Exhibit 10.1
BRIDGE LOAN AGREEMENT
THIS BRIDGE LOAN AGREEMENT (this "Agreement") is made and entered into as
of December 13, 2001 by and between RESTORAGEN, INC., a Delaware corporation
("Restoragen" or the "Company"), MEDTRONIC INTERNATIONAL, LTD., a Delaware
corporation ("Medtronic"), and those persons listed on Exhibit A (Medtronic and
each of such persons individually referred to as a "Lender"; collectively
referred to as the "Lenders").
RECITALS
WHEREAS, each of the Lenders desires to lend Restoragen the principal
amount set forth opposite such Lender's name on Exhibit A (the "Loans"), each
such Loan to be evidenced by a Secured Convertible Promissory Note in the form
attached hereto as Exhibit B (individually a "Note", collectively the "Notes");
WHEREAS, Restoragen desires to grant Medtronic, as agent for itself and
the other Lenders, a first priority security interest in Restoragen's
intellectual property to secure payment of the Notes pursuant to a Security
Agreement in the form attached hereto as Exhibit C (the "Security Agreement");
and
WHEREAS, in partial consideration for making the Loans, Restoragen desires
to issue each of the Lenders a warrant to purchase common stock of Restoragen
in the form attached hereto as Exhibit D (individually a "Warrant",
collectively the "Warrants").
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1) Specific Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
"Affiliate" of a specified person (natural or juridical) means a person
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, the person specified.
"Control" shall mean ownership of more than 50% of the shares of stock entitled
to vote for the election of directors in the case of a corporation, and more
than 50% of the voting power in the case of a business entity other than a
corporation.
"Agreement" means this Agreement and all Exhibits and Schedules hereto.
"Closing" has the meaning set forth in Section 2.5.
"Collateral" means as defined in the Security Agreement.
"Common Stock" means the Company's Common Stock, par value $.01 per share.
"Confidential Information" means discoveries, ideas, technology, know-how,
trade secrets, processes, formulas, drawings and designs, and unpublished
information disclosed (whether before or during the term of this Agreement) by
one of the parties (the "disclosing party") to the other party (the "receiving
party") or generated under this Agreement, and which is marked as proprietary
or confidential as provided below, excluding information that:
(a) was already in the possession of the receiving party prior to its
receipt from the disclosing party (provided that the receiving party is
able to provide the disclosing party with reasonable documentary proof
thereof);
(b) is or becomes part of the public domain by reason of acts not
attributable to the receiving party;
(c) is or becomes available to receiving party from a source other
than the disclosing party which source, to the best of receiving party's
knowledge, has rightfully obtained such information and has no obligation
of non-disclosure or confidentiality to the disclosing party with respect
thereto;
(d) is independently developed by the receiving party completely
without reference to any Confidential Information of the disclosing party,
as evidenced by the receiving party's written records; or
(e) has been or must be publicly disclosed by reason of legal,
accounting or regulatory requirements beyond the reasonable control, and
despite the reasonable efforts of the receiving party. In any such event,
disclosure shall be subject to delivery of a prior written notice to the
disclosing party, so that the disclosing party may seek a protective order
or other appropriate remedy.
All Confidential Information disclosed by one party to the other under
this Agreement shall be in writing and bear a legend "Proprietary,"
"Confidential" or words of similar import or, if disclosed in any manner other
than writing, shall be preceded by an oral statement indicating that the
information is proprietary or confidential, and shall be followed by
transmittal of a reasonably detailed written summary of the information
provided to the receiving party with identification as Confidential Information
designated as above within thirty (30) days (except in the case of information
disclosed during any meetings of the Company's Board of Directors or any
committee thereof).
"Conversion Shares" means the shares of Preferred Stock or Common Stock
issued or issuable upon conversion of the Notes.
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"Environmental Laws or Regulations" means any federal, state or local
statute, law, ordinance or regulation that relates to or deals with Hazardous
Substances, human health or the environment, and all regulations promulgated by
a regulatory body pursuant to any of the foregoing statutes, laws, regulations,
or ordinances.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
all regulations promulgated thereunder.
"Exclusive Period" has the meaning set forth in Section 3.1.
"Field" means the treatment or management of diabetes.
"Financial Statements" means Restoragen's consolidated financial
statements included in the SEC Documents.
"Form S-3" means such form under the Securities Act in effect on the date
hereof or any successor registration form under the Securities Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
"GLP" means the peptide molecule known as GLP-1 (7-36) Amide.
"Hazardous Substance" means asbestos, urea formaldehyde, polychlorinated
biphenyls, nuclear fuel or materials, chemical waste, radioactive materials,
explosives, known carcinogens, petroleum products, pesticides, fertilizers, or
other substance which is dangerous, toxic, or hazardous, or which is a
pollutant, contaminant, chemical, material or substance defined as hazardous or
as a pollutant or contaminant in, or the use, transportation, storage, release
or disposal of which is regulated by, any Environmental Laws or Regulations.
"Holder" means Medtronic or any person owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Article 8.
"Intellectual Property" means letters patent and patent applications;
trademarks, service marks and registrations thereof and applications therefor;
copyrights and copyright registrations and applications; all discoveries,
ideas, technology, know-how, trade secrets, processes, formulas, drawings and
designs, computer programs or software; and all amendments, modifications, and
improvements to any of the foregoing.
"Indemnifiable Losses" has the meaning set forth in Section 9.1.
"knowledge" means actual knowledge of a fact or the knowledge which such
person could reasonably be expected to have based on reasonable inquiry. The
knowledge of the Company shall include the knowledge of those executive
officers and other members of management listed in the Company's 2001 Proxy
Statement.
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"Lead Investors" means each of the SMS Group (acting by the vote or
consent of the holders of a majority of the aggregate principal amount of Notes
issued to the SMS Group) and Medtronic.
"Liens" means liens, mortgages, charges, security interests, claims,
voting trusts, pledges, encumbrances, options, assessments, restrictions, or
third-party or spousal interests of any nature.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, results of operations, assets (including intangible
assets), liabilities or condition (financial or otherwise) of Restoragen and
the Restoragen Subsidiaries, taken as a whole, or (b) the ability of Restoragen
to perform its obligations under this Agreement or any of the Transaction
Documents or any other agreement or instrument to be entered into in connection
with this Agreement.
"Notes" means as defined in the Recitals.
"Preferred Stock" means any class or series of Restoragen capital stock
having a preference over the common stock upon a liquidation of Restoragen.
"Product Liability" means any liability, claim or expense, including but
not limited to attorneys' fees and medical expenses, arising in whole or in
part out of a breach of any express or implied product warranty, strict
liability in tort, negligent manufacture of product, negligent provision of
services, product recall, or any other allegation of liability arising from the
design, testing, manufacture, packaging, labeling (including instructions for
use), or sale of products; provided that any such liability, claim or expense
relates to a product that is designed, manufactured or sold by Restoragen or
any Restoragen Subsidiary.
"Proposed Transaction" has the meaning set forth in Section 3.1.
"Real Property" means and is limited to that portion of any real property
with respect to which Restoragen or any Restoragen Subsidiary has or had a
leasehold interest, as such portion of real property is defined in the lease
relating to such real property, between Restoragen or any Restoragen
Subsidiary, as tenant, and the owner of such property, and any real property
owned by Restoragen or any Restoragen Subsidiary prior to or as of the date of
this Agreement.
"Register," "Registered," and "Registration" mean a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering by the SEC of effectiveness of
such registration statement.
"Registrable Securities" means (i) the Common Stock issuable or issued
upon conversion of the Notes or the Conversion Shares or upon exercise of the
Warrants, and (ii) any Common Stock issued as (or issuable upon the conversion
or exercise of any warrant, right, or other security issued as) a dividend or
other distribution with respect to, or in exchange for or in replacement of,
the Common Stock referenced in the preceding clause (i). Notwithstanding the
foregoing, Registrable Securities shall not include any securities sold by a
person to the public either pursuant to a registration statement or Rule 144
under the Securities Act or sold in a
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private transaction in which the transferor's rights under Article 8 of this
Agreement are not assigned.
"Registration Expenses" means all expenses incurred by the Company in
complying with Article 8 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, reasonable fees and disbursements of a
single special counsel for the Holders of Registrable Securities, and blue sky
fees and expenses (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company).
"Restoragen's Notice" has the meaning set forth in Section 3.1.
"SEC" means the United States Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"SEC Documents" means all documents filed by Restoragen with the SEC after
December 31, 2000.
"Secured Party" means as defined in the Security Agreement.
"Securities Act" means the United States Securities Act of 1933, as
amended, and all regulations promulgated thereunder.
"Security Agreement" means as defined in the Recitals.
"Selling Expenses" means all underwriting discounts and commissions
applicable to a sale of Registrable Securities.
"SMS Group" means the Lenders set forth on Exhibit A hereto or their
permitted successors and assigns of Notes issued hereunder.
"SMS Securities" means SMS Securities Sigg Merkli Xxxxxxxxx XX, a company
organized under the laws of Switzerland.
"Transaction Documents" means the Notes, the Warrants and the Security
Agreement.
"Warrants" means as defined in the Recitals.
"Warrant Shares" means the shares of Common Stock issued or issuable upon
exercise of the Warrants.
1.2) Definitional Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular provisions of this Agreement.
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(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa. Terms referring to a masculine
gender shall be deemed to refer to the feminine or neuter genders, as
applicable.
(c) References to an "Exhibit" or to a "Schedule" are, unless
otherwise specified, to one of the Exhibits or Schedules attached to or
referenced in this Agreement, and references to an "Article" or a
"Section" are, unless otherwise specified, to one of the Articles or
Sections of this Agreement.
(d) The term "person" includes any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or
any department or agency thereof.
(e) The term "dollars" or "$" shall refer to the currency of the
United States of America.
(f) All references to time shall refer to Minneapolis, Minnesota
time.
ARTICLE 2
LOANS AND SECURITY INTEREST
2.1) Loan. Subject to the terms and conditions hereof, at the Closing,
Medtronic shall loan Restoragen the principal amount of Ten Million Dollars
($10,000,000) and each of the other Lenders shall loan to Restoragen the
principal amount set forth opposite such Lender's name on Exhibit A. Each Loan
shall be evidenced by a Note to be executed and delivered by Restoragen at the
Closing.
2.2) Warrants. At the Closing, Restoragen shall issue and deliver to each
Lender a Warrant.
2.3) Use of Proceeds. Restoragen shall use proceeds of the Loans solely
for product development of Restoragen's current products and related operating
and administrative costs. Without limiting the generality of the foregoing,
Restoragen shall not use any proceeds of the Loans to redeem shares owned by or
make distributions or loans to any shareholders of Restoragen or repay existing
debt obligations; except that Restoragen may use proceeds of the Loans to (i)
redeem shares of its Series F Preferred Stock to the extent waivers of the
mandatory redemption provision have not been obtained and (ii) pay a commission
of 6% to SMS Securities with respect to $8 million of Loan proceeds and
reimburse SMS Securities and Medtronic for reasonable expenses not to exceed
$20,000 each.
2.4) Security Agreement and Intercreditor Provisions.
(a) At the Closing, Restoragen and Medtronic, as agent for itself and the
other Lenders, shall execute and deliver the Security Agreement. At the
Closing, Restoragen shall also
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execute and deliver such financing statements and other documents evidencing
the security interest created by the Security Agreement as Medtronic may
reasonably request.
(b) All of the Lenders agree that notwithstanding the date, manner or
order of attachment or perfection of any security interest and regardless of
any priority otherwise available by law or by agreement, the Lenders' security
interests in the Collateral shall be of equal priority, and any recovery by any
Secured Party of the Collateral shall be shared ratably in proportion to the
respective amounts of the Notes then due and owing to the Secured Parties in
accordance with the priorities established in subsection (d) below.
(c) Notwithstanding anything to the contrary in any agreement, instrument
or other document executed and delivered by Restoragen to any Lender, upon any
default under any Note, only Medtronic or its successor, as agent for the
Lenders, shall have the right to take possession of, or take legal action with
respect to, the Collateral, and the other Lenders each agree to be joined at
each Lender's own expense in any such action in the event such joinder is
required by any court. Medtronic shall give the other Lenders at least 10 days
written notice prior to selling or otherwise disposing of any Collateral. In
the event Medtronic proceeds under this Section with respect to any item of
Collateral, it recognizes its obligation to the other Lenders to proceed with
respect to such Collateral in a "commercially reasonable manner," as such term
has been defined and construed under the Uniform Commercial Code. Medtronic's
obligation hereunder to proceed in a commercially reasonable manner and to
share proceeds as required under this Section 2.4 shall represent the sole
obligation of Medtronic with respect to any item of Collateral, and each Lender
hereby waives any other claim, right or remedy against the other Lenders,
including Medtronic which such Lender may have arising out of this Agreement or
the Security Agreement. Without in any way limiting the generality of the
foregoing, no Lender shall be deemed a "fiduciary" to or for the other Lenders
in any respect.
(d) The proceeds of any sale, disposition or other realization upon the
Collateral shall be applied in the following order of priorities:
(i) First, to the payment in full of the expenses of such sale,
disposition or other realization, including all expenses, liabilities and
advances incurred or made by any Lender in connection therewith, including
reasonable attorneys' fees and disbursements;
(ii) Second, to the payment in full of all obligations owed by the
Company to the Lenders, whether due or not, and all accrued and unpaid
interest thereon, ratably (according to the proportion of (i) the amount
of obligations owed to a Lender to (ii) the aggregate amounts of
obligations owed to all of such Lenders other than Medtronic) and in pari
passu; and
(iii) Third, to pay to such other parties as their interests may
appear, or to the Debtor or the Debtor's representatives or as a court of
competent jurisdiction may direct, any surplus then remaining from such
proceeds.
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(e) Neither Medtronic nor any other Lender shall be obligated to marshal
any assets of Restoragen or any other person in which it has a lien or security
interest before enforcing its rights against any of the Collateral.
2.5) Closing. The closing of the Loans (the "Closing") shall take place
following the satisfaction or waiver of all of the conditions to the
obligations set forth in Article 7 herein or at such other time and date and in
such location and manner (e.g. via telecopy with executed originals to follow
via overnight courier) as the parties mutually agree. If the conditions set
forth in Article 7 are satisfied at the time of signing this Agreement, then
the Closing shall take place simultaneously with the signing of this Agreement.
At the Closing, each Lender shall deliver to Restoragen, via wire transfer to
an account designated by Restoragen, the principal amount of the Loan being
made by such Lender. All matters at each Closing shall be considered to have
taken place simultaneously and no delivery of any document shall be deemed
complete until all transactions and deliveries of documents are completed.
ARTICLE 3
DISTRIBUTION AND OTHER RIGHTS
3.1) Right of First Offer/First Negotiation for Distribution Rights.
(a) In the event that Restoragen or any of its Affiliates proposes to
sell GLP in the Field anywhere in the world on other than a direct selling
basis, Restoragen shall not enter, and shall cause each Affiliate not to
enter, into any transaction of the general types described in Section
3.1(b) below without first giving the Restoragen's Notice (as defined
below) to Medtronic with respect thereto and complying with the terms of
this Section 3.1.
(b) In the event that (referred to as a "Proposed Transaction"):
(i) Restoragen or any of its Affiliates receives a bona fide
offer from a third party regarding the grant by Restoragen or such
Affiliate of marketing, distribution, or sales representative rights
for GLP for use in the Field, or
(ii) Restoragen or any of its Affiliates determines that it
wishes to grant, or to explore the possibility of granting, licenses
to market, distribute, or sell GLP for use in the Field (including,
without limitation, a determination to seek indications of interest
with respect to such a transaction or agreement),
then Restoragen shall, within five days after such event, notify Medtronic
in writing of Restoragen's or such Affiliate's receipt of such offer
described in clause (i) above or Restoragen's or such Affiliate's
determination described in clause (ii) above ("Restoragen's Notice").
Restoragen's Notice shall set forth, as applicable, the material terms and
provisions of such offer described in clause (i) above or, in the case of
a determination described in clause (ii) above, the material terms and
provisions upon which Restoragen or such Affiliate would be willing to
enter into any such a transaction with Medtronic.
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(c) During the 60-day period following Medtronic's receipt of
Restoragen's Notice with respect to any Proposed Transaction (the
"Exclusive Period"), Restoragen shall negotiate, and shall cause each
Affiliate to negotiate, in good faith exclusively with Medtronic regarding
the entry into the Proposed Transaction with Medtronic. During the
Exclusive Period, Restoragen will not, and will cause each Affiliate not
to, solicit offers from, negotiate with, or provide information to any
third party regarding the Proposed Transaction.
(d) If Medtronic and Restoragen or such Affiliate fail to reach a
mutual agreement upon the terms and provisions of the Proposed Transaction
during the Exclusive Period, then Restoragen and its Affiliates shall have
180 days from the expiration of the Exclusive Period in which to negotiate
and enter into definitive agreements for the Proposed Transaction with the
third party whose bona fide offer was described in Restoragen's Notice
(with respect to a Proposed Transaction described in paragraph (b)(i)
above) or with any third party (with respect to a Proposed Transaction
described in paragraph (b)(ii) above); provided, however, that Restoragen
shall not enter into definitive agreements with any such third party with
respect to such Proposed Transaction unless the terms and provisions
thereof have been found by Restoragen's Board in good faith to be, in the
aggregate, more favorable to Restoragen than the final terms and
provisions proposed by Medtronic during the Exclusive Period. If
Restoragen fails to enter into definitive agreements with respect to such
Proposed Transaction within such 180-day period, then Medtronic's rights
under this Section 3.1 shall be reinstated and Restoragen may not enter
into such Proposed Transaction without first giving Medtronic a new
Restoragen's Notice and complying with the terms of this Section 3.1.
3.2) Board Representative.
(a) With respect to each of the Lead Investors, so long as either (i)
the Note issued to such Lead Investor remains outstanding or (ii) such
Lead Investor (together with its Affiliates) owns at least an aggregate of
5% of the issued and outstanding shares of Restoragen Common Stock
(assuming conversion of the Notes and conversion of all Restoragen
Preferred Stock), Restoragen shall permit each such Lead Investor to
designate one person as a voting member of the Board of Directors. If such
Lead Investor's representative has a change in employment responsibilities
or ceases to be employed by such Lead Investor, such Lead Investor shall
be entitled to designate a replacement for its representative. Each Lead
Investor's representative shall receive all notices, documents, and other
information in the same time and manner as such information is supplied to
members of the Board of Directors. Restoragen shall make reasonable
efforts to permit such Lead Investor's representative to participate in
Board of Directors meetings by telephone if such representative is unable
to attend in person. Restoragen agrees to pay the reasonable expenses
incurred by such Lead Investor's representative in connection with
attending Board of Directors meetings if and to the extent that Restoragen
pays any expenses of any other member of the Board of Directors.
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(b) Each of the Lenders who are part of the SMS Group acknowledges
that Xxxxx Xxxxx, who is already a member of the Company's Board of
Directors, shall initially be their designated representative. Restoragen
agrees to nominate Medtronic's designee for election to the Board of
Directors and to use its best efforts to cause Medtronic's designee to be
so elected within 60 days after Restoragen's receipt of Medtronic's
written notice of the identity of its representative. In any and all
future elections of directors of Restoragen (whether at a meeting or by
written consent in lieu of a meeting), each of the Lenders shall vote or
cause to be voted all shares of Restoragen capital stock now or hereafter
owned by such Lender, or over which such Lender has voting control, and
otherwise use such Lender's best efforts, so as to elect each Lead
Investor's representative to the Board of Directors. No Lender shall vote
to remove any Lead Investor's representative from the Board or Directors
unless requested in writing by such Lead Investor. Each Lender hereby
agrees that such Lender will not sell, transfer or otherwise dispose of
(or enter into a binding agreement to sell, transfer or otherwise dispose
of) all or any of such Lender's shares of Restoragen capital stock,
whether now owned or hereafter acquired, except for transfers to persons
who agree to be bound by the provisions of this Section 3.2 with respect
to such transferred shares. Each Lender and Restoragen agree to cause a
legend to be printed on all certificates issued or reissued on or after
the date hereof representing shares of Restoragen capital stock owned
beneficially or of record by a Lender with the following legend:
"The shares represented by this certificate are subject to Section
3.2 of a Bridge Loan Agreement dated December 13, 2001 among
Medtronic International, Ltd., Restoragen Inc. and the registered
holder hereof."
(c) Each Lead Investor shall receive from Restoragen notices of all
meetings of the Board of Directors, including without limitation
telephonic meetings, and each Lead Investor shall receive, with such
limitations provided herein, any materials distributed for such meeting,
and may send one representative to such meetings.
(d) Medtronic's and SMS Group's rights pursuant to this Section 3.2
shall terminate upon the closing of an initial public offering by
Restoragen.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF RESTORAGEN
Attached hereto is a Schedule of Exceptions containing sections numbered
to correspond to the sections of this Article 4 (the "Schedule of Exceptions").
Except as specifically set forth in the corresponding section of the Schedule
of Exceptions (or in any other section of the Schedule of Exceptions so long as
the applicability of such disclosure to the particular representation and
warranty which such disclosure is intended to modify is reasonably apparent),
Restoragen hereby represents and warrants to each of the Lenders as follows as
of the date hereof and as of the Closing.
4.1) Organization, Qualifications and Corporate Power. Restoragen is a
corporation duly incorporated, validly existing under the laws of the State of
Delaware. Restoragen has the
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corporate power and authority to own and hold its properties and to carry on
its business as now conducted and as proposed to be conducted by it, to
execute, deliver and perform this Agreement and the Transaction Documents and
to issue, sell and deliver the Conversion Shares and the Warrant Shares.
4.2) Capitalization. Schedule 4.2 of the Schedule of Exceptions sets forth
a list of all outstanding shares of Restoragen capital stock and all
outstanding warrants, options, convertible notes and other rights to acquire
Restoragen capital stock (including the exercise or conversion prices thereof).
All such issued and outstanding shares are duly authorized, validly issued,
fully paid and nonassessable and were issued in compliance with, or pursuant to
an exemption from, all applicable securities laws. Except as set forth in the
SEC Documents, there are no shareholder agreements or other agreements,
understandings, or commitments relating to or otherwise affecting the capital
stock of Restoragen.
4.3) Authorization of Agreement, Etc.
(a) The execution and delivery by Restoragen of this Agreement and
the Transaction Documents, the performance by Restoragen of its
obligations hereunder and thereunder, and the issuance, sale and delivery
of the Conversion Shares and Warrant Shares have been duly authorized by
all requisite corporate action and will not violate any provision of law,
any order of any court or other agency of government, the certificate of
incorporation or bylaws of Restoragen, as amended, or any provision of any
indenture, agreement or other instrument to which Restoragen or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation
or imposition of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets of Restoragen.
(b) The Conversion Shares and Warrant Shares have been duly reserved
for issuance and, if and when so issued in accordance with the Notes or
the Warrants, will be duly authorized, validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof and will be free and clear of all Liens imposed by or through
Restoragen. Except as set forth in Schedule 4.3 of the Schedule of
Exceptions, neither the issuance, sale or delivery of the Conversion
Shares or the Warrant Shares is subject to any preemptive right of
stockholders of Restoragen or lenders to Restoragen, or to any right of
first refusal, co-sale or other right in favor of any person, including
stockholders of Restoragen and lenders of Restoragen, that has not been
fully complied with or duly waived.
(c) No consents, approvals, waivers or authorizations of any third
party are legally or contractually required on the part of Restoragen to
enter into the transactions contemplated hereby.
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4.4) Subsidiaries. Except for the entities listed in Schedule 4.4 of the
Schedule of Exceptions (such entities referred to as the "Restoragen
Subsidiaries"), Restoragen has no subsidiaries.
4.5) Validity. This Agreement and the Transaction Documents have been duly
executed and delivered by Restoragen and constitute the legal, valid and
binding obligations of Restoragen, enforceable in accordance with their terms,
subject, as to the enforcement of remedies, to the discretion of the courts in
awarding equitable relief and to applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the rights of creditors
generally.
4.6 SEC Documents; Financial Statements. Restoragen has filed in a timely
manner all documents that Restoragen was required to file with the SEC during
the twelve (12) months preceding the date of this Agreement. As of their
respective filing dates, all SEC Documents complied in all material respects
with the requirements of the Exchange Act or the Securities Act, as applicable.
None of the SEC Documents contained, as of their respective dates, any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading, and such SEC
Documents, when read as a whole, do not contain any untrue statements of a
material fact and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Financial Statements comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto. The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles
consistently applied, and fairly present Restoragen's consolidated financial
position as of the dates thereof and the results of Restoragen's consolidated
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments). Except as set forth in
the Financial Statements, neither Restoragen nor any Restoragen Subsidiaries
has any liabilities, contingent or otherwise, other than liabilities incurred
in the ordinary course of business subsequent to September 31, 2001, and
liabilities of the type not required under United States generally accepted
accounting principles to be reflected in such Financial Statements. Such
liabilities incurred subsequent to September 31, 2001, are not, in the
aggregate, material to the consolidated financial condition or operating
results of Restoragen and the Restoragen Subsidiaries.
4.7) Litigation; Compliance with Law. Except as set forth in the SEC
Documents, there is no (i) action, suit, claim, proceeding or investigation
pending or, to Restoragen's knowledge, threatened against or affecting
Restoragen or any of the Restoragen Subsidiaries, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, (ii)
arbitration proceeding relating to Restoragen or any of the Restoragen
Subsidiaries pending under collective bargaining agreements or otherwise, or
(iii) governmental inquiry pending or, to Restoragen's knowledge, threatened
against Restoragen or any of the Restoragen Subsidiaries (including without
limitation any inquiry as to the qualification of Restoragen or any of the
Restoragen Subsidiaries to hold or receive any license or permit), and, to the
Company's knowledge, there is no basis for any of the foregoing. Restoragen and
each of the Restoragen Subsidiaries has
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complied with all laws, rules, regulations and orders applicable to its
business, operations, properties, assets, products and services, except when
the failure to so comply would not have a Material Adverse Effect. Restoragen
and each of the Restoragen Subsidiaries has all necessary permits, licenses and
other authorizations required to conduct its business as conducted, and has no
reason to believe that Restoragen and each of the Restoragen Subsidiaries will
not obtain the same with respect to its business as proposed to be conducted,
which, if not obtained, would have, either individually or in the aggregate, a
Material Adverse Effect.
4.8) Proprietary Information of Third Parties. No third party has claimed
or to the knowledge of Restoragen has reason to claim that any person employed
by or affiliated with Restoragen or any of the Restoragen Subsidiaries has (i)
violated or may be violating any of the terms or conditions of his employment,
non-competition or nondisclosure agreement with such third party, (ii)
disclosed or may be disclosing or utilized or may be utilizing any trade secret
or proprietary information or documentation of such third party, or (iii)
interfered or may be interfering in the employment relationship between such
third party and any of its present or former employees.
4.9) Title to Properties. Restoragen or the Restoragen Subsidiaries have
good and marketable title to or a valid leasehold interest in their properties
and assets reflected on the September 31, 2001 balance sheet included within
the Financial Statements or acquired by Restoragen or any of the Restoragen
Subsidiaries since the date of such balance sheet (other than properties and
assets disposed of in the ordinary course of business since the date of such
balance sheet), and all such properties and assets owned by Restoragen or any
of the Restoragen Subsidiaries (except for equipment leases) are free and clear
of all Liens except for Liens for current taxes not yet due and payable and
minor imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of the
Company and the Restoragen Subsidiaries taken as a whole.
4.10) Leasehold Interests. Each lease or agreement to which Restoragen or
any of the Restoragen Subsidiaries is a party under which it is a lessee of any
property, real or personal, is a valid and existing agreement without any
default of Restoragen or any of the Restoragen Subsidiaries thereunder and, to
Restoragen's knowledge, without any default thereunder of any other party
thereto. No event has occurred and is continuing which, with due notice or
lapse of time or both, would constitute a default or event of default by
Restoragen or any of the Restoragen Subsidiaries under any such lease or
agreement or, to Restoragen's knowledge, by any other party thereto.
4.11) Taxes. Other than as set forth in Schedule 4.11 of the Schedule of
Exceptions, Restoragen and each of the Restoragen Subsidiaries has timely filed
all tax returns required to be filed by it, and Restoragen or such Restoragen
Subsidiary has paid all taxes shown to be due by such returns as well as all
other taxes, assessments and governmental charges which have become due or
payable, including without limitation all taxes which Restoragen or such
Restoragen Subsidiary is obligated to withhold from amounts owing to employees,
creditors and third parties. All such taxes with respect to which Restoragen or
any of the Restoragen Subsidiaries has become obligated pursuant to elections
made by Restoragen or such Restoragen
-13-
Subsidiary in accordance with generally accepted practice have been paid and
adequate reserves have been established for all taxes accrued but not yet
payable. No deficiency assessment with respect to or proposed adjustment of
Restoragen's or any of the Restoragen Subsidiaries' taxes is pending or, to
Restoragen's knowledge, threatened.
4.12) No Defaults. Other than as set forth in Schedule 4.12 of the
Schedule of Exceptions, Restoragen and each of the Restoragen Subsidiaries, and
to the best of Restoragen's knowledge, each other party thereto, have in all
material respects performed all the obligations required to be performed by
them to date, have received no notice of default and are not in default (with
due notice or lapse of time or both) under any material lease, agreement or
contract now in effect to which Restoragen or any of the Restoragen
Subsidiaries is a party or by which it or its property may be bound. Restoragen
and each of the Restoragen Subsidiaries has no present expectation or intention
of not fully performing all its obligations under each such material lease,
contract or other agreement, and Restoragen has no knowledge of any breach or
anticipated breach by the other party to any contract or commitment to which
Restoragen or any Restoragen Subsidiary is a party. Restoragen and each
Restoragen Subsidiary is in full compliance with all of the terms and
provisions of its respective articles or certificate of incorporation and
bylaws, as amended.
4.13) Patents, Trademarks, Etc. Except as set forth in Schedule 4.13 of
the Schedule of Exceptions, to Restoragen's knowledge, Restoragen and each
Restoragen Subsidiary owns or possesses licenses or other rights to use all
Intellectual Property necessary to or used in the conduct of its business as
conducted and as proposed to be conducted by it, free and clear of any Liens of
any kind (and without any obligation of Restoragen or such Restoragen
Subsidiary to any person or entity for royalties, fees or commissions). No
claim is pending or, to Restoragen's knowledge, threatened to the effect that
the operations of Restoragen or any Restoragen Subsidiary infringe upon or
conflict with the asserted rights of any other person under any Intellectual
Property and, to the Company's knowledge, there is no basis for any such claim.
Such Intellectual Property owned or licensed by Restoragen or any Restoragen
Subsidiary, or which Restoragen or any Restoragen Subsidiary otherwise has the
right to use, is valid and enforceable and has not been challenged in any
judicial or administrative proceeding. No claim is pending or, to Restoragen's
knowledge, threatened to the effect that any such Intellectual Property owned
or licensed by Restoragen or any Restoragen Subsidiary , or which Restoragen or
any Restoragen Subsidiary otherwise has the right to use, is invalid or
unenforceable by Restoragen or such Restoragen Subsidiary, and to Restoragen's
knowledge there is no basis for any such claim (whether or not pending or
threatened). To Restoragen's knowledge, no person or entity nor such person's
or entity's business or products has infringed, misused, misappropriated or
conflicted with such Intellectual Property owned or licensed by Restoragen or
any Restoragen Subsidiary, or which Restoragen or such Restoragen Subsidiary
otherwise has the right to use or currently is infringing, misusing,
misappropriating or conflicting with such Intellectual Property owned or
licensed by Restoragen, or which Restoragen otherwise has the right to use.
Restoragen has made all statutorily required filings, if any, to record its
interests and taken reasonable actions to protect its rights in such
Intellectual Property owned or licensed by Restoragen or any Restoragen
Subsidiary, or which Restoragen or any Restoragen Subsidiary otherwise has the
right to use. All employees and consultants of the Company and each Restoragen
Subsidiary have signed a confidentiality and assignment of inventions agreement
in a
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form previously provided to Medtronic, and each such agreement is the legal,
binding and enforceable obligation of such employee or consultant, except as
may be limited by laws affecting creditors' rights generally or by judicial
limitations on the right to specific performance or other equitable remedies.
To Restoragen's knowledge, all proprietary technical information developed by
and belonging to Restoragen or any Restoragen Subsidiary which has not been
patented has been kept confidential.
4.14) Product Liability Claims. Neither Restoragen nor any Restoragen
Subsidiary has ever incurred any uninsured or insured Product Liability, or
received a claim based upon alleged Product Liability, and to Restoragen's
knowledge no basis for any such claim exists.
4.15) Relations with Suppliers. No current supplier of Restoragen or any
Restoragen Subsidiary has cancelled any material contract or material order for
provision, and there has been no threat by any such supplier not to provide raw
materials, products, supplies, or services to Restoragen or any Restoragen
Subsidiary.
4.16) Agreements; Certain Actions.
(a) Except as set forth in the SEC Documents, there are no
agreements, understandings or proposed transactions in excess of $60,000
between Restoragen or any Restoragen Subsidiary and any of its officers,
directors or shareholders, or any Affiliate thereof.
(b) There are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which
Restoragen or any of the Restoragen Subsidiaries is a party or by which it
is bound which involve (i) obligations (contingent or otherwise) of, or
payments from, Restoragen or any Restoragen Subsidiary in excess of
$50,000 other than those incurred or entered into in the ordinary course
of business, (ii) the license of any patent, copyright, trade secret, or
other proprietary right to or from Restoragen or any Restoragen
Subsidiary, (iii) provisions restricting or affecting the development,
manufacture or distribution of Restoragen's or any Restoragen Subsidiary's
products or services, or (iv) indemnification by Restoragen or any
Restoragen Subsidiary with respect to infringement of proprietary rights.
(c) Since September 31, 2001, neither Restoragen nor any Restoragen
Subsidiary (except for transactions between Restoragen and any Restoragen
Subsidiary) has (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, other than those incurred or entered into in
the ordinary course of business, any indebtedness for money borrowed or
any other liabilities individually in excess of $25,000 or, in the case of
indebtedness and/or liabilities individually less than $25,000 in excess
of $100,000 in the aggregate, (iii) made, other than those incurred or
entered into in the ordinary course of business, any loans or advances to
any person, other than ordinary advances for travel and other expenses
incurred on behalf of Restoragen or any Restoragen Subsidiary, 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.
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(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same person or entity
(including persons or entities Restoragen has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
4.17) Environmental Matters. Restoragen and each Restoragen Subsidiary has
obtained, and is in compliance with, all permits, licenses or other approvals
necessary under the Environmental Laws or Regulations with respect to its
business or assets, and is in compliance in all material respects with all
Environmental Laws or Regulations. No material capital or other expenditures
are necessary so that Restoragen's and each Restoragen Subsidiary's business
and assets comply fully with any Environmental Law or Regulation. To
Restoragen's knowledge, neither Restoragen, any Restoragen Subsidiary nor its
business or assets have been or are subject to any actual or threatened
investigations, administrative proceedings, litigation, regulatory hearings, or
other action threatened, proposed or pending that alleges (i) actual or
threatened violation of or noncompliance with any Environmental Law or
Regulation, or (ii) actual or threatened personal injury or property damage or
contamination of any kind resulting from a release or threatened release of a
Hazardous Substance with respect to Restoragen's or such Restoragen
Subsidiary's business or assets. Neither Restoragen nor any Restoragen
Subsidiary has taken any action or failed to take any action that might result
in (i) actual or threatened violation of or noncompliance with any
Environmental Law or Regulation, or (ii) actual or threatened personal injury
or property damage or contamination of any kind. With respect to the Real
Property, to Restoragen's knowledge (i) no above-ground or underground storage
tanks for Hazardous Substances are or were present on such Real Property or any
improvements or structures thereon, except for above-ground storage tanks that
are in compliance with all applicable Environmental Laws or Regulations, (ii)
such Real Property is not listed on any local, state or federal list of
hazardous waste sites, (iii) no Lien in favor of any governmental authority in
response to a release or threatened release of any Hazardous Substance has been
filed or attached to such Real Property, (iv) no person has used or is using
any portion of such Real Property for the handling, processing, storage or
disposal of Hazardous Substances except in compliance with applicable
Environmental Laws and Regulations, (v) in the course of any activities
conducted by Restoragen or any Restoragen Subsidiary, no Hazardous Substances
have been generated or are being used on such Real Property except in
compliance with applicable Environmental Laws or Regulations, (vi) neither
Restoragen, any Restoragen Subsidiary nor any other person has caused or is
causing any releases or threatened releases of Hazardous Substances adjacent,
on, to, from or under such Real Property except in compliance with applicable
Environmental Laws and Regulations, and (vii) any Hazardous Substances that
have been generated by Restoragen or any Restoragen Subsidiary on any of such
Real Property have been transported offsite and have been treated or disposed
of in compliance with applicable Environmental Laws and Regulations.
4.18) Government Approvals. No registration or filing with, or consent or
approval of or other action by, any federal, state or other governmental agency
or instrumentality is or will be necessary for the valid execution, delivery
and performance by Restoragen of this Agreement or the Transaction Documents or
for the issuance, sale and delivery of the Conversion Shares or the
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Warrant Shares, other than filings pursuant to applicable laws (all of which
filings have been made or will be timely made by Restoragen) in connection with
the issuance of the Conversion Shares and the Warrant Shares.
4.19) Brokers. Except for the commission and reimbursement of expenses
described in Section 2.3, Restoragen has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
4.20 Employees. To the Company's knowledge, no employee of the Company or
any Restoragen Subsidiary is in violation of any term of any employment
contract, patent disclosure agreement or any other contract or agreement with
any third party, the terms of which would restrict the right of any such
employee to be employed by the Company or any Restoragen Subsidiary because of
the nature of the business conducted or to be conducted by the Company or for
any other reason or would conflict with such employee's obligation to use his
best efforts to promote the interests of the Company or any Restoragen
Subsidiary, and the continued employment by the Company or any Restoragen
Subsidiary of its present employees will not to, the Company's knowledge,
result in any such violations. There are no strikes or other labor disputes
against the Company or any Restoragen Subsidiary pending or, to the knowledge
of the Company, threatened that would materially and adversely affect the
business, properties, assets or financial condition of the Company or any
Restoragen Subsidiary. Neither the Company nor any Restoragen Subsidiary is a
party to or bound by any collective bargaining agreement or other labor
agreement with any bargaining agent (exclusive or otherwise) of any of its
employees.
4.21 Insurance. The Company and each Restoragen Subsidiary maintains (i)
insurance on all material assets of a type customarily insured, covering
property damage by fire or other casualty; and (ii) adequate insurance
protection against all liabilities, claims, and risks against which it is
customary to insure.
4.22 Disclosure. To the knowledge of the Company, neither this Agreement,
the Transaction Documents nor any other documents, certificates or other items
delivered pursuant hereto or thereto contains an untrue statement of a material
fact or omits a material fact necessary to make the statements contained
therein not misleading. Except as set forth in the Schedule of Exceptions,
there is no fact which Restoragen has not disclosed to each Lender or its
counsel and of which Restoragen is aware which could reasonably be expected to
have a Material Adverse Effect. Restoragen has delivered or made available to
each Lender a complete and accurate copy of each agreement referenced in the
Schedule of Exceptions.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF LENDERS
Each of the Lenders, severally and not jointly, represents and warrants to
Restoragen as follows with respect to such Lender:
5.1) Purchase of Notes and Conversion Shares. Such Lender is an
"accredited investor" within the meaning of Rule 501 under the Securities Act
and was not organized for the specific purpose of acquiring the Notes, the
Warrants, the Conversion Shares or the Warrant
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Shares. Without limitation on such Lender's right to rely on the
representations and warranties set forth in Article 4, such Lender has
sufficient knowledge and experience in investing in companies similar to
Restoragen in terms of Restoragen's stage of development so as to be able to
evaluate the risks and merits of such Lender's investment in Restoragen and
such Lender is able financially to bear the risks thereof. Without limitation
on such Lender's right to rely on the representations and warranties set forth
in Article 4, such Lender has had an opportunity to discuss Restoragen's
business, management and financial affairs with Restoragen's management, ask
questions and examine documents related to the business of Restoragen. The
Notes, the Warrants, Conversion Shares and the Warrant Shares are being
acquired for such Lender's own account for the purpose of investment and not
with a view to or for sale in connection with any distribution thereof. Such
Lender understands that (i) the Notes, the Warrants, Conversion Shares and the
Warrant Shares have not been registered under the Securities Act by reason of
their issuance in a transaction exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506
promulgated under the Securities Act, (ii) the Notes, the Warrants, Conversion
Shares and the Warrant Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration, (iii) the Notes, the Warrants, Conversion Shares and the
Warrant Shares will bear a legend to such effect, and Restoragen will make a
notation on its transfer books to such effect.
5.2) Organization, Qualifications and Corporate Power. Such Lender, if an
entity, is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation and is duly licensed or qualified to
transact business as a foreign corporation and is in good standing in each
jurisdiction which the nature of the business transacted by it or the character
of the properties owned or leased by it requires such licensing or
qualification and where the failure to be so licensed or qualified would have a
material adverse effect on such Lender. Such Lender has the corporate power and
authority to own and hold its properties and to carry on its businesses as now
conducted and as proposed to be conducted, to execute, deliver and perform this
agreement, and to purchase the Notes, the Warrants, Conversion Shares and the
Warrant Shares.
5.3) Authority.
(a) The execution and delivery by such Lender of this Agreement and
the performance by such Lender of its obligations hereunder will not
violate any provision of law (assuming the accuracy of the representations
set forth in Article 4), any order of any court or other agency of
government, the Articles of Incorporation, By-laws or other governing
instruments of such Lender, as amended, or any provision of any indenture,
agreement or other instrument to which such Lender or any of its
properties or assets is bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or result in the creation
or imposition of any lien, charge, restriction, claim or encumbrance of
any nature whatsoever upon any of the properties or assets of such Lender.
(b) No consents, approvals, waivers or authorizations are legally or
contractually required on the part of such Lender to enter into the
transactions contemplated hereby.
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5.4) Validity. This Agreement has been duly executed and delivered by such
Lender and constitutes the legal, valid and binding obligations of such Lender,
enforceable in accordance with their terms, subject, as to the enforcement of
remedies, to the discretion of the courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws
affecting the rights of creditors generally.
ARTICLE 6
COVENANTS
Restoragen covenants to the Lenders that for so long as any Notes remain
outstanding or such Lender (together with its Affiliates) owns at least and
aggregate of 5% of issued and outstanding shares of Restoragen Common Stock
(assuming conversion of the Notes and conversion of all Restoragen Preferred
Stock):
6.1) Financial Statements, Reports, Etc. Restoragen shall furnish to each
Lender:
(a) within ninety (90) days after the end of each fiscal year of
Restoragen, a balance sheet of Restoragen as of the end of such fiscal
year and the related statements of income, stockholders' equity and cash
flows for the fiscal year then ended, prepared in accordance with GAAP and
certified by a firm of independent public accountants;
(b) within forty-five (45) days after the end of each fiscal quarter
in each fiscal year (other than the last fiscal quarter in each fiscal
year) an unaudited balance sheet of Restoragen and the related statements
of income, stockholders' equity and cash flows, and certified by the Chief
Financial Officer of Restoragen, such balance sheet to be as of the end of
such fiscal quarter and such statements of income, stockholders' equity
and cash flows to be for such fiscal quarter and for the period from the
beginning of the fiscal year to the end of such fiscal quarter, in each
case with comparative statements for the corresponding period in the prior
fiscal year;
(c) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries of the type
described in Section 4.7 that would likely have a Material Adverse Effect;
and
(d) promptly, from time to time, such other information regarding the
business, financial condition, operations, property or affairs of
Restoragen and its subsidiaries as Medtronic may reasonably request.
6.2) Reporting Status; Eligibility to Use Form S-3. Restoragen's Common
Stock is registered under Section 12 of the Exchange Act. Restoragen will
timely file all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under the reporting requirements of the
Exchange Act, and Restoragen will not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination. Restoragen
currently meets, and will take all reasonably necessary action to continue to
meet, the "registrant eligibility" requirements
-19-
set forth in the general instructions to Form S-3 (or any successor
registration form thereto) to enable the registration of the Registrable
Securities.
6.3) Inspection, Consultation and Advice. Restoragen shall permit each
Lender and such persons as it may designate, at such Lender's expense, upon
reasonable notice and at such times as such Lender may reasonably request to
visit and inspect any of the properties of Restoragen or any Restoragen
Subsidiary, examine its books and take copies and extracts therefrom, discuss
the affairs, finances and accounts of Restoragen and the Restoragen
Subsidiaries with its officers, employees and public accountants (and
Restoragen hereby authorizes said accountants to discuss with each Lender and
such designees such affairs, finances and accounts), and consult with the
management of Restoragen as to Restoragen's and its subsidiaries' affairs,
finances and accounts, all at reasonable times and upon reasonable notice. All
such information shall be subject to Section 10.1 hereof.
6.4) Transactions with Affiliates. Except for transactions contemplated by
this Agreement or as otherwise approved by the Company's Board of Directors,
the Company shall not enter into any transaction with any director, officer,
employee or holder of more than 5% of the outstanding capital stock of the
Company, any member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or member of the
family of any such person, is a director, officer, trustee, partner or holder
of more than 5% of the outstanding capital stock thereof, except for
transactions on customary terms related to such person's employment.
6.5) Use of Medtronic Name. The Company shall not, except with the written
consent of Medtronic or to the extent already disclosed in the SEC Documents or
required by the Exchange Act, use Medtronic's name or that of any Affiliate of
Medtronic.
6.6) Conditions to Closing. Restoragen shall use its reasonable best
efforts to cause the conditions set forth in Article 7 to occur as soon as
practicable.
6.7) Employee Agreements. Consistent with past practice, the Company and
each Restoragen Subsidiary shall obtain from each employee or consultant of the
Company or such Restoragen Subsidiary an agreement providing reasonable and
customary protections to the Company or such Restoragen Subsidiary regarding
the confidentiality of the Company's or such Restoragen Subsidiary's
information and the ownership by the Company or such Restoragen Subsidiary of
inventions of such employee or consultant.
6.8) Series A Preferred. The Company shall use its best efforts to obtain,
prior to the conversion of any Notes, from the holder(s) of all outstanding
Company Series A Preferred Stock a written waiver of the right of such
holder(s) to appoint one-third of the members of the Company's Board of
Directors in the event of certain failures by the Company to pay dividends on
such Series A Preferred Stock.
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ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF LENDERS
The obligation of each of the Lenders to make such Lender's respective
Loan pursuant to Section 2.1 at the Closing is, at its option, subject to the
satisfaction, on or before such Closing, of the conditions set forth in
Sections 7.1 through 7.10 inclusive.
7.1) Representations and Warranties. The representations and warranties
contained in Article 4 shall be true, complete and correct as of the date
hereof and as of the Closing (as though such representations and warranties had
been made on and as of such dates), and the President and Chief Financial
Officer of Restoragen shall have certified to such effect to the Lenders in
writing.
7.2) Performance. Restoragen shall have performed and complied in all
material respects with all agreements contained herein, and in the agreements,
documents and instruments contemplated hereby which are required to be
performed or complied with by it prior to or at the date of Closing, and the
President and Chief Financial Officer of Restoragen shall have certified to the
Lenders in writing to such effect.
7.3) All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by Restoragen in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Medtronic and its counsel, and Medtronic
and its counsel shall have received all such counterpart originals or certified
or other copies of such documents as they reasonably may request.
7.4) Supporting Documents. Restoragen shall have executed and delivered to
each of the Lenders their respective Note and Warrant. Medtronic and SMS
Securities, and their respective counsel, shall have received such other
additional supporting documents and other information they reasonably may
request, including, without limitation, an opinion of counsel in form and
content reasonably satisfactory to Medtronic and SMS Securities.
7.5) Resignations. Xxxxx X. Xxxxxxx, Xx. and Xxxxxxx X. Xxxxx shall have
resigned from the Company's Board of Directors and Medtronic and SMS Securities
shall have received copies of minutes of the Company's Board of Directors
meeting putting into effect the other provisions of that certain proposed
letter agreement between the Company and equity4life AG.
7.6) Litigation. No suit, action or other proceeding shall be pending or
threatened by any third party or by or before any court or governmental agency
in which it is sought to restrain or prohibit or to obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated by this Agreement, and no investigation that might
result in any such suit, action or other proceeding shall be pending or
threatened.
7.7) Legislation. No statute, rule, regulation, order, or interpretation
shall have been enacted, entered or deemed applicable by any domestic or
foreign government or governmental or administrative agency or court which
would make the transactions contemplated by this Agreement illegal.
-21-
7.8) No Material Adverse Changes. Since the date of this Agreement, no
events shall have occurred or circumstances arisen which are reasonably
expected to have or result in a Material Adverse Effect upon Restoragen.
Restoragen shall fully cooperate to enable each of Medtronic and SMS Securities
to determine that this condition has been satisfied.
7.9) Series F Waivers. Restoragen shall have received written waivers from
the record holders of at least 75% of the outstanding Series F Preferred Stock
waiving such holder's right to require Restoragen to redeem such holder's
Series F Preferred Shares.
7.10) Minimum Amount of Loans. An aggregate of $18,000,000 of Loans
pursuant to this Agreement shall close simultaneously at the Closing; provided
that this condition shall not excuse any Lender from tendering the amount of
such Lender's loan set forth on Exhibit A.
ARTICLE 8
REGISTRATION RIGHTS
8.1) Demand Registrations.
(a) Subject to the conditions of this Section 8.1, if the Company
shall receive at any time after the date hereof a written request from
Holder(s) of at least forty percent (40%) of the Registrable Securities
then outstanding that the Company file a registration statement under the
Securities Act covering the registration of Registrable Securities having
a proposed aggregate offering price to the public of at least $1,000,000,
then the Company shall, within 30 days after the receipt thereof, give
written notice of such request to all Holders and, subject to the
limitations of Section 8.1(b), effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that
the Holders request to be registered.
(b) If the Holder(s) requesting such registration intends to
distribute the Registrable Securities covered by its request by means of
an underwriting, such Holder(s) shall so advise the Company as a part of
the request made pursuant to this Section 8.1 and the Company shall
include such information in the written notice referred to in Section
8.1(a). In such event, the right of any Holder to include such Holder's
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Holders) to the extent
provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Holder that initially requested the registration
(which underwriter or underwriters shall be reasonably acceptable to the
Company).
(c) The Company shall not be obligated to effect more than two
registrations pursuant to this Section 8.1. Further, the Company shall not
be obligated to take any action to effect any registration pursuant to
this Section 8.1 until the earliest to occur of:
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(i) the date that is three years after the date hereof, (ii) the first
date as of which any other shareholder of the Company exercises a demand
registration, or (iii) 180 days after the effective date of the
registration statement pertaining to the first underwritten public
offering of securities of the Company for its own account. Further, the
Company shall not be obligated to effect a demand registration pursuant to
this Section 8.1 if the Company furnishes to the Holders a certificate
signed by the Chief Executive Officer stating that, in the good faith
judgment of the Board, it would be seriously detrimental to the Company
and its shareholders for such registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the
registration statement for a period of not more than 120 days after
receipt of the request of the Holder or Holders under this Section 8.1.
The Company shall give written notice to the Holders of any demand made by
other holders of securities of the Company for registration of such
securities.
8.2) Piggyback Registrations.
(a) The Company shall notify all Holders of Registrable Securities in
writing at least 30 days prior to the filing of any registration statement
under the Securities Act for purposes of a public offering of securities
of the Company (including, but not limited to, registration statements
relating to secondary offerings of securities of the Company, but
excluding registration statements relating to employee benefit plans and
corporate reorganizations) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities of such Holder. Each Holder desiring to include in any such
registration statement all or any part of such Holder's Registrable
Securities shall, within 20 days after receipt of the above-described
notice from the Company, so notify the Company in writing. Such notice
shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder of Registrable Securities decides
not to include any or all of such Holder's Registrable Securities in any
registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
(b) If the registration statement under which the Company gives
notice under this Section 8.2 is for an underwritten offering, the Company
shall so advise the Holders of Registrable Securities. In such event, the
right of any such Holder to be included in a registration pursuant to this
Section 8.2 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 Registrable Securities through such underwriting shall
enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
Notwithstanding any other provisions of this Agreement, if the underwriter
determines in good faith that marketing factors require a limitation of
the number of shares to be underwritten, the number of shares that may be
included in the underwriting shall be allocated, first, to the Company
and, second, to the Holders and any
-23-
other selling shareholders on a pro rata basis based on the total number
of securities held by such Holders and other selling shareholders and
requested to be included in such registration.
8.3 Form S-3 Registrations. If the Company receives from any Holder or
Holders of Registrable Securities a written request or requests that the
Company effect the registration under the Securities Act of all or a part of
the Registrable Securities owned by such Holder or Holders by the filing with
the SEC of a registration statement on Form S-3 covering such Registrable
Securities, the Company will:
(a) promptly give written notice of the proposed registration to all
other Holders of Registrable Securities; and
(b) as soon as practicable, effect such registration and, in
connection therewith, make all such related qualifications and compliances
as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are
specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within 15 days after
receipt of such written notice from the Company; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification, or compliance pursuant to this Section 8.3: (i) if Form S-3
under the Securities Act is not available for such offering by the
Holders, (ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any)
at an aggregate price to the public of less than $500,000, (iii) if the
Company shall furnish to the Holders a certificate signed by the Chief
Executive Officer stating that, in the good faith judgment of the Board,
it would be seriously detrimental to the Company and its shareholders for
such registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than 120 days after receipt of the
request of the Holder or Holders under this Section 8.3, (iv) in a given
six-month period, the Company has effected one such registration during
such period, (v) the registration request occurs within six months
following the effective date of a registration initiated by the Company,
or (vi) if one of the following has not occurred at the time of such
request: (a) three years have elapsed since the effective date of this
Agreement, (b) no other investor has exercised its right to demand
registration, or (c) 180 days have not elapsed since the closing of the
Company's initial public offering.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders.
8.4) Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification, or compliance pursuant to
Section 8.1 or any registration under Section 8.2 or 8.3 shall be borne by the
Company. All Selling Expenses incurred in connection with any such registration
shall be borne by the Holders of the securities so registered pro rata on
-24-
the basis of the number of shares so registered. The Company shall not,
however, be required to pay for expenses of any registration proceeding begun
pursuant to Section 8.1 or 8.3, the request of which has been subsequently
withdrawn by the Holders, unless (a) the withdrawal is based upon material
adverse information concerning the Company of which the Company was aware but
the Holders were not aware at the time of such request or (b) the Holders of a
majority of Registrable Securities agree to forfeit their right to one
requested registration pursuant to Section 8.1 (in which event such right shall
be forfeited by all Holders). If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the Holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested. If the
Company is required to pay the Registration Expenses of a withdrawn offering
pursuant to this Section 8.4, then the Holders shall not forfeit their rights
pursuant to Section 8.1 to a demand registration.
8.5) Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement, on such
form as is then available to the Company in connection with such
registration, with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective and, upon
the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for up
to nine months.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or blue
sky laws of such jurisdictions as shall be reasonably requested by the
Holders within 20 days following the original filing of such registration
statement, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
-25-
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the occurrence of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading in the
light of the circumstances then existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities
are being sold through underwriters, or, if such securities are not being
sold through underwriters, on the date that the registration statement
with respect to such securities becomes effective, (i) an opinion, dated
as of such date, of the counsel representing the Company for the purposes
of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities, and (ii) a letter dated
as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any,
and to the Holders requesting registration of Registrable Securities.
8.6) Termination of Registration Rights. All registration rights granted
under this Article 8 shall terminate and be of no further force and effect on
the date that all Holders would be able to sell all of such Holder's remaining
Registrable Securities, without limitation, under Rule 144(k) of the Securities
Act.
8.7) Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article 8.
8.8) Indemnification. If any Registrable Securities are included in a
registration statement under Section 8.1, 8.2, or 8.3:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, and directors of each
Holder, and each person, if any, who controls such Holder within the
meaning of the Securities Act or the Exchange Act, and each underwriter,
if any, and each person, if any, who controls any underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act, or other
federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon
any of the following statements, omissions, or violations (collectively a
"Violation") by the Company: (i) any untrue statement or alleged untrue
statement of a
-26-
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act, or any state
securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder,
partner, officer, director, underwriter, and controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
Section 8.8(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon a Violation that occurs in reliance upon
and in conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, officer,
director, or controlling person of such Holder.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its officers and
directors, each person, if any, who controls the Company within the
meaning of the Securities Act, and each underwriter, if any, and each
person, if any, who controls any underwriter within the meaning of the
Securities Act or the Exchange Act, and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors, or officers or any person who controls such Holder,
against any losses, claims, damages, or liabilities (joint or several) to
which the Company or any such director, officer, underwriter, controlling
person, or other such Holder, or partner, director, officer, or
controlling person of such other Holder may become subject under the
Securities Act, the Exchange Act, or other federal or state law, insofar
as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
and stated to be specifically for use in connection with such
registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
underwriter, controlling person, or other Holder, or partner, officer,
director, or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability, or
action if it is judicially determined that there was such a Violation;
provided, however, that the indemnity agreement contained in this Section
8.8(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without
the consent of the Holder, which consent shall not be unreasonably
withheld; provided, further, that in no event shall any indemnity under
this Section 2.8(b) exceed the proceeds from the offering received by such
Holder unless the Violation is the result of fraud on the part of such
Holder.
-27-
(c) Promptly after receipt by an indemnified party under this Section
8.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
8.8, deliver to the indemnifying party a written notice of the
commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party (or, if there is more than one indemnified party, the
indemnifying party shall pay the fees and expenses of one counsel for any
and all indemnified parties, to be mutually agreed upon by such
indemnified parties), if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 8.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 8.8.
(d) If the indemnification provided for in this Section 8.8 is held
by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages, or liabilities referred
to herein, the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall to the extent permitted by applicable
law contribute to the amount paid or payable by such indemnified party as
a result of such loss, claim, damage, or liability in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection with
the Violation(s) that resulted in such loss, claim, damage, or liability,
as well as any other relevant equitable considerations. The relative fault
of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or
by the indemnified party and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such
statement or omission.
(e) The foregoing indemnity agreements of the Company and Holders are
subject to the condition that, insofar as they relate to any Violation
made in a preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the registration statement in
question becomes effective or the final prospectus is filed with the SEC
pursuant to SEC Rule 424(b), such indemnity agreement shall not inure to
the benefit of any person if a copy of such final prospectus was furnished
to the indemnified party and was not furnished to the person asserting the
loss, liability, claim, or damage at or prior to the time such action is
required by the Securities Act.
-28-
(f) The obligations of the Company and Holders under this Section 8.8
shall survive the completion of any offering of Registrable Securities in
a registration statement, and otherwise.
8.9) Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Article 8 may be assigned by a
Holder to a transferee or assignee of Registrable Securities; provided,
however, that no such transferee or assignee shall be entitled to registration
rights under this Article 8 hereof unless it acquires Registrable Securities
that represent at least 25 percent of the then-outstanding Registrable
Securities (as adjusted for stock splits and combinations) and the Company
shall, within 20 days after such transfer, be furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; provided,
however, that a Holder's failure to provide such notice to the Company shall
not in any way impair a Holder's right to make an assignment under this Section
8.9, but until such notice is provided, the Company may continue to treat the
original Holder (and not the Holder's assignee) as the Holder of the
registration rights. Notwithstanding the foregoing, rights to cause the Company
to register securities may be assigned to any person or entity who is a
subsidiary, parent, general partner, or limited partner of a Holder regardless
of the number of securities transferred to such person or entity.
8.10) Amendment of Registration Rights. Any provision of this Article 8
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively) only with the
written consent of the Company and the Holders of Registrable Securities
representing at least 75% of the total of the then Registrable Securities. Any
amendment or waiver effected in accordance with this Section 8.10 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Article 8, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
8.11) Limitation on Subsequent Registration Rights. If the Company grants
to any other person or persons registration rights that are more favorable in
any respect than the rights granted to the Holders hereunder, the Holders shall
immediately be granted the same rights, and this Agreement shall be amended or
deemed amended to include such more favorable rights.
8.12) Registration Rights Separate From Other Registration Rights. The
registration rights granted to any Holder hereunder shall be deemed to be
separate and distinct from any other registration rights (the "Other
Registration Rights") granted by the Company to any such Holders or any other
holder of the Company's securities. In addition, any registration of
Registrable Securities pursuant to the rights granted hereunder shall not
affect the rights of any Holder or any other person under the Other
Registration Rights, and any registration of the Company's securities under the
Other Registration Rights shall not affect the rights of any Holder of
Registrable Securities hereunder.
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ARTICLE 9
INDEMNIFICATION
9.1) Indemnification of Medtronic. Restoragen shall indemnify, defend and
hold harmless each of the Lenders and their respective subsidiaries, officers,
directors and stockholders (such indemnitees referred to in this Article 9 as
"Lenders") from and against and in respect of any and all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities,
interest and penalties, costs and expenses (including, without limitation,
reasonable legal fees and disbursements incurred in connection therewith and in
seeking indemnification therefor, and any amounts or expenses required to be
paid or incurred in connection with any action, suit, proceeding, claim,
appeal, demand, assessment or judgment) ("Indemnifiable Losses"), resulting
from, arising out of, or imposed upon or incurred by any person to be
indemnified hereunder by reason of any breach of any representation, warranty,
covenant or agreement of Restoragen contained in this Agreement or any
agreement, certificate contemplated by this Agreement or any agreement,
certificate, or document executed and delivered by Restoragen pursuant hereto
or in connection with any of the transactions contemplated by this Agreement.
9.2) Indemnification of Restoragen. Each of the Lenders shall, severally
and not jointly, indemnify, defend and hold harmless Restoragen and each of its
subsidiaries, officers, directors and stockholders (such indemnitees referred
to in this Article 9 as "Restoragen") from and against and in respect of any
and all Indemnifiable Losses, resulting from, arising out of, or imposed upon
or incurred by any person to be indemnified hereunder by reason of any breach
of any representation, warranty, covenant or agreement of such Lender contained
in this Agreement or any agreement, certificate or document executed and
delivered by such Lender pursuant hereto or in connection with any of the
transactions contemplated by this Agreement.
9.3) Third-Party Claims. If a claim by a third party is made against an
indemnified party and if the indemnified party intends to seek indemnity with
respect thereto under this Article 9, such indemnified party shall promptly
notify the indemnifying party of such claim; provided, however, that failure to
give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying
party's ability to defend such claim against a third party. The indemnified
party shall not settle such claim without the consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed. If the
indemnifying party acknowledges in writing its indemnity obligations for
Indemnifiable Losses resulting therefrom, the indemnifying party may
participate at its own cost and expense in the settlement or defense of any
claim for which indemnification is sought.
9.4) Cooperation as to Indemnified Liability. Each party hereto shall
cooperate fully with the other parties with respect to access to books,
records, or other documentation within such party's control, if deemed
reasonably necessary or appropriate by any party in the defense of any claim
which may give rise to indemnification hereunder.
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ARTICLE 10
OTHER PROVISIONS
10.1) Non-Disclosure. Each party agrees not to disclose or use (except as
permitted or required for performance by the party receiving such Confidential
Information of its rights or duties hereunder) any Confidential Information of
the other party obtained during the term of this Agreement and for as long as
such information is maintained as confidential by the disclosing party, but in
any event, not less than a period of five (5) years after the receiving party's
receipt of such Confidential Information. Each party further agrees to take
appropriate measures to prevent any such prohibited disclosure by its present
and future employees, officers, agents, subsidiaries, or consultants during
such period.
10.2) Further Assurances. At such time and from time to time on and after
the date hereof upon request by any Lender, Restoragen will execute,
acknowledge and deliver, or will use its reasonable best efforts cause to be
done, executed, acknowledged and delivered, all such further acts, certificates
and assurances that may be reasonably required for the better conveying,
transferring, assigning, delivering, assuring and confirming to such Lender, or
to its respective successors and assigns, the Notes, Warrants, Conversion
Shares or Warrant Shares or to otherwise carry out the purposes of this
Agreement and the agreements, documents and instruments contemplated hereby.
10.3) Complete Agreement. The Schedules and Exhibits to this Agreement
shall be construed as an integral part of this Agreement to the same extent as
if they had been set forth verbatim herein. This Agreement, the Schedules and
Exhibits hereto, constitute the entire agreement between the parties hereto
with respect to the subject matters hereof and thereof and supersede all prior
agreements whether written or oral relating hereto.
10.4) Survival of Representations, Warranties and Agreements. The
representations, warranties, covenant and agreements contained herein shall
survive the Closing and remain in full force and effect; provided however, the
representations and warranties shall expire on the second anniversary of the
date hereof. No independent investigation of Restoragen by any of the Lenders,
its counsel, or any of its agents or employees shall in any way limit or
restrict the scope of the representations and warranties made by Restoragen in
this Agreement.
10.5) Waiver, Discharge, Amendment, Etc. The failure of any party hereto
to enforce at any time any of the provisions of this Agreement shall not,
absent an express written waiver signed by the party making such waiver
specifying the provision being waived, be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any part
thereof or the right of the party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach. This Agreement may be amended in
writing by Restoragen, and Lenders holding at least 75% of the aggregate amount
of principal outstanding Notes; provided that (i) no amendment of Section 3.1
hereof may be made without Medtronic's written consent, and (ii) no amendment
of Section 3.2 hereof may be made without Medtronic's and SMS Securities'
written consent.
-31-
10.6) Notices. All notices or other communications to a party required or
permitted hereunder shall be in writing and shall be delivered personally or by
facsimile (receipt confirmed electronically) to such party (or, in the case of
an entity, to an executive officer of such party) or shall be sent by a
reputable express delivery service or by certified mail, postage prepaid with
return receipt requested, addressed as follows:
if to Medtronic to:
Medtronic, Inc.
World Headquarters
000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxxxxxx, XX 00000-0000
Attention: General Counsel
FAX (000) 000-0000
with a copy to:
Medtronic, Inc.
World Headquarters
000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxxxxxx, XX 00000-0000
Attention: Vice President and Chief Development Officer
FAX (000) 000-0000
if to a Lender other than Medtronic, to the address specified on Exhibit A for
such Lender
if to Restoragen to:
Restoragen, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
FAX (000) 000-0000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
FAX (000) 000-0000
Any party may change the above-specified recipient and/or mailing address
by notice to all other parties given in the manner herein prescribed. All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by facsimile) or on the day shown on the
return receipt (if delivered by mail or delivery service).
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10.7) Public Announcement. In the event any party proposes to issue any
press release or public announcement concerning any provisions of this
Agreement or the transactions contemplated hereby, such party shall so advise
the other parties hereto, and the parties shall thereafter use their reasonable
best efforts to cause a mutually agreeable release or announcement to be
issued. Neither party will publicly disclose or divulge any provisions of this
Agreement or the transactions contemplated hereby without the other parties'
written consent, except as may be required by applicable law (including
applicable SEC rules and regulations) or stock exchange regulation, and except
for communications to employees.
10.8) Expenses. Except as expressly provided herein, Restoragen and each
of the Lenders shall pay their own expenses incident to this Agreement and the
preparation for, and consummation of, the transactions provided for herein.
Notwithstanding the foregoing, Restoragen shall reimburse each of Medtronic and
SMS Securities for up to $20,000 (each) of legal fees and expenses incurred in
connection with the transactions provided for herein.
10.9) Governing Law. The formation, legality, validity, enforceability and
interpretation of this Agreement shall be governed by the laws of the State of
Delaware.
10.10) Titles and Headings; Construction. The titles and headings to the
Articles and Sections herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement. This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.
10.11) Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
10.12) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.
10.13) Parties in Interest. All representations, covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not.
10.14) Severability. If any provision of this Agreement is held invalid by
a court of competent jurisdiction, the remaining provisions shall nonetheless
be enforceable according to their terms. Further, if any provision is held to
be overbroad as written, such provision shall be deemed amended to narrow its
application to the extent necessary to make the provision enforceable according
to applicable law and shall be enforced as amended.
10.15) Effect of Conversion of Notes. The rights granted to Medtronic
and/or the Lenders pursuant to Articles 3 and 8 shall survive the conversion of
the Notes, except as otherwise specifically provided in such Article 3 or
Article 8.
-33-
IN WITNESS WHEREOF, each of the parties has caused this Bridge Loan
Agreement to be executed in the manner appropriate for each, and to be dated as
of the date first above-written.
RESTORAGEN, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Its: Senior Vice President and Chief
Financial Officer
MEDTRONIC INTERNATIONAL, LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
Its: Vice President
ADDITIONAL "LENDERS":
/s/ Xxxxxx Xxxxxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxxxxx
EQUITY FOUR LIFE (BAHAMAS) LTD.
By: /s/ Xxxxx Xxxxxx
----------------------------------------
/s/ Xxxxxx Xxxxxxx Xxxxx
----------------------------------------
Its: Directors
/s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxx Xxxxxxxx
[SIGNATURES CONTINUED]
-34-
ROCKY MOUNTAIN ASSOCIATES S.A.
By: /s/ Pablo Layer Xxxxxx
----------------------------------------
/s/ Xxxx May Xxxxx
----------------------------------------
Its: Directors
ATTACHMENTS:
Exhibit A - Schedule of Lenders
Exhibit B - Form of Note
Exhibit C - Security Agreement
Exhibit D - Form of Warrant
Schedule of Exceptions
-35-
EXHIBIT A
Additional Lenders
Principal Amount
Name Address (in USD)
---- ------- ----------------
Xxxxxx Xxxxxxxxxxx Xxxxxxxxxxxxx 000 $ 2,000,000
CH-8645 Jona
Switzerland
EquityFourLife (Bahamas) Ltd. Attn: Xxxxxxx Xxxxx $ 1,500,000*
Xxxxxxxxx Xxxxx
Xxxx Xxxx
X.X. Xxx X-0000
Xxxxxx, Xxxxxxx
Xxxxx Xxxxxx Xxxxxxxx 0 $ 500,000
XX-0000 Xxxxxxxxxx
Xxxxxxxxxxx
Xxxxxx Xxxxxxxx Xxxxxxxxxxxxxx 00 $ 1,000,000
Xxxxxxxx 0000
XX-0000 Xxxxxx
Xxxxxxxxxxx
Rocky Mountain Associates S.A. 00xx Xxxxxx $ 3,000,000
Urbanicazion Obarrio ------------
Torre Swiss Bank
00xx Xxxxx
Xxxxxx,
Xxxxxxxx of Panama
Total from Additional Lenders $ 8,000,000
Loan from Medtronic $ 10,000,000
============
Total Loans: $18,000,000
*including $1,000,000 already advanced to Restoragen on 11/28/01 to cover
salary expenses of the Company.
