Exhibit 10.2

 

PROMISSORY NOTE

 

USD $666,666 July 15, 2014

 

 

This Promissory Note (this “Note”) was issued as of the date set forth above
(the “Issuance Date”). FOR VALUE RECEIVED, the undersigned, Navidea
Biopharmaceuticals Inc., a Delaware corporation (the “Maker”), promises to pay
to the order of R-NAV, LLC, a Delaware limited liability company or its assigns
(together with any subsequent holder of this Note, the “Holder”), the principal
sum of Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six Dollars
($666,666.00) or, if less, the portion thereof that remains outstanding, in
accordance with the payment terms set forth herein. This Note is made by the
Maker pursuant to that certain Series A Preferred Unit Purchase Agreement of
even date herewith by and among the Maker, the Holder and certain other parties
(the “Purchase Agreement”). This Note is the “Navidea Note” referred to in the
Purchase Agreement.

 

1.            Payments of Principal and Interest. The outstanding principal
amount of this Note shall initially bear interest at a rate of interest equal to
thirty one hundredths of one percent (0.31%) per annum, compounded annually;
provided, that from and after the occurrence of an Event of Default until the
unpaid principal balance of this Note is paid in full, interest shall accrue on
the unpaid principal balance of this Note at twelve percent (12%) per annum,
compounded monthly. The initial Three Hundred Thirty-Three Thousand Three
Hundred Thirty-Three Dollars ($333,333.00) of the principal sum and all interest
under this Note accrued through such date shall be due and payable by the Maker
to the Holder on July 15, 2015 (the “First Payment Date”). All remaining
amounts, including the remaining Three Hundred Thirty-Three Thousand Three
Hundred Thirty-Three Dollars ($333,333.00) of the principal sum and all interest
under this Note accrued through such date shall be due and payable by the Maker
to the Holder on July 15, 2016 (the “Maturity Date”).

 

2.            Application of Payments. All payments shall be applied first to
interest then due and payable, if any, and any balance shall be applied in
reduction of principal. The principal and interest shall be payable in lawful
money of the United States which shall be legal tender for public and private
debts at the time of payment. All interest rates herein provided shall be
calculated on the basis of a 365-day year.

 

3.            Events of Default; Acceleration of Note. The entire remaining
outstanding principal balance hereof, and all outstanding accrued and unpaid
interest thereon, shall immediately accelerate and become due, owing and payable
(without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other requirements of any kind or any action by Holder, all of
which are hereby expressly waived by the Maker) upon the occurrence of any of
the following (each an “Event of Default”):

 

(a)            the failure by Maker to pay the amounts due hereunder on the
First Payment Date or the Maturity Date, as applicable; or

 

(b)            a material breach by Maker of any of the covenants, obligations,
representations or warranties contained in this Note, and such default continues
for a period of 10 days after written notice to Borrower; or

 

 

 

 

(c)            any judgment or judgments, writ or writs or warrant or warrants
of attachment, or any similar process or processes, shall be entered or filed
against the Maker or its assets, in an aggregate amount in excess of $1,000,000
(except to the extent fully covered by insurance pursuant to which the insurer
has accepted liability therefor in writing), and which remains undischarged,
unvacated, unbonded or unstayed for a period of 60 days; or

 

(d)            (i) any default shall occur with respect to any one or more items
of indebtedness aggregating in excess of $10,000,000 which is issued, assumed,
borrowed, owed or guaranteed by the Maker, and such default is not cured within
60 days or results in the acceleration of the maturity thereof and (ii) either
(A) such default would cause a material breach under the Navidea License (as
defined in the Purchase Agreement) or (B) be reasonably likely to impair Maker’s
ability to pay any amounts outstanding under this Note; or

 

(e)            the Maker shall (i) have entered involuntarily against it an
order for relief under the United States Bankruptcy Code, as amended, (ii) admit
in writing its inability to pay its debts generally as they become due, (iii)
make an assignment for the benefit of creditors, (iv) apply for, seek, consent
to or acquiesce in, the appointment of a receiver, custodian, trustee, examiner,
liquidator or similar official for it or any substantial part of its assets, (v)
institute any proceeding seeking to have entered against it an order for relief
under the United States Bankruptcy Code, as amended, to adjudicate it insolvent,
or seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (vi) take any corporate action authorizing any matter
described in parts (i) through (v) above, or (vii) fail to contest in good faith
any appointment or proceeding described in the following clause (f) hereof; or

 

(f)            a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Maker or any substantial part of its assets,
or a proceeding described in clause (e)(v) above shall be instituted against any
the Maker, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days; or

 

(g)            any of the following occurs: (i) a consolidation, merger or
reorganization of Maker with or into any other entity in which the holders of
Maker’s outstanding voting equity securities immediately before such transaction
do not, immediately after such transaction, retain an equity interest
representing at least a majority of the voting power of the entity surviving
such transaction, (ii) a sale, conveyance, exchange or transfer of all or
substantially all of the assets of Maker and its subsidiaries on a consolidated
basis, or (iii) a sale of Maker’s equity securities in a single transaction or a
series of related transactions, with the result that the holders of Maker’s
outstanding voting equity securities immediately before the first such related
transaction do not, immediately after the last such related transaction, retain
an equity interest representing at least a majority of the voting power of
Maker.

 

4.            Prepayment. The Maker may prepay the principal balance of this
Note, together with any interest owing thereon, in whole or, from time to time,
in part, without penalty.

 

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5.            Payments. Each payment of principal, interest and any other sum
owed under this Note shall be made in United States Dollars and immediately
available funds by 2:00 p.m., Dallas, Texas time, at the address for the Holder
set forth on the signature page to this Note, or at such other location as is
specified by notice from the Holder to the Maker (or by wire of immediately
available funds to such account as is specified by notice from the Holder to the
Maker not less than three (3) days prior to the payment date). If any payment of
principal, interest or any other sum owed under this Note shall be due on a day
other than a business day, then such payment shall be made on the next
succeeding business day.

 

6.            Transfer. No obligation hereunder may be assigned (by operation of
law or otherwise) by Maker or assumed by another individual or entity without
the prior written consent of the Holder, and any attempt to do so will be void.
Subject to the preceding sentence, this Note shall be binding upon, shall inure
to the benefit of and shall be enforceable by the Holder, Maker and their
respective successors and assigns. The Holder may assign this Note and its
rights hereunder, in whole or in part, to any persons or entities without any
consent of Maker (and any subsequent “Holder(s)” may thereafter also further
assign this Note and rights hereunder without any consent of Maker).

 

7.            Special Remedy. At any time after the occurrence of an Event of
Default, the Holder may in its sole discretion, in addition to other rights and
remedies provided for herein or otherwise available to it at law or in equity,
elect in its sole discretion to terminate, cancel and cause the forfeiture by
the Maker of Series A Preferred Units (as defined in the Purchase Agreement)
held by the Maker as of the occurrence of an Event of Default, as provided in
this Section.

 

(a)            At any time, and from time to time, after an Event of Default, if
the Holder wishes to exercise the special remedy provided by this Section, the
Holder shall notify the Maker in writing that the Holder is exercising such
right, which notice shall specify the number of Series A Preferred Units held by
the Maker that are being cancelled, terminated and forfeited by the Maker. For
each such Series A Preferred Unit so cancelled, terminated and forfeited, the
aggregate amount owing under this Note to the Holder shall be reduced by $1.00
(as such number is proportionately adjusted for Series A Preferred Unit splits,
combinations and dividends after the date of this Note affecting the number of
outstanding Series A Preferred Units); provided, that the maximum number of
Series A Preferred Units that Holder may elect to cancel, terminate and have
forfeited hereunder shall not exceed the difference between (i) 666,666 (as such
number is proportionately adjusted for Series A Preferred Unit splits,
combinations and dividends after the date of this Note affecting the number of
outstanding Series A Preferred Units) and (ii) the quotient obtained by dividing
the aggregate principal amount paid by Maker hereunder by $1.00 (as such number
is proportionately adjusted for Series A Preferred Unit splits, combinations and
dividends after the date of this Note affecting the number of outstanding Series
A Preferred Units). For the avoidance of doubt, if the Holder exercises this
special remedy (including where it exercises for the maximum number of Units
permitted by the proviso in the preceding sentence), but amounts still remain
owing under this Note thereafter (whether accrued interest, expenses or
otherwise), such remaining amounts shall remain outstanding and constitute
continued indebtedness of the Maker due and owing under this Note. Further,
Holder may exercise this special remedy as many times as it may desire, subject
to the maximum limitation specified above.

 

(b)            Immediately upon delivery of any such notice, the resulting
cancellation, termination and forfeiture of the specified number of Series A
Preferred Units shall automatically be deemed to occur, without any requirement
of any further action of Maker or the Holder, and thereafter the Maker shall not
have any further rights with respect to such Series A Preferred Units of any
sort or nature. Notwithstanding the foregoing, if requested by the Holder the
Maker will return to the Holder any Unit certificate(s) representing Series A
Preferred Units held by the Maker, so that the Holder may reflect such
cancellation, termination and forfeiture by decreasing the number of Units
represented by such certificate(s) accordingly. The Maker hereby agrees from
time to time to promptly execute any and all such other documentation as the
Holder may reasonably request to evidence and effect any cancellation,
termination and forfeiture pursued by the Holder hereunder, or to otherwise give
effect to the intended special remedy of the Holder hereunder.

 

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(c)            Maker hereby agrees that it will, at all times until this Note is
indefeasibly repaid in full, retain and hold at least 666,666 Series A Preferred
Units (as such number is proportionately adjusted for Series A Preferred Unit
splits, combinations and dividends after the date of this Note affecting the
number of outstanding Series A Preferred Units) or such lesser number of shares
as may be redeemable under this Section 7, as determined in accordance with
Section 7(a) above, so that Holder may elect to use this special remedy if it so
chooses. Maker further agrees that it shall not pledge, grant a security
interest in, or otherwise transfer or assign any beneficial ownership interest
in such number of Series A Preferred Units until this Note is indefeasibly
repaid in full. The foregoing is in addition to all other transfer restrictions
applicable to Maker under other agreements to which it is party (and those under
applicable law).

 

(d)            The Holder’s rights and remedies provided herein are cumulative
and are in addition to any rights and remedies available to the Holder at law or
in equity. In no event shall Holder be required to pursue this special remedy
unless it wishes to do so. Holder shall always retain the right to pursue
payment in full of this Note in cash. Finally, the Maker hereby irrevocably
agrees and acknowledges that the amount of indebtedness that is deemed satisfied
by the cancellation, termination and forfeiture of a Series A Preferred Unit
(i.e., $1.00 per Unit, subject to potential adjustment as explicitly provided
above) has been finally and conclusively agreed by Maker and Holder, and shall
be given effect even if a Series A Preferred Unit at the time of any such
cancellation, termination and forfeiture has a higher fair market value (as this
special remedy and the $1.00 price utilized herein were integral terms to the
original issuance of Series A Preferred Units to the Maker pursuant to the
Purchase Agreement in exchange for delivery of this Note to Holder, and the
Holder would not have accepted this Note, or issued such Units, without this
special right on these terms).

 

8.            Subordination.  Pursuant to the terms of the Subordination
Agreement dated July __, 2014 between Oxford and R-NAV, LLC (the “Subordination
Agreement”) all indebtedness and obligations of Maker and rights of Holder under
this Note are expressly subordinate to all indebtedness and obligations of Maker
to Oxford Finance LLC (“Oxford”) in its capacity as agent for certain lenders,
as described in the Subordination Agreement.  The obligations of Maker and
rights of Holder under this Note are also expressly subordinate to all
obligations and indebtedness of Maker (including, without limitation, principal,
premium (if any), interest, fees, charges, expenses, costs, professional fees
and expenses, and reimbursement obligations), whether presently existing or
arising in the future, to Platinum-Montaur Life Sciences, LLC (“Platinum”) under
the Loan Agreement, dated July 25, 2012 (as amended as of June 25, 2013 and
March 4, 2014), between Maker and Platinum.

 

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9.            Miscellaneous.

 

(a)            This Note may only be amended, modified or supplemented by an
agreement in writing signed by each party hereto. The rights of Holder and
obligations of Maker under this Note may only be waived by an executed written
waiver delivered by the Holder to Maker. Any failure by Holder hereof to
exercise any right hereunder shall not be construed as a waiver of the right to
exercise the same or any other right at any other time and from time to time
thereafter.

 

(b)            The Maker hereby represents and warrants to the Holder, and
hereby agrees with Holder, that (i) this Note constitutes the legal, valid and
binding obligation of Maker, enforceable against Maker in accordance with its
terms, and (ii) Maker has the absolute and unrestricted right, power and
authority to execute and deliver this Note, and has the absolute and
unrestricted right, power and authority to perform its obligations hereunder,
including its obligation to pay all amounts due hereunder when due whether by
acceleration or otherwise, without breach or violation of any contract or
restriction of any type or nature. Maker is not subject to, and will not enter
into, any credit agreement, intercreditor agreement or other agreement or
covenant of any type, in any case, that purports to restrict, limit or prohibit
Maker from paying any amounts under this Note to Holder when due, whether by
acceleration or otherwise.

 

(c)            The Maker acknowledges that the obligations of Maker to Holder
under this Note are full recourse.

 

(d)            The Maker hereby (i) waives demand, presentment, protest, notice
of non-payment, notice of intention to accelerate, notice of acceleration,
notice of protest and any lack of diligence or delay in collection or the filing
of suit hereon, and agrees that its liability on this Note shall not be affected
by any renewal or extension in the time of payment hereof, by any indulgences,
or by any release or change in any security for the payment hereof, and (ii)
hereby consents to any and all renewals, extensions, indulgences, releases or
waives demand, presentment, protest, dishonor and notice of dishonor.

 

(e)            The Maker agrees to pay upon demand all reasonable costs and
expenses, including reasonable attorneys’ fees and expenses, incurred by the
Holder in collecting or attempting to collect under this Note after an Event of
Default, including in pursuing its rights to cancel, terminate and cause the
forfeiture of Series A Preferred Units as provided above.

 

(f)            It is the intent of the Maker and the Holder that the Maker not
pay and the Holder not receive, directly or indirectly, interest in excess of
that which may be lawfully paid by the Maker and received by the Holder under
the law applicable to this Note. Accordingly, in no event shall the rate or
amount of interest due or payable under this Note exceed the maximum rate or
amount of interest allowed by applicable law, and in the event any excess amount
is paid by the Maker or received by the Holder, the excess amount shall be
credited as a payment of principal or returned to the Maker, at the election of
the Maker upon written notice to the Holder. The foregoing shall be the Holder’s
sole obligation and the Maker’s exclusive remedy in such an event.

 

(g)            Section headings in this Note are included herein for convenience
of reference only and shall not constitute a part of this Note for any other
purpose.

 

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(h)            This Note shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its principles of conflicts
of laws. The Maker hereto irrevocably submits to the non-exclusive jurisdiction
of the courts of the State of Delaware and the United States District Court for
the District of Delaware for the purpose of any suit, action, proceeding or
judgment relating to or arising out of this Note. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under the Purchase Agreement. The Maker irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. The Maker irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. FURTHER,
THE MAKER AGREES THAT THE HOLDER SHALL HAVE THE RIGHT TO PROCEED AGAINST THE
MAKER IN A COURT IN ANY LOCATION TO ENABLE THE HOLDER TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF THE HOLDER. THE MAKER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE HOLDER HAS COMMENCED
A PROCEEDING DESCRIBED IN THIS CLAUSE.

 

(i)            EACH PARTY HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN
ANY LITIGATION WITH RESPECT TO THIS NOTE OR ANY RELATED MATTER AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

(j)            The provisions of this Note are severable, and the invalidity or
unenforceability of one or more of the provisions of this Note shall not affect
or impair the validity or enforceability of the remaining terms hereof.

 

(k)            In case the Note shall be mutilated, lost, stolen, or destroyed,
the Maker shall issue and deliver in exchange and substitution for, and upon
cancellation of the mutilated instrument or in lieu of and substitution for the
instrument lost, stolen or destroyed, a new note or other document of like tenor
and representing an equivalent right or interest, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction; the
affidavit of the Holder, without bond but with promise of indemnity, shall be
satisfactory.

 

(l)            Any notices or consents required or permitted by this Note shall
be in writing and shall be deemed delivered as specified for the giving of
notices under the Purchase Agreement.

 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of the
date first set forth above.

 

 

      Navidea Biopharmaceuticals Inc.                                 By: /s/
Brent L. Larson         Name: Brent L. Larson         Title: Executive Vice
President & CFO               ACKNOWLEDGED AND AGREED:                    
R-NAV, LLC                                 By: /s/ Gilbert Gonzales        
Name: Gilbert Gonzales         Title: Chief Executive Officer        

 

 

Navidea Biopharmaceuticals, Inc.

Signature Page to Promissory Note