8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    November 15, 2004

BIOJECT MEDICAL TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

Commission File Number: 0-15360

Oregon	93-1099680
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
211 Somerville Road, Route 202 North, Bedminster, NJ	07921
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (908) 470-2800

Former name or former address if changed since last report: no change

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

BIOJECT MEDICAL TECHNOLOGIES INC.

FORM 8-K

INDEX

Item	Description
Item 1.01	Entry into a Material Definitive Agreement
Item 3.02	Unregistered Sales of Equity Securities
Item 3.03	Material Modification to Rights of Security Holders
Item 5.03	Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Item 9.01	Financial Statements and Exhibits
Signatures

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Item 1.01  Entry into a Material Definitive Agreement

On November 15, 2004, Bioject Medical Technologies Inc. (the “Company”) entered into a Purchase Agreement with Life Sciences Opportunities Fund II, L.P. and Life Sciences Opportunities Fund II (Institutional), L.P. (collectively, the “Investors”) in connection with the Company’s sale and issuance to the Investors of an aggregate of 2,086,957 shares of its Series D convertible preferred stock and warrants to purchase an aggregate of 626,087 shares of its common stock.  The issuance price of the Series D convertible preferred stock was $1.15 per share and the exercise price of the warrants is $1.15 per share.  The warrants expire on November 14, 2008.  The Purchase Agreement provides that one representative of the Investors has the right to attend the Company’s board meetings.

The Company also entered into a Registration Rights Agreement, dated November 15, 2004, between the Company and the Investors, pursuant to which the Company has agreed to file a registration statement under the Securities Act of 1933 to register the underlying common stock issued or issuable upon conversion of the Series D preferred stock and exercise of the warrants under the Securities Act of 1933 within 180 days of November 15, 2004.  Subject to certain exceptions, the Company is required to pay the Investors liquidated damages equal to $0.0115 per share of Series D preferred stock and $0.0015 per share of common stock acquired upon exercise of the warrants per month if the Company fails to file a registration statement covering the securities within 180 days of November 15, 2004, the registration statement is not declared effective within 270 days of November 15, 2004, or the registration statement cannot be used for any reason after being declared effective.  The agreement also grants the Investors piggy-back registration rights.

In connection with the sale and issuance of the Series D preferred stock and warrants, on November 15, 2004, the Company entered into a Second Amendment to Rights Agreement, dated as of July 1, 2002, between the Company and American Stock Transfer & Trust Company to permit the Investors to own up to an aggregate of 19.99% of the Company’s common stock without being deemed an “Acquiring Person” under the Rights Agreement.

Item 3.02  Unregistered Sales of Equity Securities

On November 15, 2004, the Company sold to the Investors an aggregate of 2,086,957 shares of its Series D convertible preferred stock for $1.15 per share and warrants to purchase an aggregate of 626,087 shares of the Company’s common stock at the exercise price of $1.15 per share.  The proceeds from this sale totaled $2.4 million.

The foregoing issuance of securities was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 506 thereof, among other exemptions, on the basis that the purchasers of the securities in this issuance are accredited investors.

The Series D preferred stock may be converted into common stock.  The initial conversion rate is one share of Series D preferred stock convertible into one share of common stock, subject to adjustment under certain circumstances.

The warrants may be exercised by the warrant holders until November 14, 2008.  The exercise price of the warrants is subject to adjustment under certain circumstances.

Item 3.03 Material Modification to Rights of Security Holders

See the description of the Second Amendment to Rights Agreement between the Company and American Stock Transfer & Trust Company described under Item 1.01 above.

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Item 5.03  Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On November 15, 2004, in connection with the sale and issuance of the Series D preferred stock and warrants, the Company amended its Articles of Incorporation to prescribe the following rights and preferences for the Series D preferred stock:

•Series D preferred stock holders are entitled to receive, pro rata among such holders and on a pari passu basis with the holders of common stock, as if the Series D preferred stock had been converted into common stock, cash dividends at the same rate and in the same amount per share as any and all dividends declared and paid upon the then outstanding shares of the common stock of the Company;

•In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, Series D preferred stock holders are entitled to receive a pro rata distribution of the assets of the Company available for distribution to its shareholders, before any payment is made in respect of the common stock or any series of preferred stock or other equity securities of the Company with rights junior to the Series D preferred stock with respect to liquidation preference, in an amount equal to $1.15 per share plus all accrued but unpaid dividends;

•The Series D preferred stock may be converted into common stock.  The initial conversion rate is one share of Series D preferred stock convertible into one share of common stock, subject to adjustment in the event of:

•any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event;

•any dividend or other distribution to the common stock holders of cash, other assets, or of notes or other indebtedness of the Company, or any other securities of the Company;

•any acquisition or asset transfer that is not deemed to be a liquidation;

•any stock splits of common stock, or stock dividends payable in shares of common stock; or

•any issuance to all common stock holders the rights, options, or warrants to subscribe for or purchase shares of common stock.

•Series D preferred stock holders have the right to one vote for each share of common stock into which Series D preferred stock could then be converted, and with respect to such vote, the Series D preferred stock holders have full voting rights and powers equal to the voting rights and powers of the holders of common stock; provided, however, that for purposes of determining these voting rights, each share of Series D preferred stock will be deemed to be converted into a number of shares equal to $1.15 divided by $1.30.

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•The Company may not, without obtaining the approval of a majority of the outstanding Series D preferred stock:

•take any action that adversely affects the rights, privileges and preferences of the Series D preferred stock;

•amend, alter, or repeal any provision of, or add any provision to the Articles of Incorporation or bylaws of the Company to change the rights, powers, or preferences of the Series D preferred stock;

•declare or pay dividends on shares of common stock or preferred stock that is junior to the Series D preferred stock, subject to limited exceptions;

•create any new series or class of preferred stock or other security having a preference or priority as to dividends or upon liquidation senior or pari passu with that of the Series D preferred stock;

•reclassify any class or series of preferred stock into shares with a preference or priority as to dividends or assets superior to or on a parity with that of the Series D preferred stock;

•apply any of its assets to the redemption or acquisition of shares of common stock or preferred stock, which is redeemable by its terms, junior to the Series D preferred stock, subject to limited exceptions;

•increase or decrease the number of authorized shares of any series of preferred stock or common stock of the company;

•agree to an acquisition of the Company or sale of all or substantially all of the Company’s assets;

•materially change the nature of the Company’s business; or

•liquidate, dissolve or wind up the affairs of the Company.

Item 9.01  Financial Statements and Exhibits

(c) Exhibits

The following exhibit is filed herewith and this list is intended to constitute the exhibit index:

32002 Restated Articles of Incorporation, as amended

4Second Amendment to Rights Agreement, dated as of November 15, 2004, between the Company and American Stock Transfer & Trust Company

10.1Purchase Agreement dated November 15, 2004 between the Company, Life Science Opportunities Fund II, L.P. and Life Science Opportunities Fund II (Institutional), L.P.

10.2Registration Rights Agreement dated November 15, 2004 between the Company, Life Science Opportunities Fund II, L.P. and Life Science Opportunities Fund II (Institutional), L.P.

10.3Form of Series BB Warrant, dated November 15, 2004, issued to Life Science Opportunities Fund II, L.P. and Life Science Opportunities Fund II (Institutional), L.P.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 19, 2004	BIOJECT MEDICAL TECHNOLOGIES INC.
	(Registrant)
	/s/ JOHN GANDOLFO
	John Gandolfo
	Chief Financial Officer and Vice President of Finance

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EX-3

Exhibit 3

2002 RESTATED ARTICLES OF INCORPORATION

OF

BIOJECT MEDICAL TECHNOLOGIES INC.

ARTICLE I

Name

The name of the corporation (the “Corporation”) shall be Bioject Medical Technologies Inc.

ARTICLE II

Duration

The Corporation’s duration shall be perpetual.

ARTICLE III

Purposes

The purposes for which the Corporation is organized are:

Section 1.  In general, to carry on any lawful business whatsoever which is calculated, directly or indirectly, to promote the interests of the Corporation or to enhance the value of its properties.

Section 2.  To engage in and carry on any lawful business or trade and exercise all powers granted to a corporation formed under the Oregon Business Corporation Act, including any amendments thereto or successor statute that may hereinafter be enacted.

ARTICLE IV

Authorized Capital Stock

Section 1.  Classes.  After giving effect to the reverse stock split set forth in Section 1.1, the Corporation shall be authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock”; the total number of shares which the Corporation shall have authority to issue is One Hundred Ten Million (110,000,000) ; the authorized number of shares of Common Stock shall be One Hundred Million (100,000,000), without par value; the authorized number of shares of Preferred Stock shall be Ten Million (10,000,000), without par value.

Section 1.1.            Each five shares of issued and outstanding Common Stock of this Corporation were, on October 13, 1999 (which was the effective date of the Corporation’s previous Amended and Restated Articles of Incorporation), automatically reclassified into one share of Common Stock of this Corporation, thereby giving effect to a one-for-five reverse stock split (the “Reverse Stock Split”).  All outstanding rights and obligations (including option plans, stock options and the exercise price thereof, stock purchase warrants and the exercise prices thereof and the conversion terms of the Corporation’s shares of Series A Convertible Preferred Stock, Series B Convertible Preferred Stock and Series C Convertible Preferred Stock) relating to this Corporation’s Common Stock were on that date mathematically adjusted to reflect the Reverse Stock Split so that the proportionate ratio of such rights and obligations to the reclassified shares was equal to the proportionate ratio of such rights and obligations to the shares outstanding immediately prior to such reclassification.  In lieu of the issuance of any fractional shares that otherwise resulted from the Reverse Stock Split, the Corporation issued to any shareholder that would have otherwise received fractional shares one whole share, the additional shares thereby issued being taken from authorized but theretofore unissued shares of Common Stock.

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Section 2.  Preferred Stock.  Shares of Preferred Stock may be issued from time to time in one or more series.  Shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law.  The board of directors of the Corporation is hereby authorized to fix the designations and powers, preferences and relative participating, optional or other rights, if any, and qualifications, limitations or other restrictions thereof, including, without limitation, the dividend rate (and whether or not dividends are cumulative), conversion rights, if any, voting rights, rights and terms of redemption (including sinking fund provisions, if any), redemption price and liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but not below the number of shares of such series then outstanding.

Designation of Rights and Preferences of Series A Convertible Preferred Stock,

Series B Convertible Preferred Stock and Series C Convertible Preferred Stock

Section 2.1.  Definitions.  The following terms shall have the respective meanings ascribed to them below.

“Board” shall mean the Board of Directors of the Corporation.

“Business Day” shall mean any day other than Saturday, Sunday or a day on which federally-chartered banks located in New York, New York or Portland, Oregon are permitted by law to be closed.

“Closing Date” shall mean October 15, 1997.

“Closing Price” at any date shall mean the last reported sale price of the Common Stock on the NASDAQ Stock Market or other principal market of the Common Stock on such date.

“Common Stock” shall mean, collectively, the Corporation’s Common Stock and any capital stock of any class of the Corporation (other than any Preferred Stock) hereafter authorized that is not limited to a fixed amount of percentage of par or stated value in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Corporation.

“Conversion Stock” shall mean shares of the Corporation’s Common Stock issuable upon the conversion of any shares of Preferred Stock.

“Excluded Stock” shall mean (i) shares of Common Stock issued or reserved for issuance by the Corporation as a stock dividend payable in shares of Common Stock, or upon any subdivision or split-up of the outstanding shares of Common Stock, or upon conversion of shares of the Preferred Stock,  (ii) up to 3,650,000 shares of Common Stock (or Rights (as defined below)) therefor issued to directors, officers or employees of the Corporation or its affiliates  (or in the case of options, granted at an exercise price) at less than Fair Value under a duly-enacted stock option or compensation plan, or (iii) any shares of Common Stock issuable upon exercise of any warrants currently outstanding or warrants which the Corporation has committed, as of October 15, 1997, to issue in the future.

“Fair Value” shall mean the fair market value of any securities or assets as reasonably and in good faith determined by the Board.

“Junior Securities” shall mean any of the Corporation’s equity securities (whether or not currently authorized) that are junior in liquidation preference to the Preferred Stock.

“Liquidation Value” of any share of Series A Preferred Stock or Series B Preferred Stock as of any particular date shall be equal to $15.00 per share.  Liquidation Value of Series C Preferred Stock is the Series C Issuance Price.

“Market Price” of any security shall mean the average of the closing prices of such security’s sales on all securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in

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the NASDAQ Stock Market as of 4:00 p.m., New York time, or, if on any day such security is not quoted in the NASDAQ Stock Market, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of the 10 trading days preceding the determination date.  If at any time such security is not listed on any securities exchange or quoted in the NASDAQ Stock Market or the over-the-counter market, the “Market Price” shall be the Fair Value thereof.

“Person” shall mean an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Preferred Stock” shall mean the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, or, as the context requires, all such series of preferred stock of the Corporation.

“Preferred Issuance Price” shall mean the purchase price per share for the Series A Preferred Stock, which is $15.00, and the purchase price per share for the Series B Preferred Stock, which is $15.00.

“Series C Issuance Price” means the original price per share at which Series C Preferred Stock is issued.

“Subsidiary” shall mean any Person of which the shares of outstanding capital stock or other equity interests, as the case may be, possessing the voting power under ordinary circumstances in electing the board of directors are, at the time as of which any determination is being made, owned by the Corporation either directly or indirectly through subsidiaries.

Section 2.2.  Preferred Stock.  (a)  Series A Preferred Stock. 1,235,000 shares of the preferred stock, without par value, of the Corporation are hereby constituted as a series of preferred stock of the Corporation designated as Series A Convertible Preferred Stock (the “Series A Preferred Stock”).  Such amount shall be adjusted by the Corporation in the event that any adjustments to the Series A Preferred Stock are required as set forth herein, and, in connection therewith, the Corporation shall promptly take all necessary or appropriate actions and make all necessary or appropriate filings in connection therewith.

(b)  Series B Preferred Stock. 200,000 shares of the preferred stock, without par value, of the Corporation are hereby constituted as a series of preferred stock of the Corporation designated as Series B Convertible Preferred Stock (the “Series B Preferred Stock”).  Such amount shall be adjusted by the Corporation in the event that any adjustments to the Series B Preferred Stock are required as set forth herein, and, in connection therewith, the Corporation shall promptly take all necessary or appropriate action and make all necessary or appropriate filings in connection therewith.

(c)  Series C Preferred Stock. 500,000 shares of the preferred stock, without par value, of the Corporation are hereby constituted as a series of preferred stock of the Corporation designated as Series C Convertible Preferred Stock (the “Series C Preferred Stock”).  Such amount shall be adjusted by the Corporation in the event that any adjustments to the Series C Preferred Stock are required as set forth herein, and, in connection therewith, the Corporation shall promptly take all necessary or appropriate action and make all necessary or appropriate filings in connection therewith.

Section 2.3.  Dividends.  (a)  General.  (1)  Series A Preferred Stock.  Each outstanding share of Series A Preferred Stock shall accrue from the date of issuance through October 15, 2001 a dividend equal to 9% per annum of the Preferred Issuance Price of Series A Preferred Stock, compounded semiannually beginning on September 2, 1998; such dividend shall be paid by the issuance of additional shares of Series A Preferred Stock, based upon a value equal to the Preferred Issuance Price.

(2)  Series B Preferred Stock. The holder of each share of Series B Preferred Stock shall be entitled to receive, pro rata among such holders and on a pari passu basis with the holders of the Series C Preferred Stock and the holders of Common Stock, as if the Series B Preferred Stock had been converted into Common Stock immediately prior to the record date in respect thereof, when and as declared by the Board out of funds legally available for the declaration and payment of dividends, cash dividends at the same rate and in the same amount per

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share as any and all dividends declared and paid in respect of the Common Stock.  Except as set forth above, such holders shall not be entitled to receive any dividends.

(3)  Series C Preferred Stock. The holder of each share of Series C Preferred Stock shall be entitled to receive, pro rata among such holders and on a pari passu basis with the holders of the Series B Preferred Stock and the holders of Common Stock, as if the Series C Preferred Stock had been converted into Common Stock immediately prior to the record date in respect thereof, when and as declared by the Board out of funds legally available for the declaration and payment of dividends, cash dividends at the same rate and in the same amount per share as any and all dividends declared and paid in respect of the Common Stock.  Except as set forth above, such holders shall not be entitled to receive any dividends.

(b)  Payment of Dividends.  (1)  Series A Preferred Stock. Dividends accrued and unpaid on shares of Series A Preferred Stock shall be payable in accordance with Section 2.3(a)(1) above.

(2)  Series B Preferred Stock. Dividends payable in respect of the Series B Preferred Stock shall be paid as and when dividends are paid in respect of the Common Stock.

(3)  Series C Preferred Stock. Dividends payable in respect of the Series C Preferred Stock shall be paid as and when dividends are paid in respect of the Common Stock.

(4)  Change in Dividend Rate.  If the Corporation shall fail to declare or pay a dividend on a date on which dividends are to be compounded pursuant to Section 2.3(a)(1) hereof, dividends on each share of Series A Preferred Stock shall thereupon begin to accrue at the rate of 9% of the sum of (a) the Preferred Issuance Price and (b) accrued and unpaid dividends on such date.  If a dividend that was accrued and unpaid on a date dividends are to be compounded is subsequently paid, the rate at which dividends accrue shall thereupon be lowered to reflect such payment.

Section 2.4.  Liquidation.  Upon any liquidation, dissolution or winding up of the Corporation, each holder of Preferred Stock shall be entitled to receive from amounts remaining after satisfaction of creditors and holders of securities (if any) with liquidation preferences senior to the Preferred Stock, and pro rata based on the respective outstanding liquidation preferences with holders of securities with a liquidation preference pari passu to the Preferred Stock, an amount equal to the Liquidation Value, plus accrued and unpaid dividends thereon, per share multiplied by the number of shares of Preferred Stock, held by such holder, until paid in full, in preference and priority to any distribution to any holder of Junior Securities.  The Corporation shall provide written notice of such liquidation, dissolution or winding up, not less than 30 days prior to the payment date stated therein, to each record holder of any shares of Preferred Stock.

Section 2.5.  Voting Rights.  (a)  No Voting.  Except as provided in Section 2.5(b) below or as required by the Oregon Business Corporation Act, the outstanding shares of Preferred Stock shall not be entitled to vote on any matter as to which stockholders of the Corporation shall be entitled to vote.

(b)  Special Voting Rights. The Corporation shall not, without first obtaining the affirmative vote or written consent of a majority in interest of the Series A Preferred Stock, voting as a class:

(1)  amend or repeal any provision of, or add any provision to, the Corporation’s Articles of Incorporation or By-laws if such action would adversely alter preferences, rights, privileges or powers of, or the restrictions provided herein for the benefit of, the Series A Preferred Stock;

(2)  create a series of Preferred Stock with a liquidation preference senior to the Series A Preferred Stock;

(3)  effect any merger, consolidation or similar transaction; or

(4)  increase or decrease the number of authorized shares of Series A Preferred Stock, except as required by Section 2.2 hereof.

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Section 2.6.  Conversion.  (a)  Series A Preferred Stock. All holders of Series A Preferred Stock issued as of December 12, 2001, shall have the right to convert at any time each share of Series A Preferred Stock into two shares of Common Stock as of such date (which amount gives effect to the Reverse Stock Split described in Section 1.1), subject to Section 2.6(e) below (the “Antidilution Adjustments”).

(b)  Series B Preferred Stock. Series B Preferred Stock is convertible in the same manner and subject to the same terms and conditions as provided for in Section 2.6(a) above with respect to the holders of Series A Preferred Stock.

(c)  Series C Preferred Stock.All holders of Series C Preferred Stock issued as of December 12, 2001 shall have the right to convert at any time each share of Series C Preferred Stock into two shares of Common Stock as of such date (which amount gives effect to the Reverse Stock Split described in Section 1.1), subject to the Antidilution Adjustments.

(d)  Conversion Procedure.  (1)  Before any holder of shares of Preferred Stock shall be entitled to convert any of such shares into shares of Common Stock, such holder shall surrender the certificate or certificates, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at its principal corporate office of the election to convert such shares and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued.

(2)  Each conversion of any shares of Preferred Stock shall be deemed to have been effected on the close of business on the date on which the certificate or certificates representing such Preferred Stock to be converted have been surrendered at the principal corporate office of the Corporation or the office of any transfer agent for the Preferred Stock.  At such time as such conversion has been effected, the rights of the holder of such Preferred Stock as a holder shall cease, the Person or Persons in whose name or names any certificate or certificates for shares of Conversion Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Conversion Stock represented thereby.

(3)  As soon as possible after a conversion has been effected (but in any event within five business days in the case of clause (6) below), the Corporation or its transfer agent shall deliver to the converting holder:

(i)  a certificate or certificates representing the number of shares of Conversion Stock issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified; and

(ii)  payment in an amount equal to the amount payable under clause (6) below with respect to such conversion.

(4)  The issuance of certificates for shares of Conversion Stock upon conversion of the Preferred Stock shall be made without charge to the holders of such Preferred Stock for any cost incurred by the Corporation in connection with such conversion and the related issuance of shares of Conversion Stock.  Upon conversion of each share of Preferred Stock, the Corporation shall take all such actions as are necessary in order to ensure that the Conversion Stock issuable with respect to such conversion shall be validly issued, fully paid and nonassessable.

(5)  The Corporation shall not close its books against the transfer of the Preferred Stock or of Conversion Stock issued or issuable upon conversion of the Preferred Stock in any manner which interferes with the timely conversion of the Preferred Stock.  The Corporation shall assist and cooperate with any holder of the Preferred Stock or Conversion Stock required to make any governmental filings or obtain any governmental approval prior to or in connection with any conversion of shares hereunder (including, without limitations, making any filings required to be made by the Corporation).

(6)  If any fractional interest in a share of Conversion Stock would, except for the provisions of this clause (6), be deliverable upon any conversion of the Preferred Stock, the Corporation, in lieu of delivering the fractional share therefor, shall pay an amount to the holder thereof equal to the Market Price of such fractional interest as of the date of conversion.

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(7)  The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Conversion Stock, solely for the purpose of issuance upon the conversion of the Preferred Stock, such number of shares of Conversion Stock issuable upon the conversion of all outstanding shares of Preferred Stock.  All shares of Conversion Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges.  The Corporation shall take all such actions as may be necessary to ensure that all such shares of Conversion Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange or market upon which shares of Conversion Stock may be listed (except for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance and except for filings, notices of applicability and permissions solely within the control of, or laws and regulations solely applicable to, the holders of the Preferred Stock).

(e)  Anti-dilution Adjustments.  (1)  Changes in Common Stock.  In case the Corporation shall at any time or from time to time after October 13, 1999 (i) pay a dividend or make any other distribution with respect to its Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock or (iv) issue any shares of its capital stock or other assets in a reclassification or reorganization of the Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing entity), then the number and kind of shares of capital stock of the Corporation or other assets that may be received upon the conversion of the Preferred Stock shall be adjusted to the number of shares of Conversion Stock and amount of any such securities, cash or other property of the Corporation which the holders would have owned or have been entitled to receive after the happening of any of the events described above had the Preferred Stock been converted immediately prior to the record date (or, if there is no record date, the effective date) for such event.  An adjustment made pursuant to this clause (1) shall become effective upon the effective date of such payment, sub-division, combination or issuance as described above.  Any Conversion Stock or other assets to be acquired as a result of such adjustment shall not be issued prior to the effective date of such event.  For the purposes of this clause (1), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Corporation.

(2)  Issuance of Rights.  In case the Corporation shall issue to all holders of its Common Stock rights, options or warrants to subscribe for or purchase, or other securities exchangeable for or convertible into, shares of Common Stock that are not distributed to holders of Preferred Stock (any such rights, options, warrants or other securities, collectively, “Rights”) (excluding rights to purchase Common Stock pursuant to a Corporation plan for reinvestment of dividends or interest and excluding any Excluded Stock) at a subscription offering, exercise or conversion price per share (as defined below, the “offering price per share”) which, before deduction of customary discounts and commissions, is lower than the current Market Price per share of Common Stock on the record date of such issuance or grant, whether or not, in the case of Rights, such Rights are immediately exercisable or convertible, then the number of shares of Conversion Stock issuable upon conversion of the Preferred Stock shall be adjusted by multiplying the number of shares of Conversion Stock issuable upon conversion of the Preferred Stock immediately prior to any adjustment in connection with such issuance or grant by a fraction, the denominator of which shall be the number of shares of Common Stock outstanding (exclusive of any treasury shares) on the record date of issuance or grant of such Rights plus the number of shares which the aggregate offering price (as defined below) of the total number of shares of Common Stock so offered would purchase at the current Market Price per share of Common Stock on the record date, and the numerator of which is the number of shares of Common Stock outstanding plus the aggregate number of shares of Common Stock issuable upon exercise of the rights.  Such adjustment shall be made immediately after the record date for the issuance or granting of such Rights.  For purposes of this clause, the “offering price per share” of Common Stock shall, in the case of Rights, be determined by dividing (x) the total amount received or receivable by the Corporation in consideration of the issuance of such Rights plus the total consideration payable to the Corporation upon exercise thereof (the “aggregate offering price”), by (y) the total number of shares of Common Stock covered by such Rights.

(3)  Dividends and Distributions.  In case the Corporation shall distribute to all holders of Common Stock any dividend or other distribution of evidences of its indebtedness or other assets (in each case other than cash dividends and other than as provided in clause (1) above in which the holders of the Preferred Stock are otherwise entitled to share, as provided herein) or Rights, then, in each case, all holders of the Preferred Stock shall be entitled to receive all of the same dividends, distributions or Rights, as the case may be, as the holders of Common Stock, on an as-converted basis, as and when distributed to the holders of Common Stock, at such time, if any, that the holders of the Preferred Stock shall have elected to convert such stock to Common Stock, as provided herein.

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(4)  Computations.  For the purpose of any computation under clauses (1) and (2) above, the current Market Price per share of Common Stock at any date shall be as set forth in (i) the definition of Market Price for the 10 consecutive trading days commencing 20 trading days prior to the earlier to occur of (A) the date as of which the Market Price is to be computed or (B) the last full trading day before the commencement of “ex-dividend” trading in the Common Stock relating to the event giving rise to the adjustment required by clause (1) or (2) or (ii) any other arm’s-length adjustment formula that the Board may use in good faith.  In the event the Common Stock is not then publicly traded or if for any other reason the current market price per share cannot be determined pursuant to the foregoing provisions of this clause (4) the current market price per share shall be the Fair Value thereof.

(5)  Securities.  For the purpose of this Section 2.6, the term “shares of Common Stock” shall mean (i) the class of stock designated as Common Stock, without par value, of the Corporation on the date of filing this Certificate or (ii) any other class of stock resulting from successive changes or reclassifications of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value.

(6)  Re-Adjustment.  If, at any time after any adjustment to the number of Shares of Conversion Stock issuable upon conversion of the Preferred Stock and the Conversion Price shall have been made pursuant to clause (2) of this Section 2.6, any rights, options, warrants or other securities convertible into or exchangeable for shares of Common Stock shall have expired, or any thereof shall not have been exercised, the Conversion Price and the number of shares of Conversion Stock issuable upon conversion of the Preferred Stock shall, upon such expiration, be readjusted and shall thereafter be such as it would have been had it been originally adjusted (or had the original adjustment not been required, as the case may be) as if (A) the only shares of Common Stock offered were the shares of Common Stock, if any, actually issued or sold upon the exercise of such rights, options or warrants and (B) such shares of Common Stock, if any, were issued or sold for the consideration actually received by the Corporation for the issuance, sale or grant of all such rights, options or warrants whether or not exercised; provided, further that no such readjustment shall have the effect of increasing the Conversion Price or decreasing the number of shares of Conversion Stock issuable upon conversion of the Preferred Stock by an amount (calculated by adjusting such increase or decrease as appropriate to account for all other adjustments pursuant to this Section 2.6 following the date of the original adjustment referred to above) in excess of the amount of the adjustment initially made in respect of the issuance, sale or grant of such rights, options or warrants.

(e)  Reorganization, Reclassification Consolidation, Merger or Sale.  Any recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Corporation’s assets to another Person or other transaction which is effected in such a manner that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred to herein as an “Organic Change”.  Prior to the consummation of any Organic Change, the Corporation shall make appropriate provisions to ensure that each of the holders of each share of the Preferred Stock shall thereafter have the right to acquire and receive, in lieu of or in addition to (as the case may be) the shares of Conversion Stock immediately theretofore acquirable and receivable upon the conversion of such holder’s Preferred Stock, such shares of stock, securities or assets as such holder would have received in connection with such Organic Change if such holder had converted its Preferred Stock immediately prior to such Organic Change. In each such case, the Corporation shall also make appropriate provisions to ensure that the provisions of this Section 2.6 hereof shall thereafter be applicable to the Preferred Stock.  The Corporation shall not effect any such consolidation, merger or sale, unless prior to the consummation thereof, the successor corporation (if other than the Corporation) resulting from consolidation or merger or the corporation purchasing such assets assumes by written instrument the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire.

(f)  Notices.  (1)  Immediately upon any adjustment of the number of shares issuable upon conversion of the Preferred Stock, the Corporation shall give written notice thereof to all holders of the Preferred Stock, setting forth in reasonable detail and certifying the calculation of such adjustment.

(2)  The Corporation shall give written notice to all holders of the Preferred Stock at least 10 days prior to the date on which the Corporation closes its books or takes a record of determining rights to receive any dividends or distributions.  The Corporation shall also give written notice to the holders of the Preferred Stock at least 30 days prior to the date on which Organic Change shall occur.

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Section 2.7.  Registration of Transfer.  The Corporation shall keep a register for the registration of the record holders of the Preferred Stock.  Upon the surrender of any certificate representing any shares of Preferred Stock, the Corporation shall, at the request of the record holder of such certificate, execute and deliver (at the Corporation’s expense, provided that the holder will be responsible for any transfer taxes if the certificate is register in a new name) a new certificate or certificates in exchange therefore representing in the aggregate the number of shares of the Preferred Stock, as applicable, represented by the surrendered certificate.  Each such new certificate shall be registered in such name and shall represent such number of shares of the Preferred Stock, as applicable, as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate, and dividends shall accrue on the Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such Preferred Stock represented by the surrendered certificate.

Section 2.8.  Replacement.  Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder and an undertaking of indemnity from a creditworthy indemnitor shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of the Preferred Stock, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation, or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such series represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate, and dividends shall accrue on the Preferred Stock represented by such new certificate from the date to which dividends have been fully paid on such lost, stolen, destroyed or mutilated certificate.

Section 2.9.  Amendment and Waiver.  No amendment, modification or waiver shall be binding or effective with respect to any provision of Section 2.1 through Section 2.10 of these Articles of Incorporation without the prior written consent of a Majority in Interest of each of the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock outstanding at the time such action is taken.

Section 2.10.  Notices.  Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, or by reputable overnight courier or telecopy service, charges prepaid, and shall be deemed to have been given when so mailed or sent (a) to the Corporation, at its principal executive offices and (b) to any stockholder, at such holder’s address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder).

Section 3.               Additional Preferred Stock.  This Section 3 sets forth the designation, preferences, limitations and relative rights of a series of Preferred Stock of the corporation as determined by the board of directors of the corporation pursuant to its authority under Oregon Revised Statutes 60.134 and Section 2 of Article IV of these Articles of Incorporation.

Section 3.1.            Designation and Amount.  The shares of such series shall be designated as “Series R Participating Preferred Stock” and the number of shares constituting such series shall be 125,000.

Section 3.2.            Dividends and Distributions

(a)           The holders of shares of Series R Participating Preferred Stock shall be entitled to receive, when and as declared by the board of directors, out of funds legally available for the purpose, dividends in an amount per share equal to 1,000 (the “Adjustment Number”) multiplied by the aggregate per share amount of all cash dividends, and the Adjustment Number multiplied by the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in Common Stock or a subdivision of the outstanding Common Stock (by reclassification or otherwise), declared on the Common Stock, without par value, of the corporation (the “Common Stock”) after the first issuance of any share or fraction of a share of Series R Participating Preferred Stock.

(b)           The corporation shall declare a dividend or distribution on the Series R Participating Preferred Stock as provided in subparagraph 3.2(a) at the same time that it declares a dividend or distribution on the Common Stock (other than a dividend payable in Common Stock).

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(c)           Dividends shall not be cumulative.  Unpaid dividends shall not bear interest.  Dividends paid on the shares of Series R Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding.

Section 3.3.            Voting Rights.  The holders of Series R Participating Preferred Stock shall have the following voting rights:

(a)           Each share of Series R Participating Preferred Stock shall entitle the holder thereof to the number of votes equal to the Adjustment Number then in effect on all matters submitted to a vote of the shareholders of the corporation.

(b)           Except as otherwise provided herein or by law, the holders of Series R Participating Preferred Stock and the holders of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the corporation.

Section 3.4.            Certain Restrictions

(a)           Whenever dividends or distributions payable on the Series R Participating Preferred Stock as provided in Section 3.2 have not been declared or paid for any fiscal year, until all such dividends and distributions for such fiscal year on Series R Participating Preferred Stock outstanding shall have been declared and paid in full, the corporation shall not in such fiscal year

(i)            declare or pay dividends on or make any other distributions on any shares of stock ranking junior or on a parity (either as to dividends or upon liquidation, dissolution or winding up) to the Series R Participating Preferred Stock except dividends paid ratably on the Series R Participating Preferred Stock and all such parity stock on which dividends are payable in proportion to the total amounts to which the holders of all such shares are then entitled and dividends or distributions payable in Common Stock;

(ii)           purchase or otherwise acquire for consideration any shares of Series R Participating Preferred Stock or any shares of stock ranking on a parity with the Series R Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the board of directors) to all holders of such shares upon such terms as the board of directors, after consideration of the respective dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(b)           The corporation shall not permit any subsidiary of the corporation to purchase or otherwise acquire for consideration any shares of stock of the corporation unless the corporation could, under subparagraph 3.4(a), purchase or otherwise acquire such shares at such time and in such manner.

Section 3.5             Restriction on Issuance of Stock; Reacquired Stock.  The corporation shall not issue any shares of Series R Participating Preferred Stock except upon exercise of rights (the “Rights”) issued pursuant to the Rights Agreement dated as of June 25, 2002, between the corporation and American Stock Transfer & Trust Company (the “Rights Agreement”), a copy of which is on file with the secretary of the corporation at its principal executive office and shall be made available to shareholders of record without charge upon written request.  Any shares of Series R Participating Preferred Stock purchased or otherwise acquired by the corporation in any manner whatsoever may be restored to the status of authorized but unissued shares after the acquisition thereof.  All such shares shall upon any such restoration become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by the board of directors, subject to the conditions and restrictions on issuance set forth herein.

Section 3.6             Liquidation, Dissolution or Winding Up

(a)           Upon any liquidation (voluntary or otherwise), dissolution or winding up of the corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series R Participating Preferred Stock unless, prior thereto, the holders of shares of

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Series R Participating Preferred Stock shall have received the Adjustment Number multiplied by the per share amount to be distributed to holders of Common Stock, plus an amount equal to declared and unpaid dividends and distributions thereon to the date of such payment (the “Series R Liquidation Preference”).  Following the payment of the full amount of the Series R Liquidation Preference, no additional distributions shall be made to the holders of shares of Series R Participating Preferred Stock.

(b)           In the event that there are not sufficient assets available to permit payment in full of the Series R Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank senior to or on a parity with the Series R Participating Preferred Stock, then assets shall be distributed first to holders of any series of Preferred Stock ranking senior to the Series R Participating Preferred Stock to the extent of their liquidation preferences and such remaining assets shall be distributed ratably to the holders of Series R Participating Preferred Stock and such parity shares in proportion to their respective liquidation preferences.

Section 3.7             Consolidation, Merger, etc.  In case the corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series R Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share equal to the Adjustment Number multiplied by the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged.

Section 3.8             Anti-Dilution, Adjustments to Adjustment Number.  In the event the corporation shall at any time after July 19, 2002 (the “Rights Declaration Date”) (a) declare any dividend on Common Stock payable in shares of Common Stock, (b) subdivide the outstanding shares of Common Stock, or (c) combine the outstanding shares of Common Stock into a smaller number of shares, then in each such case the Adjustment Number for all purpose of this Section 3 of Article IV shall be adjusted by multiplying the Adjustment Number then in effect by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.  In the event the corporation shall at any time after the Rights Declaration Date, fix a record date for the issuance of rights, options or warrants to all holders of Common Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Common Stock or securities convertible into Common Stock at a price per share of Common Stock (or having a conversion price per share, if a security convertible into Common Stock) less than the then Current Per Share Market Price (as defined in Section 11(d) of the Rights Agreement) of the Common Stock on such record date, then in each such case the Adjustment Number for all purposes of this Section 3 of Article IV shall be adjusted by multiplying the Adjustment Number then in effect by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible) and the denominator of which shall be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Per Share Market Price (as defined in Section 11(d) of the Rights Agreement).  In case such subscription price may be paid in a consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the board of directors.  Shares of Common Stock owned by or held for the account of the corporation shall not be deemed outstanding for the purpose of any such computation.  Such adjustment shall be made successively whenever such a record date is fixed.  In the event that such rights, options or warrants are not so issued, the Adjustment Number shall be readjusted as if such record date had not been fixed; and to the extent such rights, options or warrants are issued but not exercised prior to their expiration, the Adjustment Number shall be readjusted to be the number which would have resulted from the adjustment provided for in this paragraph 3.8 if only the rights, options or warrants that were exercised had been issued.

Section 3.9             No Redemption.  Shares of the Series R Participating Preferred Stock shall not be redeemable at the option of the corporation or any holder thereof.  Notwithstanding the foregoing sentence, the corporation may acquire Series R Participating Preferred Stock in any other manner permitted by law.

Section 3.10           Amendment.  Subsequent to the Distribution Date (as defined in the Rights Agreement) these articles of incorporation shall not be further amended in any manner which would materially alter or change the preferences, limitations and relative rights of the Series R Participating Preferred Stock so as to affect them

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adversely without the affirmative vote of the holders of a majority of the outstanding shares of Series R Participating Preferred Stock, voting separately as a class.

Section 3.11           Fractional Shares.  Shares of Series R Participating Preferred Stock may be issued in fractions of a share in integral multiples of one one-thousandth of a share, which shall entitle the holder, in proportion to such holders’ fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series R Participating Preferred Stock.

ARTICLE V

Preemptive Rights

The owners of shares of stock of the Corporation shall not have preemptive rights to subscribe for or purchase any part of new or additional issues of stock, or securities convertible into stock, of any class whatsoever, whether now or hereafter authorized, and whether issued for cash, property, services, by way of dividends, or otherwise.

ARTICLE VI

Cumulative Voting

Each shareholder entitled to vote at any election for directors shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are directors to be elected and for those election he has a right to vote, and no shareholder shall be entitled to cumulate his votes.

ARTICLE VII

Limitation of Directors’ Liability

A director shall have no liability to the Corporation or its shareholders for monetary damages for conduct as a director, except for (a) any breach of the director’s duty of loyalty to the Corporation or its shareholders; (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law by the director; (c) conduct violating ORS 60.367; or (d) any transaction from which the director derives an improper personal benefit.  If the Oregon Business Corporation Act is hereafter amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director shall be eliminated or limited to the full extent permitted by the Oregon Business Corporation Act as so amended.  Any repeal or modification of this Article shall not adversely affect any right or protection of a director that exists at the time of such repeal or modification and that extends to an act or omission of such director occurring prior to such repeal or modification.

ARTICLE VIII

Bylaws; Amendment of Articles

Section 1.  Bylaws.  The board of directors shall have full power to adopt, alter, amend or repeal the Bylaws or adopt new Bylaws.  Nothing herein shall deny the concurrent power of the shareholders to adopt, alter, amend or repeal the Bylaws.

Section 2.  Amendment of Articles.  The Corporation reserves the right to amend, alter, change or repeal any provisions contained in its Articles of Incorporation in any manner now or hereafter prescribed or permitted by statute.  All rights of shareholders of the Corporation are granted subject to this reservation.

ARTICLE IX

Directors

Section 1.  Number of Directors.  The Board of Directors shall consist of not less than six nor more than eleven, the exact number to be set as provided herein.  Until increased or decreased as provided herein, the Board of

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Directors shall consist of eight members.  The Board of Directors is authorized to increase or decrease the size of the Board of Directors (within the range specified above) at any time by the affirmative vote of two-thirds of the directors then in office.  Without the unanimous consent of the directors then in office, no more than two additional directors shall be added to the Board of Directors in any 12-month period.  Without the unanimous approval of the directors then in office, no person who is affiliated as an owner, director, officer, employee or consultant of a company or business deemed by the Board of Directors to be competitive with that of the Corporation shall be eligible to serve of the Board of Directors of the Corporation.

Section 2.  Classified Board.

The Board shall be divided into three classes:  Class I Directors, Class II Directors and Class III Directors.  Each such class of directors shall be nearly equal in number of directors as possible.  Each director shall serve for a term ending at the third annual shareholders’ meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected as Class I Directors shall serve for a term ending at the annual meeting to be held in the year following the first election of directors by classes, the directors first elected as Class II Directors shall serve for a term ending at the annual meeting to be held in the second year following the first election of directors by classes and the directors first elected as Class III directors shall serve for a term ending at the annual meeting to be held in the third year following the first election of directors by classes.  Notwithstanding the foregoing, each director shall serve until his or her successor shall have been elected and qualified or until his or her earlier death, resignation or removal.

At each annual election, the directors chosen to succeed those whose terms then expire shall be identified as being of the same class as the directors they succeed, unless, by reason of any intervening changes in the authorized number of directors, the Board shall designate one or more directorships whose term then expire as directorships of another class in order more nearly to achieve equality in the number of directors among the classes.  When the Board fills a vacancy resulting from the death, resignation or removal of a director, the director chosen to fill that vacancy shall be of the same class as the director he or she succeeds, unless, by reason of any previous changes in the authorized number of directors, the Board shall designate the vacant directorship as a directorship of another class in order more nearly to achieve equality in the number of directors among the classes.  The terms of any director elected by the Board to fill a vacancy will expire at the next shareholders meeting at which directors are elected, despite the class such director has been elected to fill.

Notwithstanding the rule that the three classes shall be as nearly equal in number of directors as possible, upon any change in the authorized number of directors, each director then continuing to serve as such will nevertheless continue as a director of the class of which he or she is a member, until the expiration of his or her current term or his or her earlier death, resignation or removal.

Newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

Section 3.  Removal of Directors.  Directors may be removed only for cause.  For purposes of this Amendment, “cause” shall mean that the director has: (i) committed an act of fraud or embezzlement against the Corporation; (ii) been convicted of, or plead nolo contendre to a crime involving moral turpitude; (iii) failed to perform the director’s duties as a director and such failure constitutes a breach of the director’s duty of loyalty to the Corporation or provides an improper personal benefit to the director.

ARTICLE X

Shareholder Approval Of Certain Events

Notwithstanding any provision of Articles of Incorporation, as amended, or Bylaws of the Corporation, and notwithstanding the fact that some lesser percentage may be allowed by law, any amendment, change or repeal of Articles IX or X, or any other amendment of the Articles of Incorporation, as amended, which would have the effect

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of modifying or permitting circumvention of the provisions of Articles IX or X, shall require the following shareholder votes:  (i) the affirmative votes of 75 percent of all outstanding shares of the Corporation entitled to vote on the matter, voting together as a single class; and (ii) if any shares of the Corporation are entitled to vote on the matter as a separate group, the affirmative vote of 75 percent of such shares, voting separately.

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ARTICLES OF AMENDMENT

TO

2002 RESTATED ARTICLES OF INCORPORATION OF

BIOJECT MEDICAL TECHNOLOGIES, INC.

1.             The name of the corporation is Bioject Medical Technologies, Inc.

2.             The 2002 Restated Articles of Incorporation of the corporation are amended to add a new Section 4 to Article IV at the end of Article IV to read in its entirety as follows:

“Section 4.             Additional Preferred Stock.  This Section 4 sets forth the designation, preferences, limitations and relative rights of a series of Preferred Stock of the corporation as determined by the board of directors of the corporation pursuant to its authority under Oregon Revised Statutes 60.134 and Section 2 of Article IV of these Articles of Incorporation.

4.1          Designation and Amount.

(a)           Designation. The shares of such series shall be designated as “Series D Convertible Preferred Stock,” no par value (hereinafter referred to as “Series D Preferred”) and the number of shares constituting all of the Series D Preferred shall be 2,086,957 shares. Any shares of Series D Preferred Stock that are redeemed by the Corporation and retired and any shares of Series D Preferred Stock that are converted in accordance with Section 4 shall be restored to the status of authorized, unissued, and undesignated shares of the Corporation’s class of Preferred Stock and shall not be subject to issuance, and may not thereafter be outstanding, as shares of Series D Preferred Stock.

(b)           Stated Value. Each share of Series D Preferred Stock shall have a stated value equal to $1.15 (as adjusted for any stock dividends, combinations, splits, recapitalizations, and the like)(the “Series D Stated Value”).

4.2.         Dividends.  The holder of each share of Series D Preferred Stock shall be entitled to receive, pro rata among such holders and on a pari passu basis with the holders of Common Stock, as if the Series D Preferred Stock had been converted into Common Stock pursuant to the provisions of Section 3.4 hereof immediately prior to the record date with respect to such dividend, when, as, and if declared by the Board of Directors of the Corporation out of funds legally available for declaration and payment of dividends, cash dividends at the same rate and in the same amount per share as any and all dividends declared and paid upon the then outstanding shares of the Common Stock of the Corporation.

4.3.         Liquidation Preference.

(a)           Preferences.  In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Corporation (a “Liquidation”), subject to the rights of any series of Preferred Stock hereafter authorized, issued, or outstanding, the holders of Series D Preferred Stock then outstanding shall be entitled to receive, out of the assets of the Corporation available for distribution to its shareholders (if any), before any payment shall be made in respect of the Common Stock or any series of Preferred Stock or other equity securities of the Corporation with rights junior to the Series D Preferred Stock with respect to liquidation preference, and pro rata based on the respective liquidation preferences with holders of Preferred Stock with a liquidation preference pari passu with the Series D Preferred Stock, an amount per share of Series D Preferred Stock equal to the Series D Stated Value, plus all accrued but unpaid dividends thereon to the date fixed for distribution (the “Series D Liquidation Preference”).

If upon, liquidation, dissolution, or winding up of the Corporation, the assets of the Corporation available for distribution to its shareholders shall be insufficient to pay the holders of Series D Preferred Stock, the full amount to which they shall be entitled pursuant to this Section 4.3(a), then all the assets so available for distribution to the Corporation’s shareholders shall be distributed ratably first to the holders of the Series D Preferred Stock in proportion to the aggregate amounts that would be payable to such holders if the assets of the Corporation were sufficient to pay the amount to which they were entitled pursuant to this Section 4.3(a).

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(b)           Remaining Assets.  Upon completion of the distributions required by Section 4.3(a), and subject to any other distributions that may be required with respect to any other series of Preferred Stock hereafter authorized, issued, or outstanding, the remaining assets and funds of the Corporation available for distribution to its shareholders, if any, shall be distributed among the holders of the holders of Common Stock.

(c)           Deemed Liquidation.  For purposes of this Section 4.3(c), a Liquidation shall be deemed to be occasioned by, or to include, (a) the acquisition of the Corporation by another person or entity or group of affiliated persons or entities by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of the Corporation) that results in the transfer of more than 50% of the outstanding voting power of the Corporation (an “Acquisition”); or (b) a sale, lease, or other transfer of all or substantially all of the assets of the Corporation (an “Asset Transfer”); provided, however, that if the outstanding shares of Series D Preferred Stock in the aggregate represent more than 50% of the voting power of the Corporation, a transfer or sale of more than 50% of the outstanding voting power of the Corporation involving solely a transfer or sale of Series D Preferred Stock shall not be considered to be an Acquisition for the purposes of this Section and shall not result in a deemed Liquidation.  The occurrence of an Acquisition or Asset Transfer shall entitle the holders of Series D Preferred Stock to receive at the closing in cash, securities, or other property (valued as provided in Section 4.3(d) below) the respective amounts as specified in Section 4.3(a) and 4.3(b) in liquidation and redemption of their Series D Preferred Stock, unless the holders of a majority of the outstanding shares of Series D Preferred Stock, voting separately as a class, affirmatively vote that such transaction shall not be deemed to be a Liquidation.

(d)           Valuation of Non-Cash Assets.  Whenever the distribution provided for in this Section 4.3 shall be payable in securities or property other than cash, its value will be determined as follows:

(1)           Securities not subject to investment letter or other similar restrictions on free marketability covered by (2) below:

(A)          If traded on a securities exchange or through the Nasdaq Stock Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or system over the 30-day period ending three days prior to the closing;

(B)           If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the 30-day period ending three days prior to the closing; and

(C)           If there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board of Directors.

(2)           The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (1)(A), (B) or (C) to reflect the approximate fair market value thereof, as mutually determined by this Corporation and the holders of not less than a majority of the voting power of all then outstanding shares of Series D Preferred Stock.

(e)           Liquidation Notice. The Corporation shall give written notice to each holder of record of Series D Preferred Stock at their respective addresses as the same shall appear on the stock records of the Corporation of any proposed transaction described in paragraph (3) that would constitute a Liquidation not later than 20 days prior to the shareholders’ meeting called to approve such transaction or 20 days prior to the closing of such transaction, whichever is earlier, and shall notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the proposed transaction and the provisions of this Section 4.3, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than 20 days after the Corporation has given the first written notice provided for herein or sooner than 10 days after the Corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of not less than a majority of the then outstanding Series D Preferred Stock. Prior to the closing of a transaction described in Section 4.3(c) that would constitute a Liquidation, the Corporation shall either (a) make all cash distributions that

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the Corporation is required to make to the holders of Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, and Series R Preferred Stock, pursuant to the first or second paragraphs of this Section 4.3, (b) set aside sufficient funds from which the cash distributions to the holders of Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, and Series R Preferred Stock can be made, or (c) establish an escrow or other similar arrangement with a third party pursuant to which the proceeds payable to the Corporation from an Acquisition or Asset Transfer will be used to make the liquidating payments to the holders of Series D Preferred Stock immediately after the consummation of such transaction.

4.4.         Conversion.

(a)           Right to Convert.  Each share of Series D Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time after the issuance of such share, into such number of shares of Common Stock equal to the product obtained by multiplying the Conversion Rate then in effect by the number of shares of Series D Preferred Stock being converted. The “Conversion Rate” in effect at any time for conversion of the Series D Preferred Stock shall be the quotient obtained by dividing (a) the Series D Stated Value by (b) the Conversion Price. The “Conversion Price” shall initially be $1.15.  The Conversion Price shall be adjusted from time to time in accordance with Section 4.4(f).

(b)           Exercise of Conversion Right.  Each holder of Series D Preferred Stock desiring to convert any or all of such shares into shares of Common Stock pursuant to Section 4.4(a) shall surrender the certificate or certificates representing the shares of Series D Preferred Stock being converted, duly assigned or endorsed for conversion (or accompanied by duly executed stock powers relating thereto), at the principal executive office of the Corporation, the offices of the transfer agent for the Series D Preferred Stock, or such office or offices in the continental United States of an agent for conversion as may from time to time be designated by notice to the holders of the Series D Preferred Stock by the Corporation or the transfer agent for the Series D Preferred Stock, accompanied by written notice of conversion.  Such notice of conversion shall specify (a) the number of shares of Series D Preferred Stock to be converted, and (b) the address to which such holder wishes delivery to be made of such new certificates to be issued upon such conversion. Upon surrender of a certificate representing a share or shares of Series D Preferred Stock for conversion pursuant to Section 4.4(a), the Corporation shall, within five (5) business days of such surrender, issue, and send (with receipt to be acknowledged) to or upon the written order of such holder, at the address designated by such holder, a certificate or certificates for the number of validly issued, fully paid, and non-assessable shares of Common Stock to which such holder shall be entitled upon conversion and cash with respect to any fractional interest in a share of Common Stock as provided in Section 4.4(d).  In the event that there shall have been surrendered a certificate or certificates representing shares of Series D Preferred Stock, only part of which are to be converted, the Corporation shall issue and deliver to or upon the written order of such holder a new certificate or certificates representing the number of shares of Series D Preferred Stock which shall not have been converted. Upon the occurrence of any automatic conversion of the outstanding Series D Preferred Stock, the holders of such stock shall surrender the certificates representing such shares at the principal executive office of Corporation, the offices of the transfer agent for the Series D Preferred Stock, or such other place as may be designated by the Corporation. Thereupon, there shall be issued and delivered to each such holder, promptly at such office and in the name as shown on such surrendered certificate or certificates, a certificate or certificates for the number of shares of Common Stock into which such Series D Preferred Stock was convertible on the date on which such automatic conversion occurred and cash in respect of any fraction of a share as provided in Section 4.4(d).

(c)           Effective Date of Conversion. The issuance by the Corporation of shares of Common Stock pursuant to Section 4.4(a) shall be effective as of the earlier of (a) the delivery to such holder of the certificates representing the shares of Common Stock issued upon conversion thereof, or (b) immediately prior to the close of business on the day of surrender of the certificate or certificates for the shares of Series D Preferred Stock to be converted, duly assigned or endorsed for conversion (or accompanied by duly executed stock powers relating thereto) as provided in these Articles of Amendment.  On and after the effective day of the conversion, the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock. All accrued and unpaid dividends on shares of Series D Preferred Stock surrendered for conversion shall be paid in full as of the effective date of conversion. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act the conversion may, at the option of any holder tendering Series D Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s)

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entitled to receive Common Stock upon conversion of such Series D Preferred Stock shall not be deemed to have converted such Series D Preferred Stock until immediately prior to the closing of such sale of securities.

(d)           No Fractional Shares.  The Corporation shall not be obligated to issue and deliver any fractional share of Common Stock upon any conversion of shares of Series D Preferred Stock, but in lieu thereof shall pay to the holder converting such Series D Preferred Stock an amount of cash based on the fair value of a share of Common Stock as of the time when those entitled to receive those fractions are determined.

(e)           Common Stock Available. The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock, solely for issuance upon the conversion of shares of Series D Preferred Stock as herein provided, free from any preemptive rights, such number of shares of Common Stock as shall be issuable upon the conversion of all the shares of Series D Preferred Stock then outstanding and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series D Preferred Stock, in addition to such other remedies as shall be available to the holders of Series D Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in reasonable best efforts to obtain the requisite shareholder approval of any necessary amendment to the Corporation’s Articles of Incorporation.

(f)            Anti-dilution Adjustments.

(1)           Reorganizations, Mergers, Consolidations, Acquisitions, and Asset Transfers. If, prior to the conversion of all of the Series D Preferred Stock, there shall be (i) any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Corporation shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Corporation or another entity, (ii) any dividend or other distribution of cash, other assets, or of notes or other indebtedness of the Corporation (in each case other than regular cash dividends and other than as provided in Section 4.4(f)(2) below in which the holders of Series D Preferred Stock are otherwise entitled to share, as provided herein), any other securities of the Corporation (except Common Stock), or Rights (as hereinafter defined) to the holders of its Common Stock, or (iii) any Acquisition or Asset Transfer that is not deemed to be a liquidation pursuant to Section 4.3(c) hereof, then the holders of Series D Preferred Stock shall thereafter have the right to receive upon conversion of Series D Preferred Stock, upon the basis and upon the terms and conditions specified herein and in lieu of shares of Common Stock, immediately theretofore issuable upon conversion, such cash, stock, securities, Rights, and/or other assets that the holder would have been entitled to receive in such transaction had the Series D Preferred Stock been converted immediately prior to such transaction, and in any such case appropriate provisions shall be made with respect to the rights and interests of the holders of the Series D Preferred Stock to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the Conversion Rate and the number of shares issuable upon conversion of the Series D Preferred Stock) shall thereafter be applicable, as nearly as may be practicable in relation to any securities thereafter deliverable upon the conversion thereof.  In case of any distribution of any security (including rights or warrants to subscribe for any such securities) of the Corporation (except Common Stock and Rights included in Section 4.4(f)(3) below) to the holders of its Common Stock where the nature of that security is such that the adjustment provisions in this Section 4.4(f)(1) would not properly grant to the holder of Series D Preferred Stock rights intended to be granted hereby, then in each such case the Conversion Price in effect thereafter shall be determined by multiplying the Conversion Price in effect immediately prior thereto by a fraction the numerator of which shall be the total number of outstanding shares of Common Stock multiplied by the Current Market Price on the record date mentioned below, less the fair market value (as determined in good faith by the Board of Directors) of the securities distributed by the Corporation and the denominator of which shall be the total number of outstanding shares of Common Stock multiplied by the Current Market Price; such adjustment shall become effective as of the record date for the determination of shareholders entitled to receive such distribution. The subdivision or combination of shares of Common Stock issuable upon conversion of shares of Series D Preferred Stock at any time outstanding into a greater or lesser number of shares of Common Stock shall not be deemed to be a reclassification of the Common Stock of the Corporation for the purposes of this Section 4.4(f)(1).

The Corporation shall not effect any transaction described in this Section 4.4(d)(1) unless (i) it first gives at least 20 days prior notice of such merger, consolidation, exchange of shares, recapitalization, reorganization, distribution, Acquisition, Asset Transfer, or other similar event (during which time the holders of the

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Series D Preferred Stock shall be entitled to convert their Series D Preferred Stock into shares of Common Stock to the extent permitted hereby), and (ii) the resulting successor or acquiring entity (if not the Corporation) assumes by written instrument the obligation of the Corporation under the Articles of Incorporation, including the obligation of this Section 4.4(f)(1).

(2)           Adjustment for Stock Splits, Dividends, and Combinations. If at any time or from time to time after the date of the first issuance of Series D Preferred Stock, the Corporation shall subdivide or split-up the outstanding shares of Common Stock, or shall declare a dividend or other distribution on its outstanding Common Stock payable in shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock that are not distributed to the holders of Series D Preferred Stock (“Common Stock Equivalents”), without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), the Conversion Price in effect immediately prior to such subdivision or the declaration of such dividend shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of Series D Preferred Stock shall be increased in proportion to the increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with respect to Common Stock Equivalents determined from time to time, and in case the Corporation shall at any time combine the outstanding shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately increased, effective at the close of business on the date of such subdivision, dividend, or combination, as the case may be.

(3)           Issuance of Rights.  In case the Corporation shall issue to all holders of its Common Stock rights, options, or warrants to subscribe for or purchase, or other securities exchangeable for or convertible into, shares of Common Stock that are not distributed to holders of Series D Preferred Stock (any such rights, options, warrants, or other securities, collectively, “Rights”) (excluding rights to purchase Common Stock pursuant to a Corporation plan for reinvestment of dividends or interest and excluding any Excluded Stock) at a subscription offering, exercise, or conversion price per share (as defined below, the “offering price per share”) which, before deduction of customary discounts and commissions, is lower than the Current Marker Price per share of Common Stock on the record date of such issuance or grant, whether or not, in the case of Rights, such Rights are immediately exercisable or convertible, then the Conversion Price shall be adjusted by multiplying the Conversion Price in effect immediately prior to any adjustment in connection with such issuance or grant by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding on the record date of issuance or grant of such Rights plus the number of shares that the aggregate offering price (as defined below) of the total number of shares of Common Stock so offered would purchase at the Current Market Price per share of Common Stock on the record date, and the denominator of which is the number of shares of Common Stock outstanding plus the aggregate number of shares of Common Stock issuable upon exercise of the Rights.  Such adjustments shall be made immediately after the record date for the issuance or granting of such Rights.  For purposes of this clause, the “offering price per share” of Common Stock shall, in the case of Rights, be determined by dividing (x) the total amount received or receivable by the Corporation upon exercise thereof (the “aggregate offering price”), by (y) the total number of shares of Common Stock covered by such Rights.

(4)           Computations.  For the purpose of any computation under Section 4.4(f)(3) above, the “Current Market Price” per share of Common Stock at any date shall mean the average of the closing price of the Common Stock on all securities exchanges (including the NASDAQ Stock Market) on which it may at the time be listed, or, if there have been no sales on any such exchange on any day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted on the NASDAQ Stock Market as of 4:00 p.m., New York time, or if on any day such security is not quoted in the NASDAQ Stock Market, the average of the highest bid and lowest ask prices on such day in the domestic over-the-counter market as reported by the OTC Bulletin Board, Pink Sheets LLC, or any similar successor organization, in each case for (i) the 10 consecutive trading days commencing 20 trading days prior to the earlier to occur of (A) the date as of which the Current Market Price is to be computed or (B) the last full trading day before the commencement of “ex-dividend” trading in the Common Stock relating to the event giving rise to the adjustment required by Section 4.4(f)(3) or (ii) any other arm’s-length adjustment formula that the Board of Directors may use in good faith.  In the event the Common Stock is not then publicly traded or if for any other reason the Current Market Price per share cannot be determined pursuant to the foregoing provisions of this Section 4.4(f)(4), the Current Market Price per share shall be the fair market value of the Common Stock as reasonably and in good faith determined by the Board of Directors.

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(5)           Securities.  For the purpose of this Section 4.4, the term “shares of Common Stock” shall mean (i) the class of stock designated as Common Stock, without par value, of the Corporation on the date of filing these Articles of Amendment or (ii) any other class of stock resulting from successive changes or reclassifications of such shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value.

(6)           Re-Adjustment.  If, at any time after any adjustment to the number of Shares of Common Stock issuable upon conversion of the Series D Preferred Stock and the Conversion Price shall have been made pursuant to Section 4.4(f)(3) any rights, options, warrants, or other securities convertible into or exchangeable for shares of Common Stock shall have expired, or any thereof shall not have been exercised, the Conversion Price and the number of shares of Conversion Stock issuable upon conversion of the Preferred Stock shall, upon such expiration, be readjusted and shall thereafter be such as it would have been had it been originally adjusted (or had the original adjustment not been required, as the case me be) as if (i) the only shares of Common Stock offered were the shares of Common Stock, if any, actually issued or sold upon the exercise of such rights, options or warrants and (ii) such shares of Common Stock, if any, were issued or sold for the consideration actually received by the Corporation for the issuance, sale or grant of all such rights, options or warrants whether or not exercised; provided, further that no such readjustment shall have the effect of increasing the Conversion Price or decreasing the number of shares of Conversion Stock issuable upon conversion of the Series D Preferred Stock by an amount (calculated by adjusting such increase or decrease as appropriate to account for all other adjustments pursuant to this Section 4.4(f) following the date of the original adjustment referred to above) in excess of the amount of the adjustment initially made in respect of the issuance, sale or grant of such rights, options or warrants.

(7)           Miscellaneous

(A)          All calculations under this Section 4.4(f) shall be made to the nearest cent or to the nearest one hundredth (1/100) of a share, as the case may be.

(B)           No adjustment in the Series D Conversion Prices need be made if such adjustment would result in a change in such Series D Conversion Price of less than $0.01.  Any adjustment of less than $0.01, which is not made, shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or more in such Series D Conversion Price.

(C)           In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the Corporation shall mail to each holder of Series D Preferred Stock, at least 20 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

(g)           Good Faith.  The Corporation will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, share exchange, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of Section 4.4(f) and in the taking of all such actions as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series D Preferred Stock against impairment.

(h)           Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the Series D Conversion Price pursuant to Section 4.4(f), the Corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the holders of Series D Preferred Stock a certificate signed by the Chief Financial Officer (or an officer holding a similar position) of the Corporation setting forth (a) such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based and (b) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of his shares.  The Corporation shall, upon the

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written request at any time of any holder of Series D Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (a) such adjustment and readjustment, (b) the Series D Conversion Price at the time in effect, and (c) the number of shares of Common Stock and the amount, if any, of other property that at the time would be received upon the conversion of such holder’s Series D Preferred Stock.

4.5.         Voting Rights.

(a)           General Voting Rights.  Except as otherwise required by applicable law or the Articles of Incorporation, each holder of Series D Preferred Stock shall have the right to one vote for each share of Common Stock into which Series D Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any shareholders’ meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote, together with the holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote and shall vote as a series where required by law or as provided below. Fractional voting shall not be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Series D Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). In addition to any rights granted to a holder of shares of Series D Preferred Stock pursuant to the Series D Certificate, shares of Series D Preferred Stock shall be entitled to vote as a class or series, separate and apart from any other series of Preferred Stock or any holders of shares of Common Stock, on any matter as to which class voting (or series voting, as applicable) is required under applicable law.  Notwithstanding anything in this Section 4 to the contrary, solely for purposes of determining the number of shares of Common Stock into which each share of Series D Preferred Stock could then be converted for purposes of determining voting rights under this Section 4.5(a), the Conversion Price shall initially be the greater of (i) $1.15 or (ii) the closing bid price of the Common Stock on the Nasdaq SmallCap Market on the trading day immediately prior to the date that the share of Series D Preferred Stock is issued, as such value may be adjusted pursuant to Section 4.4(f).

(b)           Protective Provisions.  So long as at least 25% of the originally issued shares of Series D Preferred Stock (subject to adjustment for any stock splits, stock dividends, combinations, recapitalizations, and the like) are outstanding as a single class, and except as otherwise mandated by applicable law or the terms of the Articles of Incorporation, this Corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of not less than a majority of the then outstanding Series D Preferred Stock, voting as a class:

(1)           take any action (by reclassification, merger, consolidation, reorganization, or otherwise) that adversely affects the rights, preferences, and privileges of the holders of the Series D Preferred Stock;

(2)           amend, alter, or repeal any provision of, or add any provision to the Articles of Incorporation and/or the Articles of Amendment (whether by reclassification, merger, consolidation, reorganization, or otherwise) or bylaws of the Corporation to change the rights, powers, or preferences of the Series D Preferred Stock;

(3)           declare or pay dividends on shares of Common Stock or Preferred Stock that is junior to the Series D Preferred Stock, except as provided in Section 4.2 and except with respect to the Series R Preferred Stock;

(4)           create any new series or class of Preferred Stock or other security having a preference or priority as to dividends or upon liquidation senior or pari passu with that of the Series D Preferred Stock (by reclassification, merger, consolidation, reorganization, or otherwise);

(5)           reclassify any class or series of Preferred Stock into shares with a preference or priority as to dividends or assets superior to or on a parity with that of the Series D Preferred Stock (by reclassification, merger, consolidation, reorganization, or otherwise);

(6)           apply any of its assets to the redemption or acquisition of shares of Common Stock or Preferred Stock, which is redeemable by its terms, junior to the Series D Preferred Stock, except pursuant to any agreement granting the Corporation a right of first refusal or similar rights, and except in connection with purchases

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at fair market value from employees, advisors, officers, directors, consultants, and service providers of the Corporation upon termination of employment or service;

(7)           increase or decrease the number of authorized shares of any series of Preferred Stock or Common Stock of the Corporation;

(8)           agree to an Acquisition or Asset Transfer;

(9)           materially change the nature of the Corporation’s business; or

(10)         liquidate, dissolve, or wind up the affairs of the Corporation.

4.6.         Miscellaneous.

(a)           Transfer and Documentary Taxes. The Corporation shall pay any and all stock transfer and documentary stamp taxes that may be payable in respect of any issuance or delivery of shares of Series D Preferred Stock or shares of Common Stock or other securities issued on account of Series D Preferred Stock pursuant hereto or certificates representing such shares or securities.  The Corporation shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issuance or delivery of shares of Series D Preferred Stock or Common Stock or other securities in a name other than that in which the shares of Series D Preferred Stock with respect to which such shares or other securities are issued or delivered were registered, or in respect of any payment to any person with respect to any such shares or securities other than a payment to the registered holder thereof, and shall not be required to make any such issuance, delivery or payment described in this sentence unless and until the person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable.

(b)           Delivery of Certificates. In the event that the holder of shares of Series D Preferred Stock shall not by written notice designate the address to which the certificate or certificates representing shares of Common Stock to be issued upon conversion of such shares should be sent, the Corporation shall be entitled to send the certificate or certificates representing such shares to the address of such holder shown on the records of the Corporation or any transfer agent for the Series D Preferred Stock.

(c)           Transfer Agents. The Corporation may appoint, and from time to time discharge and change, a transfer agent of the Series D Preferred Stock.  Upon any such appointment or discharge of a transfer agent, the Corporation shall send notice thereof by first-class mail, postage prepaid, to each holder of record of Series D Preferred Stock.

(d)           Conversion Agents. The Corporation may appoint, and from time to time may replace, a conversion agent for the Series D Preferred Stock.  Upon any such replacement of the conversion agent, the Corporation shall send notice thereof by first-class mail, postage prepaid, to each holder of record of Series D Preferred Stock.

(e)           Transfer of Stock. The Series D Preferred Stock shall be transferable by the holders, provided that such transfer is made in compliance with applicable federal and state securities laws and any applicable agreements between the Corporation and the holders of Series D Preferred Stock.”

The amendment to the Articles was approved by the Board of Directors of the Corporation on November 9, 2004.

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EX-4

Exhibit 4

SECOND AMENDMENT TO RIGHTS AGREEMENT

THIS SECOND AMENDMENT is made between Bioject Medical Technologies Inc., an Oregon corporation (the “Company”), and American Stock Transfer & Trust Company (the “Rights Agent”), dated as of November 15, 2004 (this “Second Amendment”), to amend the Rights Agreement, dated as of July 1, 2002, between the Company and the Rights Agent, as amended by the First Amendment to Rights Agreement dated as of October 8, 2002 (the “Rights Agreement”).

WHEREAS, the Company and the Rights Agent have entered into the Rights Agreement;

WHEREAS, the Board of Directors of the Company adopted resolutions on November 9, 2004 to amend the Rights Agreement as stated below and in accordance with Section 26 thereof; and

WHEREAS, the Company has directed the Rights Agent to adopt this Second Amendment.

NOW THEREFORE, in consideration of the mutual agreements set forth herein, the parties agree as follows:

1.             Section 1(a) of the Rights Agreement is hereby amended in its entirety to read as follows:

(a)  “Acquiring Person” shall mean any Person (as such term is defined in this Agreement) who or which, together with all Affiliates and Associates (as such terms are defined in this Agreement) of such Person, shall be the Beneficial Owner (as such term is defined in this Agreement) of 15% or more of the shares of Common Stock then outstanding; provided, however, that an Acquiring Person shall not include the Company, any Subsidiary (as such term is defined in this Agreement) of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any entity holding shares of Common Stock for or pursuant to the terms of any such plan, or LOF Partners, LLC or its Affiliates and Associates (including Life Sciences Opportunities Fund II, L.P. and Life Sciences Opportunities Fund II (Institutional), L.P.) (collectively, “LOF”); provided, however, that if LOF shall become the Beneficial Owner of an aggregate of 19.99% or more of the shares of Common Stock then outstanding (regardless of whether such Common Stock was acquired before or after the date hereof), then LOF shall be deemed an “Acquiring Person.”  Notwithstanding the foregoing, no Person shall be deemed to be an “Acquiring Person” (including LOF) either (i) as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares of Common Stock outstanding, increases the proportionate number of shares Beneficially Owned by such Person to 15% or more (or with respect to LOF, 19.99% or more) of the shares of Common Stock then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15% or more (or with respect to LOF, 19.99% or more) of the shares of Common Stock then outstanding by reason of share acquisitions by the Company and if such Person shall, after such share acquisitions by the Company, become the Beneficial Owner of any additional shares of Common Stock representing one percent (1%) or more of Common Stock (other than pursuant to a

1

dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock), then such Person (unless such Person shall be the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity holding shares of Common Stock for or pursuant to the terms of any such plan) shall be deemed an “Acquiring Person,” or (ii) if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an “Acquiring Person,” as defined by the foregoing provisions of this paragraph (a), has become such inadvertently, and such person divests as promptly as practicable a sufficient number of shares of Common Stock so that such Person would no longer be an “Acquiring Person,” as defined by the foregoing provisions of this paragraph (a).

2.             The Rights Agreement shall remain in full force and effect without amendment except this Second Amendment and any other amendment made in accordance with Section 26 of the Rights Agreement.  All references in the Rights Agreement to “this Agreement” or the “Agreement” or “hereof” and all references in this Second Amendment to the Agreement shall hereafter be deemed to be references to the Rights Agreement as amended by this Second Amendment and any other amendment made in accordance with Section 26 of the Rights Agreement.  All terms used but not defined in this Second Amendment shall have the meanings ascribed to them in the Rights Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed as of the day and year first above written.

BIOJECT MEDICAL TECHNOLOGIES INC.
By:	/s/ John Gandolfo
Title:		CFO
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:	/s/ Herbert J. Lemmer
Title:			Vice President

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EX-10.1

EXHIBIT 10.1

BIOJECT MEDICAL TECHNOLOGIES INC.

SERIES D CONVERTIBLE PREFERRED STOCK

WARRANTS TO PURCHASE COMMON STOCK

PURCHASE AGREEMENT

NOVEMBER 15, 2004

Table of Contents

1.	AGREEMENT TO SELL AND PURCHASE
1.1					Authorization of Shares
1.2					Sale and Purchase
2.		CLOSING, DELIVERY AND PAYMENT
2.1					Closing
2.2					Delivery
3.			REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1						Organization, Good Standing and Qualification
3.2						Subsidiaries
3.3						Capitalization; Voting Rights
3.4						Authorization; Binding Obligations
3.5						Financial Statements
3.6						Liabilities
3.7						Agreements; Action
3.8						Obligations to Related Parties
3.9						Changes
3.10						Title to Properties and Assets; Liens, Etc.
3.11						Intellectual Property
3.12						Compliance with Other Instruments
3.13						Litigation
3.14						Tax Returns and Payments
3.15						Employees
3.16						Obligations of Management
3.17						Registration Rights
3.18						Compliance with Laws; Permits
3.19						Environmental and Safety Laws
3.20						Offering Valid
3.21						Full Disclosure
3.22						Minute Books
3.24						Insurance
4.		REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
4.1					Requisite Power and Authority
4.2					Investment Representations
4.3					Transfer Restrictions
5.	CONDITIONS TO CLOSING
5.1				Conditions to Investor’ Obligations at the Closing
5.2				Conditions to Obligations of the Company
6.		MISCELLANEOUS
6.1				Governing Law
6.2				Survival
6.3				Expenses
6.4				Attorneys’ Fees
6.5				Successors and Assigns

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6.6	Entire Agreement
6.7	Severability
6.8	Amendment and Waiver
6.9	Delays or Omissions
6.10	Notices
6.11	Titles and Subtitles
6.12	Counterparts
6.13	Broker’s Fees
6.15	Public Announcements and Confidentiality
6.16	Investors Business Activities
6.17	Exculpation Among Investors
6.18	Pronouns

List of Exhibits

Schedule of Purchasers	Exhibit A
Articles of Amendment	Exhibit B
Form of Warrant	Exhibit C
Registration Rights Agreement	Exhibit D
Form of Legal Opinion	Exhibit E
Second Amendment to Rights Agreement	Exhibit F
Schedule of Exceptions

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BIOJECT MEDICAL TECHNOLOGIES INC.

SERIES D CONVERTIBLE PREFERRED STOCK

WARRANTS TO PURCHASE COMMON STOCK

PURCHASE AGREEMENT

This Purchase Agreement (this “Agreement”) is made and entered into as of November 15, 2004, by and among Bioject Medical Technologies Inc., an Oregon corporation (the “Company”), and the investors whose names and addresses are set forth on the Schedule of Purchasers attached hereto as EXHIBIT A (individually, an “Purchaser” and, collectively, the “Purchasers”).

RECITALS

The Company has authorized the sale and issuance of an aggregate of 2,086,957 shares of its Series D Convertible Preferred Stock pursuant to this Agreement (the “Shares”) and warrants to purchase common stock (“Warrants”) representing the right to purchase an aggregate of 626,087 shares of common stock, no par value (“Common Stock”) of the Company.

The Purchasers desire to purchase the Shares on the terms and conditions set forth herein.

The Company desires to issue and sell the Shares to the Purchasers on the terms and conditions set forth herein.

AGREEMENT

In consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, intending to be legally bound hereby, the parties hereto agree as follows:

1.AGREEMENT TO SELL AND PURCHASE.

1.1Authorization of Shares.  On or prior to the Closing (as hereinafter defined), the Company shall have authorized (a) the sale and issuance to the Purchasers of the Shares and the Warrants and (b) the issuance of such shares of Common Stock to be issued upon conversion of the Shares and exercise of the Warrants (the “Conversion Shares”).  The Shares shall have the rights, preferences, privileges and restrictions set forth in the Articles of Amendment to the Company’s 2002 Restated Articles of Incorporation, in the form attached hereto as EXHIBIT B (the “Articles of Amendment”), and the Warrant shall be in the form attached hereto as EXHIBIT C.

1.2Sale and Purchase.  Subject to the terms and conditions hereof, at the Closing the Company hereby agrees to issue and sell to each Purchaser, severally and not jointly, and each Purchaser agrees to purchase from the Company, severally and not jointly, the number

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of Shares and Warrants set forth opposite each Purchaser’s name on EXHIBIT A at a purchase price of $1.15 per one Share and a Warrant to purchase 0.3 shares of Common Stock.

2.CLOSINGS, DELIVERY AND PAYMENT.

2.1Closing.  The closing of the sale and purchase of the Shares and the Warrants under this Agreement (the “Closing”) shall take place at 9:00 a.m. on November 15, 2004, at the offices of the Company in Bedminster, New Jersey, or at such other time or place as the Company and the Purchasers may mutually agree (such date is hereinafter referred to as the “Closing Date”).

2.2Delivery at Closing.  At the Closing, subject to the terms and conditions hereof, the Company will deliver to each Purchaser one or more certificates registered in the name of the Purchaser, or in such nominee name(s) as designated by each Purchaser in writing, representing the number of Shares and one or more certificates registered in the name of the Purchaser, or in such nominee name(s) as designated by each Purchaser in writing, representing the number of Warrants to be purchased at the Closing by such Purchaser. The name(s) in which certificates are to be registered are as set forth on EXHIBIT A. The Company’s obligation to complete the purchase and sale of the Shares and Warrants being purchased hereunder and deliver such certificates to the Purchasers at the Closing shall be subject to the following conditions:  (a) receipt by the Company of same-day funds in the full amount of the purchase price for the Shares and Warrants being purchased hereunder and (b) the accuracy in all material respects of the representations and warranties made by the Purchasers and the fulfillment of those undertakings of the Purchasers to be fulfilled prior to or at the Closing.  The Purchasers’ obligation to accept delivery of such certificates and to pay for the Shares and the Warrants evidenced thereby shall be subject to the accuracy in all material respects of the representations and warranties made by the Company herein and the fulfillment of those undertakings of the Company to be fulfilled prior to or at the Closing.

3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth on a Schedule of Exceptions delivered by the Company to the Purchasers at the Closing (the “Schedule of Exceptions”) specifically identifying the relevant Section or Sections hereof and except as disclosed in the Company’s publicly available filings made with the Securities and Exchange Commission, the Company hereby represents and warrants to each Purchaser as of the date of this Agreement as set forth below.

3.1Organization, Good Standing and Qualification.  The Company is a corporation duly organized and validly existing under the laws of the State of Oregon.  The Company has all requisite corporate power and authority to own and operate its properties and assets, to execute and deliver the Articles of Amendment, this Agreement, the Warrants, the Registration Rights Agreement in the form attached hereto as EXHIBIT D (the “Registration Rights Agreement”),and any other agreements contemplated hereby (collectively, the “Transaction Documents”), to issue and sell the Shares, the Warrants, the Conversion Shares, and to carry out the provisions of the Transactions Documents and to carry on its business as presently conducted.  The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and

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of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a Material Adverse Effect (as hereinafter defined).

3.2Subsidiaries.  The Company does not own or control any equity security or other interest of any other corporation, limited partnership or other business entity other than Bioject, Inc. and Marathon Medical Technologies, Inc.  The Company is not a participant in any joint venture, partnership, or similar arrangement.

Each of the Company’s subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and to conduct its business as conducted and as proposed to be conducted, and is duly qualified and is in good standing as a foreign corporation in each jurisdiction in which such qualification is required, except where the failure to be so qualified will not have a Material Adverse Effect.  All of the issued and outstanding capital stock of each such subsidiary has been duly authorized and validly issued, is duly paid and nonassessable and is owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and none of the outstanding shares of capital stock of each such subsidiary was issued in violation of any preemptive or similar rights of any third party.

3.3Capitalization.

(a)The authorized capital stock of the Company, immediately prior to the Closing, consists of (i) 100,000,000 shares of common stock, no par value per share (“Common Stock”), 13,667,114 shares of which are issued and outstanding and (ii) 10,000,000 shares of preferred stock, no par value per share (“Preferred Stock”), (A) 1,235,000 shares of which are designated Series A Preferred Stock (the “Series A Preferred”), of which no shares are issued and outstanding,  (B) 200,000 shares of which are designated Series B Preferred Stock (the “Series B Preferred”), of which no shares are issued and outstanding, (C) 500,000 shares of which are designated Series C Preferred Stock (the “Series C Preferred”), of which no shares are issued and outstanding, and (D) 12,500 shares of which are designated Series R Participating Preferred Stock, of which no shares are issued and outstanding.

(b)(i) No shares have been issued pursuant to restricted stock purchase agreements, (ii) options to purchase 2,124,539 shares of Common Stock have been granted and are currently outstanding, and (iii) the Company has reserved an additional 1,037,894 shares of Common Stock for future issuance to officers, directors, employees and consultants of the Company, including at the discretion of the Company’s Board of Directors, as part of a stock incentive option plan.

(c)Other than (i) as set forth in Section 3.3 of the Disclosure Schedule, (ii) the shares reserved for issuance under Section 3.3(b)(ii), and (iii) except as may be granted pursuant to this Agreement and the Registration Rights Agreement, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal, whether in favor of the Company or any other person), proxy or stockholder

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agreements, or agreements of any kind for the purchase or acquisition from the Company of any of its securities.

(d)All issued and outstanding shares of the Common Stock and Preferred Stock (i) have been duly authorized and validly issued, are fully paid and nonassessable, (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities, and (iii) were not issued in violation or subject to any preemptive rights or other rights to subscribe for or purchase securities.

(e)The rights, preferences, privileges, and restrictions of the Shares are as stated in the Articles of Amendment.  The Conversion Shares have been duly and validly reserved for issuance. When issued in compliance with the provisions of this Agreement and the Articles of Amendment and the Warrants, as the case may be, the Shares and the Conversion Shares will be validly issued, fully paid and nonassessable, and, except as provided in the Registration Rights Agreement, will be free of any liens or encumbrances; provided, however, that the Shares and the Conversion Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time a transfer is proposed.

(f)No stock plan, stock purchase, stock option, or other agreement or understanding between the Company and any holder of any equity securities or rights to purchase equity securities provides for acceleration or other changes in the vesting provisions or other terms of such agreement or understanding as the result of (i) termination of employment (whether actual or constructive); or (ii) the occurrence of any other event or combination of events.The Company reasonably believes that the shares of Common Stock available for future issuance shall be sufficient to meet the Company’s equity incentive needs for at least the 12 month period following the Closing.

(g)The sale of the Shares and the Warrants, the subsequent conversion of the Shares into Conversion Shares, ands the issuance of Conversion Shares upon exercise of the Warrant are not and will not be subject to any preemptive rights or rights of first refusal that have not been properly waived or complied with.

(h)No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares or the Warrants to be sold by the Company as contemplated herein or for the issuance and delivery of the Conversion Shares.

3.4Authorization; Binding Obligations.  All corporate action on the part of the Company, its officers, directors, and stockholders necessary for the authorization of this Agreement and the other the Transaction Documents, the performance of all obligations of the Company hereunder and thereunder at the Closing and the authorization, sale, issuance, and delivery of the Shares and the Warrants pursuant hereto and the Conversion Shares pursuant to the Articles of Amendment and the Warrants, as the case may be, has been taken or will be taken prior to the Closing.

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The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions therein contemplated will not result in the creation of any lien, charge, security interest or encumbrance upon any assets of the Company pursuant to the terms or provisions of, or conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or other instrument to which the Company is a party or by which the Company or any of its properties may be bound or affected and in each case which individually or in the aggregate would have a material adverse effect on the condition (financial or otherwise), properties, business, or results of operations of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”), or any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or any of its respective properties.  No consent, approval, authorization or other order of, or filing with, any court, regulatory body, administrative agency, or other governmental body is required for the execution and delivery of the Transaction Documents or the consummation of the transactions contemplated by the Transaction Documents, except for (a) the filing of the Articles of Incorporation, which will be filed on the Closing Date, (b) filings pursuant to Regulation D of the Securities Act, and applicable state securities laws, which have been made or will be made in a timely manner, and (c) the filing of the required notice to the NASDAQ Stock Market.

The Transaction Documents when executed and delivered, will be valid and binding obligations of the Company enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, (b) as limited by general principles of equity that restrict the availability of equitable remedies, and (c) to the extent that the enforceability of the indemnification provisions in Section 9 of the Registration Rights Agreement may be limited by applicable laws.

3.5Exchange Act Filings; Listing.  During the twelve (12) calendar months immediately preceding the date of this Agreement, all reports and statements required to be filed by the Company with the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder, have been timely filed. Such filings, together with all documents incorporated by reference therein, are referred to as “Exchange Act Documents.” The Company’s Common Stock is quoted on the NASDAQ Stock Market.  As of the Closing Date, the Company meets all the requirements for continued listing on the NASDAQ Stock Market, and to the best of the Company’s knowledge, there is no stop order suspending the trading of the Common Stock on the NASDAQ Stock Market or any information which would result in the Common Shares being delisted from the NASDAQ Stock Market.

3.6Additional Information.  A true and complete copy of each report, schedule, registration statement, and definitive proxy statement filed by the Company with the SEC under the Exchange Act during the twelve (12) months preceding the Closing Date (as such documents have since the time of their filing been amended, the “Information Documents”), which are all the documents (other than preliminary material) that the Company was required to file with the SEC since such date, has been made available to the Purchasers.  As of their

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respective dates, the Information Documents and any forms, reports and other documents filed by the Company during the period commencing on the date of this Agreement and ending on the last date on which the Company is required to maintain the effectiveness of the registration statement referred to in the Registration Rights Agreement (the “Registration Statement”), complied or will comply in all material respects with the requirements of the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, as the case may be, and the rules and regulations of the Commission thereunder applicable to the Information Documents or such other forms, reports or other documents, and none of the Information Documents contained, or will contain at the time they are filed, any untrue statement of a material fact or omitted, or will omit at the time they are filed, to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

3.7Financial Statements.  The Company has made available to the Purchaser its (or to the extent applicable, those of any predecessor in interest) (a) The audited financial statements, together with the related notes of the Company at December 31, 2003 and December 31, 2002, and for the year and transitional period then ended, respectively, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (the “2003 Statements”), and (b) the unaudited financial statements of the Company at September 30, 2004 (the “Statement Date”), and for the nine months then ended, (the “Year to Date Statements and together with the 2003 Statements, “Financial Statements”) included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.  The Financial Statements (a) represent actual bona fide transactions, (b) have been prepared from the books and records of the Company in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except as disclosed therein or in the Schedule of Exceptions, and (c) fairly present, on the basis stated therein and on the date thereof, the financial condition and position of the Company as of December 31, 2003, and the Statement Date and its results of operations and cash flows for the periods then ended; provided, however, that the Year-to-Date Statements are subject to normal recurring year-end adjustments (which are not expected to be material either individually or in the aggregate), and omit all footnotes required under generally accepted accounting principles.

The books of account and other records of the Company are complete and correct and have been maintained in accordance with sound business practices, including the maintenance of an adequate system of internal controls.

3.8Liabilities.  The Company has no material liabilities and, to the best of its knowledge, knows of no material contingent liabilities, in each case except as disclosed in the Financial Statements and except for current liabilities incurred in the ordinary course of business subsequent to the Statement Date that are not material, either in any individual case or in the aggregate.

3.9Agreements; Action.

(a)Except for the Registration Rights Agreement or other contracts or agreements referred to or contemplated herein or therein, there are no material agreements,

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understandings or proposed transactions between the Company and any of its officers, directors, affiliates or any affiliate thereof.

(b)Since the Statement Date, the Company has not (i) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock, (ii) incurred any indebtedness for money borrowed or any other liabilities (other than with respect to dividend obligations, distributions, indebtedness and other obligations incurred in the ordinary course of business or as disclosed in the Financial Statements) individually in excess of $50,000 or, in the case of indebtedness and/or liabilities individually less than $50,000, in excess of $200,000 in the aggregate, (iii) made any loans or advances to any person, other than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business.  For the purposes of this subsection, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections.

(c)Other than as described in the Schedule of Exceptions, the Company is not under any binding obligation to any third party (other than obligations to keep information or discussions confidential) as a result of any discussion or negotiation undertaken in the past twelve months relating to  (i) the consolidation or merger of the Company with or into any such corporation or corporations, (ii) the sale, conveyance, or disposition of all or substantially all of the assets of the Company, or a transaction or series of related transactions in which more than 50% of the voting power of the Company is disposed of, or (iii)  any other form of acquisition, liquidation, dissolution, or winding up, of the Company.

3.10Obligations to Related Parties.  Except as set forth on the Schedule of Exceptions, there are no obligations of the Company to officers, directors or employees of the Company other than (a) for payment of salary for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company, (c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company), and (d) obligations for indemnification under the Company’s organizational documents and applicable law.  Except as set forth on the Schedule of Exceptions, none of the officers, directors or key employees of the Company, or any members of their immediate families, are indebted to the Company or, to the Company’s knowledge, have any direct or, to the best of the Company’s knowledge, indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, other than passive investments in publicly traded companies (representing less than 1% of such company) which may compete with the Company.No officer or director, or any member of their immediate families, is, directly or, to the best of the Company’s knowledge, indirectly, interested in any contract with the Company (other than such contracts as relate to any such person’s ownership of capital stock or other securities of the Company).  Except as may be disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation.

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3.11Changes.  Since the Statement Date, there has not been:

(a)Any change in the assets, liabilities, financial condition,or operations of the Company from that reflected in the Financial Statements, other than changes in the ordinary course of business, none of which individually or in the aggregate has had or is reasonably expected to have a Material Adverse Effect;

(b)Any resignation or termination of any officer, key employee or group of employees of the Company; and the Company, to the best of its knowledge, does not know of the impending resignation or termination of employment of any such officer, key employee or group of employees;

(c)Any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;

(d)Any damage, destruction or loss, whether or not covered by insurance, which is reasonably expected to have a Material Adverse Effect;

(e)Any waiver by the Company of a valuable right or of a material debt owed to it;

(f)Any direct or indirect loans made by the Company to any employee, officer or director of the Company, other than advances made in the ordinary course of business;

(g)Any material change in any compensation arrangement or agreement with any employee, officer or director;

(h)To the knowledge of the Company, any labor organization activity related to the Company;

(i)Any debt, obligation or liability incurred, assumed or guaranteed by the Company, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business;

(j)Any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets, other than the granting of licenses to strategic partners in the ordinary course of the Company’s business;

(k)Any change in any material agreement to which the Company is a party or by which it is bound which is reasonably expected to have a Material Adverse Effect;

(l)Any other event or condition of any character that, either individually or cumulatively, has or is reasonably expected to have a Material Adverse Effect; or

(m)Any arrangement or commitment by the Company to do any of the acts described in subsection (a) through (l) above.

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3.12Title to Properties and Assets; Liens, Etc. The Company has good and marketable title to its material tangible properties and assets, including the tangible properties and assets reflected in the most recent balance sheet included in the Financial Statements, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those resulting from taxes which have not yet become delinquent, (b) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company, and (c) those that have otherwise arisen in the ordinary course of business.  All material facilities, machinery, equipment, fixtures, vehicles and other tangible assets owned, leased or used by the Company are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used.  The Company is in compliance with all material terms of each lease to which it is a party or is otherwise bound.

3.13Intellectual Property

(a)Set forth in the Schedule of Exceptions is a true and complete list of all patents, patent applications, trademarks, service marks, trademark and service mark applications, trade names, copyright registrations and licenses presently used by the Company (with the exception of licenses and rights in “off the shelf” software publications and sold as such). To the Company’s best knowledge, the Company has full title and ownership of, or is duly licensed or otherwise authorized to use, all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, know-how, information and other proprietary rights and processes and formulae, and applications for patents, trademarks, service marks, and copyrights (collectively, “Intellectual Property Rights”) necessary for its business as now conducted or as presently proposed to be conducted, without any infringement of the rights of others.  There are no outstanding options, licenses, or agreements of any kind relating to any of the Intellectual Property Rights that are owned by the Company, or to the Company’s knowledge, relating to rights that are licensed to the Company by other parties.  The Company is not bound by nor is it a party to any options, licenses or agreements of any kind with respect to the Intellectual Property Rights of any other person or entity other than such licenses or agreements arising from the purchase of “off the shelf” software or standard products, and other than licenses granted by sponsors of the Company in order to enable the Company to perform its production services for such sponsors.

(b)Neither the Company nor any of its subsidiaries is in default of its obligations to pay royalties or other amounts to other persons by reason of the ownership or use of any Intellectual Property Rights used by the Company and its subsidiaries for the conduct of their respective businesses.

(c)To the best of the Company’s knowledge, no Intellectual Property Right owned by the Company or any of its subsidiaries violates or will violate any license or infringes or will infringe any Intellectual Property Rights of another.  To the best of the Company’s knowledge, no Intellectual Property Right, product or service marketed, sold or licensed (as licensor or as licensee) by the Company or any of its subsidiaries, violates or will violate any license or infringes or will infringe any Intellectual Property Rights of another, nor has the Company or any of its subsidiaries received any notice that any of the Intellectual

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Property Rights used by the Company or any of its subsidiaries for the conduct of their respective businesses, conflicts or will conflict with the rights of others.

(d)There are no claims pending or, to the best of the Company’s knowledge, threatened with respect to any Intellectual Property Rights necessary or required for the conduct of the business of the Company or any of its subsidiaries as currently conducted, nor, to the best of the Company’s knowledge, does there exist any basis therefor.

3.14Compliance with Other Instruments.  The Company is not in violation or default of any provision of its articles of incorporation or bylaws. The Company and to the best of the Company’s knowledge, each other party thereto, is not in breach of or default with respect to any provision of any mortgage, indenture, contract, agreement, instrument, contract, decree, order, lease, franchise, license, permit, or other instrument to which it is party or by which it or any of its properties are bound; and there does not exist any state of facts which, with notice or lapse of time or both, would constitute an event of default as defined in such documents on the part of the Company, except for such breaches and defaults which individually or in the aggregate would not have a Material Adverse Effect. The execution, delivery, and performance of and compliance with this Agreement, the Articles of Amendment, the Warrants, and the Registration Rights Agreement, and the issuance and sale of the Shares pursuant hereto, and of the Conversion Shares pursuant to the Articles of Amendment and the Warrants, will not, with or without the passage of time or giving of notice or both, result in any such material violation, or be in conflict with or constitute a material default under any such term or provision, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.  The Company has avoided every condition, and has not performed any act, the occurrence of which would result in the Company’s loss of any right granted under any license, distribution agreement, or other agreement required to be disclosed on the Schedule of Exceptions.

3.15Litigation.  There is no action, suit, proceeding, or investigation pending or, to the Company’s knowledge, currently threatened against the Company that questions the validity of this Agreement, the Warrants, the Articles of Amendment, or the Registration Rights Agreement or the right of the Company to enter into any of such agreements, or to consummate the transactions contemplated hereby or thereby, or which mightresult, either individually or in the aggregate, in any Material Adverse Effect, nor is the Company aware that there is any basis for any of the foregoing. The foregoing includes, without limitation, actions pending or, to the Company’s knowledge, threatened or any basis therefor known by the Company involving the prior employment of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers.  The Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.  There is no action, suit, proceeding or investigation by the Company currently pending or which the Company intends to initiate.

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3.16Tax Returns and Payments.  The Company has timely filed all material tax returns (federal, state, and local) required to be filed by it.  All taxes shown to be due and payable on such returns and to the Company’s knowledge all other material taxes due and payable by the Company on or before the Closing, have been paid or will be paid prior to the time they become delinquent.The Company has not been notified in writing (a) that any of its federal, state, or local tax returns have been or are being audited as of the date hereof, or (b) of any proposed deficiency in or adjustment to its federal, state or local taxes.  The Company has no knowledge of any liability for any material tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for. The Company has withheld and paid all taxes required to be withheld and paid in connection with amounts paid or owing to any employee, creditor, shareholder, or other third party. There are no agreements, waivers, or other arrangements providing for an extension of time with respect to the assessment of any taxes or deficiency against the Company. To the Company’s knowledge, there is no pending or threatened investigation of the Company by any federal, state, foreign, or local authority relating to any taxes or assessments, or any claims for additional taxes or assessments asserted by any such authority.

3.17Employees.  The Company has no collective bargaining agreements with any of its employees.  There is no labor union organizing activity pending or, to the Company’s knowledge, threatened with respect to the Company. To the Company’s knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in material violation of any term of any employment contract, proprietary information agreement, or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company because of the nature of the business to be conducted by the Company; and to the Company’s knowledge the continued employment by the Company of its present employees, and the performance of the Company’s contracts with its independent contractors, will not result in any such material violation.  The Company has not received any written notice alleging that any such material violation has occurred.  No employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company.  The Company is not aware that any officer, key employee, or group of employees intends to terminate his, her, or their employment with the Company, nor does the Company have a present intention to terminate the employment of any officer, key employee, or group of employees. The Company is not aware of any claims, actions, proceedings, or threats relating to sexual harassment, wrongful termination, discrimination, or any other employment matter. To the Company’s knowledge there is no fact or circumstance that is reasonably expected to, with the passage of time or otherwise, cause this representation to be no longer true and correct. To the Company’s knowledge, the Company is in compliance in all material respects with all provisions of the Fair Labor Standards Act, all applicable state wage and hour laws, and all applicable workers’ compensation laws.

3.18Employee Benefit Plans; ERISA. All pension, retirement, bonus, profit sharing, stock option, employee, and other benefit or welfare plans or arrangements maintained by the Company, or to which the Company contributes or is required to contribute, to the extent required, materially comply with the provisions of and have been administered and maintained in material compliance with the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and all other applicable laws.  The Company is not a party to or

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bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement, or other employee compensation plan or agreement, including, but not limited to, any “employee pension benefit plan” as defined in Section 3 of ERISA. All unpaid liabilities of the Company with respect to, and all unfunded benefits (whether vested or not) under, each employee welfare benefit plan as defined in Section 3(1) of ERISA maintained by the Company have been calculated and are reflected in the Company’s financial statement in accordance with generally accepted accounting principles, and any such liabilities incurred after the date of such financial statements will be incurred in the ordinary course of business, determined in a manner substantially similar to that used in such financial statements.

3.19Obligations of Management.  Each officer and key employee of the Company is currently devoting substantially all of his or her business time to the conduct of the business of the Company.  The Company is not aware that any officer or key employee of the Company is planning to work less than full time at the Company in the future.  No officer or key employee is currently working or, to the Company’s knowledge, plans to work for a competitive enterprise, whether or not such officer or key employee is or will be compensated by such enterprise.

3.20Registration Rights and Voting Rights.  Except as set forth in Section 3.20 of the Disclosure Schedules or as required pursuant to the Registration Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to Register (as defined in Section 1.1of the Registration Rights Agreement) in the future any of the Company’s presently outstanding securities or any of its securities that may hereafter be issued. To the Company’s knowledge, no stockholder of the Company has entered into any agreement with respect to the voting of equity securities of the Company.

3.21Compliance with Laws; Permits.  The Company is not in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which violation would have a Material Adverse Effect.  No governmental orders, permissions, consents, approvals, or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement and the issuance of the Shares and the Conversion Shares, except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing (including the filing of relevant notices under applicable state law and a Form D pursuant to the Securities Act), as will be filed in a timely manner.  The Company has all franchises, permits, licenses, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could have a Material Adverse Effect and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted.

3.22Environmental and Safety Laws. The Company is not in violation in any material respect of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law, or regulation. Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by the Company

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in material compliance with all applicable statutes, laws and regulations. Except as set forth on the Schedule of Exceptions, the Company has not, and to the Company’s knowledge, no other person has caused any release, threatened release, or disposal of any Hazardous Material on any property owned, leased, or used by the Company. For the purposes of the preceding sentences, “Hazardous Material” means any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, compound, or material that is listed or otherwise regulated as “hazardous” or “toxic” under any applicable local, state and federal laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving medical waste, biological waste, or hazardous substances (“Applicable Environmental Law”), and includes asbestos, polychlorinated biphenyls (PCBs), petroleum products, or nuclear materials.  To the Company’s knowledge, the Company has no material liability for response or corrective action, natural resource damage, or other harm pursuant to Applicable Environmental Law.

3.23Offering Valid.  Assuming the accuracy of the representations and warranties of each Purchaser contained in Section 4.2 hereof, the offer, sale, and issuance of the Shares, the Warrant, and the Conversion Shares will be exempt from the registration requirements of the Securities Act, and will 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.  Neither the Company nor any agent on its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the Shares or the Warrants to any person or persons so as to bring the sale of such Shares by the Company within the registration provisions of the Securities Act or any state securities laws.

3.24Full Disclosure.  None of this Agreement, the Warrants, the Registration Rights Agreement, the Articles of Amendment, nor any other certificate delivered by the Company to the Purchaser in connection herewith or therewith or with the transactions contemplated hereby or thereby, contains any untrue statement of a material fact nor omit to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which such statements were made.

3.25Minute Books.  The minute books of the Company made available to the Purchasers’ counsel contain a complete summary in all material respects of all meetings of directors and stockholders since the time of incorporation.

3.26Insurance.  The Company has general commercial, product liability, fire and casualty insurance policies and, to the best of its knowledge, such policies provide coverage customary for companies similarly situated to the Company.

3.27Internal Accounting Controls.  The Company has established disclosure controls and procedures (as defined in Exchange Act rules 13a-15 and 15d-15) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may be, is being prepared.  The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of a date within 90 days prior to the filing date of the

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Form 10-Q for the Company’s most recently ended fiscal quarter (such date, the “Evaluation Date”).  The Company presented in its most recently filed Form 10-K or Form 10-Q the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no significant changes in the Company’s internal control over financial reporting (as such term is defined in Exchange Act rules 13a-15(f) and 15d-15(f)) or, to the Company’s knowledge, in other factors that could significantly affect the Company’s internal controls.

3.28Listing and Maintenance Requirements.  Except as specified in the Exchange Act Documents, the Company has not, in the two years preceding the date hereof, received notice from any stock exchange or automated dealer quotation system to the effect that the Company is not in compliance with the listing or maintenance requirements thereof.  The Company is, and, other than the possibility that it may fail to maintain the minimum bid requirement, has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing of the Common Stock on the NASDAQ Stock Market.

3.29Investment Company.  The Company is not regulated or required to be registered as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.30Integration, Etc.  The Company has not in the past nor will it hereafter take any action to sell, offer for sale or solicit offers to buy any securities of the Company which would bring the offer, issuance or sale of the Shares, as contemplated by this Agreement, within the provisions of Section 5 of the Securities Act.  Neither the Company nor any of its Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act) has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any “security” (as defined in the Securities Act) which is or could be integrated with the sale of the Shares in a manner that would require the registration under the Securities Act of the Shares or (ii) engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Shares or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

4.REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

Each Purchaser hereby represents and warrants to the Company as follows:

4.1Requisite Power and Authority.  Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of its state of formation.  Such Purchaser has all necessary power and authority to execute and deliver this Agreement and the Registration Rights Agreement and to carry out their provisions.  All action on such Purchaser’s part required for the lawful execution and delivery of this Agreement and the Registration Rights Agreement has been or will be effectively taken prior to the Closing.  Upon their execution and delivery, this Agreement and the Registration Rights Agreement to which it is a party will be valid and binding obligations of such Purchaser, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights, (b) as limited by general

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principles of equity that restrict the availability of equitable remedies, and (c) to the extent that the enforceability of the indemnification provisions of Section 9 of the Registration Rights Agreement may be limited by applicable laws.

4.2Investment Representations.  Such Purchaser understands that none of the Shares, the Warrants, or the Conversion Shares has been registered under the Securities Act.  Such Purchaser also understands that the Shares and the Warrants are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Purchaser’s representations contained in the Agreement.  Purchaser hereby represents and warrants as follows:

(a)Purchaser Bears Economic Risk.  Such Purchaser has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests.  Such Purchaser must bear the economic risk of this investment indefinitely unless the Shares or the Warrants (or the Conversion Shares) are registered pursuant to the Securities Act, or an exemption from registration is available.  Such Purchaser has requested, received, reviewed, and understood all information it deems relevant in making an informed decision to purchase the Shares, including without limitation, the information contained in the Information Documents.

(b)Acquisition for Own Account.  Such Purchaser is acquiring the Shares, the Warrants, and the Conversion Shares for such Purchaser’s own account for investment only, and not with a view towards their distribution.

(c)Purchaser Can Protect Its Interest.  Such Purchaser represents that by reason of its, or of its management’s, business or financial experience, such Purchaser has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement and the Registration Rights Agreement.

(d)Accredited Purchaser.  Such purchaser acknowledges that the offering of the Shares and the Warrants pursuant to this Agreement has not been reviewed by the SEC or any state regulatory authority. Such Purchaser represents that it is an “accredited investor” within the meaning of Regulation D under the Securities Act. Such Purchaser has also had the opportunity to ask questions of and receive answers from, the Company and its management regarding the terms and conditions of this investment.

(e)Rule 144.  Such Purchaser acknowledges and agrees that the Shares, the Warrants, and, if issued, the Conversion Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available, and such securities will bear a restrictive legend similar to the following:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED FOR VALUE UNLESS THEY ARE REGISTERED UNDER THE ACT AND ANY

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APPLICABLE STATE SECURITIES LAWS OR THE CORPORATION RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT, OR OTHERWISE SATISFIES ITSELF, THAT REGISTRATION IS NOT REQUIRED.”

Such Purchaser has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations.

(f)Residence.  If the Purchaser is an individual, then the Purchaser resides in the state or province identified in the address of the Purchaser set forth on EXHIBIT A; if the Purchaser is a partnership, corporation, limited liability company or other entity, then the principal place of business of the Purchaser, or if not the principal place of business, the office or offices in which its investment decision was made, is located at the address or addresses of the Purchaser set forth on EXHIBIT A.

(g)No General Solicitation.  The Purchaser has not received any general solicitation or general advertising (including any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising) concerning the Company or the Shares, nor is the Purchaser aware that any such solicitation or advertising was received by anyone else.

(h)Receipt of Information.  Such Purchaser has met with officers of the Company, has had an opportunity to ask questions and receive answers concerning the business, properties, and financial condition of the Company and the terms and conditions of an investment in the Company, and has received all information (including projections about the Company) that such Purchaser believes is necessary or desirable in connection with an investment in the Company.  Such Purchaser understands that any projections that it has received are based on numerous important assumptions and that some or all of such assumptions will likely prove to be incorrect and, accordingly, the actual results of the Company will vary from the projections and such variations may be material.  Such Purchaser has been solely responsible for its own due diligence investigation of the Company and its business, for analysis of the merits and risks of the investment made pursuant to this Agreement and for analysis of the terms of the investment.

4.3Transfer Restrictions.  Each Purchaser acknowledges and agrees that the Shares, the Warrants, and, if issued, the Conversion Shares are subject to restrictions on transfer as set forth in the Registration Rights Agreement.

4.4Short Sales.  Each Purchaser agrees not to sell short any shares of Common Stock or engage in other hedging transactions with respect to the Common Stock so long as such Purchaser owns any Shares or Conversion Shares and each Purchaser further agrees that it shall not permit its affiliates to engage in any of the foregoing activities.

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5.COVENANTS.

5.1Corporate Existence.  The Company will take all steps necessary to preserve and continue the corporate existence of the Company.

5.2Reservation of Common Stock.  As of the date hereof, the Company has authorized and reserved and the Company shall continue to reserve and keep available, free of preemptive rights, shares of Common Stock for the purpose of enabling the Company to issue the Conversion Shares.  The number of shares so reserved shall be increased or decreased to reflect adjustments in the number of Conversion Shares issuable upon conversion of the Shares.

5.3Exchange Act Registration.  The Company will maintain the registration of its Common Stock under Section 12 of the Exchange Act, will comply in all respects with its reporting and filing obligations under the Exchange Act, and will not take any action or file any document (whether or not permitted by the Exchange Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said Act, until the date which is two years from the Closing Date.

5.4Listing of Common Stock.  The Company shall prepare and file with the NASDAQ Stock Market an additional shares listing application covering a reasonable estimate of the Conversion Shares issuable upon conversion of the Shares or exercise of the Warrants.  In addition, if at any time the number of Conversion Shares issuable upon conversion of the Shares is greater than the number of shares of Common Stock theretofore listed on the NASDAQ Stock Market, the Company shall promptly take such action to file an additional shares listing application covering such additional number of shares of Common Stock. 

5.5Increase in Authorized Shares. As such time as the Company would be, if all outstanding Shares were immediately converted, precluded from honoring the conversion of the Shares and/or exercise of the Warrants in full due to the unavailability of a sufficient number of shares of authorized but unissued Common Stock, the Board of Directors of the Company shall promptly (an in any case within 90 days from such date) hold a stockholders meeting in which the stockholders would vote to amend the Company’s Articles of Incorporation to increase the number of shares of Common Stock which the Company is authorized to issue to at least a number of shares equal to the sum of (i) all shares of Common Stock then outstanding, (ii) the number of shares of Common Stock issuable on account of all outstanding warrants, options, and convertible securities (other than the Shares) and on account of all shares reserved under any stock option, stock purchase, or similar plan, and (iii) such number of Conversion Shares as would then be issuable upon conversion of all outstanding Shares and exercise of all outstanding Warrants.

5.6Observer Rights.  So long as the Purchasers own 50% or more of the number of Shares originally purchased by them at the Closing, the Company shall allow one representative of the Purchasers to attend all meetings of the Company’s Board of Directors in a nonvoting capacity, and in connection therewith, the Company shall give such representative copies of all notices, minutes consents, and other materials, financial or otherwise, which the Company provides to its Board of Directors, provided, that any such representative agrees to leave all or any portion of a meeting of the Board of Directors in the event that, in the reasonable

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good faith believe of the Board of Directors, allowing such representative to remain in the meeting would result in a waiver of the attorney-client privilege.  The failure to provide the observer rights in this Section 5.5 shall not affect the validity of any action taken by the Board.

6.CONDITIONS TO CLOSING.

6.1Conditions to Purchasers’ Obligations at the Closing.  The Purchasers’ obligations to purchase the Shares and the Warrants at the Closing are subject to the satisfaction, at or prior to the Closing Date, of the following conditions:

(a)Representations and Warranties True; Performance of Obligations.  The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the Closing Date with the same force and effect as if they had been made as of the Closing Date, and the Company shall have performed in all material respects, all obligations and conditions herein required to be performed or observed by it on or prior to the Closing.

(b)Legal Investment.  On the Closing Date, the sale and issuance of the Shares and the proposed issuance of the Conversion Shares shall be legally permitted by all laws and regulations to which the Purchasers and the Company are subject.

(c)Consents, Permits, and Waivers.  The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by this Agreement and the Registration Rights Agreement (except for such as may be properly obtained subsequent to the Closing).

(d)Articles of Amendment of Series D Convertible Preferred Stock.  The Articles of Amendment shall have been filed with the Secretary of State of the State of Oregon and shall continue to be in full force and effect as of the Closing Date.

(e)Corporate Documents.  The Company shall have delivered to the Purchasers or their counsel copies of all corporate documents of the Company as the Purchasers shall reasonably request.

(f)Reservation of Conversion Shares.  The Conversion Shares issuable upon conversion of the Shares shall have been duly authorized and reserved for issuance upon such conversion.

(g)Compliance Certificate.  The Company shall have delivered to the Purchasers a Compliance Certificate, executed by the President of the Company, dated the Closing Date, to the effect that the conditions specified in subsections (a) through (f) of this Section 6.1 have been satisfied.

(h)Secretary’s Certificate. The Purchasers shall have received from the Company’s Secretary, a certificate having attached thereto (i) the Company’s Restated Articles of Incorporation as in effect at the time of the Closing, which Restated Articles of Incorporation shall include the Articles of Amendment, (ii) the Company’s bylaws as in effect at

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the time of the Closing, (iii) the resolutions approved by the Board of Directors of the Company authorizing the transactions contemplated hereby, and (iv) good standing certificates with respect to the Company from the applicable authority(ies) in Oregon, New Jersey, and any other jurisdiction in which the Company is qualified to do business, dated a recent date before the Closing.

(i)Registration Rights Agreement. The Registration Rights Agreement substantially in the form attached hereto as EXHIBIT D shall have been executed and delivered by the parties thereto.

(j)Legal Opinion.  The Purchasers shall have received from Stoel Rives LLP, legal counsel to the Company, an opinion addressed to them, dated as of the Closing Date, in substantially the form attached hereto as EXHIBIT E.

(k)Proceedings and Documents.  All corporate and other proceedings in connection with the transactions contemplated at the Closing hereby and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Purchasers and their counsel, and the Purchasers and their counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

(l)Payment of Fees.  The Company shall have paid the fees and expenses set forth in Section 7.3.

(m)No Material Adverse Change.  The business, assets, financial condition, operations or results of operations of the Company are substantially as have been represented to the Purchasers.  Since September 30, 2004, there shall not have been any material adverse change in the business, assets, results of operations, or condition (financial or otherwise) of the Company.

6.2Conditions to Obligations of the Company at the Closing.  The Company’s obligation to issue and sell the Shares and the Warrants is subject to the satisfaction, on or prior to the Closing, of the following conditions:

(a)Representations and Warranties True.  The representations and warranties in Section 4 made by the Purchasers shall be true and correct in all material respects at the date of the Closing, with the same force and effect as if they had been made on and as of said date.

(b)Performance of Obligations.  The Purchasers shall have performed and complied with all agreements and conditions herein required to be performed or complied with by Purchasers on or before the Closing.

(c)Registration Rights Agreement. The Registration Rights Agreement substantially in the form attached hereto as EXHIBIT D shall have been executed and delivered by the Purchasers.

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(d)Amendment to Rights Agreement.  The Company and American Stock Transfer and Trust Company shall have executed and delivered the Second Amendment to Rights Agreement substantially in the form attached hereto as Exhibit F.

(e)Consents, Permits, and Waivers.  The Company shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreement and the Registration Rights Agreement.

7.MISCELLANEOUS.

7.1Governing Law.  This Agreement shall be governed in all respects by the laws of the State of Oregon, without reference to principles of conflict of laws.

7.2Survival.  The representations, warranties, covenants, and agreements made herein shall survive any investigation made by the Purchasers and the closing of the transactions contemplated hereby for a period of two years following the Closing Date. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument.

7.3Expenses.  Each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of the Agreement, the Articles of Amendment and the Registration Rights Agreement; provided, however, that the Company shall pay the reasonable fees, up to a maximum of $50,000, and expenses of the Purchasers’ counsel, Thompson & Knight LLP, in connection with the transactions set forth in this Agreement.

7.4Attorneys’ Fees.  In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

7.5Successors and Assigns.  Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Shares from time to time.

7.6Entire Agreement.  This Agreement, the exhibits and schedules hereto, the Registration Rights Agreement and the other documents delivered pursuant hereto, all of even date herewith between the parties hereto, constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

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7.7Severability.  In case any provision of the Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

7.8Amendment and Waiver.

(a)This Agreement may be amended or modified only upon the written consent of the Company and holders of at least a majority of the Shares (treated as if converted and including any Conversion Shares into which the Shares have been converted that have not been sold to the public).

(b)The obligations of the Company and the rights of the holders of the Shares, the Warrants, and the Conversion Shares under this Agreement may be waived only with the written consent of the holders of at least a majority of the Shares (treated as if converted and including any Conversion Shares into which the Shares have been converted that have not been sold to the public). The rights of the Company under this Agreement may be waived only by the prior written consent of the Company.

7.9Delays or Omissions.  It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, the Warrants, the Registration Rights Agreement or the Articles of Amendment, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring.  It is further agreed that any waiver, permit, consent or approval of any kind or character on the Purchasers’ part of any breach, default or noncompliance under this Agreement, the Registration Rights Agreement or under the Articles of Amendment or any waiver on such party’s part of any provisions or conditions of this Agreement, the Warrants, the Registration Rights Agreement or the Articles of Amendment must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement, the Warrants, the Registration Rights Agreement, the Articles of Amendment, by law, or otherwise afforded to any party, shall be cumulative and not alternative; provided, however, that Purchaser may not recover monetary damages under more than one remedy for any give breach, default or non-compliance.

7.10Notices.  All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent to the Company at the address as set forth on the signature page hereof and to the Purchasers at the addresses set forth on EXHIBIT A attached hereto or at such other address as the Company or the Purchasers may designate by ten days advance written notice to the other parties hereto.

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7.11Titles and Subtitles.  The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

7.12Counterparts.  This Agreement may be executed in any number of counterparts (including by facsimile), each of which shall be an original, but all of which together shall constitute one instrument.

7.13Broker’s Fees.  Except for a finders’ fee payable by the Company to the Maxxim Group, each party hereto represents and warrants that no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein.  Each party hereto further agrees to indemnify each other party for any claims, losses or expenses incurred by such other party as a result of the representation in this Section 7.13 being untrue.

7.14Public Announcements and Confidentiality.

(a)Any public announcement, press release, or similar publicity with respect to this Agreement or the Registration Rights Agreement will be issued, if at all, at such time and in such manner as the Purchasers and the Company mutually determine. Except with the prior consent of the Purchasers or as permitted by this Agreement, neither the Company, its shareholders, nor any of their representatives shall disclose to any person (a) the fact that any confidential information of the Company has been disclosed to the Purchasers or their representatives, that the Purchasers or their representatives have inspected any confidential information of the Company, that any confidential information of the Company has been disclosed to the Purchasers or (b) any information about the this Agreement and the Registration Rights Agreement, including the status of such discussions or negotiations, the execution of any documents (including this Agreement) or any of the terms of this Agreement or the Registration Rights Agreement.  The Company shall not use the names of any of the Purchasers in any manner, context or format (including, but not limited to, websites or links to websites, press releases, dealing with the Company’s customers, suppliers, and employees) without the prior review and express written consent of the Purchasers.  Notwithstanding anything in this section to the contrary, the Company may make any disclosures with respect to this Agreement and the transactions contemplated hereby as are required by law or the rules of the NASDAQ Stock Market without consent of the Purchasers.

(b)Each party hereto agrees that, except with the prior written consent of the other party, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone any confidential information, knowledge or data concerning or relating to the business or financial affairs of the other parties to which such party has been or shall become privy by reason of this Agreement or the Registration Rights Agreement, discussions or negotiations relating to this Agreement or the Registration Rights Agreement, the performance of its obligations hereunder or the ownership of the Shares purchased hereunder.  The provisions of this Section 7.14 shall be in addition to, and not in substitution for, the provisions of any separate nondisclosure agreement executed by the parties hereto.  Notwithstanding any other express or implied agreement or understanding to the contrary, the parties hereto and their respective

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employees, representatives, and other agents are authorized to disclose the tax treatment and tax structure of the transactions contemplated by this Agreement to any and all persons, without limitation of any kind.  The recipient and each other party may disclose all materials of any kind (including opinions or other tax analyses) to the extent (but only to the extent) that they relate to the tax treatment or tax structure of the transactions contemplated by this Agreement.  This authorization is not intended to permit disclosure of any other information including (without limitation) (a) any portion of any materials to the extent not related to the tax treatment or the tax structure of the transactions, (b) the identities of participants or potential participants in the transactions, (c) the existence or status of any negotiations, (d) any pricing information, (e) any financial, actuarial or insurance underwriting information relating to the parties hereto, or (f) any other term or detail not related to the tax treatment or tax structure of the transactions.

7.15Purchasers Business Activities.  The Company and each Purchaser hereby acknowledge that some or all of the Purchasers are professional investment funds and, therefore, invest in numerous portfolio companies, some of which may be in direct or indirect competition with the Company.  No Purchaser shall be liable to the Company or to any other Purchaser for any claim arising out of, or based upon, (i) the investment by any Purchaser in any entity competitive with the Company, or (ii) actions taken by a partner, officer, or representative of any Purchaser that may assist such competitive entity, whether or not such action was taken as a board member, officer, investor in such company or otherwise, and whether or not such action has a detrimental effect on the Company (unless such action involves a breach of Section 7.14(b)).

7.16Exculpation Among Purchasers.  Each Purchaser acknowledges that it is not relying upon any person, firm, or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company.  Each Purchaser agrees that no Purchaser nor the respective controlling persons, officers, directors, partners, agents, or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the Shares and Conversion Shares.

7.17Pronouns.  All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have executed the PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.

COMPANY:			INVESTORS:
Bioject Medical Technologies Inc.			LIFE SCIENCES OPPORTUNITIES FUND II, L.P.
By:	/s/John Gandolfo		By:			LOF Partners, LLC,
Title:		CFO				General Partner
211 Somerville Road (Route 202 North)
Bedminster, New Jersey			By:	/s/ James C. Gale
			Title: Manager
			LIFE SCIENCES OPPORTUNITIES FUND II
			(INSTITUTIONAL), L.P.
			By:		LOF Partners, LLC,
					General Partner
			By:	/s/ James C. Gale
			Title: Manager

List Of Exhibits:
Schedule of Purchasers	Exhibit A
Articles of Amendment	Exhibit B
Form of Warrant	Exhibit C
Registration Rights Agreement	Exhibit D
Form of Legal Opinion	Exhibit E
Second Amendment to Rights Agreement	Exhibit F

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EXHIBIT A

Schedule of Purchasers

NAME AND ADDRESS	SHARES	WARRANTS	AGGREGATE PURCHASE PRICE
LIFE SCIENCE OPPORTUNITIES FUND II, L.P. c/o LOF Partners LLC 126 East 56 Street New York, New York 10022 Attention: James C. Gale	316,884	95,065	$	364,416.08
LIFE SCIENCE OPPORTUNITIES FUND II (INSTITUTIONAL), L.P.c/o LOF Partners LLC 126 East 56 Street New York, New York 10022 Attention: James C. Gale	1,770,073	531,022	$	2,035,584.47
TOTAL	2,086,957	626,087	$	2,400,000.55

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EX-10.2

Exhibit 10.2

Registration Rights Agreement

This Registration Rights Agreement (the “Agreement”) is made and entered into as of the 15th day of November 2004 (the “Effective Date”) between Bioject Medical Technologies Inc., an Oregon corporation (the “Company”), and the parties set forth on the signature page and Exhibit A hereto (each, a “Purchaser” and collectively, the “Purchasers”).

R e c i t a l s:

A.The Purchasers have purchased shares of the Company’s Preferred Stock and Warrants (as defined below) pursuant to the Purchase Agreement of even date herewith (the “Purchase Agreement”) by and between the Company and each Purchaser.

B.The Company and the Purchasers desire to set forth the registration rights to be granted by the Company to the Purchasers.

Now, Therefore, in consideration of the mutual promises, representations, warranties, covenants, and conditions set forth herein and in the Subscription Agreements, the parties mutually agree as follows:

A g r e e m e n t:

1.Certain Definitions.  As used in this Agreement, the following terms shall have the following respective meanings:

“Approved Market” means the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, Inc., or the American Stock Exchange, Inc.

“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which the Commission is required or authorized to close.

“Closing Date” means November 15, 2004, or such other time as is mutually agreed between the Company and the Purchasers for the closing of the sale referred to in Recital A above.

“Commission” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

“Common Stock” means the common stock, no par value, of the Company and any and all shares of capital stock or other equity securities of: (i) the Company which are added to or exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or stock split, the issuance of any distribution or the reclassification, readjustment, recapitalization or other such modification of the capital structure of the Company; and (ii) any other corporation, now or hereafter organized under the laws of any state or other governmental authority, with which the Company is merged, which results from any consolidation or reorganization to which the Company is a party, or to which is sold all or substantially all of the shares or assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own equity securities having in the aggregate more than 50% of the total voting power of such other corporation.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Family Member” means (a) with respect to any individual, such individual’s spouse, any descendants (whether natural or adopted), any trust all of the beneficial interests of which are owned by any of such individuals or by any of such individuals together with any organization described in Section 501(c)(3) of the Internal Revenue

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Code of 1986, as amended, the estate of any such individual, and any corporation, association, partnership or limited liability company all of the equity interests of which are owned by those above described individuals, trusts or organizations and (b) with respect to any trust, the owners of the beneficial interests of such trust.

“Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the Commission, which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission.

“Holder” means each Purchaser, or any of such Purchaser’s respective successors and Permitted Assigns who acquire rights in accordance with this Agreement with respect to the Registrable Securities directly or indirectly from a Purchaser, including from any Permitted Assignee.

“Inspector” means any attorney, accountant, or other agent retained by a Purchaser for the purposes provided in Section 4(j).

“Majority Holders” means at any time Holders of a majority of the Registrable Securities.

“Offering Price” means $1.15 (as adjusted for any stock split, reverse stock split, stock dividend, recapitalization, and the like).

“Permitted Assignee” means (a) with respect to a partnership, its partners or former partners in accordance with their partnership interests, (b) with respect to a corporation, its shareholders in accordance with their interest in the corporation, (c) with respect to a limited liability company, its members or former members in accordance with their interest in the limited liability company, (d) with respect to an individual party, any Family Member of such party, (e) an entity that is controlled by, controls, or is under common control with a transferor, or (f) a party to this Agreement.

“Preferred Stock” means the Series D Preferred Stock, no par value, of the Company.

The terms “register,” “registered,” and “registration” refers to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

“Registrable Securities” means shares of Common Stock issued or issuable to each Purchaser upon conversion of the Preferred Stock or exercise of the Warrants issued to each pursuant to the Purchase Agreement, excluding (i) any Registrable Securities that have been publicly sold or may be sold immediately without registration under the Securities Act either pursuant to Rule 144 of the Securities Act or otherwise; (ii) any Registrable Securities sold by a person in a transaction pursuant to a registration statement filed under the Securities Act or (iii) any Registrable Securities that are at the time subject to an effective registration statement under the Securities Act.

“Registration Default Date” means the date which is 270 days following the Closing Date; provided, however, (i) if the 270^h day following the Closing Date falls during an S-3 Blackout Period, the Registration Default Date shall be the date immediately following the last day of such S-3 Blackout Period, and (ii) if the Registration Statement is subject to review by the SEC staff and the Company is unable to file necessary pre-effective amendments to the Registration Statement with the SEC because of an S-3 Blackout Period, the Registration Default Date shall be extended by the number of calendar days that the Company is unable to file any such pre-effective amendment during any such S-3 Blackout Period that occurs prior to the end of the 365-day period.

“Registration Default Period” means the period following the Registration Default Date during which any Registration Event occurs and is continuing.

“Registration Event” means the occurrence of any of the following events:

(a)the Company fails to file with the SEC the Registration Statement on or before the Registration Filing Date pursuant to Section 3(a),

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(b)the Registration Statement covering Registrable Securities is not declared effective by the Commission on or before the Registration Default Date, or

(c)after the SEC Effective Date, sales cannot be made pursuant to the Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement) but except as excused pursuant to Section 3(a).

“Registration Statement” means the registration statement required to be filed by the Company pursuant to Section 3(a).

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“SEC Effective Date” means the date the Registration Statement is declared effective by the Commission.

“S-3 Blackout Period” means, with respect to a registration, a period in each case commencing on the day immediately after the Company notifies the Purchasers that they are required, pursuant to Section 4(f), to suspend offers and sales of Registrable Securities during which the Company, in the good faith judgment of its Board of Directors, determines (because of the existence of, or in anticipation of, any acquisition, financing activity, or other transaction involving the Company, or the unavailability for reasons beyond the Company’s control of any required financial statements, disclosure of information which is in its best interest not to publicly disclose, or any other event or condition of similar significance to the Company) that the registration and distribution of the Registrable Securities to be covered by such registration statement, if any, would be seriously detrimental to the Company and its shareholders and ending on the earlier of (1) the date upon which the material non-public information commencing the S-3 Blackout Period is disclosed to the public or ceases to be material and (2) such time as the Company notifies the selling Holders that the Company will no longer delay such filing of the Registration Statement, recommence taking steps to make such Registration Statement effective, or allow sales pursuant to such Registration Statement to resume; provided, however, that (a) the Company shall limit its use of S-3 Blackout Periods, in the aggregate, to 30 Trading Days in any 12-month period and (b) no S-3 Blackout Period may commence sooner than 60 days after the end of a prior S-3 Blackout Period.

“Trading Day” means a day on whichever (a) the national securities exchange, (b) the Nasdaq Stock Market, or (c) such other securities market, in any such case which at the time constitutes the principal securities market for the Common Stock, is open for general trading of securities.

“Warrants” means the warrants to purchase common stock issued by the Company to the Purchasers pursuant to the Purchase Agreement.

2.Term.  This Agreement shall continue in full force and effect for a period of two (2) years from the Effective Date.

3.Registration.

(a)Registration on Form S-3.  As promptly as reasonably practicable after the date hereof, but in any event not later than 180 days after the Closing Date (the “Registration Filing Date”), the Company shall use its commercially reasonable efforts to file with the Commission a shelf registration statement on Form S-3 relating to the resale by the Holders of all of the Registrable Securities; provided, however, that the Company shall not be obligated to effect any such registration, qualification, or compliance pursuant to this Section 3(a), or keep such registration effective pursuant to Section 4: (i) in any particular jurisdiction in which the Company would be required to qualify to do business as a foreign corporation or as a dealer in securities under the securities or blue sky laws of such jurisdiction or to execute a general consent to service of process in effecting such registration, qualification or compliance, in each case where it has not already done so; or (ii) during any S-3 Blackout Period, in which case the Registration Filing Date shall be extended to the date immediately following the last day of such S-3 Blackout Period.

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(b)Piggyback Registration.  If the Company shall determine to register for sale for cash any of its Common Stock, for its own account or for the account of others (other than the Holders) pursuant to the exercise of demand registration rights, other than (i) a registration relating solely to employee benefit plans or securities issued or issuable to employees, consultants (to the extent the securities owned or to be owned by such consultants could be registered on Form S-8) or any of their Family Members (including a registration on Form S-8) or (ii) a registration relating solely to a Commission Rule 145 transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture, reorganization, or similar event, the Company shall promptly give to the Holders written notice thereof (and in no event shall such notice be given less than 20 calendar days prior to the filing of such registration statement), and shall, subject to Section 3(c), include in such registration (and any related qualification under blue sky laws or other compliance) (a “Piggyback Registration”), all of the Registrable Securities specified in a written request or requests, made within 10 calendar days after receipt of such written notice from the Company, by any Holder or Holders.  However, the Company may, without the consent of the Holders, withdraw such registration statement prior to its becoming effective if the Company or such other shareholders have elected to abandon the proposal to register the securities proposed to be registered thereby.

(c)Underwriting.  If a Piggyback Registration is for a registered public offering involving an underwriting, the Company shall so advise the Holders in writing or as a part of the written notice given pursuant to Section 3(b).  In such event the right of any Holder to registration pursuant to Section 3(b) shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein.  All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders of the Company distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company or selling shareholders, as applicable.  Notwithstanding any other provision of this Section 3(c), if the underwriter or the Company determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may exclude some or all Registrable Securities from such registration and underwriting.  The Company shall so advise all Holders (except those Holders who failed to timely elect to distribute their Registrable Securities through such underwriting or have indicated to the Company their decision not to do so), and the number of shares of Registrable Securities that may be included in the registration and underwriting, if any, shall be allocated among such Holders as follows:

(i)In the event of a Piggyback Registration that is initiated by the Company, the number of shares that may be included in the registration and underwriting shall be allocated first to the Company and then, subject to obligations and commitments existing as of the date hereof, to all selling shareholders, including the Holders, who have requested to sell in the registration on a pro rata basis according to the number of shares requested to be included; and

(ii)In the event of a Piggyback Registration that is initiated by the exercise of demand registration rights by a shareholder or shareholders of the Company (other than the Holders), then the number of shares that may be included in the registration and underwriting shall be allocated first to such selling shareholders who exercised such demand and then, subject to obligations and commitments to all other selling shareholders, including the Holders, who have requested to sell in the registration, on a pro rata basis according to the number of shares requested to be included.

No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration.  If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter.  The Registrable Securities and/or other securities so withdrawn from such underwriting shall also be withdrawn from such registration; provided, however, that, if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities pursuant to the terms and limitations set forth herein in the same proportion used above in determining the underwriter limitation.

(d)Other Registrations.  Prior to the SEC Effective Date the Company will not, without the prior written consent of the Majority Holders, file or request the acceleration of any other registration statement filed with the Commission, and during any time subsequent to the SEC Effective Date when the Registration Statement for any reason is not available for use by any Holder for the resale of any Registrable Securities, the Company shall not,

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without the prior written consent of the Majority Holders, file any other registration statement or any amendment thereto with the Commission under the Securities Act or request the acceleration of the effectiveness of any other registration statement previously filed with the Commission, other than (A) any registration statement on Form S-8 or Form S-4 and (B) any registration statement or amendment which the Company is required to file or as to which the Company is required to request acceleration pursuant to any obligation in effect on the date of execution and delivery of this Agreement.

(e)Failure to File Registration Statement. If a Registration Event occurs, then the Company will make payments to each Purchaser, as liquidated damages for the minimum amount of damages to the Qualified Purchaser by reason thereof, and not as a penalty, at a rate equal to one percent (1%) of the Offering Price per share of Preferred Stock or, one tenth of one percent (0.1%) of the Offering Price for each share of Common Stock acquired upon exercise of a Warrant, held by such Purchaser per month, for each calendar month of the Registration Default Period (pro rated for any period less than 30 days); provided, however, if a Registration Event occurs (or is continuing) on a date more than one-year after the Purchaser acquired the Registrable Securities (and thus the one-year holding period under Rule 144(d) has elapsed), liquidated damages shall be paid only with respect to that portion of a Purchaser’s Registrable Securities that cannot then be immediately resold in reliance on Rule 144. Each such payment shall be due and payable within five days after the end of each calendar month of the Registration Default Period until the termination of the Registration Default Period and within five days after such termination.  Such payments shall be in partial compensation to the Purchaser, and shall not constitute the Purchaser’s exclusive remedy for such events. The Registration Default Period shall terminate upon (i) the filing of the Registration Statement in the case of clause (a) of the definition of “Registration Event,” (ii) the SEC Effective Date in the case of clause (b) of the definition of “Registration Event,” (iii) the ability of the Purchaser to effect sales pursuant to the Registration Statement in the case of clause (c) of the Definition of “Registration Event,” and (iv) in the case of the events described in clauses (b) and (c) of the definition of “Registration Event,” the earlier termination of the Registration Default Period.  The amounts payable as liquidated damages pursuant to this paragraph shall be payable in lawful money of the United States.  Amounts payable as liquidated damages to each Purchaser hereunder with respect to each share of Registrable Securities shall cease when the Purchaser no longer holds such share of Registrable Securities or such share of Registrable Securities can be immediately sold by the Purchaser in reliance on Rule 144.

4.Registration Procedures.  In the case of each registration, qualification, or compliance effected by the Company pursuant to Section 3 hereof, the Company will keep each Holder including securities therein reasonably advised in writing (which may include e-mail) as to the initiation of each registration, qualification, and compliance and as to the completion thereof.  At its expense with respect to any registration statement filed pursuant to Section 3, the Company will use its commercially reasonable efforts to:

(a)prepare and file with the Commission with respect to such Registrable Securities, a registration statement on Form S-3 or any other form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended method(s) of distribution thereof, and use its commercially reasonable efforts to cause such registration statement to become and remain effective at least for a period ending with the first to occur of (i) the sale of all Registrable Securities covered by the registration statement, (ii) the availability under Rule 144 for the Holder to immediately, freely resell without restriction all Registrable Securities covered by the registration statement, and (iii) one year after expiration of the term of the Warrants (in either case, the “Effectiveness Period”); provided, however, if at the end of such one-year period, any Holder is not able to immediately, freely resell all Registrable Securities that it owns, the Effectiveness Period shall continue until terminated pursuant to clause (i) or (ii); provided that no later than two business days before filing with the Commission a registration statement or prospectus or any amendments or supplements thereto, the Company shall (i) furnish to one special counsel (“Holders Counsel”) selected by the Company for the benefit of the Holders (which Holders Counsel initially shall be John T. Unger of Thompson & Knight LLP, Houston, Texas), copies of all such documents proposed to be filed (excluding any exhibits other than applicable underwriting documents), in substantially the form proposed to be filed, which documents shall be subject to the review of such Holders Counsel, and (ii) notify each Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

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(b)if a registration statement is subject to review by the Commission, promptly respond to all comments and diligently pursue resolution of any comments to the satisfaction of the Commission;

(c)prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective during the Effectiveness Period (but in any event at least until expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended method(s) of disposition by the sellers thereof set forth in such registration statement;

(d)furnish, without charge, to each Holder of Registrable Securities covered by such registration statement (i) a reasonable number of copies of such registration statement (including any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement thereto as such Holder may request, (ii) such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any other prospectus filed under Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements of the Securities Act, and (iii) such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder, but only during the Effectiveness Period;

(e)use its commercially reasonable efforts to register or qualify such Registrable Securities under such other applicable securities or blue sky laws of such jurisdictions as any Holder of Registrable Securities covered by such registration statement reasonably requests as may be necessary for the marketability of the Registrable Securities (such request to be made by the time the applicable registration statement is deemed effective by the Commission) and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;

(f)as promptly as practicable after becoming aware of such event, notify each Holder of such Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company’s attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Company shall promptly prepare and furnish to such Holder a supplement or amendment to such prospectus (or prepare and file appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, unless suspension of the use of such prospectus otherwise is authorized herein or in the event of an S-3 Blackout Period, in which case no supplement or amendment need be furnished (or Exchange Act filing made) until the termination of such suspension or S-3 Blackout Period;

(g)comply, and continue to comply during the period that such registration statement is effective under the Securities Act, in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission with respect to the disposition of all securities covered by such registration statement.

(h)as promptly as practicable after becoming aware of such event, notify each Holder of Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance by the Commission of any stop order or other suspension of effectiveness of the Registration Statement at the earliest possible time;

(i)permit the Holders of Registrable Securities being included in the Registration Statement and their legal counsel, at such Holders’ sole cost and expense (except as otherwise specifically provided in Section 6) to review and have a reasonable opportunity to comment on the Registration Statement and all amendments and supplements thereto at least two Business Days prior to their filing with the Commission and shall not file any such document to which the Majority Holders reasonably object;

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(j)make available for inspection by any Holder and any Inspector retained by such Holder, at such Holder’s sole expense, all Records as shall be reasonably necessary to enable such Holder to exercise its due diligence responsibility, and cause the Company’s officers, directors, and employees to supply all information which such Holder or any Inspector may reasonably request for purposes of such due diligence; provided, however, that such Holder shall hold in confidence and shall not make any disclosure of any record or other information which the Company determines in good faith to be confidential, and of which determination such Holder is so notified at the time such Holder receives such information, unless (i) the disclosure of such record is necessary to avoid or correct a misstatement or omission in the Registration Statement and a reasonable time prior to such disclosure the Holder shall have informed the Company of the need to so correct such misstatement or omission and the Company shall have failed to correct such misstatement of omission, (ii) the release of such record is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction or (iii) the information in such record has been made generally available to the public other than by disclosure in violation of this or any other agreement.  The Company shall not be required to disclose any confidential information in such records to any Inspector until and unless such Inspector shall have entered into a confidentiality agreement with the Company with respect thereto, substantially in the form of this Section 4(j), which agreement shall permit such Inspector to disclose records to the Holder who has retained such Inspector.  Each Holder agrees that it shall, upon learning that disclosure of such Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the records deemed confidential.  The Company shall hold in confidence and shall not make any disclosure of information concerning a Holder provided to the Company pursuant to this Agreement unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) disclosure of such information to the Staff of the Division of Corporation Finance is necessary to respond to comments raised by the Staff in its review of the Registration Statement, (iii) disclosure of such information is necessary to avoid or correct a misstatement or omission in the Registration Statement, (iv) release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (v) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement.  The Company agrees that it shall, upon learning that disclosure of such information concerning a Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to such Holder and allow such Holder, at such Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information;

(k)use its commercially reasonable efforts to cause all the Registrable Securities covered by the Registration Statement to be quoted on the Nasdaq Stock Market or such other principal securities market on which securities of the same class or series issued by the Company are then listed or traded;

(l)provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities at all times;

(m)cooperate with the Holders of Registrable Securities being offered pursuant to the Registration Statement to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities sold pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts as the Holders may reasonably request and registered in such names as the Holders may request;

(n)during the Effectiveness Period, refrain from bidding for or purchasing any Common Stock or any right to purchase Common Stock or attempting to induce any Person to purchase any such security or right if such bid, purchase or attempt would in any way limit the right of the Holders to sell Registrable Securities by reason of the limitations set forth in Regulation M under the 1934 Act; and

(o)take all other reasonable actions necessary to expedite and facilitate disposition by the Holders of the Registrable Securities pursuant to the Registration Statement.

5.Suspension of Offers and Sales.  Each Holder of Registrable Securities agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f) hereof or of the commencement of an S-3 Blackout Period, such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt of the copies

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of the supplemented or amended prospectus contemplated by Section 4(f) hereof or notice of the end of the S-3 Blackout Period, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies (including, without limitation, any and all drafts), other than permanent file copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.  In the event the Company shall give any such notice, the period mentioned in Section 4(a)(iii) hereof shall be extended by the greater of (i) ten business days or (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 4(f) hereof to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(f) hereof.

6.Registration Expenses.  The Company shall pay all expenses in connection with any registration, including, without limitation, all registration, filing, stock exchange fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, the fees and disbursements of counsel for the Company and of its independent accountants, and the reasonable fees and disbursements of a Holders Counsel (not to exceed $5,000); provided that, in any underwritten registration, each party shall pay for its own underwriting discounts and commissions and transfer taxes. Except as provided above in this Section 6 and Section 9, the Company shall not be responsible for the expenses of any attorney or other advisor employed by a Holder of Registrable Securities.

7.Assignment of Rights. No Holder may assign its rights under this Agreement to any party without the prior written consent of the Company; provided, however, that a Holder may assign its rights under this Agreement without such restrictions to a Permitted Assignee as long as (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) the Company is given written notice by such Holder of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned.

8.Information by Holder.  The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may request in writing.

9.Indemnification.

(a)In the event of the offer and sale of Registrable Securities held by Holders under the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each Holder, its directors, officers, partners, and each other person, if any, who controls or is under common control with such Holder or any such underwriter within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, and expenses to which the Holder or any such director, officer, partner or underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in light of the circumstances in which they were made not misleading, and the Company shall reimburse the Holder, and each such director, officer, partner, and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding; provided that the Company shall not be liable in any such case (i) to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder or (ii) if the person asserting any such loss, claim, damage, liability (or action or proceeding in respect thereof) who purchased the Registrable Securities that are the subject thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of such Registrable Securities to such person because of the failure of such Holder or underwriter to so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue statement or omission or alleged omission of a material fact made in such

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preliminary prospectus was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or supplemented). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holders, or any such director, officer, partner, underwriter or controlling person and shall survive the transfer of such shares by the Holder.

(b)As a condition to including any Registrable Securities to be offered by a Holder in any registration statement filed pursuant to this Agreement, each such Holder agrees to be bound by the terms of this Section 9 and to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement in or omission or alleged omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information about such Holder as a Holder of the Company furnished to the Company, and such Holder shall reimburse the Company, and each such director, officer, and controlling person for any legal or other expenses reasonably incurred by them in connection with investigating, defending, or settling and such loss, claim, damage, liability, action, or proceeding; provided, however, that such indemnity agreement found in this Section 9(b) shall in no event exceed the gross proceeds from the offering received by such Holder.  Such indemnity shall remain in full force and effect, regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer by any Holder of such shares.

(c)Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in Section 9(a) or (b) hereof (including any governmental action), such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the indemnifying party of the commencement of such action; provided that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 9(a) or (b) hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice.  In case any such action is brought against an indemnified party, unless in the reasonable judgment of counsel to such indemnified party a conflict of interest between such indemnified and indemnifying parties may exist or the indemnified party may have defenses not available to the indemnifying party in respect of such claim, the indemnifying party shall be entitled to participate in and to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties arises in respect of such claim after the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a diligent manner, other than reasonable costs of investigation.  Neither an indemnified nor an indemnifying party shall be liable for any settlement of any action or proceeding effected without its consent.  No indemnifying party shall, without the consent of the indemnified party, consent to entry of any judgment or enter into any settlement, which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.  Notwithstanding anything to the contrary set forth herein, and without limiting any of the rights set forth above, in any event any party shall have the right to retain, at its own expense, counsel with respect to the defense of a claim.

(d)In the event that an indemnifying party does not or is not permitted to assume the defense of an action pursuant to Section 9(c) or in the case of the expense reimbursement obligation set forth in Section 9(a) and (b), the indemnification required by Section 9(a) and (b) hereof shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills received or expenses, losses, damages, or liabilities are incurred.

(e)If the indemnification provided for in this Section 9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall (i) contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense as is

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appropriate to reflect the proportionate relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission), or (ii) if the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount hereinafter calculated, not only the proportionate relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations.  No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.

(f)Other Indemnification.  Indemnification similar to that specified in the preceding subsections of this Section 9 (with appropriate modifications) shall be given by the Company and each Holder of Registrable Securities with respect to any required registration or other qualification of securities under any federal or state law or regulation or governmental authority other than the Securities Act.

10.Miscellaneous

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Oregon and the United States of America, both substantive and remedial. Any judicial proceeding brought against either of the parties to this agreement or any dispute arising out of this Agreement or any matter related hereto may be brought in the courts of the State of Oregon or in the United States District Court for the District of Oregon and, by its execution and delivery of this agreement, each party to this Agreement accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be deemed to confer rights on any person other than the parties to this Agreement.

(b)Successors and Assigns.  Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assigns, executors and administrators of the parties hereto.  In the event the Company merges with, or is otherwise acquired by, a direct or indirect subsidiary of a publicly traded company, the Company shall condition the merger or acquisition on the assumption by such parent company of the Company’s obligations under this Agreement.

(c)Entire Agreement.  This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof.

(d)Notices, etc. All notices or other communications which are required or permitted under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier or overnight carrier, to the persons at the addresses set forth below (or at such other address as may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:

If to the Company:	Bioject Medical Technologies Inc.
	211 Somerville Road (Route 202 North)
	Bedminster, New Jersey 07921
	Attention: Chief Financial Officer
	Facsimile: (908) 470-2800
	e-mail: jgandolfo@bioject.com

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If to the Purchasers:	To each Purchaser at the address
	set forth on Exhibit A
with a copy to:	LOF Partners, LLC
	c/o Sanders Morris Harris Inc.
	126 East 56th Street, 24th Floor
	New York, New York 10022
	Attention: Chief Investment Officer
	Facsimile: (212)-419-3900
	e-mail: james.gale@smhgroup.com

or at such other address as any party shall have furnished to the other parties in writing.

(e)Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any Holder of any Registrable Securities, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing.  All remedies, either under this Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative.

(f)Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

(g)Severability. In the case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(h)Amendments. The provisions of this Agreement may be amended at any time and from time to time, and particular provisions of this Agreement may be waived, with and only with an agreement or consent in writing signed by the Company and by the holders of an 80% majority of the number of shares of Registrable Securities outstanding as of the date of such amendment or waiver. The Purchasers acknowledge that by the operation of this Section 10(h), the holders of an 80% majority of the outstanding Registrable Securities may have the right and power to diminish or eliminate all rights of the Purchasers under this Agreement.

(i)Limitation on Subsequent Registration Rights.  After the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant such holder registration rights senior to those granted to the Holders hereunder.

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This Registration Rights Agreement is hereby executed as of the date first above written.

COMPANY:
BIOJECT MEDICAL TECHNOLOGIES
INC.
By:	/s/ John P. Gandolfo
Its:	CFO
PURCHASERS:
LIFE SCIENCES OPPORTUNITIES FUND II, L.P.
LIFE SCIENCES OPPORTUNITIES FUND II (INSTITUTIONAL), L.P.
By: LOF PARTNERS, LLC, general partner
By:	/s/ James C. Gale
Its: Manager

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EX-10.3

Exhibit 10.3

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS (I) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY BIOJECT MEDICAL TECHNOLOGIES INC., WITH AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH AN EXEMPTION THEREFROM.

Warrant No. BB-	Number of Shares:
	(subject to adjustment)
Date of Issuance: November 15, 2004

WARRANT

To Purchase Common Stock of

BIOJECT MEDICAL TECHNOLOGIES INC.

Expiring on November 14, 2008

THIS IS TO CERTIFY THAT, for value received,                                           , a                             (the “Registered Holder”), or its permitted assigns, is entitled to purchase from BIOJECT MEDICAL TECHNOLOGIES INC., an Oregon corporation (the “Company”), at the place where the Warrant Office designated pursuant to Section 2.1 is located, at a purchase price per share of $1.15 (as adjusted pursuant to the terms of this Warrant, the “Exercise Price”),                    shares of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, no par value per share (“Common Stock”), of the Company, and is entitled also to exercise the other appurtenant rights, powers and privileges hereinafter set forth. The number of shares of the Common Stock purchasable hereunder and the Exercise Price are subject to adjustment in accordance with Article III hereof. This Warrant shall expire at 5:00 p.m., New York time, on November 14, 2008.

Certain Terms used in this Warrant are defined in Article IV.

ARTICLE I

Exercise of Warrant

1.1           Method of Exercise.  This Warrant may be exercised by the Registered Holder as a whole or in part from time to time until November 14, 2008, at which time this Warrant shall expire and be of no further force or effect; provided, however, that the minimum number of Warrant Shares that may be purchased on a single exercise shall be 10,000 or the entire number of shares remaining available for exercise hereunder, whichever is less.  To exercise this Warrant, the Registered Holder or permitted assignees of all rights of the Registered Holder shall deliver to the Company, at the Warrant Office designated in Section 2.1(a), a written notice in the form of the Purchase Form attached as Exhibit A hereto, stating therein the election of the Registered Holder or such permitted assignees of the Registered Holder to exercise this Warrant in the manner provided in the Purchase Form, (b) payment in full of the Exercise Price (in the manner described below) for all Warrant Shares purchased hereunder, and (c) this Warrant.  Subject to compliance with Section 3.1(a)(vii), this Warrant shall be deemed to be exercised on the date of receipt by the Company of the Purchase Form, accompanied by payment for the Warrant Shares to be purchased and surrender of this Warrant, as aforesaid, and such date is referred to herein as the “Exercise Date.”  Upon such exercise (subject as aforesaid), the Company shall issue and deliver to the Registered Holder a certificate for the full number of the Warrant Shares purchasable by the Registered Holder hereunder, against the receipt by the Company of the total Exercise Price payable hereunder for all such Warrant Shares, in cash or by certified or

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cashier’s check.  The Person in whose name the certificate(s) for Common Stock is to be issued shall be deemed to have become a holder of record of such Common Stock on the Exercise Date.

1.2           Fractional Shares.  No fractional shares of Common Stock shall be issued upon exercise of this Warrant. Instead of any fractional shares of Common Stock that would otherwise be issuable upon exercise of this Warrant, the Company shall pay a cash adjustment in respect of such fractional interest equal to the fair market value of such fractional interest as determined in good faith by the Board of Directors.

1.3           Purchase of Warrants by the Company.  The Company shall have the right, except as limited by law, other agreement, or herein, to purchase or otherwise acquire Warrants at such time, in such manner, and for such consideration as it may deem appropriate.

1.4           Early Termination of Warrants by the Company.  In the event that, at any time prior to November 14, 2008, when a registration statement with respect to the Warrant Shares is effective and the VWAP of the Common Stock exceeds $2.25 per share for any period of 20 consecutive Trading Days, the Company will have the right, by giving written notice within five days of the end of such 20-day period to the Registered Holder of this Warrant, to provide that the Warrants not exercised on or before a date not less than 30 days following the date of such notice shall expire and cease to have any rights whatsoever; provided that a registration statement with respect to the Warrant Shares is continuously effective from the first of such 20 consecutive Trading Days until the date fixed for expiration of the Warrants.

1.5           Cancellation of Warrants.  In the event the Company shall purchase or otherwise acquire the Warrants, the same shall thereupon be cancelled by it and retired.

ARTICLE II

Warrant Office; Transfer

2.1           Warrant Office.  The Company shall maintain an office for certain purposes specified herein (the “Warrant Office”), which office shall initially be the Company’s office at 211 Somerville Road, Route 202 North, Bedminster, New Jersey 07921, and may subsequently be such other office of the Company or of any transfer agent of the Common Stock in the continental United States of which written notice has previously been given to the Registered Holder.  The Company shall maintain, at the Warrant Office, a register for the Warrant in which the Company shall record the name and address of the Registered Holder, as well as the name and address of each permitted assignee of the rights of the Registered Holder.

2.2           Ownership of Warrant.  The Company may deem and treat the Registered Holder as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer as provided in this Article II.

2.3           Transfer of Warrants.  The Company agrees to maintain at the Warrant Office books for the registration and transfer of this Warrant.  Subject to the restrictions on transfer of Warrants in Section 2.8, the Company, from time to time, shall register the transfer of this Warrant in such books upon surrender of this Warrant at the Warrant Office, properly endorsed, together with a written assignment of this Warrant, substantially in the form of the Assignment attached as Exhibit B hereto. Upon any such transfer, a new Warrant shall be issued to the transferee, and the Company shall cancel the surrendered Warrant.  The Registered Holder shall pay all taxes and all other expenses and charges payable in connection with the transfer of Warrants pursuant to this Section 2.3.

2.4           Registration Rights.  The Company agrees (a) that the Warrant Shares shall be “Registrable Securities” under the Registration Rights Agreement (the “Registration Rights Agreement”) between the Company and the purchasers of shares of Series D Preferred Stock of the Company issued and sold pursuant to the terms of the Purchase Agreement dated as of November 15, 2004, between the Company and the purchasers of such shares. and (b) that the Registered Holder shall have the rights and obligations of a Holder set forth on the Registration Rights Agreement.

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2.5           Acknowledgement of Rights.  The Company will, at the time of exercise of this Warrant in accordance with the terms hereof, upon request of the Registered Holder, acknowledge in writing its continuing obligation to afford to such holder any rights (including without limitation, any right to registration of the Warrant Shares) to which such holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant, provided that if the holder of this Warrant shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such holder any such rights.

2.6           No Rights as Shareholder Until Exercise.  This Warrant does not entitle the Registered Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.  Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to the Registered Holder as the record owner of such shares as of the close of business on the Exercise Date.

2.7           Expenses of Delivery of Warrants.  Except as provided in Section 2.3 above, the Company shall pay all reasonable expenses, taxes (other than transfer taxes), and other charges payable in connection with the preparation, issuance and delivery of Warrants and related Warrant Shares hereunder.

2.8           Compliance with Securities Laws.  The Registered Holder (and its transferees and assigns), by acceptance of this Warrant, covenants and agrees that such Registered Holder is acquiring the Warrants evidenced hereby, and, upon exercise hereof, the Warrant Shares, for its own account as an investment and not with a view to distribution thereof.  Neither this Warrant nor the Warrant Shares issuable hereunder have been registered under the Securities Act or any state securities laws and no transfer of this Warrant or any Warrant Shares shall be permitted unless the Company has received notice of such transfer in the form of the assignment attached hereto as Exhibit B, accompanied, if requested by the Company, by an opinion of counsel reasonably satisfactory to the Company that an exemption from registration of such Warrant or Warrant Shares under the Securities Act is available for such transfer, except that no such opinion shall be required with respect to the Warrant Shares after the registration for resale of the Warrant Shares has become effective if the Warrant Shares are sold pursuant to the registration statement.  Upon any exercise of the Warrants prior to effective registration for resale or except as in accordance with Rule 144 under the Securities Act, certificates representing the Warrant Shares shall bear a restrictive legend substantially identical to that set forth as follows:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or the securities laws of any state (collectively, the “Acts”).  Neither the shares nor any interest therein may be offered, sold, transferred, pledged, or otherwise disposed of in the absence of an effective registration statement with respect to the shares under all of the applicable Acts, or an opinion of counsel satisfactory to Bioject Medical Technologies Inc. to the effect that such registrations are not required.”

(c)           Any purported transfer of the Warrant or Warrant Shares not in compliance with the provisions of this section shall be null and void.  Stop transfer instructions have been or will be imposed with respect to the Warrant Shares so as to restrict resale or other transfer thereof, subject to this Section 2.8.

ARTICLE III

Anti-Dilution Provisions

3.1           Adjustment of Exercise Price and Number of Warrant Shares.  The Exercise Price shall be subject to adjustment from time to time as hereinafter provided in this Article III.  Upon each adjustment of the Exercise Price, except pursuant to Sections 3.1(a)(iii) and (iv), the Registered Holder shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares of the Common Stock obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares of the Common Stock purchasable pursuant hereto immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

(a)           Exercise Price Adjustments.  The Exercise Price shall be subject to adjustment from time to time as follows:

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(i)            Adjustment for Stock Splits and Combinations. If the Company shall, at any time or from time to time after the date hereof (the “Original Issue Date”) while this Warrant remains outstanding, effect a subdivision of the outstanding Common Stock, the Exercise Price in effect immediately before such subdivision shall be proportionately decreased.  Conversely, if the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately before such combination shall be proportionately increased.  Any adjustment under this Section 3.1(a)(i) shall become effective at the close of business on the date the subdivision or combination becomes effective.

(ii)           Adjustment for Common Stock Dividends and Distributions.  If the Company, at any time or from time to time after the Original Issue Date while this Warrant remains outstanding makes, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock, in each such event the Exercise Price that is then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Exercise Price then in effect by a fraction (i) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Exercise Price shall be recomputed accordingly as of the close of business on such record date, and thereafter the Exercise Price shall be adjusted pursuant to this Section 3.1(a)(ii) to reflect the actual payment of such dividend or distribution.

(iii)          Adjustment for Reclassification, Exchange, and Substitution.  If at any time or from time to time after the Original Issue Date while this Warrant remains outstanding, the Common Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification, or otherwise (other than an Acquisition, Asset Transfer, subdivision or combination of shares, stock dividend, reorganization, merger, consolidation, or sale of assets provided for elsewhere in this Section 3.1(a)), in any such event the Registered Holder shall have the right thereafter to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the maximum number of shares of Common Stock into which such shares of Common Stock could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.

(iv)          Reorganizations, Mergers, Consolidations, or Sales of Assets.  If at any time or from time to time after the Original Issue Date while this Warrant remains outstanding, there is a capital reorganization of the Company, an Acquisition, an Asset Transfer (other than a recapitalization, or subdivision, combination, reclassification, exchange, or substitution of shares provided for elsewhere in this Section 3.1(a)), as a part of such capital reorganization, Acquisition, or Asset Transfer, provision shall be made so that the Registered Holder shall thereafter be entitled to receive upon exercise hereof the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock deliverable upon exercise immediately prior to such event would have been entitled as a result of such capital reorganization, subject to adjustment in respect of such stock or securities by the terms thereof.  In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 3.1(a) with respect to the rights of the Registered Holder after the capital reorganization, Acquisition, or Asset Transfer to the end that the provisions of this Section 3.1(a) (including adjustment of the Exercise Price then in effect and the number of shares issuable upon exercise) shall be applicable after that event and be as nearly equivalent as practicable.

(v)           Distributions of Securities.  In case of any distribution of any security (including rights or warrants to subscribe for any such secur­ities) of the Company (except Common Stock), evidences of its indebtedness, cash, or other assets to all of the holders of its Common Stock, then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of outstanding

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shares of Common Stock multiplied by the Current Market Price on the record date mentioned below, less the fair market value (as determined in good faith by the Board of Directors) of the securities, evidences of indebtedness, cash, or other assets distributed by the Company, and the denominator of which shall be the total number of outstanding shares of Common Stock multiplied by the Current Market Price; such adjustment shall become effective as of the record date for the determination of shareholders entitled to receive such distribution. The subdivision or combination of shares of Common Stock issuable upon exercise of this Warrant at any time outstanding into a greater or lesser number of shares of Common Stock shall not be deemed to be a reclassifica­tion of the Common Stock of the Company of this clause (v).

(vi)          Rounding of Calculations; Minimum Adjustment.  All calculations under this Section 3.1(a) and under Section 3.1(b) shall be made to the nearest cent.  Any provision of this Section 3.1 to the contrary notwithstanding, no adjustment in the Exercise Price shall be made if the amount of such adjustment would be less than one percent, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate one percent or more.

(vii)         Timing of Issuance of Additional Common Stock Upon Certain Adjustments.  In any case in which the provisions of this Section 3.1(a) shall require that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event issuing to the Registered Holder after such record date and before the occurrence of such event the additional shares of Common Stock or other property issuable or deliverable upon exercise by reason of the adjustment required by such event over and above the shares of Common Stock or other property issuable or deliverable upon such exercise before giving effect to such adjustment; provided, however, that the Company upon request shall deliver to such Registered Holder a due bill or other appropriate instrument evidencing such Registered Holder’s right to receive such additional shares or other property, and such cash, upon the occurrence of the event requiring such adjustment.

(viii)        Voluntary Adjustment by the Company.  The Company may at any time during the term of this Warrant, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors, in its sole discretion.

(b)           Statement Regarding Adjustments.  Whenever the Exercise Price shall be adjusted as provided in Section 3.1(a), and upon each change in the number of shares of the Common Stock issuable upon exercise of this Warrant, the Company shall forthwith file, at the office of any transfer agent for this Warrant and at the principal office of the Company, a statement showing in detail the facts requiring such adjustment and the Exercise Price and new number of shares issuable that shall be in effect after such adjustment, and the Company shall also cause a copy of such statement to be given to the Registered Holder.  Each such statement shall be signed by the Company’s chief financial or accounting officer.  Where appropriate, such copy may be given in advance and may be included as part of a notice required to be mailed under the provisions of Section 3.1(c).

(c)           Notice to Holders.  In the event the Company shall propose to take any action of the type described in clause (iii) or (iv) of Section 3.1(a), the Company shall give notice to the Registered Holder, in the manner set forth in Section 6.6, which notice shall specify the record date, if any, with respect to any such action and the approximate date on which such action is to take place.  Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require the fixing of a record date, such notice shall be given at least 10 days prior to the date so fixed, and in case of all other action, such notice shall be given at least 15 days prior to the taking of such proposed action.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

3.2           Costs.  The Registered Holder shall pay all documentary, stamp, transfer or other transactional taxes attributable to the issuance or delivery of the Warrant Shares upon exercise of this Warrant.  Additionally, the Company shall not be required to pay any taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificate for such Warrant Shares.  The Registered Holder shall reimburse the Company for any such taxes assessed against the Company.

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3.3           Reservations of Shares.  The Company shall reserve at all times so long as this Warrant remains outstanding, free from preemptive rights, out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the exercise of this Warrant, sufficient shares of Common Stock to provide for the exercise hereof.

3.4           Valid Issuance.  All shares of Common Stock which may be issued upon exercise of this Warrant will upon issuance by the Company be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof attributable to any act or omission by the Company, and the Company shall take no action which will cause a contrary result (including without limitation, any action which would cause the Exercise Price to be less than the par value, if any, of the Common Stock).

ARTICLE IV

Terms Defined

As used in this Warrant, unless the context otherwise requires, the following terms have the respective meanings set forth below or in the Section indicated:

Acquisition means the acquisition of the Company by another person or entity or group of affiliated persons or entities by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of the Company) that results in the transfer of more than 50% of the outstanding voting power of the Company.

Asset Transfer means the sale, lease, or other transfer of all or substantially all of the assets of the Corporation

Board of Directors means the Board of Directors of the Company.

Common Stock means the Company’s authorized Common Stock, no par value per share.

Company means Bioject Medical Technologies Inc., an Oregon corporation, and any other corporation assuming or required to assume the obligations undertaken in connection with this Warrant.

Current Market Price means the arithmetic average of the daily VWAPs per share of the Common Stock on the Principal Market for the 20 consecutive Trading Days ending on and including the Trading Day immediately prior to the date in question. If the Current Market Price cannot be determined under the foregoing method, the Current Market Price shall mean the fair value per share of Common Stock on such date as determined by the Board of Directors in good faith, irrespective of any accounting treatment.

Exchange Act means the Securities and Exchange Act of 1934, as amended.

Exercise Date is defined in Section 1.1.

Exercise Price is defined in the Preamble.

Majority Holders means at any time Registered Holders of Warrant Shares which shares constitute a majority of the outstanding Warrant Shares.

Original Issue Date is defined in Section 3.1(a)(i).

Outstanding means when used with reference to Common Stock at any date, all issued shares of Common Stock (including, but without duplication, shares deemed issued pursuant to Article III) at such date.

Person means any individual, corporation, partnership, trust, organization, association or other entity.

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Principal Market means whichever of (a) the national securities exchange, (b) the Nasdaq Stock Market, or (c) such other securities market on which the Common Stock is listed for trading which at such time constitutes the principal securities market for the Common Stock.

Registered Holder is defined in the Preamble.

Securities Act means the Securities Act of 1933 and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.

Trading Day means a day on whichever of (a) the national securities exchange, (b) the Nasdaq Stock Market, or (c) such other securities markets, in any case which at the time constitutes the Principal Market for the Common Stock, is open for general trading of securities.

VWAP of the Common Stock on any Trading Day means the volume-weighted average price of the Common Stock on the Principal Market, as reported by Bloomberg Financial, L.P. (based on a Trading Day from 9:30 a.m., Eastern Time, to 4:00 p.m., Eastern Time, using the AQR function, for such Trading Day; provided, however, if the volume-weighted average price of the Common Stock on the Principal Market is not reported by Bloomberg Financial, L.P., it will be determined by (a) using all regular way trades (including sold sales and late sales) reported by the appropriate reporting authority from 9:30 a.m., Eastern Time, to 4:00 p.m., Eastern Time, (b) multiplying each respective reported price by the total number of shares traded at that price, (c) adding together each of these calculated values to compile an aggregate sum, and (d) dividing the aggregate sum by the total number of reported shares that appear in the prints included in step (a); and provided, further, during any period the VWAP is being determined, the VWAP shall be subject to equitable adjustments form time to time on terms consistent with Section 3.1(a) and otherwise reasonably acceptable to the Majority Holders for (s) stock splits, (t) stock dividends, (u) combinations, (v) capital reorganizations, (w) issuance to all holders of Common Stock of rights or warrants to purchase shares of Common Stock, (x) distribution by the Company to all holders of Common Stock of evidences of indebtedness of the Company or cash (other than regular quarterly dividends), (y) tender offers by the Company or any subsidiary for, or other repurchases of shares of, Common Stock in one or more transactions which, individually or in the aggregate, result in the purchase of more than ten percent of the Common Stock outstanding, and (z) similar events relating to the Common Stock, in each case which occur, or with respect to which “ex-” trading of the Common Stock begins, during such period. If on any Trading Day there is no reported sale of Common Stock, the VWAP will not be determinable for such day.

Warrant means this Warrant and any successor or replacement Warrant delivered in accordance with Section 2.3 or 6.8.

Warrant Office is defined in Section 2.1.

Warrant Shares means the shares of Common Stock purchased or purchasable by the Registered Holder, or the permitted assignees of such Registered Holder, upon exercise of this Warrant pursuant to Article I hereof.

ARTICLE V

Covenant of the Company

The Company covenants and agrees that this Warrant shall be binding upon any corporation succeeding to the Company by merger, consolidation, or acquisition of all or substantially all of the Company’s assets.

ARTICLE VI

Miscellaneous

6.1           Entire Agreement.  This Warrant and the Registration Rights Agreement contain the entire agreement between the Registered Holder and the Company with respect to the Warrant Shares that it can purchase upon exercise hereof and the related transactions and supersedes all prior arrangements or understanding with respect thereto.

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6.2           Governing Law.  This Warrant shall be governed by and construed in accordance with the internal laws of the State of Oregon, without regard to its conflict of law provisions.

6.3           Waiver and Amendment.  Any term or provision of this Warrant may be waived at any time by the party which is entitled to the benefits thereof, and any term or provision of this Warrant may be amended or supplemented at any time by written consent of the parties (it being agreed that an amendment to or waiver under any of the provisions of Article III of this Warrant shall not be considered an amendment of the number of Warrant Shares or the Exercise Price).  No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence.

6.4           Illegality.  In the event that any one or more of the provisions contained in this Warrant shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions of this Warrant shall not, at the election of the party for whom the benefit of the provision exists, be in any way impaired.

6.5           Copy of Warrant.  A copy of this Warrant shall be filed among the records of the Company.

6.6           Notice.  Any notice or other document required or permitted to be given or delivered to the Registered Holder shall be delivered at, or sent by certified or registered mail to such Registered Holder at, the last address shown on the books of the Company maintained at the Warrant Office for the registration of this Warrant or at any more recent address of which the Registered Holder shall have notified the Company in writing.  Any notice or other document required or permitted to be given or delivered to the Company, other than such notice or documents required to be delivered to the Warrant Office, shall be delivered at, or sent by certified or registered mail to, the office of the Company at 211 Somerville Road, Route 202 North, Bedminster, New Jersey 07921 or any other address within the continental United States of America as shall have been designated in writing by the Company delivered to the Registered Holder.

6.7           Limitation of Liability; Not Stockholders.  Subject to the provisions of Article III, until the exercise of this Warrant, the Registered Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company, including, without limitation, the right to vote, to receive dividends and other distributions, or to receive notice of, or attend meetings of stockholders or any other proceedings of the Company.  Until the exercise of this Warrant, no provision hereof, and no mere enumeration herein of the rights or privileges of the Registered Holder, shall give rise to any liability of such Registered Holder for the purchase price of any shares of Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

6.8           Exchange, Loss, Destruction, etc. of Warrant.  Upon receipt of evidence satisfactory to the Company (an affidavit of the Registered Holder shall be satisfactory evidence) of the loss, theft, mutilation or destruction of this Warrant, and, in the case of any such loss, theft or destruction, upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company, or, in the event of such mutilation upon surrender and cancellation of this Warrant, the Company will make and deliver a new Warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrant; provided, however, that the original Registered Holder of this Warrant shall not be required to provide any such bond of indemnity and may in lieu thereof provide his agreement of indemnity.  Any Warrant issued under the provisions of this Section 6.8 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an original contractual obligation on the part of the Company.  This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.  The Registered Holder of this Warrant shall pay all taxes (including securities transfer taxes) and all other expenses and charges payable in connection with the preparation, execution and delivery of replacement Warrant(s) pursuant to this Section 6.8.

6.9           Headings.  The Article and Section and other headings herein are for convenience only and are not a part of this Warrant and shall not affect the interpretation thereof.

6.10         Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and

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the successors and permitted assigns of Registered Holder.  The provisions of this Warrant are intended to be for the benefit of all Registered Holders from time to time of this Warrant and shall be enforceable by any such Registered Holder or holder of Warrant Shares.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name.

Dated: November 15, 2004

BIOJECT MEDICAL TECHNOLOGIES INC.

By

Name:

Title:

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Exhibit A

PURCHASE FORM

To:	Bioject Medical Technologies Inc.	Dated:                , 200
	211 Somerville Road, Route 202 North
	Bedminster, New Jersey 07921

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.         ), hereby irrevocably elects to purchase                  shares of the Common Stock covered by such Warrant.

The undersigned herewith makes payment of the full exercise price for such shares at the price per share provided for in such Warrant, which is $           per share in lawful money of the United States.

[                                                                          ]

Name:

Title:

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Exhibit B

ASSIGNMENT

For value received,                                              , hereby sells, assigns and transfers unto                                                  the within Warrant, together with all right, title and interest therein and does hereby irrevocably constitute and appoin                                                   attorney, to transfer said Warrant on the books of the Company, with full power of substitution.

Dated:                         , 200    

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