DEALS AND SUITS

Titan Medical Inc. announces development and license agreements with Medtronic, senior secured loan and US$18 million offering

On June 4 , 2020, Titan Medical Inc. (Titan or Titan Medical) (TSX: TMD) (Nasdaq: TMDI), a medical device company focused on the design and development of single-port robotic surgical technologies, announced that it had entered into a development and license agreement with Medtronic plc (Medtronic) (NYSE: MDT) to further the development of robotic assisted surgical technologies, as well as a separate license agreement with Medtronic in respect of certain intellectual property of Titan.

The development and license agreement provides for the development of robotic assisted surgical technologies for use by both Titan and Medtronic in their respective businesses. Titan will receive a series of payments totaling up to US$31 million for Medtronic’s license to such technologies, as technology milestones are completed and verified. A steering committee comprised of representatives from Titan and Medtronic will be established to provide oversight regarding the work toward achievement of the milestones. One of the milestones of the agreement is for Titan to raise an additional US$18 million of capital within four months of the development start date.

To support development, Titan has received a senior secured loan of U.S. $1.5 million from Medtronic which was announced on April 29, 2020. The loan, which will be increased by an amount equal to certain legal, transaction and intellectual property related expenses pursuant to the definitive agreements, will be evidenced by an amended and restated promissory note, and will bear interest at the rate of 8% per annum. The loan is repayable on June 4, 2023, or upon the earlier completion of the last milestone under the development and license agreement or a Change of Control of Titan (as defined in the note). Until repayment of the loan, Medtronic may have one non-voting observer attend meetings of Titan’s Board of Directors. The loan will be secured by way of a security agreement entered into by Titan and pursuant to which Titan has granted a security interest in favor of Medtronic in all of Titan’s present and future property including all personal property, inventory, equipment and intellectual property.

Under the terms of the separate license agreement, Medtronic has licensed certain robotic assisted surgical technologies from Titan for an upfront payment of U.S. $10 million. Titan retains the rights to continue to develop and commercialize those technologies for its own business.

On June 11, 2020, Titan closed its registered direct offering priced at the market under Nasdaq rules for the purchase and sale of 18,000,000 common shares of the Company (the Common Shares) or Common Shares equivalents at a price of US$1.00 per Common Share or Common Share equivalent and 9,000,000 Common Share purchase warrants (each, a Warrant), resulting in total gross proceeds to the Company of approximately US$18.0 million.

BLG represented Titan with a team led by Manoj Pundit that included Colin Cameron-Vendrig, Brandon Evenson, Jonas Farovitch, Christine Mason, Danny Lang and Roger Jaipargas.