Exhibit (c)(3)
CREDIT AGREEMENT
By and Between
INCONTROL, INC.
Borrower,
and
GUIDANT CORPORATION
Lender,
Dated as of August 10, 1998
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TABLE OF CONTENTS
Page
ARTICLE 1 Definitions...................................................................................... 1
ARTICLE 2 Loan............................................................................................. 7
2.1 Loan................................................................................................. 7
2.2 Interest............................................................................................. 8
2.3 Payments............................................................................................. 8
ARTICLE 3 Conditions Precedent............................................................................. 10
3.1 Conditions to Disbursement........................................................................... 10
3.2 Conditions for the Benefit of the Lender............................................................. 11
ARTICLE 4 Representations and Warranties of the Borrower................................................... 11
4.1 Due Organization..................................................................................... 11
4.2 Capitalization....................................................................................... 11
4.3 Requisite Power...................................................................................... 12
4.4 Authorization........................................................................................ 12
4.5 Officer Authorization................................................................................ 12
4.6 Binding Nature....................................................................................... 12
4.7 No Conflict.......................................................................................... 12
4.8 No Event of Default.................................................................................. 12
4.9 Full Disclosure...................................................................................... 12
4.10 Merger Agreement Representations..................................................................... 12
ARTICLE 5 Affirmative Covenants............................................................................ 13
5.1 Financial Statements and Notices..................................................................... 13
5.2 Access............................................................................................... 14
5.3 Maintenance of Existence............................................................................. 14
5.4 Facilities........................................................................................... 14
5.5 Compliance with Laws................................................................................. 14
5.6 Material Agreements.................................................................................. 15
5.7 Insurance............................................................................................ 15
5.8 Taxes and Other Liabilities.......................................................................... 15
5.9 Governmental Approvals............................................................................... 15
ARTICLE 6 Negative Covenants............................................................................... 15
6.1 Certain Covenants of the Company..................................................................... 15
6.2 Change of Business................................................................................... 15
6.3 Liens and Encumbrances............................................................................... 15
6.4 Sale-Leasebacks...................................................................................... 15
6.5 Transactions With Affiliates......................................................................... 16
6.6 Investments.......................................................................................... 16
6.7 Obligations.......................................................................................... 16
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6.8 Intellectual Property................................................................................... 16
ARTICLE 7 Events of Default................................................................................... 16
7.1 Events of Default....................................................................................... 16
7.2 Acceleration............................................................................................ 18
ARTICLE 8 Representations and Warranties of the Lender........................................................ 18
8.1 Due Organization........................................................................................ 18
8.2 Requisite Power......................................................................................... 18
8.3 Authorization........................................................................................... 18
8.4 Officer Authorization................................................................................... 18
8.5 Binding Nature.......................................................................................... 19
8.6 No Conflict............................................................................................. 19
ARTICLE 9 Miscellaneous....................................................................................... 19
9.1 Successors and Assigns and Sale of Interests............................................................ 19
9.2 No Implied Waiver....................................................................................... 19
9.3 Amendments and Waivers.................................................................................. 19
9.4 Remedies Cumulative..................................................................................... 19
9.5 Severability............................................................................................ 19
9.6 Costs, Expenses and Attorneys' Fees..................................................................... 20
9.7 General Indemnification................................................................................. 20
9.8 Confidentiality......................................................................................... 20
9.9 Notices................................................................................................. 21
9.10 Entire Agreement....................................................................................... 21
9.11 Governing Law and Consent to Jurisdiction.............................................................. 22
9.12 Publicity.............................................................................................. 22
9.13 Counterparts........................................................................................... 22
9.14 Headings............................................................................................... 22
EXHIBITS AND SCHEDULES
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No. Description
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Exhibit 2.1 (b) Form of Note
Schedule I Liens
Schedule II Existing Defaults
ii
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of August 10,
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1998, between INCONTROL, INC., A DELAWARE CORPORATION (THE "BORROWER"), AND
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GUIDANT CORPORATION, AN INDIANA CORPORATION (THE "LENDER").
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W I T N E S S E T H:
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In consideration of the premises and mutual agreements herein contained,
the parties hereto agree as follows:
ARTICLE 1
Definitions
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In addition to any terms defined elsewhere in this Agreement, the following
terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"Acceleration" means that the Loan (a) shall not have been paid at the
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Maturity Date, or (b) shall have become due and payable prior to its stated
maturity pursuant to Section 7.2 hereof.
"Agreement" or "Credit Agreement" means this Credit Agreement, as from time
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to time amended, modified or supplemented.
"Banking Day" means a day other than a Saturday or a Sunday when commercial
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banks are open for business in New York, New York.
"Borrower" shall have the meaning specified in the heading to this
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Agreement.
"Borrowing Notice" shall have the meaning specified in Section 2.1(f)
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hereof.
"Business" means the design, development, manufacture and sale of
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implantable atrial defibrillators and related products, including transvenous
defibrillation leads and temporary defibrillation catheters.
"Cash Equivalents" means the net current cash value of (a) obligations
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issued or guaranteed by the United States of America; (b) certificates of
deposit, bankers' acceptances and other "money market instruments" issued by any
Permissible Bank; (c) open market commercial paper bearing the highest credit
rating issued by Standard & Poor's Corp. or by another nationally recognized
credit rating firm; (d) repurchase agreements entered into with any Permissible
Bank; and (e) shares of "money market funds," each having net assets of not less
than $500,000,000.
"Change of Control" means the occurrence of any of the following events:
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(a) the Borrower is merged or consolidated with or into another
corporation (other than as contemplated by the Merger Agreement) with
the effect that the common stockholders immediately prior to such
merger or consolidation hold less than fifty percent (50%) of the
ordinary voting power of the outstanding securities of the surviving
corporation of such merger or the corporation resulting from such
consolidation;
(b) a change in the composition of the Board of Directors of the Borrower
after the date hereof (other than as contemplated by the Merger
Agreement) as a result of which fewer than a majority of the incumbent
directors are directors who either (i) had been directors of the
Borrower 12 months prior to such change, or (ii) were elected, or
nominated for election, to the Board of Directors with the affirmative
votes of a majority of the directors who had been directors of the
Borrower 12 months prior to such change and who were still in office
at the time of the election or nomination;
(c) any person or persons, entity or group (within the meaning of Rule
13d-5 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall:
(i) as a result of a tender or exchange offer, open market
purchases, merger, privately negotiated purchases or
otherwise, have become, directly or indirectly, the
beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of thirty percent (30%) or more of the Shares;
or
(ii) commence, or announce the intention to commence, any tender
offer or exchange offer for thirty percent (30%) or more of
the Shares;
(d) The Merger Agreement shall terminate pursuant to Sections 8.1(d) or
8.1(g) thereof; or
(e) Borrower shall enter into any agreement, including without limitation
an agreement in principle, regarding any Takeover Proposal.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Disbursement Date" means any date on which a disbursement of the Loan is
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made. Each Disbursement Date shall be on the date designated in a written
notice from the Borrower to the Lender; provided, however, that the Lender shall
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not be required to make any disbursement if the conditions thereto are not
satisfied.
"Dollars" and "$" mean United States Dollars.
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"Effective Date" means the date of this Agreement.
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"Environmental Claim" means all claims, however asserted, by any
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Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief.
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"Environmental Laws" means any Governmental Requirement pertaining to land
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use, air, soil, surface water, groundwater (including the protection, cleanup,
removal, remediation or damage thereof), public or employee health or safety or
any other environmental matter; including without limitation, the following laws
as the same may be amended from time to time:
(1) Clean Air Act (42 U.S.C. Section 7401, et seq.);
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(2) Clean Water Act (33 U.S.C. Section 1251, et seq.);
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(3) Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et
--
seq.);
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(4) Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. Section 9601, et seq.);
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(5) Safe Drinking Water Act (42 U.S.C. Section 300f, et seq.);
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(6) Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.);
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(7) Rivers and Harbors Act (33 U.S.C. Section 401, et seq.);
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(8) Endangered Species Act (16 U.S.C. Section 1531, et seq.);
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(9) Occupational Safety and Health Act (29 U.S.C. Section 651, et seq.).
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"Event of Default" shall have the meaning set forth in Article 7 hereof.
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"Fully Diluted Common Equity" means the number of shares of the Borrower's
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common stock that would be outstanding assuming the exercise or conversion of
all outstanding options, warrants, convertible securities and any other rights
to acquire common stock.
"GAAP" means generally accepted accounting principles set forth in the
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pronouncements of the Financial Accounting Standards Board applied on a
consistent basis or in such other statements, opinions or interpretive releases
by such other entities as may be approved by a significant segment of the
accounting profession, which are applicable to the circumstances as of the date
of determination. Each accounting term not defined herein and each accounting
term partly defined herein to the extent not defined shall have the meaning
given to it under GAAP.
"Governmental Approvals" means any consent, right, exemption, concession,
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permit, license, authorization, certificate, order, franchise, determination or
approval of any federal, state, provincial, municipal or governmental
department, commission, board, bureau, agency or instrumentality required for
the ownership of, or activities of the Borrower or any other Person in
connection with, the business, assets and properties of the Borrower.
"Governmental Authority" means any nation or government, any state,
----------------------
province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
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"Governmental Requirements" means all legal requirements in effect from
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time to time including all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, determinations, approvals,
notices, demand letters, directions and requirements of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, and all instruments of record, foreseen or unforeseen, ordinary or
extraordinary, including but not limited to any change in any law, regulation or
the interpretation thereof by any foreign or domestic governmental or other
authority (whether or not having the force of law), relating now or at any time
heretofore or hereafter to the business or operations of the Borrower or to any
of the property owned, leased or used by the Borrower, including, without
limitation, the development, design, construction, acquisition, start-up,
ownership and operation and maintenance of property.
"Hazardous Substance" means any pollutant, contaminant, toxic or hazardous
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substance, material, constituent or waste as such terms are defined in or
pursuant to any Environmental Law.
"Incipient Default" shall have the meaning set forth in Section 3.1(c)
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hereof.
"Indebtedness" means (a) any obligation for borrowed money; (b) any
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obligation evidenced by bonds, debentures, notes or other similar instruments;
(c) any obligation to pay the deferred purchase price of property or for
services (other than in the ordinary course of business); (d) any capitalized
lease obligation; (e) any obligation or liability secured by a lien on any asset
of the Borrower, whether or not such obligation or liability is assumed; and (f)
any other long-term obligation or liability which is required by GAAP to be
shown as part of the liabilities on a balance sheet; provided, however, that
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Indebtedness shall not mean obligations incurred in connection with (x) the
acquisition of equipment which is less than or equal to (A) if a Loan Extension
Event has occurred, two million Dollars ($2,000,000) or (B) if no Loan Extension
Event has occurred, one million Dollars ($1,000,000), in each case in the
aggregate at any time outstanding or (y) any judgment, order or decree that does
not constitute an Event of Default pursuant to Section 7.1(e) hereof.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
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court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors; and (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other, similar arrangement.
"Intellectual Property" has the meaning specified in the Merger Agreement.
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"Investment," as applied to any party, means any direct or indirect
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ownership or purchase or other acquisition by that party of any capital stock,
equity interest, obligations or other securities, or a beneficial interest in
any capital stock, equity interest, obligations, or all or substantially all
assets used to conduct a business or a line of business, or any direct or
indirect loan, or capital contribution by that party to any other party, or any
joint venture or other arrangement involving the sharing of profits or losses
from joint business activities.
"Lender" shall have the meaning specified in the heading of this Agreement.
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"Lien" means any mortgage, deed of trust, pledge, hypothecation,
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assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security
4
interest or preferential arrangement of any kind or nature whatsoever
(including, without limitation, those created by, arising under or evidenced by
any conditional sale or other title retention agreement, the interest of a
lessor under a capital lease obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the UCC or any comparable law) and any contingent or other
agreement to provide any of the foregoing; provided, however, that Lien shall
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not mean liens created in connection with the acquisition of equipment which
secure obligations less than or equal (A) if a Loan Extension Event has
occurred, two million Dollars ($2,000,000) or (B) if no Loan Extension Event has
occurred, one million Dollars ($1,000,000), in each case in the aggregate at any
time outstanding.
"Loan" shall have the meaning set forth in Section 2.1(a) hereof.
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"Loan Documents" means this Agreement and the Note and all agreements,
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instruments and documents (including, without limitation, if any, security
agreements, loan agreements, notes, fee agreements, guaranties, mortgages, deeds
of trust, subordination agreements, pledges, assignments of intellectual
property, powers of attorney, consents, assignments, contracts, notices, leases,
financing statements, letter of credit applications, reimbursement agreements,
certificates, statements, reports and notices and all other writings)
heretofore, now or hereafter executed by, on behalf of or for the benefit of the
Borrower and delivered to the Lender pursuant to or in connection with this
Agreement or the transactions contemplated hereby, together with all amendments,
modifications and supplements thereto.
"Loan Extension Event" shall have the meaning set forth in Section 2.1(e)
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hereof.
"Material Adverse Change" means a material adverse change in the business,
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assets, prospects, operations, or financial condition of the Borrower and its
subsidiaries considered as a whole.
"Material Adverse Effect" means a material adverse effect on the business,
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assets, prospects, operations, or financial condition of the Borrower and its
subsidiaries considered as a whole.
"Maturity" means the date on which the Loan or any portion thereof becomes
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due and payable whether as stated, by virtue of mandatory prepayment, by
acceleration or otherwise.
"Maturity Date" means, subject to Section 2.1(e), February 10, 1999.
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"Merger Agreement" means that certain Agreement and Plan of Merger, dated
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August 10, 1998, by and among Borrower, Lender and Pegasus Acquisitions Corp., a
Delaware corporation and a wholly-owned subsidiary of Lender.
"Monthly Disbursement Limit" has the meaning specified in Section 2.1(a),
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subject to Section 2.1(d).
"Monthly Disbursement Limit Increase Event" means, with respect to a
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calendar month, the occurrence of any of the following events:
5
(a) the Borrower has paid or is obligated to make a payment to a holder of
Series B Stock to redeem within such calendar month the Series B Stock
of such holder in accordance with the terms of the Certificate of
Designations of the Series B Stock;
(b) the Borrower has paid or is obligated to make a payment within such
calendar month to any taxing authority of any tax (i) imposed on any
amount other than operating income and (ii) not normally and
customarily incurred in the ordinary course of business; or
(c) any fees and expenses of Xxxxxxx, Xxxxx & Co. as financial advisor to
the Borrower in connection with the transactions contemplated by the
Merger Agreement shall be paid or become due and payable within such
calendar month, in accordance with the terms of an engagement letter
(a copy of which has been made available to Lender), provided that a
Monthly Disbursement Limit Increase Event shall not include any
payment of additional fees and expenses to Xxxxxxx, Sachs & Co. in
accordance with the terms and conditions of any amendment or
modification of such engagement letter unless Lender has consented to
such amendment or modification.
"Monthly Disbursement Limit Increase Event Payment" shall mean, with
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respect to a Monthly Disbursement Limit Increase Event, any payment the Borrower
has made or is obligated to make as a result of the occurrence of such Monthly
Disbursement Limit Increase Event.
"Note" has the meaning specified in Section 2.1(b).
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"Obligations" means all loans, advances, debts, liabilities, obligations,
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covenants and duties owing, to the Lender by the Borrower of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, arising under any Loan Document, whether or not for the payment of
money, arising by reason of an extension of credit, absolute or contingent, due
or to become due, now existing or hereafter arising, including all principal,
interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Borrower under this Agreement or any other Loan
Document.
"Permissible Bank" means any bank or trust company organized under the laws
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of the United States of America or any state thereof and having capital and
surplus of an aggregate amount not less than $500,000,000.
"Permitted Encumbrances" means: (a) liens arising in connection with
----------------------
worker's compensation and unemployment insurance; (b) any lien existing or
arising by operation of law in the ordinary course of business, such as a
"banker's lien" or similar right of offset; (c) liens for taxes, fees,
assessments or other government charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings; (d) liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of
Default hereunder; (e) easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title or similar encumbrances affecting real
property not interfering in any material respect with the ordinary conduct of
business; (f) liens in favor of customs and revenue authorities arising in the
ordinary course of business; (g) liens (including a lien consisting of the
rights of a lessor under a sale-leaseback transaction) created in connection
with the acquisition of equipment, which liens secure obligations not in excess
of (A) if a Loan Extension Event has occurred, two million Dollars
6
($2,000,000) or (B) if no Loan Extension Event has occurred, one million Dollars
($1,000,000), in each case in the aggregate at any time outstanding; (h) liens
securing Indebtedness, which liens secure Indebtedness not in excess of (A) if a
Loan Extension Event has occurred, two million Dollars ($2,000,000) or (B) if no
Loan Extension Event has occurred, one million Dollars ($1,000,000), in each
case in the aggregate at any time outstanding; and (i) those liens outstanding
as of the date hereof and set forth on Schedule I hereto.
"Person" means any individual, corporation, partnership, limited liability
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company, trust, association or other entity or organization, including any
government, political subdivision, agency or instrumentality thereof.
"Series B Stock" has the meaning specified in the Merger Agreement.
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"Shares" has the meaning specified in the Merger Agreement.
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"Takeover Proposal" has the meaning specified in the Merger Agreement.
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ARTICLE 2
Loan
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2.1 Loan.
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(a) Loan. Subject to all of the terms and conditions of this
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Agreement, Lender agrees to make a loan (the "Loan") to the Borrower in the
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amount of ten million Dollars ($10,000,000) to be governed by the terms and
conditions of, and repaid in accordance with, this Agreement. Disbursement
amounts shall be in multiples of one hundred thousand Dollars ($100,000).
Subject to the satisfaction of applicable conditions set forth in Article 3
hereof, the Loan shall be disbursed to the Borrower as follows: up to three
million Dollars ($3,000,000) shall be disbursed on the first Disbursement Date
and any subsequent Disbursement Date. Subject to Section 2.1(d), in no event
shall the Lender be obligated to disburse to the Borrower more than three
million Dollars ($3,000,000) in any calendar month (the "Monthly Disbursement
--------------------
Limit"). Subject to Section 2.1(e), in no event shall the Lender be obligated to
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disburse to the Borrower more than ten million Dollars ($10,000,000) in total.
In addition, no more than two Disbursement Dates shall occur in any calendar
month. The Borrower shall use the proceeds of the Loan solely for the general
corporate purposes of the Business. Amounts prepaid in respect of the Loan
(whether repaid when due or prepaid) may not be reborrowed.
(b) Note. The Borrower's obligation to the Lender to repay the
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Loan shall be evidenced by a promissory note of the Borrower (the "Note") in the
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form attached hereto as Exhibit 2.1(b).
(c) Disbursement. Upon the prior or contemporaneous
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satisfaction of all the applicable conditions precedent set forth in Article 3
hereof, or waiver by the Lender of any conditions not so satisfied, the Lender
shall disburse the proceeds of each disbursement of the Loan to the Borrower (or
to such other Person as the Borrower may designate in writing) by wire transfer
of immediately available funds to such bank account as is specified in writing
by Borrower to
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Lender. Such disbursement shall be made on such date as is specified in the
Borrowing Notice, which date shall not be earlier than five (5) Banking Days
following such notice.
(d) Increases in Monthly Disbursement Limit. If, at any time, a
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Monthly Disbursement Limit Increase Event occurs, then the Monthly Disbursement
Limit for the calendar month in which such Monthly Disbursement Limit Increase
Event occurs shall be increased to an amount which is the sum of (x) three
million Dollars ($3,000,000) and (y) the amount of any Monthly Disbursement
Limit Increase Event Payment; provided, however, and subject to Section 2.1(e),
that in no event shall the total amount required to be disbursed by Lender to
the Borrower exceed ten million Dollars ($10,000,000) in total.
(e) Lender's Breach of Merger Agreement. If the Lender shall at
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any time breach in any material respect or fail to perform in any material
respects any of its covenants or other agreements contained in the Merger
Agreement (a "Loan Extension Event"), then (i) the total amount required to be
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disbursed by Lender hereto shall be increased to fifteen million Dollars
($15,000,000) and (ii) the Maturity Date shall be one year from the date hereof.
(f) Borrowing Notice. The Borrower shall provide the Lender
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with at least five (5) Banking Days' written notice of a requested disbursement
(a "Borrowing Notice"), which notice shall include, if applicable, notification
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that a Monthly Disbursement Limit Increase Event has occurred and providing a
reasonably detailed calculation of the amount of any Monthly Disbursement Limit
Increase Event Payment. Borrower shall provide Lender with reasonable access to
all information reasonably needed by Lender to verify that a Monthly
Disbursement Limit Increase Event has occurred and the amount of the Monthly
Disbursement Limit Increase Event Payment related to such Monthly Disbursement
Limit Increase Event, and the Lender shall not be required to disburse any funds
pursuant hereto until the Lender has verified to its reasonable satisfaction
such facts and amount.
2.2 Interest.
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(a) Interest. Subject to the immediately succeeding sentence,
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the outstanding principal amount of the Loan shall bear interest at a rate per
annum equal to seven percent (7.00%). Upon the occurrence and during the
continuation of an Incipient Default or an Event of Default, the outstanding
principal amount of the Loan shall, to the extent permitted by applicable law,
bear interest at a rate equal to the applicable rate provided above plus two
percent (2.00%) per annum. Interest shall be payable as set forth in Section
2.3(a) below.
(b) Computation of Interest. Interest shall be computed for the
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actual number of days elapsed on the basis of a year consisting of 360 days.
Payments.
(a) Interest Payments. Interest accrued in respect of the Loan
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shall be added to the outstanding principal amount thereof as of the last day of
each calendar month. The Lender and the Borrower acknowledge that the
outstanding principal amount may thereby exceed ten million Dollars
($10,000,000) by an amount equal to the aggregate amount of accrued interest
that is added to outstanding principal. On the Maturity Date, Borrower shall pay
Lender all interest then accrued and not so added to the principal balance of
the Loan.
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(b) Loan Payment. The Borrower shall repay the entire
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outstanding principal amount of the Loan in full on the Maturity Date.
(c) Optional Prepayment. The Borrower may at any time prepay
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the entire outstanding principal amount of the Loan or any portion thereof;
provided that (i) all accrued interest on the amount so prepaid shall be paid in
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full and (ii) in the case of a prepayment of less than the entire outstanding
principal amount of the Loan, the principal amount outstanding after such
prepayment shall be an integral multiple of one hundred thousand Dollars
($100,000). If the Borrower prepays the outstanding principal amount of the Loan
in full, the Lender shall not be obligated to make any further disbursements
under this Agreement.
(d) Prepayment for Sale of Assets. The Borrower shall repay the
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outstanding principal amount of the Loan in its entirety plus all interest
accrued to the date of prepayment immediately upon the occurrence of a sale,
lease, exchange or transfer of all or substantially all of the assets of the
Borrower, and in such event the Lender shall have no further obligation to make
any further disbursements under this Agreement.
(e) Change of Control-Repayment. Upon the occurrence of a
---------------------------
Change of Control, the Borrower shall immediately notify the Lender in writing
of such occurrence and offer to pay to the Lender the outstanding principal
amount of the Loan plus all interest accrued to date. The Lender shall have the
option of requiring the Borrower to repay the Loan in accordance with this
Section 2.3(e) by giving the Borrower written notice to such effect. The
Borrower shall repay such amounts within one (1) Banking Day after the Lender's
notice.
(f) Payments by the Borrower. All payments (including
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prepayments) to be made by the Borrower on account of Principal and interest
shall be made without set-off or counterclaim and shall be made to the Lender by
wire transfer in Dollars and in immediately available funds to Lender's Account
No. 102-7141, at Mellon Bank, located in Pittsburgh, Pennsylvania, A.B.A. No.
0000-0000-0 no later than 12:00 noon (Eastern Standard Time) of the Banking Day
on which payment is due. Any payment which is received by the Lender later than
12:00 noon (Eastern Standard Time) shall be deemed to have been received on the
immediately succeeding Banking Day. Whenever any payment hereunder shall be
stated to be due on a day other than a Banking Day, such payment shall be made
on the next succeeding Banking Day, and such extension of time shall in such
case be included in the computation of interest.
(g) Offset. In addition to and not in limitation of all rights
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of offset that the Lender may have under applicable law, Lender, upon the
occurrence and during the continuance of an Acceleration, shall have the right
to appropriate and apply to the payment of all Obligations any and all amounts
that Lender may owe Borrower for any reason. Lender agrees promptly to notify
the Borrower after any such offset and application; provided, however, that the
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failure to give such notice shall not affect the validity of such offset and
application. The rights of Lender under this Section 2.3(h) are in addition to
the other rights and remedies which the Lender may have.
9
ARTICLE 3
Conditions Precedent
--------------------
3.1 Conditions to Disbursement.
---------------------------
(a) The obligation of the Lender to make the first disbursement of
the Loan shall be subject to the prior or contemporaneous satisfaction of each
of the following conditions:
(i) Delivery of Documents. The Note shall have been duly executed
---------------------
and delivered to the Lender;
(ii) Certificate of Secretary. The Lender shall have received, dated
------------------------
and in full force and effect as of the date of the first Disbursement
Date, a certificate of the Secretary or an Assistant Secretary of the
Borrower as to authorization of the execution, delivery and
performance of this Agreement and all of the other Loan Documents by
the Borrower; and
(iii) Legal Opinion. The Lender shall have received an opinion of
-------------
counsel to the Borrower, in form and substance satisfactory to the
Lender and its counsel, as to the enforceability of this Agreement and
the other Loan Documents (to the extent applicable) and as to such
other matters as the Lender and its counsel may reasonably request.
(b) The obligation of the Lender to make each disbursement of the
Loan, including the first disbursement thereof, shall be subject to the prior or
contemporaneous satisfaction of each of the following conditions:
(i) Reports, Certificates and Other Information. The Lender shall
-------------------------------------------
have received the following, dated and in full force and effect on
each of the respective Disbursement Dates:
(A) a certificate, signed by an authorized officer of the
Borrower, stating (x) that the representations and
warranties contained in Article 4 hereof are then accurate
and complete in all material respects as though made on and
as of such date and (y) that there has then occurred no
Event of Default or Incipient Default which is continuing;
and
(B) such other instruments or documents as the Lender may
reasonably request relating to the existence and good
standing of the Borrower or to the corporate authorization
by the Borrower for the execution, delivery and performance
of this Agreement or any of the other Loan Documents.
(ii) No Existing Default. No Event of Default or Incipient Default
-------------------
shall exist on the respective Disbursement Date or after giving effect
to the transactions contemplated to take place hereunder on such date;
10
(iii) Representations and Warranties Correct. The representations and
--------------------------------------
warranties set forth in Article 4 hereof shall be true and correct in
all material respects on and as of the respective Disbursement Date,
and after giving effect to the transactions contemplated to occur on
such date;
(iv) Cash Balances. The Lender shall have received a certificate of
-------------
the principal financial officer of the Borrower in form and substance
satisfactory to the Lender stating that as of the close of the second
Banking Day prior to the respective Disbursement Date, the aggregate
amount of cash and Cash Equivalents of the Borrower and its
subsidiaries on a consolidated basis does not exceed four million
Dollars ($4,000,000); and
(v) Other Documents. The Lender shall have received any other
---------------
document, instrument, undertaking or certificate stated in any of the
Loan Documents to be delivered on the Disbursement Date or as the
Lender may reasonably request.
3.2 Conditions for the Benefit of the Lender. The conditions set forth
----------------------------------------
in this Article 3 are for the exclusive benefit of the Lender and may be waived,
for purposes of this Agreement, only by a written waiver declaration signed by
the Lender.
ARTICLE 4
Representations and Warranties of the Borrower
----------------------------------------------
In order to induce Lender to enter into or become party to this Agreement
and to make the Loan, the Borrower makes the following representations and
warranties to the Lender:
4.1 Due Organization. The Borrower is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Delaware. The
Borrower is duly licensed or qualified to conduct business and in good standing
in each jurisdiction wherein the character of the property owned or the nature
of the business transacted by it makes such licensing or qualifications
necessary, except as to jurisdictions where the failure to be so licensed or
qualified would not have a Material Adverse Effect.
4.2 Capitalization.
--------------
(a) The corporate charter or certificate of incorporation and all
amendments thereto for the Borrower have been duly filed and are in proper
order. All of the outstanding capital stock of the Borrower has been validly
issued in compliance with all federal and state securities laws and is fully
paid and nonassessable.
(b) As of each Disbursement Date, the Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock other than the Borrower's obligation to
redeem the Series B Stock in accordance with the terms of the Certificate of
Designations of the Series B Stock and as contemplated by the Merger Agreement.
11
4.3 Requisite Power. The Borrower has all requisite corporate or other
---------------
legal power and all Governmental Approvals necessary to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted. The Borrower has all requisite power to borrow the sums provided for
in this Agreement and to execute, deliver, issue and perform this Agreement and
the Note.
4.4 Authorization. All corporate action on the part of the Borrower and
-------------
its directors and stockholders necessary for the authorization, execution,
delivery and performance of this Agreement and the Note and the other Loan
Documents has been duly taken and is in full force and effect.
4.5 Officer Authorization. Each authorized officer of the Borrower
---------------------
executing this Agreement or any of the other Loan Documents is (as of the date
of such execution) duly and properly in office and fully authorized to execute
and deliver the same.
4.6 Binding Nature. This Agreement, the Note and each of the other Loan
--------------
Documents is, or upon the execution and delivery thereof will be, a legal, valid
and binding obligation of the Borrower, and in full force and effect and
enforceable in accordance with its respective terms, except for the effect of
applicable laws regarding bankruptcy or insolvency or similar laws affecting
creditors' rights generally and by general principles of equity relating to
enforceability.
4.7 No Conflict. Neither the execution nor delivery of this Agreement,
-----------
the Note or any of the other Loan Documents nor fulfillment of nor compliance
with the terms and provisions hereof or thereof will (a) conflict with or result
in a breach of any Governmental Requirement, or of any agreement or instrument
binding upon the Borrower, where such conflict or breach is reasonably likely to
have a Material Adverse Effect, or conflict with or result in a breach of any
provision of the corporate charter or by-laws of the Borrower, or (b) result in
the creation or imposition of any Lien (other than a Permitted Lien) upon any
property of the Borrower pursuant to any such agreement or instrument, except
pursuant to or as contemplated by this Agreement or any other Loan Documents. No
authorization, consent or approval or other action by, and no notice to or
filing with, any Governmental Authority or any other Person is required to be
obtained or made by the Borrower, for the due execution, delivery and
performance by the Borrower of this Agreement, the Note or any of the other Loan
Documents or for the validity or enforceability thereof.
4.8 No Event of Default. No Event of Default or Incipient Default has
-------------------
occurred and is continuing or would result from the execution of this Agreement.
4.9 Full Disclosure. None of the representations or warranties made by
---------------
the Borrower in the Loan Documents as of the date of such representations and
warranties contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading.
4.10 Merger Agreement Representations. The representations and warranties
--------------------------------
contained in Sections 4.5 through 4.20 of the Merger Agreement (including the
defined terms used therein) are incorporated by reference herein in their
entirety, as if set forth herein in their entirety.
12
ARTICLE 5
Affirmative Covenants
---------------------
The Borrower covenants and agrees that so long as any Obligation is
outstanding it will comply with and, if applicable, cause any of its
subsidiaries to comply with the following provisions:
5.1 Financial Statements and Notices. The Borrower shall furnish to the
--------------------------------
Lender the following financial statements, information and notices:
(a) Within forty-five (45) days after the close of the first
three quarters of Borrower's fiscal year, commencing with the fiscal quarter
ending September 30, 1998, for the Borrower and its subsidiaries on a
consolidated basis: (i) a statement of cash flows for such quarter; (ii) an
income statement for such quarter; and (iii) a balance sheet as of the end of
such quarter. All such statements shall be prepared on a consolidated and
consolidating basis for the Borrower and its subsidiaries, in reasonable detail,
subject to year-end audit adjustments and without footnotes, shall include
appropriate comparisons to the same period for the prior year, and shall be
certified by the principal financial officer of the Borrower to have been
prepared in accordance with GAAP consistently applied, subject to year-end audit
adjustments;
(b) Within ninety (90) days after the close of Borrower's fiscal
year, commencing with the fiscal year ending December 31, 1998 a copy of the
annual audit report for such year for the Borrower, including for the Borrower
and its subsidiaries on a consolidated basis (i) a statement of stockholders'
equity for such fiscal year; (ii) a statement of cash flows for such fiscal
year, (iii) an income statement for such fiscal year, and (iv) a balance sheet
as of the end of such fiscal year, together with like internal unaudited
consolidating financial statements for the Borrower and its subsidiaries. All
statements required by this Section 5.1(b) shall include appropriate comparisons
to the prior year. Such consolidated financial statements shall be audited by an
independent certified public accounting firm and shall include a report of such
accounting firm, which report shall be unqualified as to the Borrower's status
as a going concern and as to the scope of the audit performed by such accounting
firm and shall state that such financial statements fairly present in all
material respects the financial position of the Borrower and its subsidiaries as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP, consistently applied;
(c) Promptly after they are sent, made available or filed,
copies of all reports, proxy statements and financial statements that the
Borrower sends or makes available to its stockholders and all registration
statements and reports that the Borrower may file with the Securities and
Exchange Commission;
(d) Promptly, but in no event later than five (5) Banking Days
after the principal financial officer of the Borrower obtains knowledge of the
occurrence of an Event of Default or an Incipient Default, provide the Lender
with a statement of an authorized officer of the Borrower setting forth details
of such Event of Default or Incipient Default and the action which the Borrower
proposes to take with respect thereto;
13
(e) Promptly but in no event later than five (5) Banking Days
after the principal financial officer of the Borrower learns thereof, written
notice of any actual or threatened claims, litigation, suits, investigations, or
proceedings against or affecting the Borrower, including, without limitation:
(i) any claim, litigation, suit, investigation, proceeding or dispute involving
a monetary amount, whether or not covered by insurance, in excess of one million
Dollars ($1,000,000), (ii) any denial, suspension, or revocation of any material
Governmental Approval; (iii) any investigation or proceeding before or by any
Governmental Authority which is reasonably likely to have a Material Adverse
Effect; (iv) any Environmental Claim from any person concerning any alleged
violation of any Environmental Law by the Borrower or any of its predecessors
which is reasonably likely to either (x) have a Material Adverse Effect or (y)
result in a liability to the Borrower, whether or not insured, in excess of one
million Dollars ($1,000,000); or (v) the commencement of any investigation by
any Government Authority, or the receipt by the Borrower of written request by
any Government Authority for information, relating to the handling, storage or
disposal of any Hazardous Substance, or the release thereof into the
environment, by the Borrower, or any of its predecessors, or any other Person,
which investigation or request is other than routine; and
(f) Within a reasonable time after a request therefor, such
other information as the Lender may reasonably request.
Each notice pursuant to this Section 5.1 (d), (e) or (f) shall be
accompanied by a written statement by an authorized officer of the Borrower
setting forth details of the occurrence referred to therein known to such
officer and stating what action the Borrower proposes to take with respect
thereto.
5.2 Access. The Borrower shall permit the Lender, at such reasonable
------
times and intervals as the Lender may designate upon reasonable notice, at its
own expense by and through the representatives and agents of the Lender, to
inspect, audit and examine its books and records, to make copies thereof, to
discuss its affairs, finances and accounts with its officers and independent
public accountants, and to visit and inspect its properties.
5.3 Maintenance of Existence. The Borrower and each of its subsidiaries
------------------------
shall preserve and maintain their respective corporate existences and all of
their material licenses, privileges and franchises and other rights necessary or
desirable in the normal course of their businesses.
5.4 Facilities. The Borrower and its subsidiaries shall use commercially
----------
reasonable efforts to keep the properties used in their respective businesses in
good repair, working order and condition, and from time to time shall use
commercially reasonable efforts to make necessary repairs or replacements
thereto so that their property shall be maintained adequately for its intended
use. The foregoing notwithstanding, the Borrower may dispose of obsolete and
unneeded property.
5.5 Compliance with Laws. The Borrower and its subsidiaries shall use
--------------------
commercially reasonable efforts to comply in all respects with all Governmental
Requirements, except where the failure to do so could not in the aggregate have
a Material Adverse Effect.
14
5.6 Material Agreements. The Borrower and its subsidiaries shall use
-------------------
commercially reasonable efforts to comply in all material respects with the
terms of each agreement to which any of them is a party.
5.7 Insurance. The Borrower and its subsidiaries shall maintain in full
---------
force and effect insurance of such types and in such amounts as are customarily
carried in their respective lines of business, including, but not limited to,
fire, public liability, property damage, hazard insurance, products liability
and workers' compensation insurance.
5.8 Taxes and Other Liabilities. The Borrower and its subsidiaries shall
---------------------------
pay and discharge when due any and all indebtedness, obligations, liabilities,
assessments and real and personal property taxes, including, but not limited to,
federal and state income and personal and real property taxes, except as may be
subject to good faith contest or as to which a bona fide dispute may arise;
provided, however, that an adequate reserve therefor is made in accordance with
-------- -------
GAAP.
5.9 Governmental Approvals. The Borrower and its subsidiaries shall use
----------------------
commercially reasonable efforts to apply for, diligently pursue, and obtain or
cause to be obtained, and shall thereafter maintain in full force and effect all
material Governmental Approvals that shall now or hereafter be necessary under
any Governmental Requirement (a) for land use, public and employee health and
safety, pollution or protection of the environment and (b) for the operation of
the business of the Borrower and the subsidiaries, except where the failure to
obtain or maintain such Governmental Approval would not have a Material Adverse
Effect.
ARTICLE 6
Negative Covenants
------------------
The Borrower covenants and agrees that so long as any Obligation is
outstanding and the Lender has not failed to make a disbursement of the Loan
which Lender was required to make, the Borrower will comply with and, if
applicable, cause any of its subsidiaries to comply with, the following
provisions:
6.1 Certain Covenants of the Company. The Borrower shall not, directly or
--------------------------------
indirectly, take (and shall cause its subsidiaries not to take) any of the
actions contemplated by Section 6.1 of the Merger Agreement.
6.2 Change of Business. The Borrower shall not engage in any business
------------------
other than the Business.
6.3 Liens and Encumbrances. The Borrower shall not, and shall not allow
----------------------
any of its subsidiaries to, create, incur, assume, or permit to exist any Lien
of any kind upon any of the property or assets of the Borrower or such
subsidiary now owned or hereafter acquired, including, without limitation, any
Intellectual Property, other than Permitted Encumbrances,.
6.4 Sale-Leasebacks. Neither the Borrower nor any of its subsidiaries
---------------
shall enter into or become liable in connection with any sale-leaseback
transaction, except for a sale-leaseback in connection with which the property
subject thereto is subject to a Permitted Encumbrance.
15
6.5 Transactions With Affiliates. Except on terms no less favorable to
----------------------------
the Borrower than would be obtainable if no such relationship existed, Borrower
shall not purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or loan or advance money to, or otherwise deal with any
affiliate or subsidiary.
6.6 Investments. Neither the Borrower nor any of its subsidiaries shall
-----------
make or permit to remain outstanding any Investment, except (a) Investments by
the Borrower in its subsidiaries; (b) investment-grade debt securities having a
term not longer than one (1) year; (c) certificates of deposit issued by a
Permissible Bank and having a term not longer than one (1) year; (d) Investments
received in the settlement of any debt owing to the Borrower or any of its
subsidiaries, where such debt was incurred in the ordinary course of business;
(e) other Investments not to exceed one hundred thousand Dollars ($100,000) in
the aggregate at any time outstanding; and (f) other Investments in connection
with a bona fide acquisition, joint venture or other business relationship;
---- ----
provided such sale or other issuance is in furtherance of the Business and does
--------
not result in the issuance of securities representing ten percent (10%) or more
of Fully Diluted Common Equity immediately prior to such sale or other issuance.
6.7 Obligations.
-----------
(a) Neither the Borrower nor any of its subsidiaries shall enter
into or otherwise become liable in connection with any contracts, agreements or
understandings which, individually or in the aggregate, obligate the Borrower or
any of its subsidiaries to pay or otherwise give consideration which is equal to
or greater than (A) if a Loan Extension Event has occurred, two million Dollars
($2,000,000) or (B) if no Loan Extension Event has occurred, one million Dollars
($1,000,000), in each case per year.
(b) Borrower shall not make any grants or gifts to any person or
enter into any commitments to do the same.
6.8 Intellectual Property. Neither the Borrower nor any of its
---------------------
subsidiaries shall sell, assign, transfer, convey or grant any license or any
other right in or to any Intellectual Property.
ARTICLE 7
Events of Default
-----------------
7.1 Events of Default. Each of the following shall constitute an Event of
-----------------
Default under this Agreement:
(a) Principal Payments. The Borrower shall fail to pay when due
------------------
(whether due when scheduled or as a result of a mandatory prepayment) any
payment of principal or premium in respect of the Loan;
(b) Interest and Other Payments. The Borrower shall fail to pay
---------------------------
when due any payment of interest or other sum payable hereunder or under any of
the other Loan Documents or in the Merger Agreement and continuance of such
default for fifteen (15) Banking Days after notice thereof to the Borrower from
the Lender;
16
(c) Other Covenants and Loan Agreements. The Borrower shall
-----------------------------------
default in the performance of any of its respective agreements set forth in any
provision herein, in any of the other Loan Documents or in the Merger Agreement
(and not constituting an Event of Default under any of the other clauses of this
Section 7.1), such default shall continue for thirty (30) days after notice
thereof to the Borrower from the Lender, and with respect to those covenants
contained in Article 5 only, such default shall have a Material Adverse Effect;
(d) Representations and Warranties. Any representation or
------------------------------
warranty contained in Section 4 hereof or certification pursuant to Section
3.2(b)(i) or 5.1 made by the Borrower, any officer of the Borrower or in the
Merger Agreement, shall be untrue in any material respect, in any case on any
date as of which the facts set forth are stated or certified;
(e) Judgments. Any final judgment, order or decree shall be
---------
rendered against the Borrower in an amount equal to or greater than five hundred
thousand Dollars ($500,000), and either (i) enforcement proceedings shall have
been commenced by any Person upon such judgment or order or (ii) there shall be
any period of thirty (30) consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect, unless such judgment, order or decree shall, within such 30-day
period, be vacated or discharged (other than by satisfaction thereof);
(f) Cross-Default. Other than as set forth on Schedule II
-------------
hereto, the Borrower shall (i) fail to pay when due, by stated maturity,
acceleration or otherwise, any Indebtedness for borrowed money of, or any
guaranty of Indebtedness for borrowed money by, the Borrower (not arising
hereunder or under any of the other Loan Documents) outstanding in aggregate
principal amount greater than five hundred thousand Dollars ($500,000), and such
failure continues after the applicable grace period, if any, specified in the
document relating thereto, or (ii) fail to perform or observe (subject to any
applicable grace period) any agreement, covenant or condition with respect to
any such Indebtedness or guaranty if the effect of such failure is to accelerate
the maturity of any such Indebtedness or to permit the holder or holders of any
such Indebtedness or guaranty, or any trustee or agent for such holders, to
cause such Indebtedness to become due and payable prior to its expressed
maturity or to call upon such guaranty in advance of nonpayment of the
guaranteed Indebtedness;
(g) Insolvency. An Insolvency Proceeding (whether voluntary or
----------
involuntary) shall be commended against the Borrower or any subsidiary of the
Borrower; or the Borrower or any subsidiary of the Borrower shall file a
petition initiating or shall otherwise institute any similar Insolvency
Proceeding under any other applicable federal or state law, or shall consent
thereto; or the Borrower or any subsidiary of the Borrower shall apply for, or
by consent or acquiescence there shall be an appointment of, a receiver,
liquidator, sequestrator, trustee or other officer with similar powers, or the
Borrower or any subsidiary of the Borrower shall make an assignment for the
benefit of creditors; or the Borrower or any subsidiary of the Borrower shall
admit in writing its inability to pay its debts generally as they become due;
or, if an involuntary case shall be commenced seeking the liquidation or
reorganization of the Borrower or any subsidiary of the Borrower under Chapter 7
or Chapter 11, respectively, of the United States Bankruptcy Code, or any
similar proceeding shall be commenced against the Borrower or any subsidiary of
the Borrower under any other applicable federal or state law, and (i) the
petition commencing the involuntary case is not timely controverted; or (ii) the
petition commencing the involuntary case is
17
not dismissed within forty-five (45) days of its filing; or (iii) an interim
trustee is appointed to take possession of all or a portion of the property
and/or to operate all or any part of the business of the debtor; or (iv) an
order for relief shall have been issued or entered therein; or a decree or order
of a court having jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee or other officer having similar
powers over the debtor, or of all or any part of the property of any of the
foregoing, shall have been entered; or any other similar relief shall be granted
against the Borrower or any subsidiary of the Borrower, under any applicable
federal or state law; or
(h) Invalidity of Loan Documents. Any of the Loan Documents
----------------------------
shall cease for any reason to be in full force and effect and the Lender shall
be substantially deprived of any of its rights under the Loan Documents or any
party thereto (other than Lender) shall purport to disavow its obligations
thereunder, shall declare that it does not have any further obligation
thereunder or shall contest the validity or enforceability thereof.
7.2 Acceleration. If any Event of Default described in Section 7.1(g)
------------
hereof shall occur, the Note and all other Obligations shall become immediately
due and payable, all without notice of any kind, and the Lender shall have no
further obligation to make any disbursement of the Loan which has not then been
made. Notwithstanding any other provision in this Agreement, if any other Event
of Default shall occur, the Lender shall have no further obligation to make any
disbursement of the Loan which has not then been made and may declare, at any
time after the occurrence of an Event of Default, the Note and all other
Obligations to be due and payable, whereupon the Note and all other Obligations
shall immediately become due and payable, all as so declared by the Lender and
without presentment, demand, protest or other notice of any kind. Any such
declaration made pursuant to this Section 7.2 may be rescinded by the Lender.
ARTICLE 8
Representations and Warranties of the Lender
--------------------------------------------
The Lender makes the following representations and warranties to the
Borrower:
8.1 Due Organization. The Lender is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Indiana.
8.2 Requisite Power. The Lender has all requisite corporate or other
---------------
legal power and all governmental licenses, permits, authorizations, consents and
approvals necessary to enter into and perform its obligations under this
Agreement.
8.3 Authorization. All corporate action on the part of the Lender and its
-------------
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Agreement and the other Loan Documents has been duly
taken and is in full force and effect.
8.4 Officer Authorization. Each authorized officer of the Lender executing
---------------------
this Agreement or any of the other Loan Documents is (as of the date of such
execution) duly and properly in office and fully authorized to execute and
deliver the same.
18
8.5 Binding Nature. This Agreement is a legal, valid and binding
--------------
obligation of the Lender, and in full force and effect and enforceable in
accordance with its terms, except for the effect of applicable laws regarding
bankruptcy or insolvency or similar laws affecting creditors' rights generally
and by general principles of equity relating to enforceability.
8.6 No Conflict. Neither the execution nor delivery of this Agreement or
-----------
any of the other Loan Documents nor fulfillment of nor compliance with the terms
and provisions hereof or thereof will (a) conflict with or result in a breach of
any material Governmental Requirement, or of any material agreement or
instrument binding upon the Lender, or conflict with or result in a breach of
any provision of the articles of incorporation or by-laws of the Lender. No
authorization, consent or approval or other action by, and no notice to or
filing with, any Governmental Authority or any other Person is required to be
obtained or made by the Lender, for the due execution, delivery and performance
by the Lender of this Agreement or any of the other Loan Documents or for the
validity or enforceability thereof.
ARTICLE 9
Miscellaneous
-------------
9.1 Successors and Assigns and Sale of Interests. The terms and
--------------------------------------------
provisions of this Agreement shall be binding upon, and, subject to the
provisions of this Section 9.1, the benefits thereof shall inure to, the parties
hereto and their respective successors and assigns; provided, however, that the
-------- -------
Borrower shall not assign this Agreement or any of its rights, duties or
obligations hereunder without the prior written consent of the Lender, and the
Lender shall not delegate its obligations or duties hereunder without the prior
written consent of the Borrower.
9.2 No Implied Waiver. No delay or omission to exercise any right, power
-----------------
or remedy accruing to the Lender upon any breach or default of the Borrower
under this Agreement or under any of the other Loan Documents shall impair any
such right, power or remedy of the Lender, nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default occurring thereafter, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring theretofore or thereafter.
9.3 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Lender, and then any such waiver shall be effective
only in the specific instance and for the specific purpose for which given.
9.4 Remedies Cumulative. All rights and remedies, either under this
-------------------
Agreement, by law or otherwise afforded to the Lender shall be cumulative and
not exclusive, and any single or partial exercise of any power or right
hereunder or thereunder does not preclude other or further exercise thereof, or
the exercise of any other power or right. In no event shall either party hereto
be liable for consequential damages for breach hereof, even if foreseeable.
9.5 Severability. Any provision of this Agreement, the Note or any of the
------------
other Loan Documents which is prohibited or unenforceable in any jurisdiction,
shall be, only as to such
19
jurisdiction, ineffective to the extent of such prohibition or unenforceability,
but all the remaining provisions of this Agreement, the Note and the other Loan
Documents shall remain valid.
9.6 Costs, Expenses and Attorneys' Fees. Each party shall pay all of its
-----------------------------------
fees and expenses associated with the negotiation, preparation, execution and
closing of this Agreement and the first disbursement of the Loan, including, but
not limited to, reasonable attorneys' fees and expenses. The Borrower shall pay
all costs and expenses, including, but not limited to, reasonable attorneys'
fees and expenses (including the allocated cost of in-house counsel), expended
or incurred by the Lender in collecting any sum which becomes due under the Note
or under this Agreement, any of the other Loan documents, or in the protection,
perfection, preservation and enforcement of any and all rights of the Lender in
connection with the Loan Documents including, without limitation, the fees and
costs incurred in any out-of-court work-out or a bankruptcy or reorganization
proceeding. This obligation on the part of the Borrower shall survive the
expiration or termination of this Agreement, without occurrence of the Closing
Date and shall survive repayment of the Loan in full.
9.7 General Indemnification. The Borrower shall indemnify and hold the
-----------------------
Lender and each of its directors, officers, employees, affiliates, attorneys and
agents (collectively referred to herein as the "Lender Indemnitees") harmless
------------------
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including without limitation, any expenses
(including attorneys' fees and the allocated cost of in-house counsel) incurred
by any such Lender Indemnitee in connection with any investigation in connection
with any such matter, whether or not any such Lender Indemnitee shall be
designated a party thereto) which may be imposed on, incurred by or asserted
against such Lender Indemnities by any Person other than the Lender with which
such Lender Indemnitee is affiliated (whether direct, indirect or consequential
and whether based on any federal or state laws or other statutory regulations,
including, without limitation, securities, environmental and commercial laws and
regulations, under common law or at equitable cause, or on contract or
otherwise) in any manner relating to or arising out of this Agreement and any
other Loan Documents, or any act, event or transaction related or attendant
thereto; the making of the Loan hereunder, the management of the Loan (including
any liability under federal, state or local Environmental Laws or regulations),
the use or intended use of the proceeds of the Loan (collectively, the
"Indemnified Matters"); provided, however, that the Borrower shall have no
------------------- -------- -------
obligation to any Lender Indemnitee under this Section 9.7 with respect to
Indemnified Matters to the extent such Indemnified Matters were caused by or
resulted from the gross negligence or willful misconduct of a Lender Indemnitee.
To the extent that the undertaking to indemnify, pay and hold harmless set forth
in the preceding sentence may be unenforceable because it is violative of any
law or public policy, the Borrower shall contribute to the payment and
satisfaction of all Indemnified Matters incurred by the Lender Indemnities the
maximum portion which the Borrower is permitted to pay and satisfy under
applicable law. This indemnification shall survive repayment by the Borrower of
the Loan made under this Agreement, and the termination of this Agreement
without occurrence of the Closing Date.
9.8 Confidentiality. Lender agrees that all information furnished to
---------------
Lender by Borrower pursuant to this Agreement will be held under the Lender's
obligations pursuant to that certain Confidentiality Agreement by and between
Lender and Borrower (the "Confidentiality Agreement"). Borrower agrees that,
-------------------------
notwithstanding the terms of said Confidentiality Agreement,
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all such information may be used by Lender in connection with this Agreement and
that Lender need not comply with the provisions of the third-to-last paragraph
of the Confidentiality Agreement until all Obligations hereunder have been paid
or otherwise satisfied in full and the Lender has no further obligation to make
the Loan.
9.9 Notices. Any notice which the Borrower or the Lender may be required
-------
or may desire to give to the other party under any provision of this Agreement
shall be in writing by electronic facsimile transmission and shall be deemed to
have been given or made when transmitted to the Lender or the Borrower as
follows:
To the Borrower: InControl, Inc.
0000 000xx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to: Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
To the Lender: Guidant Corporation
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Treasurer
Facsimile: (000) 000-0000
with a copy to: Xxxxx Xxxxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Xxxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Any party may change the address to which all notices, requests and other
communications are to be sent to it by giving written notice of such address
change to the other parties in conformity with this paragraph, but such change
shall not be effective until notice of such change has been received by the
other parties.
9.10 Entire Agreement. This Agreement, together with the exhibits to this
----------------
Agreement, all of the other Loan Documents and the Merger Agreement, is intended
by the Borrower and the Lender as a final expression of their agreement and,
together with all of the other Loan Documents and the Merger Agreement, is
intended as a complete statement of the terms and conditions of their agreement.
This Agreement, the other Loan Documents and the Merger Agreement contain all of
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the agreements and understandings between the Borrower and the Lender concerning
the Loan and the other transactions contemplated hereby.
9.11 Governing Law and Consent to Jurisdiction. The validity, construction
-----------------------------------------
and effect of this Agreement, the Note and all of the other Loan Documents shall
be governed by the laws of the State of Washington, without regard to its laws
regarding choice of applicable law. All judicial proceedings brought against the
Borrower with respect to this Agreement, the Note or any of the other Loan
Documents may be brought in any state or federal court of competent jurisdiction
in the State of Indiana, and the Borrower accepts for itself and its assets and
properties, generally and unconditionally, the nonexclusive jurisdiction of the
aforesaid courts. The Borrower waives, to the fullest extent permitted by
applicable law, any objection (including, without limitation, any objection to
the laying of venue or based on the grounds of forum non conveniens) which it
may now or hereafter have to the bringing of any such action or proceeding in
any such jurisdiction. Nothing herein shall limit the right of Lender to bring
proceedings against the Borrower in the court of any other jurisdiction. TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER WAIVES COMPLETELY ANY
RIGHT WHICH IT MIGHT OTHERWISE HAVE TO TRIAL BY JURY.
9.12 Publicity. Neither party may disclose the existence or content of
---------
this Agreement without the prior written consent of the other party, unless such
disclosure is in the judgment of the disclosing party reasonably necessary to
comply with applicable law or the rules of any stock exchange. Each party shall
have the opportunity to review and approve any press releases with respect to
this Agreement and/or the transaction contemplated hereunder prior to
disclosure. In the case of any disclosure required by law or the rules of any
stock exchange, the parties shall consult with each other for the purpose of
limiting disclosure to such matters as are required by law or the rules of any
stock exchange.
9.13 Counterparts. This Agreement may be executed in any number of
------------
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
9.14 Headings. Captions, headings and the table of contents in this
--------
Agreement are for convenience only, and are not to be deemed part of this
Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by its
duly authorized officers as of the date and year first above written.
INCONTROL, INC.
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Xxxx X. Xxxxxxx
Chairman of the Board,
President and CEO
GUIDANT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Xxxxxx X. Xxxxxxx
President and CEO
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[Exhibits Intentionally Omitted]
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