EXHIBIT 4.2
-----------
CONTINGENT STOCK PURCHASE WARRANT
---------------------------------
This CONTINGENT STOCK PURCHASE WARRANT ("Warrant") is issued as of the
____ day of February, 2001 by DYNAGEN, INC., a Delaware corporation (the
"Company"), to ARGOSY INVESTMENT PARTNERS, L.P. ("Argosy"), a Pennsylvania
limited partnership (Argosy and any subsequent assignee or transferee hereof are
hereinafter referred to collectively as "Holder" or "Holders").
AGREEMENT:
1. ISSUANCE OF WARRANT; TERM. For and in consideration of ARGOSY
INVESTMENT PARTNERS, L.P. permitting the assumption of an existing loan to the
Company and in consideration of the other settlements and agreements evidenced
by that First Amended and Restated Loan Agreement of even date herewith among
the Company, XXXXXXXX.XXX, INC., a Delaware corporation; SUPERIOR PHARMACEUTICAL
COMPANY, an Ohio corporation; ARGOSY; and FINOVA MEZZANINE CAPITAL INC.
("FINOVA"), a Tennessee corporation formerly known as SIRROM Capital
Corporation, in its individual capacity and as Collateral Agent (as now existing
and as may hereafter be amended, the "Loan Agreement"), and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase Eight
Hundred Thirty Three Thousand Three Hundred Thirty Three (833,333) shares (the
"Base Amount") of the Company's common stock (the "Common Stock"). The shares of
Common Stock issuable upon exercise of this Warrant are hereinafter referred to
as the "Shares." NOTWITHSTANDING ANY OTHER PROVISION HEREOF, THIS WARRANT SHALL
NOT BE EXERCISABLE UNTIL JUNE 17, 2002, AND SHALL THEN AND THEREAFTER BE
EXERCISABLE IF, AND ONLY IF, AS OF JUNE 17, 2002, THE "OBLIGATIONS" (AS DEFINED
IN THE LOAN AGREEMENT) REMAIN UNPAID IN ANY AMOUNT. IF THE OBLIGATIONS ARE PAID
IN FULL PRIOR TO JUNE 17, 2002 THIS WARRANT SHALL TERMINATE AND BE OF NO FURTHER
EFFECT. The Company warrants and represents that it has formally reserved for
issuance pursuant hereto the number of its common shares necessary to perform
under this Warrant and that the number of shares shall be increased in the
future if necessary to give effect to the antidilution provisions hereof.
2. EXERCISE PRICE. The exercise price (the "Exercise Price") per share
for which all or any of the Shares may be purchased pursuant to the terms of
this Warrant shall be One Cent ($.01).
3. EXERCISE. This Warrant may be exercised by the Holder hereof (but
only on the conditions hereinafter set forth) in whole or in part, upon delivery
of written notice of intent to exercise to the Company in the manner at the
address of the Company set forth in Section 13 hereof, together with this
Warrant and payment to the Company of the aggregate Exercise Price of the Shares
so purchased. The Exercise Price shall be payable, at the option of the Holder,
(a) by certified or bank check, (b) by the surrender of that Secured Promissory
Note of this date made by the Company payable to Holder in the original
principal amount of $500,000 (the "Note") or portion thereof having an
outstanding principal balance equal to the aggregate Exercise Price or
(c) by the surrender of a portion of this Warrant where the Shares subject to
the portion of this Warrant that is surrendered have a fair market value equal
to the aggregate Exercise Price. In the absence of an established public market
for the Common Stock, fair market value shall be established by the Company's
board of directors in a commercially reasonable manner. Upon exercise of this
Warrant as aforesaid, the Company shall as promptly as practicable, and in any
event within fifteen (15) days thereafter, execute and deliver to the Holder of
this Warrant a certificate or certificates for the total number of whole Shares
for which this Warrant is being exercised in such names and denominations as are
requested by such Holder. If this Warrant shall be exercised with respect to
less than all of the Shares, the Holder shall be entitled to receive a new
Warrant covering the number of Shares in respect of which this Warrant shall not
have been exercised, which new Warrant shall in all other respects be identical
to this Warrant. The Company covenants and agrees that it will pay when due any
and all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any Shares upon exercise of this
Warrant.
4. COVENANTS AND CONDITIONS. The above provisions are subject to the
following:
(a) Neither this Warrant nor the Shares have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws ("Blue Sky Laws"). This Warrant has been
acquired for investment purposes and not with a view to distribution or
resale and may not be sold or otherwise transferred without (i) an
effective registration statement for such Warrant under the Securities
Act and such applicable Blue Sky Laws, or (ii) an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel, that registration is not required under the
Securities Act or under any applicable Blue Sky Laws (the Company
hereby acknowledges that Boult, Cummings, Xxxxxxx & Xxxxx PLC is
acceptable counsel). Transfer of the Shares shall be restricted in the
same manner and to the same extent as the Warrant and the certificates
representing such Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
UNDER THE ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION
UNDER SUCH SECURITIES ACTS AND SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents
and instruments as counsel for the Company reasonably deems necessary
to effect the
-2-
compliance of the issuance of this Warrant and any shares of Common
Stock issued upon exercise hereof with applicable federal and state
securities laws.
(b) The Company covenants and agrees that all Shares which may
be issued upon exercise of this Warrant will, upon issuance and payment
therefor, be legally and validly issued and outstanding, fully paid and
nonassessable, free from all taxes, liens, charges and preemptive
rights, if any, with respect thereto or to the issuance thereof. The
Company shall at all times reserve and keep available for issuance upon
the exercise of this Warrant such number of authorized but unissued
shares of Common Stock as will be sufficient to permit the exercise in
full of this Warrant.
5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof,
this Warrant may be transferred, in whole or in part, to any person or business
entity, by presentation of the Warrant to the Company with written instructions
for such transfer. Upon such presentation for transfer, the Company shall
promptly execute and deliver a new Warrant or Warrants in the form hereof in the
name of the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
6. WARRANT HOLDER NOT SHAREHOLDER; RIGHTS OFFERING; PREEMPTIVE RIGHTS.
Except as otherwise provided herein, this Warrant does not confer upon the
Holder, as such, any right whatsoever as a shareholder of the Company.
Notwithstanding the foregoing, if the Company should offer to all of the
Company's shareholders the right to purchase any securities of the Company, then
all shares of Common Stock that are subject to this Warrant shall be deemed to
be outstanding and owned by the Holder and the Holder shall be entitled to
participate in such rights offering.
7. OBSERVATION RIGHTS. The Holder of this Warrant shall receive notice
of and be entitled to attend or may send a representative to attend all meetings
of the Company's Board of Directors in a non-voting observation capacity and
shall receive a copy of all correspondence and information delivered to the
Company's Board of Directors, from the date hereof until such time as the
indebtedness evidenced by the Note and by that Unconditional Guaranty of this
date executed by the Company in favor of Holder have been paid in full.
8. ADJUSTMENT UPON ISSUANCES OR CHANGES IN CAPITAL STOCK.
(a) In the case of any stock split, stock dividend,
recapitalization, combination of shares of the Company, or other
similar event (each a "Recapitalization Event") occurring after the
date hereof, then the Holder exercising this Warrant shall receive, for
the aggregate Exercise Price, the aggregate number and class of shares
which such Holder would have been entitled to receive if immediately
prior to such Recapitalization Event this Warrant had been exercised.
(b) In the case of any merger, consolidation, exchange of
shares, separation, reorganization or liquidation of the Company, or
other similar event (each a "Reorganization Event") occurring after the
date hereof, as a result of which shares of Common Stock shall be
changed into the same or a different number of shares of the same or
-3-
another class or classes of securities of the Company or another
entity, or the holders of Common Stock are entitled to receive cash or
other property, then the Holder exercising this Warrant shall receive,
for the aggregate Exercise Price, the aggregate number and class of
shares, cash or other property which such Holder would have received if
this Warrant had been exercised immediately prior to such
Reorganization Event.
(c) If any adjustment pursuant to this Section 8 would create
a fractional share of Common Stock (or other security) or a right to
acquire a fractional share of Common Stock (or other security), such
fractional share shall be disregarded and the number of shares subject
to this Warrant shall be the next higher number of shares, rounding all
fractions upward.
(d) Whenever there shall be (i) an issuance of securities by
the Company (whether or not requiring an adjustment pursuant to Section
8(a)) or (ii) a record date or closing date set for a Recapitalization
Event, Reorganization Event or similar event or (iii) an adjustment
pursuant to this Section 8, the Company shall immediately notify the
Holder(s) of this Warrant in writing of such issuance or adjustment,
setting forth in reasonable detail the event requiring the notice and
the method by which an adjustment, if any, was calculated.
9. INTENTIONALLY LEFT BLANK.
10. Registration.
(a) The Company and the Holder of the Warrant and the Shares
agree that if at any time after the date hereof the Company shall
propose to file a registration statement with respect to any of its
Common Stock on a form suitable for inclusion of the Shares a secondary
offering (including its initial public offering), and to the extent
that it is not prohibited contractually under agreements in effect as
of the date hereof from including the Shares therein, it will give
notice in writing to such effect to the Holder(s) at least thirty (30)
days prior to such filing or as soon thereafter as is practicable, and,
at the written request of any such registered holder, made within ten
(10) days after the receipt of such notice, will include therein at the
Company's cost and expense, but excluding underwriting discounts,
commissions and filing fees attributable to the Shares included
therein) such of the Shares as such Holder(s) shall request; provided,
however, that if the offering being registered by the Company is
underwritten and if the representative of the underwriters certifies in
writing that the inclusion therein of the Shares would materially and
adversely affect the sale of the securities to be sold by the Company
thereunder, then the Company shall be required to include in the
offering only that number of securities, including the Shares, which
the underwriters determine in their sole discretion will not jeopardize
the success of the offering. The Company may terminate or withdraw any
registration statement initiated by it and described in this Section
10(a), provided, that if a Holder of Shares has made a request under
this Section 10(a), the Company may do so only if the Board of
Directors has reasonably determined that proceeding with the
registration statement would not be in the best interests of the
Company.
-4-
(b) Whenever the Company undertakes to effect the registration
of any of the Shares, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement
covering such Shares and use its best efforts to cause such
registration statement to be declared effective by the
Commission as expeditiously as possible and to keep such
registration effective until the earlier of (A) the date when
all Shares covered by the registration statement have been
sold or (B) one hundred eighty (180) days from the effective
date of the registration statement; provided, that before
filing a registration statement or prospectus or any amendment
or supplements thereto, the Company will furnish to each
Holder of Shares covered by such registration statement,
copies of all such documents proposed to be filed (excluding
exhibits, unless any such person shall specifically request
exhibits), which documents will be subject to the review of
such Holders and underwriters, and the Company will not file
such registration statement or any amendment thereto or any
prospectus or any supplement thereto (including any documents
incorporated by reference therein) with the Commission if
information in such registration statement or prospectus
concerning a particular selling Holder has changed and such
Holder or the underwriters, if any, shall reasonably object.
(ii) Prepare and file with the Commission such
amendments and post-effective amendments to such registration
statement as may be necessary to keep such registration
statement effective during the period referred to in Section
10(b)(i) and to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered
by such registration statement, and cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed with the Commission pursuant to Rule
424 under the Securities Act.
(iii) Furnish to the selling Holder(s) such numbers
of copies of such registration statement, each amendment
thereto, the prospectus included in such registration
statement (including each preliminary prospectus), each
supplement thereto and such other documents as they may
reasonably request in order to facilitate the disposition of
the Shares owned by them.
(iv) Use its best efforts to register and qualify
under such other securities laws of such jurisdictions as
shall be reasonably requested by any selling Holder and do any
and all other acts and things which may be reasonably
necessary or advisable to enable such selling Holder to
consummate the disposition of the Shares owned by such Holder,
in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a
condition thereto to qualify to transact business or to file a
general consent to service of process in any such states or
jurisdictions.
(v) Promptly notify each selling Holder of the
happening of any event as a result of which the prospectus
included in such registration statement contains
-5-
an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading and,
at the request of any such Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such
prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the
statements therein not misleading.
(vi) Provide a transfer agent and registrar for all
such Shares not later than the effective date of such
registration statement.
(vii) Enter into such customary agreements (including
underwriting agreements in customary form for a primary
offering) and take all such other actions as the underwriters,
if any, reasonably request in order to expedite or facilitate
the disposition of such Shares (including, without limitation,
effecting a stock split or a combination of shares).
(viii) Promptly notify the selling Holder(s) of the
following events and (if requested by any such person) confirm
such notification in writing: (A) the filing of the prospectus
or any prospectus supplement and the registration statement
and any amendment or post-effective amendment thereto and,
with respect to the registration statement or any
post-effective amendment thereto, the declaration of the
effectiveness of such documents, (B) any requests by the
Commission for amendments or supplements to the registration
statement or the prospectus or for additional information, (C)
the issuance or threat of issuance by the Commission of any
stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that
purpose and (D) the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or
threat of initiation of any proceeding for such purposes.
(ix) Use commercially reasonable efforts to prevent
the entry of any order suspending the effectiveness of the
registration statement and obtain at the earliest possible
moment the withdrawal of any such order, if entered.
(x) Cooperate with the selling Holder(s) to
facilitate the timely preparation and delivery of certificates
representing the Shares to be sold and not bearing any
restrictive legends, and, upon receipt of satisfactory
confirmation on behalf of the Holder of the sale of such
Shares pursuant to the registration statement and in
accordance with the plan of distribution described therein.
(xi) Provide a CUSIP number for all the Shares not
later than the effective date of the registration statement.
(xii) Otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and
make generally available to its security holders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than forty-five (45) days after the
end of any twelve-month period (or
-6-
ninety (90) days, if such period is a fiscal year) (A)
commencing at the end of any fiscal quarter in which the
Shares are sold to underwriters in a firm or best efforts
underwritten offering, or (B) if not sold to underwriters in
such an offering, beginning with the first month of the first
fiscal quarter of the Company commencing after the effective
date of the registration statement, which statements shall
cover such twelve-month periods.
(c) (c) After the date hereof, the Company shall not grant to
any holder of securities of the Company any registration rights which
have a priority greater than or equal to those granted to Holders
pursuant to this Warrant without the prior written consent of the
Holder(s).
(d) The Company's obligations under Section 10(a) above with
respect to each Holder of Shares are expressly conditioned upon such
Holder's furnishing to the Company in writing such information
concerning such holder and the terms of such holder's proposed offering
as the Company shall reasonably request for inclusion in the
registration statement.
(e) For purposes of this Section 10, all of the Shares shall
be deemed to be issued and outstanding.
(f) In connection with any registration or qualification of
securities under this Section 10, the Company agrees to indemnify the
Holder hereof and the holders of any shares of Common Stock issuable
upon the exercise hereof and each underwriter thereof, including each
person, if any, who controls the holder or such stockholder or
underwriter within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and the costs, fees and
expenses of legal counsel) caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement,
preliminary prospectus, prospectus or notification or offering circular
(as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or caused by any omission, or
alleged omission, to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities
or expenses are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information
furnished in writing to the Company by the holder or any such
stockholder or underwriter expressly for use therein. The Company and
each officer, director and controlling person of the Company shall be
indemnified respectively by the Holder of this Warrant and by the
holders of any Shares for all such losses, claims, damages, liabilities
and expenses (including the costs of reasonable investigation and the
costs, fees and expenses of legal counsel) caused by any such untrue,
or alleged untrue, statement or any such omission or alleged omission,
based upon information furnished in writing to the Company by the
Holder hereof or any such stockholder expressly for use therein,
provided that the liability of each Holder hereof or any such
stockholder shall be limited to the dollar amount of the net proceeds
of the Shares actually sold by such Holder pursuant to the registration
statement.
-7-
(i) The indemnifying party shall be entitled to
participate in and, to the extent it may wish, jointly with
any other indemnifying party, to assume the defense of such
action at its own expense, with counsel chosen by it and
reasonably satisfactory to such indemnified party. The
indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the
indemnified party unless (a) the indemnifying party agrees to
pay the same, (b) the indemnifying party fails to assume the
defense of such action with counsel reasonably satisfactory to
the indemnified party or (c) the named parties to any such
action (including any impleaded parties) have been advised by
such counsel that representation of such indemnified party and
the indemnifying party by the same counsel would be
inappropriate under applicable standards of professional
conduct (in which case the indemnifying party shall not have
the right to assume the defense of such action on behalf of
such indemnified party). No indemnifying party shall be liable
for any settlement entered into without its consent, which
consent shall not be withheld unreasonably.
(ii) The reimbursements required to be made by the
Company pursuant to Seciton 10(f) shall be made by periodic
payments during the course of the investigation or defense, as
and when bills are received or expenses incurred.
(iii) If the indemnificiation provided for in this
Section 10(f) is unavailable or insufficient to hold harmless
an indemnified party in respect to any losses, claims,
damages, liabilities, expenses or actions in respect thereof
referred to herein, then each indemnifying party shall in lieu
of indemnifying such indemnified party contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities, expenses or
actions in such proportion as is appropriate to reflect the
relative fault of the Company, on the one hand, and the Holder
of this Warrant and the holders of any Shares, on the other,
in connection with the statements or omissions which resulted
in such losses, claims, damages, liabilities, expenses or
actions as well as any other relevant equitable
considerations, including the failure to give the notice
required hereunder. The Company and the Holder of this Warrant
agree that it would not be just and equitable if contribution
prusuant to this Section 10(f)(iii) were determined by any
method of allocation which did not take account of the
equitable considerations referred to above. Notwithstanding
the provisions of this Section 10(f)(iii), in no event shall
the amount contributed by the Holder of this Warrant or the
holder of any Shares exceed the net proceeds received by such
person from the sale of Shares to which such contribution
claim relates. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
(iv) Each Holder of this Warrant and each holder of
Shares, by acceptance hereof or thereof, as the case may be,
agrees to the indemnification and contribution provisions of
this Section 10(f).
-8-
11. CERTAIN NOTICES. In case at any time the Company shall propose to:
(a) declare any cash dividend upon its Common Stock;
(b) declare any dividend upon its Common Stock payable in
stock or make any special dividend or other distribution to the holders
of its Common Stock;
(c) offer for subscription to the holders of any of its Common
Stock any additional shares of stock in any class or other rights;
(d) reorganize, or reclassify the capital stock of the
Company, or consolidate, merge or otherwise combine with, or sell of
all or substantially all of its assets to, another corporation;
(e) voluntarily or involuntarily dissolve, liquidate or wind
up of the affairs of the Company; or
(f) redeem or purchase any shares of its capital stock or
securities convertible into its capital stock;
then, in any one or more of said cases, the Company shall give to the
Holder of the Warrant, by certified or registered mail, (i) at least
twenty (20) days' prior written notice of the date on which the books
of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights or for determining rights
to vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up,
and (ii) in the case of such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, at
least twenty (20) days' prior written notice of the date when the same
shall take place. Any notice required by clause (i) shall also specify,
in the case of any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be entitled
thereto, and any notice required by clause (ii) shall specify the date
on which the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may be.
12. ARTICLE AND SECTION HEADINGS. Numbered and titled article and
section headings are for convenience only and shall not be construed as
amplifying or limiting any of the provisions of this Warrant.
13. NOTICE. Notices shall be given respecting this Warrant in the
manner set forth in the Loan Agreement.
14. SEVERABILITY. If any provisions(s) of this Warrant or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Warrant 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.
-9-
15. ENTIRE AGREEMENT. This Warrant between the Company and Holder
represents the entire agreement between the parties concerning the subject
matter hereof, and all oral discussions and prior agreement are merged herein.
16. GOVERNING LAW AND AMENDMENTS. This Warrant shall be construed and
enforced under the laws of the State of Tennessee applicable to contracts to be
wholly performed in such State. No amendment or modification hereof shall be
effective except in a writing executed by each of the parties hereto.
17. COUNTERPARTS. This Warrant may be executed in any number of
counterparts and be different parties to this Warrant 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 Warrant.
18. CONSENT TO JURISDICTION; EXCLUSIVE VENUE. The Company hereby
irrevocably consents to the jurisdiction of the United States District Court for
the Middle District of Tennessee and of all state courts sitting in Davidson
County, Tennessee, for the purpose of any litigation to which Holder may be a
party and which concerns this Warrant. It is further agreed that venue for any
such action shall lie exclusively with courts sitting in Davidson County,
Tennessee unless Holder agrees to the contrary in writing.
19. WAIVER OF TRIAL BY JURY. HOLDER AND THE COMPANY HEREBY KNOWINGLY
AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS,
PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE,
AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS WARRANT.
20. EQUITY PARTICIPATION. This Warrant is issued in connection with the
Loan Agreement. It is intended that this Warrant constitute an equity
participation under and pursuant to T.C.A. ss.00-00-000, et seq. and that equity
participation be permitted under said statutes and not constitute interest on
the Note. If under any circumstances whatsoever, fulfillment of any obligation
of this Warrant, the Loan Agreement, or any other agreement or document executed
in connection with the Loan Agreement, shall violate the lawful limit of any
applicable usury statute or any other applicable law with regard to obligations
of like character and amount, then the obligation to be fulfilled shall be
reduced to such lawful limit, such that in no event shall there occur, under
this Warrant, the Loan Agreement, or any other document or instrument executed
in connection with the Loan Agreement, any violation of such lawful limit, but
such obligation shall be fulfilled to the lawful limit. If any sum is collected
in excess of the lawful limit, such excess shall be applied to reduce the
principal amount of the Note.
-10-
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
COMPANY:
DYNAGEN, INC.,
a Delaware corporation
By:_______________________________________
Title:___________________________________
HOLDER:
ARGOSY INVESTMENT PARTNERS, L.P.
a Pennsylvania Limited Partnership
By: Argosy Associates, L.P., its general
partner
By:_________________________________
Title:_______________________________
-11-
