Document:

EXHIBIT 10.1

FORBEARANCE NO. 1, LIMITED WAIVER
AND MODIFICATION

 

TO

 

LOAN AND SECURITY AGREEMENT

 

 

                THIS FORBEARANCE NO. 1, LIMITED WAIVER AND MODIFICATION TO LOAN AND
SECURITY AGREEMENT (this “Forbearance”)
is entered into this 19th day of November, 2007, by and among Bioject Medical
Technologies, Inc., an Oregon corporation and Bioject, Inc., each with its
principal place of business at 20245 S.W. 95th Ave., Tualatin, OR 97062 USA
(individually and collectively, “Borrower”) and PARTNERS FOR GROWTH, L.P. (“PFG”).  Capitalized terms used herein without
definition shall have the same meanings given them in the Loan Agreement (as
defined below).

RECITALS

A.            Borrower and PFG
have entered into that certain Loan and Security Agreement dated as of August
31, 2007 (as may be amended, restated, or otherwise modified, the “Loan Agreement”,
and together with such documents, instruments and security agreements as were
executed reasonably contemporaneously with or in connection with the Loan
Agreement, the “Loan Documents”), pursuant to
which PFG has extended and conditionally-agreed to make available to Borrower
certain advances of money.

B.            In addition to
the loan specified in Recital A, Borrower and PFG are party to a Term
Loan and Security Agreement dated as of March 29, 2006 (the “Convertible Loan”), a Loan and
Security Agreement dated as of December 11, 2006 (the “Revolving
Loan Agreement”) and associated cross-corporate guarantees and
security agreements (the “Additional PFG Loans”
and, together with the loan set forth in the Loan Documents, the “Outstanding PFG Loans”).

C.            Borrower is
currently in default under the Loan Agreement by its failure to comply with the
financial revenue covenant set forth in Section 5 of the Schedule to the Loan
Agreement (the “Default”) and such Default also constitutes an Event of Default
under the Additional PFG Loans.

D.            Borrower (a)
acknowledges the Default, (b) desires that PFG not declare an Event of
Default or exercise other remedies under the Outstanding PFG Loans due to the
above-referenced Default (to “Forbear”) from the date hereof until the earlier
to occur of the termination of this Forbearance or June 1, 2008 (the “Forbearance
Period”), and (c) desires that PFG provide the conditional limited waiver of
the Default upon the terms and conditions more fully set forth herein.

E.             Subject to the
representations and warranties of Borrower herein and upon the terms and
conditions set forth in this Forbearance, PFG is willing to Forbear for the
Forbearance Period and provide the conditional limited waiver contained herein.

AGREEMENT

                NOW,
THEREFORE, in consideration of the foregoing Recitals, incorporated
by reference herein, and intending to be legally bound, the parties hereto
agree as follows:

1.             Event of Default.  Borrower acknowledges the Default.

2.             Forbearance of PFG.  Subject to Borrower’s performance of this
Forbearance and the satisfaction of the conditions set forth in Section 8
hereof, PFG agrees to Forbear during the Forbearance Period.  In the event of a breach by Borrower of any
of the terms set forth in this Forbearance, a failure of any condition set
forth in Section 8, or the occurrence of any Default under the Outstanding PFG
Loans other than a Permitted Default, PFG, at its option, with such notice to
Borrower (if any) as may be required by the Loan Documents, may terminate this
Forbearance and exercise any remedies available to PFG under the Outstanding
PFG Loans and under applicable law.  For
purposes of this Forbearance, a “Permitted Default”
shall mean (i) the specific Default for which PFG is agreeing to Forbear
hereunder as set forth under Recital C, above, and (ii) all financial covenants
contained in Section 5 of the Schedule to the Loan Agreement

 

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(other than the “Minimum Liquidity” covenant set forth
in Section 8.7 of this Forbearance), and (iii) any alleged Material Adverse
Change in Borrower’s financial condition.

3.             Limited Waiver and Consent.  PFG hereby agrees to waive any Permitted
Default for the Forbearance Period, subject to satisfaction of the conditions
set forth in Section 8 hereof and Borrower’s compliance with the terms and
conditions of this Forbearance.  PFG
hereby consents to Borrower’s issuance of up to $3,000,000 aggregate principal
amount of convertible unsecured promissory notes between November 15, 2007 and
June 1, 2008. For the avoidance of doubt, the foregoing dollar threshold of
convertible unsecured promissory notes has been proposed by Borrower without
any threshold requirement on the part of PFG.

4.             Borrower’
Representations And Warranties.  Borrower represents and warrants that:

(a)           immediately upon giving effect to this
Forbearance (i) the representations and warranties contained in the Loan
Documents are true, accurate and complete (i.e., do not
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances which they were made, not misleading) in all
material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they
were true and correct as of such date), and (ii) no Event of Default has
occurred and is continuing, other than the Default(s) waived pursuant to this
Forbearance;

(b)           Borrower has the corporate power and authority
to execute and deliver this Forbearance and to perform its obligations under
the Loan Agreement, as amended by this Forbearance;

(c)           the certificate of incorporation, bylaws and
other organizational documents of Borrower delivered to PFG on the Effective
Date remain true, accurate and complete and have not been amended, supplemented
or restated and are and continue to be in full force and effect;

(d)           the execution and delivery by Borrower of this
Forbearance, the Amendments (as defined in Section 8.2) and the performance by
Borrower of its obligations under the Loan Agreement and Amended Warrant have
been duly authorized by all necessary corporate action on the part of Borrower;

(e)           this Forbearance has been duly executed and
delivered by Borrower and is the binding obligation of Borrower, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to
or affecting creditors’ rights; and

(f)            as of the date hereof, it has no known
defenses against the obligations to pay any amounts under the Obligations and
it has no known claims of any kind against PFG. 
Borrower acknowledges that, to its knowledge, PFG has acted in good
faith and has conducted in a commercially reasonable manner its relationships
with Borrower in connection with this Forbearance and in connection with the
Loan Documents. For purposes hereof, the term “knowledge” (and derivative
terms) means the actual knowledge of any executive officer of Borrower or such
knowledge as a reasonably prudent executive officer of a U.S. publicly-traded
corporation would have if such executive officer exercised reasonable diligence
in the performance of his or her legal duties and responsibilities.

Borrower
understands and acknowledges that PFG is entering into this Forbearance in
reliance upon, and in partial consideration for, the above representations and
warranties.

5.             Borrowing
During Forbearance Period.  Borrower shall not be entitled to borrow
under any Outstanding PFG Loans during the Forbearance Period and PFG may, but
shall not be obligated to, lend during the Forbearance Period.

6.             Release.  Borrower hereby forever relieves, releases,
and discharges PFG and its present or former employees, officers, directors,
agents, representatives, attorneys, and each of them, from any and all claims,
debts, liabilities, demands, obligations, promises, acts, agreements, costs and
expenses, actions and causes of action, of every type, kind, nature,
description or character, whether known or unknown, suspected or unsuspected,
absolute or contingent, arising out of or in any manner connected with or
related to facts, circumstances, issues, controversies or claims existing or
arising from the beginning of time through and including the date of execution
of this

2

 

Forbearance (collectively
“Released Claims”).
Without limiting the foregoing, the Released Claims shall include any and all
liabilities or claims (except for those arising from gross negligence or
intentional misconduct in relation to any confidentiality obligations PFG may
have in respect of Borrower) arising out of or in any manner connected with or
related to the Loan Documents, the Recitals hereto, any instruments, agreements
or documents executed in connection with any of the foregoing or the
origination, negotiation, administration, servicing and/or enforcement of any
of the foregoing.  In furtherance of this
release, Borrower expressly acknowledges and waives any and all rights under
Section 1542 of the California Civil Code, which provides as follows: “A
general release does not extend to claims which the creditor does not know or
expect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.” By
entering into this release, Borrower recognizes that no facts or
representations are ever absolutely certain and it may hereafter discover facts
in addition to or different from those which it presently knows or believes to
be true, but that it is the intention of Borrower hereby to fully, finally and
forever settle and release all matters, disputes and differences, known or
unknown, suspected or unsuspected; accordingly, if any Borrower should
subsequently discover that any fact that it relied upon in entering into this
release was untrue, or that any understanding of the facts was incorrect, neither
Borrower shall be entitled to set aside this release by reason thereof,
regardless of any claim of mistake of fact or law or any other circumstances.
Borrower acknowledges that it is not relying upon and has not relied upon any
representation or statement made by PFG with respect to the facts underlying
this release or with regard to any of such party’s rights or asserted rights.
This release may be pleaded as a full and complete defense and/or as a
cross-complaint or counterclaim against any action, suit, or other proceeding
that may be instituted, prosecuted or attempted in breach of this release.
Borrower acknowledges that the release contained herein constitutes a material
inducement to PFG to enter into this Forbearance, and that PFG would not have
done so but for PFG’s expectation that such release is valid and enforceable in
all events.  Borrower hereby represents
and warrants to PFG, and PFG is relying thereon, as follows: (i) except as
expressly stated in this Forbearance, neither PFG nor any agent, employee or
representative of PFG has made any statement or representation to any Borrower
regarding any fact relied upon by any Borrower in entering into this
Forbearance; (ii) Borrower has made such investigation of the facts pertaining
to this Forbearance and all of the matters appertaining thereto, as it deems
necessary; (iii) the terms of this Forbearance are contractual and not a mere
recital; (iv) this Forbearance has been carefully read by Borrower, the
contents hereof are known and understood by Borrower, and this Forbearance is
signed freely, and without duress, by Borrower; (v) Borrower represents and
warrants that it is the sole and lawful owner of all right, title and interest
in and to every claim and every other matter which it releases herein, and that
it has not heretofore assigned or transferred, or purported to assign or
transfer, to any person, firm or entity any claims or other matters herein
released. Borrower shall indemnify PFG, defend and hold it harmless from and
against all claims based upon or arising in connection with prior assignments
or purported assignments or transfers of any claims or matters released herein.

7.             Limitation.  The forbearance, conditional limited waivers
and amendments set forth in this Forbearance shall be limited precisely as
written and shall not be deemed (a) to be a forbearance, waiver or modification
of any other term or condition of the Loan Agreement or of any other instrument
or agreement referred to therein or to prejudice any right or remedy which PFG
may now have or may have in the future under or in connection with the Loan
Agreement or any instrument or agreement referred to therein; (b) to be a
consent to any future amendment or modification, forbearance or waiver to any
instrument or agreement the execution and delivery of which is consented to
hereby, or to any waiver of any of the provisions thereof; or (c) to limit
or impair PFG’s right to demand strict performance of all terms and covenants
as of any date.  Except as expressly
amended hereby, the Loan Agreement shall continue in full force and effect.

8.             Effectiveness.  Subject to the satisfaction of the conditions
precedent set forth below, this Forbearance shall become effective on the date
hereof, but shall continue to be subject to the satisfaction of all the
following conditions:

8.1          Partial
Repayment of Obligations.  On the date hereof, Borrower
shall issue an irrevocable instruction to UBS Financial Services Inc. to pay
PFG (in accordance with PFG’s written wire transfer instructions) on November
20, 2007 $550,000 (the “Debt Payment”) from Borrower’s account no. 04513 (the “UBS
Account”).  For the avoidance of doubt,
without regard to the source of funds for the Debt Payment, it is a condition
to this Forbearance that Borrower reduce outstanding Obligations by $550,000 on
November 20, 2007. The parties agree that PFG shall apply such payment to
reduce the outstanding revolving loan Obligations under the Revolving Loan
Agreement.

8.2          Amendment of Agreements and
Instruments.  Each of (i) the warrant dated December 11,
2006 to purchase 200,000 shares of common stock of Bioject Medical
Technologies, Inc., (ii) the $1,250,000 convertible loan dated March 29, 2006,
(iii)  the warrant dated December 14, 2004
to purchase 725,000 shares of common stock of 

3

 

Bioject Medical
Technologies, Inc., and (iv) the warrant dated August 31, 2007 to purchase
71,429 shares of common stock of Bioject Medical Technologies, Inc. shall each
be promptly amended with effect from the date hereof to reflect the terms of Exhibit
A hereof (the “Amendments”); provided,
however, that the amendment referred to in clause (ii) above shall not be
effective until Borrower has amended the Rights Agreement dated November 15,
2004, between Bioject Medical Technologies, Inc. and American Stock Transfer
and Trust Company to exclude PFG from the definition of an “Acquiring Person”
to the extent necessary and Borrower agrees to use its reasonable best efforts
to obtain such amendment as soon as practicable and in no event later than
December 31, 2007.  For the avoidance of
doubt, Borrower’s failure to secure such consent and execute the Amendments
constitutes a breach of the terms of this Forbearance.

8.3          Execution and Delivery.  Borrower and PFG shall have duly executed and
delivered this Forbearance and all Amendments to PFG;

8.4          Payment of PFG Expenses.  All PFG Expenses (including all reasonable
attorneys’ fees and reasonable expenses) incurred in connection with this
Forbearance shall immediately become a part of the Borrower’s Obligations and
shall be due and payable upon PFG demand.

8.5          Additional Capital.  Borrower shall, not later than December 14,
2007, consummate a subordinated debt or equity financing of at least $500,000
substantially upon the terms set forth in that certain term sheet appended
hereto as Exhibit B.

8.6          Further Assurances.  Borrower shall execute and deliver such
amendments, documents and instruments as are necessary or appropriate to effect
the conditions to this Forbearance, including without limitation, the
Amendments.

8.7          Minimum Liquidity.  As of November 30, 2007, December 31, 2007
and January 31, 2008, Borrower shall maintain cash and cash equivalents equal
to the greater of (i) Borrower’s aggregate net cash operating loss for the
three most recent full calendar months or (ii) $500,000.  As of February 29, 2008 and as of the last
day of each calendar month thereafter that this Forbearance is in effect,
Borrower shall maintain cash and cash equivalents equal to the greater of (i)
one and one-half times (1.5x) Borrower’s aggregate net cash operating loss for
the three most recent full calendar months or (ii) $500,000.  For purposes of this Section, Borrower’s “cash
and cash equivalents” shall include the securities in the UBS Account; Borrower’s
monthly “cash operating loss” shall be calculated on the same basis as set
forth in the “Results of Operations” in Borrower’s historical periodic reports
filed with the Securities and Exchange Commission, as adjusted for non-cash
items; and Borrower’s “aggregate net operating loss for the three most recent
full calendar months” shall be the sum of the three months’ operating losses
and profits (for example, if Borrower has losses of $200,000 and $150,000 and a
profit of $100,000 for a three month period, the aggregate net operating loss
for such months would be $250,000, not $350,000).

9.             MODIFICATION OF
OUTSTANDING PFG LOANS.  During the Forbearance Period, the interest
rate applicable to the Outstanding PFG Loans, other than the Convertible Loan
(as defined in Recital B), as set forth in Section 2 of the Schedule to the
Loan and Security Agreement for each such Outstanding PFG Loan shall be reduced
by three percent (3%) per annum and each such Loan and Security Agreement,
other than the Convertible Loan, is deemed modified accordingly.

10.          COUNTERPARTS.  This Forbearance may be signed in any number
of counterparts, and by different parties hereto in separate counterparts, with
the same effect as if the signatures to each such counterpart were upon a
single instrument.  All counterparts
shall be deemed an original of this Forbearance.

11.          INTEGRATION;
CONSTRUCTION.  This Forbearance, the Amendments and any
other documents executed in connection herewith or therewith or pursuant hereto
or thereto contain the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior agreements, understandings,
offers and negotiations, oral or written, with respect thereto and no extrinsic
evidence whatsoever may be introduced in any judicial or arbitration
proceeding, if any, involving this Forbearance; except that any financing
statements or other agreements or instruments filed by PFG with respect to
Borrower shall remain in full force and effect. The title of this Agreement and
section headings are for the readers’ convenience only and shall be ignored for
purposes of integration into the Loan Agreement. The term “Schedule” means the
Schedule to the Loan Agreement.

 

4

 

12.          Severability.  If one or more provisions of this Agreement
are held to be unenforceable or are in violation of any applicable law or stock
exchange rules or regulations to which either Borrower of PFG is subject, the
parties agree to renegotiate such provision in good faith, in order to maintain
the economic position enjoyed by each party as close as possible to that under
the provision rendered unenforceable or that is in violation.  In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the
balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.

12.          Governing Law;
Venue.  THIS FORBEARANCE SHALL BE GOVERNED BY AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.  Borrower and PFG each submit to
the exclusive jurisdiction of the State and Federal courts in San Francisco
County, California.

13.          TO THE EXTENT PERMITTED BY APPLICABLE LAW, PFG AND
BORROWER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury
is not enforceable, the parties hereto agree that any and all disputes or
controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if
they cannot agree, by the Presiding Judge of the San Francisco County,
California Superior Court) appointed in accordance with California Code of
Civil Procedure Section 638 (or pursuant to comparable provisions of federal
law if the dispute falls within the exclusive jurisdiction of the federal
courts), sitting without a jury, in San Francisco County, California; and the
parties hereby submit to the jurisdiction of such court.  The reference proceedings shall be conducted
pursuant to and in accordance with the provisions of California Code of Civil
Procedure §§ 638 through 645.1, inclusive. 
The private judge shall have the power, among others, to grant
provisional relief, including without limitation, entering temporary
restraining orders and issuing preliminary and permanent injunctions.  All such proceedings shall be closed to the
public and confidential and all records relating thereto shall be permanently
sealed.  If during the course of any
dispute, a party desires to seek provisional relief, but a judge has not been
appointed at that point pursuant to the judicial reference procedures, then such
party may apply to the San Francisco County, California Superior Court for such
relief.  The proceeding before the
private judge shall be conducted in the same manner as it would be before a
court under the rules of evidence applicable to judicial proceedings.  The parties shall be entitled to discovery
which, other than a limitation of not more than 3 depositions per party of not
more than 5 hours each, shall be conducted in the same manner as it would be
before a court under the rules of discovery applicable to judicial proceedings.  The private judge shall oversee discovery and
may enforce all discovery rules and order applicable to judicial proceedings in
the same manner as a trial court judge. 
The parties agree that the selected or appointed private judge shall
have the power to decide all issues in the action or proceeding, whether of
fact or of law, and shall report a statement of decision thereon pursuant to
the California Code of Civil Procedure § 644(a).  The private judge shall also determine all
issues relating to the applicability, interpretation, and enforceability of
this paragraph and may grant appropriate relief from the terms of this
paragraph for good cause shown.

 

 

[SIGNATURE PAGE FOLLOWS]

 

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                IN WITNESS WHEREOF, the parties
hereto have caused this Forbearance to be executed as of the date first written
above.

	
   

  	
  Borrower:

  	
   

  	
  Bioject, Inc.

  
	
   

  	
   

  	
  an Oregon corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Ralph
  Makar

  	
   

  
	
   

  	
   

  	
  Printed Name: Ralph Makar

  	
   

  
	
   

  	
   

  	
  Title: President and CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Borrower:

  	
   

  	
  Bioject Medical Technologies, Inc.

  
	
   

  	
   

  	
  an Oregon corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Ralph
  Makar

  	
   

  
	
   

  	
   

  	
  Printed Name: Ralph Makar

  	
   

  
	
   

  	
   

  	
  Title: President and CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PFG:

  	
   

  	
  Partners for Growth, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Andrew W.
  Kahn

  	
   

  
	
   

  	
   

  	
  Printed Name: Andrew W. Kahn

  	
   

  
	
   

  	
   

  	
  Title: Manager, Partners for Growth, LLC, its General Partner

  
							

 

 

Exhibit
A

 

 

Warrant/Conversion changes:

 

The Exercise Price shall
be equal to $0.90 per share, provided, however, that if the Company consummates
a Financing at an Effective Price lower than $0.90 per share, then the Exercise
Price shall be the lesser of $0.90 per share or 120% of such Effective Price.
If, however, the Company fully repays all monetary Obligations under the
Oustanding PFG Loans other than from proceeds (in whole or in part) of a Financing
(as defined), the Exercise price shall be $0.90 per share. 
For purposes of the foregoing, a “Financing” means a closing of any equity
or convertible securities financing on or before the first anniversary of the
date of the Forbearance Agreement, other than closings of up to $3,000,000 in
aggregate proceeds completed on or prior to January 31, 2008 upon the same
economic terms of the financing specified in Section 8.5 of the Forbearance No.
1, Limited Waiver and Modification to Loan and Security Agreement. The “Effective
Price” means the price at which equity securities are issued in any such
Financing or the price at which convertible securities issued in any such
Financing convert into equity securities (whether or not such price is
determinable on or before the first anniversary of the date of the Forbearance
Agreement), provided that if the securities issued in any such Financing
consist of any combination of securities (such as, for example only, a unit
consisting of stock with accompanying warrants or other derivative securities),
the Effective Price shall be reduced by the value of the accompanying warrants
or other derivative securities. For this purpose,  the value of warrants or other derivative
securities shall be valued on an “as-converted/exercised” weighted average
basis. For example, if a package of securities is sold consisting of one share
and a warrant exercisable for one share for a total consideration of 76 cents,
the Effective Price of the common stock sold would be determined to be 38 cents
(76 cents divided by [1 share plus 1 share as exercised from the warrant]). If
the securities issued in any such Financing are equity securities of a class or
series other than the Warrant Stock, this Warrant shall be exercisable, at the
sole option of Holder, for such other securities issued in any such Financing
and such securities shall be deemed to be Warrant Stock hereunder (adjusted as
appropriate to reflect conversion rates into Warrant Stock of other than
one-to-one). Notwithstanding the foregoing, with respect to the loan, the
conversion price may not be reduced below an amount that would result in a
number of shares of Common Stock issuable upon conversion of the loan, when
aggregated with the number of shares issuable upon exercise or conversion of
warrants and other convertible securities and Common Stock held by PFG at such
time, exceeding 19.9% of the Common Stock of the Company outstanding at such
time. If the adjustment to the conversion price would result in the issuance of
a number of shares of stock exceeding such threshold, the Company shall
promptly seek shareholder approval of the shares in excess of such threshold
and shall recommend shareholders approve such action.  If the shareholders do not approve the
issuance of such additional shares of stock, the Outstanding PFG Loans shall be
due upon demand. If such stockholder approval is secured, the Company agrees to
cooperate with PFG in acting as trustee of a voting trust in respect of the
stock owned by PFG in favor of the Company so that the Company may vote stock
owned by PFG.

 

[Appropriate and similar
adjustments to be made to the languge of the convertible loan.]

 

Exhibit B

Term Sheet

 

 

 

 

 

Bioject Medical Technologies Inc.

November 15, 2007

Offering Memorandum Terms

 

Offering Terms For Convertible Note

	
  Issuer:

  	
   

  	
  Bioject Medical
  Technologies Inc., an Oregon corporation (the “Company”).

  
	
  Amount:

  	
   

  	
  Up to $1.5 million.

  
	
  Timing for Offer:

  	
   

  	
  Offer will close on December 14, 2007 (latest).

  
	
  Securities to be Issued:

  	
   

  	
  Convertible note with 18 month term bearing 8%
  interest.

  
	
  Conversion Price:

  	
   

  	
  (i) The higher of $0.75 per share or current market
  price + 50% (voluntary conversion) or (ii) as part of an equity financing of
  at least $5 million (automatic conversion).

  
	
  Warrants:

  	
   

  	
  10% Warrant coverage. The exercise price of the
  Warrants will be the higher of $0.75 or current market price + 50%. The term
  of the Warrants will be four years. Piggyback registration rights and no
  cashless exercise provision.

  
	
  Investors:

  	
   

  	
  Private and Institutional.EXHIBIT
10.2

BIOJECT
MEDICAL TECHNOLOGIES INC.

CONVERTIBLE
NOTE PURCHASE AND WARRANT AGREEMENT

This
Convertible Note Purchase and Warrant Agreement (the “Agreement”)
is made as of November 19, 2007, by and between Bioject
Medical Technologies Inc., an Oregon corporation (the “Company”), and Edward Flynn (“Purchaser”).

RECITALS

The
Company desires to issue and sell and the Purchaser desires to purchase a
convertible subordinated promissory note in substantially the form attached to
this Agreement as Exhibit A
(the “Notes”), which shall be convertible on
the terms stated therein into stock of the Company.  Purchasers shall also receive a warrant to
purchase additional shares of the Company pursuant to the form of warrant
attached hereto as Exhibit B.  The Note, the equity securities issuable upon
conversion thereof (and any securities issuable upon conversion of such equity
securities), the warrant and the equity securities issued upon the Purchaser’s
exercise of the warrant are collectively referred to herein as the “Securities.”  Terms
not otherwise defined in this Agreement shall have the meaning given to them in
the Note attached hereto as Exhibit A.

AGREEMENT

In
consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:

1.             Purchase and Sale of Notes and Warrants.

(a)           Sale and Issuance of Notes. 
Subject to the terms and conditions of this Agreement, each Purchaser
agrees to purchase at the Closing and the Company agrees to sell and issue to
Purchaser a Note in the principal amount of $500,000.  The purchase price of each Note shall be
equal to 100% of the principal amount of such Note.  The Note shall be convertible into equity
securities of the Company as provided for under the Note, and the Warrant shall
be exercisable for equity securities of the Company as provided for under the
Warrant.

(b)           Warrants.  Upon the
Closing (as defined in Section 1(c) below), Purchaser shall receive a warrant
to purchase 66,667 shares of the Company’s common stock in the form attached
hereto as Exhibit B (the “Warrant”).    The
exercise price of the Warrant (“Exercise Price”)
shall be the $0.75 per share price, subject to adjustment as set forth in the Warrant.

(c)           Closing; Delivery.

(i)            The
initial purchase and sale of the Notes shall take place at the offices of the
Company, 20245 S.W. 95th Ave., Tualatin, OR 97062, at 1:00 p.m.,
on November 19, 2007 (the “Closing”).  At Closing, the Company shall deliver to
Purchaser the Note to be purchased by Purchaser against payment of the purchase
price therefor by personal check (acceptance by the Company is subject to
receipt of readily available funds) cashier’s check or by wire transfer to the
Company’s bank account and the duly executed Warrant and the parties shall
execute and deliver the Registration Rights Agreement in the form attached
hereto as Exhibit C (the “Registration
Rights Agreement”).

2.             Stock Purchase Agreement.

(a)           Purchaser
understands and agrees that the conversion of the Note into equity securities
of the Company may require such Purchaser’s execution of certain agreements (in
form reasonably agreeable to a majority in interest of the Purchasers) relating
to the purchase and sale of such securities as well as registration,
information and voting rights, if any, relating to such equity securities.

(b)           Purchaser
agrees to be bound by the agreements described in Section 2(a).

 

3.             Representations and
Warranties of the Company. 
The Company hereby represents and warrants to each Purchaser that:

(a)           Organization.  The
Company is a corporation duly organized and validly existing under the laws of
the State of Oregon and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted.

(b)           Authorization.  All
corporate action on the part of the Company, its officers, directors and
shareholders necessary for the authorization, execution and delivery of this
Agreement and the authorization, sale, issuance and delivery of the Note, the
Warrant, the Registration Rights Agreement, the shares of the Company’s capital
stock issuable on conversion or exercise thereunder, and the performance of all
obligations of the Company hereunder and thereunder, has been taken or will be
taken prior to the Closing.  The shares
of Common Stock issuable upon exercise of the Warrant and pursuant to Section
4.1.1 of the Note, upon issuance in accordance with the terms of the Warrant or
Note, as applicable, will be duly and validly issued, fully paid, and
nonassessable. The Agreement, the Registration Rights Agreement, the Note and
the Warrant, when executed and delivered by the Company, shall constitute valid
and legally binding obligations of the Company, enforceable against the Company
in accordance with their terms except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws
of general application affecting enforcement of creditors’ rights generally, as
limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.

(c)           Governmental Consents. 
All consents, approvals, orders or authorizations of, or registrations,
qualifications, designations, declarations or filings with, any governmental
authority, required on the part of the Company in connection with the valid
execution and delivery of this Agreement, the Registration Rights Agreement,
the offer, sale or issuance of the Note, the Warrant, conversion of the Note,
exercise of the Warrant or the consummation of any other transaction
contemplated hereby shall have been obtained and will be effective at the
Closing, except for notices required or permitted to be filed with certain
state and federal securities commissions, which notices will be filed on a
timely basis.

(d)           Offering.  Assuming
the accuracy of the representations and warranties of the Purchasers contained
in Section 4 hereof, the offer, issue and sale of the Notes and the
Warrant are and will be exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933, as amended (the “Securities Act”), and have been registered or qualified (or
are exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws.

(e)           SEC Documents; Financial Statements.  As of the Closing, the Company shall have
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission (“SEC”) pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC Documents”).  As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.  As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto.  Such financial statements have been prepared
in accordance with generally accepted accounting principles, consistently
applied, during the periods involved (except in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).  No other information provided by or on behalf
of the Company to the Purchaser which is not included in the SEC Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.

4.             Representations and
Warranties of the Purchaser. 
Purchaser hereby represents and warrants to the Company that:

2

 

(a)           Authorization.  The
Purchaser has the full right, power and authority to enter into and perform the
Purchaser’s obligations under this Agreement, and this Agreement when executed
and delivered by the Purchaser will constitute valid and binding obligations of
the Purchaser, enforceable in accordance with their respective terms, subject
to the laws of general application relating to bankruptcy, insolvency and the
relief of debtors, rules of law governing specific performance, injunctive
relief or other equitable remedies.

(b)           Purchase Entirely for Own Account.  The Securities to be acquired by the
Purchaser will be acquired for investment for the Purchaser’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and the Purchaser has no present intention of selling, granting
any participation in, or otherwise distributing the same.  The Purchaser is not an entity formed for the
specific purpose of acquiring any of the Securities.

(c)           Knowledge.  The
Purchaser is aware of the Company’s business affairs and financial condition
and has acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities.  The Purchaser has had the opportunity to ask
questions of the Company concerning the Company’s business and any related
matter, and has received answer to his or her satisfaction.

(d)           Restricted Securities. 
The Purchaser understands that the Securities have not been, and will
not be, registered under the Securities Act, by reason of a specific exemption from
the registration provisions of the Securities Act which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Purchaser’s representations as expressed herein.  The Purchaser understands that the Securities
are “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, the Purchaser must hold the
Securities indefinitely unless they are registered with the Securities and
Exchange Commission and qualified by state authorities, or an exemption from
such registration and qualification requirements is available.  The Purchaser further acknowledges that if an
exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Purchaser’s control, and which
the Company is under no obligation and may not be able to satisfy.

(e)           Legends.  The
Purchaser understands that the Securities, and any securities issued in respect
thereof or exchange therefor, may bear one or all of the following legends:

(i)            “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”

(ii)           “THIS
WARRANT, AND THE SECURITIES ISSUABLE PURSUANT TO AN EXERCISE OF THIS WARRANT,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THIS WARRANT, AND THE SECURITIES ISSUABLE
PURSUANT TO AN EXERCISE OF THIS WARRANT, 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 WARRANT, OR FOR
THE SECURITIES ISSUABLE PURSUANT TO AN EXERCISE OF THIS WARRANT, 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”

(iii)          Any
legend required by the Blue Sky laws of any state to the extent such laws are
applicable to the shares represented by the certificate so legended.

3

(f)            Accredited Investor.  The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act
because the undersigned is either (i) a natural person whose individual net
worth, or joint net worth with his or her spouse, exceeds $1,000,000 as of the
date of this Agreement, (ii) a natural person who had an individual income in
excess of $200,000 in each of the two most recent years or joint income with
his or her spouse in excess or $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year,
or (c) a director or executive officer of the Company.  Purchaser is in a financial position to hold
the Securities and is able to bear the economic risk and withstand a complete
loss of Purchaser’s investment in the Securities.

5.             Conditions of the Purchaser’s Obligations at Closing.  The obligations of Purchaser to the Company
under this Agreement are subject to the fulfillment, on or before the Closing,
of each of the following conditions, unless otherwise waived:

(a)           Representations and Warranties.  The representations and warranties of the
Company contained in Section 3 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Closing.

(b)           Qualifications.  All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be obtained and effective as of the Closing.

(c)           Board Appointment.  The
Board of Directors of the Company shall have appointed Purchaser a director
effective at the Closing.

6.             Conditions of the Company’s Obligations at Closing.  The obligations of the Company to Purchaser
under this Agreement are subject to the fulfillment, on or before the Closing,
of each of the following conditions, unless otherwise waived:

(a)           Representations and Warranties.  The representations and warranties of each
Purchaser contained in Section 4 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been
made on and as of the date of the Closing.

(b)           Qualifications.  All
authorizations, approvals or permits, if any, of any governmental authority or
regulatory body of the United States or of any state that are required in
connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be obtained and effective as of the Closing.

(c)           Payment of Principal Amount. 
Purchaser shall have paid by check or wire transfer of immediately
available funds the principal amount set forth on the signature page of this
Agreement.

7.             Miscellaneous.

(a)           Successors and Assigns. 
The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective 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.

(b)           Governing Law.  This
Agreement and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed, construed and interpreted
in accordance with the laws of the State of Oregon, without giving effect to
principles of conflicts of law.  The
parties agree that the state or federal courts located in the State of Oregon
constitute the sole and exclusive venue, and the exclusive jurisdiction, for
disputes arising under or with respect to this Agreement.

(c)           Counterparts.  This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one instrument.

(d)           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.

4

(e)           Notices.  Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient upon receipt, when
delivered personally or by courier, overnight delivery service or confirmed
facsimile, or forty-eight (48) hours after being deposited in the U.S. mail
as certified or registered mail with postage prepaid, if such notice is
addressed to the party to be notified at such party’s address or facsimile
number as set forth below or as subsequently modified by written notice.

(f)            Finder’s Fee.  Except
as may otherwise be specifically agreed to by the parties, each party
represents that it neither is nor will be obligated for any finder’s fee or
commission in connection with this transaction. 
Each Purchaser agrees to indemnify and to hold harmless the Company from
any liability for any commission or compensation in the nature of a finder’s
fee (and the costs and expenses of defending against such liability or asserted
liability) for which each Purchaser or any of its officers, employees, or
representatives is responsible.  The
Company agrees to indemnify and hold harmless each Purchaser from any liability
for any commission or compensation in the nature of a finder’s fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Company or any of its officers, employees or representatives is
responsible.

(g)           Amendments and Waivers. 
Any term of this Agreement may be amended or waived only with the
written consent of the Company and the holders of at least a majority of the outstanding
principal amount of the Notes.  Any
amendment or waiver effected in accordance with this Section 7(g) shall be
binding upon the Purchasers and each transferee of the Securities, each future
holder of all such Securities, and the Company.

(h)           Severability.  If one
or more provisions of this Agreement are held to be unenforceable under
applicable law or in violation of any law, exchange rule or regulation to which
the Company is subject, the parties agree to renegotiate such provision in good
faith, in order to maintain the economic position enjoyed by each party as
close as possible to that under the provision rendered unenforceable.  In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the
balance of the Agreement shall be interpreted as if such provision were so
excluded and (iii) the balance of the Agreement shall be enforceable in
accordance with its terms.

(i)            Entire Agreement. 
This Agreement, and the documents referred to herein constitute the
entire agreement between the parties hereto pertaining to the subject matter
hereof and any and all other written or oral agreements existing between the
parties hereto are expressly canceled.

(j)            Board Nomination.  For
so long as Purchaser is the beneficial owner of at least 1 million shares of
the Company’s Common Stock (as adjusted for splits, stock dividends and the
like), Purchase shall be entitled to nominate one person for election as a
director at each meeting of shareholders at which the term of Purchaser’s
designee as a director expires.  If a
nominee ceases to be a director prior to the expiration of his term, Purchaser
shall have the right to nominate such person’s successor and the Board of
Directors shall appoint such person as a director.  Notwithstanding anything in this Section 7(j)
to the contrary, the obligations of the Company under this section shall not
apply if the Board of Directors concludes upon the advice of counsel that such
nomination or appointment would violate its fiduciary duties or any law,
regulation or exchange rule to which the Company is subject.

(k)           Most Favored Terms. 
The Note is intended to be one of a series of convertible promissory
notes of like tenor to be issued by the Company prior to March 31, 2008 in an
aggregate principal amount not to exceed $1.5 million (collectively, the “Bridge Notes”).  If
any subsequent purchaser of a Bridge Note receives terms for such note or the
related warrant (including the percentage of warrant coverage) that are
superior to those contained in the Note and the Warrant, then the Company shall
amend the Note or Warrant, as applicable, to provide purchaser with the same
terms.

[Signature Page Follows]

5

The parties have executed this Convertible Note Purchase and Warrant
Agreement as of the date first written above.

	
  COMPANY:

  
	
   

  
	
  BIOJECT MEDICAL TECHNOLOGIES
  INC.

  
	
   

  
	
  By:

  	
  /s/ Ralph Makar

  	
   

  
	
  Name:

  	
  Ralph Makar

  	
   

  
	
   

  	
  (print)

  	
   

  
	
  Title: 

  	
  President and CEO

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
  Facsimile Number:

  	
   

  	
   

  
	
   

  
	
   

  
	
  PURCHASER:

  
	
   

  
	
  /s/ Edward L. Flynn

  	
   

  
	
  (Purchaser)

  
	
   

  
	
  By:

  	
  /s/ Edward L. Flynn

  	
   

  
	
  Name:

  	
  Edward L. Flynn

  	
   

  
	
   

  	
  (print)

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
  Facsimile Number:

  	
   

  	
   

  
							

 

 

 

Exhibits:

 

A – Form of Convertible Promissory Note

C – Form of Warrant

D – Form of Registration Rights Agreement

 

 

6

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