LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
NAPRO BIOTHERAPEUTICS, INC.
AND
XXXXXX LABORATORIES
JULY 23, 1999
TABLE OF CONTENTS
Page
SECTION 1. AMOUNT AND TERMS.......................................................................3
1.1 Advances......................................................................3
1.2 Borrowing Request.............................................................3
1.3 Promissory Note...............................................................4
1.4 Interest......................................................................4
1.5 Payments; Optional Prepayments................................................4
1.6 Mandatory Prepayment..........................................................6
1.7 Form of Payments..............................................................6
1.8 Use of Proceeds...............................................................6
1.9 Notice Requirements...........................................................7
SECTION 2. SECURITY INTEREST AND COLLATERAL.......................................................7
2.1 Grant of Security Interest....................................................7
2.2 Rights of Abbott..............................................................8
2.3 Obligations of NaPro..........................................................8
2.4 NaPro Covenants Regarding Faulding Agreement.................................10
2.5 Perfection and Protection of Security Interest...............................11
2.6 Location of Collateral.......................................................12
2.7 Title to, Liens on, and Sale and Use of Collateral...........................13
2.8 Appraisals...................................................................14
2.9 Access and Examination; Confidentiality......................................14
2.10 Accounts.....................................................................15
2.11 Collection of Accounts; Payments.............................................15
2.12 Equipment....................................................................17
2.13 Right to Cure................................................................18
2.14 Power of Attorney............................................................18
SECTION 3. CONDITIONS PRECEDENT..................................................................20
3.1 Conditions to Initial Advance................................................20
3.2 Conditions to Each Advance ..................................................21
SECTION 4. REPRESENTATIONS AND WARRANTIES........................................................21
4.1 Representations and Warranties of NaPro......................................21
4.2 Representations and Warranties of Abbott.....................................26
SECTION 5. COVENANTS.............................................................................28
5.1 Preservation of Corporate Existence, Etc.....................................28
5.2 Maintenance of Property......................................................28
5.3 Payment of Obligations.......................................................28
5.4 Compliance with Laws.........................................................29
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SECTION 6. EVENTS OF DEFAULT.....................................................................29
6.1 Events of Default............................................................29
6.2 Consequences of Demand and Events of Default.................................31
SECTION 7. GENERAL PROVISIONS....................................................................33
7.1 Definitions..................................................................33
7.2 Dispute Resolution...........................................................40
7.4 Indemnification..............................................................43
7.5 Amendment and Waiver.........................................................44
7.6 Delay not a Waiver; Cumulative Remedies.....................................44
7.7 Notices......................................................................44
7.8 Survival of Representations and Warranties...................................45
7.9 Descriptive Headings.........................................................45
7.10 Term of Agreement............................................................46
7.11 Successors and Assigns.......................................................46
7.12 Governing Law................................................................46
7.13 No Third Party Rights........................................................46
7.14 Complete Agreement...........................................................46
7.15 Execution in Counterparts....................................................47
SCHEDULE 1 Locations of Collateral as of Closing Date, Specified
Liens and Permitted Liens
EXHIBITS
Exhibit A Promissory Note
Exhibit B Form of Borrowing Request
Exhibit C Form of Borrowing Base Certificate
Exhibit D Faulding Agreement
Exhibit E Original Collateral Appraisal
[ALL SCHEDULES AND EXHIBITS HAVE BEEN INTENTIONALLY OMITTED.
NAPRO BIOTHERAPEUTICS, INC. WILL FURNISH SUPPLEMENTALLY A COPY
OF ANY OMITTED SCHEDULE OR EXHIBIT TO THE COMMISSION UPON
REQUEST]
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (which, together with the
Schedules and Exhibits attached to this Loan and Security Agreement and
incorporated herein by reference, the "Agreement") effective as of July 26, 1999
(the "Effective Date"), between NaPro BioTherapeutics, Inc., a Delaware
corporation ("NaPro"), and Xxxxxx Laboratories, an Illinois corporation
("Abbott"). "NaPro" and "Abbott" are each a "Party" and, collectively, the
"Parties."
RECITALS
WHEREAS, NaPro and Abbott are simultaneously with this Agreement
entering into a Development, License and Supply Agreement dated as of July 26,
1999 (the "Development Agreement") pursuant to which, among other things, (i)
Abbott will purchase bulk Paclitaxel from NaPro, (ii) Abbott and NaPro shall
work together to develop and obtain necessary regulatory approvals for one or
more formulations of Paclitaxel, (iii) Abbott will obtain a license to certain
technology owned by NaPro covering formulation or use of Paclitaxel and (iv)
Abbott may manufacture finished Paclitaxel product(s) and will sell finished
Paclitaxel product(s);
WHEREAS, NaPro and Abbott are simultaneously with this Agreement
entering into a Stock Purchase Agreement dated as of July 26, 1999 (the "Stock
Purchase Agreement") providing for an equity investment by Abbott in NaPro;
WHEREAS, Abbott wishes to loan to NaPro, and NaPro wishes to borrow
from Abbott, funds to finance general business and working capital needs on the
terms and subject to the conditions of this Agreement.
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NOW, THEREFORE, in consideration of the premises and the respective
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the parties agree as follows:
TERMS AND CONDITIONS
SECTION 1. AMOUNT AND TERMS.
1.1 Advances. Abbott hereby agrees, on the terms and subject
to the conditions of this Agreement: (a) to make an advance (the "Initial
Advance") to NaPro in the principal amount of $2,000,000 on the Effective Date;
and (b) to make advances (including the Initial Advance, the "Advances") to
NaPro at any time and from time to time during the period from the Effective
Date to the earlier of: (i) the First Commercial Sale of a Planned Indication or
(ii) the date of notice of termination pursuant to Article 15 of the Development
Agreement; provided that the aggregate principal amount of all such Advances at
any one time outstanding shall not exceed the lesser of: (i) the Commitment
Amount; or (ii) the Borrowing Base at such time (all such Advances together
being called, the "Loan").
1.2 Borrowing Request.
(a) Each Advance shall be made on notice, evidenced by a
Borrowing Request, given not later than 1:00 p.m. (Chicago time) on the fifth
Business Day prior to the date of the proposed Advance. Each such Borrowing
Request shall be completed in the form of Exhibit B, shall be sent by facsimile
and confirmed thereafter in writing, shall specify the requested: (i) date
Abbott should make the proceeds of such Advance
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available to NaPro pursuant to Section 1.2(b) (the "Drawdown Date"); and (ii)
amount of such Advance (which amount shall not exceed the then Available
Borrowing Base).
(b) On the Effective Date and each Drawdown Date thereafter,
Abbott shall make available the amount of the requested Advance by wire transfer
of immediately available funds as set forth in the Borrowing Request to such
address as is set forth in the Borrowing Request.
1.3 Promissory Note. The Loan shall be evidenced by a
promissory note of NaPro substantially in the form of Exhibit A to this
Agreement (the "Abbott Note").
1.4 Interest. NaPro shall pay interest at the rate of 6.5% per
annum on the unpaid principal amount of the Loan from the Drawdown Date of each
Advance thereunder, in each case until such principal amount shall be paid in
full; provided, however, that any amount of principal which is not paid when due
(whether upon demand (and the expiration of five (5) Business Days), by
acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate of
11% per annum. NaPro shall pay interest on such outstanding principal amount
quarterly on March 31, June 30, September 30 and December 31 of each year (each,
an "Interest Payment Date") until the principal hereof is paid or made available
for payment.
1.5 Payments; Optional Prepayments. The entire principal
amount of the Abbott Note and all accrued and unpaid interest thereon shall be
due and payable in full on the earliest of the following dates (such earliest
date being the "Termination Date"):
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(a) the second anniversary following the First Commercial
Sale; provided, however, that the principal amount of the Loan shall be off-set
by fifty-percent (50%) of all Milestone Payments and Additional Consideration
due from Abbott to NaPro earned on and following the date of the First
Commercial Sale until such time as two-thirds of such principal amount of the
Loan shall have been paid and such two-thirds of the outstanding principal
amount of the Loan shall be due and payable in installments as all such monies
from Abbott to be applied as such an offset are due and payable;
(b) the termination date of the Development Agreement pursuant
to Article 15 thereof (except for termination pursuant to Section 15.5.1 or
15.5.2); or
(c) January 1, 2007, provided however, that if Abbott
terminates the Development Agreement pursuant to Section 15.5.1 or 15.5.2 of the
Development Agreement: (i) the due date specified in Section 1.5(a) shall be
extended to the third anniversary following the date of First Commercial Sale;
and (ii) the due date specified in this Section 1.5(c) shall be extended to June
1, 2007.
NaPro shall have the right, at any time and from time to time, upon not
less than ten (10) Business Days' prior notice to Abbott, in accordance with the
terms of the Abbott Note, to prepay all or any portion of the outstanding
principal amount of the Abbott Note in immediately available funds, without
premium or penalty, provided that NaPro has paid all interest on such Abbott
Note accrued through the date of prepayment. Amounts prepaid, whether pursuant
to a voluntary or mandatory prepayment, may not be reborrowed, except that any
amount prepaid as required under Section 1.6 may be reborrowed if all applicable
conditions precedent are met upon such reborrowing.
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1.6 Mandatory Prepayment. If at any time the outstanding
principal amount of the Loan shall exceed the Borrowing Base, NaPro shall within
five (5) Business Days following such event, prepay a principal amount of the
Loan equal to such excess. NaPro agrees that upon receipt of any Faulding
Revenue or the Proceeds of any other Collateral it will, if the Loan would
exceed the Borrowing Base after subtracting such Faulding Revenue or Proceeds
from the Borrowing Base or if the Loan is then due and owing, apply such
Faulding Revenue or other proceeds to the repayment of the Loan; provided,
however, that if NaPro disputes the fact that the outstanding principal amount
of the Loan exceeds the Borrowing Base, and invokes the procedures set forth in
Section 7.2, Xxxxxx'x rights shall be stayed subject to determination under
Section 7.2.
1.7 Form of Payments. All payments (including prepayments) on
account of principal and interest shall be made in United States dollars and by
wire transfer of immediately available funds. If any payment is scheduled to
become due and payable on a day which is not a Business Day, such payment shall
instead become due and payable on the immediately following Business Day and
such extension of time shall be included in the computation of interest under
this Agreement and the Abbott Note.
1.8 Use of Proceeds. The proceeds of Advances shall be used by
NaPro solely to fund general business and working capital needs.
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1.9 Notice Requirements. NaPro hereby covenants and
agrees to furnish to Abbott:
(a) as soon as possible and in any event within five (5)
Business Days after the occurrence of each Event of Default known to NaPro which
is continuing on the date of such statement, a statement of an authorized
financial officer of NaPro setting forth the details of such Event of Default
and the actions which NaPro has taken and proposes to take with respect thereto;
(b) promptly and in any event within five (5) Business Days
after the sending or filing thereof, copies of all proxy material, reports and
other information which NaPro sends to any of its security holders pursuant to
the Securities Exchange Act of 1934, and copies of all reports and registration
statements which NaPro or any subsidiary files with the Securities and Exchange
Commission, including but not limited to reports on Form 10-Q and Form 10-K;
(c) within fifteen (15) Business Days after the last day of
each month, a Borrowing Base Certificate as of such month end.
SECTION 2. SECURITY INTEREST AND COLLATERAL.
2.1 Grant of Security Interest. As consideration for Abbott
making each and all of the Advances, and to secure the prompt and complete
payment, performance and observance of the Obligations, NaPro hereby assigns and
grants to Abbott a continuing first-priority security interest in the following
property, whether now owned or hereafter acquired: (a) the Equipment; (b) the
Inventory; (c) the Accounts; (d) the Faulding Revenue; (e) the Yew Trees; and
(f) all Proceeds thereof (all of (a), (b), (c),
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(d), (e) and (f) collectively, the "Collateral"). NaPro hereby covenants and
agrees that Abbott may exercise in respect of the Collateral, solely upon
becoming entitled to such exercise pursuant to this Agreement and in addition to
other rights and remedies provided for in this Agreement or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code as in effect in the State of Illinois (the "U.C.C."),
whether or not the U.C.C. applies to the Collateral.
2.2 Rights of Abbott. Except as otherwise expressly provided
herein, Abbott shall not be permitted to exercise any of its rights to the
Collateral under this Agreement unless and until there shall have occurred and
be continuing an Event of Default and then only to the extent of the
Obligations. Upon the occurrence of an Event of Default, Abbott may deliver to
NaPro a written notice stating: (i) that an Event of Default has occurred and is
continuing; and (ii) that Abbott elects to exercise its rights to the
Collateral, which notice shall specify whether Abbott elects to exercise its
rights with respect to the Faulding Revenue (the "Collateral Exercise Notice").
If NaPro disputes the existence of an Event of Default, it shall within two (2)
Business Days of receipt of the Collateral Exercise Notice, so advise Abbott and
may invoke the procedures set forth in Section 7.2 to determine if an Event of
Default has occurred.
2.3 Obligations of NaPro.
(a) Faulding Revenue. NaPro hereby covenants and agrees to
notify Faulding in writing within thirty (30) days after the date hereof to pay
a lockbox account (the "Lock Box Account") with a bank (the "Lock Box Bank")
satisfactory to Abbott and NaPro pursuant to documentation satisfactory to
Abbott and NaPro amounts equal to the Faulding Revenue. Until the delivery of a
Collateral Exercise Notice to NaPro and the
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Lock Box Bank, the Lock Box Bank shall release funds in the Lock Box Account to
NaPro on a daily basis. After the delivery of a Collateral Exercise Notice, the
Lock Box Bank will release funds directly to Abbott to be applied to the
Obligations; provided, however, that if NaPro disputes the existence of any
Event of Default and invokes the procedures under Section 7.2, the Lock Box Bank
shall hold all monies in the Lock Box Account pending resolution of such
procedures. Any of the Faulding Revenue received by NaPro after delivery of a
Collateral Exercise Notice shall be held in trust by NaPro and NaPro shall
deliver to the Lock Box Bank in original form all money, checks, money orders,
notes or other means of or evidences of payment in respect of the Faulding
Revenue. When and if an Event of Default has been cured or is otherwise no
longer continuing, Abbott covenants and agrees that it will immediately execute
a joint notice with NaPro directing the Lock Box Bank to resume releasing funds
in the Lock Box Account to NaPro on a daily basis. The joint notice sent by the
Parties shall indicate the date as of which the release of funds to NaPro shall
resume and Abbott shall be entitled to receive the funds in the Lock Box Account
only up to such date.
(b) Other Collateral. NaPro hereby covenants and agrees that
upon receipt of a Collateral Exercise Notice that includes an election by Abbott
to exercise rights with respect to Equipment, Inventory or Yew Trees
constituting Collateral: (i) NaPro shall, at NaPro's expense and upon the
reasonable request of Abbott, within ten (10) Business Days of NaPro's receipt
of the Collateral Exercise Notice, (A) assemble all or part of the Equipment and
Inventory constituting the Collateral as reasonably directed by Abbott, and
NaPro shall make such Equipment and Inventory available to Abbott at a place and
time that is reasonably convenient to both Parties and (B) NaPro shall promptly
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notify each of the landlords on whose property the Yew Trees are growing of
Xxxxxx'x intent to exercise its rights to realize upon such Collateral; (ii)
NaPro shall permit Abbott upon reasonable advance notice of not less than ten
(10) Business Days to enter upon any premises of NaPro and take possession of
such Collateral; and (iii) NaPro shall permit Abbott, without notice except as
specified below, to sell such Collateral or any part thereof in one or more
parcels at public or private sale, at any of NaPro's offices or elsewhere, at
such time or times, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Abbott may deem commercially
reasonable. NaPro agrees that, to the extent notice of sale shall be required by
law, at least ten (10) Business Days notice to NaPro of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. At any sale of such Collateral, if permitted
by law, Abbott may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for the purchase of such Collateral or any portion
thereof for the account of Xxxxxx. Xxxxxx shall not be obligated to make any
sale of Collateral regardless of whether a notice of sale has been given.
Subject to Sections 7.2 and 7.3, NaPro shall not be liable for any deficiency.
Abbott may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. Subject to Sections
7.2 and 7.3, Abbott shall be required to proceed against the Collateral and may
not proceed against NaPro directly.
If NaPro disputes the existence of an Event of Default and invokes the
procedures set forth in Section 7.2, Xxxxxx'x rights shall be stayed subject to
determination under Section 7.2.
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2.4 NaPro Covenants Regarding Faulding Agreement. NaPro
covenants that during the term of this Agreement, it shall use commercially
reasonable efforts to keep in full force and effect the Faulding Agreement in
accordance with the terms hereof as of the Effective Date. NaPro shall use
commercially reasonable efforts to enforce its rights under the Faulding
Agreement. In the event that a default exists under the Faulding Agreement by
either NaPro or Faulding, NaPro shall provide to Abbott prompt written notice of
such default, including the nature of the default and the actions to be taken by
the defaulting party to remedy the default. NaPro shall not amend any terms of
the Faulding Agreement or waive any of its rights thereunder without the prior
written consent of Abbott, which consent shall not be unreasonably withheld or
delayed.
2.5 Perfection and Protection of Security Interest.
(a) NaPro shall perform all steps requested by Abbott at any
time to perfect, maintain, protect and enforce Xxxxxx'x security interest,
including, without limitation: (i) executing and filing financing or
continuation statements, and amendments thereof, in form and substance
satisfactory to Abbott; (ii) delivering to Abbott the originals of all
instruments, documents and chattel paper, and all other Collateral of which
Abbott determines it should have physical possession in order to perfect and
protect Xxxxxx'x security interest therein, duly pledged, endorsed or assigned
to Abbott without restriction; (iii) delivering to Abbott warehouse receipts
covering any portion of the Collateral located in warehouses and for which
warehouse receipts are issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses designated by Abbott; (v) placing notations
on NaPro's books of account to disclose Xxxxxx'x security interest; and (vi)
taking such other steps as are deemed necessary or desirable by Abbott
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to maintain and protect Xxxxxx'x security interest. To the extent permitted by
applicable law, Abbott may file, without NaPro's signature, one or more
financing statements disclosing Xxxxxx'x security interest. NaPro agrees that a
carbon, photographic, photostatic, electronic or other reproduction of a
financing statement is sufficient as a financing statement. All reasonable
out-of-pocket expenses of NaPro under this Section 2.5(a) prior to the existence
of an Event of Default shall be reimbursed by Abbott. All reasonable out-of
-pocket expenses of Abbott under this Section 2.5 (a) after an Event of Default
has occurred and is continuing shall be reimbursed by NaPro.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of NaPro's agents or processors, then
NaPro shall notify Abbott thereof. At Xxxxxx'x request, NaPro shall notify such
Person of Xxxxxx'x security interest in such Collateral and, upon Xxxxxx'x
request, NaPro shall instruct such Person to hold all such Collateral for
Xxxxxx'x account subject to Xxxxxx'x instructions and NaPro shall obtain such
documents relating thereto as Abbott shall request; provided, however, that if
the action of NaPro requested under this sentence is not required to perfect
Xxxxxx'x security interest, NaPro shall not be required to take such action
unless a Collateral Exercise Notice has been delivered. If at any time any
Collateral is located on any operating facility of NaPro which is not owned by
NaPro, then NaPro shall use commercially reasonable efforts to obtain within 30
days following (i) the Effective Date for those facilities in effect on the
Effective Date and (ii) the leasing of facilities after the date hereof, written
waivers of all present and future liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral and consents with
respect to the liens of Abbott, all in form satisfactory to Abbott.
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2.6 Location of Collateral. NaPro represents and warrants to
Abbott that: (a) Schedule 1 is a correct and complete list of NaPro's chief
executive office, the location of its books and records, the locations of the
Collateral and the locations of all of its other places of business; and (b)
Schedule 1 correctly identifies any of such facilities and locations that are
not owned by NaPro and sets forth the names of the owners and lessors or
sublessors of and, the holders of any mortgages on, such facilities and
locations. NaPro covenants and agrees that it will not: (i) maintain any
Collateral at any location other than those locations listed for NaPro on
Schedule 1; (ii) otherwise change or add to any of such locations; or (iii)
change the location of its chief executive office from the location identified
in Schedule 1, unless it gives Abbott at least thirty (30) days' prior written
notice thereof and executes any and all financing statements and other documents
that Abbott requests in connection therewith or, if such new location would not
require any additional financing statements to be filed to maintain Xxxxxx'x
perfected security interest in all Collateral, five (5) days' prior written
notice thereof. Without limiting the foregoing, NaPro represents that all of its
Inventory (other than Inventory in transit) is, and covenants that all of its
Inventory will be, located, either: (a) on premises owned by NaPro; (b) on
premises leased by NaPro, provided that NaPro has used commercially reasonable
efforts to obtain an executed landlord waiver from the landlord of such premises
in form and substance satisfactory to Abbott; or (c) with any warehouseman,
bailee or any of NaPro's agents or processors, provided that Abbott has received
such documents relating thereto in form and substance satisfactory to Abbott as
Abbott shall request.
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2.7 Title to, Liens on, and Sale and Use of Collateral. NaPro
represents and warrants to and agrees with Abbott that: (a) NaPro owns and will
continue to own (or in the case of the Yew Trees in Canada will own or have
rights in such Yew Trees) all of the Collateral free and clear of all Liens
whatsoever, except for Permitted Liens and Specified Liens as set forth on
Schedule 1; (b) Xxxxxx'x security interest in the Collateral will not be subject
to any prior lien, except for Specified Liens; (c) NaPro will use, store and
maintain the Collateral with all reasonable care and will use such Collateral
for lawful purposes only; and (d) NaPro will not, without Xxxxxx'x prior written
approval, sell, or dispose of or permit the sale or disposition of any of the
Collateral except for sales of Inventory in the ordinary course of business,
sales of Equipment as permitted by Section 2.12 and harvesting trees in the
ordinary course of business and except that NaPro may use the Faulding Revenue
and the Proceeds in the ordinary course of business.
2.8 Appraisals. Whenever an Event of Default exists, and at
such other times not more frequently than once a year as Abbott requests, NaPro
shall, upon Xxxxxx'x request, provide Abbott with appraisals or updates thereof
of any or all of the Collateral (it being understood that: (a) the Inventory and
Equipment may be appraised separately at different times and that any such
appraisal of Inventory and Equipment shall together constitute one appraisal for
purposes of the limitation described above; and (b) the appraiser and the
preparation basis to be mutually satisfactory to Abbott and NaPro), such
appraisals and updates to include, without limitation, information required by
applicable law and regulation. NaPro and Abbott agree that an appraisal by the
same appraiser who prepared the Original Collateral Appraisal prepared in the
same manner as the Original Collateral Appraisal would be mutually satisfactory.
Abbott shall bear the
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cost of any appraisal before an Event of Default. NaPro shall bear the cost of
any appraisal after an Event of Default has occurred and is continuing.
2.9 Access and Examination; Confidentiality. Abbott may, at
all reasonable times during regular business hours with reasonable notice to
NaPro (and at any time when an Event of Default exists) have access to, examine,
audit, make extracts from or copies of and inspect any or all of NaPro's
records, files, and books of account and the Collateral, and discuss NaPro's
affairs with NaPro's officers and management. Abbott may, at any time when an
Event of Default exists, make copies of all of NaPro's books and records related
to the Collateral, or require NaPro to deliver such copies to Abbott. Any
out-of-pocket expenses of Abbott under this section prior to an Event of Default
shall be at Xxxxxx'x own expense and after an Event of Default has occurred and
is continuing shall be at NaPro's expense.
2.10 Accounts. (a) NaPro hereby represents and warrants to
Xxxxxx, that: (i) each existing Account represents, and each future Account will
represent, a bona fide sale or lease and delivery of goods by NaPro, or
rendition of services by NaPro, in the ordinary course of NaPro's business; and
(ii) each existing Account is, and each future Account will be, for a liquidated
amount payable by the account debtor thereon on the terms set forth in the
invoice therefor, without any offset, deduction, defense, or counterclaim except
those known to NaPro and disclosed to Xxxxxx pursuant to this Agreement.
(b) NaPro shall not accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account unless NaPro will deliver such instrument to Xxxxxx,
endorsed by NaPro to Xxxxxx in a
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manner satisfactory in form and substance to Xxxxxx (which endorsement may be on
an allonge attached to the note) within ten (10) days of the execution and
delivery thereof.
2.11 Collection of Accounts; Payments. (a) Until Xxxxxx
notifies NaPro to the contrary after the occurrence and during the continuance
of an Event of Default, NaPro shall make collection of all Accounts and other
Collateral. After such notice, NaPro shall receive all payments as Xxxxxx'x
trustee, and shall immediately deliver all payments in their original form duly
endorsed in blank into the Lock Box Account subject to documentation acceptable
to Xxxxxx. NaPro shall, after such notice, instruct all account debtors to make
all payments directly to the address(es) established for such service. All items
sent to any such address shall be deposited in the Lock Box Account. If,
notwithstanding such instructions, after such notice, NaPro receives any
proceeds of Accounts, it shall receive such payment as Xxxxxx'x trustee, and
shall immediately deliver such payments to Xxxxxx in their original form duly
endorsed in blank or deposit them into the Lock Box Account, as Xxxxxx may
direct. All collections received in any such lock-box or the Lock Box Account or
directly by Xxxxxx and all funds in the Lock Box Account or other account to
which such collections are deposited shall, after such notice, be credited to
repayment of the Loan. Xxxxxx or Xxxxxx'x designee may, at any time after the
occurrence of an Event of Default, notify account debtors that the Accounts have
been assigned to Xxxxxx and of Xxxxxx'x security interest therein, and may
collect them directly and charge the reasonable collection costs and expenses to
NaPro as a Loan, not subject to the limitations of Section 2.3(b). So long as an
Event of Default has occurred and is continuing, NaPro, at Abbot's request,
shall execute and deliver to Xxxxxx such
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documents as NaPro shall require to xxxxx Xxxxxx access to any post office box
in which collections of Accounts are received.
(b) If sales of Inventory are made for cash after the
occurrence and during the continuance of an Event of Default, NaPro shall
immediately deliver to Xxxxxx or deposit into the Lock Box Account the cash
which NaPro receives.
(c) All payments, including immediately available funds
received by Xxxxxx at a bank designated by it, received by Xxxxxx on account of
Accounts or as proceeds of other Collateral will be Xxxxxx'x sole property for
its benefit and will be credited to the Loans (conditional upon final
collection).
2.12 Equipment.
(a) NaPro represents and warrants to Xxxxxx and agrees with
Xxxxxx that all of the Equipment is and will be used or held for use in NaPro's
business, and is and will be fit for such purposes. NaPro shall keep and
maintain the Equipment in good operating condition and repair (ordinary wear and
tear excepted) and shall make all necessary replacements thereof.
(b) NaPro shall promptly inform Xxxxxx of any material
additions to or deletions from the Equipment exceeding $50,000 with respect to
any single transaction. NaPro shall not, without Xxxxxx'x prior written consent,
permit any Equipment to become a fixture with respect to real property or to
become an accession with respect to other personal property with respect to
which real or personal property Xxxxxx does not have a security interest.
(c) NaPro shall not, without Xxxxxx'x prior written consent,
sell, lease as a lessor, or otherwise dispose of any of its Equipment; provided,
however, that NaPro
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is permitted to sell, lease as a lessor, or otherwise dispose of any of its
Equipment in the ordinary course of business, provided, however, that if an
Event of Default has occurred and is continuing or if at the time of the
disposition, the then outstanding principal amount of the Loan exceeds the
Borrowing Base, NaPro shall not, without Xxxxxx'x prior written consent, sell,
lease as a lessor, or otherwise dispose of any of its Equipment, except that
NaPro may dispose of obsolete or unusable Equipment having an orderly
liquidation value no greater than $50,000 in the aggregate in any Fiscal Year,
without Xxxxxx'x consent.
2.13 Right to Cure. Xxxxxx may, in its discretion, pay any
amount or do any act required of NaPro hereunder in order to preserve or protect
the Collateral or Xxxxxx'x security interest therein, and which NaPro fails to
pay or do, including, without limitation, payment of any judgment against NaPro,
any insurance premium, any warehouse charge, any finishing or processing charge,
any landlord's claim, and any other lien upon or with respect to the Collateral;
provided, that, Xxxxxx shall give NaPro reasonable notice prior to any such
action or payment under this Agreement or under any agreement between Xxxxxx and
an owner or lessor of real property leased by NaPro as lessee. All payments that
Xxxxxx makes under this Section 2.13 and all out-of-pocket costs and expenses
that Xxxxxx pays or incurs in connection with any action taken by it hereunder,
after the occurrence and during the continuation of an Event of Default and at
such other times as Xxxxxx is authorized hereunder to pay or incur such costs or
expenses, shall be reimbursed by NaPro and such reimbursement shall not be
subject to the limitations set forth in Section 2.3(b).
17
2.14 Power of Attorney. NaPro hereby appoints Xxxxxx and
Xxxxxx'x designee as NaPro's attorney, with power: (a) to endorse NaPro's name
on any checks, notes, acceptances, money orders or other forms of payment or
security that come into Xxxxxx'x possession; (b) to sign NaPro's name on any
invoice, xxxx of lading, warehouse receipt or other document of title relating
to any Collateral, on financing statements and other public records and file
such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedures; and (c) to do all
things reasonably necessary to protect its interest in or exercise its rights
with respect to the Collateral. NaPro ratifies and approves all acts of such
attorney. Xxxxxx shall exercise at least the same standard of care in exercising
its rights under this Section as it does in administering its own affairs. This
power, being coupled with an interest, is irrevocable until this Agreement has
been terminated. Xxxxxx shall not exercise its rights under this Section unless
an Event of Default exists and Xxxxxx has given NaPro at least two Business
Days' notice of such Event of Default. If NaPro disputes the existence of such
Event of Default, it may invoke the procedures under Section 7.2 and Xxxxxx'x
rights shall be stayed subject to determination under Section 7.2.
2.15 Insurance.
(a) NaPro shall maintain with financially sound and reputable
insurers rated at least A+ by A.M. Best Company, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and loss in
transit; public liability and third party property damage; larceny, embezzlement
or other criminal liability; business interruption; public liability and third
party property damage; and such other hazards or of such other types as is
customary for Persons engaged in the same or similar business, and
18
under policies acceptable to Xxxxxx. Without limiting the foregoing, NaPro shall
also maintain flood insurance, in the event of a designation of the area in
which any of the Equipment or Inventory is located as "flood prone" or a "flood
risk area," as defined by the Flood Disaster Protection Act of 1973, in an
amount to be reasonably determined by Xxxxxx, and shall comply with the
additional requirements of the National Flood Insurance Program as set forth in
said Act.
(b) NaPro shall cause Xxxxxx to be named in each such policy
as secured party or mortgagee and sole loss payee or additional insured, in a
manner acceptable to Xxxxxx. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty (30) days' prior
written notice to Xxxxxx in the event of cancellation of the policy for any
reason whatsoever and a clause or endorsement stating that the interest of
Xxxxxx shall not be impaired or invalidated by any act or neglect of NaPro or
the owner of any premises or the occupation of any premises for purposes more
hazardous than are permitted by such policy. All premiums for such insurance
shall be paid by NaPro when due, and certificates of insurance and, if requested
by Xxxxxx, photocopies of the policies, shall be delivered to Xxxxxx. If NaPro
fails to procure such insurance or to pay the premiums therefor when due, Xxxxxx
may do so and the obligation to reimburse Xxxxxx for such insurance premiums
shall not be subject to the limitations set forth in Section 2.3(b). SECTION 3.
CONDITIONS PRECEDENT.
3.1 Conditions to Initial Advance. The obligation of Xxxxxx to
make the initial Advance under the Loan shall be subject to the fulfillment of
the following conditions precedent in a manner reasonably satisfactory to
Xxxxxx:
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(a) Xxxxxx shall have received: (i) the executed Xxxxxx Note;
(ii) a certified copy of the resolutions of the Board of Directors of NaPro
authorizing the execution, delivery and performance of this Agreement, the
Xxxxxx Note and any other documents required hereunder, and the borrowing under
this Agreement; (iii) an incumbency certificate evidencing the signatures of
officers of NaPro executing this Agreement and any related documents; (iv)
opinions of counsel to NaPro in form satisfactory to Xxxxxx; (v) such financing
statements and other instruments reasonably satisfactory in form and substance
to Xxxxxx evidencing its first priority security interest in the Collateral and
due perfection thereof; (vi) a certificate of an officer of NaPro, dated as of
the date of the Advance, confirming the matters set forth in Section 3.1(b); and
(vii) lien searches confirming that no prior lien exists with respect to the
Collateral except as set forth in Schedule 1.
(b) The representations and warranties of NaPro contained in
this Agreement shall be true and correct; NaPro shall have complied with all of
the terms and conditions of this Agreement to be performed or observed by it; no
Event of Default shall be in existence or shall exist after giving effect to the
execution of this Agreement or the extension of the Loan.
(c) All corporate proceedings and all documents required to be
completed and executed by the provisions of, and all instruments to be executed
in connection with the transactions contemplated by, this Agreement shall be
reasonably satisfactory in form and substance to Xxxxxx.
3.2 Conditions to Each Advance . In addition to the
conditions set forth in Section 3.1, the obligation of Xxxxxx to make any
Advance shall be subject to:
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(i) the representations and warranties of NaPro contained in this Agreement
being true and correct; (ii) no Event of Default has occurred and is continuing
after giving effect to such Advance; and (iii) Xxxxxx'x receipt of a completed
Borrowing Request in the form of Exhibit B. The delivery of a Borrowing Request
by NaPro shall be deemed a representation as of the date of such delivery as to
the matters set forth in clauses (i) and (ii).
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of NaPro. In order to
induce Xxxxxx to enter into this Agreement and to make the Advance, NaPro
represents and warrants that:
(a) Authority of NaPro. NaPro is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
NaPro has all requisite power and authority to own and operate its properties
and to carry on its business as now conducted and as presently proposed to be
conducted, and is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes such
licensing or qualification necessary or advisable, except where the failure to
be so licensed or qualified would not have a material adverse effect on NaPro
and its subsidiaries taken as a whole. NaPro has the corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
under this Agreement. All corporate action required to be taken by NaPro to
authorize the execution, delivery and performance of this Agreement has been
duly taken.
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(b) Authorization; Enforceable Obligations This Agreement and
the Xxxxxx Note have been duly authorized, executed and delivered by NaPro and
constitute the legal, valid and binding obligations of NaPro, enforceable
against NaPro in accordance with their respective terms (except to the extent
that enforcement may be limited by any applicable bankruptcy, reorganization,
moratorium or similar laws then in effect which may affect the enforceability of
creditors' rights generally, or by general equitable principles).
(c) No Legal Bar. The execution, delivery and performance of
this Agreement and the Xxxxxx Note by NaPro: (i) are not and will not be in
violation of the charter or bylaws of NaPro; (ii) are not and will not be in
violation of or conflict with any law or governmental rule or regulation,
judgment, writ, order, injunction, award or decree of any court, arbitrator,
administrative agency or other governmental authority applicable to NaPro; (iii)
are not and will not conflict or be inconsistent with, or result in any breach
of, any of the terms, covenants, conditions or provisions of or constitute a
Event of Default under any indenture, mortgage, material contract, deed of
trust, debenture, material agreement or other material undertaking or material
instrument to which NaPro is a party or by which any of the Collateral may be
bound or affected; and (iv) do not and will not result in the creation or
imposition of any lien on any of the Collateral pursuant to the provisions of
any such indenture, mortgage, contract, deed of trust, debenture, agreement or
other undertaking or instrument.
(d) No Debt Restrictions. No note, bond, debenture, indenture,
mortgage, material contract, deed of trust, material agreement or other material
undertaking or material instrument to which NaPro is subject contains any
restriction on
22
NaPro's incurring of indebtedness under this Agreement or the Xxxxxx Note,
except such restrictions as have been waived in writing (copies of which shall
be furnished to Xxxxxx).
(e) No Consents. No permit, consent, approval or authorization
of, or declaration to or filing with, any governmental authority is required in
connection with the execution, delivery and performance of this Agreement or the
Xxxxxx Note by NaPro or in connection with any transaction contemplated by this
Agreement, which would materially interfere with performance hereunder if not
obtained.
(f) Regarding the Collateral. Except as set forth in Schedule
1, NaPro has good, free and clear title to the Collateral and has not previously
assigned or transferred the Collateral or any interest therein. The Collateral
is not subject to any security interest whatsoever, nor is it subject to the
lien of any other Person except as set forth in Schedule 1.
(g) Appraisal. All written information provided to Xxxxxx by
NaPro in connection with the preparation of the Original Collateral Appraisal is
true and correct in all material respects. All oral responses by NaPro to
questions in the preparation of the Original Collateral Appraisal were true and
correct in all material respects, to the extent that such responses were made by
employees having responsibility with respect to the subject matter of the
questions. The Original Collateral Appraisal represents a true and accurate
description in all material respects of the assets of NaPro listed therein as of
the date of the Original Collateral Appraisal. NaPro has reviewed the Original
Collateral Appraisal and represents that it does not include any manifest error.
NaPro represents and warrants there has been no material adverse change in the
condition, existence or ownership of the Collateral from the date of the
Original Collateral Appraisal.
23
(h) The Faulding Agreement. The Faulding Agreement is in full
force and effect and neither Faulding nor NaPro is in default thereunder. A
true, accurate and complete copy of the Faulding Agreement, as of the date of
this Agreement, is attached hereto as Exhibit D. All indebtedness of NaPro to
Faulding has been paid in full.
(i) SEC Filings.
(i) NaPro has timely filed all forms, reports and
documents required to be filed by it with the Securities and Exchange Commission
("SEC") since January 1, 1995, and NaPro has heretofore made available to the
Xxxxxx, in the form filed with the SEC (including any exhibits thereto): (A) the
Annual Reports on Form 10-K of NaPro for the fiscal years ended December 31,
1995, December 31, 1996, December 31, 1997, December 31, 1998 (the "1998 Annual
Report"); (B) all proxy and information statements relating to meetings to
stockholders of NaPro (whether annual or special) held since January 1, 1995;
and (C) all other reports and registration statements (including all Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K) filed by NaPro with the
SEC since January 1, 1995 (including all amendments to each of the foregoing,
the forms, reports and other documents referred to in clauses (A) through (C)
being referred to in this Agreement, collectively, as the "NaPro Disclosure
Documents"). The NaPro Disclosure Documents (x) were prepared in accordance with
the Securities Act or the Securities Exchange Act, as the case may be, and the
rules and regulations thereunder, and (y) did not at the time they were filed
with the SEC contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
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(ii) Each of the consolidated financial statements
(including any notes thereto) contained in the Annual Reports on Form 10-K of
NaPro for the fiscal years ended December 31, 1995, December 31, 1996, December
31, 1997, and December 31, 1998, was prepared in accordance with U.S. generally
accepted accounting principles and all applicable rules of the SEC and fairly
presents in all material respects the consolidated financial position, results
of operations and cash flows of each of NaPro and its consolidated subsidiaries
as at the respective dates thereof and for the respective periods indicated
therein, subject, in the case of unaudited statements, to normal year-end
adjustments. As of December 31, 1998, except as set forth in the 1998 Annual
Report, neither NaPro nor any of its consolidated subsidiaries had any material
liabilities or obligations, secured or unsecured (whether accrued, absolute,
contingent or otherwise). For purposes of the preceding sentence, a "material
liability or obligation" is one that exceeds $1,150,000.
(iii) Absence of Certain Changes. Since March 31,
1999, and except as (A) set forth in the 1998 Annual Report or the March, 1999
Quarterly Report, (B) disclosed in Schedule 3(e) of the Stock Power Purchase
Agreement, or (C) as otherwise contemplated by this Agreement, there has not
been to NaPro's knowledge, any event, occurrence or development of a state of
circumstances or facts which has had or reasonably would be expected to have a
material adverse effect on the business, assets, operations, prospects or
condition (financial or otherwise) of NaPro and its subsidiaries, taken as a
whole.
(j) Validity and Priority of Security Interest. The provisions
of this Agreement create legal and valid security interests on all the
Collateral in favor of
25
Xxxxxx, and assuming such steps have been taken as are necessary to perfect such
security interests, such security interests constitute perfected and continuing
security interests on all the Collateral, having priority over all other liens
on the Collateral and enforceable against NaPro and all third parties, subject
to the liens and security interests set forth on Schedule 1.
(k) Corporate Name; Prior Transactions. NaPro has not, during
the past five (5) years, been known by or used any other corporate or fictitious
name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business.
4.2 Representations and Warranties of Xxxxxx. Xxxxxx hereby
represents and warrants that:
(a) Existence. Power and Authority. Xxxxxx is a corporation
duly incorporated and validly existing, in good standing, under the laws of
Illinois with the power, authority and legal right to make this Agreement and
perform its obligations hereunder.
(b) Authorization: Enforceable Obligations. This Agreement has
been duly authorized, executed and delivered by Xxxxxx.
(c) No Legal Bar. The execution, delivery and performance of
this Agreement by Xxxxxx: (i) are not and will not be in violation of the
charter or bylaws of Xxxxxx; (ii) are not and will not be in violation of or
conflict with any law or governmental rule or regulation, judgment, writ, order,
injunction, award or decree of any court, arbitrator, administrative agency or
other governmental authority applicable to Xxxxxx; and (iii) are not and will
not conflict or be inconsistent with, or result in any
26
breach of, any of the terms, covenants, conditions or provisions of or
constitute a Event of Default under any indenture, mortgage, material contract,
deed of trust, debenture, material agreement or other material undertaking or
material instrument to which Xxxxxx is a party or by which any of its assets may
be bound or affected.
(d) No Consents. No permit, current authorization or approval
of, or declaration or filing with, any governmental authority is required in
connection with the execution, delivery or performance by Xxxxxx of this
Agreement or in connection with any transaction contemplated by this Agreement.
(e) Enforceable Obligations. This Agreement constitutes the
legal, valid and binding obligation of Xxxxxx, enforceable against Xxxxxx in
accordance with its terms (except to the extent that enforcement may be limited
by any applicable bankruptcy, reorganization, moratorium or similar laws now or
subsequently in effect, which may affect the enforceability of creditors' rights
generally, or by general equitable principles).
(f) Government Funds. No payment to NaPro hereunder will be
made with government funds.
SECTION 5. COVENANTS.
5.1 Preservation of Corporate Existence, Etc. NaPro
shall:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;
27
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the nonpreservation of which could
reasonably be expected to have a material adverse effect on the business,
operations or properties of NaPro.
5.2 Maintenance of Property. NaPro shall maintain and preserve
all its property which is material to its business in good working order and
condition, ordinary wear and tear excepted.
5.3 Payment of Obligations. NaPro shall pay and discharge as
the same shall become due and payable all its obligations and liabilities,
including:
(a) all tax liabilities, assessments and governmental charges
or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with generally accepted accounting principles are being maintained by
NaPro;
(b) all lawful claims which, if unpaid, would by law become a
lien upon the Collateral; and
(c) all material indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any instrument or
agreement evidencing such indebtedness.
5.4 Compliance with Laws. NaPro shall comply in all material
respects with all requirements of law of any governmental authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
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SECTION 6. EVENTS OF DEFAULT.
6.1 Events of Default. For the purposes of this Agreement, an
"Event of Default" will be deemed to have occurred if:
(a) NaPro fails to pay any amount due on the Xxxxxx Note after
Xxxxxx makes demand (and the expiration of five (5) Business Days) or after any
such payment otherwise becomes due and payable;
(b) NaPro breaches or otherwise fails to perform or observe
any other provision contained in this Agreement, the Xxxxxx Note or any other
document delivered or executed pursuant to this Agreement, and such breach or
failure to perform shall continue for a period of twelve (12) Business Days
after notice thereof shall have been given to NaPro by Xxxxxx;
(c) any representation, warranty or information contained in
this Agreement, or required to be furnished to Xxxxxx pursuant to this
Agreement, or in any writing furnished by NaPro to Xxxxxx pursuant to this
Agreement, is false or misleading on the date made or furnished;
(d) NaPro makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become due;
or an order, judgment or decree is entered adjudicating NaPro bankrupt or
insolvent; or an order for relief with respect to NaPro is entered under the
United State Bankruptcy Code, or NaPro petitions or applies to any tribunal for
the appointment of a custodian, trustee, receiver or liquidator of NaPro or of
any substantial part of the assets of NaPro, or commences any proceedings
relating to NaPro under any bankruptcy, reorganization, arrangement,
29
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against NaPro and either: (i) NaPro by any act
indicates its approval thereof, consent thereto or acquiescence therein; or (ii)
such petition, application or proceeding is not dismissed within 75 days;
(e) NaPro: (A) fails to make any payment in respect of any
indebtedness or contingent obligation in an amount in excess of $1,150,000 when
due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise); or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such indebtedness or contingent obligation, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such indebtedness or beneficiary or beneficiaries of such
indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such indebtedness to be declared to be
due and payable prior to its stated maturity, or such contingent obligation to
become payable or cash collateral in respect thereof to be demanded; or
(f) One or more non-interlocutory judgments, non-interlocutory
orders, decrees or arbitration awards is entered against NaPro involving in the
aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $1,150,000 or more,
and the same shall remain unsatisfied, unvacated and unstayed pending appeal for
a period of thirty (30) days after the entry thereof.
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6.2 Consequences of Demand and Events of Default.
Notwithstanding any other provision in this Agreement, the Xxxxxx Note or any
other document executed in connection with this Agreement, upon the occurrence
and continuation of an Event of Default, Xxxxxx has the right at any time to
demand payment (which payment shall be due five (5) Business Days after such
demand) by NaPro of all principal, interest and other amounts due under the
Xxxxxx Note or this Agreement and, if NaPro shall fail to pay such amount,
Xxxxxx shall have the right to enforce payment of the Xxxxxx Note or any part
thereof and to exercise any and all rights and remedies in connection with the
Collateral provided by the U.C.C., as well as other rights and remedies in
connection with the Collateral possessed by Xxxxxx under this Agreement or
otherwise at law or equity. Upon the occurrence of any one or more of the Events
of Default and at any time thereafter that such Event of Default shall be
continuing, Xxxxxx may, by notice to NaPro, declare any amounts payable on
account of and the entire unpaid principal amount of the Xxxxxx Note and all
interest accrued and unpaid thereon to be immediately due and payable, whereupon
the Abbott Note and all such accrued and unpaid interest thereon shall become
immediately due and payable without presentment, demand, or protest or further
notice of any kind, all of which are hereby waived by NaPro. Upon the occurrence
and the continuation of any one or more Events of Default and the expiration of
five (5) Business Days after demand by Abbott for payment of the Abbott Note and
amounts owed under this Agreement, interest shall accrue at the applicable Event
of Default rate as provided in Section 1.4. Upon the occurrence of an Event of
Default on any payments due to Abbott pursuant to the terms of this Agreement by
a period of time in excess of thirty (30) days, in addition to any and all
rights Abbott may have under this Agreement
31
Abbott may, at Xxxxxx'x option, offset any payment due NaPro for Milestone
Payments or Additional Consideration under the Development Agreement against
payments due by NaPro to Abbott pursuant to this Agreement (including principal,
interests and any applicable penalties). Any withholding or offset of payments
for Milestone Payments or Additional Consideration by Abbott pursuant to this
Section 6.2 shall not constitute a breach or any other default by Abbott under
this Agreement, the Stock Purchase Agreement or the Development Agreement or
waiver of NaPro's obligations under those agreements. Notwithholding the
foregoing, if NaPro disputes the existence of such Event of Default and invokes
the procedures set forth in Section 7.2, Xxxxxx'x rights shall be stayed subject
to determination under Section 7.2.
SECTION 7. GENERAL PROVISIONS.
7.1 Definitions. For purposes of this Agreement, the following
terms shall be defined as set forth below:
"Abbott Note" shall have the meaning set forth in Section 1.3.
"Accounts" shall mean all "accounts" (as defined in the
U.C.C.) which constitute Proceeds of Collateral.
"Additional Consideration" shall have the meaning given to it
in the Development Agreement.
"Adjusted Collateral Value" shall mean the sum of:
(w) the difference of (i) the value (based on actual
cost) of any additional Equipment acquired by NaPro after the date of
the Original Collateral Appraisal designated in writing by NaPro to
Abbott to be included as part of the
32
Collateral or any Equipment on which a lien existing on the Effective
Date has been released and evidence thereof by written record has been
provided to Abbott, less (ii) the value (based on the same principles
of valuation used in the Original Collateral Appraisal) of any
Equipment sold by NaPro, together with any Equipment written-off by
NaPro as damaged, defective or obsolete, after the date of the Original
Collateral Appraisal; plus
(x) the difference of (i) the value (based on the same
principles of valuation used in the Original Collateral Appraisal) of
any Inventory acquired by NaPro, together with any increases in the
value of existing Inventory (as a result of further processing from raw
materials to work-in-progress, or work-in-progress to finished goods,
or otherwise) carried by NaPro, after the date of the Original
Collateral Appraisal, less (ii) the value (based on the same principles
of valuation used in the Original Collateral Appraisal) of any
Inventory sold by NaPro (determined in accordance with the first-in
first-out (i.e., "FIFO") method of inventory accounting), together with
any Inventory written-off by NaPro as damaged, defective or obsolete,
after the date of the Original Collateral Appraisal; plus
(y) the difference of (i) the value (based on the same
principles of valuation used in the Original Collateral Appraisal) of
any additional Yew Trees planted or acquired by NaPro, together with
any increase in the value of existing Yew Trees, after the date of the
Original Collateral Appraisal, less (ii) the value (based on the same
principles of valuation used in the Original Collateral
33
Appraisal) of any Yew Trees harvested or sold by NaPro or destroyed or
damaged after the date of the Original Collateral Appraisal; plus
(z) the difference of (i) any increase in the projected
revenue under the Faulding Agreement, due to a sustainable increase in
average selling price or a sustainable substantially better than
anticipated market conditions for the sale of the product by Faulding,
less (ii) any decrease in the projected revenue under the Faulding
Agreement, due to a decrease in average selling price or negative
change in general market conditions, product recall or adverse event
report or other similar regulatory concerns such as safety or efficacy
concerns, or default of the Faulding Agreement, or any other change to
the terms of the Faulding Agreement or general market conditions for
the product under that agreement which could negatively impact the
projected revenues under the Faulding Agreement; provided, that any
determination under this clause (z) shall be determined annually based
upon forecasts or, if mutually agreed upon, quarterly and provided
further that no Faulding Revenue shall be included in the Adjusted
Collateral Value if the Faulding Agreement has been terminated or has
expired.
If any Collateral is subject to any lien, other than the lien hereunder to
Abbott, the amount of the obligation secured by such lien shall be deducted in
the calculation of Adjusted Collateral Value. If any Equipment shall be subject
to any lien to secure borrowed money, such equipment shall not be included in
the calculation of Adjusted Collateral Value. The Adjusted Collateral Value may
be increased or decreased from time to time based upon any appraisal after the
Original Collateral Appraisal pursuant to Section 2.8.
34
No collateral located in Canada shall be included in the Adjusted Collateral
Value until steps satisfactory to Abbott have been taken to perfect Xxxxxx'x
security interest therein.
"Advance" shall have the meaning set forth in Section 1.1.
"Affiliate" shall have the meaning given it in the Development
Agreement.
"Available Borrowing Base" shall mean an amount equal to (x)
the Borrowing Base less (y) the amount of any Advances drawn under the Loan then
outstanding.
"Borrowing Base" shall mean an amount equal to (a) the
Original Collateral Value, plus (or minus) (b) the Adjusted Collateral Value, if
any, plus (c) Accounts plus (d) identifiable Proceeds.
"Borrowing Base Certificate" shall mean a certificate,
substantially in the form of Exhibit C, duly completed and executed by the chief
financial officer or chief accounting officer of NaPro.
"Borrowing Request" shall mean a request by NaPro for an
Advance in the form of Exhibit B.
"Business Day" shall have the meaning given it in the
Development Agreement.
"Collateral" shall have the meaning set forth in Section 2.1.
"Collateral Exercise Notice" shall have the meaning set forth
in Section 2.2.
35
"Commitment Amount" shall mean: [THIS PORTION HAS BEEN
REDACTED] "Development Agreement" shall have the meaning set
forth in the Recitals to this Agreement.
"Development Committee" shall have the meaning given it in the
Development Agreement."
"Development Costs" shall have the meaning given it in the
Development Agreement.
"Development Plan" shall have the meaning given it in the
Development Agreement.
"Drawdown Date" shall have the meaning set forth in Section
1.2(a).
"Effective Date" shall have the meaning set forth in the
preamble to this Agreement.
"Equipment" shall mean all "equipment" (as defined in the
U.C.C.) included as Exhibit A on the Original Collateral Appraisal and owned by
NaPro on the Effective Date, including, without limitation, all machinery, motor
vehicles, trucks, trailers, vessels, aircraft and rolling stock and all parts
thereof (but excluding the Ford Escort Wagon and the Ford Ranger XLT pickup
listed on such Exhibit A), together with all equipment acquired by NaPro after
the Original Collateral Appraisal (whether before or after the Effective Date)
that NaPro designates in writing to Abbott shall be included as Equipment for
purposes of this Loan Agreement.
"Event of Default" shall have the meaning set forth in Section
6.1.
"Faulding" shall mean X.X. Xxxxxxxx & Co., Ltd.
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"Faulding Agreement" shall mean that certain Amended and
Restated Master Agreement dated as of January 19, 1994 (a copy of which is
attached as Exhibit D), as amended (but only as permitted pursuant to Section
2.3 hereof), by and between NaPro and Faulding.
"Faulding Revenue" shall mean NaPro's right from time to time
to receive amounts under paragraph 5.6.2 of the Faulding Agreement in an amount
equal to 50% of such amounts when, as and if owing and paid by Faulding to
NaPro.
"FDA" shall have the meaning given it in the Development
Agreement.
"Finished Product" shall have the meaning given it in the
Development Agreement.
"First Commercial Sale" shall have the meaning given it in the
Development Agreement.
"Initial Advance" shall have the meaning set forth in Section
1.1.
"Inventory" shall mean all "inventory" (as defined in the
U.C.C.) now owned or hereafter acquired by NaPro, wherever located, including
finished goods, raw materials, work-in-progress and other materials and supplies
used or consumed in NaPro's business, including goods that are returned or
repossessed, but excluding inventory held for Faulding in locations outside the
United States.
"Lien" shall mean, with respect to any real or personal
property, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such property other than Permitted Liens. For purposes
of this Agreement, NaPro shall be deemed to own subject to a Lien any property
which it has acquired or holds subject to
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the interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement (other than an operating lease)
relating to such property.
"Loan" shall have the meaning set forth in Section 1.1.
"Lock Box Account" shall have the meaning set forth in Section
2.3.
"Lock Box Bank" shall have the meaning set forth in Section
2.3.
"Milestone Payment" shall mean "milestone" as such term is
used in Article III of the Development Agreement.
"Obligations" shall mean all obligations, liabilities and
indebtedness of every nature of NaPro from time to time owed to Abbott under
this Agreement, the Abbott Note and all other instruments, documents, financing
statements and agreements executed by or on behalf of NaPro in connection with
the Loan, including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable.
"Original Collateral Appraisal" shall mean that certain
appraisal of the Collateral dated April 14, 1999, prepared by American Appraisal
Associates, attached hereto as Exhibit E.
"Original Collateral Value" shall mean the liquidation value (less the
amount of any obligation secured by any lien on the Collateral (other than a
lien for the benefit of Abbott)) of the Collateral as set forth in the Original
Collateral Appraisal, except for the Faulding Revenue which appraised value is
set forth on Exhibit F to the Original Collateral Appraisal.
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. "Paclitaxel" shall have the meaning given it in the
Development Agreement.
"Permitted Liens" shall have the meaning set forth in Schedule
6.1.
"Planned Indication" shall have the meaning given it in the
Development Agreement.
"Person" shall have the meaning given it in the Development
Agreement.
"Proceeds" shall include whatever is received upon the sale,
exchange, collection or other disposition of Collateral or Proceeds. Insurance
payable by reason of loss or damage to the Collateral is Proceeds, except to the
extent that it is payable to a person other than a party to the security
agreement.
"Regulatory Approval" shall have the meaning given it in the
Development Agreement.
"Specified Liens" means the liens and security interests
described in Schedule 1.
"Termination Date" shall have the meaning set forth in Section
1.5.
"U.C.C." shall have the meaning set forth in Section 2.1.
"Yew Trees" shall mean: (a) all Taxus trees NaPro now owns,
has the right to harvest or hereafter acquires, including without limitation all
Taxus Media Hicksii owned by NaPro as of the Effective Date and growing on the
parcels of land specified on Schedule 1; (b) all of the products and cuttings
from such Taxus trees, including without limitation those which are located as
of the Effective Date in or about the parcels of land specified on Schedule 1;
and (c) all substitutions, replacements and
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proceeds of the assets specified in clauses (a) and (b) above, and all additions
and accessions thereto, wherever located.
7.2 Dispute Resolution. All disputes solely arising out of,
relating to, or connected with this Agreement (including, but not limited to,
any breach, alleged breach, asserted Event of Default, or any Claim as defined
in Section 7.4) shall forthwith be referred to alternative dispute resolutions
("ADR") to be conducted in accordance with the provisions of Section 7.2(a)
hereof. All disputes arising out of, relating to, or connected with this
Agreement and with the Development Agreement shall forthwith be referred to ADR
to be conducted in accordance with Article 16 and Exhibit G of the Development
Agreement. Either of these ADR procedures shall be the exclusive means for
either Party to this Agreement to seek resolution of any dispute arising out of,
relating to, or connected with this Agreement. The pendency of any matter
referred to ADR to be conducted in accordance with Section 7.2(a) hereof or in
accordance with Article 16 and Exhibit G of the Development Agreement, as the
case may be, shall not excuse any Party from performance under this Agreement,
it being understood that such performance is without prejudice to the dispute
resolution process.
(a) The Parties agree that within thirty days following the
first Advance, they will agree upon a mutually acceptable list of five neutrals
to preside in the resolutions of any disputes under this Section 7.2(a) (each, a
"Neutral"). (All references to days in this Section 7.2(a) are to calendar
days.) In the event of a dispute to which this Section 7.2(a) applies, either
Party may send prior written notice to the other Party of such dispute,
specifying the nature of the dispute. The Parties shall use reasonable efforts
to resolve the dispute. If the Parties have not resolved the dispute within
three days, a
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Party seeking resolution under this Section 7.2(a) may send written notice (an
"ADR Notice") to the other Party of the issues to be resolved by ADR and of a
date for an ADR hearing, which date shall be no earlier than ten (10) days
following the receipt of such notice by the other Party. The Party who sends an
ADR Notice shall contact the Neutrals to schedule one of them, whomever may be
available, to preside at the scheduled ADR hearing. From the date that NaPro
receives such an ADR Notice from Abbott until the ruling following the ADR
hearing is rendered, NaPro shall not sell or otherwise dispose of any
Collateral, other than sales of Inventory in the ordinary course of business.
Within three (3) days following receipt of an ADR Notice, the receiving Party
may send written notice to the sending Party of additional issues to be resolved
within the ADR resolution process. No later than three (3) days prior to the
hearing date, the Parties shall exchange and submit to the Neutral: (i) a copy
of all exhibits on which such Party intends to rely in any oral or written
presentation to the Neutral; (ii) a list of any witnesses such Party intends to
call at the ADR hearing, and a short summary of the anticipated testimony of
each witness; (iii) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for each issue (which
proposed rulings and remedies shall not contain any recitation of the facts or
any legal arguments and shall not exceed one (1) page per issue); (iv) a brief
in support of such Party's proposed rulings and remedies, provided that the
brief shall not exceed twenty (20) pages (which page limit shall apply
regardless of the number of issues raised in the ADR proceedings). Except as
expressly set forth in the prior sentence, no discovery shall be required or
permitted by any means, including depositions, interrogatories, requests for
admissions, or production of documents. The ADR hearing shall be conducted on
one (1) day. Each Party shall
41
have three (3) hours of hearing time to present its case. Otherwise, the hearing
shall be governed by the rules set forth in paragraph 5(b) through 5(e) of
Exhibit H to the Development Agreement. Within three (3) days following
completion of the hearing, each Party may submit to the other Party and the
Neutral a post-hearing brief in support of its proposed rulings and remedies,
provided that such brief shall not contain or discuss any new evidence and shall
not exceed ten (10) pages, regardless of the number of issues raised in the ADR
proceeding. The Neutral shall rule on each disputed issue within six (6) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy of one of the Parties on each disputed issue, but may
adopt one Party's proposed rulings and remedies on some issues and the other
Party's proposed rulings and remedies on other issues. The Neutral shall not
issue any written opinion or otherwise explain the basis of the ruling. The
provisions of paragraphs 8, 9 and 10 of Exhibit G to the Development Agreement
shall apply to resolution under this Section 7.2(a).
7.3 Costs and Expenses. NaPro shall pay or reimburse Abbott
within five Business Days after demand for all costs and expenses incurred by
Abbott (including any attorneys' cost or expenses, which attorneys may be
employees of Abbott) in connection with the enforcement, attempted enforcement,
or preservation of any rights or remedies under this Agreement during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any insolvency proceeding or appellate proceeding).
7.4 Indemnification. To the extent not prohibited by
applicable law, NaPro shall indemnify, defend and hold Abbott and each of its
officers, directors,
42
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses and disbursements
(including any attorneys' costs or expenses, which attorneys may be employees of
Abbott) (a "Claim") of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans) be imposed on, incurred
by or asserted against any such Indemnified Person arising by: (i) the breach by
NaPro of any of its covenants or agreements under this Agreement (other than the
agreement to pay principal and interest on the Loans; or (ii) arising from any
representation made by NaPro hereunder or in any statement or document delivered
or connection herewith being untrue or incorrect in any material respect,
including with respect to any investigation, litigation or proceeding (including
any insolvency proceeding or appellate proceeding) (any of the foregoing being a
"Breach") related to or arising out of this Agreement or the Loans or the use of
the proceeds thereof, whether or not any Indemnified Person is a party thereto.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 7.3 shall not apply to: (i) any Claim to the
extent that the relief sought with respect to such Claim is for payment by NaPro
of amounts due under the Loan; (ii) a Claim arising out of or based upon a
Breach which occurs in reliance upon and in conformity with information
furnished in writing to NaPro by such Indemnified Person; (iii) amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of NaPro, which consent however, shall not be unreasonably withheld; or
(iv) claims aggregating after the date hereof an amount not exceeding $1,500.
The agreements in this Section shall survive payment of the Loans and
43
shall not be limited pursuant to Section 2.3(b) or any other "nonrecourse"
provision of this Agreement or the Abbott Note.
7.5 Amendment and Waiver. This Agreement may not be amended or
modified except by written agreement of NaPro and Abbott and no consent or
waiver hereunder shall be valid unless in a writing that refers to this
Agreement, signed by NaPro and Abbott.
7.6 Delay not a Waiver; Cumulative Remedies. No failure or
delay on the part of either Abbott or NaPro in exercising any right, power or
privilege under this Agreement or the Abbott Note shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise or the exercise of any other right, power or
privilege. The rights and remedies provided in this Agreement and the Abbott
Note are cumulative and not exclusive of any rights or remedies provided by law.
7.7 Notices. All notices, demands or other communications to
be given or delivered under or by reason of this Agreement shall be in writing
(including telecopy, telegraphic, telex or cable communications) and mailed,
telecopied, telegraphed, telexed, cabled or delivered:
If to NaPro, at:
NaPro BioTherapeutics, Inc.
0000 Xxxxx Xxxx, Xxxx X
Xxxxxxx, XX 00000
Attn: General Counsel
Fax: (000) 000-0000
44
With a copy to:
Bartlit Xxxx Xxxxxx Xxxxxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
If to Abbott at:
Xxxxxx Laboratories
Hospital Products Division
000 Xxxxxx Xxxx Xxxx, Xxxx. XX-00
Xxxxxx Xxxx, XX 00000
Attn: President, Hospital Products Division
Fax: (000) 000-0000
with a copy to:
Xxxxxx Laboratories
Domestic Legal Operations
000 Xxxxxx Xxxx Xxxx
X-000, Xxxx. XX0X
Xxxxxx Xxxx, XX 00000
Attn: Divisional Vice President
Fax: (000) 000-0000
or such other address or to the attention of such other person as the recipient
Party has specified by prior written notice to the sending Party. All such
notices and communications shall, when mailed, telecopied, telegraphed, telexed
or cabled, be effective when deposited in the mails, telecopy transmission is
completed, delivered to the telegraph company, confirmed by telex answer-back or
delivered to the cable company.
7.8 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and the Abbott Note shall
survive the execution and delivery of this Agreement and the Abbott Note and the
making of the Loan.
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7.9 Descriptive Headings The captions of this Agreement are
for convenience of reference only and shall not define or limit the provisions
of this Agreement.
7.10 Term of Agreement. This Agreement shall continue until
the Abbott Note have been paid in full or discharged in accordance with the
terms of this Agreement and until all other liabilities and obligations of NaPro
under this Agreement shall have been fully satisfied.
7.11 Successors and Assigns. This Agreement, and the terms,
covenants and conditions hereof, shall be binding upon and inure to the benefit
of the Parties, and their respective successors and assigns; provided, however,
that NaPro may not assign its rights or obligations under this Agreement without
the written consent of Abbott.
7.12 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, EXCLUDING SUCH STATE'S RULES RELATING TO
CONFLICTS OF LAWS, AND ITS FORM, EXECUTION, VALIDITY,
CONSTRUCTION AND EFFECT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH INTERNAL LAW.
7.13 No Third Party Rights. This Agreement is not intended to
and shall not be construed to create any rights in or confer any benefits on any
persons other than the Parties and their respective successors and assigns.
7.14 Complete Agreement. This Agreement, including the
documents and other writings referred to herein or delivered pursuant hereto,
the Development
46
Agreement and the Stock Purchase Agreement constitute the entire agreement
between the Parties with respect to the transactions contemplated by this
Agreement and supersede any prior understandings, agreements, or representations
by or between the Parties, written or oral, that may have related in any way to
the subject matter of this Agreement.
7.15 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different Parties 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.
(signature page to follow)
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IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year first above written.
XXXXXX LABORATORIES NAPRO BIOTHERAPEUTICS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxxx
Print Name: Xxxxxxx X. Xxxxxxxx Print Name: Xxxxxxxx X. Xxxxxxxxx
Title: President Title: President/CEO
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