Document:

FACE OF SECURITY
                             Fixed Rate Senior Note

REGISTERED                                              REGISTERED
No. FXR - 10                                            $15,225,000, as modified
                                                        by Schedule A
                                                        CUSIP: 00079FAK8

     Unless this certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or such other name
as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.

<PAGE>

                               ABN AMRO BANK N.V.

                    SENIOR GLOBAL MEDIUM-TERM NOTE, SERIES A

                                  (Fixed Rate)

          13.00% Reverse Exchangeable Securities due December 19, 2002
              linked to shares of Nasdaq-100 Index Tracking Stock

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<S>     <C>    <C>    <C>    <C>    <C>    <C>
====================================================================================================================
ORIGINAL ISSUE DATE:         INITIAL REDEMPTION DATE: N/A INTEREST RATE: 13.00% per   MATURITY DATE:
    December 19, 2001                                         annum                         December 19, 2002
--------------------------------------------------------------------------------------------------------------------
INTEREST ACCRUAL DATE:       INITIAL REDEMPTION           INTEREST PAYMENT DATES:     OPTIONAL REPAYMENT DATE: N/A
    December 19, 2001            PERCENTAGE: N/A              June 19, 2002 and
                                                              December 19, 2002
--------------------------------------------------------------------------------------------------------------------
SPECIFIED CURRENCY: U.S.     ANNUAL REDEMPTION PERCENTAGE INTEREST PAYMENT PERIOD:    APPLICABILITY OF MODIFIED
Dollars                          REDUCTION: N/A               Semi-annually               PAYMENT UPON
                                                                                          ACCELERATION:

                                                                                          N/A (But see "Alternate
                                                                                          Exchange Calculation in
                                                                                          case of an Event of
                                                                                          Default")
--------------------------------------------------------------------------------------------------------------------
IF SPECIFIED CURRENCY        REDEMPTION NOTICE            APPLICABILITY OF ANNUAL     If yes, state Issue
    OTHER THAN U.S.              PERIOD: N/A                  INTEREST PAYMENTS:      Price: N/A
    DOLLARS, OPTION TO                                        N/A
    ELECT PAYMENT IN
    U.S. DOLLARS: N/A
--------------------------------------------------------------------------------------------------------------------
EXCHANGE RATE AGENT:                                                                  ORIGINAL YIELD TO
    N/A                                                                               MATURITY: N/A
--------------------------------------------------------------------------------------------------------------------
OTHER PROVISIONS:
    (see below)
====================================================================================================================

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<CAPTION>
<S>                                                      <C>
Initial Price....................................        $40.11 per Nasdaq-100 Share divided by the
                                                         Exchange Factor.

Nasdaq-100 Share ................................        Shares of Nasdaq-100 Index Tracking Stock,
                                                         representing proportionate undivided interests in
                                                         the Nasdaq-100 Trust, Series 1, which holds
                                                         substantially all the component securities of the
                                                         Nasdaq-100 Index, in substantially the same
                                                         weighting.

Minimum Denominations............................        $1,000 and integral multiples thereof.

Payment at Maturity:.............................        At maturity, the Issuer shall pay or deliver for
                                                         each $1,000 principal amount of Notes, either (i)
                                                         a cash payment equal to $1,000, if the
                                                         Determination Price on the Determination Date of
                                                         the Nasdaq-100 Shares is at or above the Initial
                                                         Price, or (ii) the number of Nasdaq-100 Shares
                                                         equal to the Stock Redemption Amount, if the
                                                         Determination Price on the Determination Date of
                                                         the Nasdaq-100 Shares is lower than the Initial
                                                         Price. The Issuer shall pay cash in lieu of
                                                         delivering fractional Nasdaq-100 Shares in an
                                                         amount equal to the corresponding fractional
                                                         Closing Price of the Nasdaq-100 Shares as
                                                         determined by the Calculation Agent on the
                                                         Determination Date.

                                                         If the Issuer is required to deliver Nasdaq-100
                                                         Shares pursuant to the terms of the Notes, it
                                                         shall, or cause the Calculation Agent to, provide
                                                         written notice to the Trustee at its New York
                                                         office, on which notice the Trustee may
                                                         conclusively rely, of the Stock Redemption
                                                         Amount, on or prior to the Issuer Notice Date.
                                                         The Issuer shall, or shall cause the Calculation
                                                         Agent to, deliver such Nasdaq-100 Shares (and/or
                                                         Exchange Property, if applicable) to the Trustee
                                                         for delivery to the Holders.

Stock Redemption Amount:.........................        The Calculation Agent shall determine the Stock
                                                         Redemption Amount for each $1,000 principal amount
                                                         of Notes on the Determination Date by dividing
                                                         $1,000 by the Initial Price.

                                                         The number of Nasdaq-100 Shares to be delivered at
                                                         maturity shall be subject to any

                                                    3
<PAGE>

                                                         applicable adjustments (i) to the Exchange Factor
                                                         and (ii) the payment at maturity to be delivered
                                                         instead of Nasdaq-100 Shares, in each case as a
                                                         result of certain events described under
                                                         "Adjustment Events" below.

Determination Date:..............................        The third Business Day prior to the Maturity Date,
                                                         or if such day is not a Trading Day, the
                                                         immediately succeeding Trading Day; provided that
                                                         the Determination Date shall be no later than the
                                                         second scheduled Trading Day preceding the
                                                         Maturity Date, notwithstanding the occurrence of a
                                                         Market Disruption Event on such second scheduled
                                                         Trading Day.

Determination Price:.............................        The Closing Price per Nasdaq-100 Share on the
                                                         Determination Date, as determined by the
                                                         Calculation Agent.

Closing Price....................................        If the Nasdaq-100 Shares (or any other security
                                                         for which a Closing Price must be determined) are
                                                         listed on a U.S. securities exchange registered
                                                         under the Exchange Act is a security of The Nasdaq
                                                         National Market or is included in the OTC Bulletin
                                                         Board Service (the "OTC Bulletin Board"), operated
                                                         by the National Association of Securities Dealers,
                                                         Inc., the Closing Price for one Nasdaq-100 Share
                                                         (or one unit of any such other security) on any
                                                         Trading Day means (i) the last reported sale
                                                         price, regular way, in the principal trading
                                                         session on such day on the principal securities
                                                         exchange on which the Nasdaq-100 Shares (or any
                                                         such other security) are listed or admitted to
                                                         trading or (ii) if not listed or admitted to
                                                         trading on any such securities exchange or if such
                                                         last reported sale price is not obtainable (even
                                                         if the Nasdaq-100 Shares (or other such security)
                                                         are listed or admitted to trading on such
                                                         securities exchange), the last reported sale price
                                                         in the principal trading session on the
                                                         over-the-counter market as reported on The Nasdaq
                                                         National Market or OTC Bulletin Board on such
                                                         day.  If the last reported sale price is not
                                                         available pursuant to clause (i) or (ii) of the
                                                         preceding sentence,

                                                    4
<PAGE>

                                                         the Closing Price for any Trading Day shall be
                                                         the mean, as determined by the Calculation Agent,
                                                         of the bid prices for the Nasdaq-100 Shares (or
                                                         any such other security) obtained from as many
                                                         dealers in such security (which may include AAI
                                                         or any of the Issuer's other subsidiaries or
                                                         affiliates), but not exceeding three, as will
                                                         make such bid prices available to the Calculation
                                                         Agent. A "security of The Nasdaq National Market"
                                                         shall include a security included in any
                                                         successor to such system
                                                         and the term "OTC Bulletin Board Service" shall
                                                         include any successor service thereto.

Issuer Notice Date...............................        The Business Day immediately succeeding the
                                                         Determination Date; provided that the Issuer
                                                         Notice Date shall be no later than the second
                                                         scheduled Trading Day preceding the Maturity Date,
                                                         notwithstanding the occurrence of a Market
                                                         Disruption Event on such scheduled Trading Day.

Trading Day:.....................................        A day, as determined by the Calculation Agent, on
                                                         which trading is generally conducted on the New
                                                         York Stock Exchange, the American Stock Exchange
                                                         Inc., the Nasdaq National Market, the Chicago
                                                         Mercantile Exchange, and the Chicago Board of
                                                         Options Exchange and in the over-the-counter
                                                         market for equity securities in the United States
                                                         and on which a Market Disruption Event has not
                                                         occurred.
Market Disruption Event:.........................        Means, with respect to the Nasdaq-100 Shares or
                                                         20% or more of the number of the underlying stocks
                                                         which then comprise the Nasdaq-100 Index:

                                                           (i) a suspension, absence or material limitation
                                                           of trading of the Nasdaq-100 Shares or 20% or
                                                           more of the number of the underlying stocks which
                                                           then comprise the Nasdaq-100 Index, in each case,
                                                           for more than two hours of trading or during the
                                                           one-half hour period preceding the close of
                                                           trading

                                                    5
<PAGE>

                                                           on the AMEX, the Nasdaq Stock Market, or any
                                                           other applicable organized U.S. exchange; a
                                                           breakdown or failure in the price and trade
                                                           reporting systems of the primary market for the
                                                           Nasdaq-100 Shares or 20% or more of the number of
                                                           the underlying stocks which then comprise the
                                                           Nasdaq-100 Index as a result of which the
                                                           reported trading prices, in each case, during the
                                                           last one-half hour preceding the closing of
                                                           trading in such market are materially inaccurate;
                                                           or the suspension, absence or material limitation
                                                           on the primary market for trading in futures or
                                                           options contracts related to the Nasdaq-100
                                                           Shares or 20% or more of the number of the
                                                           underlying stocks which then comprise the
                                                           Nasdaq-100 Index, if available, during the
                                                           one-half hour period preceding the close of
                                                           trading in the applicable market, in each case as
                                                           determined by the Calculation Agent in its sole
                                                           discretion; and

                                                           (ii) a determination by the Calculation Agent in
                                                           its sole discretion that the event described in
                                                           clause (i) above materially interfered with the
                                                           Issuer's ability or the ability of any of the
                                                           Issuer's affiliates to unwind or adjust all or a
                                                           material portion of the hedge with respect to the
                                                           Notes.

                                                         For purposes of determining whether a Market
                                                         Disruption Event has occurred: (1) a limitation
                                                         on the hours or number of days of trading will
                                                         not constitute a Market Disruption Event if it
                                                         results from an announced change in the regular
                                                         business hours of the relevant exchange; (2) a
                                                         decision to permanently discontinue trading in
                                                         the relevant option or futures contract will not
                                                         constitute a Market Disruption Event; (3)
                                                         limitations pursuant to New York Stock Exchange
                                                         Inc. Rule 80A (or any applicable rule or
                                                         regulation enacted or promulgated by the New York
                                                         Stock Exchange Inc., any other self-regulatory
                                                         organization or the Commission of

                                                    6
<PAGE>

                                                         similar scope as determined by the Calculation
                                                         Agent) on trading during significant market
                                                         fluctuations shall constitute a suspension,
                                                         absence or material limitation of trading; (4) a
                                                         suspension of trading in futures or options
                                                         contracts on the Nasdaq-100 Shares or 20% or more
                                                         of the number of the underlying stocks which then
                                                         comprise the Nasdaq-100 Index by the primary
                                                         securities market trading in such futures or
                                                         options, if available, by reason of (x) a price
                                                         change exceeding limits set by such securities
                                                         exchange or market, (y) an imbalance of orders
                                                         relating to such contracts or (z) a disparity in
                                                         bid and ask quotes relating to such contracts
                                                         will constitute a suspension, absence or material
                                                         limitation of trading in futures or options
                                                         contracts related to the Nasdaq-100 Shares or 20%
                                                         or more of the number of the underlying stocks
                                                         which then comprise the Nasdaq-100 Index; and (5)
                                                         a suspension, absence or material limitation of
                                                         trading on the primary securities market on which
                                                         futures or options contracts related to the
                                                         Nasdaq-100 Shares or 20% or more of the number of
                                                         the underlying stocks which then comprise the
                                                         Nasdaq-100 Index are traded will not include any
                                                         time when such securities market is itself closed
                                                         for trading under ordinary circumstances.

                                                         The Calculation Agent shall as soon as reasonably
                                                         practicable under the circumstances notify the
                                                         Issuer, the Trustee, the Depository Trust Company
                                                         and the Agents of the existence or occurrence of
                                                         a Market Disruption Event on any day that but for
                                                         the occurrence or existence of a Market
                                                         Disruption Event would have been the
                                                         Determination Date.

Exchange Factor..................................        The Exchange Factor shall initially be 1.0, but
                                                         shall be subject to adjustment by the Calculation
                                                         Agent upon the occurrence of certain events
                                                         affecting the Nasdaq-100 Shares through and
                                                         including the Determination Date.  See "Adjustment
                                                         Events" below.

                                                    7
<PAGE>

Adjustment Events:...............................        The Exchange Factor or the amount paid at maturity
                                                         shall be adjusted as follows:

                                                         1. If the Nasdaq-100 Shares are subject to a
                                                         stock split or reverse stock split, then once
                                                         such split has become effective, the Exchange
                                                         Factor shall be adjusted to equal the product of
                                                         the prior Exchange Factor and the number of
                                                         shares issued in such stock split or reverse
                                                         stock split with respect to one Nasdaq-100 Share.

                                                         2. If the Nasdaq-100 Shares are subject (i) to a
                                                         stock dividend (issuance of additional Nasdaq-100
                                                         Shares) that is given ratably to all holders of
                                                         Nasdaq-100 Shares or (ii) to a distribution of
                                                         the Nasdaq-100 Shares for any other reasons, then
                                                         once the dividend has become effective and the
                                                         Nasdaq-100 Shares are trading ex-dividend, the
                                                         Exchange Factor shall be adjusted so that the new
                                                         Exchange Factor shall equal the prior Exchange
                                                         Factor plus the product of (i) the number of
                                                         shares issued with respect to one Nasdaq-100
                                                         Share and (ii) the prior Exchange Factor.

                                                         3. There shall be no adjustments to the Exchange
                                                         Factor to reflect cash dividends or other
                                                         distributions paid with respect to the Nasdaq-100
                                                         Shares other than Extraordinary Dividends as
                                                         described below (except that distributions
                                                         described in paragraph 2 above shall not be
                                                         subject to this paragraph 3). A cash dividend or
                                                         other distribution with respect to the Nasdaq-100
                                                         Shares shall be deemed to be an "Extraordinary
                                                         Dividend" if such dividend or other distribution
                                                         exceeds the immediately preceding
                                                         non-Extraordinary Dividend for the Nasdaq-100
                                                         Shares by an amount equal to at least 10% of the
                                                         Closing Price of the Nasdaq-100 Shares (as
                                                         adjusted for any subsequent event requiring an
                                                         adjustment hereunder, such as a stock split or
                                                         reverse stock split) on the Trading Day preceding
                                                         the ex-dividend date for the payment of such
                                                         Extraordinary Dividend (the "ex-dividend date").
                                                         If an Extraordinary

                                                    8
<PAGE>

                                                         Dividend occurs with respect to the Nasdaq-100
                                                         Shares, the Exchange Factor with respect to the
                                                         Nasdaq-100 Shares will be adjusted on the
                                                         ex-dividend date with respect to such
                                                         Extraordinary Dividend so that the new Exchange
                                                         Factor will equal the product of (i) the then
                                                         current Exchange Factor and (ii) a fraction, the
                                                         numerator of which is the Closing Price on the
                                                         Trading Day preceding the ex-dividend date, and
                                                         the denominator of which is the amount by which
                                                         the Closing Price on the Trading Day preceding
                                                         the ex-dividend date exceeds the Extraordinary
                                                         Dividend Amount. The "Extraordinary Dividend
                                                         Amount" with respect to an Extraordinary Dividend
                                                         for the Nasdaq-100 Shares shall equal (i) in the
                                                         case of cash dividends or other distributions
                                                         that constitute regular dividends, the amount per
                                                         share of such Extraordinary Dividend minus the
                                                         amount per share of the immediately preceding
                                                         non-Extraordinary Dividend for the Nasdaq-100
                                                         Shares or (ii) in the case of cash dividends or
                                                         other distributions that do not constitute
                                                         regular dividends, the amount per share of such
                                                         Extraordinary Dividend. To the extent an
                                                         Extraordinary Dividend is not paid in cash, the
                                                         value of the non-cash component will be
                                                         determined by the Calculation Agent, whose
                                                         determination shall be conclusive. A distribution
                                                         on the Nasdaq-100 Shares described in paragraph 4
                                                         below that also constitutes an Extraordinary
                                                         Dividend shall not cause an adjustment to the
                                                         Exchange Factor pursuant to this paragraph 3.

                                                         4. If the Nasdaq-100 Trust is terminated in
                                                         accordance with its terms, which we refer to as a
                                                         Termination Event, the amount payable at maturity
                                                         of the Securities will be determined as follows:

                                                         A.    If the Termination Event occurs as a result
                                                               of the Nasdaq-100 Index ceasing to be
                                                               published, each holder of the Securities
                                                               will

                                                    9
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                                                               receive at maturity, in respect of each
                                                               $1,000 principal amount of each Security, an
                                                               amount in cash equal to the lesser of (i)
                                                               $1,000 or (ii) the product of the Stock
                                                               Redemption Amount times the amount of cash
                                                               received per Nasdaq-100 Share as a result of
                                                               the Termination Event.  Holders of
                                                               Securities will not receive any interest on
                                                               such cash. If there occurs a Termination
                                                               Event as described above in this
                                                               subparagraph A, but the liquidation has not
                                                               been completed by the Determination Date,
                                                               for purposes of determining the amount
                                                               payable at maturity of the Securities, the
                                                               amount of cash to be received per Nasdaq-100
                                                               Share due to the Termination Event shall be
                                                               determined by the Calculation Agent, which
                                                               determination shall be conclusive and
                                                               binding.

                                                         B.    If a Termination Event occurs other than as
                                                               a result of the Nasdaq-100 Index ceasing to
                                                               be published, each holder of the Securities
                                                               will receive at maturity, in respect of each
                                                               $1,000 principal amount of each Security, an
                                                               amount in cash equal to the lesser of (i)
                                                               $1,000 or (ii) the product of the Stock
                                                               Redemption Amount times the Adjusted
                                                               Determination Price, as defined below. The
                                                               "Adjusted Determination Price" means the
                                                               Closing Price of the Nasdaq-100 Index at the
                                                               regular official weekday close of trading on
                                                               the Determination Date multiplied by a
                                                               fraction, as determined by the Calculation
                                                               Agent, equal to that fraction of the
                                                               Nasdaq-100 Index represented by the Closing
                                                               Price of Nasdaq-100 Shares on the last day
                                                               before the Termination Event when a Closing
                                                               Price for the Nasdaq-100 Shares was
                                                               available.

                                                               If at any time after a Termination Event
                                                               described in this subparagraph B the

                                                    10
<PAGE>

                                                               Nasdaq-100 Index ceases to be published,
                                                               the Calculation Agent shall determine the
                                                               payment at maturity for the Securities by
                                                               reference to the value of a successor or
                                                               substitute index that the Calculation Agent
                                                               determines, in its sole discretion, to be
                                                               comparable to the Nasdaq-100 Index (such
                                                               successor or substitute index is referred
                                                               to as a "Successor Index"), at the regular
                                                               official weekday close of trading on the
                                                               Determination Date of such Successor Index.
                                                               If the Calculation Agent determines, in its
                                                               sole discretion, that there is no suitable
                                                               Successor Index, then the Calculation Agent
                                                               shall determine the payment at maturity for
                                                               the Securities by reference to the
                                                               Reconstructed Nasdaq-100 Index, as defined
                                                               below. The "Reconstructed Nasdaq-100 Index"
                                                               shall be determined by the Calculation
                                                               Agent by using the formula for and method
                                                               of calculating the Nasdaq-100 Index last in
                                                               effect prior to its discontinuance, using
                                                               the Closing Price (or, if trading in the
                                                               relevant underlying stocks has been
                                                               materially suspended or materially limited,
                                                               its good faith estimate of the Closing
                                                               Price that would have prevailed but for
                                                               such suspension or limitation) on the
                                                               Determination Date of each security most
                                                               recently comprising the Nasdaq-100 Index
                                                               before its discontinuance. All
                                                               determinations by the Calculation Agent
                                                               shall be conclusive and binding.

                                                         No adjustments to the Exchange Factor shall be
                                                         required unless such adjustment would require a
                                                         change of at least 0.1% in the Exchange Factor
                                                         then in effect. The Exchange Factor resulting
                                                         from any of the adjustments specified above shall
                                                         be rounded to the nearest one hundred-thousandth
                                                         with five one-millionths being rounded upward.

                                                    11
<PAGE>

                                                         No adjustments to the Exchange Factor or method
                                                         of calculating the Exchange Factor shall be
                                                         required other than those specified above.
                                                         However, the Issuer may, at its sole discretion,
                                                         cause the Calculation Agent to make additional
                                                         changes to the Exchange Factor upon the
                                                         occurrence of corporate or other similar events
                                                         that affect or could potentially affect market
                                                         prices of, or shareholders' rights in, the
                                                         Nasdaq-100 Shares but only to reflect such
                                                         changes, and not with the aim of changing
                                                         relative investment risk. The adjustments
                                                         specified above do not cover all events that
                                                         could affect the market price or the Closing
                                                         Price of the Nasdaq-100 Shares.

                                                         The Calculation Agent shall be solely responsible
                                                         for the determination and calculation of any
                                                         adjustments to the Exchange Factor or method of
                                                         calculating the Exchange Factor and of any
                                                         related determinations and calculations with
                                                         respect to any distributions of stock, other
                                                         securities or other property or assets (including
                                                         cash) in connection with any event described in
                                                         paragraph 4 above, and its determinations and
                                                         calculations with respect thereto shall be
                                                         conclusive.

                                                         The Calculation Agent will provide information as
                                                         to any adjustments to the Exchange Factor or
                                                         method of calculating the Exchange Factor upon
                                                         written request by any Holder of this Note.

Alternate Exchange Calculation in case of an             In case an Event of Default with respect to this
Event of Default.................................        Note shall have occurred and be continuing, the
                                                         amount declared due and payable upon any
                                                         acceleration of this Note shall be determined by
                                                         the Calculation Agent, and shall be equal to the
                                                         principal amount of this Note plus any accrued
                                                         interest to but not including the date of
                                                         acceleration.

Calculation Agent................................        ABN AMRO Incorporated ("AAI").  All determinations
                                                         made by the Calculation

                                                    12
<PAGE>

                                                         Agent will be at the sole discretion of the
                                                         Calculation Agent and will, in the absence of
                                                         manifest error, be conclusive for all purposes
                                                         and binding on the Holders and on the Issuer.

Additional Amounts...............................        The Issuer shall, subject to certain exceptions
                                                         and limitations set forth below, pay such
                                                         additional amounts (the "Additional Amounts") to
                                                         each holder of this Note as may be necessary in
                                                         order that the net payment of the principal of
                                                         this Note and any other amounts payable on this
                                                         Note, after withholding for or on account of any
                                                         present or future tax, assessment or governmental
                                                         charge imposed upon or as a result of such
                                                         payment by The Netherlands (or any political
                                                         subdivision or taxing authority thereof or
                                                         therein) or the jurisdiction of residence or
                                                         incorporation of any successor corporation or any
                                                         jurisdiction from or through which any amount is
                                                         paid by us or a successor corporation, will not
                                                         be less than the amount provided for in this Note
                                                         to be then due and payable. The Issuer shall not,
                                                         however, be required to make any payment of
                                                         Additional Amounts to any such holder for or on
                                                         account of:

                                                    13
<PAGE>

                                                         (a)   any such tax, assessment or other
                                                               governmental charge that would not have
                                                               been so imposed but for (i) the existence
                                                               of any present or former connection between
                                                               such holder (or between a fiduciary,
                                                               settlor, beneficiary, member or shareholder
                                                               of such holder, if such holder is an
                                                               estate, a trust, a partnership or a
                                                               corporation) and The Netherlands and its
                                                               possessions, including, without limitation,
                                                               such holder (or such fiduciary, settlor,
                                                               beneficiary, member or shareholder) being
                                                               or having been a citizen or resident
                                                               thereof or being or having been engaged in
                                                               a trade or business or present therein or
                                                               having, or having had, a permanent
                                                               establishment therein or (ii) the
                                                               presentation, where presentation is
                                                               required, by the holder of this Note for
                                                               payment on a date more than 30 days after
                                                               the date on which such payment became due
                                                               and payable or the date on which payment
                                                               thereof is duly provided for, whichever
                                                               occurs later;

                                                         (b)   any estate, inheritance, gift, sales,
                                                               transfer or personal property tax or any
                                                               similar tax, assessment or governmental
                                                               charge;

                                                         (c)   any tax, assessment or other governmental
                                                               charge that is payable otherwise than by
                                                               withholding from payments on or in respect
                                                               of this Note;

                                                         (d)   any tax, assessment or other governmental
                                                               charge required to be withheld by any
                                                               paying agent from any payment of principal
                                                               of, or supplemental redemption amount on,
                                                               this Note, if such payment can be made
                                                               without such withholding by presentation of
                                                               this Note to any other paying agent;

                                                    154
<PAGE>

                                                         (e)   any tax, assessment or other governmental
                                                               charge that would not have been imposed but
                                                               for a holder's failure to comply with a
                                                               request addressed to the holder or, if
                                                               different, the beneficiary of the payment,
                                                               to comply with certification, information
                                                               or other reporting requirements concerning
                                                               the nationality, residence or identity of
                                                               the holder or beneficial owner of this
                                                               Note, if such compliance is required by
                                                               statute or by regulation of The Netherlands
                                                               (or other relevant jurisdiction), or of any
                                                               political subdivision or taxing authority
                                                               thereof or therein, as a precondition to
                                                               relief or exemption from such tax,
                                                               assessment or other governmental charge; or

                                                         (f)   any combination of items (a), (b), (c), (d)
                                                               or (e);

                                                         nor shall Additional Amounts be paid with respect
                                                         to any payment on this Note to a holder who is a
                                                         fiduciary or partnership or other than the sole
                                                         beneficial owner of such payment to the extent
                                                         such payment would be required by the laws of The
                                                         Netherlands (or other relevant jurisdiction), or
                                                         any political subdivision thereof, to be included
                                                         in the income, for tax purposes, of a beneficiary
                                                         or settlor with respect to such fiduciary or a
                                                         member of such partnership or a beneficial owner
                                                         who would not have been entitled to the
                                                         Additional Amounts had such beneficiary, settlor,
                                                         member or beneficial owner been the holder of
                                                         this Note.
</TABLE>

     ABN AMRO Bank N.V., a public limited liability company incorporated under
the laws of The Netherlands and with corporate seat in Amsterdam (together with
its successors and assigns, the "Issuer"), for value received, hereby promises
to pay to CEDE & CO., or registered assignees, the principal amount specified
on Schedule A hereto on the Maturity Date specified above (except to the extent
redeemed or repaid prior to maturity) and to pay interest thereon at the
Interest Rate per annum specified above, from and including the Interest
Accrual Date specified above until the

                                      15
<PAGE>

principal hereof is paid or duly made available for payment weekly, monthly,
quarterly, semiannually or annually in arrears as specified above as the
Interest Payment Period on each Interest Payment Date (as specified above),
commencing on the Interest Payment Date next succeeding the Interest Accrual
Date specified above, and at maturity (or on any redemption or repayment date);
provided, however, that if the Interest Accrual Date occurs between a Record
Date, as defined below, and the next succeeding Interest Payment Date, interest
payments will commence on the second Interest Payment Date succeeding the
Interest Accrual Date to the registered holder of this Note on the Record Date
with respect to such second Interest Payment Date; and provided, further, that
if this Note is subject to "Annual Interest Payments," interest payments shall
be made annually in arrears and the term "Interest Payment Date" shall be
deemed to mean the first day of March in each year.

     Interest on this Note will accrue from and including the most recent date
to which interest has been paid or duly provided for, or, if no interest has
been paid or duly provided for, from and including the Interest Accrual Date,
until, but excluding the date the principal hereof has been paid or duly made
available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, subject to certain exceptions
described herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the date 15
calendar days prior to such Interest Payment Date (whether or not a Business
Day (as defined below)) (each such date a "Record Date"); provided, however,
that interest payable at maturity (or any redemption or repayment date) will be
payable to the person to whom the principal hereof shall be payable. As used
herein, "Business Day" means any day, other than a Saturday or Sunday, (a) that
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close (x) in The City of New
York or (y) if this Note is denominated in a Specified Currency other than U.S.
dollars, Australian dollars or euro, in the principal financial center of the
country of the Specified Currency, or (z) if this Note is denominated in
Australian dollars, in Sydney and (b) if this Note is denominated in euro, that
is also a day on which the Trans-European Automated Real-time Gross Settlement
Express Transfer System ("TARGET") is operating (a "TARGET Settlement Day").

     Payment of the principal of this Note, any premium and the interest due at
maturity (or any redemption or repayment date), unless this Note is denominated
in a Specified Currency other than U.S. dollars and is to be paid in whole or
in part in such Specified Currency, will be made in immediately available funds
upon surrender of this Note at the office or agency of the Paying Agent, as
defined on the reverse hereof, maintained for that purpose in the Borough of
Manhattan, The City of New York, or at such other paying agency as the Issuer
may determine, in U.S. dollars. U.S. dollar payments of interest, other than
interest due at maturity or on any date of redemption or repayment, will be
made by U.S. dollar check mailed to the address of the person entitled thereto
as such address shall appear in the Note register. A holder of U.S. $10,000,000
(or the equivalent in a Specified Currency) or more in aggregate principal
amount of Notes having the same Interest Payment Date, the interest on which is
payable in U.S. dollars, shall be entitled to receive payments of interest,
other than interest due at maturity or on any date of redemption or repayment,
by wire transfer of immediately available funds if appropriate wire transfer
instructions have been received

                                      16
<PAGE>

by the Paying Agent in writing not less than 15 calendar days prior to the
applicable Interest Payment Date.

     If this Note is denominated in a Specified Currency other than U.S.
dollars, and the holder does not elect (in whole or in part) to receive payment
in U.S. dollars pursuant to the next succeeding paragraph, payments of
interest, principal or any premium with regard to this Note will be made by
wire transfer of immediately available funds to an account maintained by the
holder hereof with a bank located outside the United States if appropriate wire
transfer instructions have been received by the Paying Agent in writing, with
respect to payments of interest, on or prior to the fifth Business Day after
the applicable Record Date and, with respect to payments of principal or any
premium, at least ten Business Days prior to the Maturity Date or any
redemption or repayment date, as the case may be; provided that, if payment of
interest, principal or any premium with regard to this Note is payable in euro,
the account must be a euro account in a country for which the euro is the
lawful currency, provided, further, that if such wire transfer instructions are
not received, such payments will be made by check payable in such Specified
Currency mailed to the address of the person entitled thereto as such address
shall appear in the Note register; and provided, further, that payment of the
principal of this Note, any premium and the interest due at maturity (or on any
redemption or repayment date) will be made upon surrender of this Note at the
office or agency referred to in the preceding paragraph.

     If so indicated on the face hereof, the holder of this Note, if
denominated in a Specified Currency other than U.S. dollars, may elect to
receive all or a portion of payments on this Note in U.S. dollars by
transmitting a written request to the Paying Agent, on or prior to the fifth
Business Day after such Record Date or at least ten Business Days prior to the
Maturity Date or any redemption or repayment date, as the case may be. Such
election shall remain in effect unless such request is revoked by written
notice to the Paying Agent as to all or a portion of payments on this Note at
least five Business Days prior to such Record Date, for payments of interest,
or at least ten days prior to the Maturity Date or any redemption or repayment
date, for payments of principal, as the case may be.

     If the holder elects to receive all or a portion of payments of principal
of and any premium and interest on this Note, if denominated in a Specified
Currency other than U.S. dollars, in U.S. dollars, the Exchange Rate Agent (as
defined on the reverse hereof) will convert such payments into U.S. dollars. In
the event of such an election, payment in respect of this Note will be based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest bid quotation in The City of New York received by such Exchange Rate
Agent at approximately 11:00 a.m., New York City time, on the second Business
Day preceding the applicable payment date from three recognized foreign
exchange dealers (one of which may be the Exchange Rate Agent unless such
Exchange Rate Agent is an affiliate of the Issuer) for the purchase by the
quoting dealer of U.S. dollars for the Specified Currency for settlement on
such payment date in the amount of the Specified Currency payable in the
absence of such an election to such holder and at which the applicable dealer
commits to execute a contract. If such bid quotations are not available, such
payment will be made in the

                                      17
<PAGE>

Specified Currency. All currency exchange costs will be borne by the holder of
this Note by deductions from such payments.

     Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.

     Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture, as defined on the reverse
hereof, or be valid or obligatory for any purpose.

                                      18
<PAGE>

     IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

DATED: December 19, 2001                      ABN AMRO BANK N.V.

                                              By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                              By:
                                                  ------------------------------
                                                  Name:
                                                  Title:

TRUSTEE'S CERTIFICATE
  OF AUTHENTICATION

This is one of the Notes referred
  to in the within-mentioned
  Indenture.

THE CHASE MANHATTAN BANK,
  as Trustee

By:
   ------------------------------
   Authorized Officer

<PAGE>

                              REVERSE OF SECURITY

     This Note is one of a duly authorized issue of Global Medium-Term Notes,
Series A, having maturities more than nine months from the date of issue (the
"Notes") of the Issuer. The Notes are issuable under an Indenture, dated as of
November 27, 2000, between the Issuer and The Chase Manhattan Bank, as Trustee
(the "Trustee," which term includes any successor trustee under the Indenture)
(as may be amended or supplemented from time to time, the "Indenture"), to
which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities of the Issuer, the Trustee and holders of the Notes and the
terms upon which the Notes are, and are to be, authenticated and delivered. The
Issuer has appointed The Chase Manhattan Bank at its corporate trust office in
The City of New York as the paying agent (the "Paying Agent," which term
includes any additional or successor Paying Agent appointed by the Issuer) with
respect to the Notes. The terms of individual Notes may vary with respect to
interest rates, interest rate formulas, issue dates, maturity dates, or
otherwise, all as provided in the Indenture. To the extent not inconsistent
herewith, the terms of the Indenture are hereby incorporated by reference
herein.

     Unless otherwise indicated on the face hereof, this Note will not be
subject to any sinking fund and, unless otherwise provided on the face hereof
in accordance with the provisions of the following two paragraphs, will not be
redeemable or subject to repayment at the option of the holder prior to
maturity.

     If so indicated on the face hereof, this Note may be redeemed in whole or
in part at the option of the Issuer on or after the Initial Redemption Date
specified on the face hereof on the terms set forth on the face hereof,
together with interest accrued and unpaid hereon to the date of redemption. If
this Note is subject to "Annual Redemption Percentage Reduction," the Initial
Redemption Percentage indicated on the face hereof will be reduced on each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction specified on the face hereof until the redemption price of this Note
is 100% of the principal amount hereof, together with interest accrued and
unpaid hereon to the date of redemption. Notice of redemption shall be mailed
to the registered holders of the Notes designated for redemption at their
addresses as the same shall appear on the Note register not less than 30 nor
more than 60 days prior to the date fixed for redemption or within the
Redemption Notice Period specified on the face hereof, subject to all the
conditions and provisions of the Indenture. In the event of redemption of this
Note in part only, a new Note or Notes for the amount of the unredeemed portion
hereof shall be issued in the name of the holder hereof upon the cancellation
hereof.

     If so indicated on the face of this Note, this Note will be subject to
repayment at the option of the holder on the Optional Repayment Date or Dates
specified on the face hereof on the terms set forth herein. On any Optional
Repayment Date, this Note will be repayable in whole or in part in increments
of $1,000 or, if this Note is denominated in a Specified Currency other than
U.S. dollars, in increments of 1,000 units of such Specified Currency (provided
that any remaining principal amount hereof shall not be less than the minimum
authorized denomination hereof) at the option of

<PAGE>

the holder hereof at a price equal to 100% of the principal amount to be
repaid, together with interest accrued and unpaid hereon to the date of
repayment. For this Note to be repaid at the option of the holder hereof, the
Paying Agent must receive at its corporate trust office inthe Borough of
Manhattan, The City of New York, at least 15 but not more than 30 days prior to
the date of repayment, (i) this Note with the form entitled "Option to Elect
Repayment" below duly completed or (ii) a telegram, telex, facsimile
transmission or a letter from a member of a national securities exchange or the
National Association of Securities Dealers, Inc. or a commercial bank or a
trust company in the United States setting forth the name of the holder of this
Note, the principal amount hereof, the certificate number of this Note or a
description of this Note's tenor and terms, the principal amount hereof to be
repaid, a statement that the option to elect repayment is being exercised
thereby and a guarantee that this Note, together with the form entitled "Option
to Elect Repayment" duly completed, will be received by the Paying Agent not
later than the fifth Business Day after the date of such telegram, telex,
facsimile transmission or letter; provided, that such telegram, telex,
facsimile transmission or letter shall only be effective if this Note and form
duly completed are received by the Paying Agent by such fifth Business Day.
Exercise of such repayment option by the holder hereof shall be irrevocable. In
the event of repayment of this Note in part only, a new Note or Notes for the
amount of the unpaid portion hereof shall be issued in the name of the holder
hereof upon the cancellation hereof.

     Interest payments on this Note will include interest accrued to but
excluding the Interest Payment Dates or the Maturity Date (or any earlier
redemption or repayment date), as the case may be. Unless otherwise provided on
the face hereof, interest payments for this Note will be computed and paid on
the basis of a 360-day year of twelve 30-day months.

     In the case where the Interest Payment Date or the Maturity Date (or any
redemption or repayment date) does not fall on a Business Day, payment of
interest, premium, if any, or principal otherwise payable on such date need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on the Interest Payment Date or on the
Maturity Date (or any redemption or repayment date), and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
the Maturity Date (or any redemption or repayment date) to such next succeeding
Business Day.

     This Note and all the obligations of the Issuer hereunder are direct,
unsecured obligations of the Issuer and rank without preference or priority
among themselves and pari passu with all other existing and future unsecured
and unsubordinated indebtedness of the Issuer, subject to certain statutory
exceptions in the event of liquidation upon insolvency.

     This Note, and any Note or Notes issued upon transfer or exchange hereof,
is issuable only in fully registered form, without coupons, and, if denominated
in U.S. dollars, unless otherwise stated above, is issuable only in
denominations of U.S. $1,000 and any integral multiple of U.S. $1,000 in excess
thereof. If this Note is denominated in a Specified Currency other than U.S.
dollars, then, unless a higher minimum denomination is required by applicable
law, it is issuable only in denominations of the equivalent of U.S. $1,000
(rounded to an integral multiple of 1,000 units of

                                      21
<PAGE>

such Specified Currency), or any amount in excess thereof which is an integral
multiple of 1,000 units of such Specified Currency, as determined by reference
to the noon dollar buying rate in The City of New York for cable transfers of
such Specified Currency published by the Federal Reserve Bank of New York (the
"Market Exchange Rate") on the Business Day immediately preceding the date of
issuance.

     The Trustee has been appointed registrar for the Notes, and the Trustee
will maintain at its office in The City of New York a register for the
registration and transfer of Notes. This Note may be transferred at the
aforesaid office of the Trustee by surrendering this Note for cancellation,
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and duly executed by the registered holder hereof inperson or by the
holder's attorney duly authorized in writing, and thereupon the Trustee shall
issue in the name of the transferee or transferees, in exchange herefor, a new
Note or Notes having identical terms and provisions and having a like aggregate
principal amount in authorized denominations, subject to the terms and
conditions set forth herein; provided, however, that the Trustee will not be
required (i) to register the transfer of or exchange any Note that has been
called for redemption in whole or in part, except the unredeemed portion of
Notes being redeemed in part, (ii) to register the transfer of or exchange any
Note if the holder thereof has exercised his right, if any, to require the
Issuer to repurchase such Note in whole or in part, except the portion of such
Note not required to be repurchased, or (iii) to register the transfer of or
exchange Notes to the extent and during the period so provided in the Indenture
with respect to the redemption of Notes. Notes are exchangeable at said office
for other Notes of other authorized denominations of equal aggregate principal
amount having identical terms and provisions. All such exchanges and transfers
of Notes will be free of charge, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge in connection
therewith. All Notes surrendered for exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and executed by the
registered holder in person or by the holder's attorney duly authorized in
writing. The date of registration of any Note delivered upon any exchange or
transfer of Notes shall be such that no gain or loss of interest results from
such exchange or transfer.

     In case this Note shall at any time become mutilated, defaced or be
destroyed, lost or stolen and this Note or evidence of the loss, theft or
destruction thereof (together with the indemnity hereinafter referred to and
such other documents or proof as may be required in the premises) shall be
delivered to the Trustee, the Issuer in its discretion may execute a new Note
of like tenor in exchange for this Note, but, if this Note is destroyed, lost
or stolen, only upon receipt of evidence satisfactory to the Trustee and the
Issuer that this Note was destroyed or lost or stolen and, if required, upon
receipt also of indemnity satisfactory to each of them. All expenses and
reasonable charges associated with procuring such indemnity and with the
preparation, authentication and delivery of a new Note shall be borne by the
owner of the Note mutilated, defaced, destroyed, lost or stolen.

     The Indenture provides that (a) if an Event of Default (as defined in the
Indenture) due to the default in payment of principal of, premium, if any, or
interest on, any series of debt securities issued under the Indenture,
including the series of Medium-Term Notes of which this Note forms a part,

<PAGE>

     or due to the default in the performance or breach of any other covenant
or warranty of the Issuer applicable to the debt securities of such series but
not applicable to all outstanding debt securities issued under the Indenture
shall have occurred and be continuing, either the Trustee or the holders of not
less than 25% in principal amount of the debt securities of each affected
series (voting as a single class) may then declare the principal of all debt
securities of all such series and interest accrued thereon to be due and
payable immediately and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in the Indenture
applicable to all outstanding debt securities issued thereunder, including this
Note, or due to certain events of bankruptcy or insolvency of the Issuer, shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of all debt securities issued under the Indenture
then outstanding (treated as one class) may declare the principal of all such
debt securities and interest accrued thereon to be due and payable immediately,
but upon certain conditions such declarations may be annulled and past defaults
may be waived (except a continuing default in payment of principal (or premium,
if any) or interest on such debt securities) by the holders of a majority in
principal amount of the debt securities of all affected series then
outstanding.

     If the face hereof indicates that this Note is subject to "Modified
Payment upon Acceleration," then (i) if the principal hereof is declared to be
due and payable as described in the preceding paragraph, the amount of
principal due and payable with respect to this Note shall be limited to the
aggregate principal amount hereof multiplied by the sum of the Issue Price
specified on the face hereof (expressed as a percentage of the aggregate
principal amount) plus the original issue discount amortized from the Interest
Accrual Date to the date of declaration, which amortization shall be calculated
using the "interest method" (computed in accordance with generally accepted
accounting principles in effect on the date of declaration), (ii) for the
purpose of any vote of securityholders taken pursuant to the Indenture prior to
the acceleration of payment of this Note, the principal amount hereof shall
equal the amount that would be due and payable hereon, calculated as set forth
in clause (i) above, if this Note were declared to be due and payable on the
date of any such vote and (iii) for the purpose of any vote of securityholders
taken pursuant to the Indenture following the acceleration of payment of this
Note, the principal amount hereof shall equal the amount of principal due and
payable with respect to this Note, calculated as set forth in clause (i) above.

     The Indenture permits the Issuer and the Trustee, with the consent of the
holders of not less than a majority in aggregate principal amount of the debt
securities of all series issued under the Indenture then outstanding and
affected (voting as one class), to execute supplemental indentures adding any
provisions to or changing in any manner the rights of the holders of each
series so affected; provided that the Issuer and the Trustee may not, without
the consent of the holder of each outstanding debt security affected thereby,
(a) extend the final maturity of any such debt security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon, or reduce any amount payable on redemption or repayment
thereof, or change the currency of payment thereof, or modify or amend the
provisions for conversion ofany currency into any other currency, or modify or
amend the provisions for conversion or exchange of the debt security for
securities of the Issuer or other entities (other than as provided in the
antidilution provisions or other

<PAGE>

similar adjustment provisions of the debt securities or otherwise in accordance
with the terms thereof), or impair or affect the rights of any holder to
institute suit for the payment thereof without the consent of the holder of
each debt security so affected or (b) reduce the aforesaid percentage in
principal amount of debt securities the consent of the holders of which is
required for any such supplemental indenture.

     Except as set forth below, if the principal of, premium, if any, or
interest on, this Note is payable in a Specified Currency other than U.S.
dollars and such Specified Currency is not available to the Issuer for making
payments hereon due to the imposition of exchange controls or other
circumstances beyond the control of the Issuer or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions within the international banking community,
then the Issuer will be entitled to satisfy its obligations to the holder of
this Note by making such payments in U.S. dollars on the basis of the Market
Exchange Rate on the date of such payment or, if the Market Exchange Rate is
not available on such date, as of the most recent practicable date; provided,
however, that if the euro has been substituted for such Specified Currency, the
Issuer may at its option (or shall, if so required by applicable law) without
the consent of the holder of this Note effect the payment of principal of,
premium, if any, or interest on, any Note denominated in such Specified
Currency in euro in lieu of such Specified Currency in conformity with legally
applicable measures taken pursuant to, or by virtue of, the treaty establishing
the European Community (the "EC"), as amended by the treaty on European Union
(as so amended, the "Treaty"). Any payment made under such circumstances in
U.S. dollars or euro where the required payment is in an unavailable Specified
Currency will not constitute an Event of Default. If such Market Exchange Rate
is not then available to the Issuer or is not published for a particular
Specified Currency, the Market Exchange Rate will be based on the highest bid
quotation in The City of New York received by the Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the date of such payment from three recognized foreign exchange
dealers (the "Exchange Dealers") for the purchase by the quoting Exchange
Dealer of the Specified Currency for U.S. dollars for settlement on the payment
date, in the aggregate amount of the Specified Currency payable to those
holders or beneficial owners of Notes and at which the applicable Exchange
Dealer commits to execute a contract. One of the Exchange Dealers providing
quotations may be the Exchange Rate Agent unless the Exchange Rate Agent is an
affiliate of the Issuer. If those bid quotations are not available, the
Exchange Rate Agent shall determine the market exchange rate at its sole
discretion.

     The "Exchange Rate Agent," if any, shall be indicated on the face hereof.

     All determinations referred to above made by, or on behalf of, the Issuer
or by, or on behalf of, the Exchange Rate Agent shall be at such entity's sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Notes and coupons.

     So long as this Note shall be outstanding, the Issuer will cause to be
maintained an office or agency for the payment of the principal of and premium,
if any, and interest on this Note as herein provided in the Borough of
Manhattan, The City of New York, and an office or agency in said

<PAGE>

Borough of Manhattan for the registration, transfer and exchange as aforesaid
of the Notes. The Issuer may designate other agencies for the payment of said
principal, premium and interest at such place or places (subject to applicable
laws and regulations) as the Issuer may decide. So long as there shall be such
an agency, the Issuer shall keep the Trustee advised of the names and locations
of such agencies, if any are so designated.

     With respect to moneys paid by the Issuer and held by the Trustee or any
Paying Agent for payment of the principal of or interest or premium, if any, on
any Notes that remain unclaimed at the end of two years after such principal,
interest or premium shall have become due and payable (whether at maturity or
upon call for redemption or otherwise), (i) the Trustee or such Paying Agent
shall notify the holders of such Notes that such moneys shall be repaid to the
Issuer and any person claiming such moneys shall thereafter look only to the
Issuer for payment thereof and (ii) such moneys shall be so repaid to the
Issuer. Upon such repayment all liability of the Trustee or such Paying Agent
with respect to such moneys shall thereupon cease, without, however, limiting
in any way any obligation that the Issuer may have to pay the principal of or
interest or premium, if any, on this Note as the same shall become due.

     No provision of this Note or of the Indenture shall alter or impair the
obligation of the Issuer, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest on this Note at the time, place,
and rate, and in the coin or currency, herein prescribed unless otherwise
agreed between the Issuer and the registered holder of this Note.

     Prior to due presentment of this Note for registration of transfer, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
holder in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and none of the Issuer, the
Trustee or any such agent shall be affected by notice to the contrary.

     No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on this Note, for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture or any indenture
supplemental thereto, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Issuer or of any successor
corporation, either directly or through the Issuer or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

     This Note shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

     All terms used in this Note which are defined in the Indenture and not
otherwise defined herein shall have the meanings assigned to them in the
Indenture.

<PAGE>

                                 ABBREVIATIONS

     The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:

       TEN COM - as tenants in common
       TEN ENT - as tenants by the entireties
       JT TEN - as joint tenants with right of survivorship and not as
                tenants in common

     UNIF GIFT MIN ACT ____________________ Custodian __________________________
                             (Minor)                            (Cust)

     Under Uniform Gifts to Minors Act__________________________________________
                                                       (State)

     Additional abbreviations may also be used though not in the above list.

                        ------------------------------

<PAGE>

     FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
     transfer(s) unto

-----------------------------------------
[PLEASE INSERT SOCIAL SECURITY OR OTHER
     IDENTIFYING NUMBER OF ASSIGNEE]

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
[PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE]

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing such person attorney to transfer such note on the books of the
Issuer, with full power of substitution in the premises.

Dated:______________________________

NOTICE: The signature to this assignment must correspond with the name
        as written upon the face of the within Note in every particular
        without alteration or enlargement or any change whatsoever.

<PAGE>

                           OPTION TO ELECT REPAYMENT

     The undersigned hereby irrevocably requests and instructs the Issuer to
repay the within Note (or portion thereof specified below) pursuant to its
terms at a price equal to the principal amount thereof, together with interest
to the Optional Repayment Date, to the undersigned at

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
        (Please print or typewrite name and address of the undersigned)

     If less than the entire principal amount of the within Note is to be
repaid, specify the portion thereof which the holder elects to have repaid:
_____________________; and specify the denomination or denominations (which
shall not be less than the minimum authorized denomination) of the Notes to be
issued to the holder for the portion of the within Note not being repaid (in
the absence of any such specification, one such Note will be issued for the
portion not being repaid): _______________________.

Dated:________________________________   _______________________________________

                                         NOTICE: The signature on this Option to
                                         Elect Repayment must correspond with
                                         the name as written upon the face of
                                         the within instrument in every
                                         particular without alteration or
                                         enlargement.

<PAGE>

                                                                      SCHEDULE A

                                PRINCIPAL AMOUNT

     The initial principal amount of this Note is $15,225,000. The maximum
principal amount of this Note is $16,500,000. The following increases or
decreases in the principal amount of this Note by reason of additional
issuances (or cancellations) have been made:

<TABLE>
                                                                             Aggregate Principal Amount of
   Settlement Date of                                                      this Note Outstanding Following
 Additional Issuance (or     Principal Amount of     Principal Amount        such Additional Issuance or
Date of any Cancellation)    Additional Issuance         Cancelled                  Cancellation

<S>                          <C>                     <C>                   <C>
-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------

-------------------------    -------------------     ----------------      -------------------------------
</TABLE>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.

<PAGE>

     "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.

                                      -2-
<PAGE>

     "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.

                                      -3-
<PAGE>

     "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

                                      -4-
<PAGE>

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 Schroedel AG, 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.

                                      -5-
<PAGE>

          (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

                                      -6-
<PAGE>

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.

                                      -7-
<PAGE>

     (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.

                                      -8-
<PAGE>

          (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.

                                      -9-
<PAGE>

          (b) Each of the Lenders who are part of the SMS Group acknowledges
     that Erich Sager, 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

                                     -10-
<PAGE>

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.

                                     -11-
<PAGE>

     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

                                     -12-
<PAGE>

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-
<PAGE>

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

                                     -14-
<PAGE>

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.

                                     -15-
<PAGE>

          (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

                                     -16-
<PAGE>

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

                                     -17-
<PAGE>

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.

                                     -18-
<PAGE>

     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-
<PAGE>

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.

                                     -20-
<PAGE>

                                   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. Grant W. Denison, Jr. and Stephen W. Jenks 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-
<PAGE>

     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:

                                     -22-
<PAGE>

     (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-
<PAGE>

     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-
<PAGE>

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-
<PAGE>

          (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-
<PAGE>

     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-
<PAGE>

          (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-
<PAGE>

          (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.

                                     -29-
<PAGE>

                                   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.

                                     -30-
<PAGE>

                                   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-
<PAGE>

     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
     710 Medtronic Parkway, N.E.
     Minneapolis, MN  55432-5604
     Attention:  General Counsel
     FAX (763) 572-5459

with a copy to:

     Medtronic, Inc.
     World Headquarters
     710 Medtronic Parkway, N.E.
     Minneapolis, MN  55432-5604
     Attention:  Vice President and Chief Development Officer
     FAX (763) 505-2542

if to a Lender other than Medtronic, to the address specified on Exhibit A for
such Lender

if to Restoragen to:

     Restoragen, Inc.
     4130 N.W. 37th Street
     Lincoln, NE  68524-1637
     Attention:  Chief Financial Officer
     FAX  (402) 470-2245

     with a copy to:

     Davis Polk & Wardwell
     450 Lexington Avenue
     New York, NY  10017
     Attention:  Lucy Fato, Esq.
     FAX  (212) 450-3596

     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).

                                     -32-
<PAGE>

     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-
<PAGE>

     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/ David S. Walker
                                        ----------------------------------------
                                        Its: Senior Vice President and Chief
                                             Financial Officer

                                     MEDTRONIC INTERNATIONAL, LTD.

                                     By: /s/ Michael D. Ellwein
                                        ----------------------------------------
                                        Its: Vice President

                                     ADDITIONAL "LENDERS":

                                     /s/ Thomas Schmidheiny
                                     -------------------------------------------
                                         Thomas Schmidheiny

                                     EQUITY FOUR LIFE (BAHAMAS) LTD.

                                     By: /s/ Pirjo Saurin
                                        ----------------------------------------
                                         /s/ Linsey Leggatt Smith
                                        ----------------------------------------
                                        Its: Directors

                                     /s/ Bruno Hauser
                                     -------------------------------------------
                                         Bruno Hauser

                                     /s/ Walter Villiger
                                     -------------------------------------------
                                         Walter Villiger

                             [SIGNATURES CONTINUED]

                                     -34-
<PAGE>

                                     ROCKY MOUNTAIN ASSOCIATES S.A.

                                     By: /s/ Pablo Layer Espino
                                        ----------------------------------------
                                         /s/ Aida May Biggs
                                        ----------------------------------------
                                        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-
<PAGE>

                                   EXHIBIT A

                               Additional Lenders

                                                               Principal Amount
Name                                   Address                     (in USD)
----                                   -------                 ----------------

Thomas Schmidheiny                     Zucherstrasse 156        $  2,000,000
                                       CH-8645 Jona
                                       Switzerland

EquityFourLife (Bahamas) Ltd.          Attn:  Vanessa Colby     $  1,500,000*
                                       Ansbacher House
                                       Bank Lane
                                       P.O. Box N-7768
                                       Nassau, Bahamas

Bruno Hauser                           Gubelweg 9               $     500,000
                                       CH-8442 Hettlingen
                                       Switzerland

Walter Villiger                        Hurdnerstrasse 10        $  1,000,000
                                       Postfach 1474
                                       CH-8640 Hurden
                                       Switzerland

Rocky Mountain Associates S.A.         53rd Street              $  3,000,000
                                       Urbanicazion Obarrio     ------------
                                       Torre Swiss Bank
                                       16th Floor
                                       Panama,
                                       Republic 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.

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