EXHIBIT 10.82
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AMENDMENT AND AGREEMENT
THIS AMENDMENT AND AGREEMENT (this "Agreement"), dated November 30,
1999 by and between DynaGen, Inc., a Delaware corporation ("Borrower"), Finova
Mezzanine Capital Inc. f/k/a Sirrom Capital Corporation, a Tennessee corporation
("Sirrom") and Argosy Investment Partners, L.P., a Pennsylvania limited
partnership ("Argosy") (Sirrom and Argosy are sometimes referred to herein
collectively as the "Investors").
WITNESSETH:
WHEREAS, pursuant to a Loan Agreement dated June 18, 1997 by and
between Borrower and the Investors (the "Loan Agreement"), the Investors have
made loans to Borrower in the original principal amount of $3,000,000 (the
"Loan");
WHEREAS, the Loan is evidenced by a Secured Promissory Note dated as of
June 18, 1997 in the principal amount of $2,000,000, made and executed by
Borrower, payable to the order of Sirrom (herein referred to, together with any
extensions, modifications, renewals and/or replacements thereof, as the "Sirrom
Note") and a Secured Promissory Note dated as of June 18, 1997 in the principal
amount of $1,000,000, made and executed by Borrower, payable to the order of
Argosy (herein referred to, together with any extensions, modifications,
renewals and/or replacements thereof, as the "Argosy Note") (the Sirrom Note and
the Argosy Note are sometimes referred to herein collectively as the "Notes");
WHEREAS, the parties desire to make certain agreements relating to the
Loan and the Notes, as well as other agreements, as hereinafter set forth:
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, Borrower agrees as follows:
1. Acquisition of Series L Preferred Stock. Sirrom hereby elects to
surrender and cancel $500,000 in principal amount of the Sirrom Note, and Argosy
hereby elects to surrender and cancel $250,000 in principal amount of the Argosy
Note, in exchange for shares of Series I Preferred Stock, $0.01 par value per
share, of the Company ("Series L Preferred Stock"). In consideration thereof,
the Company hereby agrees to issue to Sirrom 6,667 shares of Series L Preferred
Stock and 3,333 shares of Series L Preferred Stock to Argosy. Each of Sirrom and
Argosy hereby tenders to the Company the portion of its Note to be canceled in
payment of the purchase price for the Series L Preferred Stock. The portion of
the Note surrendered and the debt evidenced thereby shall be canceled on the
books of the Company as of the date hereof.
In connection with its acquisition of shares of Series L Preferred
Stock, each Investor represents and warrants to the Company that it is acquiring
the Series L Preferred Stock for its own account for investment only and not
with a present view towards the public sale or distribution thereof and must
bear the risk of the investment indefinitely, that it is an "accredited
investor" as defined under the Securities Act, that it has reviewed all of the
Company's periodic and other filings with the Securities and Exchange Commission
including, without limitation, under the heading "Certain Factors That May
Affect Future Results" in such filings, that it has been given the opportunity
to ask questions of the Company, that it understands that the investment in
Series L Preferred Stock involves a HIGH DEGREE OF RISK and that the Company's
independent auditors have included an explanatory paragraph in their opinion on
the Company's financial statements expressing substantial doubt about the
Company's ability to continue as a going concern.
The certificates for the Series L Preferred Stock and any shares of
Common Stock issued upon conversion thereof may bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the certificates for such securities):
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for the securities
under said Act, or an opinion of counsel, in form, substance and scope
customary for opinions of counsel in comparable transactions, that
registration is not required under said Act or unless the Company is
provided with reasonable assurances that the securities were sold
pursuant to Rule 144 under said Act.
2. Conversion of Remainder of Notes. The Loan Agreement and the Notes
are hereby amended in all necessary respects to provide as follows:
The Holder of a Note shall be entitled, at its option, subject to the
following provisions of this Section, to convert all or a portion of the
principal and accrued interest on the Note into shares of common stock of the
Company, $0.01 par value per share ("Common Stock") at any time until the
Maturity Date, at a conversion price for each share of Common Stock (the
"Conversion Rate") equal to the Current Market Price (as defined below).
For purposes of this Agreement, the following terms have the meanings
indicated below:
(i) "Market Price of the Common Stock" means the closing bid price
of the Common Stock for the period indicated in the relevant provision, as
reported by Bloomberg, LP or, if not so reported, as reported on the
over-the-counter market.
(ii) "Current Market Price" means the average Market Price of the
Common Stock for the three (3) trading days ending on the trading day
immediately before the relevant Conversion Date (as defined below).
To convert all or part of the Notes, the holder shall surrender the
Note to be converted to the Company accompanied or preceded by facsimile or
other delivery to the Company of written notice ("Notice of Conversion")
executed by the holder evidencing the holder's irrevocable election to convert
the Note or a specified portion thereof as specified in the notice and
accompanied, if required by the Company, by proper assignment thereof in blank.
Interest accrued or accruing under the Note from the date hereof to the
Conversion Date shall, at the option of the Company, be paid upon conversion in
cash or Common Stock at the Conversion Rate applicable to such conversion (this
sentence applies only to interest accrued over a partial interest period ending
on a Conversion Date and does not render any other ordinary interest payments as
being payable in stock). No fractional shares of Common Stock or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share. The date on which
the Notice of Conversion is received by the Company shall be the "Conversion
Date," provided that the Holder shall deliver to the Company the original Note
being converted
within five (5) business days thereafter (and if not so delivered with such
time, the Conversion Date shall be the date on which the later of the Notice of
Conversion and the original Debentures being converted is received by the
Company). Facsimile delivery of the Notice of Conversion shall be accepted by
the Company at facsimile number (000) 000-0000, Attn: Xxxxxxxxx Xxxxxxx. The
Company shall deliver certificates representing Common Stock issuable upon
conversion ("Conversion Shares") not later than three (3) business days from the
Conversion Date.
Each Investor agrees not to convert any part of the Notes or sell any
Conversion Shares before January 1, 2001. Each Investor agrees, beginning
January 1, 2001, not to sell in any calendar quarter, more than the number of
Conversion Shares as are issued upon conversion of $250,000 of principal amount
of the Investor's Note. This restriction will be in addition to any restrictions
on resale or transfer of the shares of Common Stock issuable upon conversion of
the Note as may be imposed by law.
3. Events of Default Under Note. The Company agrees that any of the
following will constitute a covenant default under Section 5.1 of the Loan
Agreement, provided that no such event will constitute a default unless and
until the affected Investor notifies the Company of its election to treat such
event as an event of default and the Company does not cure such default within
thirty (30) days after receiving such notice:
(a) An Investor is unable to sell shares of common stock upon
conversion of the Series L Preferred Stock in an amount equal to the Investor's
"Maximum Conversion Value," as defined in the terms of the Series L Preferred
Stock, solely because of the Company's failure to obtain effectiveness of the
registration statement referred to in paragraph 5.
(b) An Investor exercises the put feature of the Stock Purchase
Warrants dated June 18, 1997, and the Company fails to pay the amount due on
exercise of the put option within sixty (60) days of the due date.
In the case of a default under (a) or (b) above, or upon the occurrence
of any other Event of Default under the Loan Agreement (it being acknowledged
that a defaulted payment shall be considered an Event of Default for this
purpose even though the Investors may be prohibited from making demand for
monetary payment thereof pursuant to an agreement with the Company's senior
secured creditor) then the Investor with respect to whom the Company has
defaulted will have the right to convert the remaining portion of the Investor's
Note into shares of Common Stock in accordance with the terms of the Note, and
will have the right sell such shares of Common Stock in any amount in and any
manner allowed by law, notwithstanding any provision of Section 2 above or of
any other agreement between the Investor and the Company. An Investor wishing to
exercise this right on account of a default other than for the nonpayment of
money shall give the Company at least ten (10) days prior written notice of the
Investor's intention to convert; provided, that the Company shall be entitled to
cure such defaults within such ten (10) day period, and if the Company does cure
the default the Investor shall not be entitled to exercise the right of
conversion with respect to such default. This special notice, if applicable,
must be given after the event or condition causing the default has become an
"Event of Default" under the Loan Agreement (i.e., after all notice and cure
requirements of the Loan Agreement have been satisfied).
4. Issuance of Warrant. The Company hereby agrees to issue to Sirrom a
warrant substantially in the form of Exhibit A hereto to purchase 266,667 shares
of Common Stock at a purchase price per share equal to the Market Price of the
Common Stock as of the date hereof. The Company hereby agrees to issue to Argosy
a warrant substantially in the form of Exhibit A to purchase 133,333 shares of
Common Stock at a purchase price per share equal to the Market Price of the
Common Stock as of the date hereof.
5. Registration. The Company shall prepare and file with the SEC at its
own a registration statement on form S-3 or Form SB-2 (a "Registration
Statement") registering for resale by the Investors a sufficient number of
shares of Common Stock for the Investors to sell (a) shares of Common Stock
issuable upon conversion of Series L Preferred Stock and (b) shares of Common
Stock issuable upon exercise of the common stock purchase warrants issued to
Sirrom and Argosy dated August 31, 1999. The Company will use its reasonable
best efforts to cause such Registration Statement to be declared effective no
later than February 28, 2000 and to keep the registration statement in effect
for a sufficient time to allow the Investors to sell shares of Common Stock
yielding proceeds equal to each Investor's "Maximum Conversion Value" as defined
in the Certificate of Designations, Preferences and Rights of Series L Preferred
Stock. In the event of a default under Section 3(a) or 3(b) above, or
upon the occurrence of any other Event of Default under the Loan Agreement, at
the request of an Investor that has established its right to convert shares of
Common Stock under Section 3 above the Company shall prepare and file a
Registration Statement registering for resale by the Investor shares of Common
Stock issued or issuable to the Investor upon conversion of the Notes, and shall
use its reasonable best efforts to cause such Registration Statement to be
declared effective as soon as practicable thereafter.
If at any time or from time to time after the date of effectiveness of
the Registration Statement, the Company notifies the Investors in writing of the
existence of a "Potential Material Event," (as hereinafter defined) the
Investors shall not offer or sell any securities under the Registration
Statement or engage in any other transaction utilizing, involving or relating to
the Registration Statement, from the time of the giving of notice with respect
to a Potential Material Event until such Investor receives written notice from
the Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event. A "Potential
Material Event" means any of the following: (i) the possession by the Company of
material information not ripe for disclosure in a registration statement, which
shall be evidenced by determinations in good faith by the Board of Directors of
the Company that disclosure of such information in the registration statement
would be detrimental to the business and affairs of the Company; or (ii) any
material engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information.
Each Investor agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, including furnishing to the Company such
information regarding itself, the registrable securities held by it, and its
intended method of disposition of the registrable securities held by it.
6. Intercreditor Agreement; Pledge of Superior Stock. In connection
with this Amendment and Agreement, each Investor is simultaneously entering into
that certain Intercreditor Agreement dated as of even date herewith by and among
the Investors and BankBoston, N.A. (the "Bank"), pursuant to which, among other
things, each Investor at the Bank's request is subordinating its right, title
and interest in that certain pledge of the shares of stock of Superior
Pharmaceutical Company and tenders such shares of stock herewith to the Company
for delivery to the Bank, whose possession thereof shall perfect the senior
security interest of the Bank and the junior security interest of the Company.
The Company shall instruct the Bank to return the pledged certificate(s) to
Sirrom as agent for the Investors if the Bank wishes to release its security
interest in such shares due to its having received payment in full or otherwise.
7. Loan Agreement. As amended hereby, the Loan Agreement and each of
the Notes shall remain in effect hereafter. Each Investor hereby, by executing
and delivering this Amendment and Agreement, confirms that (i) it has
voluntarily refrained from exercising its remedies in connection with any past
obligations under the Loan, the Loan Agreement or the applicable Note from June
18, 1997 to the date hereof, (ii) it is not aware of any default thereunder that
has not been cured, other than (i) certain payments being past due for October
and November of 1999, which payments the Company agrees to pay, and the
Investors agree to accept, within five (5) days of the date hereof with no
resulting acceleration, assessment of default rate or other penalty or
consequence, and (ii) certain financial reports being past due, which the
Investors agree to accept on or before December 10, 1999 with no resulting
acceleration, assessment of default rate or other penalty or consequence. The
Company acknowledges and agrees that the Investors' past voluntary forbearance
does not evidence or create any obligation on their part to similarly forbear
upon the occurrence of any future Event of Default. Capitalized terms used but
not defined herein shall have the meanings given them in the Loan Agreement.
8. Additional Agreements. The Company agrees (i) to pay the fees and
expenses of counsel to Investors in an amount not exceeding $30,000 within five
(5) days of receipt of an invoice therefor generally summarizing the basis for
the charges, and (ii) to cause to be delivered to Sirrom as Agent for the
Investors within five (5) business days following the date hereof an opinion
letter of the Company's counsel in customary form relating to this Agreement and
the transactions contemplated hereby. The Company further agrees to deliver to
the Investors, concurrently with delivery to BankBoston, N.A., all financial
reports and information required under
Sections 10.5, 10.6 and 10.7 of the Loan and Security Agreement of this date (or
of approximately this date) between BankBoston, N.A. and the Company, as such
requirements may be amended from time to time.
