  period,  and (ii) a  roll forward EXIM borrowing  base certificate, in form and substance satisfactory to Lender,  setting   forth  EXIM  Eligible  Receivables   and  Receivable  Amounts thereof as of the last day of the preceding reporting period.

 

(h)       Within  5 business  days after  the  15th and  last day of  each calendar month (or within 5 business days after the last day of each calendar month when Borrower's Remaining  Months Liquidity  is equal to 

 

1

 

or greater  than nine (9)), and with each request for an Advance (when submitted with a request for an Advance, these must be dated within 3 business days of such Advance), detailed agings of Borrower's accounts receivable and accounts payable by invoice date and detailed agings of Borrower's accounts receivable and accounts payable by due date, in each case, separating domestic receivables  and EXIM receivables, together  with  a  sales  or  billings  journal,  a  deferred  revenue  report, a  cash receipts report and such other matters as Lender may request

 

iv. Section 4.14.  The second sentence of Section 4.14(a) is amended in its entirety and replaced with the following:

 

The statements shall be prepared on a consolidated and a consolidating basis.

 

v. Section  4.14.    A new Section 4.14(k) is added to the  Business  Financing Agreement as follows:

 

(k)        Within 3 business days of each Friday until the earlier of (i) Borrower's achievement   of  the  Capital  Raise  Milestone  or  (ii)  Borrower's   delivery  to Lender  of evidence satisfactory  to Lender that Borrower  has achieved EBDAS equal to or greater than One Dollar ($1.00), a weekly cash flow forecast in form and substance satisfactory to Lender.

 

vi.Section  4.15.    Section  4.15  is amended  in its entirety  and  replaced  with the following:

 

4.15        Maintain   all  of  its  and  its  domestic   Subsidiaries'  depository  and operating  accounts and investment accounts with Lender.  Borrower will utilize and cause its Subsidiaries  to utilize Lender's International Banking Division for any  international   banking  services  required  by  Borrower,  including,  but  not limited to, foreign currency wires, foreign exchange, hedges, swaps, and letters of credit.

 

vii. Section  4.20.    Section  4.20  is amended  in its entirety  and replaced  with the following:

 

4.20        At all times, maintain Borrower's financial condition as follows in accordance with GAAP and used consistently with prior practices (except to the extent modified by the definitions herein):

 

	
 
	
(a) 
	
Adjusted Quick Ratio, tested as of the end of each month, not at any time less than 0.70 to 1.00.

 

	
 
	
(b)
	
Unrestricted cash on deposit with Lender not at any time less than $750,000.

 

	
 
	
(c)
	
Borrower shall deliver to Lender, by no later than October 15, 2018, a signed term sheet for not less than $5,000,000 in cash proceeds  from  the  sale  or  issuance of  Borrower's  equity securities or Subordinated Debt on terms and conditions, and from  investors,  satisfactory  to  Lender  in   its  reasonable discretion.

 

	
 
	
(d)
	
Borrower shall receive cash proceeds, after the Second Amendment Date but on or prior to November 15, 2018, of not less than $5,000,000 from the sale or issuance of Borrower's  equity securities or Subordinated Debt on terms and conditions, and from investors, satisfactory to Lender in its reasonable discretion (the “Capital Raise Milestone”).

 

viii.Section 12.1: Definitions.   Clause (o) of the defined term “Domestic Eligible Receivables” in Section 12.1 is amended in its entirety and replaced with the following:

 

(o)        The Receivable is not that portion of Receivables due from an Account Debtor which is in excess of twenty percent (20%) (thirty percent (30%) for finance and distribution companies and forty percent (40%) for Dental One Partners, Highland Capital and Henry Schein) of Borrower's aggregate dollar amount of all outstanding Receivables.

 

 

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ix.Section 12.1: Definitions.  Notwithstanding anything in the Business Financing Agreement to the contrary, the defined term “EXIM Eligible Receivables” set forth in Section 12.1 shall not include Receivables owing from an Account Debtor as to which thirty-five percent (35%)  or more of the aggregate dollar amount of  all outstanding Receivables owing from such Account Debtor have not been paid within 60 days from invoice due date.

 

x.Section 12.1: Definitions.  The following terms and their respective definitions set forth in Section 12.1 are amended in their entireties and replaced with the following:

 

“Adjusted Quick Ratio” means (i) the aggregate of unrestricted global cash and Cash Equivalents plus net trade accounts receivable (net of  any reserve for uncollectable accounts and excluding any receivables from affiliates, whether trade or otherwise) divided by (ii) (a) total current liabilities determined in accordance with GAAP (including all Obligations to  Lender) minus (b) the current portion of Deferred Revenue.

 

“Credit Limit”  means  $2,500,000,  which is  intended to  be  the  maximum amount of Advances at any time outstanding.

 

“Domestic Credit  Limit” means $2,500,000, which is intended to be the maximum  amount  of  Advances  at  any  time  outstanding  with  respect  to Domestic Eligible Receivables.

 

“Domestic Facility Fee” means a fee equal to one-half of one percent (0.50%) of the Domestic Credit Limit due upon March 6, 2019, and each anniversary thereof so long as any Advances are outstanding or available hereunder.

 

“EXIM Credit Limit” means $2,500,000, which is intended to be the maximum amount of Advances at any time outstanding  with respect to EXIM Eligible Receivables.

 

“Finance Charge  Percentage” means a floating rate per year equal to (i)  the Prime Rate plus two and one-quarter  percentage points (2.25%) with respect to Advances made under the Domestic Line of Credit, and (ii) the Prime Rate plus two and one-quarter  percentage  points (2.25%)  with respect to Advances made under  the  EXIM  Line  of  Credit,  and,  in  each  case,  plus  an  additional  five percentage  points  (5.00%)  during  any  period  that  an  Event  of  Default  has occurred and is continuing.

 

“Prime Rate” means the greater of five percent (5.00%) per year or the Prime Rate published in the Money Rates section of the Western Edition of The Wall Street Journal,  or such other  rate of interest  publicly announced  from time to time by Lender  as its Prime Rate.   Lender may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Prime Rate.

 

xi. Section 12.1: Definitions.   The following  terms and their respective definitions are added to Section 12.1, in appropriate alphabetical order, as follows:

 

“Availability Amount” means the lesser of (a) (i) the lesser of (A) the Credit Limit and (B) the Borrowing Base, minus (ii) the total amount of the outstanding Advances   (including   deemed   Advances   with   respect   to   the  International Sublimit  and the total amount  of the Cash Management  Sublimit), and (b) the sum of (i) (A) the lesser of (1) the Domestic Credit Limit and (2) the Domestic Borrowing  Base, minus (B) the total amount of the outstanding Advances with respect  to  Domestic  Eligible  Receivables   (including  deemed  Advances  with respect   to  the   International   Sublimit   and   the  total   amount  of  the  Cash Management Sublimit), plus (ii) (A) the lesser of (1) the EXIM Credit Limit and (2) the EXIM  Borrowing  Base, minus (B) the total amount of the outstanding Advances with respect to EXIM Eligible Receivables.

 

“Cash Burn” means,  for any  month,  Borrower's net  income for such month plus, to the extent deducted in the calculation of net income, depreciate expense, amortization expense, and non cash stock compensation expense.

 

“EBDAS” means Borrower's net income plus, to the extent deducted from the calculation  of  net  income, (i)  depreciation  and amortization  expense, and (ii) stock  compensation   expense,   in  each  case  determined  in  accordance  with GAAP.

 

3

 

 

“Remaining Months Liquidity” means the ratio of (a) the aggregate amount of unrestricted cash maintained with Lender plus the Availability Amount to (b) Borrower's average  monthly Cash Bum  for the trailing three (3) months most recently ended.

 

“Second Amendment Date” is September 27, 2018.

 

xii.Exhibit  A:  Compliance   Certificate.  Exhibit  A  to  the  Business  Financing Agreement is amended in its entirety and replaced with Exhibit A attached hereto.

 

	
 
	
B.
	
Acknowledgements.

 

i.Lender hereby  acknowledges that,  as  of  the  date  of  this  Modification Agreement, Borrower has closed its accounts maintained with Comerica Bank.

 

ii.Lender hereby acknowledges that Borrower has completed the Subsidiary Dissolution and therefore has completed the requirement set forth in Section 4.18 of the Business Financing Agreement.

 

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

 

4.PAYMENT OF MODIFICATION FEE AND DOCUMENTATION EXPENSES. Borrower shall pay to Lender (a) a modification fee in the amount of Five Thousand Dollars ($5,000) (the “Modification Fee”), plus (b) all of Lender's out-of-pocket expenses incurred in connection with the amendment and modification of the Business Financing Agreement (the “Modification Expenses”).

 

5.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 Party, 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 Business Financing Agreement or the transactions contemplated thereby. Releasing Party waives the provisions of California Civil Code section 1542, which states:

 

A  GENERAL RELEASE  DOES  NOT  EXTEND 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 terms of this Modification Agreement and the Business Financing Agreement, and/or Lender's actions to exercise any remedy available under the Business Financing Agreement or otherwise.

 

6.CONTINUING  VALIDITY.  Borrower understands and agrees that in modifying the existing Indebtedness, 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 pursuant to this Modification Agreement in no way shall obligate Lender to make any future 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.

 

 

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7.CONDITIONS.  The effectiveness of this Modification Agreement is conditioned upon (a) the due execution and delivery to Lender of a warrant to purchase stock in form and substance satisfactory to Lender, (b) the completion of a Collateral audit with results satisfactory to Lender in its sole discretion, and (c) payment of the Modification Fee and the Modification Expenses.

 

8.TERMINATION  OF WARRANT.  Upon the effectiveness  of this Modification  Agreement, including, without limitation, the completion of the items set forth in Section 7 above, that certain Warrant to Purchase Stock, dated as of March 6, 2018, between Borrower and Lender, shall be deemed to be terminated and of no further force or effect.

 

9.NOTICE OF FINAL AGREEMENT. BY  SIGNING THIS  DOCUMENT EACH PARTY REPRESENTS AND AGREES TI:IAT: (A) THIS WRITTEN 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.

 

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

 

(Signature Page Follows]

 

 

5

 

 

	
BORROWER:
	
 
	
LENDER:

	
 
	
 
	
 

	
BIOLASE, INC.
	
 
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

	
 
	
 
	
 

	
By:
	
/s/ John R. Beaver
	
 
	
By:
	
 

	
Name:
	
John R. Beaver
	
 
	
Name:
	
 

	
Title:
	
EVP & CFO
	
 
	
Title:
	
 

	
   9/28/18
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
BL ACQUISITION CORP.
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ John R. Beaver
	
 
	
 
	
 

	
Name:
	
John R. Beaver
	
 
	
 
	
 

	
Title:
	
EVP & CFO
	
 
	
 
	
 

	
   9/28/18
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
BL ACQUISITION II INC.
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
/s/ John R. Beaver
	
 
	
 
	
 

	
Name:
	
John R. Beaver
	
 
	
 
	
 

	
Title:
	
EVP & CFO
	
 
	
 
	
 

	
   9/28/18
	
 
	
 
	
 

 

 

 

 

 

 

	
BORROWER:
	
 
	
LENDER:

	
 
	
 
	
 

	
BIOLASE, INC.
	
 
	
WESTERN ALLIANCE BANK, AN ARIZONA CORPORATION

	
 
	
 
	
 

	
By:
	
 
	
 
	
By:
	
/s/ Victor Le

	
Name:
	
 
	
 
	
Name:
	
Victor Le

	
Title:
	
 
	
 
	
Title:
	
SVP

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
BL ACQUISITION CORP.
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
BL ACQUISITION II INC.
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
By:
	
 
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 
	
 

	
   
	
 
	
 
	
 

 

 

 

 

 

 

 

EXHIBIT A 

 

COMPLIANCE CERTIFICATE

 

	
TO:
	
WESTERN ALLIANCE BANK, an Arizona corporation (“Lender”)

 

	
FROM:
	
BIOLASE, INC. (“Parent”), BL ACQUISITION CORP. (“BL Acquisition”), and BL ACQUISITION II INC. (“BL Acquisition II”, and together with Parent and BL Acquisition, individually and collectively, jointly and severally, “Borrower”)

 

The undersigned authorized officer of Biolase, Inc., on behalf of all Borrowers, hereby certifies that in accordance with the terms and conditions of the Business Financing Agreement between Borrower and Lender (the “Agreement), (i) Borrower is in complete compliance for the period ending                             with all required covenants except as noted below  and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.

 

Please Indicate compliance status by circling Yes/No under “Complies” column.

 

	
Reporting Covenant
	
 
	
Required
	
Complies

	
 
	
 
	
 
	
 

	
Monthly financial statements and Compliance Certificate
	
 
	
Monthly within 30 days
	
Yes         No

	
 
	
 
	
 
	
 

	
Annual corporate tax returns
	
 
	
Within 5 days of filing
	
Yes         No

	
 
	
 
	
 
	
 

	
10-Q, 1O-K and 8-K
	
 
	
Within 5 days of filing
	
Yes         No

	
 
	
 
	
 
	
 

	
A/R & A/P Agings (by invoice date and due date), Borrowing Base Certificates, Deferred Revenue report, Sales or billings journal, Cash receipts report
	
 
	
Within 5 business days of the 15th  and last day of each month (or monthly within

5 business days if RML ≥ 9) and with each Advance request
	
Yes         No

	
 
	
 
	
 
	
 

	
Annual financial projections (Board-approved)
	
 
	
FYE within 30 days
	
Yes         No

	
 
	
 
	
 
	
 

	
Quarterly invoice sampling
	
 
	
Quarterly within 30 days
	
Yes         No

	
 
	
 
	
 
	
 

	
Weekly cash flow forecast
	
 
	
Within 3 business days of each Friday
	
Yes         No

	
 
	
 
	
 
	
 

	
Financial Covenant
	
 
	
Required
	
Actual
	
Complies

	
 
	
 
	
 
	
 
	
 

	
Adjusted Quick Ratio
	
 
	
0.70:1.0
	
        :1.00
	
Yes         No

	
 
	
 
	
 
	
 
	
 

	
Unrestricted cash at Lender
	
 
	
$750,000
	
$                
	
Yes         No

	
 
	
 
	
 
	
 
	
 

	
Term Sheet Milestone (for $5,000,000 in proceeds)
	
 
	
10/15/18
	
     /     /      
	
Yes         No

	
 
	
 
	
 
	
 
	
 

	
Capital Raise Milestone (by 11/15/18)
	
 
	
$5,000,000
	
$                
	
Yes         No

	
 
	
 
	
 
	
 
	
 

	
Comments Regarding Exceptions: See Attached.
	
 
	
BANK USE ONLY
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
Received by: 
	
 
	
 

	
Sincerely,
	
 
	
 
	
AUTHORIZED SIGNER
	
 

	
 
	
 
	
Date:
	
 
	
 

	
SIGNATURE
	
 
	
 
	
 
	
 

	
 
	
 
	
Verified:
	
 
	
 

	
TITLE
	
 
	
 
	
AUTHORIZED SIGNER
	
 

	
 
	
 
	
Date:
	
 
	
 

	
DATE
	
 
	
 
	
 
	
 

	
 
	
 
	
Compliance Status
	
 
	
Yes         No

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