1
EXHIBIT 10.17
SECURED LOAN AGREEMENT
THIS LOAN AGREEMENT is dated December 6, 1996 between CytRx
Corporation, a Delaware corporation ("CytRx"), and Zynaxis, Inc., a
Pennsylvania corporation ("Zynaxis").
Background
This Loan Agreement is being entered into simultaneously with and in
connection with the execution of the Agreement and Plan of Merger and
Contribution among CytRx Corporation, Vaxcel, Inc., Vaxcel Merger Subsidiary,
Inc. and Zynaxis, Inc. ("Merger Agreement") and the Transaction Documents
referred to therein. Unless otherwise defined herein, capitalized terms that
are not defined herein and that are defined in the Merger Agreement shall have
the meaning given such terms in the Merger Agreement.
NOW, THEREFORE, in consideration of the above and the mutual promises
herein contained, the parties agree as follows:
Terms
1. Amount of Loan. Subject to the terms and conditions of this
Agreement, CytRx will from time to time loan to Zynaxis, and Zynaxis may from
time to time borrow, repay and reborrow, up to an aggregate principal amount
outstanding at any one time of $2,000,000 (the "Loan"). The Loan will be
evidenced by the Senior Secured Note.
2. Advances. CytRx will advance the Loan as follows:
2.1 Initial Amount. Simultaneous with the execution hereof and of
the Senior Secured Note, CytRx has made an initial loan of $500,000.00, to be
applied in accordance with the attached schedules.
2.2 Fixed Amounts. At the times set forth in Schedule 2.2, CytRx
will loan to Zynaxis the amounts set forth in Schedule 2.2, to be applied in
accordance with Schedule 2.2.
2.3 Settlement Amounts. CytRx will loan to Zynaxis the amounts to
be paid by Zynaxis in accordance with the Liquidation Agreement (i) in
settlement of Liabilities (as defined in the Liquidation Agreement) and (ii) to
reimburse CytRx pursuant to Section 6 of the Liquidation Agreement.
2.4 Budgeted Amounts. CytRx will loan to Zynaxis on the first of
each month the aggregate budgeted amount set forth in Schedule 2.4, provided
that amounts loaned pursuant to this Section 2.4 will be reduced by an amount
equal to (i) any cash held by
2
Zynaxis at the time such loan is to be made minus (ii) the total of severance
payments that would be due employees of Maker if such employees were terminated
during the following month.
3. Term of Loan. CytRx's obligation to make the Loan will terminate on
the first to occur of (i) May 1, 1997, (ii) an Event of Default (as defined in
the Senior Secured Note) under the Senior Secured Note, (iii) the Closing under
the Merger Agreement, or (iv) termination of the Merger Agreement.
4. Conditions to Loan. CytRx's obligation to make the initial loan and
each additional loan shall be subject to the following conditions:
4.1 that the representations and warranties of Zynaxis in the
Merger Agreement and in the Loan Documents shall be true and correct as of the
date of such loan with the same force and effect as made on an as of such date
except to the extent that such representations and warranties expressly relate
solely to an earlier date (in which case such representations and warranties
shall have been true and correct on and as of such earlier date), and that the
Chief Executive Officer of Zynaxis shall have provided to CytRx a certificate
as to fulfillment of this condition in a form reasonably satisfactory to CytRx;
4.2 that Zynaxis shall be in compliance with the agreements made
by it herein, in the other Loan Documents and in Article 5 of the Merger
Agreement as of the date of such loan, and that the Chief Executive Officer of
Zynaxis shall have provided to CytRx a certificate as to fulfillment of this
condition in a form reasonably satisfactory to CytRx;
4.3 that n Event of Default (as defined in the Senior Secured
Note) shall have occurred and be continuing as of the date of such loan and
that the advance of the new loan will not result in a Default or Event of
Default, and that the Chief Executive Officer of Zynaxis shall have provided to
CytRx a certificate as to fulfillment of this condition in a form reasonably
satisfactory to CytRx;
4.4 that there is no pending or threatened suit, cause of action
or proceeding against Zynaxis that could reasonably be anticipated to have a
material adverse effect on Zynaxis or its operations, properties, business
prospects or condition, financial or otherwise, and that the Chief Executive
Officer of Zynaxis shall have provided to CytRx a certificate as to fulfillment
of this condition in a form reasonably satisfactory to CytRx;
4.5 that the use of proceeds of such extension of credit shall not
violate any law applicable to or binding upon either Zynaxis or CytRx; and
4.6 that after such loan the aggregate principal balance of all
loans outstanding hereunder shall not exceed Two Million Dollars ($2,000,000).
- 2 -
3
5. Use of Proceeds. Zynaxis will use the proceeds of the Loan only in
accordance with the uses set forth in the Schedules hereto. Zynaxis will use
its best efforts to operate within the budget set forth in Schedule 2.4.
6. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Georgia, without giving effect to
conflicts of laws.
IN WITNESS WHEREOF, the undersigned has caused this Loan Agreement to
be duly executed and delivered under seal as of the day and year first above
written.
CYTRX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
Chairman, President and CEO
ZYNAXIS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxxx
Chairman, President and CEO
- 3 -
