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EXHIBIT
10.1
FORBEARANCE NO. 2, LIMITED
WAIVER AND MODIFICATION
TO
LOAN AND SECURITY
AGREEMENT
T HIS F
ORBEARANCE N O . 2, L
IMITED W AIVER A ND M
ODIFICATION T O L OAN
A ND S ECURITY A
GREEMENT (this “ Forbearance
”) is entered into this
day of May,
2008, 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).
R
ECITALS
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 “ 2007 Loan Agreement ”)
pursuant to which PFG has extended and conditionally-agreed to make
available to Borrower certain advances of money and under which
there is outstanding $166,666.64 in principal and $574.04 in
accrued and unpaid interest and $916.67 in accrued and unpaid
collateral handling fee as of May 31, 2008.
B. In addition to the
2007 Loan Agreement, Borrower and PFG are party to a Term Loan and
Security Agreement dated as of March 29, 2006 (the “
Convertible Loan ”), under which there is
outstanding $1,250,000 in principal and $5,381.94 in accrued and
unpaid interest as of May 31, 2008, a Loan and Security
Agreement dated as of December 11, 2006 (the “
Revolving Loan Agreement ”), under which there
is outstanding $108,030.54 in principal and $348.19 in accrued and
unpaid interest and $594.17 in accrued and unpaid collateral
handling fee as of May 31, 2008, and associated
cross-corporate guarantees and security agreements (the
“ Additional PFG Loans ”
and, together with the 2007 Loan Agreement, the “
Outstanding PFG Loans ” , and together
with such documents, instruments and security agreements as were
executed reasonably contemporaneously with or in connection with
the Outstanding PDF Loans, the “ Loan Documents
”).
C. Borrower and PFG
entered into that certain Forbearance No. 1, Limited Waiver
and Modification to Loan and Security Agreement dated as of
November 19, 2007, as amended by that certain Amendment
Forbearance No. 1, Limited Waiver and Modification to Loan and
Security Agreement is entered into as of December 19, 2007
(collectively, the “ Initial Forbearance
”).
D. But for the
Forbearance, Borrower would be in default of the financial
covenants set forth in the Loan Documents (the “
Default ”).
E. The Forbearance Period
under the Initial Forbearance ends June 1, 2008 and Borrower
(a) acknowledges the Default, (b) desires that PFG not
declare an Event of Default or exercise other remedies under the
Loan Documents due to the above-referenced Default (to “
Forbear ”) from the date hereof until the
earlier to occur of the termination of this Forbearance or
September 15, 2008 (the “ Extended 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.
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F. 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 Extended Forbearance Period and provide the
conditional limited waiver contained herein.
A
GREEMENT
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. E VENT
OF D EFAULT . Borrower
acknowledges the Default.
1 F ORBEARANCE
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
Extended 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 9, or the occurrence of any
Default under the Loan Documents 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 the
specific Default for which PFG is agreeing to Forbear hereunder as
set forth under Recital D, above.
2 L IMITED W
AIVER . PFG hereby agrees to waive the Permitted
Default for the Forbearance Period, subject to satisfaction of the
conditions set forth in Section 9 hereof and Borrower’s
compliance with the terms and conditions of this
Forbearance.
3 R ESTRUCTURE
OF C ONVERTIBLE L OAN
. Subject to Borrower’s compliance with the terms of this
Forbearance and provided that no Default or Event of Default has
occurred and is continuing during the Extended Forbearance Period,
PFG agrees to restructure of the Convertible Loan upon the terms
set forth below. Such restructuring shall be effected in an
amendment to the agreement reflecting the Convertible Loan in such
form as PFG may specify and Borrower may agree.
(a) If Borrower consummates
an equity financing raising not less than $5,000,000 in net
proceeds by the end of the Extended Forbearance Period, then PFG
will amend the Convertible Loan to include a minimum liquidity
financial covenant to the effect that Borrower’s ratio of
(i) cash and cash equivalents, plus eligible accounts
receivable to (ii) outstanding monetary Obligations to
PFG, shall equal or exceed 2:1, tested on a calendar monthly
basis.
(b) If Borrower is unable to
consummate (or abandons the active pursuit of) an equity financing
raising not less than $5,000,000 in net proceeds by the end of the
Extended Forbearance Period, then PFG will amend the Convertible
Loan to apply a monthly borrowing base formula (in form
substantially similar to the borrowing base formula applicable to
Borrower’s existing revolving credit facilities with PFG) to
the Convertible Loan, such formula to equal 100% of Eligible
Accounts plus 100% of Eligible Inventory. Any excess of outstanding
monetary Obligations under the Convertible Loan over
formula-eligible borrowings (an “Overadvance”), would
be required to be immediately repaid to PFG upon notice from PFG,
at PFG’s sole option (and would not be eligible for
re-borrowing by Borrower). A liquidity covenant (as calculated in
paragraph (a), above) would apply, but at a ratio of 1.25:1. The
interest rate applicable to Obligations outstanding under the
Convertible Loan would be at the prime rate, plus three percent
(3%), floating. For the avoidance of doubt, any reduction in
principal amount of the Convertible Loan due to an Overadvance
repayment required by PFG would reduce Convertible Loan eligible
for PFG conversion into Borrower’s equity
securities.
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5. B
ORROWER ’ R EPRESENTATIONS A
ND W ARRANTIES . 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
Documents, 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,
delivery and performance by Borrower of this Forbearance 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”
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