EXHIBIT 10.4
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of March 21, 2001
by and between Maxim Pharmaceuticals, Inc. (the "Borrower") and Silicon Valley
Bank ("Bank").
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to,
among other documents, a Loan and Security Agreement, dated on or about October
9, 2000, as may be amended from time to time (the "Loan Agreement"). The Loan
Agreement provided for, among other things, a Committed Term Line in the
original principal amount of Four Million Dollars ($4,000,000). Defined terms
used but not otherwise defined herein shall have the same meanings as in the
Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness
is secured by the Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATION(S) TO LOAN AGREEMENT.
1. The following term as defined in Section 1.1 entitled
"Definitions" is hereby amended to read as follows:
"Committed Term Line" means a credit extension of up
to Three Million Two Hundred Thousand Dollars
($3,200,000).
2. The term "Term Availability End Date" as defined in
paragraph "(a)" under Section 2.1.2 entitled "Term
Loans: Etc." is hereby amended to mean September 30,
2001.
3. Notwithstanding the terms and conditions contained in
paragraph "(a)" under Section 2.1.2 entitled "Term
Loans: Etc.", (i) the first Term Loan is not required
to be made substantially concurrently with the
execution of the Loan Agreement; (ii) Term Loans may
be used to finance Equipment purchased on or after
October 1, 2000; and (iii) the original principal
amount of Term Loans relating to leasehold
improvements and/or software licenses shall not
exceed $1,200,000.
4. Paragraph "(d)" under Section 2.1.2 entitled "Term
Loans: Etc." is hereby amended in part to provide
that Term Loan payments shall begin on November 1,
2001 and a final payment will be due no later than
April 1, 2005.
5. Notwithstanding the terms and conditions contained in
paragraph "(f)" under Section 2.1.2 entitled "Term
Loans, Etc.", the repayment fees are amended as
follows:
From October 1, 2001 through September 30, 2002: 3%;
From October 1, 2002 through September 30, 2003: 2%;
From October 1, 2003 through September 30, 2004: 1%;
From October 1, 2004 through April 1, 2005: 0%.
6. The minimum aggregate balance required, as described
in Section 6.7 entitled "Principal Depository", is
hereby decreased from $5,000,000 to $4,000,000.
7. Section 6.9 entitled "Financial Covenant" is hereby
amended to read as follows:
Borrower will maintain at all times a Remaining
Months Liquidity of at least 9 months, to be tested
quarterly.
"Remaining Months Liquidity" is defined as Liquidity
divided by Cash Burn.
"Liquidity" is defined as: Unrestricted cash and
equivalents.
"Cash Burn" is defined as: Net after-tax income
(loss) plus amortization and depreciation.
Borrower shall maintain a certificate of deposit to
be held on account with Bank in a minimum principal
amount equivalent to 100% of the aggregate
outstanding Obligations at such time as Borrower
fails to meet this Remaining Months Liquidity
covenant and until such time as Borrower restores and
maintains compliance with the terms of this
Agreement. Provided Borrower maintains such
certificate of deposit held on account with Bank, it
shall not be deemed an Event of Default if Borrower
does not comply with this Remaining Months Liquidity
covenant.
B. WAIVER OF DEFAULT.
1. Bank hereby waives Borrower's existing default under
the Loan Agreement by virtue of Borrower's failure to
comply with Section 8.11 entitled "Recall of
Governmental Disapproval of Borrower's Products" as a
result of the Food and Drug Administration not
approving Borrower's Ceplene product in January,
2001. Bank's waiver of Borrower's compliance of this
covenant shall apply only to such specific instance.
Accordingly, for the term of the Loan Agreement,
Borrower shall be in compliance with this covenant.
Bank's agreement to waive the above-described default
(1) in no way shall be deemed an agreement by the
Bank to waive Borrower's compliance with the
above-described term as of all other dates and (2)
shall not limit or impair the Bank's right to demand
strict performance of this term as of all other dates
and (3) shall not limit or impair the Bank's right to
demand strict performance of all other terms or
covenants as of any date.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay Bank a fee in the amount of Two
Thousand Five Hundred Dollars ($2,500)(the "Loan Fee"), plus all out-of-pocket
expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.
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 Indebtedness pursuant to this
Loan Modification Agreement in no way shall obligate Bank to make any future
modifications to the Indebtedness. Nothing in this Loan Modification Agreement
shall constitute a satisfaction of the Indebtedness. 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. 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:
MAXIM PHARMACEUTICALS, INC. SILICON VALLEY BANK
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxx X. Le Beau
Name: Xxxx X. Xxxxxx Name: Xxxxx X. Le Beau
Title: Chief Financial Officer Title: Senior Vice President
