Contract
Exhibit 10.5
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 MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES (SUBJECT TO THE PROVISIONS OF ARTICLE 5 BELOW), SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION.
WARRANT TO PURCHASE STOCK
Company: Biolase Technology, Inc., a Delaware corporation
Number of Shares: As set forth below
Class of Stock: Common Stock, $0.001 par value per share
Warrant Price: As set forth below
Issue Date: May 27, 2010
Expiration Date: May 26, 2015
Number of Shares: As set forth below
Class of Stock: Common Stock, $0.001 par value per share
Warrant Price: As set forth below
Issue Date: May 27, 2010
Expiration Date: May 26, 2015
| Credit Facility: | This Warrant is issued in connection with that certain
Loan and Security Agreement of even date herewith among
Midcap Financial, LLC, Silicon Valley Bank and the
Company (as amended and in effect from time to time, the
“Loan Agreement”). |
THIS WARRANT CERTIFIES THAT, for good and valuable consideration, MIDCAP FINANCIAL, LLC
(together with any successor or permitted assignee or transferee of this Warrant or of any Shares
issued upon exercise or conversion hereof, “Holder”) is entitled to purchase the number of fully
paid and non-assessable shares (the “Shares”) of the above-stated Class of Stock (the “Class”) of
the above-named company (the “Company”) at the above-stated Warrant Price per Share, all as set
forth above and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions and
upon the terms and conditions set forth in this Warrant.
A. Number of Shares; Warrant Price. This Warrant shall be exercisable for the Initial
Shares, plus the Additional Shares (if any).
(1) Initial Shares.
(a) Initial Shares. As used herein, “Initial Shares” means 71,186 shares of the Class,
subject to adjustment from time to time in accordance with the provisions of this Warrant.
(b) Initial Shares Warrant Price. The purchase price per Initial Share (the “Initial
Shares Warrant Price”) shall be $1.77, subject to adjustment from time to time in accordance with
the provisions of this Warrant.
(2) Additional Shares.
(a) Additional Shares. Upon the making by Holder (or its affiliate) of the Term B Loan
(as defined in the Loan Agreement) to the Company under the Loan Agreement, if at all, this Warrant
automatically shall become exercisable for such number of additional shares of the Class (the
“Additional Shares”) as shall equal (a)(i) 0.06, multiplied by (ii) the principal amount of such
Term B Loan made by Holder (or its affiliate), divided by (b) the Additional Shares Warrant Price,
and subject to adjustment thereafter from time to time in accordance with the provisions of this
Warrant.
(b) Additional Shares Warrant Price. The purchase price per Additional Share (the
“Additional Shares Warrant Price”) shall be the average closing price reported for a share of the
Class on the principal US stock exchange or trading market on which shares of the Class are then
traded or quoted for the twenty (20) consecutive trading days immediately preceding the date on
which Holder (or its affiliate) makes the Term B Loan to the Company, subject to adjustment from
time to time thereafter in accordance with the provisions of this Warrant.
(3) As used herein: (a) ”Shares” means the Initial Shares together with the Additional Shares
(if any) for which this Warrant becomes exercisable in accordance with paragraph A(2)(a) above, and
subject to adjustment from time to time in accordance with the provisions of this Warrant; and (b)
“Warrant Price” means the Initial Shares Warrant Price with respect to the Initial Shares, and the
Additional Shares Warrant Price with respect to the Additional Shares; all as adjusted from time to
time in accordance with the provisions of this Warrant.
ARTICLE 1. EXERCISE.
1.1 Method of Exercise. Holder may exercise this Warrant by delivering the original
of this Warrant together with a duly executed Notice of Exercise in substantially the form attached
as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion
right set forth in Article 1.2, Holder shall also deliver to the Company a check, 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 Article 1.1,
Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares
determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares
by (b) the fair market value of one Share. The fair market value of the Shares shall be determined
pursuant to Article 1.3.
1.3 Fair Market Value. If shares of the Class are then publicly listed or quoted on
one or more securities exchanges, inter-dealer quotation systems or over-the-counter markets, the fair market value of a Share shall be the closing price of a share of the
Class reported on the principal such exchange, system or market for the business day immediately
before Holder delivers this Warrant together with its Notice of Exercise to the Company. If
shares of the Class are not then publicly listed or quoted on one or more securities exchanges,
inter-dealer quotation systems or over-the-counter markets, then the Board of Directors of the
Company shall determine the fair market value of a Share in its reasonable good faith judgment.
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1.4 Delivery of Certificate and New Warrant. Promptly after Holder exercises or
converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant
Price, the Company shall 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.
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 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 any sale or
other disposition of all or substantially all of the assets of the Company, or any reorganization,
consolidation, merger, or sale of outstanding equity securities of the Company by the holders
thereof, where the holders of the Company’s outstanding voting equity securities as of immediately
before the transaction beneficially own less than a majority of the outstanding voting equity
securities of the surviving or successor entity as of immediately after the transaction.
1.6.2 Treatment of Warrant at Acquisition.
A) Holder agrees that, in the event of an Acquisition in which the sole consideration payable to
the Company and/or its stockholders consists of cash and/or Marketable Securities, this Warrant
shall terminate on and as of the closing of such Acquisition to the extent not previously
exercised. The Company shall provide Holder with written notice of any proposed Acquisition not
later than ten (10) days prior to the closing thereof setting forth the material terms and
conditions thereof.
B) Upon the closing of any Acquisition other than as particularly described in subsection (A)
above, the surviving or successor entity shall assume this Warrant and the obligations of the
Company hereunder, and this Warrant shall, from and after such closing, be exercisable for the same
class, number and kind of securities, cash and other property as would have been paid for or in
respect of the Shares issuable (as of immediately prior to such closing) upon exercise in full
hereof as if such Shares had been issued and outstanding on and as of such closing, at an aggregate
Warrant Price equal to
the aggregate Warrant Price in effect as of immediately prior to such closing; and subject to
further adjustment thereafter from time to time in accordance with the provisions of this Warrant.
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C) As used in this Article 1.6, “Marketable Securities” means securities meeting all of the
following requirements: (i) the issuer thereof is then subject to the reporting requirements of
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and is then current in its filing of all required reports and other information under the
Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that
would be received by Holder in connection with the Acquisition were Holder to exercise or convert
this Warrant on or prior to the closing thereof is then publicly listed or quoted on one or more
securities exchanges, inter-dealer quotation systems or over-the-counter markets, and (iii) Holder
would not be restricted by contract or by applicable federal and state securities laws from
publicly re-selling, within six (6) months and one day following the closing of such Acquisition,
all of the issuer’s shares and/or other securities that would be received by Holder in such
Acquisition were Holder to exercise or convert this Warrant in full on or prior to the closing of
such Acquisition.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on the
outstanding shares of the Class payable in additional shares of the Class or other securities, then
upon exercise or conversion 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 outstanding shares of the Class by reclassification or otherwise into a greater
number of shares, the number of Shares purchasable hereunder shall be proportionately increased and
the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class 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 shall be proportionately
decreased.
2.2 Reclassification, Exchange, Substitution, Recapitalization or Reorganization.
Upon any reclassification, exchange, substitution, recapitalization or reorganization affecting the
outstanding shares of the Class, Holder shall be entitled to receive, upon exercise or conversion
of this Warrant, the number and kind of securities and property that Holder would have received for
the Shares if this Warrant had been exercised in full immediately before such reclassification,
exchange, substitution, recapitalization or reorganization, at an aggregate Warrant Price not
exceeding the aggregate Warrant Price in effect as of immediately prior thereto. The Company or
its successor shall promptly issue to Holder a certificate pursuant to Article 2.6 hereof setting
forth the number, class and series or other designation of such new securities or other property
issuable upon exercise or conversion of this Warrant as a result of such reclassification,
exchange, substitution, recapitalization or reorganization. The provisions
of this Article 2.2 shall similarly apply to successive reclassifications, exchanges,
substitutions, recapitalizations and reorganizations.
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2.3 Adjustment to Warrant Price on Cash Dividend. In the event that the Company at
any time prior or from time to time prior to exercise or conversion in full of this Warrant pays
any cash dividend on the outstanding shares of the Class or makes any cash distribution on or in
respect of the outstanding shares of the Class, and in each such case, the Holder hereof shall,
upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of
the Class receivable thereupon, the amount of cash which such Holder would hold on the date of
such exercise had he been the holder of record of such Class as of the date on which holders of
the Class received or became entitled to receive such cash.
2.4 No Impairment. The Company shall not, by amendment of its Certificate of
Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution,
issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this Warrant by the Company,
but shall at all times in good faith assist in carrying out of all the provisions of this Article 2
and in taking all such action as may be necessary or appropriate to protect Holder’s rights under
this Article 2 against impairment.
2.5 Fractional Shares. No fractional Shares shall be issuable upon exercise or
conversion of the 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, Class
and/or number of Shares, 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
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, Class and number of Shares in effect upon the date thereof and the series of adjustments
leading to such Warrant Price, Class and number of Shares.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company represents and warrants to, and
agrees with, the Holder as follows:
(a) All Shares which may be issued upon the exercise or conversion of this Warrant shall at
all times during the term hereof and prior to exercise or conversion in full hereof be duly
reserved out of the Company’s authorized and unissued capital stock for issuance upon exercise or
conversion hereof and shall, upon
issuance, be duly and validly issued, fully paid and non-assessable, and free of any liens and
encumbrances except for restrictions on transfer provided for herein or under applicable federal
and state securities laws.
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3.2 Notice of Certain Events. If the Company proposes at any time (a) to declare any
dividend or distribution upon the outstanding shares of the Class, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (b) to offer for
subscription or sale pro rata to the holders of the outstanding shares of the Class any additional
shares of any class or series of the Company’s stock; (c) to effect any reclassification,
reorganization or recapitalization of the shares of the Class; or (d) to effect an Acquisition or
to liquidate, dissolve or wind up; then in each such event the Company shall provide written notice
thereof to Holder thereof at the same time and in the same manner as the Company gives notice
thereof to the holders of the outstanding shares of the Class.
3.3 No Shareholder Rights. Except as provided in this Warrant, Holder will not have
any rights as a shareholder of the Company until the exercise of this Warrant.
ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER. The 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 account, not as a
nominee or agent, and not with a view to the public resale or distribution in violation of
applicable securities laws. Holder also represents that it 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 such 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.
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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 the
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.
5.2 Legends. This Warrant and the Shares 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 (THE “ACT”), OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES (SUBJECT TO THE PROVISIONS OF ARTICLE 5 OF THAT CERTAIN WARRANT
TO PURCHASE STOCK ISSUED BY THE COMPANY TO MIDCAP FINANCIAL, LLC DATED AS
OF MAY 27, 2010), SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
EXEMPT FROM REGISTRATION.
5.3 Compliance with Securities Laws on Transfer. This Warrant and/or the Shares
issued upon exercise or conversion of this Warrant 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 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 any
affiliate
of Holder, provided that such affiliate is an “accredited investor” as defined in Regulation D
promulgated under the Act.
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5.4 Transfer Procedure. Subject to the provisions of Article 5.3 and upon providing
the Company with written notice, Holder may transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon
conversion of the Shares, if any) to any transferee, provided, however, in connection with any such
transfer, Holder 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 Holder will surrender
this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The
foregoing provisions of this Article 5.4 shall not apply to a public sale of any Shares issued on
exercise or conversion of this Warrant pursuant to the provisions of Rule 144 promulgated under the
Act.
5.5 Notices. All notices and other communications from the Company to the Holder, or
vice versa, shall be deemed delivered and effective when given personally or mailed by first-class
registered or certified mail, postage prepaid (or on the first business day after transmission by
facsimile), at such address as may have been furnished to the Company or Holder, as the case may
be, in writing by the Company or such holder from time to time. 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:
Midcap Financial, LLC
0000 Xxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Management- Life Sciences
Telephone: 000-000-0000
Facsimile: 000-000-0000
0000 Xxx Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Portfolio Management- Life Sciences
Telephone: 000-000-0000
Facsimile: 000-000-0000
Notice to the Company shall be addressed as follows until Holder receives notice of a change
in address:
Biolase Technology, Inc.
Attn: Chief Executive Officer
0 Xxxxxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
Attn: Chief Executive Officer
0 Xxxxxxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000 Facsimile: 000-000-0000
5.6 Waiver. This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
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5.7 Attorney’s Fees. In the event of any dispute between the parties concerning the
terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to
collect from the other party all costs incurred in such dispute, including reasonable attorneys’
fees.
5.8 Counterparts. This Warrant may be executed in counterparts, all of which together
shall constitute one and the same agreement.
5.9 Governing Law. This Warrant shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to its principles regarding conflicts of
law.
“COMPANY”
BIOLASE TECHNOLOGY, INC.
By:
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/s/ Xxxxx X. Xxxxxx
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| Title: Chief Executive Officer |
“HOLDER”
MIDCAP FINANCIAL, LLC
By:
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/s/ Xxxx Xxxxxx
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| Title: Managing Director |
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