EXHIBIT 10.33
-------------
FIRST AMENDED AND RESTATED
LOAN AGREEMENT
THIS FIRST AMENDED AND RESTATED LOAN AGREEMENT ("Agreement"), dated
as of the 23rd day of February, 2001, is made and entered into by and among
DYNAGEN, INC. ("DynaGen"), a Delaware corporation; XXXXXXXX.XXX, INC.
("RxBazaar"), a Delaware corporation; SUPERIOR PHARMACEUTICAL COMPANY
("Superior"), an Ohio 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:
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 granted a security interest to secure all of
its obligations to Lenders pursuant to that Security Agreement executed by
DynaGen dated as of June 18, 1997 (the "DynaGen Security Agreement") and has for
the same purpose granted a security interest in its stock of Superior pursuant
to that Pledge and Security Agreement dated as of June 18, 1997 (the "DynaGen
Pledge Agreement"); and
WHEREAS, Superior is a wholly-owned subsidiary of DynaGen and has
guaranteed DynaGen's obligations to Lenders pursuant to that Guaranty Agreement
dated as of June 18, 1997 (the "Superior Guaranty") and has granted to Lenders a
security interest in all of its personal property pursuant to that Security
Agreement dated as of June 18, 1997 (the "Superior Security Agreement"); and
WHEREAS, DynaGen has agreed to sell to RxBazaar all of DynaGen's
stock in Superior, 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 further that such sale be made
without the release of the Superior Guaranty, the Superior Security Agreement or
any other collateral that now secures the 1997 Loans, and Lenders have further
agreed that neither RxBazaar nor Superior shall be liable for any obligations of
DynaGen other than the 1997 Loans; 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;
AGREEMENT:
----------
NOW, THEREFORE, in consideration of the agreement of Lenders to
consent to the sale of the stock of Superior, the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree that the 1997 Loan Agreement is hereby amended and restated to provide in
full as follows:
ARTICLE 1
THE LOAN
--------
1.1 Evidence of Loan Indebtedness and Repayment; Assumption. The
parties acknowledge that as of the execution hereof, pursuant to the 1997 Loan
Agreement, DynaGen owes FINOVA the principal sum of $1,500,000 pursuant to that
Secured Promissory Note made by DynaGen dated June 18, 1997 in the original
principal amount of $2,000,000 and owes Argosy the principal sum of $750,000
pursuant to that Secured Promissory Note made by DynaGen dated June 18, 1997 in
the original principal amount of $1,000,000 (the "1997 Notes"). RxBazaar hereby
assumes the obligations evidenced by the 1997 Notes for principal and for
interest accrued beginning February 1, 2001 and Lenders hereby consent to this
assumption, without release of DynaGen, and to this end the 1997 Notes shall be
amended and restated concurrently with the effectiveness of this Agreement by
First Amended and Restated Secured Promissory Notes made by RxBazaar in the
amounts of the respective principal balances owed to FINOVA and Argosy and which
shall provide for an extended final maturity of June 17, 2004 (the "Notes").
DynaGen shall remain liable for the assumed obligations as a guarantor of the
Notes pursuant to an Unconditional Guaranty executed as of the date hereof. The
Notes, this Agreement and any other instruments and documents executed by any
person or entity evidencing, securing or in any way relating to the
indebtednesses evidenced by the Notes are herein individually referred to as a
"Loan Document" and collectively referred to as the "Loan Documents." The term
"Obligations," as used herein, shall refer to (a) the principal, interest and
expenses provided for in the Notes and any renewals, extensions, modifications
or restatements thereof (collectively the "Loan"), (b) any and all other
indebtednesses and other obligations of RxBazaar and/or Superior to Lenders
under this Agreement and all other Loan Documents, and (c) all future advances
made by Lenders and/or Agent for taxes, levies, insurance and preservation of
the collateral securing the foregoing obligations (the "Collateral") and all
attorneys' fees, court costs and expenses of whatever kind incident to the
collection of any of said indebtedness or obligations and the enforcement and
protection of the security interest created hereby or by the other Loan
Documents. Without limiting or expanding the foregoing, the "Obligations," as
defined herein, shall not include any obligations of DynaGen or Superior to
Lenders arising from the Lenders' put rights under those Stock Purchase Warrants
dated June 18, 1997 or Secured Promissory Notes issued in favor of Lenders as of
the date hereof in respect of
-2-
the exercise of such put rights, any obligations of DynaGen respecting its
Series L Preferred Stock, or any obligations of DynaGen or Superior to Lenders
arising from any provision of the 1997 Loan Agreement that are not restated in
this Agreement, it being the intention of the parties that only liability for
the matters specifically described in the preceding sentence shall constitute
the Obligations under this Agreement. THE AMENDMENT AND RESTATEMENT OF THE 1997
LOAN AGREEMENT AND OF THE 1997 NOTES ONLY EVIDENCES THE ASSUMPTION OF THOSE
OBLIGATIONS BY RXBAZAAR WITHOUT RELEASE OF DYNAGEN AND SHALL NOT BE REGARDED AS
SATISFACTIONS OR NOVATIONS THEREOF. ALL SECURITY FOR THE PAYMENT OF THE
OBLIGATIONS REMAINS IN FULL EFFECT, WITH NO INTERRUPTION OF ATTACHMENT,
PERFECTION OR PRIORITY. (RxBazaar is sometimes referred to as "Borrower" and
Superior and RxBazaar are sometimes referred to each as an "Obligor" and
collectively as "Obligors"). Following the execution of this Agreement, the
consent of, or notice to, DynaGen shall not be required for the amendment,
waiver, restatement, extension or modification in any respect of any provision
of this Agreement or of the Notes or related Loan Documents (except that
DynaGen's consent will be required for any amendment of the conversion rights as
to its stock granted in Section 1.4 hereof), and the continuing liability of
DynaGen therefor shall not be impaired in any way by the absence of any such
notice or consent; provided, however, DynaGen shall not be liable for any new
advances of principal (other than amounts added to principal due in respect of
capitalizations of expenses or of interest on the Obligations as defined herein)
made to RxBazaar or Superior after the date hereof.
1.2 Assumption and Extension Fee. Concurrently with the
effectiveness of this Agreement, DynaGen or RxBazaar, as they may agree between
themselves, shall pay to FINOVA an assumption and extension fee of $30,000 and
shall pay to Argosy an assumption and extension fee of $15,000.
1.3 Prepayment. The indebtedness evidenced by the Notes may be
prepaid in whole or in the increments set forth in each Note pursuant to the
terms of the Notes, at any time and from time to time, without penalty or
premium; provided that any prepayment shall be made on a pro rata basis among
Lenders.
1.4 Conversion Right.
(a) Right to Convert. At the option of the respective Lenders,
at any time and from time to time, the indebtedness evidenced by the
Notes may be converted in whole or in part to common stock of
DynaGen or of RxBazaar, as a Lender may elect. If converted into
stock of DynaGen, the converting Lender(s) shall assign to DynaGen
the Loan being converted or, if the Loan is being converted only in
part, the converting Lender(s) shall grant to DynaGen a last-out
participation interest therein equal to the amount being converted
and, in view of the fact that DynaGen is a guarantor of the Loans,
DynaGen shall have no rights whatsoever to participate in the
administration of the Loan in which it may have such a participation
interest or to receive payments thereunder unless and until the
Loans have, from the perspective of the Lenders, been paid in full.
If converted into
-3-
stock of RxBazaar, the converting Lender(s) shall credit RxBazaar
with the payment of the Obligations in the amount converted, with
such payment to be allocated to principal, interest or expenses as
the converting Lender(s) may elect. Any such conversion shall be
effected as follows. A Lender may elect to convert by giving the
issuer an irrevocable written notice of election effective as of the
date the notice is received by the issuer (a "Conversion Notice").
The Conversion Notice shall specify the amount of the Obligations
being converted and, if a partial conversion, shall allocate the
Obligations converted among principal, interest and expenses
outstanding. The price of the common stock that will be used in
making this conversion shall be average closing bid price of the
stock (as reported by Bloomberg, LP or, if not so reported, as
reported in the over-the-counter market) for the three trading days
next preceding the Conversion Date; provided, that if the common
stock is not then publicly traded then the conversion price shall be
the fair market value of the common stock as of the Conversion Date
as determined in good faith by the issuer's board of directors. The
shares to be issued shall be rounded up to the next whole share. The
conversion shall be deemed effective on the Conversion Date, and
within five (5) business days thereafter, (i) the issuer shall
deliver to the converting Lender one or more certificates evidencing
the resulting common shares of the issuer's stock, free of any
encumbrance or restriction excepting only customary legends
regarding securities law matters, and (ii) the converting Lender
shall deliver to the issuer (w) the original Note marked "paid," if
converted in full into shares of RxBazaar, (x) a formal written
advice of the credit against the Loan, if converted in part into
shares of RxBazaar, (y) the original Notes endorsed without warranty
or recourse, if the Loans are converted in full into shares of
DynaGen or (z) appropriate evidence of the grant of a participation
interest without warranty or recourse also in the Loan if converted
in part into shares of DynaGen.
(b) Registration Rights. At the option of the respective
Lenders, at any time after common stock is issued pursuant to the
conversion right under this Agreement and during which the equity
securities of the particular Obligor are publicly traded, a Lender
may request in writing that the issuer cause the registration of the
Lender's common stock pursuant to the Securities Act of 1933;
provided, however, a Lender shall not be entitled to obtain
registration of stock of RxBazaar in its initial public offering or
within a lockup period that is applicable to management stock of up
to two hundred forty (240) days thereafter as may be required by the
underwriter of the initial public offering. Upon receipt of such a
request from a Lender, the issuer shall at its own expense promptly
use its best efforts to prepare and file with the Securities and
Exchange Commission ("SEC") a registration statement (the
"Registration Statement") for the sale of the shares described in
the requesting Lender's notice to the issuer. The issuer shall
advise the requesting Lender of the progress of these efforts at
least once each week in writing until the registration has been
accomplished.
(c) Authorized and Reserved Shares. Each Obligor represents and
warrants that it has reserved for issuance pursuant to the
conversion right provided a sufficient
-4-
number of shares to effect the conversion if executed on the date
hereof. Obligors shall increase the number of reserved shares to
equitably reflect the effect of any stock split, stock dividend or
other event that would likely affect the number of shares necessary
to make possible the full conversion of the Loans into stock under
this Agreement as such transactions occur.
1.5 Intercreditor Agreement; Security Interest in Assets and Pledge
of Superior Stock. In connection with this Amended and Restated Loan Agreement,
each Lender is simultaneously entering into that certain Intercreditor Agreement
dated as of even date herewith by and among the Lenders and The CIT
Group/Business Credit, Inc. ("CIT"), a New York corporation, pursuant to which,
among other things, each Lender at CIT's request is subordinating its right,
title and interest in the assets and stock of Superior and the assets of
RxBazaar to a security interest granted in favor of CIT. RxBazaar shall instruct
CIT to return the pledged certificate(s) to FINOVA as agent for the Lenders if
CIT wishes to release its security interest in such shares due to its having
received payment in full or otherwise.
1.6 Status of Loan Agreement. As amended hereby, the Loan Agreement
and each of the Notes shall remain in effect hereafter. Each Lender hereby, by
executing and delivering this Amended and Restated Loan Agreement, confirms that
(i) it has voluntarily refrained from exercising its remedies in connection with
any past payment obligations of DynaGen under the Loan, the Loan Agreement or
the applicable Note from June 18, 1997 to the date hereof, and (ii) it is not
aware of any Event of Default thereunder or matter which, with the giving of
notice, the passing of time, or both, would become an Event of Default, that has
not been cured concurrently with the effectiveness of this Agreement. Each of
DynaGen and each Obligor acknowledges and agrees that the Lenders' past
voluntary forbearance or waiver does not evidence or create any obligation on
their part to similarly forbear upon the occurrence of any future Event of
Default.
1.7 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 certain Secured Promissory Notes of this date issued by DynaGen
to FINOVA and to Argosy, respectively. In consideration of these payments and
the issuance of said Secured Promissory Notes, the DynaGen Warrants and the
Superior Warrants are hereby canceled and shall be of no further force or
effect.
-5-
ARTICLE 2
SECURITY
--------
2.1 Security Provided by Borrower. Borrower shall provide the
following as security for the Obligations:
(a) Security Agreement granting a security interest in all
personal property of Borrower, together with appropriate UCC
financing statements, subject only to a prior perfected security
interest in favor of CIT; and
(b) Pledge Agreement granting a security interest in 100% of the
stock of Superior, subject only to a prior perfected security
interest in favor of CIT.
2.2 Security Provided by Superior. Superior shall provide the
following as security for the Obligations:
(a) Superior hereby reaffirms and agrees that the Superior
Guaranty continues to secure the Obligations as amended and restated
by this Agreement and by the other documents executed in connection
herewith.
(b) Superior hereby reaffirms and agrees that the Superior
Security Agreement continues to secure the Obligations as amended
and restated by this Agreement and by the other documents executed
in connection herewith, subject to a prior perfected security
interest in favor of CIT.
(c) Lenders hereby agree that the Superior Guaranty and the
Superior Security Agreement shall hereafter secure only the
"Obligations" as defined in this Agreement and, without limiting the
foregoing, shall not continue to secure any put obligations or
obligations respecting Series L Preferred Stock of DynaGen to
Lenders.
2.3 Security Provided by DynaGen. DynaGen shall execute and deliver
to Lenders an Unconditional Continuing Guaranty (the "DynaGen Guaranty") as
evidence of the continuing liability of DynaGen for the Obligations as assumed
by RxBazaar and shall therein confirm the continuing effect of all security
therefor provided by DynaGen and its subsidiaries.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Obligors' Representations. Each Obligor 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.
-6-
(a) Corporate Status. Each Obligor is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware (RxBazaar) or Ohio (Superior); 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. Each Obligor is duly qualified to do business
and in good standing in each state in which a failure to be so
qualified would have a material adverse effect on Obligor's
financial condition or its ability to conduct its business in the
manner now conducted.
(b) Subsidiaries. Schedule 3.1(b) hereto is a complete list of
each corporation, partnership, joint venture or other business
organization (the "Subsidiary" or, with respect to all such
organizations, the "Subsidiaries") in which each Obligor or any
Subsidiary owns, directly or indirectly, any capital stock or other
equity interest, or with respect to which each Obligor 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 such Obligor. 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 3.1(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. Obligors and their 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
liens, claims, charges, restrictions, security interests, equities,
proxies, pledges or encumbrances of any kind. Except where otherwise
indicated herein or unless the context otherwise requires, any
reference to Obligors herein shall include Obligors and all and each
of their Subsidiaries.
(c) Authorization. Each Obligor has full legal right, power and
authority to conduct its business and affairs. Each Obligor has full
legal right, power and authority to enter into and perform its
obligations under the Loan Documents, without the consent or
approval of any other person, firm, governmental agency or other
legal entity, except as set forth on Schedule 3.1(c). The execution
and delivery of this Agreement, the borrowing hereunder, the
execution and delivery of each Loan Document to which each Obligor
is a party, and the performance by each Obligor of its obligations
thereunder are within the corporate powers of each Obligor and have
been duly authorized by all necessary corporate action properly
taken and Obligors have received all necessary governmental
approvals, if any, that are required. The officer(s) executing this
-7-
Agreement, the Notes and all of the other Loan Documents to which
each Obligor is a party are duly authorized to act on behalf of each
Obligor.
(d) Validity and Binding Effect. This Agreement and the other
Loan Documents are the legal, valid and binding obligations of each
Obligor, enforceable in accordance with their respective terms,
subject 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. As of the date hereof, the authorized
capital stock of Borrower consists solely of 60,000,000 shares of
common stock, $.001 par value per share ("Common Stock") and
10,000,000 shares of preferred stock, $.001 par value per share (the
"Preferred Stock"). Attached hereto as Schedule 3.1(e) is a table
showing the capitalization of RxBazaar, as of the date hereof, on a
fully diluted basis. As of the date hereof, Borrower does not have
outstanding any stock or securities convertible or exchangeable for
any shares of its Common Stock or containing any profit
participation features, and does not have outstanding any rights or
options to subscribe for or to purchase its Common Stock or any
stock appreciation rights or phantom stock plans, except as set
forth on Schedule 3.1(e). Schedule 3.1(e) accurately sets forth the
following with respect to all outstanding options and rights to
acquire the Borrower's Common Stock: (i) the total number of shares
issuable upon exercise of all outstanding options; (ii) the range of
exercise prices for all such outstanding options; (iii) the number
of shares issuable, the exercise price and the expiration date for
each such outstanding option; and (iv) with respect to all
outstanding options, warrants and rights to acquire Borrower's
capital stock, the holder, the number of shares covered, the
exercise price and the expiration date. As of the date hereof,
Borrower is not be subject to any obligation (contingent or
otherwise) to repurchase, redeem, retire or otherwise acquire any
shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except as set forth on Schedule
3.1(e). As of the date hereof, all of the outstanding shares of
Borrower's capital stock are validly issued, fully paid and
nonassessable. Except as set forth on Schedule 3.1(e), there are no
statutory or contractual preemptive rights, rights of first refusal,
anti-dilution rights or any similar rights, held by stockholders or
option holders of Borrower, with respect to the issuance of the
stock of Borrower resulting from the exercise of conversion rights
provided above in this Agreement. To the best of Borrower's
knowledge, there are no agreements among Borrower's shareholders
with respect to any other aspect of Borrower's affairs, except as
set forth on Schedule 3.1(e). Borrower owns all of the issued and
outstanding shares of capital stock of Superior and Superior does
not have outstanding any options, covenants or other agreements for
the issuance of any equity securities except in favor of Lenders.
(f) Trademarks, Patents, Etc. Schedule 3.1(f) is an accurate and
complete list of all patents, trademarks, tradenames, trademark
registrations, service names, service marks, copyrights, licenses,
formulas and applications therefor owned by each Obligor or used or
required by each Obligor in the operation of its business, title to
each of which is,
-8-
except as set forth in Schedule 3.1(f) hereto, held by such Obligor
free and clear of all adverse claims, liens, security agreements,
restrictions or other encumbrances. Except as set forth in Schedule
3.1(f), each Obligor owns or possesses adequate (and will use its
best efforts to obtain as expediently as possible any additional)
licenses or other rights to use all patents, trademarks, trade
names, service marks, trade secrets or other intangible property
rights and know-how necessary to entitle such Obligor to conduct its
business as presently being conducted. There is no infringement
action, lawsuit, claim or complaint which asserts that any Obligor's
operations violate or infringe the rights or the trade names,
trademarks, trademark registrations, service names, service marks or
copyrights of others with respect to any apparatus or method of such
Obligor or any adversely held trademarks, trade names, trademark
registrations, service names, service marks or copyrights, and no
Obligor is in any way making use of any confidential information or
trade secrets of any person, except with the consent of such person.
Except as set forth in Schedule 3.1(f), each Obligor has taken
reasonable steps to protect its proprietary information (except
disclosure of source codes pursuant to licensing agreements) and is
the lawful owner of the proprietary information free and clear of
any claim, right, trademark, patent or copyright protection of any
third party. As used herein, "proprietary information" includes
without limitation, (i) any computer programming language, software,
hardware, firmware or related documentation, inventions, technical
and nontechnical data related thereto, and (ii) other documentation,
inventions and data related to patterns, plans, methods, techniques,
drawings, finances, customer lists, suppliers, products, special
pricing and cost information, designs, processes, procedures,
formulas, research data owned or used by such Obligor or marketing
studies conducted by such Obligor, all of which such Obligor
considers to be commercially important and competitively sensitive
and which generally has not been disclosed to third parties.
(g) No Conflicts. Consummation of the transactions contemplated
hereby and the performance of the obligations of each Obligor under
and by virtue of the Loan Documents do not conflict with, and will
not result in any breach of, or constitute a default or trigger a
lien under, any mortgage, security deed or agreement, deed of trust,
lease, bank loan or credit agreement, corporate charter or bylaws,
agreement or certificate of limited partnership, partnership
agreement, license, franchise or any other instrument or agreement
to which any Obligor is a party or by which any Obligor or its
respective properties may be bound or affected or to which Obligors
have not obtained an effective waiver.
(h) Litigation. Except as set forth in Schedule 3.1(h), there
are no actions, suits, arbitrations, administrative hearings or
other proceedings pending, or, to the knowledge of each Obligor
threatened, against or affecting any Obligor or any of Obligor's
property or involving the validity or enforceability of any of the
Loan Documents at law or in equity, or before any governmental or
administrative agency. To each Obligor's knowledge, such Obligor is
not subject to any order, writ, injunction, decree or demand of any
court or any governmental authority.
-9-
(i) Financial Statements. The unaudited financial statements of
Obligors dated December 31, 2000, which are attached hereto as
Schedule 3.1(i)(A), are true and correct in all material respects,
have been prepared on the basis of generally accepted accounting
principles consistently applied (except for the inclusion of
footnotes), and fairly present the financial condition of Obligors
as of the date(s) thereof and the statements of income and retained
earnings and statements of cash flows present fairly the results of
operations and cash flows of Obligors for the periods set forth
therein. No material adverse change has occurred in the financial
condition of any Obligor since the date(s) thereof, and no
additional borrowings have been made by any Obligor since the
date(s) thereof other than as set forth on Schedule 3.1(i)(B).
(j) Other Agreements; No Defaults. Except as set forth in
Schedule 3.1(j) hereto, no Obligor is a party to any indenture, loan
or credit agreement, lease or other agreement or instrument, or
subject to any charter or corporate restriction, that could have a
material adverse effect on the business, properties, assets,
operations or conditions, financial or otherwise, of such Obligor,
or the ability of such Obligor to carry out its obligations under
the Loan Documents to which it is a party. No Obligor is in default
in any 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.
(k) Compliance With Law. Each Obligor has obtained all necessary
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. Each Obligor 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 any
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 each
Obligor's ability to perform its obligations under the Loan
Documents.
(l) Debt. Schedule 3.1(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 but excluding trade credit) in respect of
which each Obligor or any of its properties is in any manner
directly or contingently obligated for a principal amount exceeding
$50,000 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
-10-
nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule 3.1(l).
(m) Taxes. Each Obligor has filed or caused to be filed all tax
returns that 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 it
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 in accordance with generally accepted accounting
principles). No tax liens have been filed against any Obligor or any
of its property.
(n) Certain Transactions. Except as set forth on Schedule 3.1(n)
hereto, no Obligor is indebted, directly or indirectly, to any of
its shareholders, officers or directors or to their respective
spouses or children, in any amount whatsoever, and none of said
shareholders, officers or directors or any members of their
immediate families, are indebted to any Obligor or have any direct
or indirect ownership interest in any firm or corporation with which
any Obligor has a business relationship, or any firm or corporation
which competes with any Obligor, except that shareholders, officers
and/or directors of each Obligor may own no more than 4.9% of
outstanding stock of publicly traded companies which may compete
with any Obligor. No shareholder, officer or director or any member
of their immediate families, is, directly or indirectly, interested
in any material contract with any Obligor. No Obligor is a guarantor
or indemnitor of any indebtedness of any person, firm, corporation
or other legal entity except for another Obligor.
(o) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by any Obligor contained in
this Agreement or any schedule attached hereto or any statement in
any document, certificate or other instrument furnished or to be
furnished by any Obligor to Lenders 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.
(p) Margin Regulations. No Obligor is 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.
(q) Significant Contracts. Schedule 3.1(q) is a complete and
correct list of all contracts, agreements and other documents
pursuant to which any Obligor receives revenues in excess of $50,000
per fiscal year or has committed to make expenditures in
-11-
excess of $50,000 per fiscal year. Each such contract, agreement and
other document is in full force and effect as of the date hereof and
no Obligor knows of any reason why such contracts, agreements and
other documents would not remain in full force and effect pursuant
to the terms thereof.
(r) Environment. Each Obligor 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 such violations would not have
a material adverse effect upon its business. Each Obligor has been
issued and will maintain all required federal, state and local
permits, licenses, certificates and approvals relating to (i) air
emissions; (ii) discharges to surface water or groundwater; (iii)
noise emissions; (iv) solid or liquid waste disposal; (v) 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, state or local law, code or
ordinance and all rules and regulations promulgated thereunder as
hazardous or potentially hazardous); or (vi) other environmental,
health or safety matters. No Obligor has received notice of, or
knows of, or suspects 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
upon its business. Except in accordance with a valid governmental
permit, license, certificate or approval, there has been no
emission, spill, release or discharge into or upon (i) the air; (ii)
soils, or any improvements located thereon; (iii) surface water or
groundwater; or (iv) 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
accordingly the premises of each Obligor is 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 (i) air emissions;
(ii) 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;
(iii) noise emissions; (iv) solid or liquid waste disposal; (v) the
use, generation, storage, transportation or disposal of toxic or
hazardous substances or waste; or (vi) other environmental, health
or safety matters affecting any Obligor or its business, operations,
assets, equipment, property, leaseholds or other facilities. No
Obligor has any 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).
-12-
(s) Fees/Commissions. No Obligor has agreed to pay any finder's
fee, commission, origination fee or other such fee or charge to any
person or entity other than Lenders with respect to the Loan
contemplated hereunder.
(t) ERISA. Each Obligor is in compliance in all material
respects with all applicable provisions 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"). Neither a reportable
event nor a prohibited transaction (as defined in ERISA) has
occurred and is continuing with respect to any pension plan is
subject to the requirements of ERISA (a "Plan"); 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 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; no Obligor
nor any commonly controlled entity (as defined in ERISA) has
completely or partially withdrawn from a multiemployer plan (as
defined in ERISA); each Obligor 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 in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of each Obligor
or any commonly controlled entity to the PBGC or the Plan under
Title IV or ERISA; and no Obligor nor any commonly controlled entity
has incurred any liability to the PBGC under ERISA.
(u) Title to Properties. Each Obligor 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 4.15
hereof).
(v) Limited Offering of Notes. No Obligor nor anyone acting on
its behalf has offered the Notes 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 institutional investors. No
Obligor nor anyone acting on its behalf has taken, or will take, any
action which would subject the issuance or sale of the Notes to
Section 5 of the Securities Act of 1933, as amended, or the
registration or qualification provisions of the blue sky laws of any
state.
(w) Registration Rights. No Obligor is under any obligation to
register under the Securities Act of 1933, as amended, 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,
except for existing registration rights that are described in
Section 3.1(w) of this Agreement.
-13-
(x) Employees. No Obligor has any current labor problems or
disputes which have resulted or such Obligor reasonably believes
could be expected to have a material adverse effect on the
operations, properties or financial condition of such Obligor, or
Obligor's ability to perform its obligations hereunder.
(y) Issuance Taxes. All taxes imposed on any Obligor in
connection with the issuance, sale and delivery of the Notes and the
capital stock issuable upon conversion of the Notes have been or
will be fully paid by Obligors, and all laws imposing such taxes
have been or will be fully satisfied by Obligors.
(z) Solvency. As of the date hereof and giving effect to the
making of the Loan, each Obligor (i) has capital sufficient to carry
on its business and transactions and all business and transactions
in which it is about to engage and is able to pay its debts as they
mature, (ii) owns property having a value, both at fair valuation
and at present fair saleable value, greater than the amount required
to pay its probable liabilities (including contingencies), and (iii)
does not believe that it will incur debts or liabilities beyond its
ability to pay such debts or liabilities as they mature.
ARTICLE 4
COVENANTS AND AGREEMENTS
------------------------
Obligors covenant and agree that during the term of this Agreement:
4.1 Payment of Obligations. Obligors shall pay the indebtedness
evidenced by the Notes according to the terms thereof, and shall timely pay or
perform, as the case may be, all of the other obligations of Obligors 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 Obligors, together with
interest thereon, and any extensions, modifications, consolidations and/or
renewals thereof and any notes given in payment thereof.
4.2 Financial Statements and Reports. Borrower shall furnish to each
of Lenders (a) as soon as practicable and in any event within one hundred twenty
(120) days after the end of each fiscal year of Borrower, an audited
consolidated and consolidating balance sheet of Obligors as of the close of such
fiscal year, an audited consolidated and consolidating statement of operations
of Obligors as of the close of such fiscal year and an audited consolidated and
consolidating statement of cash flows for Obligors for such fiscal year,
prepared in accordance with generally accepted accounting principles
consistently applied 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, Obligors have 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 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
Obligors propose to take in connection therewith), (b) within forty-five (45)
days of the
-14-
end of each calendar month, a status report indicating the financial performance
of each Obligor during such month and the financial position of each Obligor as
of the end of such month in the format required by Lenders (which format will be
delivered to Obligors on a diskette), (c) within thirty (30) days of the end of
each quarter, a consolidated balance sheet of Obligors as of the close of such
quarter and a consolidated statement of operations of Obligors as of the close
of such quarter, all in reasonable detail, and prepared substantially in
accordance with generally accepted accounting principles consistently applied
(except for the absence of footnotes and subject to year-end adjustments), and
(d) with reasonable promptness, such other financial data, including without
limitation, accounts receivable agings and accounts payable reports, as Lenders
may reasonably request.
4.3 Maintenance of Books and Records; Inspection. Each Obligor shall
maintain its books, accounts and records in accordance with generally accepted
accounting principles consistently applied, and after reasonable notice from
Lenders, permit Lenders, their officers and employees and any professionals
designated by Lenders in writing, at such Obligor's expense, to visit and
inspect any of its properties, corporate books and financial records, and to
discuss its accounts, affairs and finances with such Obligor or the principal
officers of such Obligor during reasonable business hours, all at such times as
Lenders may reasonably request; provided that no such inspection shall
materially interfere with the conduct of such Obligor's business.
4.4 Insurance. Without limiting any of the requirements of any of
the other Loan Documents, Obligors shall maintain, in amounts customary for
entities engaged in comparable business activities, (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 Lenders, 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 Obligors' business. Obligors will make reasonable efforts to
obtain and maintain public liability insurance in an amount, and at a cost,
deemed reasonable to the Obligors' Boards of Directors. At the request of Agent,
Obligors will deliver forthwith a certificate specifying the details of such
insurance in effect.
4.5 Taxes and Assessments. Each Obligor 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 such Obligor
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 any Obligor 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 in accordance
with generally accepted accounting principles are maintained with respect
thereto.
-15-
4.6 Corporate Existence. Each Obligor 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.
4.7 Compliance with Law and Other Agreements. Except where the
failure to do so would not materially adversely affect a Obligor's operations,
properties, financial condition or its ability to fulfill its obligations under
the Loan Documents, each Obligor shall maintain its business operations and
property owned or used in connection therewith in compliance with (a) all
applicable federal, state and local 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 each Obligor
is a party or by which each Obligor or any of its properties is bound. Without
limiting the foregoing, each Obligor shall pay all of its indebtedness promptly
in accordance with the terms thereof.
4.8 Notice of Default. Obligors 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 the occurrence thereof.
4.9 Notice of Litigation. Obligors shall give notice, in writing, to
Lenders of (a) any actions, suits or proceedings, instituted by any persons
whomsoever against Obligors or affecting any of the assets of Obligors 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 any Obligor on the one hand and any
governmental regulatory body on the other hand, which dispute might materially
interfere with the normal operations of any Obligor.
4.10 Conduct of Business. Each Obligor will continue to engage in a
business of the same general type and manner as conducted by it on the date of
this Agreement.
4.11 ERISA Plan. If Obligors have in effect, or hereafter
institutes, a Plan that is subject to the requirements of ERISA, then the
following warranty and covenants shall be applicable during such period as any
such Plan shall be in effect: (a) such Obligor hereby warrants that, to
Obligor's knowledge, 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) such Obligor hereby covenants that throughout
the existence of the Plan, such Obligors' contributions under the Plan will meet
the minimum funding standards required by ERISA and such Obligor will not
institute a distress termination of the Plan; and (c) such Obligor 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
PBGC, at the time that such notice is so filed.
-16-
4.12 Dividends, Distributions, etc. Except as permitted in Schedule
4.12 hereof, without the prior written consent of the holders of a majority of
the principal amount of the Loan outstanding at such time (the "Majority
Lenders"), no Obligor shall declare or pay any dividend of any kind (other than
stock dividends payable to all holders of any class of capital stock), in cash
or in property, on any class of the capital stock of any Obligor, or purchase,
redeem, retire or otherwise acquire for value any shares of such stock, 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.
4.13 Guaranties; Loans; Payment of Debt. Without prior written
consent of the Majority Lenders, no Obligor shall 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, except for the endorsement of negotiable
instruments payable to any Obligor for deposit or collection in the ordinary
course of business. Without the prior written consent of the Majority Lenders,
no Obligor shall (a) make any loan, advance or extension of credit to any person
other than in the ordinary course of business, or (b) make any payment on any
subordinated debt, other than trades payable incurred in the ordinary course of
business.
4.14 Debt. Without the prior written consent of the Majority Lenders
(which shall not be unreasonably withheld with respect to subsection 4.14(c)),
no Obligor shall create, incur, assume or suffer to exist indebtedness of any
description whatsoever, excluding:
(a) the indebtedness evidenced by the Notes;
(b) the endorsement of negotiable instruments payable to any
Obligor for deposit or collection in the ordinary course of
business;
(c) trade payables incurred in the ordinary course of business
of any Obligor (each of which, individually, does not exceed
$500,000 (excluding trade payables incurred for the purchase of
inventory for resale, as to which no limit shall apply); and
(d) the indebtedness listed on Schedule 3.1(l) hereto.
4.15 No Liens. Without the consent of the Majority Lenders, no
Obligor shall 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 assets, now owned or hereafter acquired, except the
following permitted liens (the "Permitted Liens"):
(a) liens in favor of Agent and/or Lenders relating to the
Obligations;
(b) liens for taxes or assessments or other governmental charges
or levies if not yet due and payable;
-17-
(c) liens on leased equipment granted in connection with the
leasing of such equipment in favor of the lessor of such equipment;
(d) liens described on Schedule 3.1(l) hereto.
4.16 Mergers, Consolidations, Acquisitions and Sales. Without the
prior written consent of the Majority Lenders, no Obligor shall (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, or lease all or any substantial part of its assets
(except for the transfer of lien interests permitted under this Agreement), nor
(d) create any Subsidiaries nor convey any of its assets to any Subsidiary.
Lenders shall consent to the merger of either Obligor into the other provided
that they are given at least ten (10) days advance written notice thereof and
there are no terms of the merger that would in their reasonable judgment impair
their collateral position or the value or creditworthiness of the combined
entity.
4.17 Transactions With Affiliates. Except for the presently existing
agreements with Affiliates are listed in Schedule 4.17 hereto, no Obligor shall
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 any
Obligor's business and upon fair and reasonable terms no less favorable to such
Obligor than such Obligor would obtain in a comparable arm's length transaction
with a person not an affiliate. For the purposes of this Section 4.17,
"affiliate" shall mean a person, corporation, partnership or other entity
controlling, controlled by or under common control with such Obligor. Obligors
shall not be regarded as affiliates of one another with respect to any direct
dealings between them. As of the execution of this Agreement, DynaGen and
RxBazaar take the position that they are not affiliates, which position FINOVA
accepts, but DynaGen and RxBazaar do further agree that even though not
affiliates they will observe the restrictions of this Section 4.17 in their
dealings with one another.
4.18 Intentionally Deleted.
4.19 Environment. Each Obligor 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 each Lender immediately of any notice of a hazardous
discharge or environmental complaint received from any governmental agency or
any other party; notify each Lender immediately of any hazardous discharge from
or affecting its premises; immediately contain and remove the same, in
compliance with all applicable laws; promptly pay any fine or penalty assessed
in connection therewith; permit any Lender to inspect the premises, to conduct
tests thereon, and to inspect all books, correspondence, and records pertaining
thereto; and at such Lender's request, and at such Obligor's expense, provide a
report of a qualified environmental engineer, satisfactory in scope, form, and
content to such Lender, and such other and further assurances reasonably
satisfactory to such Lender that the condition has been corrected.
-18-
4.20 Landlord Consents. Each Obligor shall use its best efforts to
obtain a Landlord Consent and Subordination of Lien, in a form reasonably
satisfactory to the Majority Lenders, from each landlord from whom such Obligor
now or hereafter may lease space in any state whose laws provide such landlord a
lien on the assets of the Obligor that is superior in to the security interest
securing the Obligations.
4.21 Fixed Charge Covenant. The ratio of cash flow from operations
of Superior for each fiscal year to the aggregate of Superior's scheduled debt
service for such year shall be no less than 1.35 to 1. For purposes of this
covenant, the term "cash flow from operations" shall mean net income, plus
depreciation, plus amortization expense, plus the interest portion of scheduled
debt service, all determined in accordance with generally accepted accounting
principles.
ARTICLE 5
CONDITIONS TO CLOSING
---------------------
5.1 Closing of the Loan. The obligation of each Lender to fund its
portion of the Loan on the date hereof (the "Closing Date") is subject to the
fulfillment, on or prior to the Closing Date, of each of the following
conditions:
(a) Obligors shall have performed and complied in all material
respects with all of the covenants, agreements, obligations and
conditions required by this Agreement.
(b) Lenders shall have received all of the closing documents
listed on the Closing Agenda attached hereto as Schedule 5.1(b),
finally executed and in form and substance acceptable to Lenders.
(c) All payments through the interest payment due February 1,
2001 on the Obligations shall have been paid.
ARTICLE 6
DEFAULT AND REMEDIES
--------------------
6.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default in the payment of the principal of or interest on
the indebtednesses evidenced by the Notes in accordance with the
terms of the Notes, which default is not cured within five (5) days;
(b) Any misrepresentation by Obligors as to any material matter
hereunder or under any of the other Loan Documents, or delivery by
Obligors 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;
-19-
(c) Failure of Obligors or any Affiliate to perform any of its
obligations, covenants or agreements under this Agreement, the Notes
or any of the other Loan Documents;
(d) Any Obligor (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 that is not dismissed within thirty
(30) days, 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) Any Obligor shall be liquidated, dissolved, partitioned or
terminated, or the charter 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) Any Obligor shall default in the timely payment or
performance of any obligation now or hereafter owed to Lenders in
connection with any other indebtedness of any Obligor now or
hereafter owed to Lenders;
(h) Any Obligor shall have defaulted and continue to be in
default in the timely payment of or performance of any covenant
relating to any other indebtedness or obligation which in the
aggregate exceeds Fifty Thousand and No/100ths Dollars ($50,000.00)
or materially adversely affects such Obligor's operations,
properties or financial condition, including the indebtedness owed
to CIT.
(i) A change in the executive staff or management of any Obligor
shall occur such as would create a right of approval or a default or
Event of Default under the loan documents evidencing the credit
between CIT and Obligors as originally executed and delivered to
Lenders unless Lenders consent thereto in writing.
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
-20-
be cured by payment of a sum of money) of notice thereof to Obligors given in
accordance with the provisions hereof; provided, however, that this provision
shall not require notice to Obligors and an opportunity to cure any Curable
Default of which Obligors have had actual knowledge for the requisite number of
days set forth above.
IT IS FURTHER AGREED THAT, NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, NEITHER THE OCCURRENCE OF A GUARANTY
EVENT OF DEFAULT UNDER THE DYNAGEN GUARANTY NOR ANY OTHER EVENT OR CONDITION
THAT MAY AFFECT GUARANTOR BUT WHICH DOES NOT AFFECT EITHER OBLIGOR AS TO CREATE
AN EVENT OF DEFAULT RESPECTING AN OBLIGOR UNDER THIS AGREEMENT SHALL CONSTITUTE
AN EVENT OF DEFAULT UNDER THIS AGREEMENT OR ALLOW LENDERS TO PURSUE ANY REMEDIES
WHATSOEVER AGAINST OBLIGORS. UPON SUCH AN OCCURRENCE, EVEN THOUGH NO REMEDY MAY
THEN BE HAD AGAINST OBLIGORS, PURSUANT TO THE TERMS OF THE DYNAGEN GUARANTY,
LENDERS MAY PURSUE COLLECTION FROM DYNAGEN AND APPLY ALL NET COLLECTION PROCEEDS
TO THE PAYMENT OF THE OBLIGATIONS IN THE INVERSE ORDER OF THEIR MATURITY. AS
PROVIDED IN THE DYNAGEN GUARANTY, DYNAGEN SHALL HAVE NO RIGHT OF SUBROGATION,
INDEMNITY, OR OTHER SUCH RIGHT ARISING FROM ANY PAYMENTS UNDER THE DYNAGEN
GUARANTY UNLESS AND UNTIL THE LOANS HAVE BEEN PAID IN FULL.
6.2 Acceleration of Maturity; Remedies.
(a) Upon the occurrence of any Event of Default described in
subsection 6.1(d), the indebtedness evidenced by the Notes as well
as any and all other indebtednesses of any Obligor to Lenders shall
be immediately due and payable in full; and upon the occurrence of
any other Event of Default described above, Agent, upon the
direction or consent of the Majority Lenders, at any time thereafter
may accelerate the maturity of the indebtednesses evidenced by the
Notes as well as any and all other indebtedness of any Obligor 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
indebtednesses evidenced by the Notes, and upon written direction of
the Majority Lenders, Agent may pursue any or all of the following
remedies, without any notice to any Obligor except as required
below:
(i) Agent may exercise any right that it may have under any
other document evidencing or securing the Obligations or
otherwise available to Agent at law or equity.
(ii) In filing suit for payment or in exercising any right
or remedy that Agent may have with respect to the Collateral,
Agent shall act for the benefit of each of Lenders. Upon any
foreclosure sale or disposition of the Collateral, Agent shall
be entitled to enter a bid that is for ratable credit upon each
of the Notes. Agent shall not be required to enter a cash bid
unless all of Lenders have contributed a ratable portion of such
cash to Agent. In the event that Agent acquires title to any of
the Collateral, it shall do so on behalf of all of Lenders.
-21-
(iii) All proceeds from the liquidation, foreclosure,
repossession, or public or private sale of the Collateral, or
enforcement of Agent's security interest in the Collateral, or
Agent's exercise of any rights or remedies pursuant to this
Section or otherwise shall be, regardless of how each Lender may
treat the payments for the purpose of its own accounting, for
the purposes of computing Obligors' Obligations hereunder and
calculating distributions under this subsection (xi), applied
first, to the costs and expenses incurred by the Agent, acting
as Agent, as set forth above, second, to the expenses of curing
the default that has occurred in the event that Agent elects to
cure the default that has occurred, third, to the ratable
payment of accrued and unpaid interest on the Notes (in the same
proportion that the then unpaid interest under each Note bears
to the aggregate of the then unpaid interest under all of the
Notes), fourth to the ratable payment of the unpaid principal of
the Notes (in the same proportion that the then unpaid principal
under each Note bears to the aggregate of the then unpaid
principal under all of the Notes) fifth, to the payment of all
other amounts then owing to the Agent or Lenders under the Loan
Documents, and sixth, the remainder, if any, to Obligors or any
other person legally entitled thereto. No application of the
payments will cure any Event of Default or prevent acceleration,
or continued acceleration, of amounts payable under the Loan
Documents or prevent the exercise, or continued exercise, of
rights or remedies of Lenders hereunder or under applicable law.
To the extent that any Lender receives any payment in excess of
that which it is entitled to receive hereunder, it shall
promptly repay such amount to Agent to be distributed to the
party or parties entitled thereto.
(iv) No disbursements shall be made by the Agent pursuant to
this Section unless and until the Agent has first determined
(based upon written notices provided by each Lender) the ratio
that the principal and interest evidenced by each Lender's Note
bears to the aggregate of all principal and interest evidenced
by all of the Notes. As used herein, the term "proceeds" of the
Collateral shall mean cash, securities and other property
realized in respect of, and distributions in kind of, the
Collateral.
(v) If the Agent is required at any time to return to any
Obligor or to a trustee, receiver, liquidator, custodian or
similar official any portion of any payment or distribution made
by Agent to any of Lenders pursuant to this Section or
otherwise, then such Lender(s) shall, upon demand, immediately
return to Agent any such payments made or transferred to such
Lender(s), but without interest or penalty (unless Agent is
required to pay interest or penalty on such amounts to the
person recovering such payments). If, however, any such
Lender(s) shall fail to make such payment within ten (10) days
of Agent's demand, then the amount of such payment shall bear
interest at the prime rate of interest plus one percent.
-22-
6.3 Remedies Cumulative; No Waiver. No right, power or remedy
conferred upon or reserved to Lenders and/or Agent 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 or
Agent 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 or Agent.
ARTICLE 7
TERMINATION
-----------
7.1 Termination of this Agreement. This Agreement shall remain in
full force and effect until the payment in full by Obligors of the Obligations,
at which time Lenders shall cancel the Notes and deliver them to Obligors;
provided, however, that the indemnity provided in Section 8.15 shall survive the
termination of this Agreement.
ARTICLE 8
MISCELLANEOUS
-------------
8.1 Performance By Agent. If any Obligor defaults 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 Agent may, at
the option of the Majority Lenders, pay, perform or observe the same, and all
payments made or costs or expenses incurred by Lenders and/or Agent in
connection therewith (including but not limited to reasonable attorneys' fees),
with interest thereon at the highest default rate provided in the Notes, shall
be immediately repaid to Lenders and/or Agent by such Obligor and shall
constitute a part of the Obligations. The Majority Lenders shall be the sole
judge of the necessity for any such actions and of the amounts to be paid.
8.2 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 Obligors or by or on behalf of Lenders or Agent shall bind
and inure to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
8.3 Costs and Expenses. Obligors agree to pay all reasonable costs
and expenses incurred by any Lender in connection with the making of the Loan,
including but not limited to filing fees, recording taxes and reasonable
attorneys' fees, promptly upon demand of such Lender. Obligors further agree to
pay all premiums for insurance required to be maintained by
-23-
Obligors pursuant to the terms of the Loan Documents and all of the
out-of-pocket costs and expenses incurred by any Lender and/or Agent 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 such Lender and/or Agent.
8.4 Assignment. The Notes, this Agreement and the other Loan
Documents may be endorsed, assigned and/or transferred in whole or in part by
Lenders. 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 Notes, and in such
event Obligors 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. Obligors shall
not assign any of its rights nor delegate any of its duties hereunder or under
any of the other Loan Documents without the prior written consent of the
Majority Lenders.
8.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Obligors hereunder and under all
of the other Loan Documents.
8.6 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.
8.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the 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 Loan or otherwise, shall the interest and other 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
Obligors in respect of the indebtedness evidenced by the Note 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 to the reduction of the principal balance of the
indebtedness evidenced by the Notes and/or refunded to Obligors so that at no
time shall the interest or loan charges paid or payable in respect of the
indebtedness evidenced by the Notes exceed the maximum amounts permitted from
time to time by applicable law.
-24-
8.8 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.
8.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, or sent by certified mail or 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, the
date of the first business day after telecopy or telex, or the date of actual
delivery if sent by mailing, 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
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 Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxxx 00000
Attention: Xxx Xxxxxxx
Telecopy No.: 781/890-0118
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
-25-
The Address of Superior is: Superior Pharmaceutical Company
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telecopy No.: 781/890-0118
With a Copy to: Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxx X. Xxxxxxxxxxx
Telecopy No.: 860/240-2800
The Address of RxBazaar is: XxXxxxxx.xxx, Inc.
------------------
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxxx 00000
Attention:Xxxxxxx Xxxxxxx
Telecopy No.:781/890-0118
With a Copy to: Xxxxxxx Xxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxx X. Xxxxxxxxxxx
Telecopy No.: 860/240-2800
8.10 Entire Agreement. This Agreement and the other written
agreements between Obligors, Agent and Lenders 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 Obligors were not based upon any fact or material
provided by Lenders, nor were Obligors induced or influenced to enter into this
Agreement or the other Loan Documents by any representation, statement, analysis
or promise by Lenders. Without limiting the foregoing, Lenders have made no
agreements with any party hereto to consent to any future senior indebtedness
that a party might propose to obtain.
8.11 Governing Law and Amendments. This Agreement 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, modification, termination or
waiver of any provision of any Loan Document to which Obligors are a party, nor
consent to any departure by any Obligor from any
-26-
Loan Document to which it is a party, shall in any event be effective unless the
same shall be in writing and signed by the Majority Lenders. It is understood,
however, until there is an event of default by Obligors, the terms of the Notes
may only be modified by the unanimous written consent of Lenders and Borrower.
8.12 Survival of Representations and Warranties. All representations
and warranties contained herein or in any of the Loan Documents made by or
furnished on behalf of Obligors in connection herewith or in any Loan Documents
shall survive the execution and delivery of this Agreement and the other Loan
Documents.
8.13 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.
8.14 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 Obligors, Lenders and their respective agents have participated in the
preparation hereof.
8.15 General Indemnification. Obligors agree, jointly and severally,
to indemnify Lenders, Agent, their officers, directors, employees and agents
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties") and each of them and agrees to hold each of them harmless from and
against any and all losses, liabilities, damages, costs, expenses and claims of
any and every kind whatsoever (except those arising solely by reason of the
gross negligence or wilful misconduct of an Indemnified Party) which may be
imposed on, incurred by, or asserted against the Indemnified Parties or any of
them arising by reason of any action or inaction or omission to any act legally
required of Obligors (including as required pursuant hereto or pursuant to any
other Loan Document).
8.16 Standard of Care; Limitation of Damages. Lenders shall be
liable to Obligors only for matters arising from this Agreement or otherwise
related to the Obligations resulting from Lenders' gross negligence or wilful
misconduct, and liability for all other matters is hereby waived. Lenders shall
not in any event be liable to Obligors for special or consequential damages
arising from this Agreement or otherwise related to the Obligations.
8.17 Consent to Jurisdiction; Exclusive Venue. Obligors hereby
irrevocably consent to the jurisdiction of the United States District Court for
the Middle District of Tennessee and of all Tennessee state courts sitting in
Davidson County, Tennessee, for the purpose of any litigation to which Lenders
may be a party and which concerns this Agreement or the Obligations. It is
further agreed that venue for any such action shall lie exclusively with courts
sitting in Davidson County, Tennessee, unless the Majority Lenders agree to the
contrary in writing.
-27-
8.18 Waiver of Trial by Jury. LENDERS AND OBLIGORS 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 AGREEMENT OR
THE LOAN DOCUMENTS.
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.
FINOVA MEZZANINE CAPITAL INC.,
By: illegible
--------------------------------------------------------
Title: Vice President
-----------------------------------------------------
ARGOSY INVESTMENT PARTNERS, L.P.
By: Argosy Associates, L.P., its general partner
By: illegible
----------------------------------------------------
Title: Vice President, Argosy Associates, Inc., its G.P.
-------------------------------------------------
XXXXXXXX.XXX, INC.
By: C. Xxxxxx Xxxxxx
--------------------------------------------------------
Title: Executive Vice President
-----------------------------------------------------
DYNAGEN, INC.
By: Xxxxxxxxx X. Xxxxxxx
--------------------------------------------------------
Title: Executive Vice President
-----------------------------------------------------
SUPERIOR PHARMACEUTICAL COMPANY
By: C. Xxxxxx Xxxxxx
--------------------------------------------------------
Title: President
-----------------------------------------------------
-28-
INDEX OF SCHEDULES
------------------
Schedule 3.1(b) - Subsidiaries
Schedule 3.1(c) - Consents
Schedule 3.1(e) - Capitalization Table
Schedule 3.1(f) - Intellectual Property
Schedule 3.1(h) - Litigation
Schedule 3.1(i)(A) and (B) - Financial Statements
Schedule 3.1(j) - Other Agreements
Schedule 3.1(l) - Debt and Liens
Schedule 3.1(n) - Certain Transactions
Schedule 3.1(q) - Significant Contracts
Schedule 3.1(w) - Registration Rights
Schedule 4.12 - Permitted Dividends
Schedule 4.17 - Affiliate Transactions
Schedule 5.1(B) - Closing Documents
-29-
