EXHIBIT 99.1
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
BETWEEN
HYBRIDON, INC.
AND
SILICON VALLEY BANK
This Second Amendment is made, effective as of the 30th day of April,
1998 to that certain Loan and Security Agreement between Hybridon, Inc., a
Delaware corporation with a principal place of business at 000 Xxxxxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx (the "Borrower") and Silicon Valley Bank (the "Bank")
dated as of December 31, 1996, as amended by consent letter agreement
(the"Consent Letter") dated January 15, 1998 and by First Amendment to Loan and
Security Agreement dated March 30, 1998 (the "First Amendment). The Loan and
Security Agreement as so amended is hereinafter referred to as the "Loan
Agreement". Capitalized terms used, but not defined in this Second Amendment
shall have the meanings ascribed to them in the Loan Agreement and ancillary
documents, instruments and agreements, and ancillary documents, instruments and
agreements, or if not so defined, shall have the meanings ascribed to them in
the Uniform Commercial Code, or in the case of financial and accounting terms,
in accordance with generally accepted accounting principles.
RECITALS
Pursuant to the Loan Agreement and on the terms and conditions set
forth therein, on December 31, 1996, the Bank made a secured term loan to the
Borrower in the original face amount of $7,500,000 (the "Loan"). The Borrower
advised the Bank of its planned offering of Units of investment in the Borrower
in January, 1998 (the "Original Offering"), which was consented to by the Bank
pursuant to the Consent Letter and which was subsequently amended by the
Borrower and consented to by the Bank in March, 1998 pursuant to the First
Amendment. The term "Offering" as used in this Second Amendment shall include
the Amended Offering or any other equity offering or corporate collaboration not
involving indebtedness of the Borrower. In connection with the May 5, 1998
closing of the Offering (the "date of the closing of the Offering"), the
Borrower has requested that the Bank defer the application of, or amend the
application of, certain covenants contained in the Loan Agreement and in certain
other documents, instruments and agreements executed and delivered in connection
with the Loan Agreement.
The Bank is willing to consent to the further amendment of the Loan
Agreement to accommodate the Offering, but only upon the terms and conditions
set forth in this Second Amendment.
AGREEMENT
In consideration of the foregoing, and of the undertakings and
obligations of the Borrower and the Bank set forth herein and for other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the Borrower and Bank agree as follows:
1. The Borrower confirms that the outstanding balance of principal and
interest on the Loan as of April 30, 1998 is as set forth in Schedule
1 hereto, and that the Borrower has no defense, claim or offset which
would preclude full payment of such amount.
2. The Borrower ratifies and confirms: (i) its Obligations to the Bank
under the Loan Agreement, as amended hereby, (ii) all of the
representations and warranties made by it in the Loan Agreement,
except as expressly disclosed to the Bank, and (iii) that it is in
compliance with the covenants and agreements contained in the Loan
Agreement except for its failure to maintain compliance with the
covenants waived in the First Amendment, and except for its failure to
comply with Section 6.10(c) of the Loan Agreement, to the extent that
such failure is nevertheless in compliance with the Intellectual
Property Security Agreement (the "IP Security Agreement") delivered by
the Borrower in connection with the Consent Letter (it being agreed
that the provisions of Section 6.10(c) shall be deemed superseded by
the analogous provisions of the IP Security Agreement).
3. The Borrower shall on or before the earlier of: (i) May 15, 1998, or
(ii) the date of closing of the Offering, pay to the Bank in good and
immediately collectible funds the sum of Three Hundred Twenty-Five
Thousand ($325,000) Dollars which had been advanced to the Borrower by
the Bank on or about April 10, 1998.
4. The Bank and the Borrower agree that the Tangible Net Worth covenant
established in Section 6.8 of the Loan Agreement shall be next tested
by the Bank as of the earlier of: (i) May 15, 1998, or (ii) the date
of the closing of the Offering (and compliance therewith shall be
deemed waived or satisfied for all prior periods), and that such
Tangible Net Worth covenant shall thereafter be tested as of the last
day of each fiscal quarter commencing with the quarter ending June 30,
1998.
5. Section 6.9 of the Loan Agreement is hereby amended to read as
follows, effective April 30, 1998, and the first test date for such
covenant shall be the earlier of: (i) May 15, 1998, or (ii) the date
of the closing of the Offering (and compliance therewith shall be
deemed waived or satisfied for all prior periods):
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"6.9. Minimum Liquidity. Borrower shall either (i) maintain as of the
fifteenth of each month (or as of the next business day if the
fifteenth is not a business day) and as of the last business day of
each month, Minimum Liquidity of Eight Million ($8,000,000) Dollars,
or (ii) make the payments required by this Section 6.9. "Minimum
Liquidity" means the sum of (i) Borrower's book balance of
unencumbered cash (including cash equivalents and marketable
securities, but exclusive of the CRLP Withold), plus (ii) 50% of
Borrower's Accounts Receivable. Cash encumbered solely by the Bank's
personal property security interest shall be considered to be
"unencumbered cash" for purposes of this covenant. If Borrower's
Minimum Liquidity is less than Eight Million ($8,000,000) Dollars as
of any test date, the Borrower shall pay to the Bank as an additional
principal payment on the Committed Term Facility in good and
immediately collectible funds an amount equal to thirty-five (35%)
percent of the then outstanding balance of the Committed Term
Facility; if Borrower's Minimum Liquidity is less than Four Million
($4,000,000) Dollars as of any test date, the Borrower shall pay to
the Bank as a principal payment on the Committed Term Facility in good
and immediately collectible funds an amount equal to one hundred
(100%) percent of the then outstanding balance of the Committed Term
Facility. Such payment shall be made on the next business day after
the applicable Minimum Liquidity Covenant test date."
6. The Borrower further acknowledges that all reasonable out-of-pocket
costs and expenses of the Bank in connection with negotiation,
documentation and administration of this Second Amendment, including
reasonable fees of attorneys engaged to represent the Bank, shall be
borne by the Borrower.
7. The Borrower acknowledges and confirms that to the extent that the
Borrower may have any claims, offsets, counterclaims, or defenses,
asserted or unasserted, the Borrower, for itself, and on behalf of its
successors, assigns, parents, subsidiaries, agents, affiliates,
predecessors, employees, officers, directors, executors and heirs, as
applicable (collectively, the "Borrower Affiliates") releases and
forever discharges the Bank, its subsidiaries, affiliates, employees,
officers, directors, agents, successors and assigns, both present and
former (collectively, the "Bank Affiliates") of and from any and all
manner of claims, offsets, counterclaims, defenses, action and
actions, cause and causes of action, suits, debts, controversies,
damages, judgments, executions, and demands whatsoever, asserted or
unasserted, in law or in equity, which against the Bank and/or the
Bank Affiliates, they or the Borrower Affiliates ever had to and
including the date hereof, upon or by reason of any matter, cause,
causes or thing whatsoever, in connection with the Loan and/or any of
the transactions and matters related thereto, except for the
obligations of the Bank in such documents, instruments and agreements
to be performed after the date of this Second Amendment. The Borrower
shall indemnify, defend and hold the Bank harmless of and from any
claim brought or threatened against the Bank by the Borrower or any
other person (as well as
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from attorneys' fees and expenses in connection therewith) on account
of the Loan Agreement, the Note, the Consent Letter, the Intellectual
Property Security Agreement, Pledge Agreement, Intercreditor
Agreement, the First Amendment, this Second Amendment, and any other
document, instrument or agreement given in connection with the Loan
and any of the transactions and matters related thereto (each of which
may be defended, compromised, settled or pursued by the Bank with
counsel of the Bank's election reasonably acceptable to the Borrower,
but at the expense of the Borrower), except in the case of the Bank's
failure to comply with its obligations hereunder or thereunder, its
gross negligence or willful misconduct.
8. To the extent possible, this Second Amendment shall be construed to be
consistent with the provisions of the Loan Agreement; however, to the
extent that the provisions of this Second Amendment expressly conflict
with or contradict the provisions of the Loan Agreement, the
provisions of this Second Amendment shall be deemed to control.
9. This Second Amendment represents the entire agreement between the
parties with respect to the modifications contained herein, and shall
be construed in accordance with the laws of the Commonwealth of
Massachusetts as an agreement under seal. The Borrower has voluntarily
entered into this Second Amendment without coercion or duress of any
kind and has been or has had the opportunity to have been represented
by legal counsel of their choosing.
WITNESS OUR hands and seals on this 19th day of May, 1998, effective as
of April 30, 1998.
HYBRIDON, INC.
By:/s/X. Xxxxxxx Xxxxxxxxx, III
---------------------------------
SILICON VALLEY BANK
By:/s/Xxxx Lynden
---------------------------------
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SCHEDULE 1 TO
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
BETWEEN
SILICON VALLEY BANK
AND HYBRIDON, INC.
Principal Balance as of April 30, 1998 $5,124,675.22
Interest outstanding at April 30, 1998 54,755.84
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