EXHIBIT 10.24
FOURTH LOAN MODIFICATION AGREEMENT
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 Newton 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)."
2
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
3
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.
4
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 Title: VP
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
5
