EXHIBIT 99.4
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") dated as of the ____ day of
February, 2001, is made and entered into by and among DYNAGEN, INC. ("DynaGen"),
a Delaware corporation; 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 referred to collectively as "Lenders").
RECITALS:
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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, as amended by that Amendment and Agreement
dated as of November 29, 1999 (as amended, 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 agreed to sell to XxXxxxxx.xxx ("RxBazaar"), a
Delaware corporation, all of DynaGen's stock in Superior Pharmaceutical Company
("Superior"), an Ohio corporation, and in exchange RxBazaar has agreed to assume
liability for the 1997 Loans; and
WHEREAS, Lenders 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 therefor; and
WHEREAS, DynaGen, RxBazaar, Superior and Lenders have agreed to amend
and restate the 1997 Loan Agreement to evidence the assumption of liability for
the 1997 Loans by RxBazaar and to reflect other agreements among them, as
evidenced by that First Amended and Restated Loan Agreement (the "FAR Loan
Agreement") dated as of the date hereof; and
WHEREAS, pursuant to the FAR Loan Agreement, DynaGen has executed that
Unconditional Guaranty (the "DynaGen Guaranty") dated as of the date hereof
whereby DynaGen acknowledges its continuing liability for the "Obligations," as
defined in the FAR Loan Agreement; and
WHEREAS, as of the date hereof, DynaGen has issued its Secured
Promissory Note to FINOVA in the original principal amount of $500,000 and has
issued its Secured Promissory Note to Argosy in the amount of $250,000
(collectively the "Put Notes") in settlement of certain put obligations under
stock purchase warrants issued by DynaGen in connection with the 1997 Loan
Agreement; and
WHEREAS, the parties wish to establish certain representations,
warranties, covenants and other agreements that apply to their continuing
relationships;
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, DynaGen (hereafter
sometimes "Borrower") and Lenders hereby agree as follows:
ARTICLE 1
PRESENT RELATIONSHIPS; THE OBLIGATIONS
1.1 Exercise of Put Rights; Conversion and Cancellation of Warrants.
The Stock Purchase Warrants dated as of June 18, 1997 issued in favor of Lenders
respecting the purchase of common stock of DynaGen (the "DynaGen Warrants")
contained a feature by which the holders thereof are entitled either to put the
warrants to DynaGen for a cash payment or to substitute the warrants for stock
purchase warrants to purchase common stock of Superior, which substitute
warrants were also executed and dated as of June 18, 1997 (the "Superior
Warrants"). The put rights of the DynaGen Warrants have been exercised by FINOVA
and Argosy. Concurrently with the effectiveness of this Agreement, DynaGen is
making payments on these put obligations in the amount of $200,000 to FINOVA and
in the amount of $100,000 to Argosy. DynaGen shall also make additional payments
as provided in the Put Notes. In consideration of these payments and the
issuance of the Put Notes, the DynaGen Warrants and the Superior Warrants are
hereby canceled and shall be of no further force or effect.
1.2 Issuance of Additional Warrants. Concurrently with the
effectiveness of this Agreement, as additional consideration for the execution
of this Agreement by FINOVA and Argosy, DynaGen is issuing to FINOVA a
Contingent Stock Purchase Warrant for the purchase of 1,666,667 shares of
DynaGen's common stock at a purchase price of $0.01 per share and is issuing to
Argosy a Contingent Stock Purchase Warrant to purchase 833,333 shares of common
stock at a purchase price of $0.01 per share (collectively the "Contingent
Warrants").
1.3 The 1997 Loans. DynaGen has executed the DynaGen Guaranty as
additional consideration for the Lenders' agreement to allow the assumption of
the 1997 Loans, which are outstanding in the total present principal amount of
$2,250,000. The 1997 Loans are convertible into common stock of Dynagen or
RxBazaar as provided in the FAR Loan Agreement.
1.4 Series L Preferred Stock. The Lenders are holders of certain shares
of DynaGen's Series L Preferred Stock, which stock is convertible into common
stock that DynaGen had previously agreed to register for public sale pursuant to
the Securities Act of 1933 (the "Securities Act"). DynaGen warrants and
represents that it has accomplished the registration of common stock into which
the Series L Preferred Stock may be converted and that the registration
statement remains in effect and shall be maintained in effect for as long as is
reasonable to allow the conversion of the Series L Preferred Stock and the
public sale of the resulting common stock, and in any event at least 180 days
after the date hereof.
1.5 Definition of Obligations. As used in this Agreement, the
"Obligations" means all of (i) the indebtedness and obligations of DynaGen
arising under the Put Notes, (ii) the obligations of DynaGen arising under the
Contingent Warrants, (iii) the obligations of DynaGen
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arising under the DynaGen Guaranty, (iv) the other obligations of DynaGen under
this Agreement, (v) all obligations of DynaGen and its subsidiaries under all
other documents now or hereafter evidencing or securing the foregoing
obligations, and (vi) all obligations of DynaGen or its subsidiaries under any
modifications, extensions, renewals, amendments, extensions and restatements of
the foregoing (all documents within the scope of this sentence are referred to
collectively as the "Loan Documents").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Borrower's Representations. Borrower hereby represents and warrants
to Lenders as follows, except as disclosed in any schedule hereto. The
disclosures in any schedule hereto shall qualify every other section of this
Agreement to the extent it is reasonably clear from a reading of such schedule
that the disclosures contained therein are applicable to such other sections.
(a) Corporate Status. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; and has the corporate power to own and operate its
properties, to carry on its business as now conducted and to enter into
and to perform its obligations under this Agreement and the other Loan
Documents to which it is a party. Borrower is duly qualified to do
business and is in good standing in the Commonwealth of Massachusetts
and every other state in which a failure to be so qualified and in good
standing would have a material adverse effect on Borrower's financial
position or its ability to conduct its business in the manner now
conducted.
(b) Other Business Organizations. Schedule 2.1(b) hereto is a
complete list of each corporation, partnership, joint venture or other
business organization (any such corporation, partnership, joint venture
or other business organization in which Borrower holds more than a 50%
interest is referred to herein as a "Subsidiary" or, with respect to
all such organizations, the "Subsidiaries") in which Borrower or any
Subsidiary owns, directly or indirectly, any capital stock or other
equity interest, or with respect to which Borrower or any Subsidiary,
alone or in combination with others, is in a control position, which
list shows the jurisdiction of incorporation or other organization and
the percentage of stock or other equity interest of each Subsidiary
owned by Borrower. Each Subsidiary which is a corporation is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing in the
jurisdictions listed in Schedule 2.1(b), which are the only
jurisdictions where the properties owned or leased or the business
transacted by it makes such licensing or qualification to do business
as a foreign corporation necessary, and no other jurisdiction has
demanded, requested or otherwise indicated that (or inquired whether)
it is required so to qualify. Each Subsidiary which is not a
corporation is duly organized and validly existing under the laws of
the jurisdiction of its organization. The outstanding capital stock of
each Subsidiary which is a corporation is validly issued, fully paid
and nonassessable. Borrower and the Subsidiaries have good and valid
title to the equity interests in the Subsidiaries shown as owned by
each of them on Schedule 2.1(b), free and clear of all
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liens, claims, charges, restrictions, security interests, equities,
proxies, pledges or encumbrances of any kind, except as set forth on
Schedule 2.1(b). Except where otherwise indicated herein, any reference
to Borrower in this Agreement shall include Borrower and all of its
Subsidiaries.
(c) Authorization. Borrower has full legal right, power and
authority to conduct its business and affairs. Borrower has full legal
right, power and authority to enter into and perform its respective
obligations under the Loan Documents to which each is a party, without
the consent or approval of any other person, firm, governmental agency
or other legal entity, except as set forth on Schedule 2.1(c). The
execution and delivery of this Agreement, the borrowing hereunder, the
execution and delivery of each Loan Document to which Borrower is a
party, and the performance by Borrower of its respective obligations
thereunder are within the corporate powers of Borrower and have been
duly authorized by all necessary corporate action properly taken, have
received all necessary governmental approvals, if any were required,
and do not and will not contravene or conflict with any provision of
law, any applicable judgment, ordinance, regulation or order of any
court or governmental agency, the articles of incorporation or bylaws
of Borrower, or any agreement binding upon Borrower. The officer(s)
executing this Agreement, the Put Notes and all of the other Loan
Documents to which Borrower is a party are duly authorized to act on
behalf of Borrower.
(d) Validity and Binding Effect. This Agreement and the other
Loan Documents to which the Borrower is a party are the legal, valid
and binding obligations of Borrower, and are enforceable in accordance
with their respective terms, subject only to limitations imposed by
bankruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors generally or the application of general equitable
principles.
(e) Capitalization. Set forth in Schedule 2.1(e) is a
capitalization table listing the authorized shares of stock of DynaGen,
by class and series; the outstanding shares thereof, by class and
series; the number of shares reserved for future issuance, by class and
series and with notation of the purpose of the reservation(s); a
summary of the conversion rights of any class or series; and a list of
and summary description of all warrants, options and other contractual
obligations for the issuance of stock of any class or series.
(f) Trademarks, Patents, Etc. Schedule 2.1(f) is an accurate
and complete list of all patents, patent applications, trademarks,
trademark registrations, trademark applications, service marks, service
xxxx registrations, service xxxx applications, trade names, service
names, copyrights, patents, trademark and/or know-how licenses owned or
granted to or by Borrower or which are used or required by Borrower in
the operation of its business, title to each of which is, except as set
forth in Schedule 2.1(f) hereto, held by Borrower free and clear of all
adverse claims, liens, security agreements, restrictions or other
encumbrances. There is no infringement action, lawsuit, claim or
complaint which asserts that any patent, trademark, service xxxx,
copyright owned or licensed by or to Borrower or any of Borrower's
products, processes, know-how or operations violate or infringe the
patents, trademarks, trade names, service names, or copyrights of
others, nor,
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to the best of Borrower's knowledge, is Borrower in any way making use
of any confidential information or trade secrets of any person except
with the consent of such person.
(g) No Conflicts. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower under
and pursuant to the Loan Documents to which each is a party will not
result in any breach of, or constitute a default under, any mortgage,
security deed or agreement, deed of trust, lease, bank loan or credit
agreement, articles of incorporation or bylaws, material contract,
license, franchise or any other material instrument or material
agreement to which Borrower is a party or by which Borrower, or its
respective properties may be bound or affected as to which Borrower has
not obtained an effective and irrevocable waiver.
(h) Litigation. Except as set forth on Schedule 2.1(h), there
are no actions, suits, proceedings or arbitrations pending, or, to the
knowledge of Borrower, threatened, against or affecting Borrower
required to be disclosed in Borrower's filings with the Securities and
Exchange Commission, including the Borrower's Annual Report on Form
10-KSB for the year ended December 31, 1999 and the Borrower's
quarterly reports on Form 10-QSB for each of the quarters ended March
31, 2000, June 30, 2000 and September 30, 2000 (the "Borrower SEC
Documents") or involving the validity or enforceability of any of the
Loan Documents at law or in equity, or before any governmental or
administrative agency required to be disclosed in the Borrower SEC
Documents; and to Borrower's knowledge, Borrower is not in default with
respect to any order, writ, injunction, decree or demand of any court
or any governmental authority.
(i) Financial Statements. The financial statements of
Borrower, for the fiscal year ended December 31, 1999 contained in
Borrower's Annual Report on Form 10-K for the year ended December 31,
1999 are true and correct in all material respects have been prepared
on the basis of generally accepted accounting principles consistently
applied, and fairly present the financial condition of Borrower as of
the fiscal year then ended. No material adverse change has occurred in
the financial condition of Borrower since the date(s) thereof, and no
additional borrowings have been made by Borrower since the date(s)
thereof other than as set forth on Schedule 2.1(i)(B).
(j) Other Agreements; No Defaults. Borrower is not a party to
any indentures, loan or credit agreements, leases or other agreements
or instruments, or subject to any restrictions contained in their
respective articles of incorporation, bylaws or corporate restrictions
that could have a material adverse effect on the business, properties,
assets, operations or conditions, financial or otherwise, of Borrower,
or the ability of Borrower to carry out its obligations under the Loan
Documents to which it is a party. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement
or instrument material to its business to which it is a party,
including but not limited to this Agreement and the other Loan
Documents, and no other default or event has occurred and is continuing
that with notice or the passage of time or both would constitute a
default or event of default under any of same.
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(k) Compliance With Law. Borrower has obtained all material
licenses, permits and approvals and authorizations necessary or
required in order to conduct its business and affairs as heretofore
conducted and as hereafter intended to be conducted. To Borrower's
knowledge, Borrower is in compliance with all laws, regulations,
decrees and orders applicable to it (including but not limited to laws,
regulations, decrees and orders relating to environmental, occupational
and health standards and controls, antitrust, monopoly, restraint of
trade or unfair competition), except to the extent that noncompliance,
in the aggregate, cannot reasonably be expected to have a material
adverse effect on its business, operations, property or financial
condition and will not materially adversely affect Borrower's financial
position or its ability to perform its obligations under the Loan
Documents.
(l) Debt. Schedule 2.1(l) is a complete and correct list of
all credit agreements, indentures, purchase agreements, promissory
notes and other evidences of indebtedness, guaranties, capital leases
and other instruments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements
and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which Borrower, or any of its
properties is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question that are
outstanding and that can be outstanding are correctly stated, and all
liens of any nature given or agreed to be given as security therefor
are correctly described or indicated in such Schedule.
(m) Taxes. Borrower has filed or caused to be filed all tax
returns that to Borrower's knowledge are required to be filed (except
for returns that have been appropriately extended), and has paid, or
will pay when due, all taxes shown to be due and payable on said
returns and all other taxes, impositions, assessments, fees or other
charges imposed on them by any governmental authority, agency or
instrumentality, prior to any delinquency with respect thereto (other
than taxes, impositions, assessments, fees and charges currently being
contested in good faith by appropriate proceedings, for which
appropriate amounts have been reserved). No tax liens have been filed
against Borrower, or any of the property thereof.
(n) Small Business Concern. Borrower, taken together with its
"affiliates" (as that term is defined in 13 C.F.R.ss.121.103), is a
"Small Business Concern" within the meaning of 15 U.S.C.ss.662(5), that
is Section 103(5) of the Small Business Investment Act of 1958, as
amended, and the regulations promulgated thereunder, as currently in
effect (collectively the "SBIC Act"), including 13 C.F.R.ss.107, and
meets the applicable size eligibility criteria set forth in 13
C.F.R.ss.121.301(c)(1) or the industry standard covering the industry
in which Borrower is primarily engaged as set forth in 13
C.F.R.ss.121.301(c)(2). Neither Borrower nor any of its Subsidiaries
presently engages in any activities for which a small business
investment company is prohibited from providing funds by the SBIC Act,
including 13 C.F.R.ss.107.
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(o) Certain Transactions. Except as set forth in the Borrower
SEC Documents or on Schedule 2.1(o), Borrower is not indebted, directly
or indirectly, to any of its shareholders, officers, or directors or to
their respective spouses or children, in any amount whatsoever; none of
said shareholders, officers or directors or any members of their
immediate families, are indebted to Borrower or have any direct or
indirect ownership interest in any firm or corporation with which
Borrower has a business relationship, or any firm or corporation which
competes with Borrower, except that shareholders, officers and/or
directors of Borrower may own no more than 4.9% of outstanding stock of
publicly traded companies which may compete with Borrower; no officer
or director of Borrower or any member of their immediate families, is,
directly or indirectly, interested in any material contract with
Borrower. Borrower is not a guarantor or indemnitor of any indebtedness
or other obligation of any other person, firm or corporation, except
for obligations of any Subsidiary.
(p) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrower, contained in this
Agreement or any other Loan Document, or any schedule attached hereto
or thereto, or in any statement in any document, certificate or other
instrument furnished or to be furnished by Borrower to Lender pursuant
hereto, taken as a whole, contains or will (as of the time so
furnished) contain any untrue statement of a material fact, or omits or
will (as of the time so furnished) omit to state any material fact
which is necessary in order to make the statements contained therein
not misleading.
(q) Margin Regulations. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
margin stock. No proceeds received pursuant to this Agreement will be
used to purchase or carry any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended.
(r) Significant Contracts. The exhibits to the Borrower SEC
Documents contain all material contracts as required by Item 601(10) of
Regulation S-B of the Securities Act. Each such contract, agreement and
other document is in full force and effect as of the date hereof and
Borrower knows of no reason why such contracts, agreements and other
documents would not remain in full force and effect pursuant to the
terms thereof.
(s) Environment. Borrower has duly complied with, and its
business, operations, assets, equipment, property, leaseholds or other
facilities are in compliance with, the provisions of all federal, state
and local environmental, health, and safety laws, codes and ordinances,
and all rules and regulations promulgated thereunder, except to the
extent that failure to do so would not have a material adverse effect
on its business. Except to the extent that failure to do so would not
have a material adverse effect on its business, Borrower has been
issued and will maintain all required federal, state and local permits,
licenses, certificates and approvals relating to (1) air emissions; (2)
discharges to surface water or groundwater; (3) noise emissions; (4)
solid or liquid waste disposal; (5) the use, generation, storage,
transportation or disposal of toxic or hazardous substances or wastes
(which shall include any and all such materials listed in any federal,
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state or local law, code or ordinance and all rules and regulations
promulgated thereunder as hazardous or potentially hazardous); or (6)
other environmental, health or safety matters. Borrower has not
received notice of, nor does it know of, facts which might constitute
any violations of any federal, state or local environmental, health or
safety laws, codes or ordinances, and any rules or regulations
promulgated thereunder with respect to its businesses, operations,
assets, equipment, property, leaseholds, or other facilities except to
the extent that such violations would not have a material adverse
effect on its business. Except to the extent that such emission, spill,
release or discharge would have a material adverse effect on its
business and except in accordance with a valid governmental permit,
license, certificate or approval, there has been no emission, spill,
release or discharge into or upon (1) the air; (2) soils, or any
improvements located thereon; (3) surface water or groundwater; or (4)
the sewer, septic system or waste treatment, storage or disposal system
servicing the premises, of any toxic or hazardous substances or wastes
at or from the premises; and to the best of Borrower's knowledge, the
premises of Borrower are free of all such toxic or hazardous substances
or wastes. There has been no complaint, order, directive, claim,
citation or notice by any governmental authority or any person or
entity with respect to (1) air emissions; (2) spills, releases or
discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage or
disposal systems servicing the premises; (3) noise emissions; (4) solid
or liquid waste disposal; (5) the use, generation, storage,
transportation or disposal of toxic or hazardous substances or waste;
or (6) other environmental, health or safety matters materially
affecting Borrower or its business, operations, assets, equipment,
property, leaseholds or other facilities. Borrower has no material
indebtedness, obligation or liability (absolute or contingent, matured
or not matured), with respect to the storage, treatment, cleanup or
disposal of any solid wastes, hazardous wastes or other toxic or
hazardous substances (including without limitation any such
indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup
or disposal).
(t) Fees; Commissions. Borrower has not agreed to pay any
finder's fee, commission, origination fee or other fee or charge to any
person or entity with respect to the Obligations and investment
transactions contemplated hereunder.
(u) ERISA. Borrower is in compliance in all material respects
with all applicable provisions of ERISA (as defined in Section 3.11
hereof). Neither a reportable event nor a prohibited transaction (as
defined in ERISA) has occurred and is continuing with respect to any
Plan (as defined in Section 3.11 hereof); no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds entitling the Pension
Benefit Guaranty Corporation (together with any entity succeeding to
any or all of its functions, the "PBGC") to institute proceedings to
terminate, or appoint a trustee to administer, a Plan, nor has the PBGC
instituted any such proceedings; neither Borrower nor any commonly
controlled entity (as defined in ERISA) has completely or partially
withdrawn from a multiemployer plan (as defined in ERISA); Borrower and
each commonly controlled entity has met its minimum funding
requirements under ERISA with respect to all of its Plans and the
present fair market value of all Plan property exceeds the present
value of all vested benefits under each Plan, as determined on the most
recent valuation date of the Plan and
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in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of Borrower or any
commonly controlled entity to the PBGC or the Plan under Title IV of
ERISA; and neither Borrower nor any commonly controlled entity has
incurred any liability to the PBGC under ERISA.
(v) Title to Properties. Borrower has good, indefeasible and
insurable title to, or valid leasehold interests in, all its real
properties and good title to its other assets, free and clear of all
liens other than Permitted Liens (as defined in Section 3.15 hereof).
(w) Material Adverse Effect. Since December 31, 1999, no event
has occurred which has resulted or which Borrower reasonably believes
could be expected to result in a material adverse effect on Borrower or
Borrower's ability to perform its obligations under the Loan Documents.
No default or event of default under any other agreement will occur as
a result of the transactions contemplated by this Agreement.
(x) Financial Solvency. Borrower is not entering into the
arrangements contemplated by this Agreement and the other Loan
Documents with actual intent to hinder, delay or defraud either present
or future creditors. On and as of the date hereof on a pro forma basis
after giving effect to the transactions contemplated by the Loan
Documents and to all debts incurred or to be created in connection
therewith:
(i) the present fair salable value of the assets of Borrower
(on a going concern and consolidated basis) will exceed the probable liability
of Borrower to Lenders;
(ii) Borrower has not incurred, nor does it intend to or
believe that it will incur, debts (including contingent obligations) beyond its
ability to pay such debts as such debts mature (taking into account the timing
and amounts of cash to be received from any source, and of amounts to be payable
on or in respect of debts); and the amount of cash available to Borrower after
taking into account all other anticipated uses of funds is anticipated to be
sufficient to pay all such amounts on or in respect of debts, when such amounts
are required to be paid; and
(iii) except as disclosed in the Borrower SEC Documents,
Borrower will have sufficient capital with which to conduct its present and
proposed business and the property of Borrower does not constitute unreasonably
small capital with which to conduct its current business at present levels of
operations.
For purposes of this Section 2.1(x) "debt" means any liability
on a (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such
a right to an equitable remedy is reduced to judgment, fixed,
contingent, unmatured, disputed, undisputed, secured, or unsecured.
(y) Offering of Note and Warrant. Neither Borrower nor anyone
acting on its behalf has offered the Put Notes, the Warrants or any
similar securities for sale to, or solicited any offer to buy any of
the same from, or otherwise approached or negotiated in respect
thereof, with, any person other than Lenders and not more than 35 other
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institutional investors. Neither Borrower nor anyone acting on its
behalf has taken, or will take, any action which would subject the
issuance or sale of the Put Notes, and the Warrants to Section 5 of the
Securities Act or the registration or qualification provisions of the
blue sky laws of any state.
(z) Registration Rights. Except as disclosed in the Borrower
SEC Documents and except for shares registered for sale on registration
statements filed with the SEC prior to the date hereof, Borrower is not
under any obligation to register under the Securities Act or the Trust
Indenture Act of 1939, as amended, any of its presently outstanding
securities or any of its securities that may subsequently be issued.
(aa) Employees. Borrower has no current labor problems or
disputes which have resulted or which Borrower reasonably believes
could be expected to have a material adverse effect upon Borrower.
(bb) Issuance Taxes. All taxes imposed on Borrower in
connection with the issuance, sale and delivery of the Put Notes, the
Warrants, and the Common Stock issuable upon exercise of the Warrants
have been or will be fully paid by Borrower in accordance with all laws
imposing such taxes.
(cc) List of Deposit Institutions. Schedule 2.1(ac) hereto
sets forth a true and complete list of all deposit institutions at
which Borrower has or maintains an account or deposits of any kind.
(dd) Locations and Names. Borrower has not, during the five
years preceding the date of this Agreement, been known as or used any
other corporate, trade or fictitious name, nor acquired all or
substantially all of the assets, capital stock or operating units of
any person except as described in the Borrower SEC Documents. Borrower
has not, during the five years preceding the date of this Agreement,
had a business location at any address other than addresses set forth
on Schedule 2.1(ad).
(ee) Able Laboratories, Inc. Able Laboratories, Inc. ("Able"),
a Delaware corporation, is a wholly-owned subsidiary of Borrower.
Concurrently with the execution hereof, Able shall execute an
Unconditional Guaranty of the Obligations, grant a perfected first
priority security interest in its personal property assets (except for
machinery and equipment, and subject to the terms of an intercreditor
agreement entered into by and among Lenders, the bondholders, trustee
and the "Senior Lender" as defined therein on or about the date hereof)
to secure its Guaranty. If Able has not merged into Borrower within
sixty (60) days after the date hereof, Borrower shall further grant a
first priority perfected security interest in the stock of Able to
secure the Obligations, pursuant to documents acceptable to Lenders and
at Borrower's expense.
(ff) Monroe Subsidiary, Inc. Monroe Subsidiary, Inc.
("Monroe"), a Delaware corporation formerly known as Generic
Distributions, Inc., a Delaware corporation, is a wholly-owned
subsidiary of Borrower. Borrower represents that Monroe has no assets
and no operations and shall continue to have no assets and no
operations. Monroe is a guarantor and grantor of a security interest
securing Lenders pursuant to documents dated
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as of November 29, 1999, and these documents continue in full effect to
secure the Obligations. Borrower shall within sixty (60) days after the
date hereof merge Monroe into Borrower or dissolve Monroe as to
terminate its corporate existence.
(gg) Pledged Notes. Borrower executed that Collateral
Assignment of Note dated as of June 18, 1997, granting a security
interest in certain promissory notes described therein. Borrower
warrants and represents that all of the promissory notes pledged
therein have been paid in full to Borrower, excepting only the pledged
note made by Xxxxxxxxx Xxxxxxx in the principal amount of $250,000,
which remains unpaid and subject to the Collateral Assignment of Note.
(hh) Satisfaction of Subordinated Notes. Borrower warrants and
represents that the obligations to former shareholders of Superior that
were subordinated to Borrower's obligations to FINOVA by that
Subordination Agreement dated as of June 18, 1997, have been satisfied
in accordance with their terms and are no longer outstanding.
ARTICLE 3
COVENANTS AND AGREEMENTS
Borrower covenants and agrees that during the term of this
Agreement:
3.1 Payment of Obligations. Borrower shall pay the indebtedness
evidenced by the Put Notes according to the terms thereof, and shall timely pay
or perform, as the case may be, all of the other obligations of Borrower to
Lenders, direct or contingent, however evidenced or denominated, and however and
whenever incurred, including but not limited to indebtedness incurred pursuant
to any present or future commitment of Lenders to Borrower, together with
interest thereon, and any extensions, modifications, consolidations and/or
renewals thereof and any notes given in payment thereof.
3.2 Financial Statements and Reports. Borrower shall furnish to Lenders
(a) as soon as practicable and in any event within ninety (90) days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower as
of the close of such fiscal year, a consolidated statement of earnings and
retained earnings of Borrower as of the close of such fiscal year and a
consolidated statement of cash flows for Borrower for such fiscal year, prepared
in accordance with generally accepted accounting principles consistently applied
("GAAP"), audited by an independent certified public accountant and certified by
an officer of Borrower and accompanied by a certificate of the President of
Borrower, stating that to the best of the knowledge of such officer, Borrower
has kept, observed, performed and fulfilled each covenant, term and condition of
this Agreement and the other Loan Documents during the preceding fiscal year and
that no Event of Default, as herein defined, has occurred and is continuing (or
if an Event of Default has occurred and is continuing, specifying the nature of
same, the period of existence of same and the action Borrower has taken or
proposes to take in connection therewith), (b) within twenty (20) days of the
end of each calendar month, a balance sheet of Borrower as of the close of such
month and a statement of earnings and retained earnings of Borrower as of the
close of such month, all in reasonable detail (including year-to-date financial
information), and prepared substantially in accordance with GAAP (except for the
absence of footnotes and subject to year-end adjustments), (c) within forty-five
(45) days of the end of each
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fiscal quarter, a Form 10-Q prepared in compliance with applicable securities
laws with respect to Borrower, and (d) with reasonable promptness, such other
financial data as Lender may reasonably request; provided, that Lender shall
agree to satisfactory confidentiality provisions respecting any such financial
data as Borrower may deem necessary for compliance with Borrower's obligations
including without limitation Borrower's compliance with the provisions of
Regulation F-D.
3.3 Maintenance of Books and Records; Inspection. Borrower shall
maintain its books, accounts and records in accordance with GAAP, and after
reasonable notice from Lenders, shall permit Lenders, its officers, employees
and any professionals designated by Lenders in writing, at Borrower's expense,
to visit, inspect and/or audit any of its properties, books and financial
records, and to discuss its accounts, affairs and finances with Borrower or the
principal officers of Borrower during reasonable business hours, all at such
times as Lenders may reasonably request; provided that no such visit, inspection
and/or audit shall materially interfere with the conduct of Borrower's business.
3.4 Insurance. Without limiting any of the requirements of any of the
other Loan Documents, Borrower shall maintain in amounts customary for entities
engaged in comparable business activity (a) to the extent required by applicable
law, worker's compensation insurance (or maintain a legally sufficient amount of
self insurance against worker's compensation liabilities, with adequate
reserves, under a plan approved by Lender, such approval not to be unreasonably
withheld or delayed), and (b) fire and "all risk" casualty insurance on its
properties against such hazards and in at least such amounts as are customary in
Borrower's business. Borrower will make reasonable efforts to obtain and
maintain public liability insurance in an amount, and at a cost, deemed
reasonable to the Borrower's Board of Directors. At the request of Lenders,
Borrower will deliver forthwith a certificate specifying the details of such
insurance in effect.
3.5 Taxes and Assessments. Borrower shall (a) file all tax returns and
appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (b) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (c) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (b) and (c) so long as appropriate reserves are maintained
with respect thereto.
3.6 Corporate Existence. Borrower shall maintain its corporate
existence and good standing in the state of its incorporation, and its
qualification and good standing as a foreign corporation in each jurisdiction in
which such qualification is necessary pursuant to applicable law.
3.7 Compliance with Law and Other Agreements. Except where the failure
to do so would not materially adversely affect Borrower's operations or its
ability to fulfill its obligations under the Loan Documents, Borrower shall
maintain its business, operations and property owned or used in connection
therewith in compliance with (a) all applicable federal, state and local
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laws, regulations and ordinances governing such business operations and the use
and ownership of such property, and (b) all agreements, licenses, franchises,
indentures and mortgages to which Borrower is a party or by which Borrower or
any of its properties is bound. Without limiting the foregoing, Borrower shall
pay all of its indebtedness promptly in accordance with the terms thereof.
3.8 Notice of Default. Borrower shall give written notice to Lenders of
the occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon its becoming aware of the
same.
3.9 Notice of Litigation. Borrower shall give notice, in writing, to
Lenders of (a) any actions, suits or proceedings instituted by any persons
whomsoever against Borrower, or affecting any of the assets of Borrower, wherein
the amount at issue is in excess of One Hundred Fifty Thousand and No/100ths
Dollars ($150,000.00), and (b) any dispute, not resolved within sixty (60) days
of the commencement thereof, between Borrower on the one hand and any
governmental regulatory body on the other hand, which dispute might materially
interfere with the normal operations of Borrower.
3.10 Conduct of Business, Name and Location of Business. Borrower will
continue to engage in a business of the same general type and manner as
conducted by it on the date of this Agreement and as described in the Borrower
SEC Documents. Borrower will not change its name or any location of its business
without providing Lender with 10 days' written notice of such change. In the
event Borrower makes a change of its name or location of business, Borrower
shall promptly execute any and all financing statements, and amendments or
continuations thereof and any other documents that Lenders may reasonably
request to evidence, continue, and/or perfect any security interest in or pledge
of collateral securing the Loan.
3.11 ERISA Plan. If Borrower has in effect, or hereafter institutes, a
pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
00 Xxxx. 000, 00 X.X.X.X. ss. 1001 et seq. (1975), as amended from time to time
("ERISA"), then the following warranty and covenants shall be applicable during
such period as any such plan (the "Plan") shall be in effect: (a) Borrower
hereby warrants that no fact that might constitute grounds for the involuntary
termination of the Plan, or for the appointment by the appropriate United States
District Court of a trustee to administer the Plan, exists at the time of
execution of this Agreement, (b) Borrower hereby covenants that throughout the
existence of the Plan, Borrower's contributions under the Plan will meet the
minimum funding standards required by ERISA and Borrower will not institute a
distress termination of the Plan, and (c) Borrower covenants that it will send
to Lenders a copy of any notice of a reportable event (as defined in ERISA)
required by ERISA to be filed with the Labor Department or the Pension Benefit
Guaranty Corporation, at the time that such notice is so filed.
3.12 Dividends, Distributions, Stock Rights, etc. Except as described
on Schedule 3.12, and except as described in the Borrower SEC Documents and
exhibits thereto relating to redemption of certain classes of preferred stock of
Borrower, Borrower shall not declare or pay any dividend of any kind (other than
stock dividends payable to all holders of any class of capital stock or
dividends consisting of shares of Common Stock to holders of any class of the
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Company's preferred stock), in cash or in property, on any class of the capital
stock of Borrower, or purchase, redeem, retire or otherwise acquire for value
any shares of such stock or enter into any agreement for the purchase,
redemption, retirement or acquisition of such stock under any circumstances, nor
make any distribution of any kind in cash or property in respect thereof, nor
make any return of capital of shareholders, nor make any payments in cash or
property in respect of any stock options, stock bonus or similar plan (except as
required or permitted hereunder), without the prior written consent of Lenders.
3.13 Guaranties; Loans; Payment of Debt. Without Lenders' prior express
written consent, Borrower shall not guarantee nor be liable in any manner,
whether directly or indirectly, or become contingently liable after the date of
this Agreement in connection with the obligations or indebtedness of any person
or entity whatsoever (other than a Subsidiary), except for the endorsement of
negotiable instruments payable to Borrower for deposit or collection in the
ordinary course of business. Without Lenders' prior express written consent,
Borrower shall not (a) make any loans, advances or extensions of credit to any
person other than in the normal course of its business, or (b) make any payment
on any subordinated debt.
3.14 Debt. Without the express prior written consent of Lenders (which
shall not be unreasonably withheld with respect to subsection 3.14(c)), Borrower
shall not create, incur, assume or suffer to exist indebtedness of any
description whatsoever, excluding:
(a) the indebtedness evidenced by the Put Notes;
(b) the endorsement of negotiable instruments payable to
Borrower for deposit or collection in the ordinary course
of business;
(c) debts incurred in the ordinary course of business (each of
which, individually, does not exceed $500,000); and
(d) the indebtedness listed on Schedule 2.1(l) hereto.
3.15 No Liens. Borrower shall not create, incur, assume or suffer to
exist any lien, security interest, security title, mortgage, deed of trust or
other encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except the following permitted liens (the "Permitted
Liens"):
(a) liens in favor of Lenders;
(b) liens for taxes or assessments or other governmental
charges or levies if not yet due and payable;
(c) liens in connection with the leasing of equipment in favor
of the lessor of such equipment;
(d) liens in connection with the shares of common stock of, or
assets of, Able Laboratories; and
(e) liens described on Schedule 2.1(l) hereto.
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3.16 Mergers, Consolidations, Acquisitions; Sales; Name and Location.
Without the prior written consent of Lenders, Borrower shall not (a) be a party
to any merger, consolidation or corporate reorganization, nor (b) purchase or
otherwise acquire all or substantially all of the assets or stock of, or any
partnership or joint venture interest in, any other person, firm or entity, nor
(c) sell, transfer, convey, grant a security interest in or lease all or any
substantial part of its assets, nor (d) create any Subsidiaries nor convey any
of its assets to any Subsidiary. Without ten (10) days' prior written notice to
Lender, Borrower shall not change its name or its location(s) of doing business.
3.17 Transactions With Affiliates. Borrower shall not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with a person not
an affiliate. For the purposes of this Section 3.17, "affiliate" shall mean a
person, corporation, partnership or other entity controlling, controlled by or
under common control with Borrower.
3.18 Environment. Borrower shall be and remain in compliance with the
provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
notify Lenders immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify Lenders immediately of any hazardous discharge from or affecting
Borrower's premises; immediately contain and remove the same, in compliance with
all applicable laws; promptly pay any fine or penalty assessed in connection
therewith; permit Lenders to inspect the premises, to conduct tests thereon, and
to inspect all books, correspondence, and records pertaining thereto; and at
Lenders' request, and at Borrower's expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to Lenders, and
such other and further assurances reasonably satisfactory to Lenders that the
condition has been corrected.
3.19 Informational Covenant. Borrower will furnish or cause to be
furnished to Odyssey information required by the U.S. Small Business
Administration ("SBA") concerning the economic impact of the Argosy Loan,
including but not limited to, information concerning taxes paid and number of
employees.
Borrower will also furnish or cause to be furnished to Lenders
such other information regarding the business, affairs and condition of Borrower
as Lenders may from time to time reasonably request. Borrower will permit
Odyssey and examiners of the SBA to inspect the books and any of the properties
or assets of Borrower and its affiliates and to discuss Borrower's business with
senior management employees at such reasonable times as those persons may from
time to time request. Odyssey agrees not to disclose any confidential
information received from Borrower (except to its partners and to its
professional advisors, whom Odyssey shall cause to keep such information
confidential, and to the SBA) and to use the same care with such information as
it affords to its own confidential information.
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3.20 Activities and Proceeds.
(a) Neither Borrower nor any of its affiliates will engage in
any activities or use directly or indirectly the proceeds from the
Argosy Loan for any purpose for which a small business investment
company is prohibited from providing funds by the SBIC Act, including
13 C.F.R. ss.107.
(b) Borrower will not, without obtaining the prior written
approval of Odyssey, change within one (1) year of the closing under
this Agreement, Borrower's business activity to a business activity to
which an SBIC is prohibited from providing funds by the SBIC Act.
Borrower agrees that any such changes in its business activity without
such prior written consent of Odyssey will constitute a material breach
of the obligations of Borrower under this Agreement and the financing
documents for the Argosy Loan (an "Activity Event of Default"). If an
Activity Event of Default occurs, Odyssey has the right to demand, in
writing, immediate repayment of the securities evidencing the Argosy
Loan, together with interest on the aggregate amount invested from the
date of the closing to the date of repayment, and Borrower will
immediately make such payment within three (3) days of receipt of a
demand. The payment remedy is in addition to any and all other rights
and remedies against Borrower to which Odyssey may be entitled.
3.21 Lender's Covenant Regarding Nonpublic Information. The information
to be disclosed by Borrower to the Lenders under this Article 3 may include
material nonpublic information that Borrower does not intend to disclose
publicly. Each Lender agrees to keep confidential and not to disclose to any
third party (except to its advisors under duties of confidentiality, to its
regulators, and as may otherwise be required by law) all information disclosed
by Borrower under this Article 3, other than information previously or
simultaneously "publicly disclosed" by Borrower as that term is defined in
Regulation FD Rule 101(e) under the Securities Exchange Act or in Borrower's
filings with the Securities and Exchange Commission (the "SEC Documents"). Each
Lender also acknowledges that it will be subject to laws and regulation
governing trading on the basis of material nonpublic information, and agrees
that it will not buy, sell or otherwise directly or indirectly effect any
transaction respecting Borrower's securities during any time in which it
possesses any material nonpublic information pertaining to Borrower or it
securities.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Closing of the Loan. The obligation of Lenders to fund the
Obligations on the date hereof (the "Closing Date") is subject to the
fulfillment, on or prior to the Closing Date, of each of the conditions stated
in the FAR Loan Agreement.
ARTICLE 5
DEFAULT AND REMEDIES
5.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
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(a) Default by Borrower in the payment of the principal of or
interest on the indebtedness evidenced by any of the Put Notes or any
obligation under the DynaGen Guaranty in accordance with their terms,
which default is not cured within five (5) business days;
(b) Any misrepresentation by Borrower as to any material
matter hereunder or under any of the other Loan Documents, or delivery
by Borrower of any schedule, statement, resolution, report,
certificate, notice or writing to Lenders that is untrue in any
material respect on the date as of which the facts set forth therein
are stated or certified;
(c) Failure of Borrower, any Subsidiary, any guarantor of
Borrower, or any shareholder of Borrower to perform any of its
obligations, covenants or agreements under this Agreement, any of the
Put Notes, or any of the other Loan Documents;
(d) Borrower (i) shall generally not pay or shall be unable to
pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have
had any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or an
adjudication or appointment is made; or (v) shall indicate, by any act
or intentional and purposeful omission, its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for
relief or the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for
a period of sixty (60) days or more;
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the certificate of incorporation thereof shall expire or
be revoked;
(f) A default or event of default shall occur under any of the
other Loan Documents and, if subject to a cure right, such default or
event of default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment or
performance of any obligation now or hereafter owed to Lenders in
connection with any other indebtedness of Borrower now or hereafter
owed to Lenders;
(h) Borrower shall have defaulted and continue to be in
default in the timely payment or performance of any other indebtedness
or obligation, which in the aggregate exceeds Twenty-Five Thousand and
No/100ths Dollars ($25,000.00) or materially adversely affects
Borrower's financial condition.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default may
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be cured by payment of a sum of money) of notice thereof to Borrower given in
accordance with the provisions hereof; provided, however, that this provision
shall not require notice to Borrower and an opportunity to cure any Curable
Default of which Borrower has had actual knowledge for the requisite number of
days set forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any
Event of Default described in subsection 5.1(d), the indebtedness evidenced by
the Put Notes as well as any and all other indebtedness of Borrower to Lenders
shall be immediately due and payable in full; and upon the occurrence of any
other Event of Default described above, Lenders at any time thereafter may at
their option accelerate the maturity of the indebtedness evidenced by the Put
Notes as well as any and all other indebtedness of Borrower to Lenders; all
without notice of any kind. Upon the occurrence of any such Event of Default and
the acceleration of the maturity of the indebtedness evidenced by the Put Notes:
(a) Lenders shall be immediately entitled to exercise any and
all rights and remedies possessed by Lenders pursuant to the terms of
the Put Notes and all of the other Loan Documents; and
(b) Lenders shall have any and all other rights and remedies
that Lenders may now or hereafter possess at law, in equity or by
statute.
5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lenders by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lenders to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lenders may be exercised
from time to time and as often as may be deemed expedient by Lenders.
5.4 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Obligations Document(s) providing the remedy or remedies exercised; if
none is specified, or if the remedy is provided by this Agreement, then as
follows:
First, to the costs and expenses, including, without
limitation, reasonable attorney's fees incurred by Lenders in
connection with the exercise of its remedies;
Second, to the expenses of curing the default that has
occurred, in the event that Lenders elect, in their sole discretion, to
cure the default that has occurred;
Third, to the payment of the obligations of Borrower under the
Loan Documents (the "Obligations"), including but not limited to the
payment of the principal of and interest on the indebtedness evidenced
by the Put Notes, in such order of priority as Lenders shall determine
in its sole discretion; and
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Fourth, the remainder, if any, to Borrower or to any other
person lawfully thereunto entitled.
ARTICLE 6
TERMINATION
6.1 Termination of this Agreement. This Agreement shall remain in full
force and effect until the payment by Borrower of all amounts owed to Lenders on
the Put Notes at which time Lenders shall cancel the Put Notes and deliver such
Notes to Borrower.
ARTICLE 7
MISCELLANEOUS
7.1 Performance By Lenders. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lenders may,
at Lender's option, pay, perform or observe the same, and all payments made or
costs or expenses incurred by Lenders in connection therewith (including but not
limited to reasonable attorney's fees), with interest thereon at the highest
default rate provided in the Put Notes (if none, then at the maximum rate from
time to time allowed by applicable law), shall be immediately repaid to Lenders
by Borrower and shall constitute a part of the Obligations. Lenders shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
7.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lenders shall bind and inure
to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
7.3 Costs and Expenses. Borrower agrees to pay all reasonable costs and
expenses incurred by Lenders in connection with the making of the Loan,
including but not limited to filing fees, recording taxes, indebtedness taxes,
and reasonable attorneys' fees, promptly upon demand of Lenders. Borrower
further agrees to pay all premiums for insurance required to be maintained by
Borrower pursuant to the terms of the Loan Documents and all of the
out-of-pocket costs and expenses incurred by Lenders in connection with the
collection of the Loan, amendment to the Loan Documents, or prepayment of the
Loan, including but not limited to reasonable attorneys' fees, promptly upon
demand of Lenders.
7.4 Assignment. The Put Notes, this Agreement and the other Loan
Documents may be endorsed, assigned and/or transferred in whole or in part by
Lenders, and any such holder and/or assignee of the same shall succeed to and be
possessed of the rights and powers of Lenders under all of the same to the
extent transferred and assigned. Lenders may grant participations in all or any
portion of its interest in the indebtedness evidenced by the Put Notes and in
such event Borrower shall continue to make payments due under the Loan Documents
to Lenders and Lenders shall have the sole responsibility of allocating and
forwarding such payments in the appropriate manner and amounts. Borrower shall
not assign any of its rights nor
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delegate any of its duties hereunder or under any of the other Loan Documents
without the prior express written consent of Lenders.
7.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower hereunder and under all
of the other Loan Documents.
7.6 Severability. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Put Notes, or any of the other Loan Documents to
the contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loan, acceleration of the maturity of the unpaid
balance of the Obligations or otherwise, shall the interest and loan charges
agreed to be paid to Lenders for the use of the money advanced or to be advanced
hereunder exceed the maximum amounts collectible under applicable laws in effect
from time to time. It is understood and agreed by the parties that, if for any
reason whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Put Notes shall exceed
the maximum amounts collectible under applicable laws in effect from time to
time, then ipso facto, the obligation to pay such interest and/or loan charges
shall be reduced to the maximum amounts collectible under applicable laws in
effect from time to time, and any amounts collected by Lenders that exceed such
maximum amounts shall be applied by such Lender to the reduction of the
principal balance of the indebtedness evidenced by the Put Notes held by such
Lender and/or refunded to Borrower, at the option of such Lender, so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Put Notes exceed the maximum amounts permitted
from time to time by applicable law.
7.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement or any of the Loan Documents shall be
in writing, signed by the party giving such notice, election or demand and shall
be delivered personally, telecopied, or sent overnight via nationally recognized
courier service (such as Federal Express), to the other party at the address set
forth below, or at such other address as may be supplied in writing and of which
receipt has been acknowledged in writing. The date of personal delivery,
telecopy or telex or the next business day after delivery to such courier
service, as the case may be, shall be the date of such notice, election or
demand. For the purposes of this Agreement:
The Address of FINOVA is: FINOVA Mezzanine Capital Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
Telecopy No.: 615/726-1208
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with a copy to: Boult, Cummings, Xxxxxxx & Xxxxx PLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxx III
Telecopy No.: 615/252-6359
The Address of Argosy is: ARGOSY Investment Partners, L.P.
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telecopy No.: 610/964-9524
The Address of DynaGen is: DynaGen, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention:Xxx Xxxxxxx
Telecopy No.:781/890-0021
with a Copy to: Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. X'Xxxxxx
Telecopy No.: 617/832-7000
7.10 Entire Agreement. This Agreement and the other written agreements
between Borrower and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the Obligations, the provision of this Agreement shall control. The
execution and delivery of this Agreement and the other Loan Documents by the
Borrower were not based upon any fact or material provided by Lender, nor was
the Borrower induced or influenced to enter into this Agreement or the other
Loan Documents by any representation, statement, analysis or promise by Lender.
7.11 Governing Law and Amendments. This Agreement and all of the Loan
Documents shall be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such State except to
the extent certain rights and privileges may be granted Lender under applicable
federal laws in which event federal law shall control. No amendment or
modification hereof shall be effective except in a writing executed by each of
the parties hereto.
7.12 Survival of Representations and Warranties. All covenants,
representations and warranties contained herein or in any of the Loan Documents,
or made by or furnished on behalf of the Borrower in connection herewith or any
of the Loan Documents, shall survive the
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execution and delivery of this Agreement and all other Loan Documents and shall
continue in full force and effect so long as the Obligations are unpaid.
7.13 Jurisdiction and Exclusive Venue. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF AND THE EXCLUSIVE VENUE OF THE COURTS OF THE STATE OF TENNESSEE
AND THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE, AS
WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN FROM
SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT
OF ANY OF ITS OBLIGATIONS ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND EXPRESSLY
WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE OR FORUM NON CONVENIENS IN
ANY OF SUCH COURTS.
7.14 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY WAIVE TRIAL BY
JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT
OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS.
7.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
7.16 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Borrower, Lenders and their respective agents and attorneys have
participated in the preparation hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDERS:
FINOVA MEZZANINE CAPITAL INC.
By:_________________________________________
Title:______________________________________
ARGOSY INVESTMENT PARTNERS, L.P.
By: Argosy Associates, L.P., its general
partner
By:_____________________________________
Title:__________________________________
BORROWER:
DYNAGEN, INC.
By:_________________________________________
Title:______________________________________
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