EXHIBIT 10.8
PROMISSORY NOTE
$3,000,000.00 June 12, 1995
FOR VALUE RECEIVED, Integrated Medical Systems, Inc., a Colorado
corporation ("Maker"), does hereby promise to pay to the order of Eli Lilly and
Company, an Indiana corporation ("Payee"), on July 1, 1996, or such earlier date
as payment may become due pursuant to the terms hereof (the "Maturity Date"),
the sum of Three Million Dollars ($3,000,000), with interest computed from the
date hereof on the unpaid principal sum from time to time outstanding at a rate
of ten percent (10%) per annum except that if any portion of the principal or
interest payable hereunder shall not be paid on the Maturity Date, the interest
rate from and after the Maturity Date shall be 12%. Payee, as holder of this
Note, and any subsequent holder of this Note, is sometimes hereinafter referred
to as "Holder." Principal and interest shall be payable in money of the United
States of America that at the time is legal tender for the payment of public and
private debts.
This Note is executed and delivered together with a certain Security
Agreement, dated as of the date hereof, between Maker and Payee (the "Security
Agreement") and a certain Pledge Agreement, dated as of the date hereof, between
Maker and Payee (the "Pledge Agreement"), which secure the obligations of Maker
under this Note. In the event of a Default (as hereinafter defined) under this
Note, Holder shall be entitled to enforce its rights and shall have recourse
against the Maker in accordance with the terms of this Note and applicable law
and Holder shall be entitled to enforce its rights against the Collateral (as
defined in the Security Agreement) and the Pledged Collateral (as defined in the
Pledge Agreement) and shall have recourse against Maker as described in the
Security Agreement and the Pledge Agreement.
The indebtedness evidenced by this Note shall be subordinate and
junior in right of payment, to the extent set forth in clauses (i) to (iv) of
this paragraph, to all principal and interest on all indebtedness of Maker for
borrowed money outstanding on the date hereof and listed on Schedule 1 hereto.
Such indebtedness of Maker to which this Note is subordinate and junior is
referred to as "Senior Debt."
(i) Upon maturity of any Senior Debt by lapse of time, acceleration
or otherwise, then all principal of, premium, if any, and interest on, all
such matured Senior Debt shall first be paid in full before any payment on
account of principal or interest is made upon this Note.
(ii) In the event of any insolvency, bankruptcy, liquidation,
reorganization or other similar proceeding, or any receivership proceedings
in connection therewith, relative to Maker or its creditors or its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of Maker, whether or not involving
insolvency or bankruptcy proceedings, then all principal and interest due
on Senior Debt shall first be paid in full, or such payment shall have been
provided for, before any payment on account of principal or interest is
made upon this Note. In any of the proceedings referred to in the first
sentence of this clause (ii), any payment or distribution of any kind or
character, whether in cash, property, stock or obligations, which may be
payable or deliverable in respect of this Note shall be paid or delivered
directly to the holders of Senior Debt (or to a banking institution
selected by the court or person making the payment or delivery or
designated by any holder of Senior Debt) for application in payment
thereof, unless and until all principal and interest on all Senior Debt
shall have been paid in full, or such payment shall have been provided for;
provided, however, that:
(a) in the event that payment or delivery of such cash,
property, stock or obligations to the Holder is authorized by an order
or decree giving effect, and stating in such order or decree that
effect is given, to the subordination of this Note to Senior Debt, and
made by a court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy or reorganization law, no
payment or delivery of such cash, property, stock or obligations
payable or deliverable with respect to this Note shall be made to the
holders of Senior Debt; and
(b) no such delivery shall be made to holders of Senior Debt of
stock or obligations which are issued pursuant to reorganization
proceedings or dissolution or liquidation proceedings, or upon any
merger, consolidation, sale, lease, transfer or other disposal by
Maker, as reorganized, or by the corporation succeeding to Maker or
acquiring its property and assets, if
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such stock or obligations are subordinate and junior at least to the
extent provided in this paragraph to the payment of all Senior Debt
then outstanding and to the payment of any stock or obligations which
are issued in exchange or substitution for any Senior Debt then
outstanding.
(iii) Maker shall not make any payment of principal or interest on
this Note during the continuance of any default in the payment of principal
of or interest on any Senior Debt.
(iv) The provisions of this paragraph are for the purpose of
defining the relative rights of the holders of Senior Debt, on the one
hand, and Holder, on the other hand, and as between Maker and the Holder,
nothing herein shall impair the obligation of Maker, which is unconditional
and absolute, to pay to the Holder the principal of and any interest on
this Note, in accordance with its terms, nor shall anything herein prevent
the Holder from exercising all remedies otherwise permitted by applicable
law upon default hereunder, subject to the rights, under this paragraph, of
holders of Senior Debt in respect of cash, property, stock, or other
securities received upon the exercise of such remedies.
This Note may be prepaid, at any time or from time to time, in whole
or in part, without penalty, at the option of Maker.
Upon the happening of any Default of Maker, the entire unpaid balance
of the amount owed by Maker under this Note, together with interest accrued
thereon, shall become immediately due and payable. Each of the following shall
constitute a "Default" of Maker:
(i) failure of Maker to make any payment of principal or interest when due
hereunder;
(ii) default by Maker in the performance or observance of any covenant or
agreement, or breach by Maker of any representation or warranty,
contained (x) herein, in the Security Agreement or in the Pledge
Agreement, (y) in paragraphs 8, 9, 10, 11 or 12 of the term sheet
dated June 12, 1995 between Payee and Maker relating to an acquisition
of Maker by Payee (the "Term Sheet"), or (z) in the definitive
agreement contemplated by the Term Sheet; provided that in the case of
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any default or breach under clause (y) or (z), if such default or
breach is reasonably capable of cure by Maker, then such default or
breach shall not be a Default hereunder
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unless such default or breach has not been cured by 12:00 noon, New
York City time, on the tenth business day after written notice of such
default or breach is provided by Holder to Maker in the manner
specified below;
(iii) any default by Maker in respect of any obligation to pay principal
under, or any acceleration of any right to payment under, any Senior
Debt.
(iv) Maker purporting to assign any of its obligations under this Note to
any person or entity without the prior written consent of Holder;
(v) Maker (a) admits in writing its inability generally to pay its debts
as they become due; (b) files a petition commencing a voluntary case
concerning it under any Chapter of Title 11 of the United States Code
entitled "Bankruptcy" ("Title 11"); (c) petitions or applies to any
tribunal for the appointment of any receiver, liquidator or trustee of
or for it or any substantial part of its property or assets; or (d)
commences any proceeding relating to it under any other bankruptcy,
reorganization, arrangement, readjustment or debt, receivership,
dissolution, liquidation or similar law or statute of any jurisdiction
(domestic or foreign), whether now or hereafter in effect, or any
other procedure for the relief of financially distressed debtors;
(vi) commencement against Maker of an involuntary case under Title 11 and
an order for relief under Title 11 is entered or the petition is
controverted but is not dismissed within 60 days after the
commencement of the case; or
(vii) commencement against Maker of any proceeding under any other
applicable federal or state bankruptcy, insolvency or other similar
law seeking the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, agent or custodian (or other similar official)
of it or any substantial part of its property, and relief against it
is ordered in such proceeding or such proceeding remains undismissed
for a period of 60 days or more.
In the event an attorney at law or other agent is retained for
collection of this Note after any Default of Maker, in addition to principal and
interest, Holder shall be entitled to collect all reasonable costs of
collection, including but not limited to, reasonable attorneys' fees and
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costs, incurred in connection with any of Holder's collection efforts, whether
or not suit on this Note is filed, and all such costs and expenses shall be
payable by Maker on demand and also shall be secured by all other collateral at
any time held by Holder as security for Maker's obligations to Holder.
No failure on the part of Holder to exercise any right or remedy
hereunder with respect to Maker, whether before or after the happening of a
Default, shall constitute waiver of any future Default or any other Default. No
failure to accelerate the debt of Maker evidenced hereby by reason of a Default
or indulgence granted from time to time shall be construed to be a waiver of the
right to insist upon prompt payment thereafter, or shall be deemed to be a
novation of this Note or a reinstatement of the debt evidenced hereby or a
waiver of such right of acceleration or any other right, or be construed so as
to preclude the exercise of any right Holder may have, whether by the laws of
the state governing this Note, by agreement or otherwise; and Maker hereby
expressly waives the benefit of any statute or rule of law or equity that would
produce a result contrary to or in conflict with the foregoing. This Note may
not be modified orally, but only by an agreement in writing signed by the party
against whom such agreement is sought to be enforced.
Any notice provided to Maker hereunder shall be sent (and shall be
deemed given on the date sent) by facsimile (and confirmed by mailing by first
class mail) as follows:
Integrated Medical Systems, Inc.
15000 West 6th Avenue, Suite 400
Golden, Colorado 80401
Fax No.: (303) 271-7998
or to such other facsimile number and address as Maker shall provide in writing
to Holder for purposes of notices hereunder.
This Note is binding upon Maker's successors and permitted assigns,
shall inure to the benefit of Holder, its successors and assigns and shall be
governed by and construed in accordance with laws of the State of New York.
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IN WITNESS WHEREOF, Maker has executed this Note on the date first
above written.
INTEGRATED MEDICAL SYSTEMS, INC.
/s/ Charles I. Brown
-----------------------------
Name: Charles I. Brown
Title: Executive Vice President and
Chief Financial Officer
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Schedule 1
to
Promissory Note
Senior Debt
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Creditor Amount
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First National Bank of Wyoming $1,000,000
Prime Leasing Corporation 120,013
CHCN Partners 30,112
NEC/XEROX (Long Term Debt) 135,404
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