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EXHIBIT 10.9
$20,000,000.00 December 10, 1996
San Francisco, California
DEBENTURE
FOR VALUE RECEIVED, the undersigned, INFLUENCE, INC., a Delaware
corporation (hereinafter, together with its successors in title and assigns,
called "Borrower"), promises and agrees to pay on the one year anniversary of
the date hereof (unless this Debenture is converted as provided in Section 3
below) to the order of MEDTRONIC, INC. (hereinafter, together with its
successors in title and assigns, called "Holder"), at 0000 Xxxxxxx Xxxxxx X.X.,
Xxxxxxxxxxx, Xxxxxxxxx 00000 or such other address provided to Borrower by
written notice, the principal sum of Twenty Million Dollars ($20,000,000.00) in
immediately available funds, together with interest from the date hereof on the
unpaid principal amount at a per annum rate (computed on the basis of actual
number of days elapsed in a 365-day year) equal to the "prime" or "reference"
rate in effect from time to time as announced by Norwest Bank Minnesota N.A.
This Debenture is being issued pursuant to the letter agreement (the "Letter
Agreement") dated November 8, 1996 among Borrower, Medtronic and certain
stockholders of Borrower. Capitalized terms not defined in this Debenture have
the meanings set forth in the Letter Agreement.
The obligations of Borrower and the rights of each Holder under and
pursuant to this Debenture shall be subject to all of the following terms and
conditions, and Borrower and Holder agree to be bound by such terms and
conditions:
1. Event of Default. The entire principal amount outstanding and all
accrued but unpaid interest thereon shall, at the option of Holder, become
immediately due and payable upon the occurrence of any of the following "Events
of Default" (whether such occurrence shall be voluntary or involuntary or come
about or be effected by operation of law or otherwise):
(a) if Borrower or any of its subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its inability to
pay or generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of Borrower or any of its subsidiaries or of any
substantial part of the assets of Borrower or any of its subsidiaries or shall
commence any case or other proceeding relating to Borrower or any of its
subsidiaries under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or if any such petition or application
shall be filed or any such case or other proceeding shall be commenced against
Borrower or any of its subsidiaries; or
(b) if there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty (30) days, whether or not consecutive, any
final (as to which the time for further appeals has expired or to which the
appeals process has been exhausted) judgment against
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Borrower or any of its subsidiaries that, with other outstanding final judgments
undischarged against Borrower or any of its Subsidiaries, exceeds in the
aggregate $500,000; or
(c) if Borrower shall be in default under the terms of any
other debt or such other event has occurred resulting in the acceleration of any
other debt in the aggregate amount of $500,000 or more; or
(d) if Borrower materially breaches any of its
representations, warranties, covenants or agreements set forth herein or in the
Letter Agreement.
2. Remedies. When any Event of Default has occurred and is continuing,
Holder shall have the option to declare the unpaid principal balance hereof and
all accrued and unpaid interest thereon (through the date of full payment
hereof) to be immediately due and payable. In addition, Holder shall have and
may exercise all other rights and remedies permitted by law.
3. Mandatory Conversion to Common Stock. In the event this Debenture
has not previously become due and payable and Holder does not exercise the
Option under the Letter Agreement prior to the Option's Termination Date, then,
unless there has been a material breach by Borrower or the Signing Stockholders
of the representations, warranties or agreements hereunder or under the Letter
Agreement, the unpaid principal and interest under this Debenture shall be
converted as of the Termination Date into such number of shares of common stock
of Borrower (the "Conversion Shares") as results by dividing the unpaid
principal and interest under this Debenture by the "Per Share Conversion Price."
The "Per Share Conversion Price" shall be equal to $400 million divided by the
sum of the total number of shares of common stock of Borrower then outstanding
plus the total number of shares of common stock of Borrower subject to then
outstanding convertible securities, options, warrants or other rights to acquire
directly or indirectly Borrower common stock. In the event of such conversion of
this Debenture, Borrower shall on the Termination Date deliver to Holder, or to
such person or persons as designated in writing by Holder, a certificate or
certificates representing the number of fully paid and nonassessable Conversion
Shares together with any cash payable in respect of a fractional share. Such
conversion shall be deemed to have been effected at the close of business on the
Termination Date, so that the person entitled to receive the Conversion Shares
shall be treated for all purposes as having become the record holder of such
shares at such time.
4. Authorization and Reservation of Shares. Borrower covenants and
agrees that all Conversion Shares which may be issued upon conversion of this
Debenture will, upon issuance, be duly authorized and issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. Borrower further covenants and agrees that Xxxxxxxx shall at all
times have authorized, and reserved for the purpose of issue upon conversion
hereof, a sufficient number of shares of its common stock for the conversion of
this Debenture.
5. Registration Rights. If this Debenture is converted into Conversion
Shares, then thereafter each time Borrower determines to prepare and file a
registration statement under the Securities Act of 1933 (the "Securities Act")
in connection with the proposed offer and sale of
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any of its securities by it or any of its security holders other than Borrower's
initial public offering ("IPO") of any of its securities, Borrower will give
written notice thereof to the Holders of the Conversion Shares. Upon the written
request of any such Holder, Borrower will cause such Holder's Conversion Shares
to be included in such registration statement. If any registration pursuant to
this Section will be underwritten on a firm commitment basis, Borrower may
require that the Conversion Shares requested for inclusion be included in the
underwriting on the same terms and conditions as securities otherwise being sold
through the underwriters, subject to customary underwriter cutbacks (in which
case such cutbacks shall be distributed pro rata among the Holders of the
Conversion Shares and all other selling stockholders participating in the
registration). In connection with Xxxxxxxx's IPO, each Holder agrees to enter
into a customary agreement not to sell following the IPO any of the Holder's
Conversion Shares in the public market for such period of time (the "lock-up
period"), not to exceed 180 days, that is no greater than the shortest lock-up
period to which a Borrower stockholder of equal or greater holdings or a
Borrower director or officer is subject; provided, Holder will not be required
to enter into any such lock-up agreement unless each Borrower stockholder of
equal or greater holdings and each Borrower director and officer is also subject
to such a lock-up. In addition, at any time after the initial public offering of
stock by Borrower, Borrower will prepare and file a registration statement, at
its expense, upon the request of Holders of at least 50% of the Conversion
Shares not previously sold through a registration, to register such Conversion
Shares on behalf of such Holders for resale and maintain such registration,
including registrations under applicable state securities laws, for a period of
six months if Borrower is not eligible to use Form S-3 for such registration or
for 12 months if Borrower is eligible to use Form S-3 for such registration.
Borrower will give notice to each of the other Holders of Conversion Shares who
did not join in such request and afford them a reasonable opportunity to do so.
Borrower will bear all expenses incurred by it in the registrations described in
this paragraph. Borrower shall also pay up to an aggregate of $15,000.00 of
legal fees incurred in such registration by one counsel for all of the Holders.
The Holders shall pay all underwriting discounts and selling commissions with
respect to the sale of the Conversion Shares, the expenses of underwriters, if
any, engaged by the Holders in connection with the Holders' demand registration
and the fees and expenses of the Holders' counsel in excess of the
above-referenced $15,000.00. Borrower will provide the Holders and their
underwriters, if any, customary indemnification covering the accuracy and
completeness of the registration statement and prospectus involved in such
registrations.
6. Miscellaneous
(a) Upon default in its obligations hereunder, Borrower shall
pay the costs, including reasonable attorneys' fees, of Xxxxxx in the pursuit of
such Xxxxxx's remedies hereunder.
(b) Borrower hereby waives presentment, demand for payment,
notice of dishonor, and all other notices or demands in connection with the
delivery, acceptance, performance, default or endorsement of this Debenture.
(c) No delay or failure on the part of Holder in exercising any
right or remedy hereunder, or at law or at equity, shall operate as a waiver of
or preclude the exercise of such
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right or remedy or of any other right or remedy, and no single or partial
exercise by Holder of any such right or remedy shall preclude or estop another
or further exercise thereof or exercise of any other right or remedy. No waiver
by Holder shall be effective unless in writing signed by Xxxxxx. A waiver on any
one occasion shall not be construed as a waiver of any such right or remedy on
any prior or subsequent occasion.
(d) No amendment, modification or waiver of any provision of
this Debenture shall be effective unless the same shall be in writing and signed
by Xxxxxx.
(e) This Debenture shall be governed by and construed in
accordance with the laws of the State of Minnesota.
(f) If any provision or application of this Debenture is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect.
(g) The terms and provisions of this Debenture shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of Borrower and the Holders.
(h) Upon receipt of evidence reasonably satisfactory to
Borrower of the loss, theft, destruction or mutilation of this Debenture and, in
the case of any such mutilation, upon surrender of this Debenture to Borrower
for cancellation, Borrower shall issue a new Debenture identical in form to the
lost, stolen, destroyed or mutilated Debenture.
IN WITNESS WHEREOF, Xxxxxxxx has caused this Debenture to be
signed by its authorized officer and dated as of the date stated above.
INFLUENCE, INC.
By: /s/ XXXXX XXXX
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Its: President & CEO
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