EXHIBIT 99.2
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FIRST AMENDED AND RESTATED
LOAN AGREEMENT
THIS FIRST AMENDED AND RESTATED LOAN AGREEMENT ("Agreement"), dated as
of the ____ 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:
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WHEREAS, DynaGen, FINOVA (then known as Sirrom Capital Corporation) and
Argosy (then known as Odyssey Investment Partners, L.P.) entered into that Loan
Agreement dated as of June 18, 1997, as amended by that Amendment and Agreement
dated as of November 29, 1999 (as amended, the "1997 Loan Agreement"), pursuant
to which DynaGen borrowed from FINOVA the principal sum of $2,000,000 and from
Argosy the principal sum of $1,000,000 (collectively the "1997 Loans"); and
WHEREAS, DynaGen has 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:
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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
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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,
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1997 or Secured Promissory Notes issued in favor of Lenders as of the date
hereof in respect of 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
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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 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 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.
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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.
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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
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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.
(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
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(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 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.
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(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.
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(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, 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
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Obligor is not subject to any order, writ, injunction, decree or demand
of any court or any governmental authority.
(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
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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 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
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in excess of $50,000 per fiscal year or has committed to make
expenditures in 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).
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(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. ? 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
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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.
(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,
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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 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.
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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.
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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;
(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.
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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.
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.
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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;
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(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 be cured
20
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.
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(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.
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
22
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 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
23
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.
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
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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
The Address of Superior is: Superior Pharmaceutical Company
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
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 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.
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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.
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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
FINOVA MEZZANINE CAPITAL INC.,
By:_________________________________
Title:______________________________
ARGOSY INVESTMENT PARTNERS, L.P.
By: Argosy Associates, L.P., its general partner
By:___________________________
Title:________________________
XXXXXXXX.XXX, INC.
By:_________________________________
Title:______________________________
DYNAGEN, INC.
By:_________________________________
Title:______________________________
SUPERIOR PHARMACEUTICAL COMPANY
By:_________________________________
Title:______________________________
