EXHIBIT 4.10
PLEDGE AND SECURITY AGREEMENT
(Borrower)
THIS PLEDGE AND SECURITY AGREEMENT ("Agreement"), dated June 18, 1997,
by and between DynaGen, Inc., a Delaware corporation ("Borrower") and Sirrom
Capital Corporation, a Tennessee corporation, with its principal office and
place of business in Nashville, Tennessee ("Sirrom") for itself and in its
capacity as Collateral Agent pursuant to that certain Collateral Agent Agreement
of even date herewith (the "Agency Agreement") by and between Sirrom and Odyssey
Investment Partners, L.P., a Pennsylvania limited partnership ("Odyssey")
(Sirrom and Odyssey are sometimes referred to herein collectively as "Lenders").
WITNESSETH:
WHEREAS, pursuant to a Loan Agreement of even date herewith, by and
between Borrower and Lenders (the "Loan Agreement"), Lenders have made loans to
Borrower in the original principal amount of $3,000,000 (the "Loan"). The Loan
is evidenced by a Secured Promissory Note of even date herewith, 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 of even date herewith, in the principal amount of
$1,000,000, made and executed by Borrower, payable to the order of Odyssey
(herein referred to, together with any extensions, modifications, renewals
and/or replacements thereof, as the "Odyssey Note") (the Sirrom Note and the
Odyssey Note are sometimes referred to herein collectively as the "Notes") .
WHEREAS, it is a condition of Lenders' agreement to make the Loan to
Borrower that Borrower execute and deliver this Agreement to Sirrom.
AGREEMENT:
NOW THEREFORE, in consideration of the foregoing, and to enable
Borrower to obtain loans and other extensions of credit from Lenders and to
induce Lenders to have transactions with Borrower, Borrower agrees as follows:
1. Pledge. Subject to the terms of that certain Subordination Agreement
of even date herewith among Lenders and former shareholders of Superior
Pharmaceutical Company, as collateral security for the payment and performance
in full of the Obligations (as hereinafter defined), Borrower hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto Sirrom, and hereby
grants to Sirrom a security interest in, the collateral described in Schedule A
hereto, together with the proceeds thereof and all cash, additional
1
securities or other property at any time and from time to time receivable or
otherwise distributable in respect of, in exchange for, or in substitution for
any and all such pledged securities (all such pledged securities, the proceeds
thereof, cash, dividends, additional securities and other property now or
hereafter pledged hereunder are hereinafter collectively called the "Pledged
Securities");
TO HAVE AND TO HOLD the Pledged Securities, together with all rights,
titles, interests, powers, privileges and preferences pertaining or incidental
thereto, unto Sirrom, its successors and assigns; subject, however, to the
terms, covenants and conditions hereinafter set forth.
Upon delivery to Sirrom, the Pledged Securities shall be accompanied by
executed stock powers in blank and by such other instruments or documents as
Sirrom or its counsel may reasonably request. Each delivery of certificates for
such Pledged Securities shall be accompanied by a schedule showing the number of
shares and the numbers of the certificates theretofore and then pledged
hereunder, which schedule shall be attached hereto as Schedule A and made a part
hereof. Each schedule so delivered shall supersede any prior schedule so
delivered.
2. Obligations Secured. This Agreement is made, and the security
interest created hereby is granted to Sirrom, to secure full payment and
performance of any and all indebtedness and other obligations of Borrower to
Lenders, direct or contingent, however evidenced or denominated, and however or
whenever incurred, including without limitation indebtedness incurred pursuant
to any past, present or future commitment of Lenders to Borrower (regardless of
the class of such future advance), including, without limitation, the
indebtedness evidenced by the Notes (collectively the "Obligations"). Lenders
acknowledge that the Collateral is presently pledged to certain other note
holders who have a first priority pledge pursuant to a Pledge Agreement dated
June 18, 1997 by and between Borrower, Xxxxxx Xxxxxxx, Xxxx X. Xxxxxxxxxxx and
Xxxxxx Xxxxx (the "Senior Pledge Agreement").
3. Representations and Warranties. Borrower hereby represents and
warrants to Sirrom (a) that Borrower is the legal and equitable owner of the
Pledged Securities, that Borrower has the complete and unconditional authority
to pledge the Pledged Securities being pledged by it, and holds the same free
and clear of all liens, charges, encumbrances and security interests of every
kind and nature except for the pledge pursuant to the Senior Pledge Agreement in
favor of Xxxxxx Xxxxxxx, Xxxx X. Xxxxxxxxxxx and Xxxxxx Xxxxx, which shall be
released on or before June 18, 2000 at which time Sirrom shall have a first
priority pledge and security interest in the Pledged Securities; and (b) that no
consent or approval of any governmental body or regulatory authority, or of any
other party, which was or is necessary to the validity of this pledge, has not
been obtained. Borrower further represents and warrants that no part of the
Obligations will be used to purchase or carry any "margin stock", as defined in
Regulation U of the Board of Governors of the Federal Reserve System, 12 CFR ss.
221.1 et seq.
2
4. Registration in Nominee Name; Denominations. Subject to the rights
of the pledgees under the Senior Pledge Agreement, Sirrom shall have the right
(in its sole and absolute discretion) to hold the certificates representing the
Pledged Securities in its own name or in the name of the Borrower, endorsed or
assigned in blank or in favor of Sirrom. Borrower shall deliver to Sirrom all
certificates representing the Pledged Securities promptly upon receipt by
Borrower. Upon request and delivery of certificates representing the Pledged
Securities to the issuer of the Pledged Securities, Sirrom may have such Pledged
Securities registered in the name of Sirrom or any nominee or nominees of
Sirrom. Sirrom shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
5. Remedies Upon Default. Subject to the priority interest in the
Collateral and the rights contained in the Senior Pledge Agreement, upon the
occurrence of a default or Event of Default under the Loan Agreement, or in the
event that any representation or warranty herein shall prove to have been untrue
when made, then, and in any such event, Sirrom shall have all of the rights,
privileges and remedies of a secured party under the Uniform Commercial Code as
in effect in the State of Tennessee, and without limiting the foregoing, Sirrom
may (a) collect any and all amounts payable in respect of the Pledged Securities
and exercise any and all rights, privileges, options and remedies of the holder
and owner thereof, and (b) sell, transfer and/or negotiate the Pledged
Securities, or any part thereof, at public or private sale, for cash, upon
credit or for future delivery as Sirrom shall deem appropriate, including
without limitation, at Sirrom's option, the purchase of all or any part of said
securities at any public sale by Sirrom. Upon consummation of any sale, Sirrom
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Pledged Securities so sold. Each such purchaser at any
such sale shall hold the property sold absolutely, free from any claim or right
on the part of the Borrower, and the Borrower hereby waives (to the extent
permitted by law) all rights of redemption, stay or appraisal that Borrower now
has or may at any time in the future have under any rule of law or statute now
existing or hereinafter enacted. Borrower hereby expressly waives notice to
redeem and notice of the time, place and manner of such sale.
6. Application of Proceeds. The proceeds of the sale of Pledged
Securities sold pursuant to Section 5 hereof, and the proceeds of the exercise
of any of Sirrom's other remedies hereunder, shall be applied by Sirrom as
follows:
First: To the payment of all costs and expenses incurred by Sirrom in
connection with any such sale, including, but not limited to, all court costs
and the reasonable fees and expenses of counsel for Sirrom in connection
therewith, and
Second: To the payment in full of the Obligations, first to accrued
interest and thereafter to the unpaid principal amount thereof, to the extent
not previously paid by Borrower, and
3
Third: The excess, if any, shall be paid to Borrower or any other
person lawfully thereunto entitled.
7. Reimbursement of Lender. Borrower agrees to reimburse Sirrom, upon
demand, for all expenses, including without limitation reasonable attorney's
fees, incurred by it in connection with the administration and enforcement of
this Agreement, and agrees to indemnify Sirrom and hold it harmless from and
against any and all liability incurred by it hereunder or in connection
herewith, unless such liability shall be due to willful misconduct or gross
negligence on the part of Sirrom.
8. No Waiver. No failure on the part of Sirrom to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by Sirrom preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies are cumulative and
are not exclusive of any other remedies provided by law.
9. Limitation of Lender Liability. Except in the case of their
intentional malfeasance or gross negligence, neither Sirrom nor its partners,
employees, agents, representatives, or nominees shall be liable for any loss
incurred by Borrower arising out of any act or omission of Sirrom, its partners,
employees, agents, representatives or nominees, with respect to the care,
custody or preservation of the Pledged Securities.
10. Binding Agreement. This Agreement and the terms, covenants and
conditions hereof shall be binding upon and inure to the benefit of the parties
hereto and to all holders of indebtedness secured hereby and their respective
successors and assigns.
11. Governing Law; Amendments. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of Tennessee
applicable to contracts to be wholly performed in such state. This Agreement may
not be amended or modified, nor may any of the Pledged Securities be released
except in a writing signed by the party to be charged therewith. Time is of the
essence with respect to the obligations of Borrower pursuant to this Agreement.
12. Further Assurances. Borrower agrees to do such further acts and
things, and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as Sirrom may at any time request in connection with
the administration and enforcement of this Agreement or relative to the Pledged
Securities or any part thereof or in order to better assure and confirm unto
Sirrom its rights and remedies hereunder.
13. Headings. Section numbers and headings used herein are for
convenience only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
4
IN WITNESS WHEREOF, Borrower and Sirrom have executed this Agreement,
or have caused this Agreement to be duly executed by a duly authorized officer,
all as of the day first above written.
BORROWER:
DYNAGEN, INC.,
a Delaware corporation
By: /s/ Xxxxxxxxx X. Xxxxxxx
----------------------------
Title: Executive Vice President
----------------------------
SIRROM:
SIRROM CAPITAL CORPORATION, a
Tennessee corporation, for itself
and in its capacity as Collateral
Agent pursuant to the Agency
Agreement
By: /s/ [Illegible]
----------------------------
Title: Vice President
----------------------------
5
SCHEDULE A
PLEDGED SECURITIES
No. of
Issuer Shares Class Certificate Nos.
----------------------- ------ ------- ----------------
Superior Pharmaceutical 100 Common 11, 12 and 13
Company
6
