NORTHWEST BIOTHERAPEUTICS,
INC.
LOAN AGREEMENT and
10% CONVERTIBLE PROMISSORY NOTE
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$100,000.00
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April 27,
2007
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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 One Hundred
Thousand Dollars ($100,000.00) 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 April 27, 2007 (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.
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.
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.
(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.
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.
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.
(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, promise or commit to do so, except in
accordance with the Maker’s budget that has been approved by
the Maker’s board of directors and the Holder.
(i) Expenses . Maker shall make no
expenditures in excess of $10,000 in aggregate other than in
accordance with a budget (including any amendments thereto)
pre-approved by Holder. Maker shall not deviate, during the period
covered by such budget, more than $10,000 in aggregate from
the budget approved by Holder, nor take any action or make 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.
(i) Maker shall not change the nature of
its business activity in a manner that would cause a violation of
13 C.F.R. Section 107.720 and/or Section 107.760(b)
(including, without limitation, by undertaking real estate, film
production or oil and gas exploration activities). In the event
that Maker changes the nature of its business activity such that
such change would render Maker ineligible for financing pursuant to
applicable SBA rules and regulations, Maker agrees to use its best
efforts to facilitate a transfer or redemption of any securities
then held by Holder.
(ii) Maker will at all times comply with
the non-discrimination requirements of 13 C.F.R. Parts 112, 113 and
117.
(iii) For a period of at least one year
after the date of this Note, Maker will locate no more than
49 percent of the employees or tangible assets of Maker
outside the United States.
10.3 Additional Covenant . Until the date
on which this Note has been discharged in full, Maker shall not
sell, license, loan or otherwise in any way transfer or distribute
Maker’s Tangential Flow Filtration (“TFF”)
devices or any similar device, or any specifications, diagrams,
description or other information about the TFF devices, to any
third party, or commit or promise or enter into any
understand
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