Document:

EXHIBIT 10.39

                    INSIDER INDEBTEDNESS CONVERSION AGREEMENT
                    -----------------------------------------

         THIS INSIDER INDEBTEDNESS CONVERSION AGREEMENT ("Agreement") is made as
of the 17th day of August,  2007 by and among  INTRAOP  MEDICAL  CORPORATION,  a
Nevada corporation (the "Company"), and the persons listed on Exhibit A attached
hereto (each a "Holder" and collectively the "Holders").

                                    Recitals

         A. The Holders hold an aggregate of $1,592,670.63 in indebtedness  owed
to them by the Company.

         B. The Company and the Holders  desire to retire such  indebtedness  in
exchange for warrants to purchase the Company's Common Stock.

         C. This  Agreement  is being  delivered in  connection  with the Common
Stock and Warrant  Purchase  Agreement  dated as of August 17, 2007 by and among
the  Company  and the other  persons  set forth on the  schedule  of  purchasers
attached thereto.

         D. This  Agreement  shall be binding  upon the  Company and the Holders
only  upon  delivery  of the  signatures  pages  hereto by the  Company  and the
Holders.

                                    Agreement

                  In  consideration  of the mutual  promises made herein and for
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

         1. Definitions.  In addition to those terms defined above and elsewhere
in this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings set forth below:

                  "First  Closing"  shall  have  the  meaning  set  forth in the
Purchase Agreement.

                  "Indebtedness"  means  indebtedness in the aggregate amount of
$1,592,670.63 held by the Holders and listed on Exhibit A hereto.

                  "Insider  Warrants" means warrants in  substantially  the form
attached hereto as Exhibit B.

                  "Insider  Warrant  Shares"  means the shares of the  Company's
Common Stock issuable upon exercise of the Insider Warrants.

                  "January  Bridge Notes" means the 8% debentures  dated January
10, 2007 listed on Exhibit A attached hereto in the aggregate  principal  amount
of $428,570.63.

<PAGE>

                  "January  Securities  Purchase Agreement" means the Securities
Purchase Agreement dated as of January 10, 2007 by and among the Company and the
Holders named therein.

                  "Purchase  Agreement"  means  the  Common  Stock  and  Warrant
Purchase  Agreement dated as of August 17, 2007 by and among the Company and the
other persons set forth on the schedule of purchasers attached thereto.

                  "Second  Closing"  shall  have the  meaning  set  forth in the
Purchase Agreement.

                  "Securities"  means  the  Insider  Warrants  and  the  Insider
Warrant Shares.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

         2. Conversion of Indebtedness; Issuance of Insider Warrants.

                  2.1 Conversion of Indebtedness.  Upon the terms and subject to
the conditions set forth in this  Agreement,  at the First Closing,  each Holder
shall surrender to the Company the promissory note,  invoice or other instrument
evidencing the Indebtedness to the Company marked "paid in full" in exchange for
an Insider  Warrant to purchase that number of Insider  Warrant  Shares equal to
the aggregate  amount of  Indebtedness  held by such Holder  multiplied by 12.5.
Fractional  shares shall be rounded down to the nearest  whole share.  Upon such
conversion,  the  Indebtedness  shall  cease to  represent  indebtedness  of the
Company as stated  therein and the sole right of the Holder  thereof shall be to
receive the Insider Warrant to which such Holder has become entitled pursuant to
the terms hereof.

                  2.2 Exercise of Warrant.  At or within ten (10) days after the
Second Closing, each Holder of an Insider Warrant shall exercise such warrant in
full.

                  2.3  Release  of  Liabilities.  Except  with  respect  to  the
obligations  set forth in this  Agreement,  upon the First  Closing  each Holder
shall,  for itself and its legal  successors  and  assigns  release  and forever
discharge  the  Company and its  stockholders,  partners,  directors,  officers,
employees,  agents, attorneys,  legal successors and assigns of and from any and
all  claims,  demands,  damages,  debts,  liabilities,   accounts,   reckonings,
obligations,  costs, expenses, liens, actions and causes of action of every kind
and nature  whether  now known or unknown,  suspected  or  unsuspected  which it
either now has, owns or holds or at any time before ever owned or held or could,
shall  or may in the  future  have,  own or hold  against  the  Company  or such
stockholders, partners, directors, officers, employees, agents, attorneys, legal
successors  and assigns  based upon or arising out of any matter,  cause,  fact,
thing, act, or omission related to the Indebtedness occurring or existing at any
time up to and including the effective date of this Agreement  (collectively the
"Released  Matters").  It is the  intention  of each  Holder in  executing  this
Agreement  and in receiving  an Insider  Warrant  that this  Agreement  shall be
effective as a full and final accord and satisfaction and general release of and
from all Released  Matters.  In  furtherance of the intentions set forth in this
Agreement,  each Holder  acknowledges  that it is familiar with California Civil
Code Section 1542 which provides as follows:

         GENERAL  RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR  DOES NOT
         KNOW OR SUSPECT  TO EXIST IN HIS OR HER FAVOR AT THE TIME OF  EXECUTING
         THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED
         HIS OR HER SETTLEMENT WITH THE DEBTOR.

                                       2
<PAGE>

         Each Holder waives and relinquishes any rights or benefits which it has
or may have under Section 1542 or any similar  provision of the law of any other
jurisdiction  to the full  extent  that it may  lawfully  waive its  rights  and
benefits pertaining to the Released Matters.

         3. Waiver of Default under the January  Bridge Notes.  Each Holder of a
January  Bridge Note hereby  waives any Event of Default  arising  under Section
2.(a)(vi)  of  such  January   Bridge  Note  to  the  extent  the   transactions
contemplated  by the  Purchase  Agreement  are deemed to be a "Change of Control
Transaction" as defined in Section  2.(a)(vi) of the January Bridge Notes.  This
waiver shall not be deemed to be a  continuing  waiver in the future or a waiver
of any other provision, condition or requirement of the January Bridge Notes.

         4. Waiver of  Participation  Right under  January  Securities  Purchase
Agreement. Each Holder party to the January Securities Purchase Agreement hereby
waives the provisions of Section 4.13 (Participation in Future Financing) of the
January   Securities   Purchase  Agreement  with  respect  to  the  transactions
contemplated by the Purchase Agreement.  This waiver shall not be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement of the January Securities Purchase Agreement.

         5.  Representations  and Warranties of the Company.  The Company hereby
represents and warrants to the Holders that:

                  5.1  Organization   and  Good  Standing.   The  Company  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has all  requisite  corporate  power and authority to
carry on its business as now conducted and to own its properties.

                  5.2  Authorization.  The Company has full corporate  power and
authority  and has taken all  requisite  action on the part of the Company,  its
officers,  directors  and  stockholders  necessary  for (i)  the  authorization,
execution  and  delivery  of  this  Agreement,  (ii)  the  authorization  of the
performance  of  all  obligations  of  the  Company   hereunder  and  (iii)  the
authorization,  issuance,  sale and delivery of the  Securities,  subject in the
case of the Insider  Warrant  Shares to  stockholder  approval  and filing of an
amendment  to the  Company's  Amended and  Restated  Articles  of  Incorporation
authorizing  an increase in the number of shares of Common Stock issuable by the
Company to  500,000,000  (as adjusted for stock  splits,  combinations  or other
similar  transactions).  This Agreement constitutes the legal, valid and binding
obligation of the Company,  enforceable  against the Company in accordance  with
its   terms,   subject   to   bankruptcy,   insolvency,   fraudulent   transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally.

                  5.3 Valid Issuance.  The Securities have been duly and validly
authorized.  The Insider Warrant Shares have been reserved for issuance, subject
to stockholder  approval and filing of an amendment to the Company's Amended and
Restated  Articles  of  Incorporation  authorizing  an increase in the number of
shares of Common Stock issuable by the Company to  500,000,000  (as adjusted for
stock splits,  combinations or other similar  transactions),  and, upon issuance
pursuant to the Insider Warrants, will be duly and validly issued and fully paid
and nonassessable.

                                       3
<PAGE>

                  5.4 Consents.  The execution,  delivery and performance by the
Company of this  Agreement  and the offer,  issuance and sale of the  Securities
requires no consent of, action by or in respect of, or filing with,  any person,
governmental  body,  agency,  or official other than filings that have been made
pursuant to applicable state  securities laws and post-sale  filings pursuant to
applicable  state and federal  securities  laws which the Company  undertakes to
file within the applicable time periods.

                  5.5  Private  Placement.  Subject  to  the  accuracy  of  each
Holder's  representations  in  Section  6  hereof,  the  offer  and  sale of the
Securities to the Holders as contemplated hereby is exempt from the registration
requirements of the Securities Act.

         6.  Representations and Warranties of the Holders.  Each of the Holders
hereby, severally and not jointly, represents and warrants to the Company that:

                  6.1 Organization and Existence.  Such Holder is an individual,
trust, a validly existing corporation,  limited partnership or limited liability
company  and, to the extent  applicable,  has all  requisite  trust,  corporate,
partnership  or limited  liability  company power and authority to invest in the
Securities pursuant to this Agreement.

                  6.2 Authorization.  The execution, delivery and performance by
such Holder of this  Agreement  have been duly  authorized,  and this  Agreement
constitutes  the  valid  and  legally   binding   obligations  of  such  Holder,
enforceable  against  such  Holder in  accordance  with its  terms,  subject  to
bankruptcy,  insolvency,  fraudulent  transfer,  reorganization,  moratorium and
similar  laws of general  applicability,  relating  to or  affecting  creditors'
rights generally.

                  6.3 Purchase  Entirely for Own Account.  The  Securities to be
received  by such  Holder  hereunder  will be  acquired  for such  Holder's  own
account,  not as  nominee  or  agent,  and  not  with a view  to the  resale  or
distribution  of any part thereof in violation of the  Securities  Act, and such
Holder has no present  intention of selling,  granting any  participation in, or
otherwise distributing the same in violation of the Securities Act.

                  6.4 Investment  Experience.  Such Holder  acknowledges that it
can bear the economic risk and complete loss of its investment in the Securities
and has such knowledge and  experience in financial or business  matters that it
is  capable  of  evaluating  the  merits  and  risks  of the  investment  in the
Securities contemplated hereby.

                  6.5  Disclosure  of  Information.   Such  Holder  has  had  an
opportunity to receive all  information  related to the Company  requested by it
and to ask  questions  of and receive  answers  from the Company  regarding  the
Company,  its  business  and the terms and  conditions  of the  offering  of the
Securities.

                  6.6 Restricted  Securities.  Such Holder  understands that the
Securities are  characterized as "restricted  securities" under the U.S. federal
securities  laws  inasmuch  as they are being  acquired  from the  Company  in a
transaction  not  involving  a public  offering  and that  under  such  laws and
applicable  regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances.

                                       4
<PAGE>

                  6.7 Legends.  It is understood that, except as provided below,
certificates  evidencing  the  Securities  may bear the following or any similar
legend:

                           (a)  "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
OR ANY STATE  SECURITIES  LAWS.  THE  SECURITIES  REPRESENTED  HEREBY MAY NOT BE
TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO
THE SECURITIES ACT, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR
(III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY  SATISFACTORY TO
IT THAT SUCH  TRANSFER  MAY  LAWFULLY  BE MADE  WITHOUT  REGISTRATION  UNDER THE
SECURITIES ACT OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS."

                           (b) If required by the  authorities of any  state  in
connection with the issuance of sale of the  Securities,  the legend required by
such state authority.

                  6.8  Accredited  Investor.   Such  Holder  is  an  "accredited
investor" as defined in Rule 501(a) of Regulation D under the Securities Act.

                  6.9 No General Solicitation.  Such Holder did not learn of the
investment in the  Securities as a result of any public  advertising  or general
solicitation.

         7. Miscellaneous.

                  7.1 Successors and Assigns. This Agreement may not be assigned
by a party  hereto  without  the prior  written  consent  of the  Company or the
Holders holding a majority of the Securities,  as applicable.  The provisions of
this Agreement  shall inure to the benefit of and be binding upon the respective
permitted  successors  and assigns of the  parties.  Nothing in this  Agreement,
express or implied,  is intended to confer upon any party other than the parties
hereto  or  their  respective  successors  and  assigns  any  rights,  remedies,
obligations,  or  liabilities  under or by reason of this  Agreement,  except as
expressly provided in this Agreement.

                  7.2 Counterparts; Faxes. This Agreement may be executed in two
or more  counterparts,  each of which  shall be deemed an  original,  but all of
which together shall constitute one and the same instrument.  This Agreement may
also be executed via facsimile or PDF, which shall be deemed an original.

                  7.3 Titles and  Subtitles.  The titles and  subtitles  used in
this  Agreement  are used for  convenience  only and are not to be considered in
construing or interpreting this Agreement.

                  7.4 Notices. Unless otherwise provided, any notice required or
permitted  under this  Agreement  shall be given in writing  and shall be deemed
effectively  given as hereinafter  described (i) if given by personal  delivery,
then such  notice  shall be deemed  given upon such  delivery,  (ii) if given by
facsimile  or  electronic  mail,  then such  notice  shall be deemed  given upon
receipt of  confirmation of complete  transmittal,  (iii) if given by mail, then
such notice shall be deemed given upon the earlier of (A) receipt of such notice
by the  recipient  or (B) three (3) days after such notice is deposited in first
class mail, postage prepaid, and (iv) if given by an internationally  recognized
overnight  air courier,  then such notice shall be deemed given one (1) Business
Day after delivery to such carrier.  All notices shall be addressed to the party
to be notified at the address as follows, or at such other address as such party
may designate by ten (10) days' advance written notice to the other party:

                                       5
<PAGE>

                           If to the Company:

                                   Intraop Medical Corporation
                                   570 Del Rey Avenue
                                   Sunnyvale, CA 94085
                                   Attention: Chief Financial Officer
                                   Facsimile:  (734) 503-6529

                           With a copy to:

                                   Hanson, Bridgett, Marcus, Vlahos & Rudy, LLC
                                   425 Market Street, 26th Floor
                                   San Francisco, CA  94105
                                   Attention:  David M. Pike
                                   Facsimile: (415) 541-9366

                           If to the Holders,  to the addresses on file with the
Company.

                  7.5 Expenses. The parties hereto shall pay their own costs and
expenses in connection herewith.

                  7.6 Amendments and Waivers.  Any term of this Agreement may be
amended and the  observance of any term of this  Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written  consent of the Company and the Holders holding a majority
of the  Securities.  Any amendment or waiver  effected in  accordance  with this
paragraph  shall be binding upon each holder of any Securities  purchased  under
this  Agreement  at the  time  outstanding,  each  future  holder  of  all  such
Securities and the Company.

                  7.7  Severability.  Any  provision of this  Agreement  that is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating the remaining  provisions  hereof but shall be interpreted as if it
were  written  so as to be  enforceable  to  the  maximum  extent  permitted  by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall  not  invalidate  or  render  unenforceable  such  provision  in any other
jurisdiction.  To the extent  permitted by  applicable  law, the parties  hereby
waive any  provision of law which  renders any  provision  hereof  prohibited or
unenforceable in any respect.

                                       6
<PAGE>

                  7.8 Entire Agreement. This Agreement,  including the exhibits,
constitute  the entire  agreement  among the parties  hereof with respect to the
subject  matter  hereof and  thereof  and  supersede  all prior  agreements  and
understandings,  both oral and written,  between the parties with respect to the
subject matter hereof and thereof.

                  7.9 Further Assurances.  The parties shall execute and deliver
all such further  instruments  and  documents and take all such other actions as
may reasonably be required to carry out the transactions contemplated hereby and
to evidence the fulfillment of the agreements herein contained.

                  7.10 Governing Law;  Consent to  Jurisdiction;  Waiver of Jury
Trial.  This Agreement  shall be governed by, and construed in accordance  with,
the internal laws of the State of Delaware  without  regard to the choice of law
principles  thereof.  Each of the  parties  hereto  irrevocably  submits  to the
exclusive jurisdiction of the courts of the State of California located in Santa
Clara County and the United States  District Court for the Northern  District of
California for the purpose of any suit, action,  proceeding or judgment relating
to or arising out of this Agreement and the  transactions  contemplated  hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party  hereto  anywhere  in the world by the same  methods as are
specified  for the giving of notices under this  Agreement.  Each of the parties
hereto  irrevocably  consents to the  jurisdiction of any such court in any such
suit,  action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or  proceeding  brought in such courts and  irrevocably  waives any claim
that any such  suit,  action or  proceeding  brought  in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY  LITIGATION  WITH RESPECT TO THIS  AGREEMENT  AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

                            (Signature page follows)

                                       7
<PAGE>

                  IN WITNESS  WHEREOF,  the parties have  executed  this Insider
Indebtedness Conversion Agreement as of the date first above written.

The Company:                           INTRAOP MEDICAL CORPORATION

                                       By: /s/ Donald A. Goer
                                           -------------------------------------
                                           Name: Donald A. Goer
                                           Title: President and CEO

<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Insider Indebtedness
Conversion Agreement.

Holders:       Name of Holder:                   M. Dean Whitney
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ M. Dean Whitney
                                                 -------------------------------

               Print Name of Authorized Signer:
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):
                                                 -------------------------------

               Name of Holder:                   Mestman Family Trust Dated
                                                 August 30, 2005

               Signature of Authorized Signer:   /s/ Scott J. Mestman
                                                 -------------------------------

               Print Name of Authorized Signer:  Scott J. Mestman
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  Trustee, Mestman Family Trust
                                                 -------------------------------

               Name of Holder:                   Wilder Solovei Revocable Trust
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Howard Solovei
                                                 -------------------------------

               Print Name of Authorized Signer:  Howard Solovei
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  Trustee
                                                 -------------------------------

               Name of Holder:                   Admedico Aps.
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Hans Chr. Koaergaard-Hansen
                                                 -------------------------------

               Print Name of Authorized Signer:  Hans Chr. Koaergaard-Hansen
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  CEO
                                                 -------------------------------

               Name of Holder:                   E.U. Capital Venture, Inc.
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Hans Morkner
                                                 ------------------------------

               Print Name of Authorized Signer:  Hans Morkner
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  Managing Director
                                                 -------------------------------

<PAGE>

               Name of Holder:                   Donald A. Goer & Henci L. Goer
                                                 -------------------------------
                                                 1989 Family Trust
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Donald A. Goer
                                                 -------------------------------

               Print Name of Authorized Signer:  Donald A. Goer
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  Trustee
                                                 -------------------------------

               Name of Holder:                   Donald A. Goer
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Donald A. Goer
                                                 -------------------------------

               Print Name of Authorized Signer:
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):
                                                 -------------------------------

               Name of Holder:                   Tomovation GMBH
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Michael Friebe
                                                 ------------------------------

               Print Name of Authorized Signer:  Michael Friebe
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  CEO
                                                 -------------------------------

               Name of Holder:                   Affect Strategies, Inc.
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Sandra Fathi
                                                 -------------------------------

               Print Name of Authorized Signer:  Sandra Fathi
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  President
                                                 -------------------------------

<PAGE>

               Name of Holder:                   Stephen Dirks
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Stephen Dirks
                                                 -------------------------------

               Print Name of Authorized Signer:  Stephen Dirks
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):
                                                 -------------------------------

               Name of Holder:                   Emerging Markets Consulting LLC
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ James S. Painter III
                                                 -------------------------------

               Print Name of Authorized Signer:  James S. Painter
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  CEO
                                                 -------------------------------

               Name of Holder:                   Schonberg Research Corporation
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Russell G. Schonberg
                                                 -------------------------------

               Print Name of Authorized Signer:  Russell G. Schonberg
                                                 ------------------------------

               Print Title of Authorized Signer
               (if applicable):                  CEO
                                                 -------------------------------

               Name of Holder:                   Richard Simon
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Richard Simon
                                                 -------------------------------

               Print Name of Authorized Signer:  Richard Simon
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):
                                                 -------------------------------

               Name of Holder:                   Scott Mestman
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Scott Mestman
                                                 -------------------------------

               Print Name of Authorized Signer:  Scott Mestman
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):
                                                 -------------------------------

<PAGE>

               Name of Holder:                   The O Group
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Orit L. Shizzman
                                                 -------------------------------

               Print Name of Authorized Signer:  Orit L. Shizzman
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):                  President/CEO
                                                 -------------------------------

               Name of Holder:                   Mary Louise Meurk
                                                 -------------------------------

               Signature of Authorized Signer:   /s/ Mary Louise Meurk
                                                 -------------------------------

               Print Name of Authorized Signer:  Mary Louise Meurk
                                                 -------------------------------

               Print Title of Authorized Signer
               (if applicable):
                                                 -------------------------------

<PAGE>

                                    EXHIBIT A
                                    ---------

April and May Promissory Notes
------------------------------
M. Dean Whitney                                                   $50,000.00
Mestman Family Trust dated August 30, 2005                        125,000.00
Mestman Family Trust dated August 30, 2005                        125,000.00
M. Dean Whitney                                                    25,000.00
Wilder Solovei Revocable Trust                                     25,000.00
Admedico Aps.                                                      50,000.00
Scott Parris                                                      100,000.00

Subtotal                                                         $500,000.00

January 2007 Debentures
-----------------------
E.U. Capital Venture, Inc.                                       $200,000.00
Donald A. Goer and Henci L. Goer 1989 Family Trust                 40,000.00
Donald A. Goer                                                    143,570.63
Tomovation Gmbh                                                    20,000.00
Mestman Family Trust dated August 30, 2005                         25,000.00

Subtotal                                                         $428,570.63

Other Payables
--------------
Affect Strategies, Inc.                                            $7,500.00
Stephen Dirks                                                      40,500.00
Tomovation Gmbh                                                    20,000.00
Emerging Markets Consulting, LLC                                   32,500.00
Royalty payable to Schonberg Research Corporation                 100,000.00
Richard Simon                                                       1,000.00
Scott Mestman                                                       4,300.00
The O Group                                                         8,300.00

Subtotal                                                         $214,100.00

Other Indebtedness
------------------
Promissory note dated February 26, 2007 payable to
Schonberg Research Corporation                                    $50,000.00
Promissory note dated March 15, 2007, payable to
Donald A. Goer and Henci L. Goer 1989 Family Trust                 50,000.00
Promissory note dated September 30, 2004, payable
to Mary Louise Meurk                                            *  50,000.00
Promissory note dated October 31, 2005, payable to
Donald A. Goer                                                 ** 300,000.00

Subtotal                                                         $450,000.00

Total                                                          $1,592,670.63

* Represents  partial repayment of $50,000 of principal to be repaid on original
face amount of  $164,670.25  plus accrued  interest.  Note principal and accrued
interest in the approximate  amount of $171,442.27 is outstanding as of June 30,
2007.

**  Represents  partial  repayment  of  $300,000  of  principal  to be repaid on
original face amount of $821,301.07.  Note principal and accrued interest in the
approximate amount of $579,506.16 is outstanding as of June 30, 2007.

<PAGE>

                                    EXHIBIT B
                                    ---------

                             Form of Insider Warrant
                             -----------------------EXHIBIT 10.40

                         AMENDMENT AND WAIVER AGREEMENT
                         ------------------------------

         This Amendment and Waiver  Agreement (the  "Agreement")  is dated as of
August 17, 2007 and is  executed by and among  Intraop  Medical  Corporation,  a
Nevada  corporation  (the  "Company") and the Purchasers  named on the signature
pages hereto (each, a "Purchaser" and together, the "Purchasers").

         WHEREAS,  reference  is made to (i) that  certain  Securities  Purchase
Agreement  dated  as of  August  31,  2005 by and  among  the  Company  and each
Purchaser  signatory thereto (the "Purchase  Agreement"),  pursuant to which 10%
senior secured  debentures  (the  "Debentures")  and warrants to purchase Common
Stock (the  "Warrants")  were  issued to the  Purchasers  and (ii) that  certain
Registration  Rights  Agreement  dated as of  August  31,  2005 by and among the
Company and the Purchasers named therein (the "Rights Agreement").

         WHEREAS,  the  Company is  entering  into a  transaction  (the  "Lacuna
Transaction")   with  Lacuna  Hedge  Fund,  LLLP  and  certain  other  investors
(collectively,  "Lacuna") pursuant to which (i) Lacuna will invest approximately
$6.68 million in the Company, including the purchase of outstanding indebtedness
from existing debtholders,  in exchange for approximately  238,268,307 shares or
warrants for shares of the Company's Common Stock,  representing a 65% ownership
interest in the Company, (ii) holders of certain indebtedness, including Company
insiders, will exchange such indebtedness for approximately 47,715,050 shares or
warrants  for shares of Company  Common  Stock,  (iii)  certain  advisors to the
Company and Lacuna will receive warrants for approximately  10,780,732 shares of
Company Common Stock,  (iv) 709,180  existing  warrants for Company Common Stock
will be re-priced at $0.08 per share,  (v) the pool of options  available  under
the  Company's  2005 Equity  Incentive  Plan will be increased by  approximately
22,062,664  shares,  and (vi) the number of authorized  shares of Company Common
Stock will be increased to 500,000,000.

         WHEREAS,  the Company  desires to amend or waive certain  provisions of
the Purchase  Agreement,  the Debentures and the Warrants in connection with the
Lacuna Transaction.

         WHEREAS,  the  Company  has  agreed to pay to the  Purchasers  or their
designees a restructuring  fee in the aggregate amount of $85,000 upon the first
closing of the Lacuna  transactions  in  consideration  for the  amendments  and
waivers set forth herein.

         NOW, THEREFORE, BE IT RESOLVED, for good and valuable consideration and
intending to be legally bound, the parties hereto agree as follows:

         1.  Purchase Agreement

                  1.1       Section 1.1 (Definitions).

            (a) A new  definition is hereby added to Section 1.1 of the Purchase
Agreement as follows:

<PAGE>

                           "Lacuna  Transaction" means a transaction with Lacuna
                  Hedge Fund,  LLLP and certain other  investors  (collectively,
                  "Lacuna")   pursuant   to  which  (i)   Lacuna   will   invest
                  approximately  $6.68  million in the  Company,  including  the
                  purchase   of   outstanding    indebtedness    from   existing
                  debtholders,  in exchange for approximately 238,268,307 shares
                  or  warrants  for  shares  of  the  Company's   Common  Stock,
                  representing  a 65%  ownership  interest in the Company,  (ii)
                  holders of certain  indebtedness,  including Company insiders,
                  will exchange such indebtedness for  approximately  47,715,050
                  shares or warrants for shares of Company  Common Stock,  (iii)
                  certain  advisors  to the  Company  and  Lacuna  will  receive
                  warrants for approximately 10,780,732 shares of Company Common
                  Stock, (iv) 709,180 existing warrants for Company Common Stock
                  will be re-priced at $0.08 per share,  (v) the pool of options
                  available under the Company's 2005 Equity  Incentive Plan will
                  be increased by approximately  22,062,664 shares, and (vi) the
                  number of  authorized  shares of Company  Common Stock will be
                  increased to 500,000,000.

                  (b) The  definition of "Exempt  Issuance" set forth in Section
1.1 of the  Purchase  Agreement  is  hereby  amended  by  adding  the  following
subsection (h) and re-lettering subsection (h) as subsection (i):

                  "(h) shares or warrants for shares issued in  connection  with
                  the Lacuna Transaction."

                  1.2 Section  4.13  (Participation  in Future  Financing).  The
Purchasers acknowledge that they have received notice with respect to the Lacuna
Transaction and hereby waive all rights to participate in the Lacuna Transaction
pursuant to Section 4.13.

                  1.3 Section 4.14  (Subsequent  Equity  Sales).  The Purchasers
hereby  waive  the  provisions  of  Section  4.14  with  respect  to the  Lacuna
Transaction.

         2.  Debentures

                  2.1  Section 1  (Definitions).  The  definition  of "Change of
Control  Transaction" set forth in Section 1 of the Debentures is hereby amended
by adding the following sentence as the last sentence of such definition:

                  "Notwithstanding   the   foregoing,   a  "Change   of  Control
                  Transaction" shall not include the Lacuna Transaction."

                  2.2 Section 1  (Definitions).  The  definition  of  "Permitted
Indebtedness"  set forth in Section 1 of the Debentures is hereby amended in its
entirety to read as follows:

                  "Permitted   Indebtedness"   shall  mean  the  individual  and
                  collective  reference  to  the  following:   (a)  Indebtedness
                  incurred in  connection  with the Purchase  Agreement  and the
                  Convertible  Debenture Financing,  (b) during the term of this
                  Debenture  and after  August __,  2007,  up to an aggregate of
                  $6,000,000   in  connection   with  the  Company's   revolving
                  inventory  and  receivables   financing  agreement  with  E.U.
                  Capital  Venture,  Inc. and EC Bonding & Escrow Corp.  and (c)
                  during the term of this  Debenture  and after August __, 2007,
                  up to $2,000,000 of New Indebtedness."

                                       2
<PAGE>

                  2.3 Section 5(c) (Negative  Covenants).  The Purchasers hereby
waive the  provisions  of Section  5(c) of the  Debentures  with  respect to the
Lacuna Transaction.

                  2.4 Section  5(d)  (Negative  Covenants).  Section 5(d) of the
Debentures  is hereby  amended  by  deleting  "$130,000"  in the third  line and
replacing it with "$200,000."

                  2.5 Section 6(a)(vi) (Events of Default).  Section 6(a)(vi) of
the  Debenture is hereby  amended by deleting  "$150,000"  in the sixth line and
replacing it with "$200,000."

                  2.6 Section  6(a)(viii)  (Events of Default).  The  Purchasers
hereby waive the provisions of Section 6(a)(viii) of the Debentures with respect
to the Lacuna Transaction.

                  2.7 Section 6(b) (Remedies Upon Default).  Section 6(b) of the
Debentures  is hereby  amended by deleting  "(i)" in the first line and deleting
the words "and (ii) the Exercise Price of the Warrant shall be adjusted to equal
$0.01, subject to further adjustment therein." in the 4th and 5th lines.

         3.  Warrants.

                  3.1 Section 2(b)  (Exercise).  Section 2(b) of each Warrant is
hereby  amended by  deleting  "$0.40" in the second line and  replacing  it with
$0.05."

                  3.2 Section 2(c)  (Cashless  Exercise).  Notwithstanding  that
there is an  effective  Registration  Statement  registering  the  resale of the
Warrant  Shares by the  Holder  (such  terms as defined  in the  Warrants),  the
Company and each Purchaser  hereby agree that such  Purchaser  shall exercise in
full the Warrant  held by it pursuant to the  cashless  exercise  provisions  of
Section  2(c) of the  Warrant at an  exercise  price of $0.05 per share upon the
first  closing of the Lacuna  Transaction.  Each  Purchaser  shall  deliver  the
original  Warrant(s)  held by such Purchaser with an executed Notice of Exercise
in the form attached to the Warrant to the Company upon such first closing.  The
Company,  at its  expense,  shall cause its legal  counsel to provide a Rule 144
opinion  letter to the  Company's  transfer  agent with  respect to the  Warrant
Shares  issued  upon  exercise  of the  Warrant  held by such  Purchaser,  if so
requested by the transfer agent.

         4. Rights Agreement.  The Purchasers acknowledge and agree that (i) the
Rights  Agreement  shall terminate in its entirety upon the first closing of the
Lacuna  Transaction and (ii) the Company  intends to terminate the  Registration
Statements (as defined in the Rights Agreement) on or about November 30, 2007.

         5.  Restructuring  Fee. Upon execution of this Agreement by the parties
hereto, the Company shall pay the Purchasers, or their designee, a restructuring
fee in the amount of eighty five thousand dollars ($85,000).

         6. Effective Date of the Agreement.  This Agreement  shall be effective
when executed by the Company and the Purchasers.

                                       3
<PAGE>

         7. No Other Waiver or Amendment.  This Agreement shall not be deemed to
be a continuing waiver in the future or a waiver of any subsequent  default or a
waiver  of any  other  provision,  condition  or  requirement  of  the  Purchase
Agreement, the Debentures or the Rights Agreement. Except as expressly stated in
this Agreement,  all of the terms and conditions of the Purchase Agreement,  the
Debentures  and the Rights  Agreement  shall  continue  in full force and effect
after the  execution  of this  Agreement,  and shall not be in any way  changed,
modified or superseded by the terms set forth herein.

         8. Interpretation. This Agreement and the rights and obligations of the
parties hereunder shall be construed in accordance with and governed pursuant to
the terms of the Purchase Agreement.

         9. Reference to the Purchase Agreement and the Debentures. On and after
the effective date of this Agreement,  each reference in the Purchase  Agreement
or the Debentures to "the  Agreement,"  this  Agreement,"  "the Debenture," this
"Debenture," "hereunder" and "hereof" or words of like import shall refer to the
Purchase  Agreement  or the  Debentures,  as  applicable,  as  amended  by  this
Agreement.  The  Purchase  Agreement  and the  Debentures,  as  amended  by this
Agreement,  are and shall continue to be in full force and effect and are hereby
in all respects ratified and confirmed.

         10. Governing Law. All questions concerning the construction, validity,
enforcement  and  interpretation  of this  Agreement  shall be  governed  by and
construed and enforced in accordance  with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof.

         11.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts,  each of which when so executed  shall be deemed to be an original
and, all of which taken together shall constitute one and the same agreement. In
the event that any  signature  is  delivered  by  facsimile  transmission,  such
signature shall create a valid binding  obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

         12. No Joint Obligations.  The obligations of each Purchaser under this
Agreement are several and not joint with the obligations of any other Purchaser,
and no Purchaser  shall be  responsible  in any way for the  performance  of the
obligations  of any other  Purchaser  under this  Agreement.  Nothing  contained
herein or in this  Agreement,  and no  action  taken by any  Purchaser  pursuant
thereto,  shall be deemed to  constitute  the  Purchasers as a  partnership,  an
association,  a  joint  venture  or any  other  kind  of  entity,  or  create  a
presumption  that the  Purchasers are in any way acting in concert or as a group
with  respect  to such  obligations  or the  transactions  contemplated  by this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.  Each Purchaser has been
represented by its own separate  legal counsel in its review and  negotiation of
this Agreement.

                                       4
<PAGE>

                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Agreement as of the date first above written.

                                       COMPANY:

                                       INTRAOP MEDICAL CORPORATION

                                       By: /s/ Donald A. Goer
                                           -------------------------------------
                                           Name: Donald A. Goer
                                           Title: President and CEO

                                       PURCHASERS:

                                       REGENMACHER HOLDINGS, LTD.

                                       By: /s/ Jonathan P. Knight
                                           -------------------------------------
                                           Name: Jonathan P. Knight
                                           Title: As Agent

                                       ABS-SOS PLUS PARTNERS, LTD.

                                       By: /s/  Jonathan P. Knight
                                           -------------------------------------
                                           Name: Jonathan P. Knight
                                           Title: As Agent

                                       5

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