EXHIBIT 10.1

 

NOTE AND WARRANT PURCHASE AGREEMENT

 

by and among

 

BIOJECT MEDICAL TECHNOLOGIES INC.

 

and

 

THE PURCHASERS LISTED ON SCHEDULE 1 HERETO

 

 

March 8, 2006

 

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TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

1

Section 1.1

Affiliate

1

Section 1.2

Agreement

2

Section 1.3

Base Rate

2

Section 1.4

Borrowed Money

2

Section 1.5

Bridge Loan

2

Section 1.6

Bridge Loan Closing; Bridge Loan Closing Date

2

Section 1.7

Bridge Note

2

Section 1.8

Business Day

2

Section 1.9

Common Stock

2

Section 1.10

Default Rate

2

Section 1.11

Event of Default

3

Section 1.12

Existing Subsidiary

3

Section 1.13

GAAP

3

Section 1.14

Governmental Authority

3

Section 1.15

Guarantor

3

Section 1.16

Guaranty

3

Section 1.17

Lien

3

Section 1.18

Loan Documents

3

Section 1.19

Maturity Date

3

Section 1.20

Obligations

3

Section 1.21

Permitted Liens

3

Section 1.22

Person

4

Section 1.23

PFG Obligations

4

Section 1.24

PFG Subsequent Obligations

4

Section 1.25

Purchaser and Purchasers

4

Section 1.26

Purchaser Majority Interest

4

Section 1.27

Security Agreement

4

Section 1.28

Warrants

4

 

 

 

ARTICLE 2 BRIDGE LOANS

4

Section 2.1

Issuance and Terms of the Bridge Notes.

4

Section 2.2

Maturity Date

5

 

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Section 2.3

Bridge Note Conversion Mechanics

5

 

Section 2.4

Conversion Upon Closing of Other Securities Offerings

5

Section 2.5

Maturity Date Conversion

5

Section 2.6

Issuance of Warrants

6

Section 2.7

Overall Cap on Common Shares Issuable to Purchasers.

6

 

 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

7

 

Section 3.1

Representations and Warranties of the Purchasers

7

 

 

 

 

ARTICLE 4 COLLATERAL

7

 

Section 4.1

Generally

7

 

Section 4.2

Lien Documents

7

Section 4.3

Searches

7

Section 4.4

Power of Attorney

8

 

 

 

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

8

 

Section 5.1

Incorporation of SPA Representations and Warranties

8

 

Section 5.2

No Other Liens or Encumbrances

8

Section 5.3

Solvency

8

 

 

 

ARTICLE 6 LOAN CLOSING AND CONDITIONS OF LENDING

9

 

Section 6.1

Conditions Precedent to Agreement

9

 

Section 6.2

Bridge Loan Closing

12

Section 6.3

Waiver of Rights

12

 

 

 

ARTICLE 7 AFFIRMATIVE COVENANTS

12

 

Section 7.1

Maintenance of Existence.

12

 

Section 7.2

Cost Reduction Program

12

Section 7.3

Further Assurances

13

 

 

 

ARTICLE 8 NEGATIVE COVENANTS

13

 

Section 8.1

Borrowing

13

 

Section 8.2

No Liens and Encumbrances; No Disposition of the Collateral

13

Section 8.3

Sale and Leaseback

13

Section 8.4

Contingent Liabilities

13

Section 8.5

Subsidiaries

14

Section 8.6

Contracts and Agreements

14

Section 8.7

Certain Fundamental Changes

14

 

 

 

ARTICLE 9 EVENTS OF DEFAULT

14

 

Section 9.1

Events of Default

14

 

Section 9.2

Acceleration

16

 

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ARTICLE 10 MISCELLANEOUS

16

 

Section 10.1

Expenses and Taxes.

16

 

Section 10.2

Entire Agreement; Amendments

16

Section 10.3

No Waiver; Cumulative Rights

17

Section 10.4

Notices

17

Section 10.5

Severability

18

Section 10.6

Successors and Assigns

18

Section 10.7

Counterparts

18

Section 10.8

Interpretation

18

Section 10.9

Survival of Terms

18

Section 10.10

Release of Purchasers

19

Section 10.11

Time

19

Section 10.12

Commissions

19

Section 10.13

Third Parties

20

Section 10.14

Discharge of the Company’s Obligations

20

Section 10.15

Indemnity

20

Section 10.16

Purchaser Approvals

20

Section 10.17

Further Assurances

20

Section 10.18

Choice of Law

21

 

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NOTE AND WARRANT PURCHASE AGREEMENT

 

THIS NOTE AND WARRANT PURCHASE SECURITY AGREEMENT (this “Agreement”) is made as
of March 8, 2006 by and between BIOJECT MEDICAL TECHNOLOGIES INC., an Oregon
corporation (the “Company”), and the parties listed on Schedule 1 hereto
(collectively, the “Purchasers” and each, a “Purchaser”).

 

RECITALS

 

A.            The Purchasers desire to purchase and the Company desires to sell,
subject to shareholder approval and the terms and conditions stated in that
certain Securities Purchase Agreement, dated as the date hereof (the “Securities
Purchase Agreement”), $4,500,000 (plus the amount of accrued interest on the
Bridge Notes) of the Company’s Series E Convertible Preferred Stock.

 

B.            To provide the Company with additional resources to conduct its
business and pursue shareholder approval of the transactions contemplated by the
Securities Purchase Agreement, the Purchasers have agreed, subject to the terms
and conditions of this Agreement, to lend the Company the principal sum of One
Million Five Hundred Thousand Dollars ($1,500,000).

 

C.            The Company desires to borrow funds from each Purchaser, and each
Purchaser, severally, is willing to make a loan to the Company in the amounts,
with respect to each Purchaser, set forth on Schedule 1 hereto, and on the terms
and conditions set forth below.

 

D.            In consideration of each Purchaser’s agreement to make the loans
on the terms and conditions set forth herein, the Company shall issue, and each
Purchaser will receive, a Warrant to purchase the number of shares of the
Company’s common stock, without par value (the “Common Stock”), set forth
opposite such Purchaser’s name on Schedule 1 hereto.

 

E.             The Obligations (as defined herein) will be secured by the
Collateral (as defined in the Security Agreement).

 

NOW, THEREFORE, in consideration of the promises and covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties covenant and agree as
follows:

 

ARTICLE 1

 

DEFINITIONS

 

As used in this Agreement, unless otherwise specified, all references to
“Sections” shall be deemed to refer to Sections of this Agreement, and the
following terms shall have the meanings set forth below:

 

Section 1.1            Affiliate. “Affiliate” means, with respect to a specified
Person, any Person directly or indirectly controlling, controlled by, or under
common control with the

 

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specified Person, including, without limitation their stockholders and any
Affiliates thereof. A Person shall be deemed to control a corporation or other
entity if the Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and business of the corporation or other
entity, whether through the ownership of voting securities, by contract, or
otherwise. The term “Affiliate” shall include, without limitation, the Existing
Subsidiaries.

 

Section 1.2            Agreement. “Agreement” means this Note and Warrant
Purchase Agreement, as it may be amended or supplemented from time to time in
accordance with the terms herein, together with all attachments, exhibits,
schedules, riders and addenda, all of which are incorporated herein by this
reference and made a part hereof.

 

Section 1.3            Base Rate. “Base Rate” means 10.0% per annum.

 

Section 1.4            Borrowed Money. “Borrowed Money” means, with respect to
any Person, without duplication, (a) all indebtedness for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) that
portion of obligations with respect to capital leases that is properly
classified as a liability on a balance sheet conformity with GAAP, (d) any
obligations of such Person issued or assumed as the deferred purchase price of
property or services purchased by such Person (other than trade debt incurred in
the ordinary course of business and due within six (6) months of the incurrence
thereof or evidenced by a note or other instrument), (e) all Borrowed Money of
others secured by (or for which the holder of such Borrowed Money has an
existing right, contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, any property or asset owned,
held or acquired by such Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person, (f) all guaranty obligations of such Person in respect of any
Borrowed Money of any other person,(g) the maximum amount of all standby letters
of credit issued or bankers’ acceptances facilities created for the account of
such Person and, without duplication, all drafts drawn thereunder (to the extent
unreimbursed), (h) the principal balance outstanding under any synthetic lease,
tax retention operating lease, off-balance sheet loan or similar off-balance
sheet financing product plus any accrued interest thereon, and (i) the Borrowed
Money of any partnership or unincorporated joint venture in which such Person is
a general partner or joint venturer.

 

Section 1.5            Bridge Loan. “Bridge Loan” has the meaning set forth in
Section 2.1(a).

 

Section 1.6            Bridge Loan Closing; Bridge Loan Closing Date. “Bridge
Loan Closing” and “Bridge Loan Closing Date” have the meanings set forth in
Section 6.2.

 

Section 1.7            Bridge Note. “Bridge Note” has the meaning set forth in
Section 2.1(a).

 

Section 1.8            Business Day. “Business Day” means any day on which
financial institutions are open for business in the State of New York, excluding
Saturdays and Sundays.

 

Section 1.9            Common Stock. “Common Stock” has the meaning set forth in
the RECITALS hereto.

 

Section 1.10         Default Rate. “Default Rate” means 12.0% per annum.

 

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Section 1.11         Event of Default. “Event of Default” and “Events of
Default” have the meanings set forth in Section 9.1.

 

Section 1.12         Existing Subsidiary. “Existing Subsidiary” means Bioject
Inc., an Oregon corporation and a wholly-owned subsidiary of the Company.

 

Section 1.13         GAAP. “GAAP” means generally accepted accounting principles
applied in a consistent manner.

 

Section 1.14         Governmental Authority. “Governmental Authority” means and
includes any federal, state, District of Columbia, county, municipal, or other
government and any department, commission, board, bureau, agency or
instrumentality thereof, whether domestic or foreign.

 

Section 1.15         Guarantor. “Guarantor” means the Existing Subsidiary and
any other Person who may from time to time guaranty, pledge assets as security
for, or otherwise become obligated in respect of, the obligations of the Company
under the Loan Documents.

 

Section 1.16         Guaranty. “Guaranty” means any guaranty of the obligations
of the Company under the Loan Documents from time to time outstanding, as the
same may be amended, modified, or supplemented from time to time.

 

Section 1.17         Lien. “Lien” shall mean any mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge or other security interest or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the same
practical effect as any of the foregoing).

 

Section 1.18         Loan Documents. “Loan Documents” means and includes this
Agreement, the Bridge Notes, any Guaranty, the Warrants, the Security Agreement,
the Securities Purchase Agreement and each and every other document now or
hereafter delivered by the Company or any Guarantor in connection with this
Agreement, as any of them may be amended, modified, increased, renewed or
restated from time to time.

 

Section 1.19         Maturity Date. “Maturity Date” has the meaning set forth in
Section 2.2.

 

Section 1.20         Obligations. “Obligations” has the meaning set forth in
Section 4.1.

 

Section 1.21         Permitted Liens. “Permitted Liens” means: (a) deposits or
pledges to secure obligations under workmen’s compensation, social security or
similar laws, or under unemployment insurance; (b) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of business; (c) mechanic’s,
workmen’s, materialmen’s or other like Liens arising in the ordinary course of
business with respect to obligations which are not due, or which are being
contested in good faith by appropriate proceedings which suspend the collection
thereof and in respect of which adequate reserves have been made (provided that
such proceedings do not, in Purchasers’ sole discretion,

 

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involve any substantial risk of the sale, loss or forfeiture of such property or
assets or any interest therein); (d) Liens and encumbrances in favor of
Purchaser; and (e) Liens in favor of Partners for Growth, L.P. (“PFG”), securing
(i) PFG Obligations not in excess of the amount specified in Section 8.1(d)
hereof or (ii) PFG Subsequent Obligations.

 

Section 1.22         Person. “Person” means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.

 

Section 1.23         PFG Obligations. “PFG Obligations” means outstanding
indebtedness and all other amounts payable to PFG under (i) the Term Loan and
Security Agreement, dated December 15, 2004, between PFG, the Company and the
Existing Subsidiary, (ii) the Loan and Security Agreement, dated December 15,
2004, between PFG, the Company and the Existing Subsidiary, (iii) all other
agreements, documents and instruments executed or delivered in connection with,
or otherwise related to, any of the foregoing and (iv) any and all
modifications, amendments, replacements or extensions to any of the foregoing in
clauses (i), (ii) and (iii) above dated as of or before the date hereof.

 

Section 1.24         PFG Subsequent Obligations. “PFG Subsequent Obligations”
means outstanding indebtedness (the principal amount of which shall not exceed
$1,250,000) and any other amounts payable to PFG pursuant to documents dated
after the date hereof.

 

Section 1.25         Purchaser and Purchasers. “Purchaser” and “Purchasers” have
the meanings set forth in the Preamble.

 

Section 1.26         Purchaser Majority Interest. “Purchaser Majority Interest”
means holders of a majority in principal amount of the Bridge Notes.

 

Section 1.27         Security Agreement. “Security Agreement” has the meaning
set forth in Section 6.1(q)(vi).

 

Section 1.28         Warrants. “Warrants” shall mean the Warrants to be issued
to the Purchasers on the Bridge Loan Closing Date, substantially in the form
attached hereto as Exhibit B.

 

ARTICLE 2

BRIDGE LOANS

 

Section 2.1            Issuance and Terms of the Bridge Notes.

 

(a) Subject to the terms and conditions herein contained, the aggregate
principal amount of the loans to be made by the Purchasers to the Company
pursuant to this Section 2.1 (each, a “Bridge Loan”) shall be One Million Five
Hundred Thousand Dollars ($1,500,000). Each Bridge Loan shall be evidenced by a
promissory note substantially in the form of Exhibit A attached hereto, which
promissory note shall be deemed incorporated into and made part of this
Agreement (each, a “Bridge Note”).

 

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(b) Subject to the terms and conditions herein contained, the Company hereby
agrees to issue and sell the Bridge Notes to the Purchasers, and the Purchasers
hereby severally agree to purchase the Bridge Notes from the Company, in the
principal amounts and for the purchase price set forth opposite each Purchaser’s
name set forth on Schedule 1 hereto.

 

(c) The outstanding principal amount of the Bridge Loans shall accrue interest
at the Base Rate from the date of issuance thereof through and including the
date of repayment in full of all principal and unpaid interest on the Bridge
Notes, based on a year of 360 days; provided, however, upon the occurrence and
during the continuance of an Event of Default, the Bridge Loans shall accrue
interest at the Default Rate.

 

Section 2.2            Maturity Date. Principal and interest on each Bridge Note
shall be payable by the Company to the Purchasers immediately upon the earliest
of (a) April 1, 2007; (b) subject to Section 2.7, the time of closing of the
Company’s offering and sale of at least $4,500,000 of its Series E Preferred
Stock (the “Securities”) pursuant to the Securities Purchase Agreement; and (c)
the occurrence of an Event of Default. All payments shall be made without
deduction for any set-off, recoupment, counterclaim or defense that the Company
now has or may have in the future.

 

Section 2.3            Bridge Note Conversion Mechanics. The outstanding
principal of, and accrued and unpaid interest on, each Bridge Note shall be
converted automatically on the Closing Date (as defined in the Securities
Purchase Agreement) into shares of the Securities, at the time of the Securities
Closing, in accordance with the following sentence. On the date of the
Securities Closing, each Purchaser shall surrender its Bridge Note for
conversion, and upon such surrender, such Purchaser will receive such number of
shares of the Securities equal to the quotient obtained by dividing (A) the
outstanding principal amount of, and accrued and unpaid interest on, its Bridge
Note by (B) the price per share equal to $1.37 (as adjusted for stock splits,
stock dividends and the like in the same manner as the Exercise Price (as
defined in the Warrants) is adjusted pursuant to the Warrants).

 

Section 2.4            Conversion Upon Closing of Other Securities Offerings.
Subject to Section 2.7, if, prior to Maturity Date, an offering and sale of
equity securities of the Company, other than the offering pursuant to the
Securities Purchase Agreement, approved by the Company’s Board of Directors,
occurs which does not meet the requirements of a Securities Offering (each, an
“Other Securities Offering”), the Purchasers shall have the right to convert, on
the closing date of such offering and sale, the outstanding principal amount of,
and all accrued and unpaid interest on, the Bridge Notes, in whole but not in
part, into shares of the Company’s securities offered sold in such Other
Securities Offering or into Common Stock (at the election of each Purchaser), at
a price per share equal to the lower of (i) the Exercise Price (as defined in
the Warrants) or (ii) the price per share of the equity securities so offered
and sold to the investors in such offering. If the Purchasers exercise such
right, the Bridge Notes will be deemed paid in full on the closing date of such
offering and sale.

 

Section 2.5            Maturity Date Conversion. Subject to Section 2.7, if no
offering and sale of equity securities of the Company approved by the Company’s
Board of Directors occurs on or prior to the Maturity Date, then each Purchaser
shall have the right to convert, on the Maturity Date, the outstanding principal
amount of, and all accrued and unpaid interest on, the

 

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Bridge Notes, in whole but not in part, into shares of the Common Stock, at a
price per share equal to the lower of (i) the Exercise Price (as defined in the
Warrants) or (ii) the Current Weighted Market Price (as defined in the Warrants)
on the Maturity Date. If the Purchasers exercise such right, the Bridge Notes
will be deemed to be paid in full on the Maturity Date.

 

Section 2.6            Issuance of Warrants. Subject to the terms and conditions
hereof, the Company agrees to issue the Warrants to the Purchasers in the form
attached as Exhibit B on the Bridge Loan Closing Date as described on Schedule
1.

 

Section 2.7            Overall Cap on Common Shares Issuable to Purchasers.

 

(a) Notwithstanding anything in this Agreement, the Bridge Notes, the Warrants
or the Loan Agreements to the contrary, if the rules of Nasdaq require, the
Purchaser shall not have the right to acquire the Warrants, or to convert or
exercise any portion thereof or of the Bridge Notes into shares of Common Stock
in accordance with the terms hereof or thereof (such shares of Common Stock
being referred to herein as “Conversion Shares”), to the extent that either (i)
the aggregate number of Conversion Shares issued and issuable by the Company
pursuant to the Bridge Notes and the Warrants exceeds 19.9% of the number of
shares of Common Stock or the voting power of the Company outstanding on the
original date of issuance of the Bridge Notes and the Warrants (“Date of
Original Issuance”) or (ii) after giving effect to such acquisition, conversion
or exercise, the Purchaser (together with the Purchaser’s Affiliates) would
beneficially own in excess of 19.9% of the number of shares of the Common Stock
or the voting power of the Company outstanding immediately after the Loan
Closing (the securities issued and issuable up to and in compliance with the
19.9% thresholds described in clauses (i) and (ii) above being referred to
herein as the “Issuable Maximum”), unless the issuance of securities in excess
of the Issuable Maximum shall first be approved by the Company’s shareholders in
accordance with applicable law and the Bylaws and Articles of Incorporation of
the Company. If at the time of any potential issuance of the Warrants, or any
conversion or exercise thereof or of the Bridge Notes, the Conversion Shares
issued and issuable exceed the Issuable Maximum (and if the Company has not
previously obtained the required shareholder approval), the Company shall issue
to the Purchaser a number of Conversion Shares not exceeding the Issuable
Maximum, and the remainder of the Bridge Notes, Warrants and Conversion Shares
to be issued shall constitute “Excess Securities” pursuant to Section 2.7(b)
below.

 

(b) In the event that the Purchaser’s receipt of the Conversion Shares is
restricted based on the Issuable Maximum, the Company shall promptly call a
shareholder’s meeting for the purpose of obtaining shareholder approval of the
issuance of the Excess Securities to the Purchaser. No Conversion Shares issued
upon exercise of any Bridge Notes or Warrants acquired pursuant to this
Agreement shall be entitled to vote to approve the issuance of the Excess
Securities.

 

(c) Neither the Company nor the Purchasers may waive the provisions of this
Section 2.7.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

Section 3.1            Representations and Warranties of the Purchasers. Each
Purchaser hereby covenants and agrees that all representations and warranties of
the Purchasers set forth in Article 3 of the Securities Purchase Agreement are
true and correct as of the Bridge Loan Closing date, which representations and
warranties are incorporated herein by this reference with the same force and
effect as though each such representation and warranty was set forth in full
herein.

 

ARTICLE 4

COLLATERAL

 

Section 4.1            Generally. As security for the payment of all liabilities
of the Company to the Purchasers, including, without limitation: (a)
indebtedness evidenced under the Bridge Note, repayment of the Bridge Loans and
all other liabilities and obligations of every kind or nature whatsoever of the
Company to the Purchasers, whether now existing or hereafter incurred, joint or
several, matured or unmatured, direct or indirect, primary or secondary, related
or unrelated, due or to become due, including but not limited to, any
extensions, modifications, substitutions, increases and renewals thereof, (b)
the payment of all amounts advanced by any Purchaser to preserve, protect,
defend, and enforce its rights under this Agreement and in the following
property in accordance with the terms of this Agreement, and (c) the payment of
all expenses incurred by any Purchaser in connection therewith (collectively,
the “Obligations”), the Company hereby assigns and grants to the Purchasers a
continuing second priority Lien (second only to the existing Lien of PFG and, if
applicable, the lien of PFG in connection with the PFG Subsequent Obligations)
on, and security interest in, upon, and to, the Collateral (as defined in the
Security Agreement).

 

Section 4.2            Lien Documents. At the Bridge Loan Closing and thereafter
as the Purchasers deem necessary in their sole discretion, the Company shall
execute and deliver to the Purchasers, or have executed and delivered (all in
form and substance satisfactory to the Purchasers in their sole discretion) any
agreements, documents, instruments (including Guaranties), and writings deemed
necessary by any Purchaser or as the Purchasers may otherwise request from time
to time in their sole discretion to evidence, perfect, or protect any
Purchaser’s Lien and security interest in the Collateral required under this
Agreement. The Company hereby authorizes each Purchaser to file one or more
financing statements and amendments thereto describing the Collateral and
describing any agricultural liens or other statutory liens held by Purchaser,
and providing any other notices deemed necessary by each Purchaser.

 

Section 4.3            Searches. Before the Bridge Loan Closing and thereafter
(as and when determined by any Purchaser in its sole discretion), such Purchaser
will perform the searches described in clauses (a), (b) and (c) below against
the Company and the Existing Subsidiary (the results of which are to be
consistent with the Company’s representations and warranties under this
Agreement), all at the Company’s expense:

 

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(a) Uniform Commercial Code searches with the Secretary of State and local
filing offices of each jurisdiction where the Company or the Existing Subsidiary
maintains its executive offices, a place of business, or assets and the
jurisdiction in which the Company or the Existing Subsidiary is organized;

 

(b) Judgment, federal tax lien and corporate and partnership tax lien searches,
in each jurisdiction searched under clause (a) above; and

 

(c) Searches of applicable corporate, limited liability company, partnership and
related records to confirm the continued valid existence and organization of the
Company and the Existing Subsidiary and the exact legal name under which each of
the Company and the Existing Subsidiary is organized.

 

Section 4.4            Power of Attorney. Each of the officers or managing
members of each Purchaser is hereby irrevocably made, constituted and appointed
the true and lawful attorney for the Company and the Existing Subsidiary
(without requiring any of them to act as such) with full power of substitution
to do the following: (a) endorse the name of the Company and the Existing
Subsidiary upon any and all checks, drafts, money orders, and other instruments
for the payment of money that are payable to the Company and constitute
collections on the Company’s Accounts (as defined in the Securities Purchase
Agreement); (b) execute in the name of the Company and the Existing Subsidiary
any financing statements, schedules, assignments, instruments, documents, and
statements that the Company is obligated to give any Purchaser under this
Agreement; (c) following the occurrence of an Event of Default, do such acts and
deeds in the name of the Company and the Existing Subsidiary that the Purchasers
may deem necessary or desirable to enforce any Account or other Collateral; and
(d) do such other and further acts and deeds in the name of the Company and/or
Existing Subsidiary that the Purchasers may deem necessary or desirable to
perfect each Purchaser’s security interest or Lien in any Collateral.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company represents and warrants to each Purchaser, that:

 

Section 5.1            Incorporation of SPA Representations and Warranties. All
representations and warranties of the Company set forth in Article 2 of the
Securities Purchase Agreement are true and correct as of the Bridge Loan Closing
Date, which representations and warranties are incorporated herein by this
reference with the same force and effect as though each such representation and
warranty was set forth in full herein.

 

Section 5.2            No Other Liens or Encumbrances. Except for Permitted
Liens, no Collateral is subject to any Lien or any encumbrance or security
interest of any kind.

 

Section 5.3            Solvency. Both before and after giving effect to the
transactions contemplated by the terms and provisions of this Agreement, the
Company (a) owns property whose fair saleable value is greater than the amount
required to pay all of the Company’s

 

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Indebtedness (including contingent debts), and (b) was and is able to pay all of
its Indebtedness as such Indebtedness matures. After giving effect to the
transactions contemplated by the terms and provisions of this Agreement, the
Company has capital sufficient to carry on its business and transactions and all
business and transactions in which it about to engage. For purposes of this
Agreement, the term “Indebtedness” means, without duplication (x) all items
which in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet of the Company as of the date
on which Indebtedness is to be determined, (y) all obligations of any other
person or entity which the Company has guaranteed, and (z) the Obligations.

 

ARTICLE 6

LOAN CLOSING AND CONDITIONS OF LENDING

 

Section 6.1            Conditions Precedent to Agreement. The obligations of
each Purchaser to make a Bridge Loan are subject to the following conditions
precedent:

 

(a) The Purchasers shall have received one (1) original of this Agreement, any
Guaranty and all other Loan Documents required to be executed and delivered at
or before the Bridge Loan Closing, executed by the Company.

 

(b) Each Purchaser shall have received all searches required by Section 4.3.

 

(c) The Company shall have complied and shall then be in compliance with all the
terms, covenants and conditions of the Loan Documents.

 

(d) There shall have occurred and be continuing no Event of Default and no event
that, with the giving of notice or the lapse of time, or both, could constitute
such an Event of Default.

 

(e) Each Purchaser shall have executed a subordination agreement with PFG with
respect to the PFG Obligations, the PFG Subsequent Obligations and the
Obligations in form and substance satisfactory to the Purchasers, and each
Purchaser shall have received copies of a written consent of PFG to (i) the
issuance of the Bridge Notes, (ii) the grant by the Company of a continuing
second priority security interest in the Collateral as contemplated hereby and
(iii) the performance by the Company of all other transactions contemplated
hereby.

 

(f) Each Purchaser shall have received copies of all board of directors
resolutions and other action taken by the Company to authorize the execution,
delivery and performance of the Loan Documents and the borrowing of the Bridge
Loan under the Loan Documents and the issuance of the Warrants, as well as the
names and signatures of the officers of the Company authorized to execute
documents on its behalf in connection with the transactions contemplated hereby,
all as also certified as of the date of this Agreement by the Company’s chief
financial officer, or equivalent, and such other papers as Purchaser may
require.

 

(g) Each Purchaser shall have received (i) copies, certified as true, correct
and complete by the applicable state of organization of the Company, of the
Articles and ByLaws, each as amended to date, (ii) copies, certified as true,
correct and complete by an authorized

 

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officer of the Company, of all other documents necessary for performance of the
obligations of the Company under this Agreement and the other Loan Documents,
and (iii) certificates of valid existence for the Company, each Existing
Subsidiary issued by the respective states of organization and by each state in
which the Company is doing and currently intends to do business for which
qualification is required.

 

(h) The Company shall have delivered to each Purchaser reports and lists
satisfactory to the Purchaser in their sole reasonable discretion, with respect
to the value and nature of any property which is Collateral, including, without
limitation, the Accounts, the Inventory and the Equipment.

 

(i) Each Purchaser shall have received such financial statements, reports,
certifications, and other operational information required to be delivered under
this Agreement, or with respect to the Collateral, such additional information
as may be reasonably requested by a Purchaser.

 

(j) The representations and warranties on the part of the Company contained in
Article V of this Agreement shall be true and correct in all material respects
(except to the extent that such representations and warranties expressly relate
solely to an earlier date).

 

(k) No material adverse change in the condition (financial or otherwise),
properties, business, or operations of the Company shall have occurred and be
continuing with respect to the Company since the date of this Agreement.

 

(l) The Company shall have obtained all necessary blue sky law permits and
qualifications, or secured exemptions therefrom, required by any state or
foreign or other jurisdiction for the issuance of the Notes, the Warrants and
the Issuable Common Stock (defined below).

 

(m) The Company shall have filed with Nasdaq a Notification Form:  “Listing of
Additional Shares” covering the shares of the Company’s Common Stock issuable
upon exercise of the Warrants (the “Issuable Common Stock”).

 

(n) The Company shall have delivered to such Purchaser an opinion, dated as of
the Bridge Loan Closing Date, from Stoel Rives LLP, counsel to the Company, in
substantially the form attached hereto as Exhibit C.

 

(o) No proceeding challenging this Agreement or the Securities Purchase
Agreement and the Related Agreements or the transactions contemplated hereby or
thereby, or seeking to prohibit, alter, prevent or materially delay the Bridge
Loan Closing, shall have been instituted or be pending before any court,
arbitrator, governmental body, agency or official.

 

(p) Subject to Section 2.7, the issuance of the Bridge Notes, the Warrants and
the Issuable Common Stock by the Company shall not be prohibited by any law or
governmental order or regulation and any governmental, regulatory or third party
consents of approvals, if any, necessary for the sale of the Bridge Notes, the
Warrants and the Issuable Common Stock shall have been obtained.

 

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(q) The following documents, in a form satisfactory to Purchasers, shall have
been duly executed, acknowledged and delivered by all parties thereto, and shall
be in full force and effect:

 

(i)            The Securities Purchase Agreement;

 

(ii)           This Agreement;

 

(iii)          The Bridge Notes;

 

(iv)          The Warrants;

 

(v)           A certificate from an officer of the Company with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement and the Related Agreements;

 

(vi)          A Security Agreement of even date herewith, the form of which is
attached hereto as Exhibit D (the “Security Agreement”); and

 

(vi)          A UCC-1 National Standard Form financing statement covering all of
the Collateral described in this Agreement shall have been recorded or filed for
record in each public office wherein such recording or filing is deemed
necessary or appropriate by the Purchasers to perfect the lien thereof as
against creditors of or purchasers from the Company.  Without limiting the
foregoing, all taxes, fees and other charges in connection with the execution,
delivery, recording and filing of the foregoing instruments shall have been paid
or allowance therefor shall have been made;

 

(r) The Company shall have duly authorized and issued the Warrants and shall
have executed and delivered the Warrants to each Purchaser.

 

(s) The Company and American Stock Transfer and Trust Company shall have
executed and delivered the Third Amendment to Rights Agreement in the form
approved by the Company and the Purchasers.

 

(t) The Company’s Board of Directors (which shall have eight (8) members as of
the Loan Closing, including the Investor Representative (as defined below)),
shall have appointed, effective as of the Loan Closing, one Person designated by
the purchasers (the “Investor Representative”) as a member of the Company’s
Board of Directors, initially Jerald S. Cobbs, in accordance with and subject to
the requirements of applicable legal rules and regulations and rules of Nasdaq
and the SEC. Subject to being to being deemed eligible to serve on the
compensation committee and the nominating and corporate governance committee of
the Board of Directors pursuant to the terms of the committee charters and
applicable listing standards and securities law requirements, the Company’s
Board of Directors shall have appointed, effective as of the Closing, the
Investor Representative as a member of the compensation committee and as chair
of the nominating and corporate governance committee of the Company’s Board of
Directors, and such appointments shall be in full force and effect.

 

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(u) Promptly following the date hereof and prior to the time that the Investor
Representative is appointed to the Company’s Board of Directors, the Company
shall have executed an indemnification agreement with such director in form
reasonably acceptable to the Purchasers.

 

Section 6.2            Bridge Loan Closing. Subject to the conditions of this
Article VI, the Bridge Loans shall be made on the date as is mutually agreed by
the parties (the “Bridge Loan Closing Date”), at such time as may be mutually
agreeable to the parties upon the execution of this Agreement (the “Bridge Loan
Closing”) and at such place as may be requested by the Purchasers.

 

Section 6.3            Waiver of Rights. By completing the Bridge Loan Closing
under this Agreement, no Purchaser waives a breach of any representation or
warranty of the Company under this Agreement or under any other Loan Document,
and all of each Purchaser’s claims and rights resulting from any breach or
misrepresentation by the Company are specifically reserved to the Purchasers.

 

ARTICLE 7

AFFIRMATIVE COVENANTS

 

Section 7.1            Maintenance of Existence.

 

(a) The Company shall at all times preserve, renew and keep in full, force and
effect its corporate existence and rights and franchises with respect thereto
and maintain in full force and effect all permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on the business as presently or proposed to be conducted.

 

(b) The Company shall not change its name unless each of the following
conditions is satisfied: (i) each Purchaser shall have received not less than
thirty (30) days prior written notice from the Company of such proposed change
in its corporate name, which notice shall accurately set forth the new name; and
(ii) each Purchaser shall have received a copy of the amendment to the Articles
of Incorporation of the Company providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of the
Company as soon as it is available.

 

(c) The Company shall not change its chief executive office or its mailing
address or organizational identification number (or if it does not have one,
shall not acquire one) unless each Purchaser shall have received not less than
thirty (30) days’ prior written notice from the Company of such proposed change,
which notice shall set forth such information with respect thereto as the
Purchasers may require and the Purchaser shall have received such agreements as
each Purchaser may reasonably require in connection therewith. The Company shall
not change its type of organization, jurisdiction of organization or other legal
structure.

 

Section 7.2            Cost Reduction Program. The cost reduction program, which
includes the sale of the Company’s headquarters facility in Bedminster, New
Jersey, and which was specifically disclosed in writing to the Purchasers will
be implemented by the Company in accordance with terms so disclosed, including
with respect to the timing thereof.

 

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Section 7.3            Further Assurances. At the request of any Purchaser at
any time and from time to time, the Company shall, at its expense, duly execute
and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Loan Documents.

 

ARTICLE 8

NEGATIVE COVENANTS

 

The Company covenants and agrees that until payment in full of the Bridge Notes
and performance of all other obligations of the Company under the Loan
Documents:

 

Section 8.1            Borrowing. The Company shall not create, incur or assume
any liability for Borrowed Money except: (a) indebtedness to a Purchaser;
(b) borrowings incurred in the ordinary course of its business and not exceeding
$50,000 in the aggregate outstanding at any one time; (c) indebtedness secured
by Permitted Liens; (d) any refinancing of the Company’s outstanding
indebtedness to PFG which increases the principal amount of such indebtedness by
not more than the amount of accrued and unpaid interest thereon, which
indebtedness, in any event, shall not exceed $2.4 million in the aggregate.

 

Section 8.2            No Liens and Encumbrances; No Disposition of the
Collateral. The Company shall not:  (a) create, incur or assume any mortgage,
pledge, Lien or other encumbrance of any kind (including the charge upon
property purchased under a conditional sale or other title retention agreement)
upon, or any security interest in, any of its Collateral, whether now owned or
hereafter acquired, except for Permitted Liens; (b) make any sale or leases of
any of the Collateral (except in the ordinary course of its business and except
for a sale of the Company’s corporate headquarters located in Bedminster, New
Jersey and the sale of all fixtures and furniture located at such premises); or
(c) license any of the Collateral.

 

Section 8.3            Sale and Leaseback. The Company will not, directly or
indirectly, enter into any arrangement whereby the Company sells or transfers
all or any part of its assets and thereupon and within one year thereafter rents
or leases the assets so sold or transferred without prior written notice to and
the prior written consent of the Purchasers, which consent shall not be
unreasonably withheld.

 

Section 8.4            Contingent Liabilities. The Company will not assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.

 

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Section 8.5            Subsidiaries. The Company will not form any subsidiary,
or make any investment in or any loan in the nature of an investment to, any
other Person (other than investments already existing in the Existing
Subsidiary).

 

Section 8.6            Contracts and Agreements. The Company will not become or
be a party to any contract or agreement which would breach this Agreement, or
breach any other material instrument, agreement, or document to which the
Company is a party or by which it is or may be bound.

 

Section 8.7            Certain Fundamental Changes. The Company will not,
without providing the Purchasers with thirty (30) days’ prior written notice,
change the state of its formation or change its legal name.

 

ARTICLE 9

EVENTS OF DEFAULT

 

Section 9.1            Events of Default. Each of the following (individually,
an “Event of Default” and collectively, the “Events of Default”) shall
constitute an event of default under this Agreement:

 

(a) A default in the payment of any principal of, or interest upon, any Bridge
Note when due and payable, whether at maturity or otherwise, which default or
breach, as applicable, shall have continued unremedied for a period of five (5)
days after written notice of the default or breach from any Purchaser to the
Company;

 

(b) A default in the due observance or performance by the Company of the other
Obligations or any other term, covenant or agreement contained in any of the
Loan Documents, which default shall have continued unremedied for a period of
fifteen (15) days after written notice of the default from any Purchaser to the
Company;

 

(c) Any representation or warranty made by the Company in this Agreement or in
any of the other Loan Documents, any financial statement, or any statement or
representation made in any other certificate, report or opinion delivered in
connection with this Agreement or the other Loan Documents proves to have been
incorrect or misleading in any material respect when made;

 

(d) Any obligation of the Company (other than its Obligations under this
Agreement) for the payment of Borrowed Money in an aggregate amount in excess of
$50,000 is not paid when due or within any applicable grace period, or such
obligation becomes or is declared to be due and payable before the expressed
maturity of the obligation, or there shall have occurred an event that after
expiration of any applicable grace period remains uncured;

 

(e) The Company makes an assignment for the benefit of creditors, offers a
composition or extension to creditors, or makes or sends notice of an intended
bulk sale of any business or assets now or hereafter conducted by the Company;

 

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(f) The Company, the Existing Subsidiary or any Guarantor (i) files a petition
in bankruptcy, (ii) is adjudicated insolvent or bankrupt, petitions or applies
to any tribunal for any receiver of or any trustee for itself or any substantial
part of its property, (iii) commences any proceeding relating to itself under
any reorganization, arrangement, readjustment or debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or any such proceeding is commenced against the Company, the Existing
Subsidiary or any Guarantor and such proceeding remains undismissed for a period
of sixty (60) days, (iv) by any act indicates its consent to, approval of, or
acquiescence in, any such proceeding or the appointment of any receiver of or
any trustee for the Company, the Existing Subsidiary or Guarantor or any
substantial part of its property, or suffers any such receivership or
trusteeship to continue undischarged for a period of sixty (60) days, or (v)
admits in writing its inability to pay its debts as they become due;

 

(g) One or more (i) final judgments against the Company or the Existing
Subsidiary or attachments against its property in each case, obligating the
Company or the Existing Subsidiary to pay in excess of $100,000 in the
aggregate, shall be rendered by a court, arbitrator, arbitration panel, mediator
or any individual(s) or entity with the authority to issue binding judgments
against the Company or the Existing Subsidiary or (ii) final settlements by or
on behalf of the Company or the Existing Subsidiary of any pending litigation,
arbitration or other claim or otherwise disputed matter, which obligate the
Company or the Existing Subsidiary to pay in excess of $100,000 in the aggregate
and which are not otherwise fully covered by insurance with respect to the
amount in excess of $100,000, shall remain unpaid, unstayed on appeal,
undischarged, unbonded and undismissed for a period of thirty (30) days;

 

(h) There shall occur any uninsured damage to or loss, theft or destruction of
any portion of the tangible Collateral that exceeds $100,000 in the aggregate;

 

(i) The Company or the Existing Subsidiary ceases any material portion of its
business operations as currently conducted;

 

(j) Any indication or evidence is received by any Purchaser that the Company or
the Existing Subsidiary may have directly or indirectly been engaged in any type
of activity which, in a Purchaser’s discretion, may result in the forfeiture of
any property of the Company or the Existing Subsidiary to any Governmental
Authority, which default shall have continued unremedied for a period of sixty
(60) days after written notice from Purchaser;

 

(k) The Company or any Affiliate of the Company, shall challenge or contest, in
any action, suit or proceeding, the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or the
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to any Purchaser;

 

(l) The Company or the Existing Subsidiary shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any Collateral; or

 

(m) There shall occur a material adverse change in the financial condition or
business prospects of the Company, or if a Purchaser in good faith deems itself
insecure as a result of acts or events bearing upon the financial condition of
the Company or the repayment of

 

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the Bridge Notes, which default shall have continued unremedied for a period of
thirty (30) days after written notice from Purchaser; provided, however, that
termination or suspension of development or licensing agreements or commercial
supply agreements to which the Company or the Existing Subsidiary is a party
shall not be deemed a material adverse change or a reason for a Purchaser to
deem itself insecure.

 

Section 9.2            Acceleration. Upon the occurrence of any of the foregoing
Events of Default, the Obligations under the Bridge Notes shall become and be
immediately due and payable upon declaration to that effect delivered by a
Purchaser to the Company.

 

ARTICLE 10

MISCELLANEOUS

 

Section 10.1         Expenses and Taxes.

 

(a) The Company agrees to pay, whether or not any transaction contemplated by
the Loan Documents closes, but on the Bridge Loan Closing Date, if a Bridge Loan
Closing occurs, and on the Closing Date if the Closing (as defined in the
Securities Purchase Agreement) occurs, a reasonable documentation preparation
fee, together with actual legal, audit and appraisal fees and all other
out-of-pocket charges and expenses reasonably incurred by the Purchasers in
connection with the negotiation, preparation, legal review and execution of each
of the Loan Documents and the transactions and agreements contemplated thereby
(provided that the aggregate of such fees, charges and expenses of Purchasers to
be paid by the Company with respect to the Bridge Loan Closing and the Closing
(as defined in the Securities Purchase Agreement), taken together, shall not
exceed $65,000), including but not limited to, UCC and judgment lien searches
and UCC and other lien filings and fees for post-Loan Closing UCC and judgment
lien searches. In addition, the Company shall pay all such fees associated with
any amendments, modifications and terminations to the Loan Documents following
Loan Closing.

 

(b) The Company also agrees to pay all out-of-pocket charges and expenses
incurred by each Purchaser (including the fees and expenses of Purchasers’
counsel) in connection with the enforcement, protection or preservation of any
right or claim of each Purchaser, the termination of this Agreement, the
termination of any Liens of the Purchasers on the Collateral, or the collection
of any amounts due under the Loan Documents.

 

(c) The Company shall pay all taxes (other than taxes based upon or measured by
a Purchaser’s income or revenues or any personal property tax), if any, in
connection with the issuance of the Bridge Notes and the recording of the
security documents therefor. The obligations of the Company under this clause
(c) shall survive the payment of the Company’s indebtedness under this Agreement
and the termination of this Agreement.

 

Section 10.2         Entire Agreement; Amendments. This Agreement and the other
Loan Documents constitute the full and entire understanding and agreement among
the parties with regard to their subject matter and supersede all prior written
or oral agreements, understandings, representations and warranties made with
respect thereto. No amendment, supplement or

 

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modification of this Agreement nor any waiver of any provision thereof shall be
made except in writing executed by the Company and a Purchaser Majority
Interest.

 

Section 10.3         No Waiver; Cumulative Rights. No waiver by any party to
this Agreement of any one or more defaults by the other party in the performance
of any of the provisions of this Agreement shall operate or be construed as a
waiver of any future default or defaults, whether of a like or different nature.
No failure or delay on the part of any party in exercising any right, power or
remedy under this Agreement, nor acceptance of partial performance or partial
payment, shall operate as a waiver of such right, power or remedy nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise of such right, power or remedy or the exercise of any other
right, power or remedy. The remedies provided for in this Agreement are
cumulative and are not exclusive of any remedies that may be available to any
party to this Agreement at law, in equity or otherwise.

 

Section 10.4         Notices. Any notice or other communication required or
permitted under this Agreement shall be in writing and personally delivered,
mailed by registered or certified mail (return receipt requested and postage
prepaid), e-mailed, sent by telecopier (with a confirming copy sent by regular
mail), or sent by prepaid overnight courier service, and addressed to the
relevant party at its address set forth below, or at such other address as such
party may, by written notice, designate as its address for purposes of notice
under this Agreement:

 

(a) If to the Purchasers, at:

 

c/o LOF Partners, LLC
126 East 68th Street
New York, New York  10022
Attention:  James C. Gale
Telephone:  (212) 419-3906
Telecopier:  (212) 419-3956
E-mail:  james.gale@smhgroup.com

 

with a copy to:

 

Heller Ehrman LLP
7 Times Square
Times Square Tower
New York, New York  10036
Attention:  Salvatore J. Vitiello, Esq.
Telephone:  (212) 847-8732
Fax:  (212) 703-8923
E-mail:  Sal.Vitiello@hellerehrman.com

 

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(b) If to the Company, at:

 

Bioject Medical Technologies Inc.
20245 S.W. 95th Avenue
Tualatin, OR  97062
Attention:      Christine Farrell
Telephone     (503) 691-4132
Telecopier     (503) 692-6783
E-mail:            cfarrell@bioject.com

 

If mailed, notice shall be deemed to be given five (5) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed to be given when delivered.

 

Section 10.5         Severability. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law.

 

Section 10.6         Successors and Assigns. This Agreement, the Bridge Notes,
the Warrants, and the other Loan Documents shall be binding upon and inure to
the benefit of the Company and each Purchaser and their respective successors
and assigns and shall bind all Persons who become bound as a debtor to this
Agreement. Notwithstanding the foregoing, the Company may not assign any of its
rights or delegate any of its obligations under this Agreement without the prior
written consent of the Purchasers, which may be withheld in their sole
discretion. Subject to the terms hereof, each Purchaser may sell, assign,
transfer, or participate any or all of its rights or obligations under this
Agreement without notice to or consent of the Company.

 

Section 10.7         Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.

 

Section 10.8         Interpretation. No provision of this Agreement or any other
Loan Document shall be interpreted or construed against any party because that
party or its legal representative drafted that provision. The titles of the
paragraphs of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and neuter gender as the case may be. The words “herein,” “hereof,” and
“hereunder” shall be deemed to refer to this entire Agreement, except as the
context otherwise requires.

 

Section 10.9         Survival of Terms. All covenants, agreements,
representations and warranties made in this Agreement, any other Loan Document,
and in any certificates and other

 

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instruments delivered in connection with this Agreement shall be considered to
have been relied upon by each Purchaser and shall survive the making by each
Purchaser of the Bridge Loans contemplated by this Agreement and the execution
and delivery to each Purchaser of the Bridge Notes, and shall continue in full
force and effect until all liabilities and obligations of the Company to the
Purchasers are satisfied in full.

 

Section 10.10       Release of Purchasers. For and in consideration of the
Bridge Loans, the Company, voluntarily, knowingly, unconditionally, and
irrevocably, with specific and express intent, for and on behalf of itself and
its agents, attorneys, heirs, successors, and assigns (collectively the
“Releasing Parties”) does hereby fully and completely release, acquit and
forever discharge each Purchaser, and its successors, assigns, heirs,
affiliates, subsidiaries, parent companies, principals, directors, officers,
employees, shareholders and agents (hereinafter called the “Purchaser Parties”),
and any other person, firm, business, corporation, insurer, or association which
may be responsible or liable for the acts or omissions of the Purchaser Parties,
or who may be liable for the injury or damage resulting therefrom (collectively
the “Released Parties”), of and from any and all actions, causes of action,
suits, debts, disputes, damages, claims, obligations, liabilities, costs,
expenses and demands of any kind whatsoever and not resulting from the gross
negligence or willful misconduct of any of the Released Parties, at law or in
equity, whether matured or unmatured, liquidated or unliquidated, vested or
contingent, choate or inchoate, known or unknown, that the Releasing Parties (or
any of them) have or may have, against the Released Parties or any of them
(whether directly or indirectly) relating to this Agreement or the transactions
contemplated hereby. The Company acknowledges that the foregoing release is a
material inducement to each Purchaser’s decision to extend to the Company the
financial accommodations hereunder and has been relied upon by each Purchaser in
agreeing to make the Bridge Loans. The foregoing release is not intended to
apply to misappropriation of the Company’s funds or failure to apply the
Company’s funds to sums due under this Agreement.

 

Section 10.11       Time. Whenever the Company is required to make any payment
or perform any act on a Saturday, Sunday, or a legal holiday under the laws of
the State of New York (or other jurisdiction where the Company is required to
make the payment or perform the act), the payment may be made or the act
performed on the next Business Day. Time is of the essence in the Company’s
performance under this Agreement and all other Loan Documents.

 

Section 10.12       Commissions. The transactions contemplated by this Agreement
were brought about by the Purchasers and the Company acting as principals and,
except as set forth on Schedule 3.12 of the Securities Purchase Agreement,
without any brokers, agents, or finders being the effective procuring cause. The
Company represents that it has not committed any Purchaser to the payment of any
brokerage fee, commission, or charge in connection with this transaction. If any
such claim is made on a Purchaser by any broker, finder, or agent or other
person, the Company will indemnify, defend, and hold Purchaser harmless from and
against the claim and will defend any action to recover on that claim, at the
Company’s cost and expense, including each Purchaser’s counsel’s fees. The
Company further agrees that until any such claim or demand is adjudicated in a
Purchaser’s favor, the amount demanded will be deemed a liability of the Company
under this Agreement, secured by the Collateral.

 

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Section 10.13       Third Parties. No rights are intended to be created under
this Agreement or under any other Loan Document for the benefit of any third
party donee, creditor, or incidental beneficiary of the Company. Nothing
contained in this Agreement shall be construed as a delegation to any Purchaser
of the Company’s duty of performance, including, without limitation, the
Company’s duties under any account or contract in which any Purchaser has a
security interest.

 

Section 10.14       Discharge of the Company’s Obligations. Each Purchaser, in
its sole discretion, shall have the right at any time, and from time to time,
without prior notice to the Company if the Company fails to do so, to: (a)
obtain insurance covering any of the Collateral as required under this
Agreement; (b) pay for the performance of any of the Company’s obligations under
this Agreement; (c) discharge taxes, Liens, security interests, or other
encumbrances at any time levied or placed on any of the Collateral in violation
of this Agreement unless the Company is in good faith with due diligence by
appropriate proceedings contesting those items; and (d) pay for the maintenance
and preservation of any of the Collateral. Expenses and advances shall be added
to the Bridge Loans, until reimbursed to the Purchasers and shall be secured by
the Collateral. Any such payments and advances by a Purchaser shall not be
construed as a waiver by a Purchaser of an Event of Default.

 

Section 10.15       Indemnity. The Company hereby indemnifies and agrees to
defend (with counsel acceptable to the Purchasers) and hold harmless Purchaser,
its partners, officers, agents and employees (collectively, “Indemnitee”) from
and against any liability, loss, cost, expense (including reasonable attorneys’
fees and expenses for both in-house and outside counsel), claim, damage, suit,
action or proceeding ever suffered or incurred by a Purchaser or in which a
Purchaser may ever be or become involved (whether as a party, witness or
otherwise) (a) arising from the Company’s failure to observe, perform or
discharge any of its covenants, obligations, agreements or duties under this
Agreement, (b) arising from the breach of any of the representations or
warranties contained in Article V of this Agreement, (c) by reason of this
Agreement, the other Loan Documents or the transactions contemplated hereby or
thereby, or (d) relating to claims of any Person (other than PFG to the extent
such claims arise out of the PFG Subsequent Obligations or documents and
agreements existing and in effect at the time of the Bridge Loan Closing) with
respect to the Collateral. Notwithstanding any contrary provision in this
Agreement, the obligation of the Company under this Section 10.15 shall survive
the payment in full of the Obligations and the termination of this Agreement.

 

Section 10.16       Purchaser Approvals. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of the Purchasers with
respect to any matter that is the subject of this Agreement may be granted or
withheld by a Purchase Majority Interest in their sole and absolute discretion.

 

Section 10.17       Further Assurances. The Company hereby agrees that at any
time and from time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary or that the Purchasers may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Purchaser or any of its agents to
exercise and enforce its rights and remedies under this Agreement with respect
to any portion of such Collateral.

 

20

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Section 10.18       Choice of Law. EXCEPT TO THE EXTENT THAT THE UCC PROVIDES
FOR THE APPLICATION OF THE LAW OF THE COMPANY’S STATE OF ORGANIZATION, THIS
AGREEMENT, THE WARRANTS, THE BRIDGE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS.

 

[Signature Page Follows]

 

21

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IN WITNESS WHEREOF, intending to be legally bound, and intending that this
Agreement constitutes an instrument executed under seal, the parties have caused
this Agreement to be executed under seal as of the date first written above.

 

 

 

THE COMPANY:

 

 

 

 

BIOJECT MEDICAL TECHNOLOGIES
INC.

 

 

 

 

 

 

By:

 

/s/ JOHN GANDOLFO

 

 

Name:

John Gandolfo

 

Title:

Chief Financial Officer and Vice

 

 

President, Finance

 

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

 

 

PURCHASER:

 

 

 

 

LIFE SCIENCES OPPORTUNITIES FUND
II, L.P.,

 

a Delaware limited partnership

 

 

 

 

By:

LOF Partners, LLC,

 

 

its general manager

 

 

 

 

 

 

 

 

By:

  /s/ JAMES C. GALE

 

 

 

Name:

James C. Gale

 

 

 

Title:

Managing Partner

 

 

 

 

 

 

 

PURCHASER:

 

 

 

 

LIFE SCIENCES OPPORTUNITIES FUND
II (Institutional), L.P.,

 

a Delaware limited partnership

 

 

 

 

By:

LOF Partners, LLC,

 

 

its general partner

 

 

 

 

 

 

 

 

By:

  /s/ JAMES C. GALE

 

 

 

Name:

James C. Gale

 

 

 

Title:

Managing Partner

 

 

 

 

 

 

 

 

 

 

 

PURCHASER:

 

 

 

SANDERS OPPORTUNITY FUND, L.P.,

 

a Delaware limited partnership

 

 

 

 

 

 

 

 

 

 

 

By:

SOF Management, LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

  /s/ BRAD D. SANDERS

 

 

 

Name:

Brad D. Sanders

 

 

 

Title:

Director of Fund Administration

 

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

 

 

PURCHASER:

 

 

 

SANDERS OPPORTUNITY FUND
(Institutional), L.P.,

 

a Delaware limited partnership

 

 

 

 

 

 

By:

SOF Management, LLC,

 

 

its general partner

 

 

 

 

 

 

 

By:

  /s/ BRAD D. SANDERS

 

 

 

Name:

Brad D. Sanders

 

 

 

Title:

Director of Fund Administration

 

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

 

LIST OF EXHIBITS

 

Exhibit A - Form of Bridge Notes

 

Exhibit B - Form of Warrants

 

Exhibit C - Form of Opinion of Counsel

 

Exhibit D - Form of Security Agreement

 

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Schedule 1

 

 

 

Principal
Amount of
Bridge Loan

 

Number
of
Warrants

 

Life Sciences Opportunities Fund II, L.P.

 

$

127,546

 

55,416

 

 

 

 

 

 

 

Life Sciences Opportunities Fund (Institutional) II, L.P.

 

$

712,454

 

309,547

 

 

 

 

 

 

 

Sanders Opportunities Fund, L.P.

 

$

158,400

 

70,073

 

 

 

 

 

 

 

Sanders Opportunities Fund (Institutional), L.P.

 

$

501,600

 

221,898

 

 

 

 

 

 

 

Total:

 

$

1,500,000

 

656,934

 

 

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