Exhibit 10.1

 

LOAN MODIFICATION AGREEMENT

 

This Loan Modification Agreement (this “Loan Modification Agreement’) is entered
into as of January 25, 2004, by and between SILICON VALLEY BANK, a
California-chartered bank, with its principal place of business at 3003 Tasman
Drive, Santa Clara, California  95054 and with a loan production office located
at One Newton Executive Park, Suite 200, 2221 Washington Street, Newton,
Massachusetts  02462, doing business under the name “Silicon Valley East”
(“Bank”) and GTC BIOTHERAPEUTICS, INC., a Massachusetts corporation with its
chief executive office located at 175 Crossing Boulevard, Suite 410, Framingham,
Massachusetts 01702  (“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 loan arrangement
dated as of March 27, 2002, evidenced by, among other documents, a certain Loan
and Security Agreement dated as of March 27, 2002, between Borrower and Bank, as
amended by a Loan Modification Agreement dated June 11, 2003, and by a Loan
Modification Agreement dated August 13, 2003 (as amended, 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 shall be amended by
deleting the following provision appearing in the first sentence of
Section 2.1.6(a) thereof:

 

“2.1.6.           2003 Equipment Advances.

 

(a)  Availability.  Through December 31, 2003 (the “2003 Equipment Availability
End Date”), Bank shall make Equipment Advances under the 2003 Committed
Equipment not exceeding the 2003 Committed Equipment Line.”

 

and inserting in lieu thereof the following:

 

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“2.1.6.           2003 Equipment Advances.

 

(a)  Availability.  Through June 30, 2004 (the “2003 Equipment Availability End
Date”), Bank shall make Equipment Advances under the 2003 Committed Equipment
not exceeding the 2003 Committed Equipment Line.”

 

2.                                       The Loan Agreement shall be amended by
deleting the following, appearing as Section 6.7(a) thereof, in its entirety:

 

“(a)  Liquidity.  Borrower and its Subsidiaries shall maintain unrestricted cash
and marketable securities less outstanding Obligations under the Committed
Revolving Line, of not less than Twenty-Five Million Dollars ($25,000,000.00). 
If, at any time, the Borrower shall fail to satisfy the terms of this
Section 6.7(a), then the Borrower shall immediately deposit with the Bank an
amount of unrestricted cash equal to the outstanding Obligations hereunder, and
shall thereafter maintain unrestricted cash with the Bank equal to the
outstanding Obligations, as such amount may increase or decrease.”

 

and inserting in lieu thereof the following:

 

“(a)  Liquidity.  Borrower and its Subsidiaries shall maintain unrestricted cash
and marketable securities less outstanding Obligations under the Committed
Revolving Line, of not less than Eighteen Million Dollars ($18,000,000.00).  If,
at any time, the Borrower shall fail to satisfy the terms of this
Section 6.7(a), then the Borrower shall immediately deposit with the Bank an
amount of unrestricted cash equal to the outstanding Obligations hereunder, and
shall thereafter maintain unrestricted cash with the Bank equal to the
outstanding Obligations, as such amount may increase or decrease.”

 

3.                                       The Loan Agreement shall be amended by
inserting the following provision to appear as Section 6.9 thereof:

 

“6.9                        Market Approval.  On or before February 28, 2004,
the Borrower shall provide the Bank with a evidence, acceptable to the Bank, in
it reasonable discretion, that the Borrower has submitted to the European
Medicines Evaluation Agency a market approval application for its drug,
rhATIII”.

 

4.                                       The Compliance Certificate appearing as
Exhibit D to the Loan Agreement is hereby replaced with the Compliance
Certificate attached as Exhibit A hereto.

 

4.                                       FEES.  The Borrower shall pay to Bank a
modification fee equal to Twenty Thousand Dollars ($20,000.00), which
modification fee shall be due and payable on the date hereof and

 

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shall be deemed fully earned as of the date hereof. The Borrower shall also
reimburse Bank for all legal fees and expenses incurred in connection with this
amendment to the Existing Loan Documents.

 

5.                                       RATIFICATION OF PLEDGE AGREEMENT. 
Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms
and conditions of a certain Pledge Agreement dated as of March 27, 2002, between
Borrower and Bank, and acknowledges, confirms and agrees that said Pledge
Agreement shall remain in full force and effect and the Collateral defined
therein shall continue to secure the Obligations under the Loan Agreement, as
amended hereby.

 

6.                                       RATIFICATION OF NEGATIVE PLEDGE. 
Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms
and conditions of a certain Negative Pledge Agreement dated as of March 27,
2002, between Borrower and Bank, and acknowledges, confirms and agrees that said
Negative Pledge Agreement shall remain in full force and effect.

 

7.                                       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 March 27, 2002, 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.

 

8.                                       CONSISTENT CHANGES.  The Existing Loan
Documents are hereby amended wherever necessary to reflect the changes described
above.

 

9.                                       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.

 

10.                                 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.

 

11.                                 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.

 

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12.                                 COUNTERSIGNATURE.  This Loan Modification
Agreement shall become effective only when it shall have been executed by
Borrower and Bank (provided, however, in no event shall this Loan Modification
Agreement become effective until signed by an officer of Bank in California).

 

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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:

 

 

GTC BIOTHERAPEUTICS, INC.,

SILICON VALLEY BANK,

formerly known as

doing business as

Genzyme Transgenics Corporation

SILICON VALLEY EAST

 

 

 

 

By:

 

/s/ John B. Green

 

By:

 

/s/ Pamela Aldsworth

 

Name:

John B. Green

Name:

Pamela Aldsworth

Title:

Senior Vice President

Title:

SCO

 

 

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

By:

 

/s/ Karen J. Beraud

 

 

Name:

Karen J. Beraud

 

Title:

Division Manager

 

(signed in Santa Clara County, California)

 

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EXHIBIT A
COMPLIANCE CERTIFICATE

 

TO:

 

SILICON VALLEY BANK

 

 

 

FROM:

 

GTC BIOTHERAPEUTICS, INC.

 

The undersigned authorized officer of GTC Biotherapeutics, Inc. certifies that
under the terms and conditions of the 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

 

 

 

 

 

Quarterly financial statements with CC

 

Within 5 days after filing with SEC

 

Yes  No

Annual (CPA Audited)

 

With 5 days after filing with SEC

 

Yes  No

Projects approved by Board of Directors

 

Annually, and as updated

 

Yes  No

 

 

 

 

 

Financial Covenant

 

Required

 

Actual

 

Complies

 

 

 

 

 

 

 

Maintain on a Quarterly Basis:

 

 

 

 

 

 

Minimum Liquidity

 

$

18,000,000.00

 

$

 

Yes  No

 

Comments Regarding Exceptions:  See Attached.

 

Sincerely,

BANK USE ONLY

 

 

 

 

 

Received by:

 

 

SIGNATURE

 

AUTHORIZED SIGNER

 

 

 

 

 

Date:

 

 

TITLE

 

 

Verified:

 

 

 

 

 

AUTHORIZED SIGNER

 

DATE

Date:

 

 

 

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