Exhibit 10.26.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of October 8, 2004, by
and among Refocus Group, Inc., a Delaware corporation (the "Company"), and the
lenders listed on Exhibit A attached hereto (each, a "Lender" and, collectively,
the "Lenders").
WHEREAS, the Company desires to borrow from the Lenders, and the Lenders
desire to lend to the Company, the aggregate principal amount of up to
$1,000,000, such indebtedness to be evidenced by convertible promissory notes in
the form attached hereto as Exhibit B for all Lenders, except for Verus
International Group Ltd. and its designees, which form of convertible promissory
note is attached hereto as Exhibit C (each such convertible promissory note, as
amended, modified and restated from time to time, is referred to herein,
individually, as a "Note", and all of such convertible promissory notes, as
amended, modified and restated from time to time, are, collectively, referred to
herein as the "Notes").
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the Lenders and the Company, intending to be
legally bound, hereby agree as follows:
1. AGREEMENT TO LEND. Subject to the terms and conditions of this Agreement
and the Loan Documents (hereinafter defined), each Lender hereby agrees to lend
to the Company the principal amount specified opposite such Lender's name on
Exhibit A attached hereto and the Company agrees to issue to the Lender (payable
to the order of the Lender or its nominee, if any) a Note evidencing such
obligation to the Lender on the Closing Date (hereinafter defined). The
obligations of each Lender shall be several and not joint, and no Lender shall
have any obligation or liability to any person for the performance or
non-performance by any other Lender hereunder or under any of the Loan
Documents.
2. CLOSING. The closing (the "Closing") shall occur on the day of the
satisfaction or waiver of all conditions or obligations of the Lenders and the
Company set forth in Sections 3.1 and 3.2 hereof (the "Closing Date").
3. CONDITIONS TO CLOSING; CLOSING DELIVERIES; CLOSING IN ESCROW. The
obligations of the Company and the Lenders to make the closing deliveries set
forth in Sections 3.3 or 3.4, respectively, shall be conditioned upon the
simultaneous delivery of the closing deliveries required to be made by the other
party hereto pursuant to subsections Sections 3.3 or 3.4.
3.1 Company's Conditions to Closing. The Company's obligation to issue
the Notes to the Lenders is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that these
conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
(a) Closing Deliveries. The Company shall have received all
documents, duly executed in a form reasonably satisfactory to the
Company set forth in Section 3.4 hereof.
(b) Representations and Warranties. The representations and
warranties of the Lenders in this Agreement shall be true and correct
when made and at the time of the Closing.
(c) No Litigation. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or governmental
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authority of competent jurisdiction or any self-regulatory
organization having authority over the parties or the matters
contemplated hereby that prohibits the consummation of any of the
transactions contemplated by the Loan Documents.
3.2 Lenders' Conditions to Closing. The Lenders' obligation to advance
the principal amount of the Notes to the Company as set forth in Section
3.4 hereof is subject to the fulfillment, prior to or at the Closing, of
the following conditions:
(a) Representation and Warranties. The representations and
warranties of the Company in this Agreement shall be true and correct
when made and at the time of the Closing.
(b) Performance; No Default. The Company shall have performed and
complied with all agreements and conditions contained in this
Agreement and required to be performed or complied with by it prior to
or at the Closing, unless waived by the Lenders, and after giving
effect to the issuance of the Notes, no Event of Default (as defined
in the Notes) shall have occurred and be continuing.
(c) Consent of Other Lenders. Any consent or approval required to
be obtained from any lender or holder of any outstanding debt for
borrowed money of the Company and any amendment and agreement pursuant
to which any debt for borrowed money may have been incurred by the
Company and any other consents, which shall be necessary to permit the
consummation of the transactions contemplated hereby, shall have been
obtained.
(d) Closing Deliveries. Lenders shall have received all
documents, duly executed in a form reasonably satisfactory to the
Lenders, set forth in Section 3.3 hereof.
(e) No Litigation. No litigation, statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by or in any court or governmental
authority of competent jurisdiction or any self-regulatory
organization having authority over the parties or the matters
contemplated hereby that prohibits the consummation of any of the
transactions contemplated by the Loan Documents.
3.3 Closing Deliveries of the Company. At the Closing, the Company
shall deliver to the Lenders the following, all of which shall be in form
and content satisfactory to the Lenders and their counsel:
(a) Note. The Notes made payable to the order of each respective
Lender or its nominee, if any, in the principal amount specified
opposite such Lender's name on Exhibit A hereto.
(b) Warrant. The Warrants (hereinafter defined), duly executed
and delivered by the Company.
3.4 Closing Deliveries of the Lenders. Prior to the Closing, the
entire principal amount specified opposite such Lender's name on Exhibit A
attached hereto shall be delivered to the Escrow Agent (hereinafter
defined) by wire transfer in immediately available funds or by certified
check or personal check in accordance with the wiring instructions or
mailing instructions, as applicable, set forth in Exhibit D attached
hereto.
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3.5 Closing in Escrow. Notwithstanding anything herein to the
contrary, the Closing shall not occur unless and until at least $500,000
("Minimum Amount") has been deposited with Jenkens & Xxxxxxxxx, a
Professional Corporation ("Escrow Agent"), in accordance with Section 3.4
hereof. If the Minimum Amount is not deposited with the Escrow Agent on or
prior to October 8, 2004, the Escrow Agent will thereupon immediately
return any and all funds deposited by a Lender with the Escrow Agent to
such Lender.
4. WARRANTS.
4.1 Issuance of Warrants. On the Closing Date, the Company shall issue
to each Lender, for no additional cash consideration, but as consideration
for the risks assumed by the Lender, a warrant to purchase that number of
shares of Company common stock (the "Warrant", and together with the Notes,
collectively, the "Loan Documents") equal to the principal amount specified
opposite such Lender's name on Exhibit A attached hereto divided by $1.00.
The agreement evidencing the Warrant shall have the exercise price, shall
be for the term and shall otherwise be in substantially the form, as set
forth in Exhibit E attached hereto. The number of shares issuable upon
exercise of the Warrants shall be appropriately adjusted to reflect any
stock split, stock dividend, combination, recapitalization or such other
adjustment to the Company's common stock occurring subsequent to the date
hereof and prior to their respective issuance in accordance with the terms
of the agreement evidencing the Warrants.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Lenders that the following are true on the date
hereof and will be true and correct at the Closing, as if made on that date:
5.1 The Company has all requisite power and authority to execute and
deliver this Agreement and the other agreements and instruments
contemplated herein to which it is a party and to consummate the
transactions contemplated by this Agreement and the other agreements and
instruments contemplated herein to which it is a party.
5.2 The execution of this Agreement and the documents executed by the
Company pursuant to this Agreement have been duly authorized by all
necessary actions on the part of the Company, have been executed and
delivered, and constitute valid, legal, binding and enforceable agreements
of the Company, except as may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditor rights,
(b) laws and judicial decisions regarding indemnification for violations of
federal securities laws, (c) the availability of specific performance or
other equitable remedies, and (d) with respect to any indemnification
agreements set forth herein or therein, principles of public policy.
5.3 The Notes and the Warrants are duly authorized and, when issued,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity and except that rights to
indemnification and contribution under the Note may be limited under
applicable law.
5.4 Subject to sufficient number of authorized shares of Company
common stock and any required stockholder approvals, the shares of Company
common stock issuable upon conversion of the Notes, when issued, will be
duly authorized, validly issued, fully paid and non-assessable.
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5.5 The Company has reserved for issuance that number of shares of
Company common stock necessary for the exercise of the Warrants, and such
shares of Company common stock issuable upon exercise of the Warrants, when
issued by the Company for the consideration stated in, and in accordance
with the terms and conditions of, the Warrants, will be duly authorized,
validly issued, fully paid and non-assessable.
5.6 No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any governmental authority or any other
individual, corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency
or political subdivision thereof) or other entity of any kind is necessary
or required in connection with the execution, delivery and performance by
the Company of this Agreement, or any other documents executed pursuant to
this Agreement, except for federal and state securities filings, if any.
5.7 The Confidential Private Offering Memorandum of the Company, dated
September 21, 2004, as supplemented, amended and modified, does not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
6. REPRESENTATIONS AND WARRANTIES OF THE LENDERS. Each Lender hereby
represents and warrants, severally and not jointly, to the Company that:
6.1 Such Lender has all requisite power and authority to execute and
deliver this Agreement and the other agreements and instruments
contemplated herein to which it is a party and to consummate the
transactions contemplated by this Agreement and the other agreements and
instruments contemplated herein to which it is a party.
6.2 The execution of this Agreement and the documents executed by such
Lender pursuant to this Agreement have been duly authorized by all
necessary actions on the part of such Lender, have been executed and
delivered, and constitute valid, legal, binding and enforceable agreements
of such Lender, except as may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditor rights,
(b) laws and judicial decisions regarding indemnification for violations of
federal securities laws, (c) the availability of specific performance or
other equitable remedies, and (d) with respect to any indemnification
agreements set forth herein or therein, principles of public policy.
6.3 Such Lender is aware that an investment in the Note, the Warrant
and any shares of Company common stock acquirable upon the conversion of
the Note and exercise of the Warrant (the "Shares" and together with the
Note and the Warrant, collectively, the "Securities"), is speculative and
involves a high degree of risk. Such Lender has carefully considered the
risks of this investment.
6.4 Such Lender has such knowledge and experience in financial and
business matters and is capable of evaluating the merits and risks of
investing in the Securities and of protecting its interest in connection
with this investment.
6.5 Such Lender is purchasing the Securities for its own account, for
investment purposes only and not with a view to the resale or distribution
of any of the Securities. Such Lender understands that it must bear the
economic risk of the investment for an indefinite period of time because
the sale and issuance of the Securities by the Company to such Lender has
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not been registered under the Securities Act of 1933, as amended (the
"Act"), pursuant to an exemption from registration under Regulation D
promulgated under the Act or such other available exemptions thereto, nor
under any applicable state securities laws, and the Securities may not be
sold or transferred by such Lender in the absence of evidence satisfactory
to the Company of compliance with applicable laws, which evidence may
include an opinion of counsel satisfactory to the Company that, among other
things, the Securities have been registered under the Act and all
applicable state securities laws or that such registrations are not
required.
6.6 Such Lender represents that it is an "accredited investor" within
the meaning of Rule 501 of Regulation D, as presently in effect, as
promulgated under the Act.
6.7 Based upon the information provided to such Lender, no approval,
consent, exemption, authorization, or other action by, or notice to, or
filing with, any governmental authority or any other individual,
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency
or political subdivision thereof) or other entity of any kind is necessary
or required in connection with the execution, delivery and performance by
such Lender of this Agreement, or any other documents executed by such
Lender pursuant to this Agreement, except for federal and state securities
filings, if any.
7. REGISTRATION RIGHTS. The rights and obligations of the Company with
respect to the registration of the Shares for resale, if any, shall be the same
as, and pari passu with, those set forth for new investors in the registration
rights provisions (the "Registration Rights Provisions") in the documents to be
entered into by the Company in connection with a completed financing that is in
the form of equity securities of the Company aggregating at least $2.0 million,
excluding the outstanding principal balance and interest due under the Notes on
the date thereof, to be used for working capital and general corporate purposes.
The Company may include in a registration statement covering the resale of the
Shares other securities of the Company to be resold by holders other than the
Lenders. The rights and obligations of the Lenders with respect to the
registration of the Shares for resale, if any, shall be as set forth in
Registration Rights Provisions. The terms of Registration Rights Provisions are
hereby incorporated by reference herein.
8. USE OF PROCEEDS. The Company will use the net proceeds generated from
the issuance of the Notes for the following purposes:
(a) For working capital and general corporate purposes of the Company;
and
(b) To take such action as may be necessary to secure additional
funding.
9. Miscellaneous.
9.1 No Waiver; Cumulative Remedies. No failure on the part of the
Lenders or the Company to exercise, and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under this Agreement
preclude any further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies provided for in this Agreement
are cumulative and not exclusive of any rights and remedies provided by
law.
9.2 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lenders and the Company and their respective
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heirs, personal representatives, successors and assigns, except that the
Company may not assign any of its rights or obligations under this
Agreement without the prior written consent of the Lenders.
9.3 Amendment; Entire Agreement. THIS AGREEMENT, INCLUDING THE
EXHIBITS ATTACHED HERETO, EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO
THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF
THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
The provisions of this Agreement may be amended or waived only by an
instrument in writing signed by the parties hereto.
9.4 Governing Law; Severability. This Agreement shall be governed by,
and construed in accordance with, the applicable law pertaining in the
State of New York, other than those conflict of law provisions that would
defer to the substantive laws of another jurisdiction. This governing law
election has been made by the parties in reliance (at least in part) on
Section 5-1401 of the General Obligations Law of the State of New York, as
amended (as and to the extent applicable), and other applicable law. In the
event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law (as determined by a court of
competent jurisdiction), then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof that may
prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
9.6 Headings. The headings, captions and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
9.7 Other Agreements. Except as specifically set forth in the Loan
Documents, the Loan Documents shall not constitute a waiver of the Lenders'
rights, the Company's obligations or the conditions, if any, contained any
other agreements, instruments or documents, as previously amended, modified
and restated, by and between the Company and each Lender hereto.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the Company and the Lenders have caused this
Agreement to be duly executed as of the day and year first above written.
COMPANY:
REFOCUS GROUP, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxx
Name: Xxxx X. Xxx
Title: Vice President
EXHIBITS AND OTHER SIGNATURES INTENTIONALLY OMITTED.
