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Exhibit 10.4
EXECUTION VERSION
NORTHWEST BIOTHERAPEUTICS, INC.
LOAN AGREEMENT and
10% CONVERTIBLE PROMISSORY NOTE
SECTION 1. GENERAL .
For value received, Northwest Biotherapeutics, Inc. , a
Delaware corporation (the " Maker " or the " Company
"), hereby promises to pay to the order of Toucan Partners, LLC or
its assigns (collectively, the " Holder "), the principal
amount of [
] Dollars ($xxx,xxx.xx) upon written demand by Holder at any time
on or after June 30, 2007 of this Loan Agreement and 10%
Convertible Promissory Note (this " Note " or this "
Agreement "), or such earlier date as may be applicable
under Sections 3 and 4 hereof (the " Maturity Date
").
Maker shall pay interest on the unpaid principal amount of this
Note, accruing from and after [
], 200___(the " Issue Date ") at the rate of ten percent
(10%) per annum, compounding annually (computed on the basis of a
365-day year and the actual number of days elapsed) (the "
Interest Rate "). Accrued interest shall be payable upon the
payment of the principal of this Note. The principal of, and
interest on, this Note shall be payable in lawful currency of the
United States of America by wire transfer in immediately available
funds to the account of Holder, as provided in writing to Maker by
Holder. All payments shall be applied first to fees, costs and
charges relating to this Note (including, without limitation, any
costs of collection), then to accrued and unpaid interest, and
thereafter to principal. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the
Recapitalization Agreement.
SECTION 2. PRE-PAYMENT .
This Note may be pre-paid in whole or in part prior to the
Maturity Date; provided Maker provides Holder with 30 days
prior written notice thereof. In the event of prepayment, Maker
shall pay a penalty in the amount of 1% of the principal and
accrued interest then outstanding under this Note, unless a greater
or lesser penalty is established or approved by the U.S. Small
Business Administration (" SBA ").
SECTION 3. DEFAULT INTEREST .
Upon the occurrence of an Event of Default (as hereinafter
defined), the unpaid principal amount and accrued and unpaid
interest shall bear interest payable on demand at the lesser of
(i) fourteen percent (14%) per annum, (ii) the maximum
rate permitted under applicable rules and regulations of the SBA,
or (iii) the maximum rate allowed by law (the " Default
Interest "). Such interest shall accrue, commencing upon the
occurrence of an Event of Default and continuing until such Event
of Default is cured or waived.
SECTION 4. DEFAULTS .
4.1 Definitions . Each
occurrence of any of the following events shall constitute an "
Event of Default ":
(a) if
a default occurs in the payment of any principal of, interest on,
or other obligation with respect to, this Note, whether at the due
date thereof or upon acceleration thereof, and such default remains
uncured for five (5) business days after written notice
thereof from Holder;
(b) if
any representation or warranty of Maker made herein shall have been
false or misleading in any material respect, or shall have
contained any material omission, as of the date hereof;
(c) if
a default occurs in the due observance or performance of any
covenant or agreement on the part of Maker to be observed or
performed pursuant to the terms of this Note and such default
remains uncured for five (5) business days after written
notice thereof from Holder;
(d) if
a default occurs in Maker’s performance of any of the terms
and conditions of that certain Amended and Restated
Recapitalization Agreement, dated as of July 30, 2004 and as
amended on October 22, 2004, November 10, 2004,
December 27, 2004, January 26, 2005, April 12, 2005,
May 13, 2005, June 16, 2005, July 26, 2005,
September 7, 2005 and November 14, 2005 (the "
Recapitalization Agreement ") or any Related
Recapitalization Document;
(e) if
Maker shall (i) discontinue its business, (ii) apply for
or consent to the appointment of a receiver, trustee, custodian or
liquidator of Maker or any of its property, (iii) make a
general assignment for the benefit of creditors, or (iv) file
a voluntary petition in bankruptcy, or a petition or an answer
seeking reorganization or an arrangement with creditors, or take
advantage of any bankruptcy, reorganization, insolvency,
readjustment of debt, dissolution or liquidation laws or statutes,
or file an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law;
(f) if
there shall be filed against Maker an involuntary petition seeking
reorganization of Maker or the appointment of a receiver, trustee,
custodian or liquidator of Maker or a substantial part of its
assets, or an involuntary petition under any bankruptcy,
reorganization or insolvency law of any jurisdiction, whether now
or hereafter in effect (any of the foregoing petitions being
hereinafter referred to as an " Involuntary Petition ") and
such Involuntary Petition shall not have been dismissed within
ninety (90) days after it was filed;
(g) if
final judgment(s) for the payment of money in excess of an
aggregate of $25,000 (excluding any portion thereof that an
insurance company of nationally recognized standing and
creditworthiness has agreed to pay) shall be rendered against Maker
and the same shall remain undischarged for a period of thirty
(30) days;
(h) if
there occurs any event that may have a material adverse effect on
the business, affairs, prospects, operations, properties, assets,
liabilities, structure or condition, financial or otherwise, of the
Company (as such business is presently currently conducted and/or
as it is proposed to be conducted), or on any material assets or
any Intellectual Property developed, owned, controlled, licensed,
possessed, or used by Maker, or to which Maker has any right,
option, entitlement or claim; or
(i) if
Maker deviates, during the period covered by such budget, more than
$10,000 in aggregate from the budget included in the
Disclosure Schedule (as defined herein) or the budget otherwise
expressly approved by Holder, including any amendments expressly
approved by Holder, or takes any action or makes any promise,
undertaking or commitment that would result in Maker incurring or
accumulating payables and/or other financial obligations of any
kind, whether current or deferred, direct or indirect, for purposes
other than as set forth in budgets expressly agreed to by Holder,
and/or in any amounts in excess of the amounts set forth in such
agreed budgets, which equal or exceed $10,000 in aggregate ,
and which have not been approved in writing in advance by
Holder.
4.2 Cross-Default : Maker
acknowledges that the financing contemplated by this Note is part
of an integrated Recapitalization Plan, as set forth in the
Recapitalization Agreement and the Related Recapitalization
Documents. Maker further acknowledges and agrees that this Note is
subject to all terms and conditions set forth in the
Recapitalization Agreement and the Related Recapitalization
Documents, and that the Recapitalization Agreement and the Related
Recapitalization Documents are subject to all of the terms and
conditions of this Note. Maker agrees that any default by Maker
under any provision of this Note, the Recapitalization Agreement or
any of the Related Recapitalization Documents will constitute a
default under each other Related Recapitalization Document and the
Recapitalization Agreement.
4.3 Remedies on
Default.
(a) Upon
each and every such Event of Default and at any time thereafter
during the continuance of such Event of Default: (i) any and
all indebtedness of Maker to Holder under this Note or otherwise
shall immediately become due and payable, both as to principal and
interest (including any deferred interest and any accrued and
unpaid interest and any Default Interest); and (ii) Holder may
exercise all the rights of a creditor under applicable state and/or
federal law.
(b) In case any one or more
Events of Default shall occur and be continuing, and acceleration
of this Note or any other indebtedness of Maker to Holder shall
have occurred, Holder may, inter alia , proceed to protect
and enforce its rights by an action at law, suit in equity and/or
other appropriate proceeding, whether for the specific performance
of any agreement contained in this Note, or for an injunction
against a violation of any of the terms hereof or thereof or in
furtherance of the exercise of any power granted hereby or thereby
or by law. No right conferred upon Holder by this Note shall be
exclusive of any other right referred to herein or therein or now
or hereafter available at law, in equity, by statute or
otherwise.
SECTION 5. DEFENSES .
5.1 No Offsets . The
obligations of Maker under this Note shall not be subject to
reduction, limitation, impairment, termination, defense, set-off,
counterclaim or recoupment for any reason.
5.2 Usury Limitations . It
is the intention of the parties hereto to comply with all
applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Note or any
other agreements or instruments between them, in no event shall
such agreements or instruments require the payment or permit the
collection of interest (which term, for purposes hereof, shall
include any amount which, under applicable law, is deemed to be
interest, whether or not such amount is characterized by the
parties as interest) in excess of the maximum amount permitted by
such laws. If any excess of interest is unintentionally contracted
for, charged or received under the Note or under the terms of any
other agreement or instrument between the parties, the rate of
interest shall be reduced to the maximum rate of interest allowed
under the applicable usury laws as now or hereafter construed by
the courts having jurisdiction thereof.
SECTION 6. REPLACEMENT OF NOTE .
Upon receipt by Maker of
reasonable evidence of the loss, theft, destruction, or mutilation
of this Note, Maker will deliver a new Note containing the same
terms and conditions in lieu of this Note. Any Note delivered in
accordance with the provisions of this Section 6 shall be
dated as of the date of this Note.
SECTION 7. EXTENSION OF MATURITY .
Should the principal of or
interest on this Note become due and payable on other than a
business day, the due date thereof shall be extended to the next
succeeding business day, and, in the case of principal, interest
shall be payable thereon at the rate per annum herein specified
during such extension. For the purposes of the preceding sentence,
a business day shall be any day that is not a Saturday, Sunday, or
legal holiday in the State of Delaware.
SECTION 8. ATTORNEYS’ FEES AND COLLECTION FEES
.
Should the indebtedness evidenced
by this Note or any part hereof be collected at law or in equity or
in bankruptcy, receivership or other court proceedings, arbitration
or mediation, or any settlement of any of the foregoing, Maker
agrees to pay, in addition to principal and interest due and
payable hereon, all costs of collection, including, without
limitation, reasonable attorneys’ fees and expenses, incurred
by Holder in collecting or enforcing this Note.
SECTION 9. WAIVERS; CONSENT TO JURISDICTION .
9.1 Waivers by Maker .
Maker hereby waives presentment, demand for payment, notice of
dishonor, notice of protest and all other notices or demands in
connection with the delivery, acceptance, performance or default of
this Note.
9.2 Actions of Holder not a
Waiver . No delay by Holder in exercising any power or right
hereunder shall operate as a waiver of any power or right, nor
shall any single or partial exercise of any power or right preclude
other or further exercise thereof, or the exercise of any other
power or right hereunder or otherwise; and no waiver or
modification of the terms hereof shall be valid unless set forth in
writing by Holder and then only to the extent set forth
therein.
9.3 Consent to Jurisdiction
. Maker hereby irrevocably submits to the jurisdiction of any state
or federal court sitting in the State of Delaware over any suit,
action, or proceeding arising out of or relating to this Note or
any other agreements or instruments with respect to Holder. Maker
hereby irrevocably waives, to the fullest extent permitted by law,
any objection that Maker may now or hereafter have to the laying of
venue of any such suit, action, or proceeding brought in any such
court and any claim that any such suit, action, or proceeding
brought in any such court has been brought in an inconvenient
forum. Final judgment in any such suit, action, or proceeding
brought in any such court shall be conclusive and binding upon
Maker and may be enforced in any court in which Maker is subject to
jurisdiction by a suit upon such judgment, provided that service of
process is effected upon Maker as provided in this Note or as
otherwise permitted by applicable law.
9.4 Waiver of Jury Trial .
MAKER WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN MAKER
AND HOLDER RELATING TO THE SUBJECT MATTER OF THIS NOTE. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS NOTE, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR TO ANY OTHER DOCUMENT OR AGREEMENT RELATING TO
THE LOAN.
9.5 Service of Process .
Maker hereby consents to process being served in any suit, action,
or proceeding instituted in connection with this Note by delivery
of a copy thereof by certified mail, postage prepaid, return
receipt requested, to Maker, and/or by delivery of a copy thereof
to a registered agent of Maker. Refusal to accept delivery, and/or
avoidance of delivery, shall be deemed to constitute delivery.
Maker irrevocably agrees that service in accordance with this
Section 9.5 shall be deemed in every respect effective service
of process upon Maker in any such suit, action or proceeding, and
shall, to the fullest extent permitted by law, be taken and held to
be valid personal service upon Maker. Nothing in this
Section 9.5 shall affect the right of Holder to serve process
in any manner otherwise permitted by law or limit the right of
Holder otherwise to bring proceedings against Maker in the courts
of any jurisdiction or jurisdictions.
SECTION 10. COVENANTS .
10.1 Affirmative Covenants
. So long as this Note shall remain outstanding:
(a)
Office . Maker shall maintain its principal office, and the
majority of its employees, assets and operations, in the United
States.
(b)
Use of Proceeds . Maker will use the proceeds from this Note
only for the following purposes:
(i) Operating expenses and other obligations of the Company
incurred in the ordinary course of business or in pursuing the
Company’s business plan and strategy;
(ii) Expenses relating to the development and protection of
its intellectual property;
(iii) Audit expenses and regular and special SEC filing
expenses, for audits and filings occurring on or after the
effective date hereof, including, without limitation, SEC filings
relating to solicitation of any shareholder consents to the
recapitalization of Maker; and (iv) Expenses of accountants,
attorneys, consultants and other professionals (including, without
limitation, the expenses of Investor described in Section 4.11
of the Recapitalization Agreement) relating to the recapitalization
of Maker,
in each case only to the extent that both the nature and the
amount of such expenses are in conformity with the budget (and any
amendments thereof) approved in advance in writing by Holder. Maker
will not use the proceeds from this Note for any other purpose.
Without limiting the generality of the foregoing, none of the
proceeds will be used, without prior written agreement by the
Holder, (i) to purchase or carry (or refinance any borrowing,
the proceeds of which were used to purchase or carry) any
"security" within the meaning of the Securities Act of 1933, as
amended (the " Securities Act "), (ii) to repay any
indebtedness or discharge any obligation to an person or entity,
other than as provided in Section 10.1(b)(i)-(iv) above, , or
(iii) to engage in business activities which would cause a
violation of 13 CFR 107.720. This latter limitation prohibits,
without limitation, the use of proceeds, other than as provided in
Section 10.1(b)(i)-(iv) above: (i) directly or
indirectly, for providing funds to others; (ii) for the
purchase or discounting of debt obligations; (iii) for
factoring or long-term leasing of equipment with no provision for
maintenance or repair; (iv) for engaging in real estate
transactions such that Maker could reasonably be classified under
Major Group 65 (Real Estate) of the SIC Manual; (v) for
business activities wherein the assets of the business of Maker
(the " Business ") will be reduced or consumed, generally
without replacement, as the life of the Business progresses, and
the nature of the Business does not require that a stream of cash
payments be made to the financing sources of the Business, on a
basis associated with the continuing sale of assets (examples of
such businesses would include real estate development projects, the
financing and production of motion pictures, and oil and gas well
exploration, development and production); (vi) for a foreign
operation; (vii) to provide capital to a corporation licensed or
sub-licensed under the Small Business Investment Act,
(viii) to acquire farm land, (ix) to fund production of a
single item or defined limited number of items generally over a
defined production period, such production to constitute the
majority, of the activities of Maker (examples include electric
generating plants), or (x) for any purpose contrary to the
public interest (including, but not limited to, activities which
are in violation of law) or inconsistent with free competitive
enterprise, in each case, within the meaning of
Section 107.720 of Title 13 of the Code of Federal
Regulations.
(c)
Seniority . Except as otherwise expressly provided, and
except for security interests and liens described in items 2, 3, 4
and 5 of Schedule 14.11 of the Disclosure Schedule attached
hereto as Exhibit B (the " Disclosure Schedule "), the
indebtedness evidenced by this Note: (i) shall be senior in
all respects to all other indebtedness or obligations of Maker of
any kind, direct or indirect, contingent or otherwise, other than
obligations of Maker owed directly to the state or federal
government, and other than any other indebtedness or obligations of
Maker to Holder; (ii) shall be pari passu with any other
indebtedness or obligations of Maker to Holder; and
(iii) shall not be made subordinate or subject in right of
payment to the prior payment of any other indebtedness or
obligation of any kind, direct or indirect, contingent or
otherwise, other than obligations of Maker owed directly to the
state or federal government, and other than any other indebtedness
or obligations of Maker to Holder.
(d)
No Conflicting Agreements . Maker shall not enter into any
agreement that would materially impair, interfere or conflict with
Maker’s obligations hereunder. Without Holder’s prior
written consent, Maker shall not permit the inclusion in any
material contract to which it becomes a party of any provisions
that could or might in any way result in the creation of a security
interest in any assets of Maker.
(e)
Disclosure of Material Adverse Events . Within three
(3) business days of Maker obtaining knowledge thereof, Maker
will notify Holder in writing of any event that may have a material
adverse effect on the business, affairs, prospects, operations,
properties, assets, liabilities, structure or condition, financial
or otherwise, of the Company (as such business is presently
conducted and/or as it is proposed to be conducted), or on any
material assets or any Intellectual Property or other assets
developed, owned, controlled, licensed, possessed, or used by
Maker, or to which Maker has any right, option, entitlement or
claim. Operating expenditures in the ordinary course of business
and in accordance with budgets (and any amendments thereto)
approved in writing in advance by Holder shall not be deemed to be
material adverse events solely because they weaken Maker’s
financial condition in the absence of new equity financing of
Maker.
(f)
Financial Information . So long as any principal and/or
interest under this Note shall remain outstanding:
(i)
Promptly after the end of each fiscal year (but in any event prior
to February 28 of each year) and at such other times as Holder
may reasonably request, Maker shall deliver to Holder a written
assessment, in form and substance satisfactory to Holder, of the
economic impact of such Holder’s financing hereunder,
specifying the full-time equivalent jobs created or retained in
connection with such investment, and the impact of the financing on
Maker’s business in terms of revenues and profits and on
taxes paid by Maker and its employees.
(ii) Maker
shall provide on a timely basis to Holder all financial information
requested from time to time by Holder, including without limitation
its
quarterly and annual balance sheet and income statement. Such
financial information shall be certified by a member of
Maker’s senior management. Financial information required
shall also include such information as would be necessary for
Holder to file form 468 with the SBA, if it were applicable.
(iii)
In addition to the information specified in Section 10.1(f)(i)
and (ii) above, upon request, Maker agrees promptly to provide
Holder with sufficient additional information to provide any other
information reasonably requested or required by any governmental
agency asserting jurisdiction over Holder.
(g)
Access . So long as any principal and/or interest under this
Note shall remain outstanding, Maker shall permit Holder and its
agents or representatives to visit and inspect Maker’s
properties, to examine its books of account and records and to
discuss Maker’s affairs, finances and accounts with its
officers, all at such times during normal business hours as
reasonably may be requested by Holder.
(h)
[Reserved]
(i)
Business Activity . As long as this Note shall remain
outstanding, Maker shall make no change in its business activity
that would make it or any of its business activities non-compliant
with SBA regulations and guidelines.
10.2 Negative Covenants .
So long as this Note shall remain outstanding:
(a)
Indebtedness . Maker shall not incur additional
indebtedness, beyond the indebtedness already existing as of the
date hereof, for borrowed money in excess of $10,000, in aggregate,
other than indebtedness incurred in the ordinary course of business
in accordance with a budget (and any amendments thereto) approved
in writing by Holder, or in pursuing the Company’s business
plan and strategy approved in writing by Holder. In no event shall
Maker issue, or make any promises, commitments, undertakings,
agreements or letters of intent to issue, any indebtedness directly
or indirectly exercisable for or convertible into any equity of
Maker, except as expressly provided in Section 10.2(d)
hereof.
(b)
Liens . Maker shall not grant to any person or entity a
security interest, lien, license, or other encumbrance of any kind,
direct or indirect, contingent or otherwise, in, to or upon any
assets of Maker, including, without limitation, any intellectual
property of any kind, as defined in Exhibit A hereto (the "
Intellectual Property ").
(c)
Sale or License of Assets . Maker shall not sell, lease,
transfer, assign or otherwise dispose of or encumber (including,
without limitation through licensing or partnering arrangements) or
abandon, conceal, injure or destroy any material assets (whether
tangible or intangible) of Maker, other than with the prior written
approval of Holder and in the ordinary course of business.
(d)
Issuance of Capital Stock . Notwithstanding any other
provision of this Note or any applicable agreement or document,
except for (a) any transaction pursuant to an
Unsolicited Proposal that Maker accepts in accordance with the
fiduciary exception provided in Section 3.2 of the
Recapitalization Agreement or (b) shares of Capital Stock
issuable upon exercise or conversion of warrants or convertible
securities outstanding prior to February 1, 2004, Maker shall
not without Holder’s prior written approval: (i) issue
any shares of Capital Stock (as defined in Section 12.1
hereof) or other securities, or any instruments exercisable for or
convertible into Capital Stock or other securities, or
(ii) make any promises, commitments, undertakings, agreements
or letters of intent for any of the issuances described in
(i) hereof.
(e)
Distributions and Redemptions . Maker shall not declare or
pay any dividends or make any distributions of cash, property or
securities of Maker with respect to any shares of its common stock,
preferred stock or any other class or series of its stock, or,
directly or indirectly (except for repurchases of common stock by
Maker in accordance with the terms of employee benefit plans or
written agreement between Maker and any of its employees approved
by the Board of Directors of Maker prior to February 1, 2004),
redeem, purchase, or otherwise acquire for any consideration any
shares of its common stock or any other class of its stock.
(f)
Hiring . Maker shall not hire, engage, retain, or agree to
hire, engage or retain, any Personnel, except with Holder’s
express prior written approval, on a case by case basis.
(g)
Severance . Maker shall not enter into, increase, expand,
extend, renew or reinstate any severance, separation, retention,
change of control or similar agreement with any Personnel, or
agree, promise, commit or undertake to do so, except with
Holder’s prior written approval, on a case by case basis.
(h)
Facilities . Maker shall not purchase, lease, hire, rent or
otherwise acquire directly or indirectly any rights in or to any
asset or facility outside of the ordinary course of business in an
amount in excess of $10,000, in aggregate, or agree, promis
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