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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
to
SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
AMENDMENT NO. 2
to
SCHEDULE 13D
Under the Securities Exchange Act of 1934
FEMRX, INC.
(Name of Subject Company)
ET/FM ACQUISITION CORP.
ETHICON, INC.
JOHNSON & JOHNSON
(Bidders)
Common Stock, Par Value $.001 Per Share
(Title of Class of Securities)
314463 10 0
(CUSIP Number of Class of Securities)
Philip P. Crowley, Esq.
ET/FM Acquisition Corp.
c/o Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, New Jersey 08933
(732) 524-2450
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Bidders)
Copies to:
Robert A. Kindler, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
October 3, 1998
(Date of Event Which Requires Filing Statement on Schedule 13D)
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CUSIP No. 314463 10 0 14D-1 and 13D Page 2 of 6 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Ethicon, Inc. (22-2881674)
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 (Common Stock)
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8 CHECKED IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0%
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10 TYPE OF REPORTING PERSON
CO
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This statement amends and supplements the combined Tender Offer
Statement on Schedule 14D-1 and Statement on Schedule 13D, as amended by
Amendment No. 1 thereto, originally filed with the Securities and Exchange
Commission on October 9, 1998 (collectively and as amended, the "Schedule
14D-1 & Schedule 13D"), by Johnson & Johnson, a New Jersey corporation
("Parent"), and ET/FM Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent (the "Purchaser"), in connection with the
offer to purchase all the outstanding shares of Common Stock, par value
$.001 per share (the "Shares"), of FemRx, Inc., a Delaware corporation (the
"Company"), at $2.35 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated October 9, 1998 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). Capitalized
terms used and not defined herein shall have the meanings assigned to such
terms in the Offer to Purchase and the Schedule 14D-1 & Schedule 13D. The
purpose of this Amendment to the Schedule 14D-1 & Schedule 13D is to add
Ethicon, Inc., a New Jersey corporation and a wholly owned subsidiary of
Parent ("Ethicon"), as one of the bidders for the Company.
Item 2. Identity and Background.
Items 2(a)-(g) of the Schedule 14D-1 & Schedule 13D are hereby
amended and supplemented by adding the following language thereto:
Ethicon's principal line of business is the development and
marketing of innovative products for surgery in the areas of wound
management, soft tissue repair and women's health. Ethicon is a New Jersey
corporation and a wholly owned subsidiary of Parent with its principal
office located at U.S. Route #22, Somerville, New Jersey 08876. The name,
business address, present principal occupation or employment, five year
employment history and citizenship of each of the directors and executive
officers of the Ethicon are set forth in Exhibit (a)(9) to the Schedule
14D-1 & Schedule 13D ("Exhibit (a)(9)") and such information is
incorporated herein by reference.
Except as described in the Schedule 14D-1 & Schedule 13D, during
the last five years, none of Ethicon or, to the best knowledge of Ethicon,
any of the persons listed in Exhibit (a)(9) (i) has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors)
or (ii) was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting activities subject to, Federal or state securities laws
or finding any violation of such laws.
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
Items 3(a) and (b) of the Schedule 14D-1 & Schedule 13D are
hereby amended and supplemented by adding the following language thereto:
Except as described in the Schedule 14D-1 & Schedule 13D, there
have not been any contacts, transactions or negotiations between Ethicon,
any of its subsidiaries or, to the best knowledge of Ethicon, any of the
persons listed in Exhibit (a)(9), on the one hand, and the Company or any
of its directors, officers or affiliates, on the other hand, that are
required to be disclosed pursuant to the rules and regulations of the
Commission.
Item 6. Interest in Securities of the Subject Company.
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Items 6(a) and (b) of the Schedule 14D-1 & Schedule 13D are
hereby amended and supplemented by adding the following language thereto:
Except as described in the Schedule 14D-1 & Schedule 13D, neither
Ethicon nor, to the best knowledge of Ethicon, any of the persons listed in
Exhibit (a)(9) or any associate or majority owned subsidiary of Ethicon or
any of the persons so listed, beneficially owns any equity security of the
Company, and none of Ethicon or, to the best knowledge of Ethicon, any of
the other persons referred to above, or any of the respective directors,
executive officers or subsidiaries of any of the foregoing, has effected
any transaction in any equity security of the Company during the past 60
days.
Item 7. Contracts, Arrangements, Understandings or Relationships with
Respect to the Subject Company's Securities.
Item 7 of the Schedule 14D-1 & Schedule 13D are hereby amended
and supplemented by adding the following language thereto:
Except as described in the Schedule 14D-1 & Schedule 13D, none of
Ethicon or, to the best knowledge of Ethicon, any of the persons listed in
Exhibit (a)(9) has any contract, arrangement, understanding or relationship
with any person with respect to any securities of the Company.
Item 10. Additional Information.
Item 10 of the Schedule 14D-1 & Schedule 13D is hereby amended by
adding the following language thereto:
On October 30, 1998, the Purchaser and the Company entered into a
Loan and Security Agreement (the "Credit Facility") as required by Section
7.13 of the Merger Agreement. The Credit Facility provides that the
Purchaser will provide loans to the Company in an aggregate amount of up to
$3.5 million for working capital needs of the Company from the date of the
Merger Agreement to the date on which the Stockholder Agreements terminate
pursuant to their terms. The Purchaser plans to obtain all funds needed to
provide loans under the Credit Facility through a capital contribution
which will be made by Parent to the Purchaser. The information set forth in
the Credit Facility, a copy of which is attached hereto as Exhibit (c)(5),
is incorporated by reference herein.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended and supplemented by adding the
following:
(a)(9) Schedule of Directors and Executive Officers of Ethicon,
Inc.
(c)(5) Loan and Security Agreement dated as of October 30,
1998, by and between the Purchaser and the Company.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: October 30, 1998
ET/FM ACQUISITION CORP.
By: /s/ Philip P. Crowley
---------------------------
Name: Philip P. Crowley
Title: Vice President
ETHICON, INC.
By: /s/ Philip P. Crowley
---------------------------
Name: Philip P. Crowley
Title: Secretary
JOHNSON & JOHNSON
By: /s/ Philip P. Crowley
---------------------------
Name: Philip P. Crowley
Title: Secretary
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EXHIBIT INDEX
Exhibit
Number Exhibit Name Page No.
*(a)(1) Offer to Purchase.
*(a)(2) Letter of Transmittal.
*(a)(3) Notice Of Guaranteed Delivery.
*(a)(4) Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
*(a)(5) Letter to Clients for use by Brokers,
Dealers, Commercial Banks, Trust Companies
and Other Nominees.
*(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form
W-9.
*(a)(7) Form of Summary Advertisement dated October
9, 1998.
*(a)(8) Text of Joint Press Release dated October 5,
1998, issued by the Company and Parent.
(a)(9) Schedule of Directors and Executive Officers
of Ethicon, Inc.
(b) None.
*(c)(1) Agreement and Plan of Merger dated as of
October 3, 1998, among Parent, the Purchaser
and the Company.
*(c)(2) Stockholder Agreement dated as of October 3,
1998, among Parent, the Purchaser and
certain stockholders of the Company.
*(c)(3) Letter regarding continued employment dated
October 1, 1998, between Andrew M. Thompson
and Ethicon, Inc.
*(c)(4) Letter regarding continued employment dated
October 1, 1998, between George M. Savage,
M.D., and Ethicon, Inc.
(c)(5) Loan and Security Agreement dated as of
October 30, 1998, by and between the
Purchaser and the Company.
(d) None.
(e) Not applicable.
(f) None.
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*Previously filed.
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EXHIBIT (a)(9)
DIRECTORS AND EXECUTIVE OFFICERS OF ETHICON, INC.
The name, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Ethicon are set forth below. Unless otherwise
indicated, the business address of each such director and each such
executive officer is U.S. Route #22, Somerville, New Jersey 08876. Unless
otherwise indicated below, each occupation set forth opposite an
individual's name refers to employment with Ethicon. All directors and
officers listed below are citizens of the United States.
Position with Ethicon;
Principal Occupation or
Employment;
Name and Business Address 5-Year Employment History
Philip P. Crowley.......................Director and Secretary
One Johnson & Johnson Plaza since December of 1997.
Brunswick, NJ 08933 Assistant General Counsel and
Assistant Secretary of Parent since
June 1992.
Clifford E. Holland.....................Director since October 1998.
President since October 1998. Group
Vice President and General Manager
from November 1997 until October
1998. Executive Vice President of
Sales and Marketing of Johnson &
Johnson Health Care Systems Inc. from
January 1995 until November 1997.
Vice President of Sales and Marketing
from June 1994 until January 1995.
Vice President of Sales from February
1992 until June 1994.
Frank J. Ryan...........................Director since December of 1997.
One Johnson & Johnson Plaza Company Group Chairman
Brunswick, NJ 08933 of Parent since October 1998.
President from December 1991 until
October 1998.
Sylvia Liu..............................Vice President, Research and
Development, since January 1997.
Director of Suture Technologies from
February 1996 until January 1997.
Director of Corporate Product
Characterization from February 1994
until February 1996. Manager,
Pathology/Toxicology/Surgical from
August 1991 until February 1994.
Barbara Schwartz........................Vice President, Marketing, Ethicon
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Products since January 1997. Vice
President, Research and Development
from January 1994 until January 1997.
Vice President, New Business
Development, from May 1992 until
January 1994.
Richard S. Sofinowski...................Vice President, Worldwide Operations
Marketing, Ethicon Franchise, since
October 1998. Vice President,
Operations, from January 1995 until
October 1998. Vice President,
Organizational Redesign, from May
1993 until January 1995. Vice
President, Manufacturing, from April
1990 until May 1993.
Andrew D. Stewart.......................Vice President, Sales, Ethicon
Products, since August 1994. Vice
President, Sales & Marketing, of
Johnson & Johnson Professional
Corporation from September 1993 until
August 1994.
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Exhibit (c)(5)
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
covenants 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
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certain 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 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
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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 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;
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(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
(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
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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.
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
7
<PAGE>
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.
(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
8
<PAGE>
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>
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>
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
1
<PAGE>
ADVANCES
Name of
Amount of Unpaid Principal Person Making
Date Advance Balance of Loan Notation
2
<PAGE>
Execution Copy
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
PATENTS AND PATENT APPLICATIONS
1
<PAGE>
Execution Copy
SCHEDULE 1-A
to
FORM OF ASSIGNMENT FOR SECURITY
PATENTS AND PATENT APPLICATIONS
1
<PAGE>
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
1
<PAGE>
STATE OF )
) ss:
COUNTY OF )
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
2
<PAGE>
SCHEDULE 1-A
to
FORM OF ASSIGNMENT FOR SECURITY
PATENTS AND PATENT APPLICATIONS
1
<PAGE>
EXHIBIT D
to
LOAN AND SECURITY AGREEMENT
SPECIAL POWER OF ATTORNEY
STATE OF )
) ss:
COUNTY OF )
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.
1
<PAGE>
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
STATE OF )
) ss:
COUNTY OF )
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
2
<PAGE>
EXHIBIT E
to
LOAN AND SECURITY AGREEMENT
(to be executed in five originals)
IN THE UNITED STATES PATENT & TRADEMARK OFFICE
In re the Application of )
)
) Examiner:
Serial No.: )
)
Filed: ) G.A.U.:
)
For: )
)
)
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
1
