**Exhibit 4.5**

 

THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACTOF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED, SOLD OR OTHERWISETRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTEREDUNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSELSATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOTREQUIRED.

 

**PROMISSORYNOTE**

 
| $79,399.53 |   | February 18, 2005 |
|------------|--------|-------------------|
|       |   | Boulder, Colorado |

 

**FOR VALUE RECEIVED**,**TAPESTRY PHARMACEUTICALS, INC.**, aDelaware corporation formerly known as NaPro BioTherapeutics, Inc. (the “***Company***”), herebypromises to pay to **TL VENTURES V INTERFUNDL.P.** or registered assigns (“***Holder***”), in lawful money of the UnitedStates of America, the principal sum of Seventy-nine Thousand Three HundredNinety-nine and Fifty-three One Hundredth Dollars ($79,399.53), on the datesand in the amounts set forth below.  ThisNote shall not bear interest, except as expressly provided below.

 

**1.         Principal Payments.**  The outstanding principal amount of the Loanshall be paid on the dates and in the amounts stated below.

 
| **Repayment  Date**                                           | ** ** | **Repayment Amount** |
|---------------------------------------------------------------|------------|----------------------|
| ** **                                                    | ** ** | ** **           |
| Last business day of each month in 2005 beginning in February |       | $                    | 850.10 |
|                                                          |       |                 |
| Last business day of each month in 2006                       |       | $                    | 1,870.22 |
|                                                          |       |                 |
| Last business day of each month in 2007                       |       | $                    | 2,550.31 |
|                                                          |       |                 |
| January 31, 2008                                              |       | $                    | 17,002.07 |
|                                                               |            |                      |  |  |

 

**2.         Default.**

 

**2.1         **A“***Default***”occurs if (a) the Company defaults in the payment when due of any principal onthis Note and such default continues for a period of fifteen (15) days afterwritten notice thereof has been given by the Holder to the Company as providedherein, (b) the Company fails (i) to maintain its corporate existence andremain in good standing under the laws of the State of Delaware or (ii) totimely pay any Taxes relating to the Company or its business as such Taxesbecome due and payable (except such as are being contested in good faith and byappropriate proceedings or where the failure to effect such payment is notadverse in any material respect to the Holder), and, in the case of clauses (i)and (ii), such failure continues for a period of thirty (30) days after writtennotice thereof has been given to the Company or (c) the

 

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Company breaches any of the covenants contained in Sections 6, 7 or 8of this Note, and such breach continues for a period of thirty (30) days afterwritten notice thereof has been given to the Company.  The Company shall notify the Holder of anyevent that with the giving of notice and the passage of time would constitute aDefault under subsections (b) or (c) of this Section 2.1 of which it is awareas soon as practicable and, in any event, no later than five (5) days after theCompany becomes aware of such event.

 

**2.2         **Uponthe occurrence and during the continuation of a Default, interest on the unpaidbalance of the Notes shall accrue at a rate of ten percent (10%) simpleinterest per annum.

 

**2.3         **ADefault under Section 2.1(a) is cured when the Company has paid all interestaccrued under this Section 2 and has made all principal payments due prior tothe date thereof.

 

**3.         Continuing Default.**

 

**3.1         **A“***Continuing Default***”occurs

 

**(a)          **Ifthe Company fails to be current in the payment of principal and interest for acontinuous period of six (6) months after the occurrence of a Default that hasnot been cured and such failure continues for a period of fifteen (15) daysafter written notice thereof has been given by Holder to the Company asprovided herein;

 

**(b)          **Ifa Default occurs for a third time (two Defaults have occurred previously andbeen cured by the Company) and the continuation of such Default for a period offifteen (15) day after written notice thereof has been given by Holder to theCompany as provided herein;

 

**(c)          **Ifthe Company shall default in the payment of principal or interest due and owingunder any agreement relating to Company Indebtedness (as defined below) otherthan Partner Indebtedness (as defined below) beyond any period of grace providedwith respect thereto or in the performance or observance of any otheragreement, term or condition contained in any agreement under which suchobligation is created, if the principal amount due and payable on such CompanyIndebtedness exceeds $1,000,000 and the effect of such default is to cause suchCompany Indebtedness to become due prior to its stated maturity; or

 

**(d)          **If(i) a court having jurisdiction in the premises enters a decree or order forrelief in respect of the Company in an involuntary case under any applicablebankruptcy, insolvency or other similar law now or hereafter in effect, orappointing a receiver, liquidator, assignee, custodian, trustee, sequestrate(or similar official) of the Company or for any substantial part of theproperty of the Company or ordering the winding up or liquidation of theaffairs of the Company, and such decree or order remains unstayed and in effectfor a period of sixty (60) consecutive days or (ii) the Company commences avoluntary case under any applicable bankruptcy, insolvency or other similar lawnow or hereafter in effect, or consent to the entry of an order for relief inan involuntary case under any such law, or consent to the appointment or takingpossession by a receiver, liquidator, assignee, custodian, trustee, sequestrate(or similar official) of the Company or for any substantial part of theproperty of the Company, or the Company makes any general assignment for thebenefit of creditors.

 

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**3.2         **Uponthe occurrence and during the continuation of a Continuing Default, the Holdermay declare the entire principal amount of this Note and any interest accruedthereon to be due and payable immediately by giving written notice thereof tothe Company as provided herein, and upon any such declaration the same shall beimmediately due and payable.  Any demandfor payment may be rescinded and annulled by the Holder at any time prior topayment hereunder.  No such rescission orannulment shall affect any subsequent Default or Continuing Default or impairany right consequent thereon.

 

**4.         Application of Payments; Prepayments.**

 

**4.1****         **Ifany amounts are then due hereunder, payments on this Note shall be appliedfirst to interest, if any, and then to any principal that is past duehereunder.

 

**4.2****         **TheCompany may prepay the Notes, in whole or in part, at any time by giving ten(10) days written notice thereof to the Holder.

 

**(a)****          **Theamount necessary to prepay all or any portion of the Notes shall be equal tothe net present value of the amount to be prepaid, discounted at a rate of fourpercent (4%) per annum.

 

**(b)****          **TheCompany may designate in its notice of prepayment given to the Holder thescheduled principal payment or payments to which such prepayment shall beapplied.  In the absence of such a designation,the prepayment shall be applied to the principal payment or payments next due.

 

**5.         Place of Payment.**  All amounts payable hereunder shall bepayable to the Holder by a check issued by the Company to the Holder anddelivered to the Holder at its office at TL Ventures V Interfund L.P., 435Devon Park Drive, 700 Building, Wayne, PA 19087, or by wire transfer to the following account: Comerica Bank, SanJose, CA, ABA #121-137-552, for the account of TL Ventures V L.P., A/C #1891668863.  The Holder may direct thatpayment be made to another office or account by giving written notice thereofto the Company as provided herein at least five (5) days before the payment isto be made.

 

**6.         Rank; Additional Indebtedness; Liens.**

 

**6.1         **Obligationsunder this Note, including payments of principal and interest and otherpayments due under this Note, (i) shall rank *paripassu* in bankruptcy with all Permitted Senior Indebtedness (asdefined below) and (ii) shall be senior to all Permitted SubordinatedIndebtedness (as defined below).

 

**6.2         **Solong as this Note is outstanding, the Company shall not, directly orindirectly, incur or guarantee, assume or suffer to exist any CompanyIndebtedness, other than (i) the Indebtedness evidenced by this Note, (ii)Permitted Senior Indebtedness, and (iii) Permitted Subordinated Indebtedness.

 

**6.3**          So long as this Note is outstanding,the Company shall not, directly or indirectly, allow or suffer to exist anyLien upon or in any property or assets (including accounts and contract rights)owned by the Company, except for Permitted Liens (as defined below).

 

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**7.         Dividends; Redemption of Equity; Etc.**  The Company hereby covenants and agrees thatit will not, directly or indirectly, declare or pay any dividend or otherdistribution in respect of any class of its outstanding capital stock, or makeany payment to redeem, purchase or otherwise acquire, or call for redemption,any of such stock, except for (a) dividends or other distributions in respectof any series of preferred stock of the Company issued after the date hereof,provided that no Continuing Default exists, (b) purchases or redemptions ofcapital stock of the Company for which the consideration paid, in theaggregate, does not exceed fifty percent (50%) of the net proceeds received bythe Company from the issuance of capital stock by the Company after the datehereof, (c) purchases or redemptions of shares of common stock of the Company (“***Common Stock***”), whichpurchases or redemptions, in the aggregate, do not exceed ten percent (10%) ofthe number of shares of Common Stock that are issued and outstanding as of thedate hereof, and (d) dividends or distributions payable solely in shares ofCommon Stock or in warrants or other rights to acquire Common Stock.

 

**8.         Noncircumvention. **The Company herebycovenants and agrees that it will not, by amendment of its Certificate ofIncorporation or through any reorganization, transfer of assets, consolidation,merger, dissolution, issue or sale of securities, or other voluntary action,other than as contemplated by the terms of this Note, avoid or seek to avoidthe performance of any of the terms of this Note, and will at all times in goodfaith carry out all of the provisions of this Note.  The consequences of actions taken by theCompany in the conduct of its business in good faith shall not be deemed toconstitute a breach or default of this Section 8.

 

**9.         Mutilated, Defaced, Destroyed, Lost andStolen Notes**.  In caseany temporary or definitive Note shall become mutilated, defaced or beapparently destroyed, lost or stolen, the Company shall execute and deliver anew Note in exchange and substitution for the mutilated or defaced Note or insubstitution for the apparently destroyed, lost or stolen Note.  In the case that a Note has been destroyed,lost or stolen, the Holder shall furnish to the Company such security orindemnity as the Company may reasonably require to indemnify and defend and tosave the Company harmless from all risks, and shall also furnish to the Companyevidence to the Company’s reasonable satisfaction of the apparent destruction,loss or theft of such Note and of the ownership thereof.

 

**10.       Certain Definitions.**

 

**10.1       **“***Acquisition Indebtedness***”shall mean Company Indebtedness for which the Company becomes obligated inconnection with the acquisition by the Company of the business or assets ofanother person or as a result of the merger or consolidation of the Companywith another person, which indebtedness was an obligation of such other personthat existed at the time of such acquisition, merger or consolidation and wasnot incurred in connection with or in anticipation of such acquisition, mergeror consolidation.

 

***10.2        “Company Indebtedness***”shall mean (a) all obligations of the Company for borrowed money, (b) allobligations of the Company evidenced by bonds, debentures, notes or othersimilar instruments (including, without limitation, any seller notes, deferredpurchase price obligations or earnout obligations issued or entered into inconnection with any acquisition undertaken by the Company), (c) all obligationsin respect of letters of credit, to the extent

 

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drawn, and bankers’ acceptances issued for the account of the Companyand (d) any accrued interest, prepayment premiums or penalties related to anyof the foregoing.

 

**10.3       **“***Liens***” shall mean anymortgage, pledge, security interest, conditional sale or other title retentionagreement, encumbrance, lien, easement, option, debt, charge, claim orrestriction of any kind.

 

**10.4**        “***Partner Indebtedness***” shall mean any CompanyIndebtedness assumed or incurred in connection with a bona fide transactionwith a third party which involves a license, development, or marketing agreement,establishment of a joint venture, or the purchase of assets or stock from suchthird party, merger with a third party, or any other similar transaction.

 

**10.5       **“***Permitted Liens***”shall mean (a) Liens imposed by law, such as mechanics’, materialmens’,carriers’, workmens’, repairmens’, contractors’ Liens arising or incurred inthe ordinary course of business and securing payment of obligations that arenot more than 60 days past due or are being contested in good faith and byappropriate proceedings, (b) easements, rights-of-way, restrictions and othersimilar charges and encumbrances of record not interfering materially with theordinary conduct of the business of the Company or detracting materially fromthe use, occupancy, value or marketability of title of the assets subjectthereto, (c) Liens for Taxes not yet due and payable or for Taxes that thetaxpayer is contesting, (d) purchase money Liens securing rental payments undercapital lease arrangements, (e) purchase money Liens secured solely by theproperty purchased and (f) other Liens arising in the ordinary course ofbusiness and not incurred in connection with the borrowing of money.

 

**10.6       **“***Permitted Senior Indebtedness***”shall mean any Company Indebtedness that ranks *paripassu* in bankruptcy to the Company Indebtedness evidenced by thisNote and, other than restrictions contained in Acquisition Indebtedness thatwere not put in place in connection with or in anticipation of the acquisition,merger or consolidation giving rise to the incurrence of such AcquisitionIndebtedness by the Company, that does not contractually prohibit the Companyfrom making any payments to the Holder pursuant to this Note.

 

**10.7       **“***Permitted Subordinated Indebtedness***”shall mean any Company Indebtedness that is subordinate in right of payment tothe Company Indebtedness evidenced by this Note and, other than restrictionscontained in Acquisition Indebtedness that were not put in place in connectionwith or in anticipation of the acquisition, merger or consolidation giving riseto the incurrence of such Acquisition Indebtedness by the Company, that doesnot contractually prohibit the Company from making any payments to the Holderpursuant to this Note.

 

**10.8       **“***Taxes***” shall mean anyforeign, federal, state or local income, gross receipts, franchise, estimated,alternative minimum, add-on minimum, sales, use, transfer, real property gains,registration, value added, excise, natural resources, severance, stamp,occupation, premium, windfall profit, environmental, customs, duties, realproperty, personal property, capital stock, social security, unemployment,disability, payroll, license, employee or other withholding, or other tax, ofany kind whatsoever, including any interest, penalties or additions to tax oradditional amounts in respect of the foregoing.

 

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**11.       Notices.**  Any notices required or permitted to be givenunder the terms of this Note shall be in writing and shall be deemed to havebeen delivered (a) upon receipt, when delivered personally, or (b) one (1)business day after deposit with a nationally recognized overnight courier, ineach case properly addressed to the party to receive the same.  The addresses for such notices shall be:  If to the Company:  Tapestry Pharmaceuticals, Inc., 4840 PearlEast Circle, Suite 300W, Boulder, Colorado 80301, Attention: Chief Financial Officer, with a copy to TapestryPharmaceuticals, Inc., 4840 Pearl East Circle, Suite 300W, Boulder, Colorado  80301, Attention: General Counsel; and if tothe Holder: TL Ventures V Interfund L.P., 435 Devon Park Drive, 700 Building,Wayne, Pennsylvania  19087.  The Company and the Holder shall providewritten notice to the other in accordance with the provisions hereof of anychange in the address to which it desires notice to be given.

 

**12.       Governing Law.**  This Note shall be governed by, and construedand enforced in accordance with, the laws of the State of Delaware, excludingconflict of laws principles that would cause the application of laws of anyother jurisdiction.  Each party herebyirrevocably submits to the nonexclusive jurisdiction of the state and federalcourts sitting in the State of Delaware, for the adjudication of any disputehereunder or in connection herewith or with any transaction contemplated herebyor discussed herein, and hereby irrevocably waives, and agrees not to assert inany suit, action or proceeding, any claim that it is not personally subject tothe jurisdiction of any such court, or that such suit, action or proceeding isimproper.  The parties hereto, includingall guarantors or endorsers, hereby waive presentment, demand, notice, protestand all other demands and notices in connection with the delivery, acceptance,performance and enforcement of this Note, except as specifically providedherein, and assent to extensions of the time of payment, or forbearance orother indulgence without notice.

 

**13.       Waiver of Jury Trial.**  Each party hereby expressly waives, to thefullest extent permitted by law, the right to a trial by jury in any action orproceeding brought with respect to any dispute, controversy or claim arisingout of or relating in any way to this Note or the interpretation, breach,termination or invalidity thereof, or the transactions contemplated thereby.  This Note may be submitted in any suchproceeding to evidence the foregoing waiver.

 

**14.       Successors and Assigns**.  The provisions of this Note shall inure tothe benefit of and be binding on any successor to the Company and shall extendto any Holder hereof.

 

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**IN WITNESS WHEREOF**,the Company has caused this instrument to be duly executed on the date setforth above.

 
| ** ** | **TAPESTRY PHARMACEUTICALS, INC.** |
|------------|------------------------------------|
| ** ** | ** **                         |
| ** ** | ** **                         |
| ** ** | By:                                | /s/ Kai Pace Larson | ** ** |
| ** ** | ** **                         | ** ** |
| ** ** | Printed Name:                      | Kai Pace Larson | ** ** |
| ** ** | ** **                         | ** ** |
| ** ** | Title:                             | Vice President, General Counsel | ** ** |
|            |                                    |  |  |  |  |

 

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