Blueprint





 






 Exhibit 10.23



THIS
PROMISSORY EQUITY SECURITY AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES
LAWS OF APPLICABLE STATES.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENT. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL
RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER
OR RESALE IS IN COMPLIANCE WITH THE ACT AND ALL APPLICABLE STATE
SECURITIES LAWS.


8%
SENIOR CONVERTIBLE EQUITY SECURITY


	
 $100,000

	
 November
26, 2012







 


Subject
to the terms and conditions of this Convertible Equity Security,
for value received, Adgero
Biopharmaceuticals, Inc., a Delaware corporation (the
“Buyer”), hereby promises to pay to the order of Steven
J. Rychnovsky (the
“Seller’s
Designee”) on behalf of St. Cloud Investments, LLC
(the “Seller”), the
principal sum of One Hundred Thousand Dollars ($100,000) (the
“Principal
Amount”) in cash or equity at Buyer’s
discretion, together with interest thereon accruing on and from the
date hereof on the Balance at an annual rate equal to eight percent (8%). Interest shall
accrue daily and be calculated based on a 360-day year of twelve
30-day months, but in no event shall the rate of interest exceed
the maximum rate, if any, allowable under applicable law.
“Balance”
means, at the applicable time, the sum of all then outstanding
principal of this Convertible Equity Security and all then accrued
but unpaid interest.


This
senior Convertible Equity Security is issued by the Buyer pursuant
to that certain Asset Purchase Agreement entered into as of
November 26, 2012 by and between Buyer and Seller (the
“Purchase
Agreement”), and is subject to, and Buyer, Seller and
Seller’s Designee shall be bound by, all the terms,
conditions and provisions of the Asset Purchase
Agreement.


The
following is a statement of the rights of Seller’s Designee
and the terms and conditions to which this Convertible Equity
Security is subject and to which the Seller’s Designee, by
acceptance of this Convertible Equity Security,
agrees:


1. Payment. If this Convertible
Equity Security has not been previously converted (as provided in
Section 5 hereof), then the Principal Amount of this Convertible
Equity Security, all accrued and unpaid interest and all other
amounts accrued under this Convertible Equity Security shall, on
the Maturity Date, be payable in cash or equity at Buyer’s
discretion. “Maturity Date”
shall mean November 26, 2019. No interest shall be payable other
than as set forth in the preceding sentence. Unless the
indebtedness outstanding under this Convertible Equity Security is
converted in accordance with Section 5 hereof, all payments on
account of principal and interest shall be made in lawful money of
the United States of America at the principal office of the
Seller’s Designee, or such other place as the holder hereof
may from time to time designate in writing to the
Buyer.



 

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2. Prepayment. Buyer may prepay
this Convertible Equity Security at any time prior to the Payment
Equity Financing.


3. Priority. This Convertible
Equity Security shall be senior in all respects (including right of
payment) to all other indebtedness of the Buyer, now existing or
hereafter.


4. Amendments and Waivers; Resolutions of
Dispute; Notice. The amendment or waiver of any term of this
Convertible Equity Security, the resolution of any controversy or
claim arising out of or relating to this Convertible Equity
Security and the provision of notice shall be conducted pursuant to
the terms of the Purchase Agreement.


5. Conversion of Convertible Equity
Security upon a Payment Equity Financing.


(a) Conversion of Convertible Equity
Security upon a Payment Equity Financing. If the Buyer has
not paid the entire Balance within 5 days following the last
closing of the Payment Equity Financing (the “Payment Equity Financing
Closing”), then the entire Balance then outstanding
under this Convertible Equity Security shall be convertible into
that number of shares of the security sold in the Payment Equity
Financing as is equal to the Conversion Amount (as defined below)
divided by the Payment Equity Financing Purchase Price (as defined
below). Buyer shall deliver to Seller’s Designee notice of
the Payment Equity Financing prior to the Payment Equity Financing
Closing, notifying the Seller’s Designee of the conversion to
be effected, including specifying (i) the Conversion Amount
(calculated as of the Conversion Date), (ii) the Payment Equity
Financing Purchase Price and (iii) the anticipated date of the
Payment Equity Financing Closing.


(i) Payment Equity Financing
Defined. For purposes of this Convertible Equity Security,
the term Payment Equity Financing shall mean the consummation of
the combined total equity financing in excess of Five Million
Dollars ($5,000,000) including all financing consummated by either
the Buyer or the Buyer Licensee in each case occurring after the
date hereof and on or before the Maturity Date. “Buyer Licensee” means any
Person, Group of People or Entity to which the Buyer licenses or
transfers any intellectual property rights in the Acquired Assets
(as such term is defined in that certain Asset Purchase Agreement,
dated November 26, 2012, by and between the Buyer and Seller). In
the event of any conflicts or inconsistencies between this
definition and the language contained in the Asset Purchase
Agreement, the language in the Asset Purchase Agreement shall
prevail.


(ii) Payment
Equity Financing Purchase Price Defined. For purposes of
this Convertible Equity Security, the term Payment Equity Financing
Purchase Price shall mean an amount equal to (i) seventy percent (70%) times (ii) the per
share purchase price paid by those investors participating in that
investment round which case the five million dollar threshold of
the Payment Equity Financing to be met.



 

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(iii) Conversion
Amount Defined. For purposes of this Convertible Equity
Security, the term Conversion Amount shall mean the sum of all
unpaid principal and accrued interest outstanding under this
Convertible Equity Security as of the date of the Payment Equity
Financing.


(b) Termination of Rights. This
Convertible Equity Security shall terminate upon the termination of
the Asset Purchase Agreement or upon effective conversion or
repayment of the entire Balance of the Convertible Equity Security,
whether or not this Convertible Equity Security has been
surrendered to Buyer for cancellation. Prior to the Payment Equity
Financing, Buyer may terminate its obligation under this
Convertible Equity Security. In the event that Buyer initiates such
a termination prior to the Payment Equity Financing, Buyer shall
return all assets still in existence that were purchased in the
Asset Purchase Agreement.


(c) Delivery of Stock
Certificates; No Fractional Shares. Subject to Section 5(c) above,
as promptly as practicable after any conversion of this Convertible
Equity Security, Buyer at its expense will issue and deliver to
Seller’s Designee a certificate or certificates evidencing
the number of full equity securities as are issuable to Seller in
connection with a conversion under this Section 5. No fractional
shares of any of Buyer’s equity securities will be issued in
connection with any conversion hereunder. In lieu of fractional
shares which would otherwise be issuable, Buyer shall pay cash
equal to the product of such fraction multiplied by the price per
share of such other securities issuable to Seller’s Designee
upon such conversion.


6. Officers and Directors not
Liable. In no event shall any officer or director of the
Buyer be liable for any amounts due and payable pursuant to this
Convertible Equity Security.


7. Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Convertible Equity Security shall be
governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the
principles of conflict of laws thereof. All legal proceedings
concerning the interpretation, enforcement and defense of this
Convertible Equity Security (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced in the state and federal
courts sitting in the City of New York, Borough of Manhattan (the
“New York
Courts”). Each party hereto hereby irrevocably submits
to the exclusive jurisdiction of the New York Courts for the
adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein and
hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject
to the jurisdiction of such New York Courts, or such New York
Courts are improper or inconvenient venue for such proceeding. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS CONVERTIBLE
EQUITY SECURITY OR THE TRANSACTIONS CONTEMPLATED
HEREBY.


8. Severability. The invalidity or
unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.



 

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9. Headings; Interpretation. In
this Convertible Equity Security, (i) the meaning of defined terms
shall be equally applicable to both the singular and plural forms
of the terms defined; (ii) the captions and headings are used only
for convenience and are not to be considered in construing or
interpreting this Convertible Equity Security and (iii) the words
“including,” “includes” and
“include” shall be deemed to be followed by the words
“without limitation”. All references in this
Convertible Equity Security to sections, paragraphs, exhibits and
schedules shall, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this
reference. All references to dollars or “$” shall refer
to United States dollars or U.S. “$”.


10. Transfer of Rights. In the
event that Seller’s Designee is deceased or otherwise
incapacitated at the time of the Payment Equity Financing
Conversion, his rights under this Convertible Equity Security shall
be transferred to his estate or legal trustee as the case may
be.


 


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IN WITNESS WHEREOF, the undersigned has
caused this instrument to be executed by its duly authorized
officers as of the date Payment above written.


ADGERO
BIOPHARMACEUTICALS, INC.


 


By:
/S/Frank G.
Pilkiewicz


Name:
Frank G.
Pilkiewicz


Title:
President and CEO


 


On this
26 day of November 2012, before me, the undersigned Notary Public,
personally appeared Michael Khoury, proved to me
through satisfactory evidence of identification, which was/were
California DL, to
be the person whose name is signed on the lines above on behalf of
Buyer, and who swore or affirmed to me that the contents of the
document are truthful and accurate to the best of his/her knowledge
and belief. The above-indicated individual is duly authorized to
execute this document singly on behalf of Buyer and executed this
document of his/her own free will.



/S/Darren F. Haworth     
(Seal)


Signature
of Notary


 




My
Commission Expires: __10.9.14______


 



Acknowledged and agreed by Seller:


 



ST. CLOUD INVESTMENTS, LLC


 


By:
/S/ Michael
Khoury


Name:
Michael Khoury


Title:
Director


 



Acknowledged and agreed by Seller’s Designee:


 



Steven J. Rychnovsky


 


By:____________________________




 




 

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