LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") dated as of October ____, 1999, is entered
into by and among HYBRIDON, INC. (the "Borrower"), a Delaware corporation having
its principal place of business at 000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxxxxx
00000 and _______________________________________________________, with an
address at ________________________________________________________________,
(the "Lenders").
W I T N E S S E T H:
WHEREAS, the Borrower has requested and the Lenders have agreed to make a
loan to the Borrower in an aggregate principal amount of
__________________________ Dollars and 00/100 (US$________________), the
("Loan") on the terms, and subject to the conditions set forth herein;
NOW, THEREFORE, IT IS AGREED that, in consideration of the premises and
mutual agreements contained herein, the parties hereby agree as follows:
SECTION 1. THE LOAN.
1.1 Loan. Subject to and upon the terms and conditions set forth herein,
Lenders agree to make the Loan to Borrower on October _______, 1999 in an
aggregate principal amount of _______________________________________________
Dollars and 00/100 (US$______________________) (the "Loan"). At the Borrower's
request, the Lenders may, but are not required to, make additional advances (up
to a maximum of an additional US$_________________) to the Borrower under this
Agreement. Any such additional advances shall also be deemed to be part of the
Loan hereunder.
1.2 Senior Indebtedness. The Lender and the Borrower intend that the Loan
constitutes "Senior Indebtedness" under the Borrower's 9% Convertible Secured
Notes due 2004.
1.3 Conversion of Loan. The parties agree that the Loan will be converted,
at the Lenders' option, into either (a) preferred equity, or (b) secured debt,
in each case on substantially the terms described in Exhibit A hereto, no later
than December 31, 1999 (the "Conversion"). The Lenders shall notify the Borrower
regarding which Conversion option (i.e. preferred equity or secured debt) it
elects not later than December 17, 1999. At the Borrower's request, the
Conversion may be effected prior to December 31, 1999, in which case the
Borrower shall notify the Lenders (the "Conversion Notice") at least five (5)
business days prior to the proposed Conversion date. Lenders shall have two (2)
business days from the date of the Conversion Notice to notify the Borrower
which Conversion option it elects.
SECTION 2. INTEREST RATE AND OTHER CHARGES.
2.1 Interest. (a) Borrower shall pay the Lenders interest monthly, in
arrears, on the unpaid principal amount of the date the Conversion is effected
(the "Conversion Date") at the rate of eight per cent (8%) per annum, payable in
common stock of the Borrower at the rate of fifty cents (US$0.50) per share. Any
common stock of the Borrower issued pursuant to this Section 2.1 shall bear an
appropriate securities law legend and, at the request of Borrower, the issuance
thereof shall be subject to the Lenders' execution and delivery of an
appropriate private placement agreement.
(b) Interest shall accrue from and including the Closing Date and to but
excluding the Conversion Date (or the date upon which the principal balance is
paid in full) and shall be payable as provided above on the first business day
of each month that the Loan is outstanding, commencing November 1, 1999 and upon
any repayment (to the extent accrued on the amount being repaid), and at the
Conversion Date.
(c) All computations of interest hereunder shall be made on the basis of a
360-day year consisting of 12 30-day months.
2.2 Excess Interest. In no event whatsoever shall the interest rate and
other charges charged hereunder exceed the highest rate permissible under any
law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. In the event that a court determines that the Lenders
have received interest or other charges hereunder in excess of the highest
permissible rate applicable thereto, the Lenders shall promptly refund the
amount thereof to Borrower, and the provisions hereof shall be deemed amended to
provide for such permissible rate.
SECTION 3. PRINCIPAL PAYMENTS AND REPAYMENTS.
3.1 Repayment and Conversion. The Loan shall be repaid as provided in this
Section 3.1 or converted as provided in Section 1.3 above. Borrower may repay
the Loan in whole or in part without premium or penalty at any time. Repayments
of the Loan may not be re-borrowed. All repayments of the Loan or any portion
thereof shall be made together with the payment of all interest accrued on the
amount repaid through the date of such payment.
3.2 [Reserved]
3.3 Notices. Borrower shall give the Lenders five (5) days' prior written
notice of each repayment of the Loan or any portion thereof. Each notice of
repayment shall specify the amount of the Loan to be repaid and the date of
repayment.
3.4 Payments Without Deductions. Borrower shall pay principal, interest,
and all other amounts payable hereunder, or under the Note, without any
deduction whatsoever, including, but not limited to, any deduction for any
setoff or counterclaims
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whatsoever, provided that with respect to withholding taxes Borrower may make
such deductions as may be required by law if Lender fails to deliver a Form W-9
to Borrower.
SECTION 4. LEGAL EXPENSES AND SETOFF
4.1 (a) The Borrower agrees to pay on demand reasonable attorneys' fees of
the Lenders in connection with the enforcement of the this Agreement and the
Notes, whether in any action, suit or litigation, any bankruptcy, insolvency or
other similar proceeding affecting creditors' rights generally or otherwise.
(b) The Borrower agrees not to assert any claim against any Lender or any
of its affiliates, or any of its directors, officers, employees, attorneys or
agents, on any theory of liability, for special, indirect, consequential, or
punitive damages arising out of or otherwise relating to any of the transactions
contemplated herein or in the Notes.
(c) If the Borrower fails to pay when due any costs, expenses or other
amounts payable by it under this Agreement, such amount may be paid on behalf of
the Borrower by the Lenders in their sole discretion.
(d) The Borrower's obligations under this Section 4.1 shall survive any
termination of this Agreement and the payment in full of the obligations
hereunder, and are in addition to and not in substitution of any of its
obligations in this Agreement or the Notes.
4.2 Right of Setoff. Upon the occurrence and during the continuance of any
Event of Default each Lender and each of its Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and otherwise apply any and all amounts such Lender may owe to Borrower
pursuant to any agreement or otherwise to and in reduction of the obligations
hereunder, irrespective of whether such Lender shall have made any demand under
this Agreement or the Notes and although such obligations may be unmatured. Each
Lender agrees promptly to notify the Borrower after any such setoff and
application; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of the Lenders
and their Affiliates under this Section 4.2 are in addition to other rights and
remedies (including, without limitation, other rights of setoff) that the
Lenders and their Affiliates may have.
SECTION 5. TERM.
The term of this Agreement commences on the Closing Date and shall extend
through the date upon which all the Borrower's obligations hereunder and under
the Notes have been fulfilled.
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SECTION 6. EVENTS OF DEFAULT
6.1 If any of the following events ("Events of Default") shall occur and
be continuing:
(a) the Borrower shall fail to pay any principal of, or interest on, the
Loan, or the Borrower shall fail to make any other payment under this Agreement
or the Notes, in each case when the same becomes due and payable and such
failure continues unremedied for fifteen days after such amount was due and
payable;
(b) the Borrower shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain undismissed
or unstayed for a period of 60 days or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur; or the
Borrower shall take any corporate action to authorize any of the actions set
forth above in this Section 6.1; or
(c) any provision of this Agreement or the Notes shall for any reason
cease to be valid and binding on or enforceable against the Borrower in any
material respect, or the Borrower shall so state in writing;
then, and in any such event, the Lenders may, by notice to the Borrower, declare
the Loan, all interest thereon and all other amounts payable under this
Agreement and the Notes to be forthwith due and payable, whereupon the Loan, all
such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind;
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code, the
Loan, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind.
Each Lender shall also have all of its rights and remedies under
applicable law.
SECTION 7. DEFINITIONS.
7.1 Defined Terms. The following terms shall have the definitions set
forth below.
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. For purposes of
this definition, the term "control" (including the terms "controlling",
"controlled by" and "under common control with") of a Person means the
possession, direct or indirect, of the power to vote 5% or more of the voting
stock of such Person or to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting stock, by
contract or otherwise.
"Closing" means the funding of the Loan by the Lenders pursuant to this
Agreement.
"Closing Date" means the date upon which the Lenders fund the Loan
pursuant to this Agreement.
"Default" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"Event of Default" has the meaning specified in Section 6.
"Notes" shall mean the Promissory Notes, dated of even date herewith,
in the original aggregate principal amount of_____________ dollars
(US$________), of the Borrower and payable to the Lenders, evidencing amounts
outstanding under the Loan, as the same may be amended, extended, renewed,
restated or replaced from time to time.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
SECTION 8. MISCELLANEOUS.
8.1 Certain Waivers. All obligations hereunder shall be payable by
Borrower as provided for herein and, in full, at the termination of this
Agreement; Borrower waives presentment and protest of any instrument and notice
thereof, notice of default and, to the extent permitted by applicable law, all
other notices to which Borrower might otherwise be entitled.
8.2 No Waiver by the Lenders. The Lenders' failure to exercise any right,
remedy or option under this Agreement or any supplement or other agreement
between the Lenders and Borrower or delay by the Lenders in exercising the same
will not operate as a waiver. No waiver by the Lenders will be effective unless
in writing and then only to the extent stated. No waiver by the Lenders shall
affect their right to require strict
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performance of this Agreement. The Lenders' rights and remedies will be
cumulative and not exclusive.
8.3 Binding on Successor and Assigns. All terms, conditions, promises,
covenants, provisions and warranties shall inure to the benefit of and bind the
Lenders' and Borrower's respective representatives, successors and assigns.
8.4 Severability. If any provision of this Agreement shall be prohibited
or invalid under applicable law, it shall be ineffective only to such extent,
without invalidating the remainder of this Agreement.
8.5 Amendments; Assignments. This Agreement may not be modified, altered
or amended, except by an agreement in writing signed by Borrower and the
Lenders. Borrower may not sell, assign or transfer any interest in this
Agreement or any other Loan Document, or any portion thereof, including, without
limitation, any of Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder.
8.6 Integration. This Agreement, together with the Notes, reflect the
entire understanding of the parties with respect to the transactions
contemplated hereby.
8.7 Governing Law; Jurisdiction and Venue. This Agreement and the legal
relations between the parties hereto shall be governed by and construed in
accordance with the laws of the State of Massachusetts applicable to contracts
made and to be performed entirely within such State.
8.8 Survival. All of the representations and warranties of Borrower
contained in this Agreement shall survive the execution, delivery and acceptance
thereof by the parties. No termination of this Agreement or of any guaranty of
the obligations hereunder shall affect or impair the powers, obligations,
duties, rights, representations, warranties or liabilities of the parties hereto
and all shall survive such termination.
8.9 Notices. Any notice required hereunder shall be in writing and
addressed to the Borrower and the Lenders at their addresses set forth at the
beginning of this Agreement. Notices hereunder shall be deemed received on the
earlier of receipt, whether by mail, personal delivery, facsimile, overnight
courier or otherwise, or three (3) days after deposit in the United States mail,
postage prepaid.
8.10 Captions. The Section titles contained in this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
8.11 Injunctive Relief. Borrower recognizes that, in the event Borrower
fails to perform, observe or discharge any of its obligations under this
Agreement, any remedy of law may prove to be inadequate relief to the Lenders.
Therefore, the Lenders, if they so request, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
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8.12 Counterparts; Telecopy Execution. This Agreement may be executed in
any number of separate counterparts, each of which, when taken together, shall
constitute one and the same agreement, admissible into evidence, notwithstanding
the fact that all parties have not signed the same counterpart. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be equally as
effective as delivery of a manually executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile
shall also deliver a manually executed counterpart of this Agreement, but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding affect of this Agreement.
8.13 Construction. The parties acknowledge that each party and its counsel
have reviewed and participated in the preparation of this Agreement and that the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of this Agreement or any amendments or exhibits hereto.
8.14 Time of Essence. Time is of the essence for the performance by
Borrower of the obligations set forth in this Agreement.
8.15 MUTUAL WAIVER OF RIGHT TO JURY TRIAL. THE LENDERS AND BORROWER EACH
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS AGREEMENT; OR (ii) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN THE LENDERS AND BORROWER; OR
(iii) ANY CONDUCT, ACTS OR OMISSIONS OF THE LENDERS OR BORROWER OR ANY OF THEIR
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER PERSONS
AFFILIATED WITH THE LENDERS OR BORROWER; IN EACH OF THE FOREGOING CASES, WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
8.16 AGENT. In the event more than one Person is named as Lender
hereunder, each such Person, as a Lender hereunder, hereby appoints Xxxx Xxxxxx
as its agent ("Agent") with full authority to take any action and to execute any
instrument in the place and stead of such Lender to the same extent as the
Lender may do or take hereunder, and any notices or other communications
required to be given by the Borrower to the Lender shall be satisfied by the
provision of same to the Agent.
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
duly executed as of the day and year first above written.
HYBRIDON, INC.
By:
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Name: Xxxxxx X. Xxxxxxxx
Title: Vice President, Operations and
Planning
[New Lenders]
By:
--------------------------------
Xxxx Xxxxxx, Attorney-in-Fact
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EXHIBIT A
HYBRIDON, INC.
CONVERSION PROVISION
Lenders will have the option to invest in two different financing vehicles
as described below.
A. PREFERRED STOCK (MAXIMUM TEN MILLION DOLLARS [US$10MM])
o Rank senior to existing preferred stock, but junior to all debt.
o Dividend rate will be eight per cent (8%), payable semi-annually in
arrears.
o Dividend is payable in Hybridon common stock, priced at market on
the record date.
o Convertible to common at fifty cents (US$0.50) per share at any
time.
o Callable by Hybridon at any time after three (3) years.
B. SECURED DEBT (MAXIMUM FIVE MILLION DOLLARS [US$5MM])
o Five (5) year term.
o Interest rate of eight per cent (8%), payable semi-annually in
arrears.
o Interest is payable in cash or Hybridon common stock, at the
Company's option. If paid in stock, the stock will be priced at
market on the interest due date.
o Convertible into common stock at sixty cents (US$0.60) per share.
o Prepayable by Hybridon, in whole or in part, at any time in cash.
o If prepaid at Hybridon's election during the first three years of
the term, Hybridon will issue a number of warrants to purchase
common stock equal to the number of shares into which the amount
prepaid was convertible, with a sixty cent (US$0.60) strike price.
o Secured by all assets.
o Ranks pari passu with the current six million dollars (US$6MM) loan.
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