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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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AMENDMENT NO. 1
to
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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FEMRX, INC.
(Name of Subject Company)
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FEMRX, INC.
(Name of Person Filing Statement)
COMMON STOCK, PAR VALUE $0.001 PER SHARE
(Title of Class of Securities)
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314463 10 0
(CUSIP Number of Class of Securities)
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ANDREW M. THOMPSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FEMRX, INC.
1221 INNSBRUCK DR.
SUNNYVALE, CALIFORNIA 94089
(408) 752-8580
(Name, address and telephone number of person authorized
to receive notice and communications on behalf
of the person filing statement)
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Copies to:
CRAIG E. DAUCHY, ESQ.
COOLEY GODWARD LLP
3000 SAND HILL ROAD
BUILDING 3, SUITE 230
MENLO PARK, CA 94025-7116
(650) 843-5100
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This statement amends and supplements the Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") of FemRx, Inc., a Delaware
corporation (the "Company"), filed with the Securities and Exchange Commission
(the "Commission") on October 9, 1998, with respect to the tender offer made by
Johnson & Johnson, a New Jersey corporation and ET/FM Acquisition Corp., a
Delaware corporation ("Purchaser"), to purchase all outstanding shares of common
stock of the Company at a price of $2.35 per share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated October 9, 1998 (the "Offer to Purchase"), of Johnson & Johnson and the
Purchaser and the related Letter of Transmittal (which, together with any
amendments and supplements thereto, collectively constitute the "Offer").
Capitalized terms used and not defined herein shall have the meanings given to
them in the Schedule 14D-9. The purpose of this Amendment is to (i) reflect the
addition of Ethicon, Inc., a New Jersey corporation and a wholly owned
subsidiary of Parent ("Ethicon"), as an additional bidder for the Company and
(ii) reflect the execution of a Loan and Security Agreement, dated October 30,
1998, by and between the Purchaser and the Company.
ITEM 2. TENDER OFFER OF THE BIDDER
On October 9, 1998, Parent and the Purchaser filed a Schedule 14D-1, dated
October 9, 1998 (the "Schedule 14D-1"), to purchase all outstanding shares of
common stock of the Company at a price of $2.35 per share, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer.
According to Amendment No. 1 to the Schedule 14D-1, filed with the
Commission on October 30, 1998, Parent and the Purchaser have amended the
Schedule 14D-1 to add Ethicon as an additional bidder for the Company. According
to Amendment No. 1 to the Schedule 14D-1, the principal executive office of
Ethicon is located at U.S. Route #22, Sommerville, New Jersey 08876. Item 2 of
the Schedule 14D-9 is hereby amended to reflect the foregoing.
ITEM 3. IDENTITY AND BACKGROUND
The introductory text of Item 3(b) of the Schedule 14D-9 is hereby deleted
in its entirety and replaced with the following:
(b) Except as set forth in this Item 3(b), to the knowledge of the Company,
there are no material contracts, agreements, arrangements or understandings and
no actual or potential conflicts of interest between the Company or its
affiliates, and (i) the Company, its executive officers, directors or affiliates
or (ii) Parent, the Purchaser or Ethicon or any of their respective executive
officers, directors or affiliates.
The heading for section (ii) of Item 3(b) of the Schedule 14D-9 is hereby
deleted in its entirety and replaced with the following:
(ii) ARRANGEMENTS WITH PARENT, THE PURCHASER OR ETHICON, OR ANY OF THEIR
EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES
Item 3(b)(ii) of the Schedule 14D-9 is hereby amended to add the following:
THE LOAN AND SECURITY AGREEMENT
Set forth below is a summary of certain terms of the Loan and Security
Agreement, dated as of October 30, 1998 (the "Loan Agreement"), by and between
the Purchaser and the Company. The summary does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the Loan
Agreement, a copy of which is filed as Exhibit 9 hereto and is incorporated
herein by reference.
GENERAL. The Loan Agreement provides for up $3,500,000 in periodic loans
for working capital needs of the Company and to fund certain costs incurred by
the Company as contemplated in the Merger Agreement. Such advances will be
documented by a promissory note payable to the order of the Purchaser. The Loan
Agreement provides that the Company may require advances of up to $250,000 every
two weeks, commencing on November 2, 1998, and terminating on the date upon
which the Stockholder Agreements terminate pursuant to their terms, provided
that no Event of Default (as defined in "--Events of Default" below) has
occurred.
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INTEREST. The Loan Agreement provides that interest on advances made
thereunder will accrue at a per annum rate equal to the Prime Rate plus 2%. For
the purposes of the Loan Agreement, "Prime Rate" means the per annum rate in
effect from time to time of The Chase Manhattan Bank for prime commercial loans
of 90-day maturities. After maturity, interest on advances accrues at the rate
of 1% per month. Interest shall be payable quarterly beginning April 1, 1999 and
at maturity.
REPAYMENT; PREPAYMENT. The principal amount of advances under the Loan
Agreement, together with any and all accrued but unpaid interest thereon shall
be due and payable on December 29, 1999. The Loan Agreement provides that the
Company may prepay the outstanding principal amount of the advances and/or the
accrued interest thereon in whole or in part at any time during the term of the
loan without premium or penalty.
CONDITIONS TO BORROWING. The Loan Agreement provides for a number of
customary and other conditions to borrowing including that (i) the Company shall
not then be in default under the terms of the Merger Agreement (provided that
the foregoing condition shall be deemed waived in the event that the Company has
terminated the Merger Agreement pursuant to Section 9.01(g) of the Merger
Agreement, see clause (vii) of "The Merger Agreement--Termination of the Merger
Agreement"), (ii) the Company shall not have provided to Lender a Notice of
Superior Proposal (as defined in "The Merger Agreement--Takeover Proposals"),
(iii) the Merger Agreement shall not have been terminated by any of the parties
thereto in accordance with its terms other than by the Company as permitted
pursuant to Section 9.01(g) of the Merger Agreement, see clause (vii) of "The
Merger Agreement--Termination of the Merger Agreement" and (iv) no Event of
Default shall have occurred and be continuing.
SECURITY. The obligations of the Company under the Loan Agreement and all
advances made thereunder are secured by a first priority security interest in
all rights of the Company to its patents and patent applications (collectively,
the "Collateral"). The Loan Agreement provides that the Company shall cooperate
with the Purchaser as may reasonably be required to document, record, file,
maintain and perfect such security interest.
EVENTS OF DEFAULT. The Loan Agreement contains customary events of default,
including (i) a failure to pay principal or interest, (ii) a failure to comply
with certain covenants, (iii) the insolvency of the Company, (iv) the imposition
of liens with respect to certain Company assets, (v) default under the terms of
the Merger Agreement, (vi) the failure of any representation or warranty
contained in the Loan Agreement or in the Merger Agreement to be true in any
material respect during the term of the loan and (vii) a breach by the Company
of, or default by the Company under, the terms or covenants of any other
material agreement with a third party to which the Company or its assets are
bound. In the event of default, the Purchaser has a number of remedies
available, including declaration of the entire outstanding principal and
interest to be due and payable and foreclosure on, and sale of, the Collateral.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
Item 4 "Background" of the Schedule 14D-9 is hereby amended to include the
following:
Between October 21, 1998 and October 30, 1998, representatives of the
Company and of the Purchaser negotiated the text of the Loan Agreement. On
October 30, 1998, the Loan Agreement was executed.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 of the Schedule 14D-9 is hereby amended to include the following as
an exhibit:
<TABLE>
<S> <C>
Exhibit 9: Loan and Security Agreement, dated as of October 30,
1998, by and between ET/FM Acquisition Corp. and
FemRx, Inc.
</TABLE>
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 is true, complete
and correct.
FEMRX, INC.
By: /s/ Andrew M. Thompson
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Name: Andrew M. Thompson
Title: President and Chief Executive
Officer
Dated: November 2, 1998
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
9 Loan and Security Agreement, dated as of October 30, 1998,
by and between ET/FM Acquisition Corp. and FemRx, Inc.
</TABLE>
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EXHIBIT 9
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT (the "Agreement") dated
as of October 30, 1998, by and between ET/FM Acquisition
Corp., a Delaware corporation (the "Lender"), and FemRx, Inc.,
a Delaware corporation ("FemRx").
Preliminary Statement
In connection with the proposed merger (the "Merger") of Lender, a wholly
owned subsidiary of Johnson & Johnson, a New Jersey corporation ("Parent"), with
and into FemRx, pursuant to that certain Agreement and Plan of Merger by and
among Lender, Parent and FemRx dated as of October 3, 1998 (the "Merger
Agreement"), Lender has commenced a tender offer (the "Offer") for all the
outstanding shares of common stock, par value $.001 per share, of FemRx (the
"Shares"), at a price of $2.35 per Share. Pursuant to the Merger Agreement,
Lender agreed to establish a credit facility to provide periodic advances to
FemRx for a defined period. Lender is willing to establish a credit facility and
to make advances to FemRx, subject to the terms and conditions of this
Agreement. FemRx and its stockholders will benefit directly and/or indirectly
under this Agreement and under the Merger Agreement. FemRx is willing to grant
to Lender a first priority pledge and security interest in certain collateral to
secure the obligations of FemRx under this Agreement and a promissory note and
to cooperate with Lender as may reasonably be required to document, record,
file, maintain and perfect such pledge and security interest. Terms used herein
but not defined herein shall have the meanings assigned to such terms in the
Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual convenants
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
THE LOAN
1.01 The Loan.
(a) Commitment to Lend. During the period commencing on November 2,
1998 and terminating on the date on which the Stockholder Agreements (as
defined below) terminate pursuant to their terms (the "Lending Period") and
for so long as no Event of Default (as hereinafter defined), or event
which, with the passage of time or giving of notice or both would become an
Event of Default, has occurred, Lender agrees on the terms and conditions
set forth herein, to make advances (each an "Advance," collectively, the
"Loan") to FemRx in an aggregate principal amount outstanding at any one
time not to exceed Three Million Five Hundred Thousand Dollars
($3,500,000.00). For purposes hereof, "Stockholder Agreements" shall mean
those certain Stockholder Agreements dated as of October 3, 1998, by and
among Lender, Parent and certain
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holders of common stock of FemRx and/or stock options for FemRx common
stock, executed in connection with the proposed Merger.
(b) Note. The Loan shall be evidenced by a secured promissory note,
as the same may from time to time be amended, modified, extended or renewed
(the "Note"), substantially in the form set forth on Exhibit A annexed
hereto. The Lender shall endorse on the reverse side of the Note an
appropriate notation evidencing the date and amount of each Advance made by
the Lender, as well as the date and the amount of each respective repayment
by FemRx with respect thereto.
(c) Interest. Interest shall accrue on each Advance from the date of
such Advance to the date of repayment at a per annum rate equal to the
Prime Rate plus two percent (2%) on the unpaid principal amount thereof, in
like money. Interest shall be payable quarterly in arrears on the first day
of April, July and October in each year, commencing on the first day of
April, 1999, and at maturity. For purposes of this Note, the "Prime Rate"
shall mean the rate per annum in effect from time to time of Chase
Manhattan Bank for prime commercial loans of 90-day maturities. Each change
in the rate of interest hereon resulting from a change in the Prime Rate
shall be effective as of the opening of business on the effective date of
each change in the Prime Rate. After maturity, interest shall accrue at the
rate of one percent (1%) per month until paid. Anything in this Agreement
or the Note notwithstanding, in the event that the interest rate chargeable
pursuant to the terms of this Note or the Agreement shall exceed the
highest lawful rate that may be charged under applicable law, the interest
rate shall be deemed to be equal to the highest lawful rate.
(d) Repayment; Optional Prepayments.
(i) The principal amount of the Loan, together with any and all
accrued but unpaid interest thereon shall be due and payable on
December 29, 1999.
(ii) FemRx may prepay the outstanding principal amount of the
Loan and/or the accrued interest thereon in whole or in part at any
time, or from time to time, during the term of the Loan without
premium or penalty.
(e) Conditions to Borrowing. Lender's consideration of FemRx's
request for an Advance hereunder is subject to the satisfaction of the
following conditions:
(i) prior to making its first request for an Advance, FemRx
shall have delivered to Lender the duly executed Note;
(ii) FemRx shall not then be in default under the terms of the
Merger Agreement (provided that the foregoing condition shall be
deemed waived in the event that FemRx shall have terminated the Merger
Agreement pursuant to Section 9.01(g) thereof);
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(iii) FemRx shall not have provided to Lender a Notice of
Superior Proposal (as defined in the Merger Agreement);
(iv) the Merger Agreement shall not have terminated by any of the
parties thereto in accordance with its terms other than by FemRx as
permitted pursuant to Section 9.01(g) thereof;
(v) FemRx shall have given Lender at least three (3) business
days' written notice specifying the date and amount of any proposed
Advance;
(vi) each Advance sought shall be for not more than Two Hundred
Fifty Thousand Dollars ($250,000.00) in each two week period (and pro
rata for any shorter period) beginning November 2, 1998 and ending at
maturity;
(vii) receipt by Lender of financing statements (Form UCC-1) or
other documents, in form and substance satisfactory to Lender, which
Lender may reasonably request in order to create, perfect or protect
its pledge and security interest on the Collateral (as hereinafter
defined); and
(viii) no Event of Default, or event which, with the passage of
time or giving of notice or both, shall have occurred and be
continuing or shall occur as a result of Lender making the Loan.
The conditions precedent to funding are solely for the benefit of
Lender and may be waived by Lender; provided, however, if Lender waives
compliance with any condition precedent, FemRx shall, and does hereby agree
to indemnify and hold Lender harmless against any loss, cost or expense
(including reasonable attorneys' fees) incurred or suffered by Lender as a
result of such waiver.
1.02. Use of Proceeds. FemRx expressly agrees that the proceeds of the Loan
funds shall only be used for working capital needs and to pay any costs incurred
by FemRx as contemplated by the Merger Agreement which are required to be paid
in cash, including, but not limited to, those specified in Section 7.08 of the
Merger Agreement.
1.03 Further Assurance. In addition to the obligations set forth in Section
2.03 below, FemRx agrees to do any and all things, and execute such additional
documents, instruments, agreements and certificates, as may be reasonably
necessary fully to effect the terms hereof.
1.04 Payments Are Provisional. All payments made by FemRx to Lender shall
be provisional and shall not be considered final unless and until such payment
is not subject to avoidance under any provision of the United States Bankruptcy
Code, as amended, or any state law governing insolvency or creditors rights. If
any payment is avoided or set aside under any provision of the United States
Bankruptcy Code, or any state law governing insolvency or creditors rights, the
payment shall be considered not to have been made for all purposes of this
Agreement and Lender shall adjust its records to reflect the fact that the
avoided payment was not made and has not been credited against the Loan.
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ARTICLE II
CREATION OF SECURITY INTEREST
2.01. Definitions. Except as otherwise defined herein, any and all terms
used in this Agreement which are defined in the New York Uniform Commercial Code
(the "UCC"), as amended from time to time, shall be construed and defined in
accordance with the meaning and definition ascribed to such terms under the UCC.
Any reference to Lender herein shall be construed as including Lender and its
designees.
2.02. Pledge and Grant of Security Interest and Pledge. In order to secure
the timely payment and performance of all of FemRx's obligations under this
Agreement and the Note, including without limitation, the repayment in full of
all outstanding interest and principal of the Loan, FemRx hereby pledges,
assigns, hypothecates, mortgages, conveys and transfers to Lender, and hereby
grants to Lender a continuing first priority security interest in all rights of
FemRx to the patents, and/or applications for patent more particularly described
on Exhibit B hereto, and any other right of FemRx to patents or patent
applications whether now owned or hereafter acquired, howsoever arising or
created (the "Collateral").
2.03. Delivery of Additional Documents. FemRx shall, at any time and from
time to time, upon the request of Lender, and at the sole expense of FemRx,
promptly and duly execute and deliver to Lender financing statements,
continuation statements, mortgages, pledges, and any and all other instruments
and documents as specified by, and in form and substance acceptable to, Lender,
and take whatever actions as Lender may reasonably deem desirable to obtain the
full benefits of this Agreement and to perfect Lender's security interest in and
to the Collateral. All sums and costs advanced by Lender pursuant to this
Agreement shall be added to and deemed a part of the then outstanding principal
amount of the Loan and shall be secured by this Agreement. Among other things,
FemRx shall deliver forms of grants of assignment for security purposes for all
patents executed in blank, to Lender in order to perfect the creation of the
security interest in the Collateral to Lender under, and otherwise comply with
the terms of, Section 2.02 above.
2.04. Collateral Purposes Only; Recourse. The pledge and security interests
created hereby are granted for collateral purposes only. Upon repayment in full
of all outstanding interest and principal of the Loan, Lender shall execute and
deliver to FemRx, as the case may be, at the expense of FemRx, all releases and
reassignments, termination statements and other instruments (and promptly return
to FemRx the forms of assignment) as may be necessary or proper to terminate the
pledge and security interest of Lender in the Collateral, subject to any
disposition thereof which may have been made by Lender pursuant to the terms of
the Note or of this Agreement. This Agreement shall be construed as a security
device.
2.05. Lender's Appointment as Attorney-In-Fact. FemRx hereby irrevocably
appoints Lender as its attorney-in-fact, with full irrevocable power and
authority to act in its or his place and stead in its or his name or in Lender's
own name, effective only upon the occurrence and
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during the continuance of an Event of Default, for the purpose of carrying out
the terms of this Agreement and the Note, to take any and all appropriate action
and to execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, to make collections and to otherwise
preserve and protect Lender's security interest in the Collateral. FemRx shall
execute and deliver to Lender concurrently with its execution and delivery of
this Agreement the special power of attorney attached as Exhibit D hereto.
2.06. Priority of Security Interests. Each of the security interests
granted by FemRx to Lender pursuant to this Agreement shall be perfected first
priority security interests.
ARTICLE III
DEFAULTS AND REMEDIES
3.01. Events of Default. As used herein, the term "Event of Default" means
one or more of the following:
(a) the failure of FemRx to make any payment of interest or principal
on the Loan or under the Note when due and payable, at its stated maturity,
by acceleration or otherwise;
(b) the breach (or other failure to observe or perform) by FemRx of
any of the terms and conditions contained herein or in the Note other than
as set forth in paragraph (a) above, and the continuation of such failure
for ten (10) calendar days after written notice thereof from Lender to
FemRx;
(c) the institution by FemRx of proceedings to be adjudged a
voluntary bankrupt; the filing by FemRx of a petition, answer or consent
seeking reorganization under any bankruptcy act or other similar applicable
law now or hereafter in effect; FemRx's consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy of it or its
property; the admission by FemRx in writing of its inability to pay its
debts generally as they become due; the making by FemRx of an assignment
for the benefit of creditors; the entry of a decree or order by a Federal
court or other court with jurisdiction adjudging FemRx bankrupt, or
approving as properly filed a petition seeking the reorganization of FemRx
under any bankruptcy act or similar applicable law, provided such petition
has not been discharged within 60 days after its filing; or the entry of a
decree or order of a court for appointment of a receiver or liquidator or
trustee or assignee in bankruptcy of FemRx or of its property or for the
winding-up or liquidation of its affairs;
(d) the event of a notice of a lien, levy or assessment of a material
nature being filed of record with respect to all or a material portion of
FemRx's assets or any of the Collateral, or if any tax or debt owing at any
time hereafter becomes a lien upon all or
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a material portion of FemRx's assets, or if a judgment or other claim
becomes a lien or encumbrance upon all or a material portion of FemRx's
assets;
(e) FemRx shall be in default under the terms of the Merger
Agreement;
(f) the failure of any representation or warranty contained herein or
in the Merger Agreement to be true in any material respect during the
Lending Period; or
(g) a breach by FemRx of or default by Fem Rx under the terms or
covenants of any other material transaction or material agreement with a
third party to which FemRx or its assets are bound.
3.02. Lender's Rights and Remedies. FemRx hereby acknowledges and affirms
that, upon the occurrence of an Event of Default and at any time thereafter
during the continuance thereof, Lender may do any one or more of the following:
(a) by written notice to FemRx, declare the outstanding aggregate
principal amount of the Loan to be immediately due and payable, whereupon
the same, together with interest accrued thereof due to the date of
declaration, shall become and be immediately due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by FemRx, and FemRx agrees that upon such declaration it will
immediately pay the same to Lender; provided, however, on the occurrence of
a default specified under Section 3.01(c) above, the principal of and all
accrued interest on the Loan shall become immediately due and payable,
without notice, demand, presentment, notice of dishonor, protests, notice
of acceleration, or intention to accelerate, which are expressly waived by
FemRx.
(b) bring suit at law, in equity, and/or in any other appropriate
proceeding or forum: (i) for the specific performance of any covenant or
agreement contained herein, (ii) for an injunction against a violation of
any of the terms hereof, (iii) in aid of the exercise of any power granted
hereby or by law, or (iv) to recover judgment for any and all amounts due
hereunder;
(c) institute legal proceedings (i) to foreclose upon the Collateral
and to collect judgment for all amounts then due and owing hereunder out of
any of the Collateral; (ii) for the sale, under the judgment or decree of
any court of competent jurisdiction, of any of the Collateral; and (iii)
for the appointment of a receiver or receivers pending foreclosure of any
of the Collateral under the order of a court of competent jurisdiction or
under other legal process;
(d) without notice of its election and without demand, exercise in
addition to all other rights and remedies granted to it by this Agreement,
the Note, or in any other instrument or agreement securing, evidencing or
relating to the Loan or the Collateral, all rights and remedies of a
secured party under the UCC; and
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(e) Lender may agree to sell or otherwise dispose of and deliver the
Collateral or any part thereof or interest therein, in one or more parcels
at public or private sale or sales, at such prices and on such terms as it
may deem best, for cash or on credit, or for future delivery without
assumption of any credit risk, with the right of Lender or any purchaser to
purchase upon any such sale the whole or any part of the Collateral free of
any right or equity of redemption in FemRx, which right or equity is hereby
expressly waived and released. Lender need not give more than five (5)
days' notice of the time and place of any public sale or of the time after
which a private sale may take place, which notice FemRx hereby deems to be
commercially reasonable. Lender shall be entitled to purchase the
Collateral in any sale in its own name, or in the name of any designee or
nominee. In connection with any sale or transfer of the Collateral, Lender
shall have the right to execute any document or form, in its name or in the
name of FemRx, without liability of any kind to FemRx, which may be
necessary or desirable in connection with such sale.
3.03. Proceeds, etc. FemRx agrees that the proceeds of any sale,
disposition or other realization upon all or any part of the Collateral may be
applied by Lender to the payment of expenses incurred by Lender in connection
with such sale, disposition or other realization, including, without limitation,
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Lender in satisfaction of the Loan. Any excess of such proceeds above repayment
of principle, interest and expenses shall be remitted to FemRx as soon as
practicable after such sale, disposition or other realization; provided,
however, if Lender shall terminate the Merger Agreement as described in the
second last sentence of Section 9.02 thereof, Lender shall be entitled to deduct
from such proceeds the amount specified therein (if not previously paid to
Lender or its affiliate).
ARTICLE IV
MISCELLANEOUS
4.01. Notices. Any and all notices, requests and other communications to
any party hereunder shall be in writing (including telex, facsimile
transmissions or similar writings) and shall be given to such party at the
party's last-known address and/or number, as the case may be, or as such party
shall otherwise direct. Each such notice, request or other communication shall
be effective (i) if given by mail, five days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
or (ii) if given by any other means, when delivered at the address specified in
this Section 4.01.
4.02. No Waiver, etc. No course of dealing among the parties hereto, nor
any failure to exercise, nor any delay in exercising, on the part of Lender, of
any right, power, privilege or option hereunder or under the Note shall operate
as a waiver thereof or of any default. Any and all rights, powers, privileges or
options of the Lender hereunder or thereunder shall be cumulative. Lender shall
have all other rights and remedies not inconsistent herewith as provided by law
or in equity.
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4.03. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall be deemed the
whole.
4.04. Severability; Governing Law. If any provision of this Agreement shall
be determined to be illegal or unenforceable, the remaining provisions shall be
severable and enforceable in accordance with their terms. This Agreement shall
be governed by the laws of the State of New York, without regard to its choice
of laws principles.
4.05. No Amendment. Neither this Agreement nor any provision hereof can be
modified, changed, discharged or terminated except by an instrument in writing
signed by the party against whom the enforcement of any modification, change,
discharge or termination is sought.
4.06. Entire Agreement; Binding Effect. This Agreement constitutes the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and understandings of the
parties in connection therewith. This agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, legal representatives and heirs.
4.07. Representations of FemRx. To induce Lender to make the Loans and to
enter into this Agreement, FemRx makes the representations and warranties set
forth below:
(a) All information, documents, reports, statements, financial
information and data submitted by or on behalf of FemRx in connection with
the Merger Agreement, or in support thereof, are true, accurate, and
complete in all material respects as of the date made and contain no
knowingly false, incomplete or misleading statements.
(b) FemRx is not in default with respect to any of its existing
obligations, and the execution and performance of this Agreement will not
immediately, or with the passage of time, the giving of notice, or both:
(i) violate the charter, by-laws or any other organizational document of
FemRx; (ii) violate any law applicable to FemRx; (iii) result in a default
under any contract, agreement, or instrument to which FemRx is a party or
by which its property is bound; or (iv) result in the creation or
imposition of any security interest in , or lien or encumbrance upon, any
of the assets of FemRx, except in favor of Lender.
(c) Except as disclosed in Schedule 4.09 of the Company Disclosure
Schedule to the Merger Agreement or in the Letter to FemRx by Coleman
Sudol, LLP dated October 14, 1998, there is no suit, action or proceeding
pending or, to the knowledge of FemRx, threatened in writing against FemRx
or any of its subsidiaries that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on FemRx, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against FemRx having, or which, insofar as
reasonably can be foreseen, in the future could reasonably be expected to
have, a Material Adverse Effect.
8
<PAGE> 9
(d) FemRx has good and marketable title to all of the Collateral.
(e) FemRx is validly incorporated under the laws of the State of
Delaware. FemRx has the power to own its properties, conduct its business
and affairs, and enter into the Agreement and perform its obligations
hereunder. FemRx's entry into this Agreement has been validly and
effectively approved by its board of directors and shareholders as may be
required by its charter, by-laws, and applicable laws. All copies of the
charter, by-laws, and corporate resolutions of FemRx submitted to Lender
are true, accurate, and complete and no action has been taken in diminution
or abrogation thereof. Except as previously disclosed in writing to Lender,
FemRx has not changed its name, been the surviving corporation or
partnership in a merger, or changed the location of its chief executive
office within the last two (2) years. FemRx does not operate under any
trade or fictitious name.
4.08. Negative Covenants. FemRx covenants and agrees during the term of the
Loan and while any amounts are outstanding and unpaid not to do or to permit to
be done or to occur any of the acts or happenings set forth below without the
prior written authorization of Lender:
(a) FemRx shall not change its name or enter into any merger,
consolidation, reorganization or recapitalization.
(b) FemRx shall not sell, transfer, lease or otherwise dispose of all
or any part of the Collateral, or all or any material part of any of its
other assets.
(c) FemRx shall not mortgage, pledge, grant or permit to exist a
security interest in or lien upon any of the Collateral, now owned or
hereafter acquired.
(d) FemRx shall not assign or attempt to assign this Agreement.
(e) FemRx shall not assign or otherwise transfer any of its rights to
any of the Collateral.
4.09. Loan Obligations Are Unconditional. The payment and performance of
the Loan obligations shall be the absolute and unconditional duty and obligation
of FemRx, and shall be independent of any defense or any rights of set-off,
recoupment or counterclaim which FemRx might otherwise have against Lender, and
FemRx shall pay absolutely during the term of the Loan the payments of the
principal and interest to be made on account of the Loan and all other payments
required hereunder, free of any deductions and without abatement, diminution or
set-off.
9
<PAGE> 10
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto
have executed this Agreement as of the date first above written.
ET/FM ACQUISITION CORP.
By: /s/ Philip P. Crowley
------------------------------
Name: Philip P. Crowley
Title: Vice President
FEMRX, INC.
By: /s/ Andrew M. Thompson
------------------------------
Name: Andrew M. Thompson
Title: President and Chief Executive
Officer
10
<PAGE> 11
EXHIBIT A
to
LOAN AND SECURITY AGREEMENT
FORM OF NOTE
Sunnyvale, CA.
October 30, 1998
FOR VALUE RECEIVED, FEMRX, INC., a Delaware corporation ("Maker"), DOES
HEREBY PROMISE to pay to the order of ET/FM Acquisition Corp. ("Lender"), at its
office at One Johnson & Johnson Plaza, New Brunswick, N.J. 08933, on December
29, 1999, in lawful money of the United States of America, the aggregate unpaid
principal balance of all Advances made by Lender to Maker pursuant to Section
1.01 of that certain Loan and Security Agreement to which reference is
hereinafter made and set forth on the reverse hereof, and to pay interest on
each Advance from the date of such Advance to the date of repayment at a per
annum rate equal to the Prime Rate plus two percent (2%) on the unpaid principal
amount thereof, in like money. Interest shall be payable quarterly in arrears on
the first day of April, July and October in each year, commencing on the first
day of April, 1999, and at maturity. For purposes of this Note, "Prime Rate"
shall mean the rate per annum announced as being in effect from time to time by
Chase Manhattan Bank as its "prime rate" of interest. Each change in the rate of
interest hereon resulting from a change in the Prime Rate shall be effective as
of the opening of business on the effective date of each change in the Prime
Rate. Interest at and after maturity (whether after the stated term or by
acceleration) shall be the lesser of (i) one percent (1%) per month, or (ii) the
maximum contract rate provided by applicable law.
This Note is the Note to which reference is made in that certain Loan and
Security Agreement dated as of October 30, 1998, among Maker and Lender, and is
subject to the terms and conditions thereof including, without limitation,
prepayment, and acceleration of the maturity date, all as provided in said Loan
and Security Agreement.
FEMRX, INC.
By:
-------------------------------------
Name: Andrew M. Thompson
Title: President and Chief Executive
Officer
11
<PAGE> 12
ADVANCES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Name of
Amount of Unpaid Principal Person Making
Date Advance Balance of Loan Notation
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
PATENTS AND PATENT APPLICATIONS
12
<PAGE> 14
EXHIBIT C
to
LOAN AND SECURITY AGREEMENT
FORM OF ASSIGNMENT FOR SECURITY
WHEREAS, FEMRX, INC., a Delaware corporation (herein referred to as
"Assignor"), whose address is 1221 Innsbruck Drive, Sunnyvale, CA 94089, owns
the patents, and/or applications for patent more particularly described on
Schedule 1-A annexed hereto as part hereof (the "Patents");
WHEREAS, the Assignor has entered into a Loan and Security Agreement dated
October 30, 1998 (said agreement, as it may hereafter be amended or otherwise
modified from time to time, the "Loan and Security Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined)
in favor of EF/TM Acquisition Corp. (the "Assignee"), and the Lender is desirous
of having a security interest and mortgage in its favor on the above-identified
property in order to secure the payment of certain obligations of Assignor now
or hereafter owning to Assignee; and
WHEREAS, pursuant to the Loan and Security Agreement, Assignor has assigned
to Assignee or its designee, and granted to Assignee or its designee, a pledge
and security interest in, and mortgage on, all right, title and interest of
Assignor in and to the Patents (the "Collateral"), to secure the Loan;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Assignor does hereby further assign unto Assignee and grant
to Assignee a security interest in, and mortgage on, the Collateral to secure
the Loan.
Assignor does hereby further acknowledge and affirm that the rights and
remedies of Assignee with respect to the assignment of, security interest in and
mortgage on the Collateral made and granted hereby are more fully set forth in
the Loan and Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference as if fully set forth herein.
IN WITNESS WHEREOF, Assignor has duly executed or caused this Assignment to
be duly executed as of the October 30, 1998.
FEMRX, INC.
By:
--------------------------------------
Name: Andrew M. Thompson
Title: President and Chief
Executive Officer
13
<PAGE> 15
SCHEDULE 1-A
to
FORM OF ASSIGNMENT FOR SECURITY
PATENTS AND PATENT APPLICATIONS
<TABLE>
<S> <C> <C>
STATE OF )
) ss:
COUNTY OF )
</TABLE>
On this ____ day of _______________, 1998, before me personally appeared
Andrew M. Thompson, to me known, who, being by me duly sworn, did depose and say
that he is President and Chief Executive Officer of the Assignor, that he knows
the seal of said corporation, that the seal affixed to said instrument is such
corporate seal; that it was affixed pursuant to authority of the Board of
Directors of said corporation and that he signed his name thereto in his
capacity as an authority officer of said corporation pursuant to such authority.
-----------------------------------------
Notary Public
14
<PAGE> 16
SCHEDULE 1-A
to
FORM OF ASSIGNMENT FOR SECURITY
PATENTS AND PATENT APPLICATIONS
15
<PAGE> 17
EXHIBIT D
to
LOAN AND SECURITY AGREEMENT
SPECIAL POWER OF ATTORNEY
<TABLE>
<S> <C> <C>
STATE OF )
) ss:
COUNTY OF )
</TABLE>
KNOW ALL MEN BY THESE PRESENTS, that FEMRX, INC. (hereinafter called
"Assignor"), a Delaware corporation with it principal office at 1221 Innsbruck
Drive, Sunnyvale, CA 94089, hereby appoints and constitutes Johnson & Johnson, a
New Jersey corporation, as Agent (hereinafter called "Assignee"), its true and
lawful attorney, with full power of substitution, and with full power and
authority to perform the following acts on behalf of Assignor:
I. Subject to the terms of the Loan and Security Agreement dated October
30, 1998 by and between Assignor and ET/FM Acquisition Corp., a wholly owned
subsidiary of Assignee (the "Loan Agreement"), (i) for the purpose of assigning,
selling, licensing or otherwise disposing of all right, title and interest of
Assignor in and to any patents (as defined in the Loan Agreement) and Proceeds
(as defined in the Loan Agreement) and (ii) and for the purpose of the
recording, registering and filing of, or accomplishing any other action with
respect to the foregoing, to execute and deliver any and all agreements,
documents, instruments of assignment or other papers necessary or advisable; and
II. Subject to the terms and conditions of the Loan Agreement, to execute
any and all documents, statements, certificates or other papers necessary or
advisable in order to obtain the purposes described above as Assignee may in its
sole discretion determine.
16
<PAGE> 18
This power of attorney may not be revoked until the repayment in full of
the "Loan" as defined in such Loan and Security Agreement.
Dated: October 30, 1998 FEMRX, INC.
By:
-------------------------------------
Name: Andrew M. Thompson
Title: President and Chief Executive
Officer
<TABLE>
<S> <C> <C>
STATE OF )
) ss:
COUNTY OF )
</TABLE>
On this ____ day of _______, 1998, before me personally appeared Andrew M.
Thompson, to me known, who, being by me duly sworn, did depose and say that he
is President and Chief Executive Officer of the Assignor; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was affixed pursuant to authority of the Board of Directors of
said corporation and that he signed his name thereto in his capacity as an
authorized officer of said corporation pursuant to such authority
-----------------------------------------
Notary Public
17
<PAGE> 19
EXHIBIT E
to
LOAN AND SECURITY AGREEMENT
(to be executed in five originals)
IN THE UNITED STATES PATENT & TRADEMARK OFFICE
<TABLE>
<S> <C> <C>
In re the Application of )
)
) Examiner:
Serial No.: )
)
Filed: ) G.A.U.:
)
For: )
)
)
</TABLE>
Honorable Commissioner of Patents & Trademarks
Washington, D.C. 20231
POWER TO INSPECT AND MAKE COPIES
The undersigned, being a duly authorized officer of FEMRX, INC., 1221
Innsbruck Drive, Sunnyvale, CA 94089, the owner of the above-referenced
application ("Owner"), hereby authorizes and grants to:
ET/FM Acquisition Corp., a Delaware corporation ("Assignee"),
subject to and in accordance with the terms and conditions of the Loan and
Security Agreement dated October 30, 1998 by and between the Owner and Assignee
the power to inspect and make copies of the file history of the above-referenced
patent as well as any patent applications.
Respectfully submitted,
FEMRX, INC.
By:
--------------------------------------
Name: Andrew M. Thompson
Title: President and Chief Executive
Officer
18
