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WAIVER AND AMENDMENT TO LOAN AND SECURITY AGREEMENT

Waiver Agreement

WAIVER AND AMENDMENT TO LOAN AND SECURITY AGREEMENT | Document Parties: Bioject Medical Technologies, Inc | Bioject, Inc | Growth, LLC | GROWTH, LP You are currently viewing:
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Bioject Medical Technologies, Inc | Bioject, Inc | Growth, LLC | GROWTH, LP

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Title: WAIVER AND AMENDMENT TO LOAN AND SECURITY AGREEMENT
Governing Law: California     Date: 9/19/2008
Industry: Medical Equipment and Supplies     Sector: Healthcare

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EXHIBIT 10.1

WAIVER AND AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

T HIS W AIVER AND A MENDMENT TO L OAN AND S ECURITY A GREEMENT (this “ Amendment ”) is entered into as of this 15 th day of September, 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 P ARTNERS FOR G ROWTH , 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 extended advances of money, all of which were repaid by Borrower on September 3, 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 Agreement ”), under which there is outstanding $1,250,000 in principal (prior to any payment referred to in Section 7.5 hereof) and $2,604.17 in accrued and unpaid interest as of September 15, 2008, a Loan and Security Agreement dated as of December 11, 2006 (the “ Revolving Loan Agreement ”), repaid by Borrower on June 11, 2008, and associated cross-corporate guarantees and security agreements (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 to Forbearance No. 1, Limited Waiver and Modification to Loan and Security Agreement entered into as of December 19, 2007 (collectively, the “ 2007 Forbearance ”).

D . Borrower and PFG entered into that certain Forbearance No. 2, Limited Waiver and Modification to Loan and Security Agreement on May 30, 2008 (the “ Forbearance ”), pursuant to which the parties entered into certain agreements regarding the conditional restructure of the Convertible Loan Agreement on or before September 15, 2008.

E . But for the Forbearance, Borrower would be in default of the financial covenants set forth in the Loan Documents (the “ Specified Default ”).

F . The Forbearance Period under the Forbearance ends September 15, 2008 and Borrower (a) acknowledges the Specified Default, (b) desires that the Convertible Loan Agreement be amended as contemplated in the Forbearance, and (c) desires that PFG waive the Specified Default upon the terms and conditions set forth herein.

G . Subject to the representations and warranties of Borrower herein and upon the terms and conditions set forth in this Amendment, PFG is willing to amend the terms of the Convertible Loan Agreement and waive the Specified Default.

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 Specified Default.

 

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2. W AIVER OF PFG . Subject to Borrower’s performance of this Amendment and the satisfaction of the conditions set forth in Section 7 hereof, PFG waives Borrower’s non-compliance up to and including the date hereof with the Loan Documents giving rise to the Specified Default and agrees to not exercise remedies under the Loan Documents as a result thereof. In the event of a breach by Borrower of any of the terms set forth in this Amendment, a failure of any condition set forth in Section 7, or the occurrence after the date hereof of any Default under the Convertible Loan Agreement, associated security agreements and any associated cross-corporate guaranties, PFG may exercise any remedies available to PFG under the Convertible Loan Agreement, associated security agreements and any associated cross-corporate guaranties and under applicable law. For purposes of this Amendment, the “ Specified Default ” shall mean the specific historical Default that PFG is agreeing to waive hereunder as set forth under Recital E, above.

3 . A MENDMENT OF C ONVERTIBLE L OAN A GREEMENT . The Convertible Loan Agreement is hereby amended prospectively as follows:

3.1 Acknowledgment of Borrower. Borrower acknowledges its receipt from PFG at the initial Closing of the Convertible Loan the sum of $1,250,000 and that such principal amount remains outstanding on the date hereof (before the specified repayments required to be made under Section 7.5 as conditions to this Amendment). The relevant provisions of the Convertible Loan Agreement shall be construed accordingly.

3.2 Repayment. The first two paragraphs of Section 1 of the Schedule consisting of approximately four lines of text (under the general heading “LOAN (Section 1.1)”) shall be replaced with the following:

1. LOAN (Section 1.1):

 

 

 

 

 

  

The Loan shall consist of a term loan in the original principal amount of $1,250,000, funded in its
entirety on or about March 29, 2006.

 

 

    Repayment:

  

The principal amount of the Loan shall be repaid as follows:

 

 

 

  

(1) $137,500 on September 15, 2008;

 

 

 

  

(2) $137,500 on October 1, 2008;

 

 

 

  

(3) in monthly installments of $55,000 commencing October 1, 2008 (and, for the avoidance of doubt, the $55,000 payment due on October 1, 2008 is in addition to the payment required under clause (2), above); and

 

 

 

  

(4) a final principal payment equal to the principal amount outstanding at the Maturity Date, together with accrued interest thereon, and any and all other monetary Obligations due under this Loan, on the Maturity Date.

 

 

 

  

Notwithstanding the requirement to tender payments under clause (3), above, within three (3) Business Days of the end of any month in which a payment is due under clause (3), above, PFG may notify Borrower that it is not requiring a regularly-scheduled principal payment to be made for such month. If Borrower makes such regularly-scheduled principal payment notwithstanding PFG’s notice that no such payment for the month will be required, or Borrower makes any non-scheduled payment of principal (collectively “Non-Required Principal Payments”), such Non-Required Principal Payments shall be treated as Prepayments under the applicable clause of this Schedule 1, below.

 

 

 

  

Any reduction in the principal amount of the Loan due to the scheduled principal payments specified above made by Borrower shall reduce the amount of the Loan eligible for PFG conversion into Borrower’s equity

 

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securities under Section 1 of this Schedule in the provisions identified as “PFG Conversion” and “BMTI-Initiated Conversion”.”

3.3 Prepayment. The clause entitled “Prepayment” in Section 1 of the Schedule is amended in its entirety as follows:

 

 

 

 

“Prepayment:

  

Borrower may make a Non-Required Principal Payment, plus all accrued and unpaid interest thereon in whole or in part at any time, without penalty, subject to compliance with the following provisions. At the time any Non-Required Principal Payment is made, BMTI shall issue PFG a warrant to purchase that number of shares of BMTI’s common stock as would be issued at such time if BMTI or PFG had converted that portion of the Loan that is equal to the prepayment (each a “Warrant” and all such Warrants collectively, “Warrants”). The exercise price of the Warrant(s) shall be equal to the Conversion Price. The expiration date of each Warrant issued under this clause shall be the Maturity Date (ignoring any early termination of the Loan due to prepayment or otherwise). The form of Warrant shall be in substantially the form of the warrant issued to PFG in connection with the Existing PFG Loans (as defined in Section 8 of this Schedule).”

3.4 Interest Rate . The first paragraph of Section 2 of the Schedule to the Convertible Loan Agreement is amended to read in its entirety as follows:

 

 

 

 

 

 

“A rate equal to the Prime Rate plus three percent (3%) per annum, floating, and applied to the average daily aggregate amount outstanding under this Agreement each month. Interest shall be calculated on the basis of a 360-day year and a year of twelve months of 30 days each for the actual number of days elapsed. Accrued interest for each month shall be payable monthly, on the first day of each month for interest accrued during the prior month.”

3.5 Financial Covenants . To Section 5 of the Convertible Loan Agreement are added the following new provisions:

 

 

 

 

“Minimum Liquidity:

  

Borrower shall maintain at all times, to be tested as of the last day of each month, unless otherwise noted:

 

 

 

  

Liquidity Ratio . A minimum Liquidity Ratio of 1.50 : 1.00. “Liquidity Ratio ” means a ratio of (a) Borrower’s unrestricted Cash maintained at or through financial institutions, plus Borrower’s Eligible Accounts, to (b) outstanding monetary Obligations owed to PFG.

 

 

 

  

Cash ” means (i) funds deposited with depositary institutions, (ii) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (iii) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc., (iv) bank certificates of deposit issued maturing no more than one (1) year after issue; and (v) money market funds at least ninety-five percent (95%) of the assets of which constitute cash equivalents of the kinds described in clauses (ii) through (iv) of this definition.”

3.6 Definitions. The following new definitions shall be added to Section 7 (“Definitions”) of the Convertible Loan Agreement:

 

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Eligible Accounts ” means Accounts and General Intangibles arising in the ordinary course of Borrower’s business from the sale of goods or the rendition of services, or the non-exclusive licensing of Intellectual Property, which PFG, in its good faith business judgment, shall deem eligible for borrowing. Without limiting the fact that the determination of which Accounts are eligible for borrowing is a matter of PFG’s good faith business judgment, the following (the “ Minimum Eligibility Requirements ”) are the minimum requirements for a Account to be an Eligible Account:

(i) the Account must not be outstanding for more than 90 days from its invoice date (the “ Eligibility Period ”),

(ii) the Account must not represent progress billings, credit balances, accounting entries made to nullify a prior entry (contras), or be due under a fulfillment or requirements contract with the Account Debtor,

(iii) the Account must not be subject to any contingencies (including Accounts arising from sales on consignment, guaranteed sale or other terms pursuant to which payment by the Account Debtor may be conditional),

(iv) the Account must not be owing from an Account Debtor with whom Borrower has any material dispute (whether or not relating to the particular Account),

(v) the Account must not be owing from an Affiliate of Borrower,

(vi) the Account must not be owing from an Account Debtor which is subject to any insolvency or bankruptcy proceeding, or whose financial condition is not acceptable to PFG in its good faith business judgment, or which fails or goes out of a material portion of its business,

(vii) the Account must not be owing from the United States or any department, agency or instrumentality thereof (“Government Accounts”), to the extent the aggregate of such Government Accounts exceeds 25% of Eligible Accounts at any time (unless there has been compliance, to PFG’s satisfaction, with the United States Assignment of Claims Act) and, for the avoidance of doubt, any Government Accounts in excess of such threshold shall not be treated as Eligible Account unless PFG, in its sole discretion, otherwise expressly permits,

(viii) the Account must not be owing from an Account Debtor located outside the United States or Canada (unless an Excepted Concentration Account, pre-approved by PFG in its discretion in writing, or backed by a letter of credit satisfactory to PFG, or FCIA insured satisfactory to PFG),

(xi) the Account must not be owing from an Account debtor whose accounts receivable aged over 90 days from invoice date exceed 50% of all accounts receivable from such account debtor, and in such case, no account receivable of such account debtor would be eligible for financing hereunder; and

(x) the Account must not be owing from an Account Debtor to whom Borrower is or may be liable for goods purchased from such Account Debtor or otherwise (but, in such case, the Account will be deemed not eligible only to the extent of any amounts owed by Borrower to such Account Debtor).

Accounts owing from one Account Debtor will not be deemed Eligible Accounts to the extent they exceed 25% of the total Accounts outstanding; provided that the foregoing shall not include Excepted Concentration Accounts. In addition, if more than 50% of the Accounts owing from an Account Debtor are outstanding for a period longer than their Eligibility Period (without regard to unapplied credits) or are otherwise not eligible Accounts, then all Accounts owing from that Account Debtor will be deemed ineligible for borrowing. PFG may, from time to time, in its good faith business judgment, revise the Minimum Eligibility Requirements, upon written notice to Borrower.

Excepted Concentration Accounts ” means Accounts Receivable from Merial, Amgen, Inc. (AMGN: NASDAQ), Ferring and Serono, Inc. (SRA: NYSE).

Minimum Eligibility Requirements ” is defined in the definition of “Eligible Accounts” above.

3.7 Provisions Dealing with Accounts. To Section 4 of the Convertible Loan Agreement are added the following new provisions:

“4.10 Representations Relating to Accounts. Borrower represents and warrants to PFG as follows: Each Account used by Borrower to determine its compliance with the financial covenant set forth in Section 5 of the Schedule shall, (i) represent an undisputed bona fide existing unconditional obligation of the Account Debtor created by the sale, delivery, and acceptance of goods or the rendition of services, or the licensing of Intellectual

 

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Property, in the ordinary course of Borrower’s business, and (ii) meet the Minimum Eligibility Requirements set forth in Section 8 below.

4.11 Representations Relating to Documents and Legal Compliance. Borrower represents and warrants to PFG as follows: All statements made and all unpaid balances appearing in all invoices, instruments and other documents evidencing the Accounts are and shall be true and correct in all material respects and all such invoices, instruments and other documents and all of Borrower’s books and records are and shall be genuine and in all respects what they purport to be. All sales and other transactions underlying or giving rise to each Account shall comply in all material respects with all applicable laws and governmental rules and regulations. To the best of Borrower’s knowledge, all signatures and endorsements on all documents, instruments, and agreements relating to all Accounts are and shall be genuine, and all such documents, instruments and agreements are and shall be legally enforceable in accordance with their terms.

4.12 Documents Relating to Accounts. If requested by PFG, Borrower shall furnish PFG with copies (or, at PFG’s request, originals) of all contracts, orders, invoices, and other similar documents, and all shipping instructions, delivery receipts, bills of lading, and other evidence of delivery,


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