EXHIBIT 10.31
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of April 29, 2002, by and
between Intrabiotics Pharmaceuticals, Inc. (the "Borrower") and Silicon Valley
Bank ("Bank").
1. DESCRIPTION OF EXISTING OBLIGATIONS: Among other Obligations which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, an Amended and Restated Loan and Security Agreement, dated August 20,
2001, as may be amended from time to time, (the "Loan Agreement"). The Loan
Agreement provides for, among other things, a Committed Revolving Line in the
original principal amount of Two Million Five Hundred Thousand Dollars
($2,500,000) and a Term Loan in the original principal amount of Seven Million
Five Hundred Thousand Dollars ($7,500,000). Defined terms used but not otherwise
defined herein shall have the same meanings as set forth in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Obligations."
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the
Collateral as described in the Loan Agreement and in an Intellectual Property
Security Agreement.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Obligations shall be referred
to as the "Security Documents". Hereinafter, the Security Documents, together
with all other documents evidencing or securing the Obligations shall be
referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement.
1. Notwithstanding anything to the contrary contained under
Section 2.1.1 entitled "Revolving Advances", upon Bank's
receipt of evidence of Borrower's satisfactory completion
of the Performance Covenant, Borrower shall have the
option prior to the Revolving Maturity Date to amortize
the outstanding Advances under the Committed Revolving
Line in 36 equal monthly payments of principal plus
interest beginning 30 days following the date of
amortization and continuing on the same day of each month
thereafter (the "Amortizing Term Loan"). The final payment
for the Amortizing Term Loan due on the 36th month
following the date of amortization, however no later than
August 20, 2005 (the "Amortizing Term Loan Maturity
Date"), shall be for all outstanding principal plus all
accrued unpaid interest. Amounts repaid under the
Amortizing Term Loan may not be reborrowed.
The Amortizing Term Loan accrues interest at a per annum
rate of 1.50 percentage points above the Prime Rate. After
an Event of Default, Obligations accrue interest at 5
percentage points above the rate immediately before the
Event of Default. The interest rate increases and
decreased when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days
elapsed.
2. Sub Section (a) under Section 2.4 entitled "Interest Rate,
Payments" is hereby amended in part to read to provide
that beginning with the first day of the month following
Bank's receipt of satisfactory evidence of Borrower's
completion of the Performance Covenant, the Term Loan
shall accrue interest at a per annum rate of 1.50
percentage points above the Prime Rate then in effect.
3. Notwithstanding anything to the contrary contained under
Sections 6.2 entitled "Financial Statements, Reports,
Certificates" and Section 6.7 entitled "Financial
Covenants" Bank shall no longer require Borrower to comply
with the Weekly
Reporting requirements, as provided therein. Accordingly,
Borrower shall comply with the Monthly Reporting, as
applicable.
4. Section 6.6 entitled "Primary Accounts" is hereby amended
to read as follows:
Borrower will maintain its primary operating accounts with
Bank. Additionally, Borrower will maintain the greater of
either (i) $20,000,000 or (ii) 33% of its total cash and
cash equivalents, (as shown on Borrower's financial
statement), in accounts with Bank or invested through
Bank. Additionally, in the event Borrower transfers a
portion of its investments and/or deposits to another
financial institution, Borrower shall cause an Account
Control Agreement to be executed between Bank and such
financial institution prior to such transfer.
5. Sub section (i) under Section 6.7 entitled "Financial
Covenants" is hereby amended in part to provide that
"Liquidity" is defined as a ratio of unrestricted cash
(and equivalents) divided by all Bank term debt.
6. Sub section (iii) under Section 6.7 entitled "Financial
Covenants" is hereby amended in part to provide that
Borrower will maintain a Remaining Months Liquidity of at
least 3 months. Remaining Months Liquidity is defined as
Liquidity minus all Bank term debt divided by the monthly
Net Cash Loss.
7. Section 6.8 entitled "Performance Covenant" is hereby
amended to read as follows:
Borrower will submit to Bank on or prior to May 10, 2002
evidence of its satisfactory completion from the phase III
clinical trial evaluating the safety and efficacy of
iseganan HCI oral solution in patients receiving
radiotherapy for cancer of the head and neck.
8. Section 6.9 entitled "Cash Collateral" is hereby amended
in part to include all Bank term debt (including the Term
Loan and the Amortizing Term Loan, if applicable) for
calculation purposes.
9. Notwithstanding anything to the contrary contained in
Section 7.1 entitled "Dispositions", Bank hereby consents
to the release and Borrower's sales of certain
Intellectual Property of Borrower pursuant to an Asset
Purchase Agreement between Borrower and Micrologix
Biotech, Inc. subject to Bank's satisfactory review and
acceptance of the definitive Asset Purchase Agreement.
10. The following defined terms under Section 13.1 entitled
"Definitions" are hereby amended, deleted and/or
incorporated to read as follows:
"Amortizing Term Loan" is defined under Section 2.1.1.
"Amortizing Term Loan Maturity Date" is defined under
Section 2.1.1.
"Monthly Reporting" applies at such times as Borrower's
Liquidity falls below (i) 2.50 times the outstanding
balance under the Term Loan and the Committed Revolving
Line (or the Amortizing Term Loan, if applicable) or (ii)
6 months Remaining Months Liquidity (as defined in Section
6.7).
"Revolving Maturity Date" is the earlier of (i) August 20,
2002 or (ii) Borrower's election to convert the
outstanding Advances into an Amortizing Term Loan,
(subject to the terms and conditions herein) at which time
the Amortizing Term Loan Maturity Date shall be effective.
"Weekly Reporting" is hereby deleted in its entirety.
B. Conditional Release of Certificate of Deposit.
Borrower hereby reaffirms that Bank has had a perfected
security interest in Borrower's Certificate of Deposit
#8800053649 (the "CD"). Upon Borrower's election to
convert outstanding Advances to the Amortizing Term Loan
(subject to the terms and conditions herein), Bank hereby
agrees to release its hold placed on such CD.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against paying any
of the Obligations.
6. PAYMENT OF LOAN FEE. Borrower shall pay Bank a fee in the amount of Seven
Thousand Five Hundred and 00/100 Dollars ($7,500.00) ("Loan Fee") plus all
out-of-pocket expenses.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
understands and agrees that in modifying the existing Indebtedness, Bank is
relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Obligations pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Obligations.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Obligations. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. Unless expressly released herein, no
maker, endorser, or guarantor will be released by virtue of this Loan
Modification Agreement. The terms of this paragraph apply not only to this Loan
Modification Agreement, but also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: BANK:
INTRABIOTICS PHARMACEUTICALS, INC. SILICON VALLEY BANK
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------- ---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------- -------------------------------
Title: CFO Title: V.P.
------------------------------- ------------------------------
[SILICON VALLEY BANK LOGO]
SILICON VALLEY BANK
PRO FORMA INVOICE FOR LOAN CHARGES
BORROWER: INTRABIOTICS PHARMACEUTICALS, INC.
LOAN OFFICER: ▇▇▇ ▇▇▇▇▇▇▇
DATE: APRIL 29, 2002
LOAN FEE $7,500.00
DOCUMENTATION FEE $ 250.00
TOTAL FEE DUE $7,750.00
=========
PLEASE INDICATE THE METHOD OF PAYMENT:
{ } A CHECK FOR THE TOTAL AMOUNT IS ATTACHED.
{ } DEBIT DDA # __________________ FOR THE TOTAL AMOUNT.
{ } LOAN PROCEEDS
--------------------------------------
BORROWER (DATE)
--------------------------------------
SILICON VALLEY BANK (DATE)
ACCOUNT OFFICER'S SIGNATURE
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FROM: INTRABIOTICS PHARMACEUTICALS, INC.
The undersigned authorized officer of IntraBiotics Pharmaceuticals, Inc.
("Borrower") certifies that under the terms and conditions of the Amended and
Restated Loan and Security Agreement between Borrower and Bank (the
"Agreement"), (i) Borrower is in complete compliance for the period ending
_______________ with all required covenants except as noted below and (ii) all
representations and warranties in the Agreement are true and correct in all
material respects on this date. Attached are the required documents supporting
the certification. The Officer certifies that these are prepared in accordance
with Generally Accepted Accounting Principles (GAAP) consistently applied from
one period to the next except as explained in an accompanying letter or
footnotes. The Officer acknowledges that no borrowings may be requested at any
time or date of determination that Borrower is not in compliance with any of the
terms of the Agreement, and that compliance is determined not just at the date
this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER
"COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Financial statements + CC *Monthly within 30 days Yes No
Annual (Audited) FYE within 95 days Yes No
Annual Projections (approved) FYE within 30 days Yes No
10-Q, 10-K and 8-K Within 5 days after filing with SEC Yes No
*MONTHLY REPORTING applies as of any month-end, Borrower's Liquidity Coverage
falls below 2.50 times the outstanding balances under all Bank term debt or 6
months Remaining Months Liquidity.
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Maintain on a Quarterly Basis:
Minimum Liquidity Coverage 2x balance of all Bank _____:1.00 Yes No
term debt and 3 months
Remaining Months
Liquidity
Performance Covenant ** Yes No
Maximum Loss: Quarterly*** $ Yes No
--------
**Borrower will submit its Performance Covenant to Bank on or prior to May 10,
2002
***Borrower shall not report quarterly losses in excess of 20% of its projection
approved by its Board of Directors.
Have there been updates to Borrower's intellectual property? Yes / No
Borrower only has deposit accounts located at the following
institutions:_______________________________.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
IntraBiotics Pharmaceuticals, Inc.
-----------------------------------------
SIGNATURE
-----------------------------------------
TITLE
-----------------------------------------
DATE
BANK USE ONLY
Received by:
-------------------------------
AUTHORIZED SIGNER
Date:
--------------------------------------
Verified:
----------------------------------
AUTHORIZED SIGNER
Date:
--------------------------------------
Compliance Status: Yes No