Exhibit 10.3

THIS NOTE, AND THE SECURITIES ISSUABLE PURSUANT TO A CONVERSION OF THIS NOTE,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”). THIS NOTE, AND THE SECURITIES ISSUABLE PURSUANT TO A CONVERSION OF THIS
NOTE, HAVE BEEN ACQUIRED WITHOUT A VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THIS NOTE, OR FOR THE SECURITIES ISSUABLE PURSUANT TO
A CONVERSION OF THIS NOTE, AS THE CASE MAY BE, UNDER THE ACT AND UNDER ANY
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL FOR THE HOLDER
(CONCURRED IN BY LEGAL COUNSEL FOR THE CORPORATION) THAT SUCH REGISTRATION IS
NOT REQUIRED AS TO SUCH SALE OR OFFER

Form of Unsecured Subordinated Convertible Promissory Note

 

$            Tualatin, Oregon    As of June 29 2011

For value received, Bioject Medical Technologies Inc., an Oregon corporation
(the “Company”), promises to pay to              (the “Holder”) the principal
sum of              dollars ($        ), together with interest thereon as set
forth herein (this “Note”). This Note is issued as part of a series of similar
notes (collectively, the “Bridge Notes”) issued pursuant to the terms of, and is
entitled to the benefits of, the Convertible Note and Warrant Purchase Agreement
(the “Agreement”) of even date herewith to the persons listed on the Exhibit A
thereto.

The following is a statement of the rights of the Holder and the conditions to
which this Note is subject, and to which the Holder, by the acceptance of this
Note, agrees:

 

1. Payment Terms. The unpaid principal balance from time to time outstanding
under this Note shall bear interest at the rate of 10% per annum. The
outstanding principal balance of and accrued but unpaid interest under this Note
shall be repaid by the Company on or before December 29, 2011 (December 29 2011
or as extended, the “Maturity Date”) unless prepaid or extended pursuant to the
terms hereof. This Maturity Date of this Note may, at the Holder’s option be
extended to June 28, 2012 by the Holder’s prior written notice of his or her
desire to extend the Maturity Date. Except as otherwise provided herein, both
principal and interest shall be payable on the Maturity Date in lawful money of
the United States of America to the Holder at the address listed on the
signature page hereto (or at such other location as shall be designated by the
Holder in a written notice to the Company), in same day funds.

 

2. Events of Default. If any of the events specified in this Section 2 shall
occur (herein individually referred to as an “Event of Default”), the Holder of
the Note may, so long as such condition exists, declare the entire principal and
unpaid accrued interest hereon immediately due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived:

 

  (a) Default in the payment of the principal and unpaid accrued interest of
this Note when due and payable if such default is not cured by the Company
within ten (10) business days after the Holder has given the Company written
notice of such default; or

 

  (b) Any breach by the Company of any representation, warranty, or covenant in
this Note; provided, that, in the event of any such breach, to the extent such
breach is susceptible to cure, such breach shall not have been cured by the
Company within ten (10) business days after written notice to the Company of
such breach; or

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  (c) The Company shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its or
any of its creditors, (iii) be dissolved or liquidated in full or in part,
(iv) commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding commenced
against it or (v) take any action for the purpose of effecting any of the
foregoing; or

 

  (d) Proceedings for the appointment of a receiver, trustee, liquidator or
custodian of the Company or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to the Company or the debts thereof
under any bankruptcy, insolvency or other similar law now or hereafter in effect
shall be commenced and an order for relief entered, or such case or proceeding
shall not be dismissed, discharged or stayed within 60 days of commencement.

Notwithstanding anything to the contrary contained herein, if any of the events
described in Sections 2(c) or (d) occur, this Note shall be automatically
accelerated and the entire principal and unpaid accrued interest thereon shall
immediately become due and payable without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived.

 

3. Prepayment. Prior to the Maturity Date, this Note may not be prepaid except
with the written consent of the holders of a majority in interest of the Bridge
Notes (the “Majority Holders”).

 

4. Conversion.

 

  4.1 Voluntary Conversion.

 

  4.1.1 Holder, at his sole option and upon giving written notice to the
Company, may at any time prior to the payment of this Note in full, convert the
outstanding principal and unpaid interest under this Note into the number of
shares of the Company’s Common Stock equal to the sum of the outstanding
principal balance of this Note plus all accrued and unpaid interest owing under
this Note, divided by the amount equal to the Exercise Price (as adjusted for
stock splits, stock dividends and the like in the same manner as the Exercise
Price (as defined in the Agreement, dated the date hereof and issued to Holder)
is adjusted pursuant to the Warrant issued to Holder under the Agreement)).

 

  4.1.2 If a Qualified Financing is completed on or before the Maturity Date,
the Holder may elect to convert the outstanding principal amount of this Note
plus accrued and unpaid interest hereunder into the securities issued in the
Qualified Financing concurrently with the closing of the transaction on the
Financing Date at a conversion price per share equal the Financing Price without
any other action by Holder.

 

  4.1.3 For purposes of this Section 4.1, the following terms shall have the
definitions set forth below:

 

  (a) “Qualified Financing” means the offering by the Company of shares of
equity securities, including units consisting of stock and warrants, resulting
in the receipt of cash proceeds by the Company after the date hereof of at least
$225,000 in the aggregate (the “Minimum Proceeds”) on or prior to the Maturity
Date (as defined herein). For purposes of this Note, Minimum Proceeds shall not
be deemed to include the conversion of the principal amount of the outstanding
Bridge Notes and accrued and unpaid interest thereon.

 

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  (b) “Financing Date” means the date of the closing of the Qualified Financing
pursuant to which the Company receives the Minimum Proceeds.

 

  (c) “Financing Price” shall mean the price per share or unit, as applicable,
for the securities issued in the Qualified Financing.

 

  4.2 Notice of Conversion Pursuant to Section 4.2. If this Note is converted
pursuant to Section 4.1, written notice shall be given by the Holder of this
Note to the Company at the place where the principal executive office of the
Company is located, notifying the Company of Holder’s election to convert. If
this Note is eligible to be converted pursuant to Section 4.1.2, at least four
business days before the Qualified Financing, the Company shall deliver written
notice to the Holder of this Note at the address last shown on the records of
the Company for the Holder or given by the Holder to the Company for the purpose
of notice or, if no such address appears or is given, at the place where the
principal executive office of the Company is located, notifying the Holder of
the conversion, specifying the conversion price, the principal amount of the
Note eligible to be converted, the amount of accrued interest converted, the
date of the proposed conversion and requesting the Holder notify the Company of
his election to convert the Note if any, in the manner and at the place
designated in the Company’s notice. A holders election to convert the Note in
connection with a Qualified Financing must be made at least two business days
before the expected date of the Qualified Financing.

 

  4.3 Delivery of Stock Certificates; Effect of Conversion. No fractional shares
of stock shall be issued upon conversion of this Note. Upon conversion of this
Note into stock, in lieu of the Company issuing any fractional shares to the
Holder, the Company shall pay to the Holder the amount of outstanding principal
that is not so converted in cash. As promptly as practicable after the
conversion of this Note, the Company at its expense will issue and deliver to
the Holder of this Note a certificate or certificates for the number of shares
of stock or units, as applicable, issuable upon such conversion (rounded down to
the nearest whole number, such that no fractional shares shall be issued). Such
certificate or certificates shall bear such legends as are required by
applicable state and federal securities laws in the opinion of counsel to the
Company. Upon conversion of this Note, the Company shall be forever released
from all its obligations and liabilities under this Note.

 

  4.4 Payment of Expenses and Taxes on Conversion. The Company shall pay all
expenses, taxes (excluding income or franchise taxes) and other charges payable
in connection with the preparation, execution, issuance and delivery of stock
certificate(s) pursuant to this Section 4, except that, in the event such stock
certificate(s) shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all stock transfer fees, which shall be payable
upon the execution and delivery of such stock certificate(s), shall be paid by
the Holder hereof to the Company at the time of delivering this Note to the
Company upon conversion.

 

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5. Subordination. To induce one or more lenders to extend credit to the Company,
and for the benefit of such lenders, Holder agrees, by its acceptance of this
Note, for itself and for each future holder (if any) of this Note, that the
obligations evidenced by this Note (the “Subordinated Obligations”) are
expressly subordinate and junior in right of payment to all principal amounts
of, and accrued interest on (including, without limitation, any interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency or reorganization of the Company), each loan
agreement, bridge note, revolving credit note, term note and other indebtedness,
obligation and liability of the Company (other than the Bridge Notes) under any
agreement or contract with any senior creditor, the payment or performance of
which is expressly secured by a security interest in all or substantially all of
the assets of the Company (the “Senior Obligations”). For purposes of this note,
“subordinate and junior in right of payment” shall mean that no part of the
Subordinated Obligations shall have any claim to the Company’s assets on a
parity with or prior to the claim of the Senior Obligations. From and after the
date of receipt of notice from any senior creditor of any default with respect
to any of the Senior Obligations, Holder shall not ask for, demand, sue for,
take or receive any payments with respect to all or any part of the Subordinated
Obligations or any security therefor, whether from the Company or any other
source, unless and until the Senior Obligations have been paid in full. Holder
further agrees that upon any distribution of money or assets, or readjustment of
the indebtedness of the Company whether by reason of foreclosure, liquidation,
composition, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding involving the Subordinated
Obligations, or the application of the assets of the Company to the payment or
liquidation thereof, the Senior Creditors shall be entitled to receive payment
in full in cash of all of the Senior Obligations prior to the payment of any
part of the Subordinated Obligations.

 

6. Assignment. The rights and obligations of the Company and the Holder of this
Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.

 

7. Waiver and Amendment. Any provision of this Note may be amended, waived or
modified upon the written consent of the Company and the Holder or the Majority
Holders. The Holder agrees to be bound by any waivers or amendments approved by
the Majority Holders, irrespective of whether the Holder consents to such waiver
or amendment. However, any waiver or amendment that adversely affects the Holder
in a manner different from all other holders of Bridge Notes shall require the
consent of such Holder. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising because of any prior or subsequent such
occurrence.

 

8. Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed telex or facsimile (provided that notice is
also given under clause (c) below) if sent during normal business hours of the
recipient; if not sent during normal business hours of the recipient, then on
the next business day, or (c) upon receipt by the party to be notified by
nationally recognized overnight courier service. All communications shall be
sent to the party at the address as set forth herein or at such other address as
such party may designate by ten (10) days advance written notice to the other
party hereto.

 

9. Governing Law; Waiver of Jury Trial. This Note shall be governed by and
construed in accordance with the laws of the state of Oregon, exclusive of
conflicts of law provisions. IN THE EVENT OF ANY DISPUTE AMONG OR BETWEEN ANY OF
THE PARTIES TO THIS NOTE ARISING OUT OF THE TERMS OF THIS NOTE, THE PARTIES
HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN THE COUNTY
OF MULTNOMAH, STATE OF OREGON, OR THE UNITED STATES DISTRICT COURTS FOR THE
DISTRICT OF OREGON FOR RESOLUTION OF SUCH DISPUTE, AND AGREE NOT TO CONTEST SUCH
EXCLUSIVE JURISDICTION OR SEEK TO TRANSFER ANY ACTION RELATING TO SUCH DISPUTE
TO ANY OTHER JURISDICTION. THE COMPANY AND THE HOLDER AGREE TO ACCEPT SERVICE OF
PROCESS PURSUANT TO THE PROCEDURES SET FORTH IN SECTION 8. THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS NOTE.

 

10. Heading; References. All headings used herein are used for convenience only
and shall not be used to construe or interpret this Note. Except where otherwise
indicated, all references herein to Sections refer to Sections hereof.

(Signature Page Follows)

 

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IN WITNESS WHEREOF, each of the Company and Holder has executed this
Subordinated Unsecured Convertible Promissory Note as of the date first above
written.

 

BIOJECT MEDICAL TECHNOLOGIES INC. By                             
                                                                     
Name:                                                                       
                     Title:                            
                                                                 

Holder:

 

 

Name:                                                                       
                     Address:                            
                                                           

 

 

 

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