EXHIBIT 99.1
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement"), dated as of the 18th day of June,
1997, is made and entered into on the terms and conditions hereinafter set
forth, by and between DYNAGEN, INC., a Delaware corporation ("Borrower"), and
SIRROM CAPITAL CORPORATION, a Tennessee corporation ("Sirrom") and ODYSSEY
INVESTMENT PARTNERS, L.P., a Pennsylvania limited partnership ("Odyssey")
(Sirrom and Odyssey are sometimes referred to herein individually as "Lender"
and collectively as the "Lenders").
RECITALS:
WHEREAS, Borrower has requested that Sirrom make available to Borrower
a term loan in the principal amount of Two Million and No/100ths Dollars
($2,000,000.00) (the "Sirrom Loan") on the terms and conditions hereinafter set
forth, and for the purpose(s) hereinafter set forth; and
WHEREAS, Borrower has requested that Odyssey make available to Borrower
a term loan in the principal amount of One Million and No/100ths Dollars
($1,000,000) (the "Odyssey Loan") on the terms and conditions hereinafter set
forth, and for the purpose(s) hereinafter set forth; and
WHEREAS, the Sirrom Loan and the Odyssey Loan are hereinafter
collectively referred to as the "Loan"; and
WHEREAS, in order to induce Lenders to make the Loan to Borrower,
Borrower has made certain representations to Lenders; and
WHEREAS, Lenders, in reliance upon the representations and inducements
of Borrower, have agreed to make the Loan upon the terms and conditions
hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the agreement of Lenders to make
the Loan, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lenders hereby agree as follows:
ARTICLE 1
THE LOAN
1.1 Evidence of Loan Indebtedness and Repayment. Subject to the terms
and conditions hereof, Lenders shall advance an aggregate total of $3,000,000.00
of the Loan proceeds to Borrower by wire transfer on the date hereof to or for
the benefit of Borrower in immediately available funds. The Loan shall be
evidenced by Secured Promissory Notes in the aggregate principal amount of Three
Million and No/100ths Dollars ($3,000,000.00), substantially in the form of
Exhibits A-1 and A-2 attached hereto and incorporated herein by this reference
(the "Notes"), dated as of the date hereof, and executed by Borrower to the
order of Lenders, respectively. The Loan shall be payable in accordance with the
terms of the Notes, this Agreement and any other instruments and documents
executed by Borrower, any Subsidiary (as hereinafter defined), any guarantor of
Borrower, or any shareholder of Borrower, now or hereafter evidencing, securing
or in any way related to the indebtedness evidenced by the Notes (all such
notes, instruments, agreements and other documents being hereinafter sometimes
individually referred to as a "Loan Document" and collectively referred to as
the "Loan Documents").
1.2 Processing Fee. Borrower shall pay a processing fee of $45,000 to
Sirrom, $33,750 of which shall be paid prior to closing with the balance of
$11,250 to be paid at closing. Borrower shall pay an application fee of $10,000
to Odyssey, all of which shall be paid at closing and a closing fee of $12,500
to Odyssey, all of which shall be paid at closing.
1.3 Purpose(s) of Loan and Use of Proceeds. The purposes of the Loan
shall be to acquire all of the capital stock of Superior Pharmaceutical Company
("Superior") through a wholly owned subsidiary of Borrower, to provide working
capital to Borrower, and to pay all costs and expenses incurred by the parties
hereto in connection with the making and documenting of the Loan, including
attorneys' fees and expenses. The proceeds of the Loan shall not be used for any
other purpose.
1.4 Prepayment. Borrower may prepay the Loan in whole or in part at any
time and from time to time without premium or penalty.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 Borrower's Representations. Borrower hereby represents and warrants
to Lenders as follows, except as disclosed in any schedule hereto. The
disclosures in any schedule hereto shall qualify every other section of this
Agreement to the extent it is reasonably clear from a reading of such schedule
that the disclosures contained therein are applicable to such other sections.
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(a) Corporate Status. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; and has the corporate power to own and operate its
properties, to carry on its business as now conducted and to enter into
and to perform its obligations under this Agreement and the other Loan
Documents to which it is a party. Borrower is duly qualified to do
business and is in good standing in the Commonwealth of Massachusetts
and every other state in which a failure to be so qualified and in good
standing would have a material adverse effect on Borrower's financial
position or its ability to conduct its business in the manner now
conducted.
(b) Other Business Organizations. Schedule 2.1(b) hereto is a
complete list of each corporation, partnership, joint venture or other
business organization (any such corporation, partnership, joint venture
or other business organization in which Borrower holds more than a 50%
interest is referred to herein as a "Subsidiary" or, with respect to
all such organizations, the "Subsidiaries") in which Borrower or any
Subsidiary owns, directly or indirectly, any capital stock or other
equity interest, or with respect to which Borrower or any Subsidiary,
alone or in combination with others, is in a control position, which
list shows the jurisdiction of incorporation or other organization and
the percentage of stock or other equity interest of each Subsidiary
owned by Borrower. Each Subsidiary which is a corporation is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing in the
jurisdictions listed in Schedule 2.1(b), which are the only
jurisdictions where the properties owned or leased or the business
transacted by it makes such licensing or qualification to do business
as a foreign corporation necessary, and no other jurisdiction has
demanded, requested or otherwise indicated that (or inquired whether)
it is required so to qualify. Each Subsidiary which is not a
corporation is duly organized and validly existing under the laws of
the jurisdiction of its organization. The outstanding capital stock of
each Subsidiary which is a corporation is validly issued, fully paid
and nonassessable. Borrower and the Subsidiaries have good and valid
title to the equity interests in the Subsidiaries shown as owned by
each of them on Schedule 2.1(b), free and clear of all liens, claims,
charges, restrictions, security interests, equities, proxies, pledges
or encumbrances of any kind, except as set forth on Schedule 2.1(b).
Except where otherwise indicated herein, any reference to Borrower in
this Agreement shall include Borrower and all of its Subsidiaries.
(c) Authorization. Borrower has full legal right, power and
authority to conduct its business and affairs. Borrower has full legal
right, power and authority to enter into and perform its respective
obligations under the Loan Documents to which each is a party, without
the consent or approval of any other person, firm, governmental agency
or other legal entity, except as set forth on Schedule 2.1(c). The
execution and delivery of this Agreement, the borrowing hereunder, the
execution and delivery of each Loan Document to which Borrower is a
party, and the performance by Borrower of its respective obligations
thereunder are within the
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corporate powers of Borrower and have been duly authorized by all
necessary corporate action properly taken, have received all necessary
governmental approvals, if any were required, and do not and will not
contravene or conflict with any provision of law, any applicable
judgment, ordinance, regulation or order of any court or governmental
agency, the articles of incorporation or bylaws of Borrower, or any
agreement binding upon Borrower. The officer(s) executing this
Agreement, the Notes and all of the other Loan Documents to which
Borrower is a party are duly authorized to act on behalf of Borrower.
(d) Validity and Binding Effect. This Agreement and the other
Loan Documents to which the Borrower is a party are the legal, valid
and binding obligations of Borrower, and are enforceable in accordance
with their respective terms, subject only to limitations imposed by
bankruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors generally or the application of general equitable
principles.
(e) Capitalization. As of the date hereof, the authorized
capital stock of Borrower consists solely of (i) 75,000,000 shares of
common stock, $.01 par value per share ("Common Stock"), of which
32,164,144 shares are issued and outstanding (the "Common Shares") and
(ii) 10,000,000 shares of preferred stock, $.01 par value per share, of
which 50,000 shares have been designated Series A Preferred Stock of
which 41,000 shares are issued and outstanding and of which 7,500
shares have designated as Series B Preferred Stock, all of which are
issued and outstanding. 400,000 shares of Common Stock shall be
reserved for issuance upon exercise of the Stock Purchase Warrants
dated as of the date hereof and issued to Lenders (the "Borrower
Warrants"); provided, however, that the number of shares of Common
Stock reserved for issuance upon exercise of the Borrower Warrants
shall be increased from time to time in accordance with the terms of
the Borrower Warrants. As of the date hereof, except for the Borrower
Warrants and as may otherwise be set forth on Schedule 2.1(e), 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, nor shall it have outstanding any rights
or options to subscribe for or to purchase its Common Stock or any
stock or securities convertible into or exchangeable for its Common
Stock or any stock appreciation rights or phantom stock plans. Schedule
2.1(e) accurately sets forth the following with respect to all
outstanding options and rights to acquire the Borrower's Common Stock
from Borrower: (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 Common Stock other than the Borrower Warrants, the holder,
the number of shares covered, the exercise price and the expiration
date. As of the date hereof, Borrower does not have any obligation
(contingent or otherwise) to repurchase, redeem, retire or otherwise
acquire any shares of its Common Stock or to issue any warrants,
options or other rights to acquire its Common Stock, except
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as set forth in the Borrower Warrants or on Schedule 2.1(e). As of the
date hereof, all of the outstanding shares of Borrower's Common Stock
have been validly issued, fully paid and are nonassessable. Except as
may be set forth on Schedule 2.1(e), there are no statutory or
contractual preemptive rights, rights of first refusal, anti-dilution
rights or any similar rights, held by any person, corporation,
partnership, limited liability company or other legal entity,
including, but not limited to, stockholders or other holders of any
securities of the Borrower, with respect to the issuance of the
Borrower Warrants or the issuance of the Common Stock upon exercise of
the Borrower Warrants. All such rights granted in the documents, if
any, listed on Schedule 2.1(e) have been effectively and irrevocably
waived to the extent required (if any) with regard to the issuance of
the Borrower Warrants, the exercise of the Borrower Warrants and the
issuance of the Common Stock upon exercise of the Borrower Warrants.
Borrower has not violated any applicable federal or state securities
laws in connection with the offer, sale or issuance of any of its
Common Stock, and the offer, sale and issuance of the Borrower Warrants
hereunder do not require registration under the Securities Act or any
applicable state securities laws. To the best of Borrower's knowledge,
there are no agreements among Borrower's stockholders with respect to
any other aspect of Borrower's affairs, except as set forth on Schedule
2.1(e). As of the date hereof, the authorized capital stock of Superior
consists solely of (i) 750 shares of common stock, no par value per
share ("Superior Common Stock"), of which 100 shares are issued and
outstanding (the "Superior Common Shares") and 35 shares of which shall
be reserved for issuance upon exercise of the Stock Purchase Warrants
dated as of the date hereof and issued to Lenders by Superior (the
"Superior Warrants"); provided, however, that the number of shares of
Common Stock reserved for issuance upon exercise of the Superior
Warrants shall be increased from time to time in accordance with the
terms of the Superior Warrants. As of the date hereof, except for the
Superior Warrants and as may otherwise be set forth on Schedule 2.1(e),
no Subsidiary has outstanding any stock or securities convertible or
exchangeable for any shares of its common stock or containing any
profit participation features, nor shall it have outstanding any rights
or options to subscribe for or to purchase its common stock or any
stock or securities convertible into or exchangeable for its common
stock or any stock appreciation rights or phantom stock plans. Schedule
2.1(e) accurately sets forth the following with respect to all
outstanding options and rights to acquire common stock from any
Subsidiary: (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
any Subsidiary's common stock other than the Superior Warrants, the
holder, the number of shares covered, the exercise price and the
expiration date. As of the date hereof, no Subsidiary has any
obligation (contingent or otherwise) to repurchase, redeem, retire or
otherwise acquire any shares of its common stock or to issue any
warrants, options or other rights to acquire its common stock, except
as set forth in the Superior Warrants or on Schedule 2.1(e). As of the
date hereof, all of the outstanding shares of each Subsidiary's common
stock have been validly issued,
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fully paid and are nonassessable. Except as may be set forth on
Schedule 2.1(e), there are no statutory or contractual preemptive
rights, rights of first refusal, anti-dilution rights or any similar
rights, held by any person, corporation, partnership, limited liability
company or other legal entity, including, but not limited to,
stockholders or other holders of any securities of any Subsidiary, with
respect to the issuance of the Superior Warrants or the issuance of the
common stock upon exercise of the Superior Warrants. All such rights
granted in the documents, if any, listed on Schedule 2.1(e) have been
effectively and irrevocably waived with regard to the issuance of the
Superior Warrants, the exercise of the Superior Warrants and the
issuance of the common stock upon exercise of the Superior Warrants. No
Subsidiary has violated any applicable federal or state securities laws
in connection with the offer, sale or issuance of any of its Common
Stock, and the offer, sale and issuance of the Subsidiary Warrants
hereunder do not require registration under the Securities Act or any
applicable state securities laws. To the best of Borrower's knowledge,
there are no agreements among Subsidiary's stockholders with respect to
any other aspect of Subsidiary's affairs, except as set forth on
Schedule 2.1(e). The Borrower Warrants and the Subsidiary Warrants are
sometimes referred to herein individually as a "Warrant" and
collectively as the "Warrants." For purposes of this Section 2.1(e),
the term "Subsidiary" shall not include Able Laboratories, Inc.
(f) Trademarks, Patents, Etc. Schedule 2.1(f) is an accurate
and complete list of all patents, patent applications, trademarks,
trademark registrations, trademark applications, service marks, service
xxxx registrations, service xxxx applications, trade names, service
names, copyrights, patents, trademark and/or know-how licenses owned or
granted to or by Borrower or which are used or required by Borrower in
the operation of its business, title to each of which is, except as set
forth in Schedule 2.1(f) hereto, held by Borrower free and clear of all
adverse claims, liens, security agreements, restrictions or other
encumbrances. There is no infringement action, lawsuit, claim or
complaint which asserts that any patent, trademark, service xxxx,
copyright owned or licensed by or to Borrower or any of Borrower's
products, processes, know-how or operations violate or infringe the
patents, trademarks, trade names, service names, or copyrights of
others, nor, to the best of Borrower's knowledge, is Borrower in any
way making use of any confidential information or trade secrets of any
person except with the consent of such person.
(g) No Conflicts. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower under
and pursuant to the Loan Documents to which each is a party will not
result in any breach of, or constitute a default under, any mortgage,
security deed or agreement, deed of trust, lease, bank loan or credit
agreement, articles of incorporation or bylaws, material contract,
license, franchise or any other material instrument or material
agreement to which Borrower is a party or by which Borrower, or its
respective properties may be bound or affected as to which Borrower has
not obtained an effective and irrevocable waiver.
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(h) Litigation. Except as set forth on Schedule 2.1(h), there
are no actions, suits, proceedings or arbitrations pending, or, to the
knowledge of Borrower, threatened, against or affecting Borrower
required to be disclosed in Borrower's filings with the Securities and
Exchange Commission or involving the validity or enforceability of any
of the Loan Documents at law or in equity, or before any governmental
or administrative agency required to be disclosed in Borrower's filings
with the Securities and Exchange Commission; and to Borrower's
knowledge, Borrower is not in default with respect to any order, writ,
injunction, decree or demand of any court or any governmental
authority.
(i) Financial Statements. The financial statements of
Borrower, for the fiscal year ended December 31, 1996 contained in
Borrower's Annual Report on Form 10-K for the year ended December 31,
1996 (the "Form 10-K") and the financial statements of Superior for the
fiscal year ended December 31, 1996, attached hereto as Schedule
2.1(i)(A), are true and correct in all material respects have been
prepared on the basis of generally accepted accounting principles
consistently applied, and fairly present the financial condition of
Borrower as of the fiscal year then ended. No material adverse change
has occurred in the financial condition of Borrower since the date(s)
thereof, and no additional borrowings have been made by Borrower since
the date(s) thereof other than as set forth on Schedule 2.1(i)(B).
(j) Other Agreements; No Defaults. Borrower is not a party to
any indentures, loan or credit agreements, leases or other agreements
or instruments, or subject to any restrictions contained in their
respective articles of incorporation, bylaws or corporate restrictions
that could have a material adverse effect on the business, properties,
assets, operations or conditions, financial or otherwise, of Borrower,
or the ability of Borrower to carry out its obligations under the Loan
Documents to which it is a party. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any agreement
or instrument material to its business to which it is a party,
including but not limited to this Agreement and the other Loan
Documents, and no other default or event has occurred and is continuing
that with notice or the passage of time or both would constitute a
default or event of default under any of same.
(k) Compliance With Law. Borrower has obtained all material
licenses, permits and approvals and authorizations necessary or
required in order to conduct its business and affairs as heretofore
conducted and as hereafter intended to be conducted. To Borrower's
knowledge, Borrower is in compliance with all laws, regulations,
decrees and orders applicable to it (including but not limited to laws,
regulations, decrees and orders relating to environmental, occupational
and health standards and controls, antitrust, monopoly, restraint of
trade or unfair competition), except to the extent that noncompliance,
in the aggregate, cannot reasonably be expected to have a material
adverse effect on its business, operations, property or
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financial condition and will not materially adversely affect Borrower's
financial position or its ability to perform its obligations under the
Loan Documents.
(l) Debt. Schedule 2.1(l) is a complete and correct list of
all credit agreements, indentures, purchase agreements, promissory
notes and other evidences of indebtedness, guaranties, capital leases
and other instruments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements
and arrangements for the issuance of letters of credit or for
acceptance financing) in respect of which Borrower, or any of its
properties is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question that are
outstanding and that can be outstanding are correctly stated, and all
liens of any nature given or agreed to be given as security therefor
are correctly described or indicated in such Schedule.
(m) Taxes. Borrower has filed or caused to be filed all tax
returns that to Borrower's knowledge are required to be filed (except
for returns that have been appropriately extended), and has paid, or
will pay when due, all taxes shown to be due and payable on said
returns and all other taxes, impositions, assessments, fees or other
charges imposed on them by any governmental authority, agency or
instrumentality, prior to any delinquency with respect thereto (other
than taxes, impositions, assessments, fees and charges currently being
contested in good faith by appropriate proceedings, for which
appropriate amounts have been reserved). No tax liens have been filed
against Borrower, or any of the property thereof.
(n) Small Business Concern. Borrower, taken together with its
"affiliates" (as that term is defined in 13 C.F.R. ss.121.103), is a
"Small Business Concern" within the meaning of 15 U.S.C. ss.662(5),
that is Section 103(5) of the Small Business Investment Act of 1958, as
amended, and the regulations promulgated thereunder, as currently in
effect (collectively the "SBIC Act"), including 13 C.F.R. ss.107, and
meets the applicable size eligibility criteria set forth in 13 C.F.R.
ss.121.301(c)(1) or the industry standard covering the industry in
which Borrower is primarily engaged as set forth in 13 C.F.R.
ss.121.301(c)(2). Neither Borrower nor any of its Subsidiaries
presently engages in any activities for which a small business
investment company is prohibited from providing funds by the SBIC Act,
including 13 C.F.R. ss.107.
On or before the closing of the Odyssey Loan, Odyssey
shall have received from Borrower SBA Forms 480 and 652, which have
been completed and executed by Borrower, and SBA Form 1031, Parts A and
B of which have been completed by Borrower.
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(o) Certain Transactions. Except as set forth in the Form 10-K
or on Schedule 2.1(o), Borrower is not indebted, directly or
indirectly, to any of its shareholders, officers, or directors or to
their respective spouses or children, in any amount whatsoever; none of
said shareholders, officers or directors or any members of their
immediate families, are indebted to Borrower or have any direct or
indirect ownership interest in any firm or corporation with which
Borrower has a business relationship, or any firm or corporation which
competes with Borrower, except that shareholders, officers and/or
directors of Borrower may own no more than 4.9% of outstanding stock of
publicly traded companies which may compete with Borrower; no officer
or director of Borrower or any member of their immediate families, is,
directly or indirectly, interested in any material contract with
Borrower. Borrower is not a guarantor or indemnitor of any indebtedness
or other obligation of any other person, firm or corporation, except
for obligations of any Subsidiary.
(p) Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrower, contained in this
Agreement or any other Loan Document, or any schedule attached hereto
or thereto, or in any statement in any document, certificate or other
instrument furnished or to be furnished by Borrower to Lender pursuant
hereto, taken as a whole, contains or will (as of the time so
furnished) contain any untrue statement of a material fact, or omits or
will (as of the time so furnished) omit to state any material fact
which is necessary in order to make the statements contained therein
not misleading.
(q) Margin Regulations. Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying
margin stock. No proceeds received pursuant to this Agreement will be
used to purchase or carry any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act of
1934, as amended.
(r) Significant Contracts. Schedule 2.1(r) and the exhibits to
the Form 10- K contain all material contracts as required by Item
601(10) of Regulation S-K of the Securities Act of 1933, as amended
(the "Securities Act"). Each such contract, agreement and other
document is in full force and effect as of the date hereof and Borrower
knows of no reason why such contracts, agreements and other documents
would not remain in full force and effect pursuant to the terms
thereof.
(s) Environment. Borrower has duly complied with, and its
business, operations, assets, equipment, property, leaseholds or other
facilities are in compliance with, the provisions of all federal, state
and local environmental, health, and safety laws, codes and ordinances,
and all rules and regulations promulgated thereunder, except to the
extent that failure to do so would not have a material adverse effect
on its business. Except to the extent that failure to do so would not
have a material adverse effect on its business, Borrower has been
issued and will maintain all required federal, state and local permits,
licenses, certificates and approvals relating to (1) air emissions; (2)
discharges to surface water or
9
groundwater; (3) noise emissions; (4) solid or liquid waste disposal;
(5) the use, generation, storage, transportation or disposal of toxic
or hazardous substances or wastes (which shall include any and all such
materials listed in any federal, state or local law, code or ordinance
and all rules and regulations promulgated thereunder as hazardous or
potentially hazardous); or (6) other environmental, health or safety
matters. Borrower has not received notice of, nor does it know of,
facts which might constitute any violations of any federal, state or
local environmental, health or safety laws, codes or ordinances, and
any rules or regulations promulgated thereunder with respect to its
businesses, operations, assets, equipment, property, leaseholds, or
other facilities except to the extent that such violations would not
have a material adverse effect on its business. Except to the extent
that such emission, spill, release or discharge would have a material
adverse effect on its business and except in accordance with a valid
governmental permit, license, certificate or approval, there has been
no emission, spill, release or discharge into or upon (1) the air; (2)
soils, or any improvements located thereon; (3) surface water or
groundwater; or (4) the sewer, septic system or waste treatment,
storage or disposal system servicing the premises, of any toxic or
hazardous substances or wastes at or from the premises; and to the best
of Borrower's knowledge, the premises of Borrower are free of all such
toxic or hazardous substances or wastes. There has been no complaint,
order, directive, claim, citation or notice by any governmental
authority or any person or entity with respect to (1) air emissions;
(2) spills, releases or discharges to soils or improvements located
thereon, surface water, groundwater or the sewer, septic system or
waste treatment, storage or disposal systems servicing the premises;
(3) noise emissions; (4) solid or liquid waste disposal; (5) the use,
generation, storage, transportation or disposal of toxic or hazardous
substances or waste; or (6) other environmental, health or safety
matters materially affecting Borrower or its business, operations,
assets, equipment, property, leaseholds or other facilities. Borrower
has no material indebtedness, obligation or liability (absolute or
contingent, matured or not matured), with respect to the storage,
treatment, cleanup or disposal of any solid wastes, hazardous wastes or
other toxic or hazardous substances (including without limitation any
such indebtedness, obligation, or liability with respect to any current
regulation, law or statute regarding such storage, treatment, cleanup
or disposal).
(t) Fees; Commissions. Borrower has not agreed to pay any
finder's fee, commission, origination fee (except for the processing
and commitment fees due pursuant to Section 1.2 and $185,000 of fees
payable to Quaker Capital Corporation) or other fee or charge to any
person or entity with respect to the Loan and investment transactions
contemplated hereunder.
(u) ERISA. Borrower is in compliance in all material respects
with all applicable provisions of ERISA (as defined in Section 3.11
hereof). Neither a reportable event nor a prohibited transaction (as
defined in ERISA) has occurred and is continuing with respect to any
Plan (as defined in Section 3.11 hereof); no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; no
circumstances exist which constitute grounds entitling the Pension
Benefit
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Guaranty Corporation (together with any entity succeeding to any or all
of its functions, the "PBGC") to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted
any such proceedings; neither Borrower nor any commonly controlled
entity (as defined in ERISA) has completely or partially withdrawn from
a multiemployer plan (as defined in ERISA); Borrower and each commonly
controlled entity has met its minimum funding requirements under ERISA
with respect to all of its Plans and the present fair market value of
all Plan property exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the
Plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of Borrower or any
commonly controlled entity to the PBGC or the Plan under Title IV of
ERISA; and neither Borrower nor any commonly controlled entity has
incurred any liability to the PBGC under ERISA.
(v) Title to Properties. Borrower has good, indefeasible and
insurable title to, or valid leasehold interests in, all its real
properties and good title to its other assets, free and clear of all
liens other than Permitted Liens (as defined in Section 3.15 hereof).
(w) Material Adverse Effect. Since March 31, 1997, no event
has occurred which has resulted or which Borrower reasonably believes
could be expected to result in a material adverse effect on Borrower or
Superior or Borrower's or Superior's ability to perform its obligations
under the Loan Documents. No default or event of default under any
other agreement will occur as a result of the transactions contemplated
by this Agreement or by the Warrants.
(x) Financial Solvency. Borrower is not entering into the
arrangements contemplated by this Agreement and the other Loan
Documents with actual intent to hinder, delay or defraud either present
or future creditors. On and as of the date hereof on a pro forma basis
after giving effect to the transactions contemplated by the Loan
Documents and to all debts incurred or to be created in connection
therewith:
(i) the present fair salable value of the assets of
Borrower (on a going concern and consolidated basis) will
exceed the probable liability of Borrower to Lenders;
(ii) Borrower has not incurred, nor does it intend to
or believe that it will incur, debts (including contingent
obligations) beyond its ability to pay such debts as such
debts mature (taking into account the timing and amounts of
cash to be received from any source, and of amounts to be
payable on or in respect of debts); and the amount of cash
available to Borrower after taking into account all other
anticipated uses of funds is anticipated to be sufficient to
pay all such amounts on or in respect of debts, when such
amounts are required to be paid; and
11
(iii) except as disclosed in the Form 10-K, Borrower
will have sufficient capital with which to conduct its present
and proposed business and the property of Borrower does not
constitute unreasonably small capital with which to conduct
its current business at present levels of operations.
For purposes of this Section 2.1(x) "debt" means any liability
on a (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or
unsecured; or (ii) right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such
a right to an equitable remedy is reduced to judgment, fixed,
contingent, unmatured, disputed, undisputed, secured, or unsecured.
(y) Offering of Note and Warrant. Neither Borrower nor anyone
acting on its behalf has offered the Notes, the Warrants or any similar
securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof, with,
any person other than Lenders and not more than 35 other institutional
investors. Neither Borrower nor anyone acting on its behalf has taken,
or will take, any action which would subject the issuance or sale of
the Notes, and the Warrants to Section 5 of the Securities Act or the
registration or qualification provisions of the blue sky laws of any
state.
(z) Registration Rights. Except as disclosed in the Form 10-K
and Schedule 2.1(z), Borrower is not under any obligation to register
under the Securities Act or the Trust Indenture Act of 1939, as
amended, any of its presently outstanding securities or any of its
securities that may subsequently be issued.
(aa) Employees. Borrower has no current labor problems or
disputes which have resulted or which Borrower reasonably believes
could be expected to have a material adverse effect upon Borrower.
(ab) Issuance Taxes. All taxes imposed on Borrower in
connection with the issuance, sale and delivery of the Notes, the
Warrants, and the Common Stock issuable upon exercise of the Warrants
have been or will be fully paid by Borrower in accordance with all laws
imposing such taxes.
(ac) List of Deposit Institutions. Schedule 2.1(ac) hereto
sets forth a true and complete list of all deposit institutions at
which Borrower has or maintains an account or deposits of any kind.
(ad) Locations and Names. Borrower has not, during the five
years preceding the date of this Agreement, been known as or used any
other corporate, trade or fictitious name, nor acquired all or
substantially all of the assets, capital stock or operating units of
any person except as described in the Form 10-K.
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Borrower has not, during the five years preceding the date of this
Agreement, had a business location at any address other than addresses
set forth on Schedule 2.1(ad).
ARTICLE 3
COVENANTS AND AGREEMENTS
Borrower covenants and agrees that during the term of this
Agreement:
3.1 Payment of Obligations. Borrower shall pay the indebtedness
evidenced by the Notes according to the terms thereof, and shall timely pay or
perform, as the case may be, all of the other obligations of Borrower to
Lenders, direct or contingent, however evidenced or denominated, and however and
whenever incurred, including but not limited to indebtedness incurred pursuant
to any present or future commitment of Lenders to Borrower, together with
interest thereon, and any extensions, modifications, consolidations and/or
renewals thereof and any notes given in payment thereof.
3.2 Financial Statements and Reports. Borrower shall furnish to Lenders
(a) as soon as practicable and in any event within ninety (90) days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower as
of the close of such fiscal year, a consolidated statement of earnings and
retained earnings of Borrower as of the close of such fiscal year and a
consolidated statement of cash flows for Borrower for such fiscal year, prepared
in accordance with generally accepted accounting principles consistently applied
("GAAP"), audited by an independent certified public accountant and certified by
an officer of Borrower and accompanied by a certificate of the President of
Borrower, stating that to the best of the knowledge of such officer, Borrower
has kept, observed, performed and fulfilled each covenant, term and condition of
this Agreement and the other Loan Documents during the preceding fiscal year and
that no Event of Default, as herein defined, has occurred and is continuing (or
if an Event of Default has occurred and is continuing, specifying the nature of
same, the period of existence of same and the action Borrower has taken or
proposes to take in connection therewith), (b) within twenty (20) days of the
end of each calendar month, a balance sheet of Superior as of the close of such
month and a statement of earnings and retained earnings of Superior as of the
close of such month, all in reasonable detail (including year-to-date financial
information), and prepared substantially in accordance with GAAP (except for the
absence of footnotes and subject to year-end adjustments), (c) within forty-five
(45) days of the end of each fiscal quarter, a Form 10-Q prepared in compliance
with applicable securities laws with respect to Borrower, and (d) with
reasonable promptness, such other financial data as Lender may reasonably
request, including without limitation, the "Closing Financial Statements" as
defined in that certain Agreement and Plan of Merger Agreement dated March 7,
1997, by and among Borrower, DynaGen Acquisition Corp., Superior and the
shareholders of Superior, as amended (the "Plan of Merger").
13
3.3 Maintenance of Books and Records; Inspection. Borrower shall
maintain its books, accounts and records in accordance with GAAP, and after
reasonable notice from Lenders, shall permit Lenders, its officers, employees
and any professionals designated by Lenders in writing, at Borrower's expense,
to visit, inspect and/or audit any of its properties, books and financial
records, and to discuss its accounts, affairs and finances with Borrower or the
principal officers of Borrower during reasonable business hours, all at such
times as Lenders may reasonably request; provided that no such visit, inspection
and/or audit shall materially interfere with the conduct of Borrower's business.
3.4 Insurance. Without limiting any of the requirements of any of the
other Loan Documents, Borrower shall maintain in amounts customary for entities
engaged in comparable business activity (a) to the extent required by applicable
law, worker's compensation insurance (or maintain a legally sufficient amount of
self insurance against worker's compensation liabilities, with adequate
reserves, under a plan approved by Lender, such approval not to be unreasonably
withheld or delayed), and (b) fire and "all risk" casualty insurance on its
properties against such hazards and in at least such amounts as are customary in
Borrower's business. Borrower will make reasonable efforts to obtain and
maintain public liability insurance in an amount, and at a cost, deemed
reasonable to the Borrower's Board of Directors. At the request of Lenders,
Borrower will deliver forthwith a certificate specifying the details of such
insurance in effect.
3.5 Taxes and Assessments. Borrower shall (a) file all tax returns and
appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (b) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (c) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided, however, that Borrower in good faith may
contest any such tax, assessment, governmental charge or levy described in the
foregoing clauses (b) and (c) so long as appropriate reserves are maintained
with respect thereto.
3.6 Corporate Existence. Borrower shall maintain its corporate
existence and good standing in the state of its incorporation, and its
qualification and good standing as a foreign corporation in each jurisdiction in
which such qualification is necessary pursuant to applicable law.
3.7 Compliance with Law and Other Agreements. Except where the failure
to do so would not materially adversely affect Borrower's operations or its
ability to fulfill its obligations under the Loan Documents, Borrower shall
maintain its business, operations and property owned or used in connection
therewith in compliance with (a) all applicable federal, state and local laws,
regulations and ordinances governing such business operations and the use and
ownership of such property, and (b) all agreements, licenses, franchises,
indentures and mortgages to which Borrower is a party or by which Borrower or
any of its properties is bound. Without limiting the foregoing, Borrower shall
pay all of its indebtedness promptly in accordance with the terms thereof.
14
3.8 Notice of Default. Borrower shall give written notice to Lenders of
the occurrence of any default, event of default or Event of Default under this
Agreement or any other Loan Document promptly upon the occurrence thereof.
3.9 Notice of Litigation. Borrower shall give notice, in writing, to
Lenders of (a) any actions, suits or proceedings instituted by any persons
whomsoever against Borrower, or affecting any of the assets of Borrower, wherein
the amount at issue is in excess of One Hundred Fifty Thousand and No/100ths
Dollars ($150,000.00), and (b) any dispute, not resolved within sixty (60) days
of the commencement thereof, between Borrower on the one hand and any
governmental regulatory body on the other hand, which dispute might materially
interfere with the normal operations of Borrower.
3.10 Conduct of Business, Name and Location of Business. Borrower will
continue to engage in a business of the same general type and manner as
conducted by it on the date of this Agreement and as proposed to be conducted in
the Form 10-K. Borrower will not change its name or any location of its business
without providing Lender with 10 days' written notice of such change. In the
event Borrower makes a change of its name or location of business, Borrower
shall promptly execute any and all financing statements, and amendments or
continuations thereof and any other documents that Lenders may reasonably
request to evidence, continue, and/or perfect any security interest in or pledge
of collateral securing the Loan.
3.11 ERISA Plan. If Borrower has in effect, or hereafter institutes, a
pension plan that is subject to the requirements of Title IV of the Employee
Retirement Income Security Act of 1974, Pub. L. No. 93-406, September 2, 1974,
00 Xxxx. 000, 00 X.X.X.X. ss. 1001 et seq. (1975), as amended from time to time
("ERISA"), then the following warranty and covenants shall be applicable during
such period as any such plan (the "Plan") shall be in effect: (a) Borrower
hereby warrants that no fact that might constitute grounds for the involuntary
termination of the Plan, or for the appointment by the appropriate United States
District Court of a trustee to administer the Plan, exists at the time of
execution of this Agreement, (b) Borrower hereby covenants that throughout the
existence of the Plan, Borrower's contributions under the Plan will meet the
minimum funding standards required by ERISA and Borrower will not institute a
distress termination of the Plan, and (c) Borrower covenants that it will send
to Lenders a copy of any notice of a reportable event (as defined in ERISA)
required by ERISA to be filed with the Labor Department or the Pension Benefit
Guaranty Corporation, at the time that such notice is so filed.
3.12 Dividends, Distributions, Stock Rights, etc. Except as described
on Schedule 3.12, Borrower shall not declare or pay any dividend of any kind
(other than stock dividends payable to all holders of any class of capital stock
or dividends consisting of shares of Common Stock to holders of any class of the
Company's preferred stock), in cash or in property, on any class of the capital
stock of Borrower, or purchase, redeem, retire or otherwise acquire for value
any shares of such stock, 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
15
similar plan (except as required or permitted hereunder), without the prior
written consent of Lenders. Superior shall not distribute to Borrower and
Borrower shall not receive any loans, advances, corporate expense allocations,
fees, distributions, dividends and/or any other payments or advances of any kind
from Superior other than amounts that Borrower uses to make payments under the
Notes and the promissory notes in the aggregate principal amount of $5,000,000
payable to the former shareholders of Superior pursuant to the Plan of Merger.
3.13 Guaranties; Loans; Payment of Debt. Without Lenders' prior express
written consent, Borrower shall not guarantee nor be liable in any manner,
whether directly or indirectly, or become contingently liable after the date of
this Agreement in connection with the obligations or indebtedness of any person
or entity whatsoever (other than a Subsidiary), except for the endorsement of
negotiable instruments payable to Borrower for deposit or collection in the
ordinary course of business. Without Lenders' prior express written consent,
Borrower shall not (a) make any loans, advances or extensions of credit to any
person other than in the normal course of its business, or (b) make any payment
on any subordinated debt.
3.14 Debt. Without the express prior written consent of Lenders (which
shall not be unreasonably withheld with respect to subsection 3.14(c)), Borrower
shall not create, incur, assume or suffer to exist indebtedness of any
description whatsoever, excluding:
(a) the indebtedness evidenced by the Notes;
(b) the endorsement of negotiable instruments payable to
Borrower for deposit or collection in the ordinary
course of business;
(c) debts incurred in the ordinary course of business
(each of which, individually, does not exceed
$500,000); and
(d) the indebtedness listed on Schedule 2.1(l) hereto.
3.15 No Liens. Borrower shall not create, incur, assume or suffer to
exist any lien, security interest, security title, mortgage, deed of trust or
other encumbrance upon or with respect to any of its properties, now owned or
hereafter acquired, except the following permitted liens (the "Permitted
Liens"):
(a) liens in favor of Lenders;
(b) liens for taxes or assessments or other governmental
charges or levies if not yet due and payable;
(c) liens in connection with the leasing of equipment in
favor of the lessor of such equipment;
16
(d) liens in connection with the shares of common stock
of, or assets of, Able Laboratories; and
(e) liens described on Schedule 2.1(l) hereto.
3.16 Mergers, Consolidations, Acquisitions; Sales; Name and Location.
Without the prior written consent of Lenders, Borrower shall not (a) be a party
to any merger, consolidation or corporate reorganization, nor (b) purchase or
otherwise acquire all or substantially all of the assets or stock of, or any
partnership or joint venture interest in, any other person, firm or entity, nor
(c) sell, transfer, convey, grant a security interest in or lease all or any
substantial part of its assets, nor (d) create any Subsidiaries nor convey any
of its assets to any Subsidiary. Without ten (10) days' prior written notice to
Lender, Borrower shall not change its name or its location(s) of doing business.
3.17 Transactions With Affiliates. Borrower shall not enter into any
transaction, including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms no less favorable to Borrower than
Borrower would obtain in a comparable arm's length transaction with a person not
an affiliate. For the purposes of this Section 3.17, "affiliate" shall mean a
person, corporation, partnership or other entity controlling, controlled by or
under common control with Borrower.
3.18 Environment. Borrower shall be and remain in compliance with the
provisions of all federal, state and local environmental, health, and safety
laws, codes and ordinances, and all rules and regulations issued thereunder;
notify Lenders immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify Lenders immediately of any hazardous discharge from or affecting
Borrower's premises; immediately contain and remove the same, in compliance with
all applicable laws; promptly pay any fine or penalty assessed in connection
therewith; permit Lenders to inspect the premises, to conduct tests thereon, and
to inspect all books, correspondence, and records pertaining thereto; and at
Lenders' request, and at Borrower's expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to Lenders, and
such other and further assurances reasonably satisfactory to Lenders that the
condition has been corrected.
3.19 Fixed Charge Covenant. The ratio of cash flow from operations of
Superior for each of the following fiscal years to the aggregate of Superior's
scheduled debt service for such years shall be no less than the following:
17
Year-End Ratio
-------- -----
December 31, 1997 1.25 to 1.0
December 31, 1998 1.30 to 1.0
December 31, 1999 and each year 1.35 to 1.0
thereafter
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 GAAP.
3.20 Informational Covenant. Borrower will furnish or cause to be
furnished to Odyssey information required by the U.S. Small Business
Administration ("SBA") concerning the economic impact of the Odyssey Loan,
including but not limited to, information concerning taxes paid and number of
employees.
Borrower will also furnish or cause to be furnished to Lenders
such other information regarding the business, affairs and condition of Borrower
as Lenders may from time to time reasonably request. Borrower will permit
Odyssey and examiners of the SBA to inspect the books and any of the properties
or assets of Borrower and its affiliates and to discuss Borrower's business with
senior management employees at such reasonable times as those persons may from
time to time request. Odyssey agrees not to disclose any confidential
information received from Borrower (except to its partners and to its
professional advisors, whom Odyssey shall cause to keep such information
confidential, and to the SBA) and to use the same care with such information as
it affords to its own confidential information.
3.21 Use of Proceeds. Borrower will use the proceeds from the Loan for
the purposes and in the amounts set forth in Paragraph 1.3 of this Agreement.
Borrower will deliver within ninety (90) days of the closing of the Loan a
written report, certified as correct by Borrower's chief financial officer
verifying the purposes and amounts for which proceeds from the Loan have been
disbursed, and, if the proceeds have not been fully disbursed within that ninety
(90) day period, an additional report also so certified, delivered not later
than the end of each succeeding ninety (90) day period, verifying the purposes
and amounts for which proceeds have been disbursed. Borrower will supply to
Lenders such additional information and documents as Lenders reasonably request
with respect to use of proceeds and will permit Lenders to have access (upon
reasonable notice and during business hours) to any and all records and
information and personnel as Lenders deem necessary to verify how proceeds have
been or are being used, and to assure that the proceeds have been used for the
purposes specified.
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3.22 Activities and Proceeds.
(a) Neither Borrower nor any of its affiliates will engage in
any activities or use directly or indirectly the proceeds from the
Odyssey Loan for any purpose for which a small business investment
company is prohibited from providing funds by the SBIC Act, including
13 C.F.R. ss.107.
(b) Borrower will not, without obtaining the prior written
approval of Odyssey, change within one (1) year of the closing under
this Agreement, Borrower's business activity to a business activity to
which an SBIC is prohibited from providing funds by the SBIC Act.
Borrower agrees that any such changes in its business activity without
such prior written consent of Odyssey will constitute a material breach
of the obligations of Borrower under this Agreement and the financing
documents for the Odyssey Loan (an "Activity Event of Default"). If an
Activity Event of Default occurs, Odyssey has the right to demand, in
writing, immediate repayment of the securities evidencing the Odyssey
Loan, together with interest on the aggregate amount invested from the
date of the closing to the date of repayment, and Borrower will
immediately make such payment within three (3) days of receipt of a
demand. The payment remedy is in addition to any and all other rights
and remedies against Borrower to which Odyssey may be entitled.
ARTICLE 4
CONDITIONS TO CLOSING
4.1 Closing of the Loan. The obligation of Lenders to fund 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) Borrower 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 an opinion of the Borrower's
counsel, Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, and an opinion of Borrower's
counsel, Xxxx, Xxxxxxxxx & Hollister, dated the Closing Date, in form
and substance satisfactory to Lenders' counsels.
(c) Borrower shall have delivered to Lenders the Notes
executed by Borrower.
(d) Borrower shall have delivered to Lenders Stock Purchase
Warrants executed by Borrower, substantially in the form of Exhibits
B-1 and B-2 which are attached hereto and incorporated herein by
reference, together with related Warrant Valuation Letters executed by
Borrower, each in a form acceptable to Lenders.
19
(e) Borrower shall have delivered to Lenders Stock Purchase
Warrants executed by Superior, substantially in the form of Exhibits
C-1 and C-2 which are attached hereto and incorporated herein by
reference.
(f) Borrower shall have delivered to Lenders a Security
Agreement executed by Borrower (in form acceptable to Lenders) and
related UCC-1 Financing Statement(s) (in form acceptable to Lenders)
executed by Borrower.
(g) Borrower shall have delivered to Lenders a Security
Agreement executed by Superior (in a form acceptable to Lenders) and
related UCC-1 Financing Statement(s) (in form acceptable to Lenders)
executed by Superior.
(h) Borrower shall have delivered to Lenders a Pledge and
Security Agreement (in a form acceptable to Lenders) and related stock
proxy and stock power (all in form acceptable to Lenders), executed by
Borrower and related stock pledge letter (in form acceptable to
Lenders) executed by Superior. Borrower shall have delivered the stock
certificates that are described in the Pledge and Security Agreement to
the agent for the former shareholders of Superior to be held for
Lenders' benefit.
(i) Borrower shall have delivered to Lenders Landlord's
Consents and Subordination of Lien, executed by Borrower's and
Superior's landlords, in a form acceptable to Lenders with respect to
Borrower's and Superior's leasehold interests at Cambridge,
Massachusetts and Cincinnati, Ohio, respectively.
(j) Lenders shall have received copies of the certificate of
incorporation and other publicly filed organizational documents of
Borrower and Superior, certified by the Secretary of State or other
appropriate public official in the jurisdiction in which Borrower and
Superior are incorporated.
(k) Lenders shall have received certified (as of the date of
this Agreement) copies of all corporate action taken by Borrower and
Superior, including resolutions of the Board of Directors, authorizing
the execution, delivery and performance of the Loan Documents.
(l) Lenders shall have received a certificate as to the legal
existence and good standing of Borrower and Superior, issued by the
Secretary of State or other appropriate public official in the
jurisdiction in which Borrower and Superior are incorporated.
(m) Lenders shall have received certificates of the
Secretaries of State or other appropriate public officials as to
Borrower's and Superior's qualification to do business and good
standing in each jurisdiction in which a failure to be so qualified
would have a material adverse effect on its or their financial
positions or its or their ability to conduct its or their business in
the manner now conducted and as hereafter intended to be conducted.
20
(n) Borrower shall have delivered to Lenders Authorization
Agreements for Pre-Authorized Payments (Debit) executed by Borrower, in
form acceptable to Lenders.
(o) Borrower, Superior, Lenders and Huntington Bank shall have
executed an Intercreditor Agreement in form and content acceptable to
Lenders.
(p) Borrower shall have delivered to Odyssey the Small
Business Administration Forms 480, 652 and 1031 (Parts A and B)
completed by Borrower.
(q) Borrower shall have delivered to Odyssey a Small Business
Administration Economic Impact Assessment completed by Borrower, in a
form acceptable to Odyssey.
(r) Borrower shall have delivered to Lenders a Subordination
Agreement executed by the former shareholders of Superior, and
acknowledged by Borrower, in form acceptable to Lenders.
(s) Borrower shall have delivered to Lender a Guaranty
Agreement executed by Superior, in form acceptable to Lenders.
(t) Borrower shall have delivered to Lenders a Collateral
Assignment of Note executed by Borrower, together with the originals of
the related promissory notes, all in form acceptable to Lenders.
ARTICLE 5
DEFAULT AND REMEDIES
5.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) Default by Borrower in the payment of the principal of or
interest on the indebtedness evidenced by any of the Notes in
accordance with the terms of the Notes, which default is not cured
within five (5) business days;
(b) Any misrepresentation by Borrower as to any material
matter hereunder or under any of the other Loan Documents, or delivery
by Borrower of any schedule, statement, resolution, report,
certificate, notice or writing to Lenders that is untrue in any
material respect on the date as of which the facts set forth therein
are stated or certified;
(c) Failure of Borrower, any Subsidiary, any guarantor of
Borrower, or any shareholder of Borrower to perform any of its
obligations, covenants or agreements under this Agreement, any of the
Notes, or any of the other Loan Documents;
21
(d) Borrower (i) shall generally not pay or shall be unable to
pay its debts as such debts become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or (iv) shall have
had any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or an
adjudication or appointment is made; or (v) shall indicate, by any act
or intentional and purposeful omission, its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for
relief or the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for
a period of sixty (60) days or more;
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the certificate of incorporation thereof shall expire or
be revoked;
(f) A default or event of default shall occur under any of the
other Loan Documents and, if subject to a cure right, such default or
event of default shall not be cured within the applicable cure period;
(g) Borrower shall default in the timely payment or
performance of any obligation now or hereafter owed to Lenders in
connection with any other indebtedness of Borrower now or hereafter
owed to Lenders;
(h) Borrower shall have defaulted and continue to be in
default in the timely payment or performance of any other indebtedness
or obligation, which in the aggregate exceeds Twenty-Five Thousand and
No/100ths Dollars ($25,000.00) or materially adversely affects
Borrower's financial condition.
With respect to any Event of Default described above that is capable of
being cured and that does not already provide its own cure procedure (a "Curable
Default"), the occurrence of such Curable Default shall not constitute an Event
of Default hereunder if such Curable Default is fully cured and/or corrected
within thirty (30) days (ten (10) days, if such Curable Default may be cured by
payment of a sum of money) of notice thereof to Borrower given in accordance
with the provisions hereof; provided, however, that this provision shall not
require notice to Borrower and an opportunity to cure any Curable Default of
which Borrower has had actual knowledge for the requisite number of days set
forth.
5.2 Acceleration of Maturity; Remedies. Upon the occurrence of any
Event of Default described in subsection 5.1(d), the indebtedness evidenced by
the Notes as well as any and all other indebtedness of Borrower to Lenders shall
be immediately due and payable in full; and upon the occurrence of any other
Event of Default described above, Lenders at any time thereafter may at their
option accelerate the maturity of the indebtedness evidenced by the Notes as
well as any and all other indebtedness of Borrower to Lenders; all without
notice of
22
any kind. Upon the occurrence of any such Event of Default and the acceleration
of the maturity of the indebtedness evidenced by the Notes:
(a) Lenders shall be immediately entitled to exercise any and
all rights and remedies possessed by Lenders pursuant to the terms of
the Notes and all of the other Loan Documents; and
(b) Lenders shall have any and all other rights and remedies
that Lenders may now or hereafter possess at law, in equity or by
statute.
5.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred
upon or reserved to Lenders by this Agreement or any of the other Loan Documents
is intended to be exclusive of any other right, power or remedy, but each and
every such right, power and remedy shall be cumulative and concurrent and shall
be in addition to any other right, power and remedy given hereunder, under any
of the other Loan Documents or now or hereafter existing at law, in equity or by
statute. No delay or omission by Lenders to exercise any right, power or remedy
accruing upon the occurrence of any Event of Default shall exhaust or impair any
such right, power or remedy or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein, and every right, power and remedy
given by this Agreement and the other Loan Documents to Lenders may be exercised
from time to time and as often as may be deemed expedient by Lenders.
5.4 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
First, to the costs and expenses, including, without
limitation, reasonable attorney's fees incurred by Lenders in
connection with the exercise of its remedies;
Second, to the expenses of curing the default that has
occurred, in the event that Lenders elect, in their sole discretion, to
cure the default that has occurred;
Third, to the payment of the obligations of Borrower under the
Loan Documents (the "Obligations"), including but not limited to the
payment of the principal of and interest on the indebtedness evidenced
by the Notes, in such order of priority as Lenders shall determine in
its sole discretion; and
Fourth, the remainder, if any, to Borrower or to any other
person lawfully thereunto entitled.
23
ARTICLE 6
TERMINATION
6.1 Termination of this Agreement. This Agreement shall remain in full
force and effect until the payment by Borrower of all amounts owed to Lenders on
the Notes at which time Lenders shall cancel the Notes and deliver such Notes to
Borrower.
ARTICLE 7
MISCELLANEOUS
7.1 Performance By Lenders. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
which default is not cured within the applicable cure period, then Lenders may,
at Lender's option, pay, perform or observe the same, and all payments made or
costs or expenses incurred by Lenders in connection therewith (including but not
limited to reasonable attorney's fees), with interest thereon at the highest
default rate provided in the Notes (if none, then at the maximum rate from time
to time allowed by applicable law), shall be immediately repaid to Lenders by
Borrower and shall constitute a part of the Obligations. Lenders shall be the
sole judge of the necessity for any such actions and of the amounts to be paid.
7.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lenders shall bind and inure
to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
7.3 Costs and Expenses. Borrower agrees to pay all reasonable costs and
expenses incurred by Lenders in connection with the making of the Loan,
including but not limited to filing fees, recording taxes, indebtedness taxes,
and reasonable attorneys' fees, promptly upon demand of Lenders. Borrower
further agrees to pay all premiums for insurance required to be maintained by
Borrower pursuant to the terms of the Loan Documents and all of the
out-of-pocket costs and expenses incurred by Lenders in connection with the
collection of the Loan, amendment to the Loan Documents, or prepayment of the
Loan, including but not limited to reasonable attorneys' fees, promptly upon
demand of Lenders.
7.4 Assignment. The Notes, this Agreement and the other Loan Documents
may be endorsed, assigned and/or transferred in whole or in part by Lenders, and
any such holder and/or assignee of the same shall succeed to and be possessed of
the rights and powers of Lenders under all of the same to the extent transferred
and assigned. Lenders may grant participations in all or any portion of its
interest in the indebtedness evidenced by the Notes and in such event Borrower
shall continue to make payments due under the Loan Documents to Lenders and
Lenders shall have the sole responsibility of allocating and forwarding such
payments in the appropriate manner and amounts. Borrower shall not assign any of
its rights
24
nor delegate any of its duties hereunder or under any of the other Loan
Documents without the prior express written consent of Lenders.
7.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower hereunder and under all
of the other Loan Documents.
7.6 Severability. If any provision(s) of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
7.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the 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 loan charges agreed to
be paid to Lenders for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time
to time. It is understood and agreed by the parties that, if for any reason
whatsoever the interest or loan charges paid or contracted to be paid by
Borrower in respect of the indebtedness evidenced by the Notes shall exceed the
maximum amounts collectible under applicable laws in effect from time to time,
then ipso facto, the obligation to pay such interest and/or loan charges shall
be reduced to the maximum amounts collectible under applicable laws in effect
from time to time, and any amounts collected by Lenders that exceed such maximum
amounts shall be applied by such Lender to the reduction of the principal
balance of the indebtedness evidenced by the Notes held by such Lender and/or
refunded to Borrower, at the option of such Lender, so that at no time shall the
interest or loan charges paid or payable in respect of the indebtedness
evidenced by the Notes exceed the maximum amounts permitted from time to time by
applicable law.
7.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
7.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement or any of the Loan Documents shall be
in writing, signed by the party giving such notice, election or demand and shall
be delivered personally, telecopied, or sent overnight via nationally recognized
courier service (such as Federal Express), to the other party at the address set
forth below, or at such other address as may be supplied in writing and of which
receipt has been acknowledged in writing. The date of personal delivery,
telecopy or telex or the next business day after delivery to such courier
service, as the case may be, shall be the date of such notice, election or
demand. For the purposes of this Agreement:
25
The Address of Sirrom is: Sirrom Capital Corporation
Suite 200
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxx
Telecopy: 615/726-1208
with a copy to: Xxxxxxxxx, Xxxxxx & Xxxxxxx, P.C.
0000 Xxxxxx Xxxxxxxx
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: J. Xxxxxxx Xxxxxx, Esq.
Telecopy: 423/265-9574
The Address of Odyssey is: Odyssey Investment Partners, L.P.
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telecopy: 610/964-9524
The Address of Borrower and
Subsidiary is: DynaGen, Inc. or Superior Pharmaceutical
Company
00 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Telecopy: 617/354-3902
with a copy to: Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
High Street Tower
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telecopy: 617/248-7100
The Huntington National Bank
000 Xxxx 0xx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx Xxxxxx
Telecopy: 513/762-1873
7.10 Entire Agreement. This Agreement and the other written agreements
between Borrower and Lender represent the entire agreement between the parties
concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; provided, if there is a conflict between this
Agreement and any other document executed
26
contemporaneously herewith with respect to the Obligations, the provision of
this Agreement shall control. The execution and delivery of this Agreement and
the other Loan Documents by the Borrower were not based upon any fact or
material provided by Lender, nor was the Borrower induced or influenced to enter
into this Agreement or the other Loan Documents by any representation,
statement, analysis or promise by Lender.
7.11 Governing Law and Amendments. This Agreement and all of the Loan
Documents shall be construed and enforced under the laws of the State of
Tennessee applicable to contracts to be wholly performed in such State except to
the extent certain rights and privileges may be granted Lender under applicable
federal laws in which event federal law shall control. No amendment or
modification hereof shall be effective except in a writing executed by each of
the parties hereto.
7.12 Survival of Representations and Warranties. All covenants,
representations and warranties contained herein or in any of the Loan Documents,
or made by or furnished on behalf of the Borrower in connection herewith or any
of the Loan Documents, shall survive the execution and delivery of this
Agreement and all other Loan Documents and shall continue in full force and
effect so long as the Obligations are unpaid.
7.13 Jurisdiction and Venue. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF TENNESSEE AND THE UNITED STATES
DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE, AS WELL AS TO THE
JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS,
FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF
ITS OBLIGATIONS ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND EXPRESSLY WAIVES ANY AND
ALL OBJECTIONS IT MAY HAVE AS TO VENUE OR FORUM NON CONVENIENS IN ANY OF SUCH
COURTS.
7.14 Waiver of Trial by Jury. LENDER AND BORROWER HEREBY WAIVE TRIAL BY
JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT
OR TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENTS.
7.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
7.16 Construction and Interpretation. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly
27
construed against the party that itself or through its agent prepared the same,
it being agreed that the Borrower, Lenders and their respective agents and
attorneys have participated in the preparation hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
LENDERS:
SIRROM CAPITAL CORPORATION, a Tennessee
corporation
By: /s/ [Illegible]
-----------------------------------
Title: Vice President
-----------------------------------
ODYSSEY INVESTMENT PARTNERS, L.P., a
Pennsylvania limited partnership
By: ODYSSEY ASSOCIATES, L.P., its General
Partner
By: ODYSSEY ASSOCIATES, INC., its General
Partner
By: /s/ [Illegible]
-----------------------------------
Title: President
-----------------------------------
BORROWER:
DYNAGEN, INC., a Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------
Title: Executive Vice President
-----------------------------------
28
INDEX OF SCHEDULES AND ATTACHMENTS
----------------------------------
Exhibit A-1 - Form of Sirrom Note
Exhibit A-2 - Form of Odyssey Note
Exhibit B -Form of Borrower Warrants
Exhibit C - Form of Subsidiary Warrants
Schedule 2.1(b) - Subsidiaries
Schedule 2.1(c) - Authorization
Schedule 2.1(e) - Options, Warrants, Stock Rights, Etc.
Schedule 2.1(f) - Trademarks, Patents, Etc.
Schedule 2.1(h) - Litigation
Schedule 2.1(i)(A) and (B) - Financial Statements
Schedule 2.1(l) - Debt and Liens
Schedule 2.1(o) - Shareholder Loans
Schedule 2.1(r) - Significant Contracts
Schedule 2.1(ac) - Deposit Institutions
Schedule 2.1(ad) - Names and Locations
Schedule 3.12 - Distributions to Shareholders
