Exhibit 10.16
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement
(this “ Agreement ”) is dated as of this 6
th day
of June 2008 (the “ Effective Date ”), by
and between Innovive Pharmaceuticals, Inc. , a Delaware
corporation (“ Borrower ”), and CytRx
Corporation , a Delaware corporation (“ Lender
”).
BACKGROUND
WHEREAS, Borrower has requested that
Lender enter into a financing arrangement with Borrower pursuant to
which Lender may make loans to Borrower;
WHEREAS, Lender is willing to agree
to make such loans to Borrower on the terms and conditions set
forth herein; and
WHEREAS, this Agreement is intended
to aid the completion of the transactions contemplated by the
Agreement and Plan of Merger dated as of the Effective Date by and
among Borrower, Lender and CytRx Merger Subsidiary, Inc. (the
“ Merger Agreement ”).
NOW, THEREFORE, in consideration of
the mutual conditions and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION I. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms : As used in
this Agreement, the following terms have the following respective
meanings:
Advance(s) — Any monies advanced or credit extended to
Borrower by Lender under the Loan, including, without limitation,
cash advances.
Business Day — A day other than Saturday or Sunday
when banks are open for business in Los Angeles, California.
Collateral — All of the Property and interests in
Property described in Section 3.1 of this Agreement and all
other interests in Property that now or hereafter secure payment of
the Obligations and satisfaction by Borrower of all covenants and
undertakings contained in this Agreement and the other Loan
Documents.
Closing — The making of the Initial Advance to the
Borrower on the Closing Date pursuant to the terms of this
Agreement.
Closing Date — The date upon which the conditions set
forth in Section 4.1 hereof each have been satisfied or
waived, which shall in any event be no more than two
(2) Business Days after the Effective Date or at such other
time as may be mutually agreed to by the parties.
Default — Any event, act, condition or occurrence
which with notice, or lapse of time or both, would constitute an
Event of Default hereunder.
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Initial Advance — The initial Advance in the principal
amount set forth on Schedule 1.1(a ) attached
hereto.
Lien — Any interest of any kind or nature in property
securing an obligation owed to, or a claim of any kind or nature in
property by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute, regulation or
contract, and including, but not limited to, a security interest or
lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt, a financing lease, consignment or bailment for
security purposes, a trust, or an assignment. 6
Loan Documents — Collectively, this Agreement and all
agreements, certificates, instruments and documents executed and/or
delivered in connection therewith, all as may be supplemented,
restated, superseded, amended or replaced from time to time. The
Loan Documents shall not include the Merger Agreement.
Loan Maturity Date — The earliest of (i) the date
of commencement of any bankruptcy, insolvency or similar proceeding
with respect to Borrower, (ii) the date on which the Merger
Agreement is terminated pursuant to its terms, and
(iii) September 30, 2008 or such later date as the
parties hereto mutually agree.
Maximum Loan Amount — The aggregate amount of Five
Million Five Hundred Thousand Dollars ($5,500,000) of
principal.
Obligations — All existing and future debts,
liabilities and obligations owing by Borrower to Lender or any
other subsidiary or affiliate of Lender under the Loan Documents
and the Merger Agreement.
Permitted Liens — (a) Liens securing taxes,
assessments or governmental charges or levies or the claims or
demands of materialmen, mechanics, carriers, warehousemen, and
other like persons not yet due; (b) Liens incurred or deposits
made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance, social
security and other like laws; and (c) Liens existing on the
Closing Date and shown on Schedule 1.1(b ) attached
hereto and made part hereof.
Person — An individual, partnership, corporation,
trust, limited liability company, limited liability partnership,
unincorporated association or organization, joint venture or any
other entity.
Property — Any interest of Borrower in any kind of
property or asset, whether real, personal or mixed, or tangible or
intangible.
UCC — The Uniform Commercial Code of the State of
Delaware and any other applicable law of any state that has
jurisdiction with respect to all, or any portion of, the Collateral
or this Agreement, from time to time.
1.2 Other Capitalized Terms
— Any other capitalized terms used without further definition
herein shall have the meanings set forth in the UCC.
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SECTION II. THE LOAN
2.1 Loan:
a.
Subject to the terms and conditions of this Agreement, Lender
hereby establishes for the benefit of Borrower a credit facility
(the “ Loan ”), which shall include Advances
extended by Lender to or for the benefit of Borrower from time to
time hereunder. The aggregate principal amount of all Advances made
hereunder shall not exceed the Maximum Loan Amount. To the extent
any Advance made hereunder shall cause the sum of all Advances
hereunder to exceed the Maximum Loan Amount, Borrower shall
immediately return and repay to Lender the excess of such Advance
over the Maximum Loan Amount. All Advances under the Loan shall be
due and payable, in full, on the Loan Maturity Date, subject to the
provisions of Section VII below.
b. This
Agreement shall evidence Borrower’s unconditional obligation
to repay Lender for all Advances made under the Loan, with interest
and other charges and expenses as herein provided. Each Advance
under the Loan shall be deemed evidenced by this Agreement.
c. The
term of the Loan shall expire on the Loan Maturity Date. On such
date, unless having been sooner accelerated by Lender pursuant to
the terms hereof, all sums owing under the Loan and this Agreement
shall be due and payable in full, and as of and after such date
Borrower shall not request and Lender shall not make any further
Advances under the Loan.
2.2 Advances and Payments
:
a.
Except to the extent otherwise set forth in this Agreement, all
payments of principal and of interest on the Loan and all Expenses,
fees, indemnification obligations and all other charges and any
other Obligations of Borrower, shall be made to Lender via wire
transfer of same day funds to such account as Lender may from time
to time direct. Any payments received prior to 2:00 P.M., Pacific
Time, on any Business Day shall be deemed received on such Business
Day. Any payments (including any payment in full of the
Obligations), received after 2:00 P.M., Pacific Time, on any
Business Day shall be deemed received on the immediately following
Business Day.
b.
Lender shall make the Initial Advance on the third Business Day
following the Closing Date. All additional Advances under the Loan
must be requested by Borrower by 11:00 A.M., Pacific Time, at
least two Business Days prior to the date such Advance is to be
made. All requests for an Advance are to be in writing pursuant to
a written request executed by Steven Kelly or J. Gregory Jester in
the form of Exhibit “A” (“ 6Advance
Request ”) attached hereto and made part hereof. Such
request may be sent by facsimile transmission provided that Lender
shall have the right to require that receipt of such request not be
effective unless confirmed via telephone with Lender.
c. All
Advances following the Initial Advance shall be at the sole
discretion of Lender. Upon receiving a request for an Advance in
accordance with subparagraph (b) above,
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and
subject to the terms and conditions set forth in this Agreement,
Lender, in its discretion, shall make the requested Advance, or any
amount thereof as Lender determines in its discretion, to Borrower
by Lender’s check delivered to Borrower or, in Lender’s
discretion, by wire transfer to Borrower’s account specified
on Schedule 2.2 attached hereto, on the Business Day
the requested Advance is to be made or as soon as is reasonably
practicable thereafter.
2.3 Interest : The outstanding
principal under the Loan shall bear interest, subject to the terms
hereof, at the rate of 12.5% per annum. Interest shall be payable
on the Loan Maturity Date.
2.4 Additional Interest
Provisions :
a.
Interest on the Loan shall be calculated on the basis of a year of
three hundred sixty (360) days and charged for the actual
number of days elapsed.
b.
After the occurrence and during the continuance of an Event of
Default hereunder, the per annum rate of interest on all
outstanding principal under the Loan shall be increased by two
hundred (200) basis points. All such increases shall be
applied retroactively to the date of the occurrence of the Event of
Default. Borrower agrees that the default rate payable to Lender is
a reasonable estimate of Lender’s damages and is not a
penalty.
c.
Borrower shall not request any Advance while a Default
exists.
d.
Interest on outstanding principal under the Loan shall continue to
accrue and be paid even after an Event of Default, maturity,
acceleration, judgment, bankruptcy, insolvency proceedings of any
kind or the happening of any event or occurrence, similar or
dissimilar.
e. In
no contingency or event whatsoever shall the aggregate of all
amounts deemed interest hereunder and charged or collected pursuant
to the terms of this Agreement exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such
court determines Lender has received interest hereunder in excess
of the highest applicable rate, Lender shall apply, in its sole
discretion, and set off such excess interest received by Lender
against other Obligations due or to become due and such rate shall
automatically be reduced to the maximum rate permitted by such
law.
2.5 Prepayments : Borrower may
prepay the Loan, without premium or penalty, in whole or in part,
at any time or from time to time. Any partial prepayment shall
first be applied to accrued and unpaid interest on the Loan being
prepaid and then to the principal balance of the Loan.
2.6 Use of Proceeds :
a. The
Initial Advance shall be used by Borrower to pay the accounts
payable and accrued liabilities of Borrower set forth on
Schedule 1.1(a ) attached hereto.
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b.
Additional Advances may be used by Borrower for working capital and
general corporate purposes consistent with Borrower’s
covenants under the Merger Agreement, including, without
limitation, for professional and other fees and expenses and other
transaction costs incurred by Borrower in connection with the
negotiation, documentation, execution and consummation of the
transactions contemplated in the Merger Agreement. Each Advance
Request shall state the specific intended uses of the Advance
requested, including, without limitation, the name of each payee
(or class of payees in the case of employees and other readily
identifiable categories of payees) and amount to be paid to such
payee out of such Advance. Any actual use by Borrower of an Advance
that differs materially from the intended use as set forth in the
Advance Request shall constitute a material breach of this
Agreement.
SECTION III. COLLATERAL
3.1 Collateral : As security
for the payment of the Obligations, and satisfaction by Borrower of
all covenants and undertakings contained in this Agreement and the
other Loan Documents, Borrower hereby assigns and grants to Lender,
a continuing Lien on and security interest in, upon and to all
assets of Borrower and all subsidiaries of Borrower, including but
not limited to the following Property, all whether now owned or
hereafter acquired, created or arising and wherever located:
a. all
Accounts;
b. all
Chattel Paper;
c. all
Documents;
d. all
Instruments;
e. all
Inventory;
f. all
General Intangibles;
g. all
Equipment,
h. all
Fixtures;
i. all
Deposit Accounts;
j. all
Goods;
k. all
Investment Property; and
l. all
Proceeds (including, without limitation, insurance proceeds),
whether cash or non-cash, of all of the foregoing Property
described in clauses (a) through (k).
3.2 Lien Documents : On the
Effective Date and thereafter as Lender reasonably deems necessary,
Borrower shall execute and deliver to Lender, or have executed and
delivered (all in form and substance satisfactory to Lender and its
counsel):
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a.
Financing statements pursuant to the UCC, which Lender may file in
the jurisdiction where Borrower is organized and in any other
jurisdiction that Lender deems appropriate; and
b. Any
other agreements, documents, instruments and writings, including,
without limitation, intellectual property security agreements,
required by Lender to evidence, perfect or protect the Liens and
security interests in the Collateral or as Lender may reasonably
request from time to time.
3.3 Other Actions :
a. In
addition to the foregoing, Borrower shall do anything further that
may be reasonably required by Lender to secure Lender and
effectuate the intentions and objects of this Agreement, including,
without limitation, the execution and delivery of security
agreements, contracts and any other documents required hereunder.
At Lender’s request, Borrower shall also immediately deliver
(with execution by Borrower of all necessary documents or forms to
reflect, implement or enforce the Liens described herein), or cause
to be delivered to Lender all items for which Lender must receive
possession to obtain a perfected security interest, including
without limitation, all Deposit Accounts and all notes, stock
powers, letters of credit, certificates and documents of title,
Chattel Paper, Warehouse Receipts, Instruments, and any other
similar instruments constituting Collateral.
b.
Lender is hereby authorized to file financing statements and
amendments to financing statements without Borrower’s
signature, in accordance with the UCC. Borrower hereby authorizes
Lender to file all such financing statements and amendments to
financing statements describing the Collateral in any filing office
as Lender, in its sole discretion may determine, including
financing statements listing “All Assets” in the
collateral description therein. Borrower agrees to comply with the
requests of Lender in order for Lender to have and maintain a valid
and perfected security interest in the Collateral.
3.4 Searches, Certificates
:
a.
Lender may, as Lender reasonably determines from time to time, at
Lender’s expense, obtain the following searches:
i. UCC
searches with the Secretary of State and local filing office of
each state where Borrower is organized, maintains its executive
office, a place of business, or assets; and
ii. judgment,
state and federal tax lien and corporate tax lien searches, in all
applicable filing offices of each state searched under subparagraph
(i) above.
3.5 Filing Security Agreement
: A carbon, photographic or other reproduction or other copy of
this Agreement is sufficient, as and may be filed in lieu of, a
financing statement.
3.6 Power of Attorney : Each
of Steven A. Kriegsman and Mitchell K. Fogelman, both executive
officers of Lender, is hereby irrevocably made, constituted and
appointed the true
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and
lawful attorney for Borrower (without requiring any of them to act
as such) with full power of substitution to do the following:
a.
during the continuance of an Event of Default, endorse the name of
Borrower upon any and all checks, drafts, money orders and other
instruments for the payment of monies that are payable to Borrower
and constitute collections on Borrower’s Accounts or proceeds
of other Collateral;
b.
execute and file in the name of Borrower any financing statements,
schedules, assignments, instruments, documents and statements that
Borrower is obligated to give Lender hereunder or is necessary to
perfect (or continue or evidence the perfection of such security
interest or Lien) Lender’s security interest or Lien in the
Collateral; and
c.
during the continuance of an Event of Default, do such other and
further acts and deeds in the name of Borrower that Lender may deem
necessary or desirable to enforce any Account or preserve or
protect any other Collateral.
SECTION IV. CLOSING AND CONDITIONS PRECEDENT TO INITIAL
ADVANCE
4.1 Closing : The Closing
under this Agreement is subject to the following conditions
precedent (all instruments, documents and agreements to be in form
and substance reasonably satisfactory to Lender and Lender’s
counsel), unless waived by the Lender:
a.
Borrower shall have delivered, or caused to be delivered to Lender
the following:
i. the
Merger Agreement and this Agreement, properly executed;
ii. each
of the other documents to be delivered by Borrower or any other
Person pursuant to this Agreement; and
iii. such
other documents reasonably required by Lender;
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