EXECUTION VERSION
Exhibit 4.1
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SECURED PROMISSORY NOTE
$2,600,000 October 25, 2004
FOR VALUE RECEIVED, each of INNAPHARMA, INC., a Delaware corporation,
and TETRAGENEX PHARMACEUTICALS, INC., a Delaware corporation, (each a "BORROWER"
and, collectively, the "BORROWERS") hereby jointly and severally promises to pay
to the order of KBC BANK N.V. as administrative agent (in such capacity the
"ADMINISTRATIVE AGENT") for itself and EACH OF THE OTHER LENDERS PARTY HERETO
FROM TIME TO TIME (each, including KBC Bank N.V., a "LENDER" and, collectively,
the "LENDERS") the principal sum of TWO MILLION SIX HUNDRED THOUSAND DOLLARS
($2,600,000), together with interest thereon under this secured promissory note
(as amended, restated, supplemented or otherwise modified from time to time,
this "NOTE") from July 24, 2004 until paid in full. Each Borrower is jointly and
severably liable to the Administrative Agent and the Lenders for all obligations
arising hereunder and in connection herewith.
The principal outstanding on this Note, together with accrued interest
to date, shall be due and payable on the date that is 53 months after the
Effective Date (the "MATURITY DATE"). The outstanding principal balance of this
Note shall bear interest (computed on the basis of a 365-day year) from July 24,
2004 until paid in full, at a rate per annum equal to the lesser of 3% or the
maximum rate of interest permitted under applicable law. Notwithstanding the
foregoing, from and after the Maturity Date, or such earlier date as all amounts
owing under this Note become due and payable by acceleration or otherwise
(including as a result of any Event of Default), the outstanding amounts under
this Note shall bear simple interest until paid in full at a default rate per
annum (computed on the basis of a 365-day year) equal to the lesser of 7% or the
maximum rate of interest permitted under applicable law.
All payments shall be made in lawful money of the United States of
America to the Administrative Agent for the benefit of the Lenders. Any payment
on this Note shall be credited first to default interest (if any), next to
accrued interest then due and payable and the remainder applied to principal,
PROVIDED, HOWEVER, that in the event that the Administrative Agent or any Lender
receives any payment from either Borrower other than the Administrative Fee,
prior to the payment in full by the Borrowers of the Cash Payments, such payment
shall be applied as part of the Cash Payments and shall not reduce the amount
due hereunder until the Cash Payments have been made in full. Upon receipt of
any monies from either Borrower, the Administrative Agent shall pay such monies
to each Lender in proportion to the amount owed by the Borrowers to such Lender
as set forth on Schedule 1 hereto.
1. DEFINITIONS AND RULES OF INTERPRETATION.
(a) DEFINITIONS. Unless the context otherwise requires, the
following capitalized terms when used in this Note shall have the following
meanings:
"ADMINISTRATIVE AGENT" has the meaning provided in the preamble hereto.
"AFFILIATE" means, with respect to a specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified, or who holds
or beneficially owns 5% or more of any class of voting securities of the Person
specified.
"BORROWER" and "BORROWERS" have the meaning provided in the preamble
hereto.
"CASH PAYMENTS" means the Initial Cash Payment and the Second Cash
Payment. For the sake of clarity, no payment of the Cash Payments shall reduce
the amount of principal, interest or default interest owed hereunder.
"CODE" means the United States Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL" has the meaning provided in SECTION 7 hereto.
"CONVERSION PRICE" has the meaning provided in SECTION 8 hereto.
"CONVERSION RIGHT" has the meaning provided in SECTION 8 hereto.
"CONVERSION SHARES" has the meaning provided in SECTION 8 hereto.
"EFFECTIVE DATE" means the date on which the Plan becomes effective.
"EVENT OF DEFAULT" has the meaning provided in SECTION 5 hereto.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"INITIAL CASH PAYMENT" means a $600,000 payment required under the Plan
to be made by the Borrowers to the Lenders on or prior to the Effective Date.
"ISSUED PATENTS" has the meaning provided in the Security Agreement.
"KBC" or "KBC PARTIES" means Keijser Securities N.V., formerly known as
KBC Securities Nederland N.V.; KBC Securities N.V.; KBC Bank N.V.; KBC
Verzekeringen N.V.; Fidea N.V.; KBC Private Equity Fund Biotech N.V.; and KBC
Equity Fund N.V., together with each of their predecessors, successors and
assigns.
"KBC INDEMNIFIED PARTIES" means the KBC Parties together with each of
the KBC Parties' respective officers, directors, employees, affiliates,
predecessors, successors and assigns.
"LENDER" and "LENDERS" have the meaning provided in the preamble hereto.
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"LIEN" means, with respect to any asset, any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge, security interest or similar
encumbrance in, on or of such asset, whether or not filed, recorded or otherwise
perfected as or effective under applicable law, as well as the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"LOAN DOCUMENTS" means this Note, the Security Agreement and any other
agreement or instrument granting a Lien on the property of either Borrower in
favor of the Administrative Agent for the benefit of the Lenders, and any
financing statements, notices and the like filed, recorded or delivered in
connection with the foregoing. "Loan Document" means any one of the Loan
Documents.
"MANDATORY PREPAYMENT" means any payment required to be made to the
Lenders or the Administrative Agent pursuant to clause (r) of SECTION 4.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, prospects, assets or financial condition of the Borrower, (b) the
rights or interest of the Lenders under the Loan Documents or on any security
interest granted pursuant thereto or the value thereof, or (c) the ability of
the Borrowers to comply with their obligations hereunder.
"MATURITY DATE" has the meaning provided in the preamble hereto.
"MERGER AGREEMENT" means the Agreement and Plan of Merger, to be dated
on or about the Effective Date, by and between Innapharma, Inc. and Tetragenex
Pharmaceuticals, Inc.
"MILESTONE PAYMENTS" means any and all consideration received by either
Borrower on account of or with respect to the Collateral, including
consideration realized in respect of any license or encumbrance of the
Collateral (or grant of a license or freedom of use with respect to the
Collateral).
"NOTE" has the meaning provided in the preamble hereto.
"PATENT APPLICATION" has the meaning provided in the Security Agreement.
"PATENT LICENSE" has the meaning provided in the Security Agreement.
"PATENT RIGHTS" has the meaning provided in the Security Agreement.
"PERFECTED COLLATERAL" means all Collateral of the Borrowers located in
or subject to the laws of the United States, Canada, Germany, France and the
United Kingdom or any Governmental Authority related to any of the foregoing.
"PERSON" means and includes an individual, corporation, limited
liability company, partnership, trust or trustee thereof, estate or executor
thereof, unincorporated organization or joint venture, court or governmental
unit or any agency or subdivision thereof, or any other legally recognizable
entity.
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"PLAN" means the Modified Third Amended Plan of Reorganization of
Innapharma, Inc., dated February 19, 2004, under Chapter 11 of the Bankruptcy
Code.
"PTO" means the United States Patent and Trademark Office or with
respect ot any non-U.S. patents, a similar office under applicable law.
"SECOND CASH PAYMENT" means a $600,000 payment required under the Plan
to be made by the Borrowers to the Lenders on or before the date that is 365
days after the Effective Date.
"SECURITY AGREEMENT" means that certain patent security agreement, dated
as of the date hereof, made by the Borrowers in favor of KBC Bank N.V. as the
administrative agent for the benefit of itself and each of the Lenders.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York, PROVIDED, HOWEVER, in the event
that, by reason of mandatory provisions of law, any or all of the perfection or
priority of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term "UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or priority and for purposes of definitions related to such provisions.
"TAXES" means any and all present or future taxes, levies, imposts,
duties, deductions, charges, withholdings or fees of any nature (including
interest, penalties and additions thereto) imposed by any Governmental
Authority.
RULES OF INTERPRETATION. The following rules of interpretation apply to
this Note and the Security Agreement:
(i) The singular includes the plural and the plural
includes the singular.
(ii) "or" is not exclusive.
(iii) A reference to a Governmental Rule includes any
amendment or modification to such Governmental Rule, and all
regulations, rulings and other Governmental Rules promulgated under such
Governmental Rule.
(iv) A reference to a Person includes its permitted
successors and permitted assigns.
(v) Accounting terms have the meanings assigned to
them by GAAP, as applied by the accounting entity to which they refer.
(vi) The words "include", "includes" and "including"
are not limiting.
(vii) A reference to a Section, Exhibit, Schedule or
Annex is to the Section, Exhibit, Schedule or Annex of such document
unless otherwise indicated. Exhibits, Schedules or Annexes to any
document shall be deemed incorporated by
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reference in such document. A reference to any Exhibit, Schedule or
Annex of a document shall mean such Exhibit, Schedule or Annex as,
amended, modified or supplemented from time to time in accordance with
the terms of this Note or the Security Agreement, as applicable.
(viii) References to any document, instrument or
agreement (i) shall include all exhibits, schedules and other
attachments thereto, (ii) shall include all documents, instruments or
agreements issued or executed in replacement thereof, and (iii) shall
mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, amended and restated, supplemented or
otherwise modified from time to time and in effect at any given time.
(ix) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Note or any other Loan
Document shall refer to such document as a whole and not to any
particular provision of such document.
2. CONDITIONS PRECEDENT. The obligation of the Lenders to extend
credit to the Borrowers as provided for hereunder is subject to the satisfaction
or waiver by the Administrative Agent of each of the following conditions
precedent:
(a) Innapharma, Inc., together with each of its respective
officers, directors, employees, shareholders, affiliates, predecessors,
successors and assigns, shall have dismissed with prejudice the complaint
against KBC, Ruth Devenyns and Samer Mansour (filed as Adversary Proceeding No.
8-04-08204-sb in the chapter 11 case of Innapharma, Inc., and referred to in
this clause (b) as the "ADVERSARY PROCEEDING"), and shall have released and
forever discharged the aforementioned parties from any and all claims, actions,
causes of action, suits, debts, damages, losses, obligations, demands,
attorneys' fees and liabilities, whether known or unknown, billed or unbilled,
whether sounding in tort, contract or otherwise, whether anticipated or
unanticipated, both in law and in equity, including such claims or causes of
action arising from or relating to the Adversary Proceeding, the Plan, and the
Note and all other Loan Documents;
(b) Neither Borrower shall have transferred, disposed of,
licensed or granted any license or freedom of use with respect to the
Collateral, or otherwise encumbered in any way any of the Collateral in
existence as of April 15, 2003, other than (i) pursuant to this Note and the
other Loan Documents and (ii) any immaterial patent application which was
abandoned after such date;
(c) The Debtor shall have paid: (i) to the Lenders, and each
Lender shall have received in proportion to such Lender's percentage interest as
provided in SCHEDULE 1 hereto, $600,000 less the amount paid to the
Administrative Agent pursuant to SECTION 10; PROVIDED, that, for the sake of
clarity, such payment shall not constitute payment of any amount owed under this
Note and (ii) to the Administrative Agent, all amounts due and payable pursuant
to SECTION 10;
(d) Any and all existing Liens on the Collateral shall have
been released by any and all parties holding such Liens;
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(e) The Borrowers shall have delivered valid and perfected
first priority liens on the Collateral to the Administrative Agent for the
benefit of the Lenders;
(f) The Administrative Agent shall have received, in form
and substance satisfactory to the Administrative Agent, the Security Agreement
and the Assignment of Patents (as defined in the Security Agreement) duly
executed by the Borrowers (with as many duplicate originals as may be required,
or expected to be required, for filing purposes), together with: (i) Uniform
Commercial Code financing statements authorized by Borrower to be filed in all
jurisdictions that the Administrative Agent may deem necessary or desirable in
order to perfect the security interests created by the Security Agreement, (ii)
a SCHEDULE A to the Security Agreement with a detailed list of all patents held
by either Borrower (whether held in the United States or any other country)
which shall be subject to the lien thereunder, and (iii) such other agreements
or instruments duly executed by the Borrowers and any other party thereto that
the Administrative Agent may deem necessary or desirable in order to perfect the
first priority security interests created by the Security Agreement, including
any agreements and documents for filing and recording with the PTO or any other
patent office in any country or jurisdiction and powers-of-attorney related
thereto;
(g) The Administrative Agent shall have received, in form
and substance satisfactory to the Administrative Agent, a certificate of the
Secretary or an Assistant Secretary of each Borrower certifying the names and
true signatures of the officers of such Borrower authorized to sign this Note,
the Security Agreement and each Loan Document to which it is a party and the
other documents to be delivered hereunder; and
(h) The Administrative Agent shall have received, in form
and substance satisfactory to the Administrative Agent, such other agreements,
instruments, documents and certificates duly executed or otherwise authorized by
Borrower as may be reasonably requested by Lender.
3. REPRESENTATIONS AND WARRANTIES. To induce the Administrative
Agent and each Lender to enter into this Note, each Borrower hereby represents
and warrants to the Administrative Agent and each Lender that:
(a) Such Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to carry on its business as now
conducted, and is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to qualify would have a material adverse
effect on its business or operations; Borrower is not organized under the laws
of any other jurisdiction;
(b) Borrower's chief executive office is, and has since
January, 2000, been, located at 1 Maynard Drive, Park Ridge, New Jersey. Prior
thereto, the Borrower's office was located at 400 Rella Boulevard, Suffern, New
York 10901 for a period in excess of one year;
(c) Such Borrower has taken all corporate action necessary
for the authorization, execution and delivery of this Note and the other Loan
Documents, and the performance of all obligations of such Borrower hereunder and
thereunder;
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(d) The execution, delivery and performance of this Note and
the other Loan Documents will not violate, conflict with, contravene, or
constitute a default under or result in a Lien upon assets of such Borrower
pursuant to, (i) any applicable law or regulation, (ii) any charter document of
such Borrower, or (iii) any contract, agreement, judgment, order, decree, or
other instrument binding upon or affecting such Borrower or its properties;
(e) After giving effect to the transactions contemplated by
the Merger Agreement, the authorized capital stock of Tetragenex
Pharmaceuticals, Inc. will be (i) 5,000,000 shares of "blank check" preferred
stock, $0.01 par value per share, none of which will be issued or outstanding,
and (ii) 50,000,000 shares of common stock, $0.01 par value per share, of which
at least 381,000 shares will have been duly reserved for issuance upon any
Conversion;
(f) The Borrowers have good and marketable title to the
Collateral, free of all Liens and other encumbrances (other than the Liens
created by the Loan Documents);
(g) All filings, recordings and other actions required to
provide the Administrative Agent, for the benefit of the Lenders, with a valid
and perfected first priority security interest in the Perfected Collateral in
existence as of the date hereof, subject to no Liens, have been taken;
(h) Such Borrower has not violated any laws, ordinances or
rules, the violation of which could reasonably be expected to have a material
adverse effect on the business or property of such Borrower or on the
Collateral;
(i) There are no actions or proceedings pending, or to the
best knowledge of such Borrower, threatened by or against such Borrower;
(j) This Note and the other Loan Documents constitute the
valid and legally binding obligations of such Borrower enforceable in accordance
with their respective terms;
(k) The board of directors of each Borrower has approved the
Plan; this Note, the Security Agreement and any other agreement, contract,
instrument or document executed or otherwise authorized (or to be executed or
otherwise authorized) in connection with this Note or the Security Agreement;
and
(l) Each condition precedent to the effectiveness of this
Note set forth in SECTION 2 hereto (A) has been satisfied or (B) has been waived
in writing by the Administrative Agent.
4. COVENANTS. So long as any part of the indebtedness contemplated
by this Note remains unpaid or any other obligation under this Note or any other
Loan Document remains outstanding, each Borrower shall comply with the following
covenants:
(a) Such Borrower shall not create, incur, assume or permit
to exist any Lien on any of the Collateral other than (i) the Liens in favor of
the Administrative Agent pursuant to this Note and the other Loan Documents, or
(ii) such Liens as shall be expressly junior to the Liens grated to or for the
benefit of the Lenders pursuant to the Loan Documents;
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(b) Such Borrower shall comply with all obligations of such
Borrower in favor of the Administrative Agent and each Lender under the Plan,
including making the Cash Payments when due;
(c) Such Borrower shall comply with the requirements of all
applicable laws, rules, regulations and orders (including, without limitation,
the Internal Revenue Code and all regulations promulgated in connection
therewith) of any Governmental Authority as now in effect and which may be
imposed in the future in all jurisdictions in which such Borrower is now doing
business or may hereafter be doing business, except any thereof that could not
reasonably be expected (in the aggregate) to have a Material Adverse Effect;
(d) Such Borrower shall at all times preserve and keep in
full force and effect its corporate existence, except that Innapharma, Inc. may
merge with and into Tetragenex Pharmaceuticals, Inc. pursuant to the Merger
Agreement;
(e) Such Borrower will not make any payment to, or sell,
lease, transfer or otherwise dispose of any of its properties or assets, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of the Borrower unless (i) such
transaction is on terms that are no less favorable to the Borrower than those
that would have been obtained in an arm's-length transaction by the Borrower
with an unrelated Person and (ii) if such transaction relates to the Collateral,
the Administrative Agent provides its prior written approval of such
transaction;
(f) Such Borrower shall not take any action or do any thing
which, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect;
(g) Such Borrower shall promptly, upon any officer of such
Borrower obtaining knowledge of (i) the institution or threatened institution of
any action, suit, proceeding, governmental investigation or arbitration against
or affecting such Borrower or any property of such Borrower not previously
disclosed by such Borrower to the Administrative Agent, or (ii) any material
development in any action, suit, proceeding, governmental investigation or
arbitration at any time pending against or affecting the Borrower or any
property of such Borrower, give notice thereof to the Administrative Agent and
provide such other information as may be reasonably available to such Borrower
to enable the Administrative Agent and its counsel to evaluate such matter;
(h) Such Borrower shall maintain accurate books and records
in accordance with generally accepted accounting principles and permit the
Administrative Agent, upon reasonable notice given, to inspect such books and
records;
(i) Such Borrower shall deliver to the Administrative Agent
(i) quarterly financial statements of such Borrower and any subsidiaries of such
Borrower that such Borrower has filed with the Securities and Exchange
Commission pursuant to the reporting requirements of the Securities Exchange Act
of 1934, as amended, which financial statements (if any) shall include (A)
statements of income and cash flows and (B) balance sheets, in each case within
60
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days of the end of each fiscal quarter of such Borrower, (ii) all financial
statements, reports, certificates and other information provided to the
shareholders of such Borrower and (iii) with reasonable promptness, such other
information and data with respect to any of the Collateral as from time to time
may be reasonably requested by the Administrative Agent to enable the
Administrative Agent to confirm compliance by such Borrower with the covenants
contained herein;
(j) Such Borrower shall pay all liens, taxes, assessments
and other governmental charges, PROVIDED, HOWEVER, that nothing herein contained
shall require such Borrower to pay any tax or other lien so long as its validity
is being contested in good faith and by appropriate proceedings and for which
adequate reserves have been provided in accordance with generally accepted
accounting principles;
(k) Such Borrower has such insurance policies relating to
property, casualty, fire, public liability insurance, and insurance covering
intellectual property infringement or misappropriation as are listed on Schedule
2 hereto, will maintain in full force and effect all such policies during the
term of this Note, and upon reasonable request, promptly deliver to the
Administrative Agent copies of such policies;
(l) Such Borrower shall furnish to the Administrative Agent
evidence of each payment of any Cash Payment made pursuant to the Plan by such
Borrower to any Lender;
(m) Such Borrower shall take all steps as may be necessary
or desirable to preserve and protect the value of the Collateral;
(n) Such Borrower shall from time to time, execute,
acknowledge, record, register, deliver and/or file all such notices, statements,
instruments and other documents (including any, financing statement,
continuation statement, or estoppel certificate), relating to this Note, stating
the interest and charges then due and any known defaults, and take such other
steps as may be necessary or advisable to render fully valid and enforceable
under all applicable laws the rights, Liens and priorities of the Administrative
Agent and the Lenders with respect to all Collateral furnished under this Note
and the other Loan Documents or intended to be so furnished, in each case in
such form and at such times as shall be reasonably satisfactory to the
Administrative Agent;
(o) Such Borrower shall refrain from entering into any sale,
licensing agreement or similar arrangement without the prior written consent of
the Administrative Agent unless such licensing agreement or similar arrangement
shall result in an immediate Mandatory Prepayment to the Administrative Agent of
not less than the remaining principal amount and all other amounts due,
including accrued interest and default interest, if any, under this Note (after
giving effect to the requirement that any amounts paid to any Lender or the
Administrative Agent shall be applied to the Cash Payments until such payments
are paid in full) PROVIDED that the Administrative Agent shall not withhold its
consent to any such proposed sale, licensing agreement or similar arrangement in
the event that (i) the agreement will result in Mandatory Payments to the
Administrative Agent during the term of this Note of not less than all amounts
due hereunder and (ii) the Borrowers, not less than 15 days prior to the
execution date of any such proposed agreement (or term sheet related to such
proposed agreement), provide evidence
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to the Administrative Agent, including financial statements and related
documents in form and substance satisfactory to the Administrative Agent, of the
creditworthiness and financial security of any proposed licensee, transferee, or
other counterparty under such proposed agreement;
(p) Such Borrower shall, upon receipt (whether actual or
constructive) of any Milestone Payment or licensing fee, pay in cash 50% of the
amount received (i) if the Cash Payments have not been made in full, to the
holders of the Class 6 Interests (as defined in, and in accordance with, the
Plan), to be applied toward the Cash Payments and (ii) if all Cash Payments have
been made in full, to the Administrative Agent to be applied toward payment of
amounts due under this Note and the other Loan Documents;
(q) Such Borrower (either itself or through licensees) will
not do any act, or omit to do any act, whereby any Issued Patent, Patent
Application or other Patent Right may become (or is reasonably likely to become)
forfeited, abandoned or dedicated to the public or whereby the validity, grant
or enforceability of the security interests granted to the Secured Parties
therein could be adversely affected in any material respect;
(r) Such Borrower will notify the Administrative Agent
promptly if it knows, or has reason to know, that any Patent Application or
registration relating to any Patent Right may become forfeited, abandoned,
dedicated to the public or invalid or unenforceable, or subject to any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the PTO or any court,
tribunal or agency in any country) regarding such Borrower's ownership of, use
of, or the validity of, any Patent Application or any Patent Right or such
Borrower's right to register the same or to own and maintain the same;
(s) Such Borrower will take all commercially reasonable
steps, including in any proceeding before the PTO or any similar office or
agency in any other country or group of countries or any political subdivision
of any of the foregoing, to maintain and pursue each material Patent Application
(and to obtain the relevant registration) and to maintain each registration of
the material Issued Patents which are now or shall become included within the
Collateral, including, in each case, those items on SCHEDULE A to the Security
Agreement, and the filing of all material applications for renewal, affidavits
of use and affidavits of incontestability;
(t) In the event that any Issued Patent, Patent Application
or Patent Right is infringed, misappropriated or diluted by a third party, such
Borrower shall (i) promptly take all actions necessary to stop such
infringement, misappropriation or dilution and to protect its rights in such
Issued Patent, Patent Application or Patent Right, (ii) promptly notify the
Administrative Agent after it learns of such infringement, misappropriation or
dilution and (iii) seek injunctive relief where appropriate and sue to recover
any and all damages for such infringement, misappropriation or dilution;
(u) Each Borrower shall (i) report to the Administrative
Agent at least 15 days prior to the date of any of the following actions: (A)
the filing of any Patent Application with the PTO, or any state registry or
foreign counterpart of the foregoing (whether such application is filed by such
Borrower or through any agent, employee, licensor, licensee, or designee
thereof), (B) to the extent pertaining to any compound or other technology
developed by the Grantor as of
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the date hereof, the registration of any patent by any such office, and (C) to
the extent pertaining to any compound or other technology developed by the
Grantor as of the date hereof, the acquisition of any application or
registration and (ii) in each case, concurrently with such report to the
Administrative Agent, authorize, execute and deliver to the Administrative Agent
any documentation necessary or desirable to establish, preserve or protect the
Administrative Agent's first priority security interest in the Collateral
including an updated version of SCHEDULE A to the Security Agreement;
(v) With respect to the Collateral, no Borrower shall
execute, and there will not be on file in any public office, any financing
statement or other document or instrument, except (i) financing statements or
other documents or instruments filed or to be filed in favor of the
Administrative Agent in connection with the Loan Documents and (ii) financing
statements or other documents or instruments filed or to be filed in connection
with Liens which are expressly junior to the Liens granted to or for the benefit
of the Lenders pursuant to the Loan Documents PROVIDED that no such filing shall
be made in any jurisdiction in which the first priority Liens granted to or for
the benefit of the Lenders pursuant to the Loan Documents have not been
perfected or if such filing will in any way impair the first priority interest
of the Liens granted to or for the benefit of the Lenders pursuant to the Loan
Documents;
(w) Such Borrower shall promptly notify the Administrative
Agent and each Lender in writing of the occurrence of any Event of Default or of
any Material Adverse Effect; and
(x) Such Borrower shall, upon the request of the
Administrative Agent, promptly take any and all actions necessary to enable the
Administrative Agent, for the benefit of the Lenders, to obtain a valid and
perfected first priority security interest in any Collateral in existence as of
the date of such request, in each case to the extent such security interest is
available under the laws of any relevant jurisdiction.
5. EVENTS OF DEFAULT. Any and each of the following shall
constitute an "Event of Default":
(a) The Borrowers fail to make, or cause to be made, the
full amount of the Second Cash Payment on or before the date which is 365 days
after the date Effective Date;
(b) The Borrowers fail to make, or cause to be made, (i) on
or before November 25, 2004, the Initial Cash Payment or (ii) any payment of
principal or interest or any other sum when due under this Note or any other
Loan Document (other than payments specified in clause (a) of this SECTION 5)
including any Mandatory Prepayments due under clause (p) of SECTION 4;
(c) Either Borrower fails to observe or perform any material
term or provision of this Note, the Security Agreement or any other Loan
Document (other than any failure described in clause (a) or (b) of this SECTION
5) and such failure shall continue unremedied for a period of 30 days from the
earliest of (i) either Borrower becoming aware of such failure or (ii) the
Administrative Agent or any Lender providing either Borrower with notice of such
failure;
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(d) Any representation or warranty or statement made or
furnished by either Borrower in or in connection with any Loan Document is
misleading, inaccurate or incomplete in any material respect;
(e) On or after the Effective Date, (i) either Borrower
fails to pay its debts generally as they become due (other than any debt the
validity of which is being disputed in good faith as provided in Section 4(j)),
or admits in writing its inability to pay its debts as they become due, or such
Borrower becomes insolvent, or either Borrower files any petition or action for
relief under any bankruptcy, insolvency, reorganization, moratorium, creditor
composition law, or any other law for the relief of or relating to Borrowers;
(ii) an involuntary petition is filed under any bankruptcy law against either
Borrower (and such petition is not dismissed within 60 days), or a custodian,
receiver, trustee, assignee for the benefit or creditors, or other similar
official, is appointed to take possession, custody or control of the properties
of either Borrower; or (iii) either Borrower is dissolved or its business
terminated other than as provided in the Merger Agreement;
(f) The happening of any event under any agreement involving
the borrowing of money by, or advance of credit to, either Borrower (other than
any agreement which is not material to the business of such Borrower and
pursuant to which such Borrower's liabilities do not exceed $7,500), which event
gives to the holder of such obligation the right to accelerate the maturity of
such obligation, whether or not such right is exercised, unless such debt is
being disputed in good faith by the Borrower and neither such debt nor dispute
could reasonably be expected to have a Material Adverse Effect;
(g) Any material change occurs in the corporate or legal
structure of any Borrower (other than pursuant to the Merger Agreement) in any
manner that negatively affects the Lenders without the prior written approval of
the Administrative Agent;
(h) The Merger Agreement is amended, supplemented or
otherwise modified in any manner that materially affects the Lenders (including
with respect to the Lenders' conversion rights hereunder) other than with the
prior written approval of the Administrative Agent;
(i) Any judgment in excess of $50,000 is entered against
either Borrower, or any involuntary Lien of any kind or character attaches to
any assets or property of either Borrower, any of which, in the judgment of the
Administrative Agent, may have a Material Adverse Effect, PROVIDED that for
purposes of this clause (i), no Lien arising from a judgment shall be considered
to have a Material Adverse Effect so long as an appeal or proceeding for review
is being prosecuted in good faith and adequate reserves, bonds, insurance or
other security reasonably acceptable to the Administrative Agent has been
provided with respect to such Lien;
(j) The Security Agreement or any auxiliary instrument or
agreement for any reason ceases to create a valid security interest in the
Collateral, or, with respect to any Perfected Collateral or any other Collateral
upon which the Administrative Agent at any time perfects its first priority
security interest, such security interest shall for any reason cease to be a
perfected and first priority security interest;
12
(k) Borrower has failed to file, within 30 months of the
Effective Date, appropriate documentation in form and substance reasonably
satisfactory to the Administrative Agent with the United States Food and Drug
Administration (the "FDA") requesting that the FDA hold on drug development
efforts with respect to the Collateral be lifted;
(l) The FDA hold on drug development efforts with respect to
the Collateral shall not have been lifted by the date which is 3 years after the
Effective Date;
(m) The Borrowers have abandoned their efforts to develop
and bring to market a drug product; and
(n) Any Cash Payment or any payment made to the
Administrative Agent or any Lender under any Loan Document has been rescinded
for any reason and, if such rescission is not the fault of either Borrower, the
Borrowers have not reimbursed the Administrative Agent for such rescission
within 5 business days thereof.
6. REMEDIES. If any Event of Default shall occur, at the
Administrative Agent's option, all obligations of the Borrowers to the
Administrative Agent and the Lenders under or in respect of this Note and the
other Loan Documents will become immediately due and payable, all without notice
of any kind to any Borrower, except that in the case of an Event of Default of
the type described in clause (e) of SECTION 5, such acceleration shall be
automatic and not optional. In addition, the Administrative Agent and the
Lenders shall have all rights and remedies provided in the Loan Documents or
available at law, in equity or otherwise. All rights and remedies of the
Administrative Agent and the Lenders shall be cumulative and may be exercised
singularly or concurrently. Any election by the Administrative Agent or any
Lender to pursue any remedy shall not exclude or be deemed a waiver of the right
to pursue any other remedy, and an election to make expenditures or to take
action to perform an obligation of Borrower shall not affect the right of the
Administrative Agent or any Lender to declare a default and to exercise its
rights and remedies. Notwithstanding the forgoing, if an Event of Default as
described in clause (a) of SECTION 5 has occurred (and no other Event of Default
has occurred), the Administrative Agent shall not exercise its right to
liquidate the Collateral until the date that is 30 days after the occurrence of
such Event of Default, PROVIDED, HOWEVER, that (a) the Administrative Agent
shall have the right to exercise all other remedies available under this Note,
any other Loan Document, or at law and (b) the Administrative Agent may take
actions and begin proceedings which will result in the liquidation of the
Collateral so long as such liquidation does not occur prior to the expiration of
the 30 day period.
7. GRANT OF SECURITY INTEREST. To secure the obligations of the
Borrowers under this Note, each Borrower hereby assigns, pledges and grants to
the Administrative Agent for the benefit of the Lenders a security interest in
all of such Borrower's right, title and interest in and to all patents and
related rights held by such Borrower whether now held or, to the extent
pertaining to any compound or other technology developed by the Grantor on or
prior to the date hereof, hereafter acquired and all proceeds and products
thereof (collectively, and as more specifically defined in the Security
Agreement, the "COLLATERAL"). Concurrent herewith, the Borrowers have entered
into the Security Agreement to further evidence such grant of security interest.
Each Borrower shall execute and deliver such further documents and instruments
and shall take such other further actions as may be required or appropriate, in
the judgment of the
13
Administrative Agent, to carry out the intent and purposes of this Section and
hereby authorizes the Administrative Agent to prepare and file without the
signature of either Borrower such financing statements or other documents as may
be necessary or advisable and containing such description of collateral as the
Administrative Agent shall determine in its sole discretion.
8. CONVERSION RIGHT.
(a) Each Lender may, at any time subsequent to the
consummation of the Merger Agreement, regardless of whether or not any Event of
Default shall have occurred, exchange all of the amount owed to such Lender
hereunder for common shares of Tetragenex Pharmaceuticals, Inc. at the
Conversion Price (such right a "CONVERSION RIGHT" and such shares received, the
"CONVERSION SHARES").
(i) Any Lender that desires to exercise its
Conversion Right shall provide written notice to the Administrative
Agent and to each of the Borrowers stating that such Lender is
exercising such right and stating the amount owed to such Lender which
is to be converted to Conversion Shares. As promptly as practical after,
and in any case within 5 days of, receipt of such notice from any
Lender, Tetragenex Pharmaceuticals, Inc. shall issue and deliver to such
Lender a certificate or certificates for the number of Conversion Shares
issuable upon such conversion (rounding up if any fractional shares
would otherwise be due), based upon the Conversion Price.
(ii) The "Conversion Price" shall initially be $5.25
per Conversion Share and shall be adjusted to account for any and all
stock splits, reverse stock splits, and recapitalizations (it being
agreed that no sales of securities by either Borrower shall constitute a
"recapitalization" for purposes of this SECTION 8) such that any Lender
exercising its Conversion Right shall receive Conversion Shares
representing the same percentage of total shares outstanding as such
Lender would have been entitled to were such Lender to have exercised
its Conversion Right immediately upon the effectiveness of the Merger
Agreement.
(iii) Upon issuance of any Conversion Shares,
Tetragenex Pharmaceuticals, Inc. shall provide written notice of such
issuance to the Administrative Agent, together with a written
acknowledgement of receipt of such Conversion Shares by the applicable
Lender. Upon receipt of such notice (together with such
acknowledgement), (A) the amount owed under this Note shall be reduced
by the amount converted pursuant to the applicable Lender's request and
(B) SCHEDULE 1 hereto shall be automatically amended to reflect the
reduction in the amount owed to such Lender, and the reduction in such
Lender's proportionate share of the amounts owed hereunder.
(b) For so long this Note or any Conversion Shares remain
outstanding, (a) on each occasion that Tetragenex Pharmaceuticals, Inc.
registers under the Securities Act of 1933, as amended (the "Securities Act"),
any shares of its common stock (other than any registration on Form S-8)
Tetragenex Pharmaceuticals, Inc. shall include in such registration any and all
Conversion Shares then outstanding that have previously not been so registered,
and (b) Tetragenex Pharmaceuticals, Inc. shall use all commercially reasonable
efforts to cause to become effective a shelf registration statement under the
Securities Act with respect to the resale
14
of any and all Conversion Shares previously not so registered no later than the
first anniversary of the date on which Tetragenex Pharmaceuticals, Inc. first
registered any of its securities under the Securities Act, provided that if the
Conversion Shares of each Lender holding Conversion Shares are eligible for sale
under Rule 144(k) of the Securities Act, the Lenders shall not have registration
rights at such time. This clause (b) shall survive termination of this Note.
(c) Any Conversion Shares issued hereunder shall be subject
to a voting proxy in favor of Tetragenex Pharmaceuticals, Inc.
(d) Each certificate for Conversion Shares issued upon
exercise by any Lender of its conversion right hereunder, unless at the time of
exercise such Conversion Shares are registered under the Securities Act, shall
bear the following legend (or a substantively equivalent legend):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE
SECURITIES LAWS AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
THE RULES AND REGULATIONS THEREUNDER AND OF ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS, OR (B) PURSUANT TO AN EXEMPTION THEREFROM
UNDER SAID ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS."
9. ADMINISTRATIVE AGENT.
(a) Each Lender hereby appoints and authorizes the
Administrative Agent to act as its agent hereunder and under the other Loan
Documents (including as collateral agent under the Security Agreement) with such
powers as are expressly delegated to the Administrative Agent by the terms of
this Note and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. The Administrative Agent shall not have any
duties or responsibilities except those expressly set forth in this Note or in
any other Loan Document, or be a trustee or a fiduciary for any Lender.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent shall not be required to take any action which is contrary to this Note or
any other Loan Documents or any law, rule, regulation, ordinance, order, treaty,
judgment, or similar form of decision of any governmental authority or which
conflicts with the governing documents of the Administrative Agent or exposes
the Administrative Agent to any liability. None of the Administrative Agent, the
Lenders or any of their respective affiliates shall be responsible to any other
Lender for any recitals, statements, representations or warranties made by any
Borrower contained in this Note, the other Loan Documents or in any certificate
or other document referred to or provided for in, or received by the
Administrative Agent, or any Lender under this Note or any other Loan Document,
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Note, the other Loan Documents, or any other document
referred to or provided for herein or for any failure by any Borrower to perform
their respective obligations hereunder or thereunder. The Administrative Agent
may employ agents and attorneys-in-fact and shall not be responsible for
15
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care.
(b) The Administrative Agent shall receive all payments for
each Lender and shall distribute such payments to each of the Lenders on a pro
rata basis in proportion to such Lender's interest in the amount owed hereunder
as provided on Schedule 1 hereto, as such schedule may be updated from time to
time. Payments shall be made at the principal office of each Lender as set forth
beneath such Lender's name on the signature page hereto, or at such other place
as such Lender may from time to time designate in writing to the Administrative
Agent.
(c) To the extent required by any applicable law, the
Administrative Agent may withhold from any interest payment to any Lender an
amount equivalent to any applicable withholding tax. If any Governmental
Authority asserts a claim that the Administrative Agent did not properly
withhold tax from amounts paid to or for the account of any Lender because the
appropriate form was not delivered or was not properly executed or because such
Lender failed to notify the Administrative Agent of a change in circumstance
which rendered the exemption from, or reduction of, withholding tax ineffective
or for any other reason, such Lender shall indemnify the Administrative Agent
fully for all amounts paid, directly or indirectly, by the Administrative Agent
as tax or otherwise, including any penalties or interest and together with all
expenses (including legal expenses, allocated internal costs and out-of-pocket
expenses) incurred.
10. ADMINISTRATIVE FEES AND EXPENSES.
(a) On or before the Effective Date, the Borrowers shall pay
an origination and servicing fee of 3% of the face value of this Note to the
Administrative Agent. The Borrowers shall also reimburse or pay the
Administrative Agent and the other KBC Parties for any and all expenses incurred
or expected to be incurred by such party in relation to the Plan, this Note and
the Security Agreement. All fees and expenses, including the origination and
servicing fee, referenced in this SECTION 10, to the extent incurred on or prior
to the Effective Date or included as estimated future expenses, shall be paid by
the Borrowers to the Administrative Agent from the Initial Cash Payment and
shall reduce the Initial Cash Payment made to each holder of Class 6 Interests
(as defined in the Plan) in proportion to such holder's Pro Rata (as defined in
the Plan) share of the Initial Cash Payment.
(b) The Borrower shall also reimburse or pay the
Administrative Agent and the other KBC Parties for any and all expenses incurred
or expected to be incurred by such party (to the extent not previously paid or
reimbursed) in relation to the Plan, this Note and the Security Agreement after
the Effective Date and such amounts shall be paid by the Borrowers to the
Administrative Agent from the Second Cash Payment and shall reduce the Second
Cash Payment made to each holder of Class 6 Interests (as defined in the Plan)
in proportion to such holder's Pro Rata (as defined in the Plan) share of the
Second Cash Payment.
(c) In the event that, after payment in full in cash to the
Lenders of all amounts due under this Note, payments of fees and expenses made
hereunder exceed the actual fees and expenses incurred by the Administrative
Agent, the Administrative Agent shall refund
16
any excess payments to the holder of Class 6 Interests (as defined in the Plan)
in proportion to their Pro Rata share of the Cash Payments.
(d) Notwithstanding anything to the contrary herein, any and
all fees, costs and expenses of whatever kind or nature, including attorneys'
fees and expenses, incurred by the Administrative Agent in connection with the
enforcement of the Administrative Agent's or any Lender's rights under this
Note, the Security Agreement or any other Loan Document (including the
Administrative Agent's rights under SECTION 7 of the Security Agreement as well
as the costs of any action taken by Administrative Agent upon the occurrence and
during the continuance of any Event of Default). Such fees and expenses shall
not result in the reduction of the amount of any Cash Payments.
11. INDEMNIFICATION.
(a) Each Borrower, together with its affiliates, successors
and assigns, hereby agrees to indemnify and hold harmless the KBC Parties,
including the Administrative Agent, together with the KBC Indemnified Parties,
from any and all claims, actions, causes of action , suits, debts, damages,
losses, obligations, demands, attorneys' fees and liabilities, whether known or
unknown, billed or unbilled, whether resounding in tort, contract, or otherwise,
whether anticipated or unanticipated, whether past or present, both in law and
in equity (including acts or omissions constituting ordinary negligence),
arising from or relating to this Note and the other Loan Documents and such KBC
Indemnified Parties' administration thereof, except to the extent that such acts
or omissions are finally judicially determined to result solely from such KBC
Indemnified Parties' gross negligence or willful misconduct.
(b) Each Lender hereby releases the KBC Parties, including
the Administrative Agent, from any liability arising from or relating to its
role in the negotiation, documentation, and/or administration of this Note and
any other Loan Document, except to the extent that such acts or omissions are
finally judicially determined to result solely from such KBC Indemnified
Parties' gross negligence or willful misconduct.
12. ASSIGNMENT. Any Lender may assign all of its interest under this
Note to any other Person, PROVIDED that such Lender obtains the prior written
consent of the Administrative Agent, which consent is not to be unreasonably
withheld, and PROVIDED FURTHER that:
(a) it shall be reasonable for the Administrative Agent to
withhold its consent to any assignment if such assignment (alone or in
conjunction with any other assignment or assignments) will increase the
administrative burden borne by the Administrative Agent; and
(b) such assignment shall not be effective unless and until
the Administrative Agent receives written documentation of such assignment in
form and substance reasonably satisfactory to the Administrative Agent.
Upon such assignment, (1) the assignee shall be deemed to be a "Lender" under
this Note and the other Loan Documents, (2) the assigning Lender shall no longer
be a "Lender" under this Note or any other Loan Document; PROVIDED, HOWEVER, the
obligations of such assigning Lender under clause (b) of SECTION 11 in respect
of any period prior to such assignment shall survive such assignment, and (3)
Schedule 1 shall be automatically updated to reflect such assignment.
17
13. MISCELLANEOUS.
(a) This Note and the other Loan Documents shall be binding
upon and inure to the benefit of the Administrative Agent, each Lender and each
Borrower and, in each case, the respective successors and assigns of such party.
Notwithstanding the foregoing, no Borrower may assign this Note or any other
Loan Document in whole or in part without the prior written consent of the
Administrative Agent and each Lender.
(b) This Note shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of New York, without
regard to conflicts of laws provisions (other than Section 5-1401 of the New
York General Obligations Law).
(c) THE PARTIES HERETO HERBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
NOTE OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS TO ACCEPT THIS NOTE IN
PARTIAL SATISFACTION OF THE OBLIGATIONS OWED BY THE BORROWERS TO THE LENDERS.
(d) The section headings and subheadings used in this Note
are used for convenience only and are not to be considered in construing or
interpreting this Note.
(e) Unless otherwise provided, any notice or other
communication required or permitted under this Note shall be given in writing
and shall be deemed effectively given upon personal delivery to the party to be
notified or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and properly addressed to such party at (i) in
the case of any Lender, at the address set forth under such Lender's signature
on the signature page attached hereto or (ii) in the case of the Administrative
Agent or any Borrower, at the address set forth below, or, in any case, at such
other address as such party may designate by 10 days' advance written notice to
the other parties.
If to the Administrative
Agent,
addressed to: KBC Bank N.V.
c/o KBC Investco NV
Havenlaan 12 Avenue du Port - SIV 8034
B-1080 Brussels
Attention: Ruth Devenyns, Senior Investment Manager
With a copy to: Latham & Watkins LLP
885 Third Avenue, Suite 1000
New York, New York 10022
United States of America
Attention: Mitchell A. Seider and John W. Weiss
18
If to either or both
of the Borrowers,
addressed to: Tetragenex Pharmaceuticals, Inc.
1 Maynard Drive, Suite 205
Park Ridge, New Jersey 07656
United States of America
Attention: Martin F. Schacker
Telephone: (201) 505-1300
Facsimile: (201) 505-1503
and
Innapharma, Inc.
1 Maynard Drive, Suite 205
Park Ridge, New Jersey 07656
United States of America
Attention: Martin F. Schacker
Telephone: (201) 505-1300
Facsimile: (201) 505-1503
With a copy to: Silverman Perlstein & Acampora LLP
100 Jericho Quadrangle, Suite 300
Jericho, New York 11753
United States of America
Attention: Gerard R. Luckman
Telephone: (516) 479-6300
and
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
101 East 52nd Street, 9th Floor
New York, New York 10022
United States of America
Attention: Jay M. Kaplowitz, Esq.
Telephone: (212) 752-9700
Facsimile: (212) 980-5192
(f) This Note and the other Loan Documents constitute the
full and entire understanding and agreement among the Borrowers, the
Administrative Agent and the Lenders with regard to the subjects hereof and
thereof and supersede all prior agreements and understandings among or between
the Borrowers, the Administrative Agent and the Lenders relating to the subjects
hereof and thereof. This Note and the other Loan Documents may not be amended,
modified, altered or supplemented and the observance of any term hereof or
thereof may not be waived (either generally or in a particular instance and
either retroactively or prospectively) other than by means of a written
instrument duly executed and delivered on behalf of the Administrative Agent.
19
(g) This Note is subject to modification only by a writing
signed by the Administrative Agent and the Borrowers. No party hereto shall be
deemed to have waived any right hereunder unless such waiver shall be in writing
and signed by the waiving party. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right on any future occasion. No failure
or delay on the part of the Administrative Agent or any Lender in exercising any
power, right or privilege under this Note or any other Loan Document shall
operate as a waiver thereof, and no single or partial exercise of any such
power, right or privilege shall preclude any further exercise thereof or the
exercise of any other power, right or privilege.
(h) If any term of this Note shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall in no way
be affected thereby, and this Note shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein.
(i) Upon effectiveness of the Merger Plan, all references to
the "Borrowers" or "Grantors" herein and in the other Loan Documents shall be
construed as references to Tetragenex Pharmaceuticals, Inc.
(j) This Note may be executed in any number of counterparts
(including by facsimile), 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.
14. ADJUSTMENT. If the Administrative Agent receives, at least 3
business days prior to the Effective Date, (i) written notice from any Lender
hereunder that such Lender has reached an agreement with the Borrowers whereby
such Lender shall no longer be party to this Note and (ii) a written release by
such Lender, in form and substance satisfactory to the Administrative Agent, of
all of its rights hereunder, then the principal amount of this Note shall be
reduced by the principal amount owed to such Lender as set forth on Schedule 1
and Schedule 1 shall be automatically adjusted to reflect such reduction
(including the deletion of such Lender).
[SIGNATURE PAGES FOLLOW.]
20
Each Borrower, for itself and its permitted successors and assigns,
hereby expressly waives presentment, demand for payment, dishonor, notice of
dishonor, protest, notice of protest, and any other formality.
TETRAGENEX PHARMACEUTICALS,
INC., as a Borrower
By:
------------------------------------
Name:
Title:
INNAPHARMA, INC., as a Borrower
By:
------------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED
KBC BANK N.V., as the Administrative Agent and as a Lender
By:
----------------------------------------
Name:
Title:
S-1
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
KBC VERZEKERINGEN NV, as a Lender
By:
----------------------------------------
Name:
Title:
KBC Verzekeringen
c/o KBC Investco NV
Havenlaan 12 Avenue du Port - SIV 8034
B-1080 Brussels
Attention: Ruth Devenyns, Senior Investment Manager
S-2
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
FIDEA NV, as a Lender
By:
----------------------------------------
Name:
Title:
Fidea NV
c/o KBC Investco NV
Havenlaan 12 Avenue du Port - SIV 8034
B-1080 Brussels
Attention: Ruth Devenyns, Senior Investment Manager
S-3
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
KBC PRIVATE EQUITY FUND BIOTECH NV, as a Lender
By:
----------------------------------------
Name:
Title:
KBC Private Equity Fund Biotch NV
c/o KBC Investco NV
Havenlaan 12 Avenue du Port - SIV 8034
B-1080 Brussels
Attention: Ruth Devenyns, Senior Investment Manager
S-4
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
KBC EQUITY FUND NV, as a Lender
By:
----------------------------------------
Name:
Title:
KBC Equity Fund NV
c/o KBC Investco NV
Havenlaan 12 Avenue du Port - SIV 8034
B-1080 Brussels
Attention: Ruth Devenyns, Senior Investment Manager
S-5
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
CFH BETILIGUNGSGESELLSCHAFT MBH, as a Lender
By:
----------------------------------------
Name:
Title:
CFH Betiligungsgesellschaft mbH
Loehrstrasse 16
D-04105 Leipzig, Germany
Attention: Joerg Mueller
S-6
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
EUROPEAN DEVELOPMENT CAPITAL CORPORATION NV, as a Lender
By:
----------------------------------------
Name:
Title:
European Development Capital Corporation NV
Castorweg 22-24
Willemstad, Curacao
Netherlands Antilles
Attention: Mr. R. J. Huyzen
S-7
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
STICHTING RUISCHEND LOOF, as a Lender
By:
----------------------------------------
Name:
Title:
Stichting Ruischend Loof
Herengracht 468
1017 CA Amsterdam
The Netherlands
Attention: Ms. P.B. Schellens
S-8
[Secured Promissory Note - Signature Page]
ACKNOWLEDGED AND AGREED
DR. NANCY CHANG, as a Lender
By:
----------------------------------------
Name:
Title:
Tanox, Inc.
10301 Stella Link
Houston, Texas 77025-5497
Attention: Dr Nancy Chang
S-9
[Secured Promissory Note - Signature Page]
SCHEDULE 1: LENDERS AND INTERESTS
PRINCIPAL AMOUNT OWED PERCENTAGE OF TOTAL
NAME OF LENDER TO LENDER OWED TO LENDER
KBC Bank N.V. $430,344.83 16.55%
KBC Verzekeringen NV $236,689.66 9.10%
Fidea NV $50,206.90 1.93%
KBC Private Equity Fund
Biotech NV $717,241.38 27.59%
KBC Equity Fund NV $358,620.69 13.79%
CFH Beteiligungsgesellschaft mbH $358,620.69 13.79%
European Development Capital
Corporation NV $179,310.34 6.90%
Stichting Ruischend Loof $179,310.34 6.90%
Dr. Nancy Chang (c/o Tanox, Inc.) $89,655.17 3.45%
TOTAL $2,600,000 100%
SCHEDULE 2: INSURANCE
[BORROWERS TO PROVIDE]