Exhibit 10.1
LINE OF CREDIT AND SECURITY AGREEMENT
This Agreement (this "Agreement") is made effective as of July 10, 2000
(the "Effective Date"), by and between those persons executing this Agreement as
lenders ("Lenders") and Hybridon, Inc. ("Borrower"), a Delaware corporation with
its principal place of business at 155 Fortune Boulevard, Milford,
Massachusetts.
BACKGROUND
This Agreement is made in light of the following Background:
A. As of December 31, 1996, Borrower entered into a non-revolving term loan
with Silicon Valley Bank which was evidenced, in part, by that certain Loan
and Security Agreement dated as of December 31, 1996 (the "Subordinate Loan
Agreement").
B. On or about November 20, 1998, Forum Capital Markets, LLC ("Forum"),
Delaware State Employees Retirement Fund, Declaration of Trust for the
Defined Benefit Plans of ICI American Holdings Inc., Declaration of Trust
for the Defined Benefit Plans of Zeneca Holdings Inc., The J.W. McConnell
Family Foundation and General Motors Employees Domestic Group Trust (said
trusts, foundation and fund being referred to collectively as the "Pecks
Parties"; Forum and the Pecks Parties are collectively referred to as the
"Subordinate Lenders") purchased Silicon Valley Bank's interest in the
credit facility evidenced by the Subordinate Loan Agreement.
C. On or about December 13, 1999, various persons loaned the principal amount
of $7.6 million to Borrower, which loans were evidenced by Borrower's 8%
convertible promissory notes, due November 30, 2002 (the "1999 Notes").
D. In connection with the issuance of the 1999 Notes, Borrower, Subordinate
Lenders and those persons who from time to time hold the 1999 Notes
(collectively, the "Senior Lenders") entered into a Subordination and
Intercreditor Agreement (the "Intercreditor Agreement"), pursuant to which
the Subordinate Lenders agreed to subordinate the obligations of Borrower
under the Subordinate Loan Agreement and the collateral securing such
obligations to the Borrower's obligations under the 1999 Notes.
E. Borrower has entered into negotiations with Boston Biosystems, Inc.
("BBI"), to sell certain of Borrower's assets to BBI upon terms and under
conditions set forth in an Asset Purchase Agreement (the "BBI Agreement")
between Borrower and BBI (the "BBI Transaction").
F. In order to fund its operations pending the closing of the BBI Transaction,
Borrower may require additional funds. Lenders are collectively willing to
enter into a line of credit arrangement with Borrower, pursuant to which
Lenders would commit to advance such funds, in an aggregate amount not to
exceed Two Million and no/100 Dollars, from time to
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time upon Borrower's request, on the terms and subject to the conditions
set forth in this Agreement. Each Lender, by execution of this Agreement,
in confirming his, her or its willingness to advance a proportionate amount
of such funds, in an amount not to exceed the individual maximum indicated
below such Lender's name on the signature page to this Agreement (the
Lender's "Commitment").
AGREEMENT
NOW, THEREFORE, in consideration of the promises set forth herein,
Borrower and Lenders severally but not jointly hereby agree as follows:
1. DEFINITIONS. In addition to the definitions set forth elsewhere in this
Agreement, the following terms shall have the following meanings, giving effect
to any numerical differences:
1.1. "Borrower's Liabilities": All obligations and liabilities of
Borrower to Lenders (including without limitation all debts, claims, and
indebtedness) whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing, due or
payable, however evidenced, created, incurred, acquired or owing and however
arising, whether under the Loan Documents or operation of law or otherwise.
1.2. "Charges": All national, Federal, state, county, city, municipal
and/or other governmental (or any instrumentality, division, agency, body or
department thereof, including without limitation the Pension Benefit Guaranty
Corporation) taxes, levies, assessments, charges, Liens, claims or encumbrances
upon and/or relating to the Collateral, Borrower's Liabilities, Borrower's
business, Borrower's ownership and/or use of any of its assets, Borrower's
income and/or gross receipts and/or Borrower's ownership and/or use of any of
its material assets.
1.3. "Collateral" shall have the meaning ascribed in Section 4.1,
below.
1.4. "Common Stock" shall mean the Borrower's Common Stock, $0.001 par
value per share.
1.5. "Conversion Price" shall equal $1.08 per Share.
1.6. "Indebtedness": With respect to any Person, at a particular time:
(a) indebtedness for borrowed money or for the deferred purchase price of
property or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise or any commitment by which such
Person assures a creditor against loss; (b) obligations under leases which shall
have been or should be, in accordance with generally accepted accounting
principals, recorded as capital leases in respect of which obligations such
Person is liable, contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person assures a creditor against loss;
and (c) any obligations and liabilities of such Person with respect to unfunded
vested benefits under any "employee benefit plan" or with respect to withdrawal
liabilities to a "multiemployer plan," as such terms are defined under ERISA.
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1.7. "Lien": With respect to any asset, any mortgage, pledge, Charge,
hypothecation, judgment lien or similar legal process, title retention lien or
other lien or security interest or encumbrance of any kind in respect of such
asset. For the purposes of this Agreement, a Person shall be deemed to own,
subject to a Lien, any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
1.8. "Lender's Percentage" shall, as to any Lender equal that
percentage which Lender's Commitment bears to the total commitments of
$2,000,000.
1.9. "Lenders' Representative" shall initially mean Youssef El-Zein (a
representative designated by Pillar Investments Ltd.) or, from time to time, a
successor representative chosen by the holders of a majority (measured by dollar
amount) of the Borrowers Obligations hereunder, outstanding from time to time.
1.10. "Loan Document": The Notes, this Agreement and each and every
other agreement, document, assignment, certificate, statement, instrument or
other written matter, now or at any time hereafter delivered to any Lender to
evidence or secure liabilities and/or obligations of Borrower to Lenders,
whether now or hereafter existing, arising or created, whether executed by or on
behalf of Borrower or any other Person, together with all amendments,
modifications, supplements, restatements, supplements, extensions and
restatements or replacements thereof or thereto.
1.11. "Person": Any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, limited liability
company, corporation, institution, entity, party or government (whether
national, Federal, state, county, city, municipal or otherwise, including
without limitation any instrumentality, division, agency, body or department
thereof).
1.12. "Subsidiary": With respect to any Person, any corporation of
which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, owned
by such Person.
1.13. "Unmatured Default": Any event which with the passage of time,
the giving of notice or both would be an Event of Default hereunder or under any
other Loan Document.
1.14. All financial terms used herein, unless otherwise defined herein,
shall have the meaning ascribed to such term in accordance with generally
accepted accounting terms.
2. LOANS.
2.1. Amount. Lenders agree severally but not jointly, on the terms and
conditions of this Agreement, to make loans to Borrower in an aggregate
principal amount at any one time outstanding up to but not exceeding $2,000,000
(the "Loans") and in the individual maximum
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amounts indicated on their respective signature pages (which names and amounts
shall be aggregated onto Schedule 2.1). The Loans made by Lenders to Borrower
pursuant to this Agreement may or may not (at the sole and absolute discretion
of Lenders' Representative) be evidenced by notes or other instruments issued or
made by Borrower to Lender (the "Notes"). Subject to the provisions hereof,
Borrower may borrow the Loans at any time or from time to time between the
Effective Date and September 30, 2000, subject to compliance with the
requirements of this Section 2. The outstanding principal amount of the Loans
shall bear interest at a rate equal to eight percent (8%) per annum computed for
the actual number of days elapsed on the basis of a 360-day year. In computing
interest on the Loans, (i) the date of funding shall be included and (ii) the
date of payment shall be excluded.
2.2. Manner of Borrowing. Borrower shall give Lenders' Representative
written, telegraphic or facsimile notice (the "Draw Notice") executed by a
Designated Person (as defined below), specifying (a) the amount to be disbursed,
which amount shall not be greater, at any one time, than the difference between
$2,000,000, minus the then outstanding principal amount of all Loans theretofore
made hereunder, (b) the date upon which Borrower request such amounts be
disbursed to it (which date shall be not less than seven (7) calendar days after
the date of delivery of the Draw Notice) and (c) Borrower's wire transfer
instructions. Lenders' Representative shall immediately forward the Draw Notice
to each Lender. Within two business days following receipt by each Lender of a
Draw Notice in compliance with this Section 2, each such Lender shall disburse
the Lender's Percentage of the requested funds to an account specified by
Lenders' Representative. Lenders' Representative, in turn, shall upon receipt of
funds from all Lenders, remit the funds to Borrower in care of the account
specified in the Draw Notice. Prior to or concurrently with the execution
hereof, Borrower shall certify to Lender the officer or officers of Borrower who
are authorized to request advances (each a "Designated Person"), together with
true signatures of such officer or officers, and Lenders' Representative may
conclusively rely on such certification until it shall receive notice in writing
to the contrary.
2.3. Term; Conversion. Lender's obligation to make Loans to Borrower
hereunder shall terminate on the earlier of (i) September 30, 2000 and (ii) the
date on which the BBI Transaction is consummated (the "Maturity Date"). On the
Maturity Date, each Lender may elect in its respective sole discretion either to
(a) require Borrower to convert the unpaid principal balance, plus all interest
earned, under the Loans into shares of Borrower's Common Stock at the Conversion
Price; provided, that in the event that a fractional interest in a share of
Borrower's Common Stock would be deliverable to Lender upon any such conversion
of the Fixed Loan, that number of shares of Common Stock deliverable to Lender
shall be rounded to the nearest whole or (b) demand repayment of all principal
and interest on the Loans.
2.4. Use of Proceeds. Borrower shall use the Loan Proceeds to fund its
working capital needs.
3. CONDITIONS OF LENDING.
3.1. Conditions Precedent to Initial Advance. Prior to or
contemporaneously with the making of the initial advance of funds, Lender's
obligation to make the Loan is subject to the satisfaction of the following
conditions precedent:
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(a) Fees and Expenses. Borrower shall have paid all fees owed
to Lenders and Lenders' Representative, including, but not limited to,
an arrangement fee of $20,000 due to Lenders' Representative, and
reimbursed Lender for all expenses due and payable hereunder on or
before the date hereof including, but not limited to, reasonable legal
fees not to exceed $10,000;
(b) Issuance of Warrants. Borrower shall have issued to
Lenders' Representative warrants to purchase up to 500,000 shares of
Borrower's Common Stock exercisable at the Conversion Price. In
addition, Borrower shall have issued to the various Lenders, in
proportion to their respective Lender's Percentages, warrants to
purchase up to an aggregate of 1,000,000 shares of Borrower's Common
Stock, exercisable at the Conversion Price. All such warrants shall be
exercisable for a three-year period, running from the Maturity Date.
(c) Documents. Lender shall have received the Loan Documents,
each in form and substance satisfactory to Lender, and all of the
transactions contemplated by each such document shall have been
consummated or each condition contemplated by each such document shall
have been satisfied.
(d) Financing Statements. The applicable Form UCC-1 and UCC-2
financing statements related to the Collateral shall have been executed
and delivered to Lenders' Representative for filing in all
jurisdictions that Lenders' Representative deems necessary or
advisable.
(e) Internal Approvals. Certified copies of resolutions of
Borrower's Board of Directors approving the execution and delivery of
and the consummation of the transactions contemplated by the Loan
Documents and all other documents or instruments to be executed and
delivered in conjunction herewith and therewith by Borrower.
(f) Amendment of Intercreditor Agreement. Borrower, the Senior
Lenders and the Subordinate Lenders shall have executed an amendment to
the Intercreditor Agreement, providing that Borrower's Obligations
shall have a priority of repayment and a security interest in the
Collateral, that are in each case pari passu with those of the Senior
Lenders, and Lenders hereunder shall be added as parties to the
Intercreditor Agreement.
(g) BBI Arrangements. Borrower and BBI shall have entered into
a final and binding BBI Agreement.
(h) Other Documents. Such other documents as Lender may
reasonably request, including Registration Rights Agreements covering
the shares of Common stock issuable upon conversion of the Notes or
exercise of the Warrants..
3.2. Additional Conditions. The obligation of Lender to make each
advance of a Loan hereunder is subject to the following conditions precedent:
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(a) no Event of Default or Unmatured Default shall have
occurred and be continuing;
(b) all representations and warranties of Borrower set forth
herein, or in any other Loan Document shall be true on and as of the
date of the making of such Loan with the same force and effect as if
such representation or warranty was made on and as of such date;
(c) Borrower shall have duly performed and complied with all
applicable agreements, covenants and conditions hereunder;
(d) no change in the business condition or operations, or
results of operations, performance, properties or prospects, financial
or otherwise, of Borrower shall have occurred which is deemed, in the
reasonable discretion of Lenders' Representative, to have a material
adverse effect on Borrower;
(e) no litigation or proceeding shall be outstanding or have
been instituted or threatened which Lenders' Representative determines
to be material against Borrower or any of Borrower's assets; and
(f) the BBI Agreement shall remain in full force and effect
and shall not have been canceled or terminated and the Buyer under the
BBI Agreement shall not have overtly asserted that any condition to
Buyer's obligation to close, as set forth in Section 7(a) of the BBI
Agreement and not waived by Buyer, shall not have been satisfied.
4. COLLATERAL.
4.1. Grant of Security Interest. To secure the prompt payment to
Lenders of Borrower's Liabilities and the prompt, full and faithful performance
by Borrower of all of the provisions to be kept, observed or performed by
Borrower under the Loan Documents, Borrower grants to Lenders' Representative,
as representative of all Lenders hereunder, a security interest in and to, and
collaterally assigns to Lender, all of the Collateral (as that term is defined
in the Subordinate Loan Agreement), on the terms and subject to the conditions
set forth in the Subordinate Loan Agreement, as amended. In addition to the
Collateral as specified in the Subordinate Loan Agreement, the term "Collateral"
shall include all rights of Borrower as "Seller" under the BBI Agreement,
including a right to enforce Borrower's rights against BBI, in the event of a
default by BBI in its purchase obligations. Borrower shall make appropriate
entries upon its financial statements and its books and records disclosing
Lender's security interest in the Collateral.
4.2. Perfection of Security Interest. Borrower shall execute and
deliver to Lenders' Representative, at the request of Lenders' Representative,
all agreements, instruments and documents that Lenders' Representative
reasonably may request, in form and substance acceptable to Lender, to perfect
and maintain perfected Lender's security interest in the Collateral
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and to consummate the transactions contemplated in or by the Loan Documents.
Borrower agrees that a carbon, photographic or photostatic copy, or other
reproduction, of this Agreement or of any financing statement, shall be
sufficient as a financing statement.
4.3. Inspection. Lenders' Representative shall have the right, at any
time during Borrower's usual business hours, to inspect the Collateral and all
related records (and the premises upon which it is located) and to verify the
amount and condition of, or any other matter relating to, the Collateral.
4.4. Priority. Borrower warrants and represents to and covenants with
Lenders that Lenders' security interest in the Collateral is now and at all
times hereafter, until Borrower's Liabilities have been indefeasibly paid and
performed in full, shall be perfected and have a first priority pari passu with
the Senior Lenders.
4.5. Location of Collateral. The office and/or locations where Borrower
keeps the Collateral are specified in Exhibit 4.4 hereto and Borrower shall not
remove such Collateral from such locations and shall not keep any of such
Collateral at any other office or location unless Borrower gives Lenders'
Representative written notice thereof prior thereto and the same is within the
continental United States of America. Borrower, by written notice delivered to
Lenders' Representative prior thereto, shall advise Lenders of Borrower's
opening of any new office or place of business or its closing of any existing
office or place of business.
4.6. Proceeds of Collateral. At the request of Lenders' Representative,
during the pendency of an Event of Default, and subject to the terms and
conditions of the Intercreditor Agreement, Borrower shall receive, as the sole
and exclusive property of Lenders and as trustee for Lenders, all monies,
checks, notes, drafts and all other payment for and/or proceeds of Collateral
which come into the possession or under the control of Borrower and immediately
upon receipt thereof, Borrower shall remit the same (or cause the same to be
remitted), in kind, to Lenders or at Lenders' Representative's direction.
4.7. Event of Default. Upon demand or an Event of Default or any
Unmatured Default, Lenders' Representative may, subject to the terms and
conditions of the Intercreditor Agreement, take control of, in any manner, and
may endorse Borrower's name to any of the items of payment of proceeds described
in Paragraph 4.6 above and, pursuant to the provisions of this Agreement,
Lenders shall apply the same to and on account of Borrower's Liabilities.
5. COVENANTS. At all times during the term hereof, Borrower agrees
that, unless Lenders' Representative shall otherwise consent in writing:
5.1. Affirmative Covenants.
(a) Insurance.
(i) Borrower will at all times maintain or cause to be
maintained on Borrower's tangible assets, insurance against such risks
ordinarily insured against by other owners or users of such properties
in similar businesses similarly situated
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and in any event the following: (1) insurance covering Borrower's
tangible assets in the event of fire, lightning, windstorm, vandalism,
malicious mischief and all other risks normally covered by "Special
Perils" coverage policies in an amount, subject to commercially
reasonable deductibles, equal to 100% of the replacement value thereof;
(2) comprehensive general public liability insurance in such minimum
combined single limit amount as Lenders' Representative shall require,
in its reasonable discretion, subject to commercially reasonable
deductibles; and (3) Worker's Compensation and employer's liability
insurance covering Borrower's employees in such amounts as is required
by law.
(ii) Upon the request of Lenders' Representative, Borrower
shall deliver to Lenders' Representative a certified copy of each
policy of insurance and evidence of payment of all premiums therefor.
Lenders shall be named as an "additional named insured" on all policies
of liability insurance. Such endorsement shall provide that the
insurance companies will give Lenders' Representative prior notice
before any such policy shall be materially modified or canceled and
that no act or default of Borrower or any other Person (other than
Lenders' Representative) shall affect the right of Lenders to recover
under such policy in case of loss or damage.
(b) Payment of Charges and Debts. Borrower shall pay when due all
Indebtedness and all Charges at or before maturity or before the same
becomes delinquent; provided that Borrower shall not be required to pay
any Indebtedness or Charges, on the conditions that (i) Borrower, in
good faith, shall be contesting the same in an appropriate proceeding,
(ii) enforcement thereof against any assets of Borrower shall be
stayed; and (iii) appropriate reserves therefor shall have been
established on the records of Borrower in accordance with generally
accepted accounting principles.
5.2. Negative Covenants.
(a) Limitations on Indebtedness. Borrower shall not, without
the prior written consent of Lenders' Representative, incur
Indebtedness (including guarantying or otherwise becoming liable with
respect to the obligations of any other Person or any agreement to
maintain the net worth of any other Person) except for: (i)
Indebtedness incurred under this Agreement, (ii) Indebtedness, existing
on the date hereof, disclosed to Lenders on the Financial Statements,
and (iii) obligations or liabilities created or arising under any lease
or trade payable incurred or arising in the ordinary course of
business.
(b) Sale; Liens. Until Borrower's Liabilities have been
indefeasibly paid and performed in full, Borrower shall not grant,
permit or suffer any Lien upon any of Borrower's assets to arise after
the date hereof, except Liens in the ordinary course of business.
Borrower shall not sell, assign, transfer or convey all or
substantially all of its assets, except pursuant to the BBI
Transaction.
(c) Attachment; Receivers. Borrower shall not permit or
suffer: (i) any levy, attachment
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or restraint to be made affecting any of its assets which such levy,
attachment or restraint has not been released within a reasonable
period of time, or (ii) any receiver, trustee or assignee for the
benefit of creditors, or any other custodian to be appointed to take
possession of all or any of Borrower's assets.
(d) Merger; Change Capital Structure. Except with respect to
the BBI Transaction or with the prior written consent of the Lenders'
Representative, Borrower shall not: (i) make any material change in
Borrower's capital structure or in any of its business objectives,
purposes and operations which might in any way adversely affect the
repayment of the Loan, or (ii), without prior notice to Lender, change
its corporate name.
(e) Distributions; Borrower's Stock. If an Event of Default or
an Unmatured Default exists or would be created thereby, Borrower shall
not declare or pay dividends upon any of Borrower's stock or redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of
Borrower's stock or other evidence of ownership interest or make any
distributions or transfers of Borrower's property or assets in respect
of its stock to any Persons. Notwithstanding the prior sentence,
Borrower shall be permitted to make interest payments on outstanding
debt instruments through the issuance of additional debt or equity
securities, and to cancel securities outstanding as of the Effective
Date which are later tendered to the Borrower for conversion.
6. REPRESENTATIONS AND WARRANTIES OF BORROWER.
6.1. General Representations. Borrower represents, covenants and
warrants as follows:
(a) Organization. Borrower is duly organized and existing as a
corporation in good standing under the laws of the State of Delaware
and is qualified to do business and is in good standing in each other
state where the nature and extent of the business transacted by it or
the ownership of its assets makes such qualification necessary.
Borrower has no Subsidiaries or ERISA Affiliates.
(b) Corporate Authority; Due Diligence. The execution,
delivery and performance by Borrower of this Agreement and each of the
other Loan Documents are: (i) within Borrower's corporate powers; (ii)
have been duly authorized by all necessary corporate action of
Borrower; (iii) do not contravene (1) the Certificate of Incorporation
or by-laws of Borrower or (2) any law or contractual restriction
binding on or affecting Borrower; and (iv) do not result in or require
the creation of any Lien upon or with respect to any of its properties
(other than the Liens contemplated by this Agreement and the other Loan
Documents). No authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by Borrower
of this Agreement and the other Loan Documents to which Borrower is a
party.
(c) Binding Obligations. This Agreement and the other Loan
Documents to which Borrower is a party are legal, valid and binding
obligations of Borrower, and are enforceable against Borrower, in
accordance with their respective terms, except as such
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enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or limiting
creditors' rights or equitable principles generally.
(d) Litigation. There is no pending action or proceeding
before any court, governmental agency or arbitrator against or directly
involving Borrower and, to the best of Borrower's knowledge, there is
no threatened action or proceeding affecting Borrower or any of its
assets before any court, governmental agency or arbitrator (i) which,
in any case, may materially and adversely affect the financial
condition or operations of Borrower, (ii) which seeks to restrain or
would otherwise have a material adverse effect on the transactions
contemplated herein, or (iii) which would affect the validity or
enforceability of this Agreement or the other Loan Documents.
(e) Title; Liens. Borrower has good, indefeasible and
merchantable title to and ownership of the Collateral. None of the
Collateral is subject to any Lien, except for (i) Liens arising under
the Subordinate Loan Agreement and the 1999 Notes, (ii) Liens arising
in the ordinary course of business and (iii) Liens reflected on the
Financial Statements delivered by Borrower to Lenders prior to the date
of the initial funding of the Loan.
(f) Business Purpose; Investment Company. Borrower shall use
the proceeds of all loans solely for business purposes and consistently
with all applicable laws and statutes. Borrower is not an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended. Borrower
is not engaged principally, or as one of Borrower's important
activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System), and will not
use the proceeds of any Loan hereunder so as to violate Regulation U as
it may be amended or interpreted from time to time by the Board of
Governors of the Federal Reserve System.
(g) Tax Returns. Borrower has filed or caused to be filed all
Federal, state and local tax reports and returns which are required to
be filed, and has paid or caused to be paid all taxes as shown on said
returns or which are due or on any assessment received by it, to the
extent that such taxes have become due.
(h) Financial Condition. The balance sheets and statements of
income and retained earnings of Borrower for the year ended December
31, 1999 and for the period ended March 31, 2000 (collectively, the
"Financial Statements"), are complete and correct and fairly represent
the financial condition of Borrower as at the dates of said financial
statements and the results of its operations for the periods ending on
said dates. Borrower has previously furnished Lenders' Representative
with copies of the Financial Statements. Borrower has no material
contingent obligations, liabilities for taxes, long-term leases, or
unusual forward or long-term commitments not disclosed by, or reserved
against in Financial Statements or the notes thereto; and at the
present time there are no material unrealized or anticipated losses
from any unfavorable commitments not disclosed by, or reserved against
in said the Financial Statements or the notes thereto. The
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Financial Statements were prepared in accordance with generally
accepted accounting principles consistently applied throughout the
period involved. Since the date of the latest of such Financial
Statements, there has been no material adverse change in the financial
condition of Borrower from that set forth in the Financial Statements
as at that date.
(i) Default in Other Agreements. Borrower is not in default
(other than defaults which have been waived in writing, as listed on
Schedule 6.1 hereof) in the payment or performance of any of its
obligations or in the performance of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which it is a
party or by which it or any of its assets may be bound, which default
would have a material and adverse effect on the business, operations,
assets or condition, financial or otherwise, of Borrower, either
individually or taken as a whole. Borrower is not in default under any
order, award or decree of any court, arbitrator, or governmental
authority binding upon or affecting it or by which any of its assets
may be bound or affected which default would have a material adverse
effect on the business, operations, assets or condition, financial or
otherwise, of Borrower, either individually or taken as a whole, and no
such order, award or decree adversely affects the ability of Borrower
to carry on its business as currently conducted or the ability of
Borrower to perform its obligations under this Agreement and the other
Loan Documents to which it is a party.
(j) Business Prospects. There is no fact known to Borrower
which materially adversely affects or in the future may (so far as
Borrower can now foresee) materially adversely affect the business,
property, assets or financial condition of Borrower which has not been
set forth in this Agreement or in the other Loan Documents, prior to
the date hereof in connection with the transactions contemplated
hereby.
(k) Licenses. Borrower possesses adequate licenses, patents,
patent applications, copyrights, service marks, trademarks and trade
names to conduct its business as heretofore conducted and as intended
to be hereafter conducted by it and all such items are owned by or
licensed to Borrower free and clear of conflicting claims or uses of
any other Person, except where the failure to possess or own such
licenses, patents, patent applications, copyrights, service marks and
trademarks would not have a material adverse effect on the business of
Borrower.
6.2. Compliance with ERISA. Neither Borrower, nor any member of its
controlled group (as defined under Section 414 of the Internal Revenue Code),
has any obligations with respect to any Employee Benefit Plan, as defined under
Section 3(3) of ERISA. Borrower and its controlled group (a) are in compliance
with ERISA in all material respects, (b) have paid or accrued all contributions
owed pursuant to the terms of each applicable plan, (c) neither participate in
nor sponsor any Employee Benefit Plan with an actuarial present value of accrued
plan benefits, on a termination basis, that exceeds the net assets available for
such benefits, as determined using the actuarial assumptions set forth in the
actuarial reports for each such plan's most recently completed plan year, and
(d) offer no welfare benefit plans with accrued unfunded liabilities to any of
its retirees. Borrower and its controlled group agree to (a) keep in full force
and effect any and all Employee Benefit Plans that are presently in existence or
may, from time
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to time, come into existence, unless such plans can be terminated without
material liability to Borrower, (b) make contributions to all Employee Benefit
Plans in a timely manner and in a sufficient amount to comply with the
requirements of ERISA, and (c) comply with all material requirements of ERISA so
as to avoid any event that would have a material adverse effect on Borrower.
6.3. Solvency. Borrower has capital sufficient to carry on its business
and transactions and all businesses and transactions in which it is about to
engage and is able to pay its debts as they mature and Borrower owns property
the fair saleable value of which is greater than the amount required to pay
Borrower's Liabilities. No transfer of property is being made and no
Indebtedness is being incurred in connection with the transactions contemplated
by this Agreement with the intent to hinder, delay or defraud either present or
future creditors of Borrower.
6.4. Compliance with Laws and Regulations. The execution and delivery
by Borrower of this Agreement and the other Loan Documents and the performance
of Borrower's obligations hereunder and thereunder are not in contravention of
any law or laws. Borrower is and, at all times during the term hereof shall be,
in substantial compliance with all laws, orders, regulations and ordinances of
all Federal, foreign, state and local governmental authorities relating to its
business, operations and assets and no failure to fully comply shall,
individually or in the aggregate, have a material adverse effect on Borrower's
business, operations, condition (financial or otherwise) or prospects.
6.5. Survival. The foregoing representations, covenants and warranties
of Borrower shall be continuing and shall survive the execution and delivery of
this Agreement and the other Loan Documents and shall be true and correct at all
times prior to the payment in full of all indebtedness under this Agreements and
other Loan Documents. By submitting to Bank any request for an advance, Borrower
shall be deemed to have restated each and every representation and warranty as
of the date of such request. Borrower hereby affirmatively covenants to take all
actions or to avoid taking any action which would render any representation or
warranty untrue or inaccurate at any time during the term hereof.
7. DEFAULT; REMEDIES.
7.1. Events of Default. Any one or more of the following events is an
"Event of Default" under this Agreement, and the term "Event of Default,"
wherever used herein, means any one of the following events:
(a) if Borrower shall fail to pay any payment of principal,
interest or any other amount due to Lenders under the Notes or any
other Loan Document within ten (10) days of the date due and payable;
or if any representation or warranty made by Borrower herein or in any
other Loan Document shall prove at any time to be, in any material
respect, incorrect or misleading as of the date made; or;
(b) if Borrower breaches the covenants set forth in Sections
5.2 or if Borrower shall default in the performance of any other
covenant hereunder (not constituting an
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Event of Default under any other clause of this Section 7) and such
default shall continue unremedied for a period of thirty (30) days
after Lenders' Representative shall have delivered written notice
thereof to Borrower;
(c) any event of default shall have occurred under the terms
of the Notes or any other Loan Document (which event is not an Event of
Default under any other provision of this Section 7.1) which is not
cured within the time period provided therefor, if any;
(d) if a petition under any section or chapter of the
Bankruptcy Reform Act of 1978, as amended, or any similar law or
regulation shall be filed by Borrower or if Borrower shall make an
assignment for the benefit of creditors or if any case or proceeding is
filed by Borrower for dissolution or liquidation or if Borrower is
enjoined, restrained or in any way prevented by court order from
conducting all or any material part of its business affairs or if a
petition under any section or chapter of the Bankruptcy Reform Act of
1978, as amended, or any similar law or regulation is filed against
Borrower or if any case or proceeding is filed against Borrower for
dissolution or liquidation and such injunction, restraint or petition
is not dismissed or stayed within thirty (30) days after the entry or
filing thereof;
(e) if an application is made by any Person other than
Borrower for the appointment of a receiver, trustee, or custodian for
any portion of Borrower's assets and the same is not dismissed or
stayed within thirty (30) days after the application therefor; or
(f) Lenders' Representative shall have reason to believe that
the prospect of payment of the Loans or the performance of any of
Borrower's obligations under this or any other agreement with any of
the Lenders is impaired.
7.2. Remedies. Upon the occurrence of an Event of Default and during
the continuation thereof, Lender, in its sole and absolute discretion, may: (a)
declare all of Borrower's Liabilities immediately due and payable, terminate all
commitments hereunder and declare all liabilities under the other Loan Documents
immediately due and payable; and (b) exercise any and all rights and remedies
under the other Loan Documents, at law or at equity, provided however that any
such actions shall only be taken in strict conformity with the terms and
conditions of the Intercreditor Agreement. Lenders' failure at any time or times
hereafter to require strict performance by Borrower of any provision of this
Agreement shall not waive, affect or diminish any right to Lenders thereafter to
demand strict compliance and performance therewith.
8. GENERAL.
8.1. Designation of Lenders' Representative as Agent. Each Lender, by
his, her or its execution of this Agreement, hereby irrevocably designates the
Lenders' Representative (including any duly chosen successor Lenders'
Representative) to act as agent and representative of such Lender, with respect
to this Agreement and as specified in the other Operative
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Documents. Each Lender hereby irrevocably authorizes the Lenders' Representative
to take such action on its behalf under the provisions of this Agreement and the
other Operative Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to, or required of, the
Lenders' Representative by the terms hereof or thereof and such other powers as
are reasonably incidental thereto. Each Lender, on behalf of itself and future
holders of the Notes issued to such Lender, hereby authorizes and directs the
Lenders' Representative, from time to time in the Lenders' Representative's
discretion to take any action and promptly to execute and deliver on its behalf
any document or instrument that the Company may reasonably request to effect,
confirm or evidence the provisions of this Agreement.
8.2. Notices. Any notice, consent, waiver or other notification
required or permitted to be given under this Agreement shall be in writing and
shall be personally delivered or mailed, first-class postage prepaid, or sent by
recognized overnight courier express mail service or by facsimile transmission
(confirmed electronically or in writing). A written notice shall be deemed to
have been given to the recipient party on the earlier of: (a) the date it shall
be delivered to the address required hereunder; (b) the date delivery shall have
been refused at the address required hereunder; and (c) with respect to notices
sent by mail, the date as of which the postal service shall have indicated such
notice to be undeliverable at the address required hereunder. Any and all
notices shall be mailed to the following addresses:
If to Lenders:
c/o Pillar Investments Ltd., as Representative
28 Avenue de Messine
Paris, FRANCE 75008
Attn: Youssef El-Zein
Fax: 011 331 44 136 464
With a Copy to:
Sachnoff & Weaver, Ltd.
30 South Wacker Drive,
29th Floor
Chicago, Illinois 60606-7484
Attention: Lance Rodgers, Esq.
Fax: (312) 207-6400
If to Borrower:
Hybridon, Inc.
155 Fortune Boulevard
Milford, Massachusetts
Attention: Robert G. Andersen
Fax: 508/482-7692
With a Copy to:
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Holland & Knight
One Beacon Street
Boston, MA
Attention: James Pollock, Esq.
Fax: (617) 720-0325
or at such other address or addresses as the party addressed may from time to
time designate in writing by similar means. Any such notice shall be deemed
given when actually received by the party to whom notice is intended to be given
or actually delivered at the address of the party as shown above.
8.3. Amendments, Changes, and Modifications. This Agreement may not be
amended, changed, modified, altered or terminated without the written consent of
Lenders' Representative.
8.4. Indemnification. Borrower shall indemnify, defend and hold Lenders
harmless from and against any and all losses, costs, liabilities, damages and
expenses (including attorney's fees) of every kind, nature and description
resulting or arising from: (a) the breach of any material representation,
warranty or covenant herein or in any other Loan Document; (b) any third party
claims relating to Borrower's business or any act or omission of Borrower; (c)
any material breach or alleged breach by Borrower of any applicable law, order,
regulation or ordinance of any Federal, foreign, state or local governmental
authorities.
8.5. Release. Borrower hereby acknowledges and agrees that Lenders
shall not be liable to Borrower and hereby releases and discharges Lenders from
any liability, for any and all losses, costs, expenses (including attorneys'
fees), damages, judgments, claims and causes of action, paid, incurred or
sustained by Borrower as a result of or relating to any action, or failure or
refusal to act, on the part of Lenders or any other party with respect to this
Agreement, or the documents and transactions related hereto or thereto or
contemplated hereby or thereby, including, without limitation, the exercise by
Lenders or any third party of any of its rights or remedies pursuant to any of
such documents; provided that nothing herein shall be deemed a waiver or release
of any claim arising after the date hereof out of Lenders' gross negligence or
willful misconduct.
8.6. Choice of Law. Borrower and Lenders hereby agree that this
Agreement shall be governed by the internal laws of the Commonwealth of
Massachusetts, without regard to any choice of law principles.
8.7. Interpretation. If a term or provision of this Agreement shall be
held invalid, illegal or unenforceable, all other terms and provision hereof
shall ,to the maximum extent possible, remain in effect.
8.8. Waiver of Jury Trial. BORROWER AND LENDERS EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER PARTY.
BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THIS WAIVER IS A MATERIAL INDUCEMENT FOR
LENDER TO ACCEPT THIS AGREEMENT AND TO MAKE THE LOAN EVIDENCED HEREBY AND BY THE
OTHER LOAN DOCUMENTS.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth above.
BORROWER:
HYBRIDON, INC.
By:________________________________
(Signature)
Print Name of Signatory:_____________________________
Its:________________________________
(Print Title or Status of Signatory)
LENDERS:
Name of Lender: ______________________________________
By: ______________________________________
(Signature)
Print Name of Signatory:_______________________________________
Its: ____________________________________
(Print Title or Status of Signatory)
Dollar of Loan Commitment: $______________
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