FOURTH LOAN MODIFICATION AGREEMENT
Exhibit 10.1
This Fourth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into
as of January 6, 2006, by and between SILICON VALLEY BANK, a California-chartered bank, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan
production office located at One Xxxxxx Executive Park, Suite 200, 0000 Xxxxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (“Bank”) and CRITICAL THERAPEUTICS, INC., a Delaware corporation with its
chief executive office located at 00 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (“Borrower”).
1. | DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a certain loan arrangement dated as of June 28, 2002, evidenced by, among other documents, a certain Loan and Security Agreement dated as of June 28, 2002, between Borrower and Bank, as amended by a certain Loan Modification Agreement dated as of December 11, 2002, between Borrower and Bank, as amended by a certain Second Loan Modification Agreement dated as of April 10, 2003, between Borrower and Bank, and as further amended by a certain Third Loan Modification Agreement dated as of June 30, 2004, between Borrower and Bank (as may be further amended from time to time, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement. |
2. | DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement (together with any other collateral security granted to Bank, 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. | Modifications to Loan Agreement. |
1. | The Loan Agreement is hereby amended by deleting the date “December 31, 2005” appearing in Section 2.1.4 (a) and inserting the date “March 31, 2006” thereof. |
2. | The Loan Agreement is hereby amended by deleting the follow Section 6.2 entitled “Financial Statements, Reports, Certificates “ in its entirety: |
“6.2 Financial Statement, Report, Certificates.
Borrower shall deliver to Bank: (i) as soon as available, but no later
than thirty (30) days after the last day of each month, a Compliance
Certificate signed by a Responsible Office in the Form of Exhibit
C, together with a company prepared consolidated balance sheet and
income statement covering Borrower’s consolidated operations during the
period certified by a Responsible Officer and in a form acceptable to Bank;
(ii) as soon as available, but no later than one hundred and twenty (120)
days after the last day of Borrower’s fiscal year, a Compliance Certificate
signed by a Responsible Office in the form of Exhibit C, together
with audited consolidated financial statements prepared under GAAP,
consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably
acceptable to Bank; (iii) in the event that the Borrower’s stock becomes
publicly held, within five (5) days of filing, copies of all statements,
reports and notices made available to Borrower’s security holders or to any
holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K
filed with the Securities and Exchange Commission; (iv) a prompt report of
any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or
more; (v) annually, but not later than fifteen (15) days after Board
Approval, budgets, sales projections and operating plans, and (vi) other
financial information reasonably requested by Bank.
and inserting in lieu thereof the following:
“6.2 Financial Statements, Reports, Certificates.
Borrower shall deliver to Bank: (i) for each month in which the
unrestricted cash of the Borrower, as set forth on its balance sheet is
less than Fifteen Million Dollars ($15,000,000.00), a company prepared
consolidated balance sheet and income statement covering Borrower’s
consolidated operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) within five (5) days of
filing, copies of or electronic notice of links to all statements, reports
and notices made available to Borrower’s security holders or to any holders
of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with
the Securities and Exchange Commission; (iii) a prompt report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of Three Hundred
Thousand Dollars ($300,000.00) or more; (iv) annually, but not later than
fifteen (15) days after Board Approval, final budgets, sales projections
and operating plans, and (v) other financial information reasonably
requested by Bank.”
3. | The Loan Agreement shall be amended by deleting the follow Section 6.3 entitled “Inventory; Returns “ in its entirety: |
“6.3 Inventory; Returns. Borrower shall keep all Inventory in good and
marketable condition, free from material defects. Returns and allowances between
Borrower and its account debtors shall follow Borrower’s customary practices as they
exist at the Closing Date. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than Fifty Thousand Dollars
($50,000.00).”
and inserting in lieu thereof:
“6.3 Inventory; Returns. Borrower shall keep all Inventory in good and
marketable condition, free from material defects. Returns and allowances between
Borrower and its account debtors shall follow Borrower’s customary practices as they
exist at the Closing Date. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than Five Hundred Thousand Dollars
($500,000.00).”
4. | The Loan Agreement is hereby amended by deleting the following definitions appearing in Section 13.1 thereof: |
""2004 Equipment Line” is a 2004 Equipment Advance or 2004
Equipment Advances of up to Three Million Dollars ($3,000,000.00).”
""2004/2005 Other Equipment” is leasehold improvements,
transferable software licenses, and other soft costs approved by the
Bank, including sales tax, freight and installation expenses. Unless
otherwise agreed to by Bank, not more than 30% of the proceeds of
either the 2004 Equipment Line or the 2005 Equipment Line shall be
used to finance 2004/2005 Other Equipment.”
""2005 Equipment Line” is a 2005 Equipment Advance or 2005 Equipment
Advances of up to the lesser of (i) Three Million Dollars
($3,000,000.00) minus the aggregate original principal amount of all
2004 Equipment Advances made
hereunder or (ii) One Million Three Hundred Thousand Dollars
($1,300,000.00).”
and insert in lieu thereof the following:
""2004 Equipment Line” is a 2004 Equipment Advance or 2004 Equipment
Advances of up to Three Million Five Hundred Thousand Dollars
($3,500,000.00).”
""2004/2005 Other Equipment” is leasehold improvements,
transferable software licenses, and other soft costs approved by the
Bank, including sales tax, freight and installation expenses. Unless
otherwise agreed to by Bank, not more than 35% of the proceeds of
either the 2004 Equipment Line or the 2005 Equipment Line shall be
used to finance 2004/2005 Other Equipment.”
""2005 Equipment Line” is a 2005 Equipment Advance or 2005 Equipment
Advances of up to Three Million Five Hundred Thousand Dollars
($3,500,000.00) minus the aggregate original principal amount of all
2004 Equipment Advances and 2005 Equipment Advances made hereunder
(for clarification, such available amount, as of the date of this
Loan Modification Agreement is in an amount not to exceed Five
Hundred Seventy-Six Thousand Nineteen Dollars and 85/100
($576,019.85).”
5. | The Compliance Certificate appearing as Exhibit C to the Loan Agreement is hereby deleted in its entirety. |
B. | Waivers. |
1. | Bank hereby waives Borrower’s existing defaults under the Loan Agreement by virtue of Borrower’s failure to comply with the financial reporting requirements set forth in Section 6.2(a)(i) thereof as of the months ending July 31, 2005, and August 31, 2005. Bank’s waiver of Borrower’s compliance of said affirmative covenant shall apply only to the foregoing specific periods. |
4. | FEES. Borrower shall reimburse Bank for all legal fees and expenses incurred in connection with this amendment to the Existing Loan Documents. |
5. | RATIFICATION OF NEGATIVE PLEDGE AGREEMENT. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Negative Pledge Agreement dated as of June 28, 2002 between Borrower and Bank, and acknowledges, confirms and agrees that said Negative Pledge Agreement shall remain in full force and effect. |
6. | RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of June 30, 2004, between Borrower and Bank, and acknowledges, confirms and agrees the disclosures and information above Borrower provided to Bank in the Perfection Certificate has not changed, as of the date hereof. |
7. | CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above. |
8. | RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations. |
9. | NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder. |
10. | CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, 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 of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement. |
11. | COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank. |
This Loan Modification Agreement is executed as a sealed instrument under the laws of the
Commonwealth of Massachusetts as of the date first written above.
BORROWER: | BANK: | |||||||
CRITICAL THERAPEUTICS, INC. | SILICON VALLEY BANK | |||||||
By:
|
/s/ Xxxxx X. Xxxxxx | By: | /s/ Xxxxxxxxxx X. Xxxxxxx | |||||
Name:
|
Xxxxx X. Xxxxxx | Name: | Xxxxxxxxxx X. Xxxxxxx | |||||
Title:
|
Chief Financial Officer, Senior Vice President | Title: | Vice President | |||||
Of Finance and Treasurer |
The undersigned, CTI SECURITIES CORP., a Massachusetts corporation, ratifies, confirms and
reaffirms, all and singular, the terms and conditions of a certain Unconditional Guaranty dated
December 3, 2003 (the “Guaranty”) and a certain Security Agreement dated December 3, 2003 (the
“Security Agreement”) and acknowledges, confirms and agrees that the Guaranty and the Security
Agreement shall remain in full force and effect and shall in no way be limited by the execution of
this Loan Modification Agreement, or any other documents, instruments and/or agreements executed
and/or delivered in connection herewith.
CTI SECURITIES CORP. | ||||||||
By: | /s/ Xxxxx X. Xxxxxx | |||||||
Name: | Xxxxx X. Xxxxxx | |||||||
Title: | Treasurer | |||||||