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EXHIBIT 10.7
CONVERTIBLE NOTE
January 7, 1999 Norcross, Georgia
For value received, Vaxcel, Inc., a Delaware corporation (the
"Borrower"), hereby promises to pay to CytRx Corporation, a Delaware corporation
(the "Lender"), the principal amount as shall have been advanced under this
Convertible Note ("the Note") and shall then be outstanding, together with
interest accrued upon such outstanding balances calculated in accordance with
this Note.
1. ▇▇▇▇▇▇ agrees to make loans (the "Loan") to the Borrower from time
to time in aggregate principal amounts not to exceed at any one time outstanding
$25,000 (the "Commitment"). ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ agree that the purpose of the
Loan is to provide such funds as necessary for payment of compensation to
▇▇▇▇▇▇▇▇'s President & CEO for the period January 1 to February 28, 1999.
2. Lender and Borrower agree that certain amounts currently owed to
Lender by Borrower for certain administrative services, facilities rental,
401(k) matching contributions, and miscellaneous expenses paid by Lender on
behalf of Borrower (eg. Group insurance premiums), as well as future amounts of
such nature, shall be added to the principal balance of this Note.
3. Interest shall accrue on the outstanding principal balance
hereunder, at a per annum rate of nine percent (9%) and shall be added to the
outstanding principal balance at the end of each month if not sooner paid.
Interest shall be calculated on the basis of a 365-day year for the actual
number of days elapsed.
4. The Borrower may prepay any Loan in whole at any time or in part
from time to time, without premium or penalty. All payments of principal,
interest, fees or other amounts payable hereunder shall be remitted to the
Lender at the address specified by the Lender from time to time by check or as
the Lender shall otherwise direct. Upon payment in full of the principal and
interest on this Note, the Lender will surrender to the Borrower this Note duly
marked canceled.
5. The aggregate outstanding principal balance of the Loan and accrued
interest outstanding thereon shall be due and payable on March 31, 1999, or such
other time as may be agreed to in writing by ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇.
6. The outstanding principal balance of the Loan and accrued interest
outstanding shall be fully collateralized by any proceeds received from the
sale, sublicense, or other
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disposition of any technology rights or other assets currently held by Borrower
or its affiliates, such rights and assets to include, but not be limited to,
certain technology rights granted to Borrower by Southern Research Institute,
certain technology rights granted to Borrower by ▇▇▇▇▇▇, and a $300,000 note due
to Borrower by Proclinical, Inc.
7. Lender has the right, at its option, to convert all or any portion
of the outstanding principal and accrued but unpaid interest payable under this
Note into that number of fully paid and non-assessable shares of common stock of
the Borrower ("Common Stock") obtained by dividing the outstanding principal
amount of this Note or portion thereof to be converted by the lower of (a)
$.03125 or (b) the average closing bid price of Borrower's common stock for the
5 days preceeding Lender's conversion notice, or if ▇▇▇▇▇▇▇▇'s common stock has
not traded during at least 3 of the 5 preceeding days, then the average price
shall be determined by reference to the last 3 days on which ▇▇▇▇▇▇▇▇'s common
stock did trade (the "Conversion Price"), upon surrender of this Note to the
Borrower accompanied by written notice of conversion duly executed and (if so
required by the Borrower) by instruments of transfer, in form satisfactory to
the Borrower, duly executed by the Lender or its duly authorized attorney.
8. No failure or delay on the part of the Lender in exercising any
right, power or remedy under this Note shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy under this Note. The rights and remedies provided under this Note are
cumulative and not exclusive of any remedies provided on by law.
9. No amendment, modification, termination or waiver of this Note or
any provision hereof nor any consent to any departure by the Borrower herefrom
shall be effective unless the same is in writing and signed by the Lender and
then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No notice to or demand on the
Borrower shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
10. THIS NOTE AND ALL RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF GEORGIA.
11. This Note shall bind and inure to the benefit of the Borrower and
the Lender and their respective successors and assigns, except the Borrower
shall not have the right to assign or otherwise transfer any of its rights or
any interest of it under this Note without the prior written consent of the
Lender.
12. Any provision of this Note which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remainder of this Note or the enforceability of such
provision in any other jurisdiction.
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13. All notices, requests, demands, directions, declarations and other
communications provided for in this Note shall, except as otherwise expressly
provided, be mailed by registered or certified mail, return receipt requested,
or telegraphed, telecopied, or delivered in hand to the applicable party at its
address specified from time to time. The foregoing shall be effective when
deposited in the mails, postage prepaid, addressed as aforesaid and shall
whenever sent by telegram or telecopied or delivered in hand be effective when
received. Any party may change its address by a communication in accordance
herewith.
IN WITNESS WHEREOF, the Borrower and the Lender have caused this Note
to be duly executed as of the day and year first above written.
VAXCEL, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
President & Chief Executive Officer
Accepted and agreed to by:
CYTRX CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President & Chief Executive Officer