EXHIBIT 99.3
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UNCONDITIONAL GUARANTY
THIS UNCONDITIONAL GUARANTY ("Guaranty") is executed as of the
____ day of February, 2001, by DYNAGEN, INC. ("DynaGen" or "Guarantor"), a
Delaware corporation, in favor of ARGOSY INVESTMENT PARTNERS, L.P. ("Argosy"), a
Pennsylvania limited partnership formerly known as Odyssey Investment Partners,
L.P., and FINOVA MEZZANINE CAPITAL INC. ("FINOVA"), a Tennessee corporation
formerly known as SIRROM Capital Corporation, in its individual capacity and as
Collateral Agent for FINOVA and Argosy (in this capacity, "Agent"; Argosy and
FINOVA are sometimes referred to collectively as "Lender").
RECITALS:
WHEREAS, DynaGen, FINOVA (then known as Sirrom Capital
Corporation) and Argosy (then known as Odyssey Investment Partners, L.P.)
entered into that Loan Agreement dated as of June 18, 1997 (the "1997 Loan
Agreement"), pursuant to which DynaGen borrowed from FINOVA the principal sum of
$2,000,000 and from Argosy the principal sum of $1,000,000 (collectively the
"1997 Loans"); and
WHEREAS, DynaGen has granted a security interest to secure its
obligations to Lender pursuant to that Security Agreement executed by DynaGen
dated as of June 18, 1997 (the "DynaGen Security Agreement") and has granted a
security interest in its stock of Superior Pharmaceutical Company ("Superior"),
an Ohio corporation, to secure such obligations by that Pledge and Security
Agreement dated as of June 18, 1997 (the "DynaGen Pledge Agreement"); and
WHEREAS, DynaGen has agreed to sell to XxXxxxxx.xxx, Inc.
("RxBazaar" or "Borrower"), a Delaware corporation, all of DynaGen's stock in
Superior, and in exchange RxBazaar has agreed to assume liability for the 1997
Loans, as evidenced by that First Amended and Restated Loan Agreement (the "Loan
Agreement") dated as of the date hereof among DynaGen, RxBazaar, Superior,
FINOVA and Argosy; and
WHEREAS, FINOVA and Argosy have agreed to consent to the
proposed sale of the stock of Superior on various terms and conditions
including, but not limited to, the requirement that RxBazaar's assumption of the
1997 Loans is made without the release of DynaGen as an obligor therefore, and
DynaGen shall thus remain liable for the 1997 Loans as an unreleased party and
guarantor, and further that such sale be made without the release of the DynaGen
Security Agreement, the DynaGen Pledge Agreement or any other collateral that
now secures the obligations of DynaGen to Lenders; and
NOW, THEREFORE, as an inducement to cause Lender to permit the
sale of the stock of Superior to RxBazaar, and for other valuable consideration,
the receipt and sufficiency of which are acknowledged, it is agreed as follows:
1. Definition of Guaranteed Obligations. As used in this Guaranty, the
"Guaranteed Obligations" shall mean the obligations of Borrower evidenced by (i)
that First Amended and Restated Secured Promissory Note of even date herewith
made by Borrower payable to the order of FINOVA in the principal amount of
$1,500,000, (ii) that First Amended and Restated Secured Promissory Note of even
date herewith made by Borrower payable to the order of Argosy in the
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principal amount of $750,000, (iii) the Loan Agreement, and (iv) all
modifications, extensions and renewals of the foregoing; provided, however,
Guarantor shall not be liable for any new advances of principal made to RxBazaar
after the date hereof (other than expenses incurred in enforcing the rights of
the Lenders under the Loan Agreement or of interest on the "Obligations," as
defined in the Loan Agreement, as may be added to the principal amount
outstanding from time to time, which shall be secured hereby); provided,
however, that Guarantor shall not be liable for the increased costs resulting
from any modification or amendment of the Loan Agreement or the Notes to which
Guarantor does not consent in writing.
2. Guaranty of Payment. Guarantor hereby guarantees to Lender the
timely payment and performance of the Guaranteed Obligations, without setoff.
Guarantor hereby agrees that if the Guaranteed Obligations are not timely paid
and/or performed, as the case may be, in accordance with the terms thereof,
Guarantor will immediately pay and/or perform such Guaranteed Obligations.
3. The occurrence of an Event of Default under that Credit Agreement
executed by Guarantor and Lenders dated as of the date hereof shall constitute a
"Guaranty Event of Default." Upon the occurrence of a Guaranty Event of Default,
even if no default or Event of Default then exists under the Loan Agreement,
Lender may declare the Guaranteed Obligations to be due in full from Guarantor
and pursue remedies against Guarantor for the collection of the Guaranteed
Obligations by recovery against collateral or by any other means and apply those
collections to the Guaranteed Obligations in the inverse order of their
maturity. A Guaranty Event of Default shall not in itself cause an Event of
Default under the Loan Agreement, and Guarantor acknowledges that Lender may
have the right to collect the Guaranteed Obligations from Guarantor at a time
that Lender does not have the present right to accelerate against or collect
from Borrower.
4. Reaffirmation of Security. Guarantor reaffirms and agrees that the
DynaGen Security Agreement, the DynaGen Pledge Agreement and all other
collateral that, prior to the execution of this Guaranty, secured the
obligations of Guarantor arising under the 1997 Loan Agreement, remain in full
effect to secure the obligations of Guarantor hereunder and to secure the
"Obligations," as defined in the Loan Agreement, being the same obligations
formerly owed directly by DynaGen and having been assumed by RxBazaar as set
forth in the Loan Agreement.
5. Guaranty Unconditional. Guarantor's guarantee of the Guaranteed
Obligations is absolute and unconditional. The validity of this Guaranty shall
not be impaired by any event whatsoever, including, but not limited to, the
merger, consolidation, dissolution, cessation of business or liquidation of
Borrower; the financial decline or bankruptcy of Borrower; the failure of any
other party to guarantee the Guaranteed Obligations or to provide collateral
therefor; Lender's compromise or settlement with or without release of any other
party liable for the Guaranteed Obligations; Lender's release of any collateral
for the Guaranteed Obligations; Lender's failure to file suit against Borrower
(regardless of whether Borrower is becoming insolvent, is believed to be about
to leave the state or any other circumstance); Lender's failure to give
Guarantor notice of default by Borrower; the unenforceability of the Guaranteed
Obligations against Borrower, due to bankruptcy discharge, counterclaim or
otherwise; Lender's acceleration of the Guaranteed Obligations at any time; the
extension, modification or renewal of the Guaranteed Obligations; Lender's
failure to exercise diligence in collection; the termination of any relationship
of Guarantor with Borrower, including, but not limited to, any relationship of
employment, ownership or commerce; Borrower's change of name or use of any name
other than
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the name used to identify Borrower in this Guaranty; or Borrower's use of the
credit extended for any purpose whatsoever. Guarantor agrees that this Guaranty
shall be valid and binding upon Guarantor upon the delivery of this executed
Guaranty to Lender by any party whomsoever.
6. Guaranty Irrevocable. Guarantor's guarantee of the Guaranteed
Obligations is irrevocable.
7. Primary Liability of Guarantor. This Guaranty constitutes a
guarantee of payment and performance and not of collection. Accordingly, Lender
may enforce this Guaranty against Guarantor without first making demand upon or
instituting collection proceedings against Borrower. Guarantor's liability for
the Guaranteed Obligations is hereby declared to be primary, and not secondary,
and Guarantor may be called upon hereunder to make any payment when due under
the Guaranteed Obligations irrespective of the existence of any default
thereunder.
8. Bankruptcy of Borrower. If proceedings are instituted by Borrower
under any state insolvency law or under any federal bankruptcy law, or if such
proceedings are instituted against Borrower, Lender may, at its option, without
notice, notwithstanding any limitation on Lender's ability to use such
proceedings as the basis of a default against Borrower, declare all the
Guaranteed Obligations presently due and payable by Guarantor.
9. No Marshalling of Assets. Lender may proceed against any collateral
securing the Guaranteed Obligations and against parties liable therefor in such
order as it may elect, and Guarantor shall not be entitled to require Lender to
xxxxxxxx assets. The benefit of any rule of law or equity to the contrary is
hereby expressly waived.
10. Impairment of Collateral; Release of Liable Parties. Lender may, in
its sole discretion and with or without consideration, release any collateral
securing the Guaranteed Obligations or release any party liable therefor. The
defenses of impairment of collateral and impairment of recourse and any
requirement of diligence on Lender's part in collecting the Guaranteed
Obligations are hereby waived.
11. Amendment of Guaranteed Obligations. Lender may, without notice to
or the joinder of Guarantor and without affecting Guarantor's liability
hereunder, modify, extend, accelerate, reinstate, refinance, or renew the
Guaranteed Obligations (with or without the execution of new Promissory Notes)
and grant any consent or indulgence with respect thereto.
12. Waivers of Notice. Guarantor hereby waives any requirement of
presentment, protest, notice of dishonor, notice of default, demand, and all
other actions or notices that may be required on Lender's part in connection
with the Guaranteed Obligations.
13. Subordination. Guarantor agrees that any existing or future loan
made by Guarantor to Borrower and any other existing or future obligation of
Borrower to Guarantor shall be subordinate to the Guaranteed Obligations as to
both payment and collection. Accordingly, Guarantor agrees not to accept any
payment whatsoever from Borrower or to allow any payment by Borrower on
Guarantor's behalf until this Guaranty has been terminated in full. This section
shall not be construed to prohibit the issuance of shares of capital stock by
RxBazaar to Guarantor in respect of any convertible or derivative securities of
RxBazaar held by Guarantor, including without limitation any shares of Series A
Preferred Stock of RxBazaar that may be held by Guarantor from time to time.
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14. Deferral of Subrogation of Guarantor. Guarantor shall not be
subrogated to any rights of Lender against Borrower or be entitled to any
reimbursement or payment from Borrower until the Guaranteed Obligations have
been paid in full. Without limiting the foregoing, if Lender receives any
payments from Guarantor or recovers funds from the exercise of remedies against
any of Guarantor's property on account of a Guaranty Default, Guarantor shall
have no right of indemnity, exoneration, subrogation, or other right of payment
or action until and unless the Guaranteed Obligations are first paid in full.
15. Application of Funds. Lender may apply payments received for
Borrower's account first to pay any indebtedness of Borrower that is not
guaranteed by Guarantor, if any, before reducing the Guaranteed Obligations.
16. Statute of Limitations. Guarantor acknowledges that the statute of
limitation applicable to this Guaranty shall begin to run only upon Lender's
accrual of a cause of action against Guarantor hereunder caused by Guarantor's
refusal to honor a demand for performance hereunder made by Lender in writing;
provided, however, if, subsequent to the demand upon Guarantor, Lender reaches
an agreement with Borrower on any terms causing Lender to forbear in the
enforcement of its demand upon Guarantor, the statute of limitation shall be
reinstated for its full duration until Lender subsequently again makes demand
upon Guarantor.
17. Cancellation by Lender. Lender may evidence its cancellation of
this Guaranty and the release of Guarantor from liability hereunder by
delivering to Guarantor an instrument of release, or by delivering this Guaranty
to Guarantor, or both. Unless Lender delivers this original Guaranty to
Guarantor with a notation on its face signed and dated by an authorized officer
of Lender stating "Cancelled in Full As To All Guaranteed Obligations," however,
the purported cancellation hereof and release of Guarantor shall not impair
Guarantor's continuing liability for (i) any amount of principal, interest, or
expenses that was mistakenly omitted by Lender in calculating the final payment
due under the Guaranteed Obligations, if the release of Guarantor was based upon
Lender's belief that it had been paid in full; (ii) any surviving liability of
Borrower to reimburse Lender for expenses or to indemnify Lender provided for in
any document executed prior to the purported cancellation hereof evidencing or
securing the Guaranteed Obligations; and (iii) liability for avoided payments
and expenses related thereto (as provided in detail below). Lender shall not be
obligated to release any collateral securing this Guaranty until after all
applicable time periods have expired regarding bankruptcy preference or other
avoidance actions that may be applicable to the circumstances of payment of any
or all of the Guaranteed Obligations.
18. Recovery of Avoided Payments. If any amount applied by Lender to
the Guaranteed Obligations is subsequently challenged by a bankruptcy trustee or
debtor-in-possession as an avoidable transfer on the grounds that the payment
constituted a preferential payment or a fraudulent conveyance under state law or
the Bankruptcy Code or any successor statute thereto or on any other grounds,
Lender may, at its option and in its sole discretion, elect whether to contest
such challenge. If Lender contests the avoidance action, all costs of the
proceeding, including Lender's attorneys fees, will become part of the
Guaranteed Obligations. If the contested amount is successfully avoided, the
avoided amount will become part of the Guaranteed Obligations hereunder. If
Lender elects not to contest the avoidance action, Lender may tender the amount
subject to the avoidance action to the bankruptcy court, trustee or
debtor-in-possession and the amount so advanced shall become part of the
Guaranteed
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Obligations hereunder. Guarantor's obligation to reimburse Lender for amounts
due under this paragraph shall survive the purported cancellation hereof except
as otherwise provided above.
19. Solvency of Guarantor. Guarantor warrants to Lender that Guarantor
is not insolvent and that Guarantor's execution hereof does not render Guarantor
insolvent.
20. Security Interest; Setoff. In order to further secure the payment
of the Guaranteed Obligations, Guarantor hereby grants to Lender a security
interest and right of setoff against all of Guarantor's presently owned or
hereafter acquired monies, items, credits, deposits and instruments (including
certificates of deposit) presently or hereafter in the possession of Lender. By
maintaining any such accounts or other property at Lender, Guarantor
acknowledges that Guarantor voluntarily subjects the property to Lender's rights
hereunder.
21. Recitals. Guarantor warrants and agrees that the recitals set forth
at the beginning of this Guaranty are true.
22. No Burdensome Agreements. Guarantor warrants that the execution and
performance of this Guaranty will not cause a default under any other contract
or agreement to which Guarantor or any property of Guarantor is subject.
23. Legal and Binding Agreement. Guarantor warrants that the execution
and performance of this Guaranty will not violate any judicial or administrative
order or governmental law or regulation, and that this Guaranty is valid and
binding in every respect according to its terms.
24. No Consent Required. Guarantor warrants that Guarantor's execution
and performance of this Guaranty do not require the consent of or the giving of
notice to any third party including, but not limited to, any other lender,
governmental body or regulatory authority.
25. Consent to Jurisdiction and Venue. Guarantor hereby irrevocably
consents to the jurisdiction of the United States District Court for the Middle
District of Tennessee and of all Tennessee state courts sitting in Davidson
County, Tennessee, for the purpose of any litigation to which Lender may be a
party and which concerns this Guaranty or the Guaranteed Obligations. It is
further agreed that venue for any such action shall lie exclusively with courts
sitting in Davidson County, Tennessee, unless Lender agrees to the contrary in
writing.
26. Not Partners; No Third Party Beneficiaries. Nothing contained
herein or in any related document shall be deemed to render Lender a partner of
Borrower or Guarantor for any purpose. This Guaranty and any documents securing
the Guaranteed Obligations has been executed for the sole benefit of Lender as
an inducement to cause it to extend credit to Borrower, and neither Guarantor
nor any other third party is authorized to rely upon Lender's rights hereunder
or to rely upon an assumption that Lender has or will exercise its rights under
any document.
27. Costs of Collection Against Guarantor. Guarantor agrees to pay all
costs of collection, including, without limitation, court costs, attorney's fees
and compensation for time spent by Lender's employees, that Lender may incur in
enforcing the terms of this Guaranty against Guarantor.
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28. Notices. Any communications concerning this Guaranty or the credit
described herein shall be addressed as provided in the Loan Agreement.
29. Indulgence Not Waiver. Lender's indulgence in the existence of a
default under the Guaranteed Obligations or any departure from the terms of this
Guaranty or any other document shall not prejudice Lender's rights to make
demand and recover from Guarantor in accordance with this Guaranty.
30. Cumulative Remedies. The remedies provided Lender in this Guaranty
are not exclusive of any other remedies that may be available to Lender under
any other document or at law or equity.
31. Amendment and Waiver in Writing. No provision of this Guaranty can
be amended or waived, except by a statement in writing signed by the party
against which enforcement of the amendment or waiver is sought.
32. Assignment. This guaranty shall be binding upon heirs, successors
and assigns of Guarantor and Lender, except that Guarantor shall not assign any
rights or delegate any obligations arising hereunder without the prior written
consent of Lender. Any attempted assignment or delegation by Guarantor without
the required prior consent shall be void.
33. Severability. Should any provision of this Guaranty be invalid or
unenforceable for any reason, the remaining provisions hereof shall remain in
full effect.
34. Applicable Law. The validity, construction and enforcement of this
Guaranty and all other documents executed with respect to the Guaranteed
Obligations shall be determined according to the laws of Tennessee, in which
state this Guaranty has been executed and delivered.
35. Gender and Number. Words used herein indicating gender or number
shall be read as context may require.
36. Captions Not Controlling. Captions and headings have been included
in this Guaranty for the convenience of the parties, and shall not be construed
as affecting the content of the respective paragraphs.
37. Entire Agreement; No Oral Representations Limiting Enforcement.
This Guaranty represents the entire agreement between the parties concerning the
liability of Guarantor for the Guaranteed Obligations, and any oral statements
regarding Guarantor's liability for the Guaranteed Obligations are merged
herein. Without limiting the foregoing, Guarantor acknowledges Lender's
intention to enforce this Guaranty to the fullest extent possible and Guarantor
acknowledges that Lender has made no oral statements to Guarantor that could be
construed as a waiver of Lender's right to enforce this Guaranty by all
available legal means.
38. Agent. The rights and remedies of FINOVA and Argosy hereunder may
be enforced only by FINOVA in its capacity as Agent pursuant to that Collateral
Agent Agreement between them dated as of June 18, 1997.
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39. Waiver of Jury Trial. Guarantor and, by their acceptance hereof,
FINOVA and Argosy, hereby knowingly, voluntarily and with benefit of counsel
waive any right to trial by jury in any dispute arising from or related to this
Guaranty or the Guaranteed Obligations, with the result that all matters of fact
and law in any such dispute will be tried by a judge sitting without a jury.
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Executed as of the date first written above.
THE UNDERSIGNED ACKNOWLEDGES A THOROUGH
UNDERSTANDING OF THE TERMS OF THIS
GUARANTY AND AGREES TO BE BOUND THEREBY:
DYNAGEN, INC.
By:
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Title:
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[Signature Page to Unconditional Guaranty]
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