Document:

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                                                                   Exhibit 10.17

                           CRITICAL THERAPEUTICS, INC.

                              CONSULTING AGREEMENT

      This Agreement dated as of January 31, 2001 is between Critical
Therapeutics, Inc., a Delaware corporation (the "Company"), and Kevin J. Tracey,
M.D. (the "Consultant"), a. member of the medical staff at North Shore-Long
Island Jewish Research Institute, (together with any other non-profit
institution with which the Consultant may be affiliated in the future, the
"Institution").

1.    SERVICES

            1.1 Services. The Company hereby retains the Consultant to perform
such consulting and advisory services in the Field (as defined in Section 1.2)
as the Company may from time to time reasonably request (the "Services"). The
Consultant shall also serve as a member of the Company's Scientific Advisory
Board ("SAB") until his membership is terminated by him or by written notice
tram the Company's Board of Directors.

            1.2. The Field. During the term of this Agreement, the term "Field"
shall mean the discovery and development of therapeutic products for application
in critical care and inflammation and diagnostic products intended to be sold in
conjunction with such therapeutic products. Following termination of this
Agreement, for purposes of Section 1.4(a), the term "Field" shall be limited to
those projects that were either (a) actually undertaken by the Company or (b)
described in a written proposal approved by the Company's Board of Directors or
(c) pursued to the extent that the Company developed or obtained proprietary
scientific or business information relating thereto, before termination of this
Agreement.

            1.3 Commitment. The Consultant agrees to make himself available to
render the Services from time to time as requested by the Company at such times
and locations as may be mutually agreed, provided that the Consultant shall not
be required to devote time equivalent to more than 42 days pet year to the
performance of the Services.

      1.4 Exclusivity.

            (a) Subject to the following sentence and subsection 1.4(c), the
Consultant agrees that he will not, without the approval of the Company, render
advice or services in the Field (whether as a director, scientific advisory
board member, officer, employee, consultant or otherwise) to a for-profit
entity. It is understood that nothing herein shall be construed to restrict or
limit the duties the Consultant is performing or may perform in the course of,
or incidental to, his appointment at the Institution, including but not limited
to research sponsored by a third party commercial entity, nor shall anything
herein be construed to restrict or limit the Consultant's right to serve as an
advisor to any hospital, or to any governmental or not-for-profit organization.

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The Consultant's obligations under this subsection l.4(a) shall be applicable
during the term of this Agreement and for the one (1) year period following
termination of this Agreement.

            (b) Notwithstanding the foregoing, in the event that, during the
term of this Agreement, the Consultant performs research which is sponsored by a
third party commercial entity and in the Field, the Consultant shall provide
prompt written notice to the Company and the Company may, at its option,
terminate this Agreement as provided in Section 7.4.

            (c) In the event that, at any time during the term of this Agreement
and the period of one (1) year following termination hereof, the Consultant is
not principally employed by the Institution and if, notwithstanding a reasonably
diligent search of not less than ninety (90) days (the "Search Period"), he is
unable (i) to find Alternate Employment with a non-profit employer or (ii)
because of the restrictions of Section 1.4(a), to find Alternate Employment with
a for-profit employer, then the Company may only enforce Consultant's
obligations under this Section 1.4 after the expiration of the Search Period if
it either:

            (x) narrows the scope of the "Field" to the extent that Section
      1.4(a) does not bar any Alternate Employment he does find or

            (y) pays the Consultant compensation in an amount equal to the
      Consultant's annual rate of compensation last received from the
      Institution, commencing at the end of the Search Period and continuing on
      a bi-weekly basis until such time as the Consultant commences Alternate
      Employment; provided that if Consultant would be able to secure Alternate
      Employment but for the lack of suitable compensation, the Company may
      enforce Consultant's obligations under Section 1.4(a) by paying Consultant
      an amount equal to the difference between the compensation last paid by
      the Institution to the Consultant and the compensation payable by such
      employment.

            As used herein, "Alternate Employment" means a position commensurate
with Consultant's principal skills and the stature of his current employment and
at a level of compensation not less than that last paid Consultant by the
Institution.

2.    TERM

      Subject to Section 7, this Agreement will be for a term beginning as of
the date set forth in the first paragraph and ending four years thereafter.

3.    COMPENSATION AND EXPENSES

            3.1 Compensation. As full compensation for the Services, the Company
shall pay the Consultant (i) $75,000 during the first year of this Agreement,
(ii) $77,250 during the second year of this Agreement, (iii) $79.567.50 during
the third year of this Agreement and (iv) $81,954.53 during the fourth year of
this Agreement. Such fees shall be payable in arrears on the earlier of the date
of closing of' the Company's first institutional equity financing or October 31,
2001, and thereafter bi-weekly in arrears in accordance with the Company's
regular payroll practices

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      3.2 Expenses. The Consultant shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred by the Consultant in
the performance of the Services following submission of written expense
statements and other supporting documentation in accordance with the policy and
practice of the Company.

4.    THIRD PARTY RESTRICTIONS AND POLICIES

      4.1 Absence of Restrictions. The Consultant represents that, except as set
forth on Exhibit A, he is presently under no contractual or other restriction or
obligation which is inconsistent with the Consultant's execution of this
Agreement or the performance of the Services, and during the term of this
Agreement, the Consultant will not enter into any agreement, either written or
oral, which conflicts with this Agreement. In the event of any conflict between
the Consultant's obligations under this Agreement and his obligations under any
such other restriction or obligation set forth on Exhibit A, such other
restriction or obligation shall take precedence.

      4.2 Compliance with Institutional Policies. The Company recognizes that,
as a member of the medical staff of the Institution, the Consultant is
responsible for ensuring that any consulting agreement the Consultant enters
into with a for-profit entity is not in conflict with the patent, ownership of
inventions, consulting or other policies of the Institution, and the Consultant
represents and warrants that the Consultant has determined that this Agreement
complies with all such Institution policies. If the Consultant is required by
the Institution to disclose to it any proposed agreements, the Consultant
represents that he has made such disclosure and obtained any necessary formal
approvals of this Agreement by the Institution.

5.    OWNERSHIP OF INVENTIONS

      5.1 "Inventions" means all inventions, ideas, discoveries, developments,
methods, data, information, improvements and biological or chemical materials,
(whether or not reduced to practice and whether or not protectible under state,
federal, or foreign patent, copyright, trade secrecy or similar laws) which are
conceived, created or developed by the Consultant (whether alone or with others)
(i) in the course of providing Services or as a direct result of Confidential
Information acquired by Consultant and on the premises or at the direct expense
of the Company and (ii) are not generated in the course of the Consultant's
activities as an employee of the Institution and are not owned by the
Institution or assignable to the Institution.

      5.2 Ownership by Company. Subject to Section 5.4 below, all Inventions are
and shall remain the exclusive property of the Company, and the Company may use
or pursue them without restriction or additiona1 compensation. The Consultant
shall promptly and fully disclose to the Company any and all Inventions. The
Consultant shall maintain complete written records of all Inventions and of all
work or investigations done or carried out by the Consultant at all stages
thereof, which records shall be the exclusive property of the Company.

      5.3 Assignment of Inventions. Subject to Section 5.4 below, the Consultant
hereby assigns and agrees to assign to the Company all of the Consultant's
right, title and interest in and to any Inventions. The Consultant agrees to
cooperate fully in obtaining patent, copyright or other proprietary protection
for such Inventions, all in the name of the Company and at the

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Company's cost and expense, and shall execute and deliver all requested
applications, assignments and other documents, and take such other measures, as
the Company shall reasonably request in order to perfect and enforce the
Company's rights in the Inventions (including transfer of possession to the
Company or all Inventions embodied in tangible materials), and hereby appoints
the Company its attorney to execute and deliver any such documents on its behalf
in the event the Consultant fails or refuses to do so.

      5.4 Avoidance of Claims by Institution. The Consultant will not perform
any Services for the Company on the premises of the Institution or with its
facilities or funds or in any other manner which could result in claims by
Institution of rights in any Inventions without the express prior agreement of
Company and Institution. In furtherance of the foregoing, the Company shall have
no rights under this Agreement in or to any publication, invention, discovery,
improvement, or other intellectual property whatsoever, whether or not
publishable, patentable, or copyrightable, which is developed as a result of
research under the control of the Institution. The Company also acknowledges and
agrees that it will enjoy no priority or advantage as a result of the
Consultant's consultancy created by this Agreement in gaining access, whether by
license or otherwise, to any proprietary information or intellectual property
that arises from any research undertaken by the Consultant in his capacity as an
employee of the Institution. Notwithstanding the foregoing, it is understood
that Consultant shall have the right to disclose, and shall disclose, to the
Institution's office of Corporate Sponsored Research and Licensing, in
confidence, all Inventions which relate to Consultant's research at the
Institution in order that the Institution may independently verify that such
Inventions are not subject to the policies of the Institution.

      5.5 Third Party Claims. Unless covered by an appropriate agreement between
any third party and the Company, the Consultant shall not engage in any
activities or use any facilities in the course of providing Services, which
could result in claims of ownership to any Inventions being made by such third
party.

6.    CONFIDENTIAL INFORMATION AND MATERIALS

      6.1 "Materials" means all tangible biological or chemical materials
furnished to the Consultant by the Company in connection with performance of the
Services, as well as any other materials derived from such materials, including
any progeny derived from a cell line, monoclonal antibodies or recombinant
proteins produced from such materials, and substances routinely purified from
any source material included in such materials. It is understood that Materials
shall not include any tangible biological or chemical materials discovered, made
or prepared at the Institution by the Consultant or under the Consultant's
direction, and transferred to the Company by the Institution, nor shall it
include any derivatives of such materials and that the rights and obligations of
the Company and of the Consultant with respect to any such material shall be
governed by a duly executed agreement between the Institution and the
Consultant.

      6.2 "Confidential Information" means any information relating to the
scientific or business affairs of the Company that is treated by the Company as
confidential or proprietary. Confidential Information is contained in various
media, including records of research data and observations, records of clinical
trials, patent applications, computer programs, supply and

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customer lists, internal financial data and other documents and records of the
Company, whether or not labeled or identified as "Confidential" or prepared by
the Consultant in the performance of the Services hereunder. Any similar
information obtained by or given to the Company about or belonging to its
suppliers, licensors, licensees, partners, affiliates, customers, potential
customers or others is referred to herein as "Third Party Confidential
Information" and is subject to the exclusions comparable to those set forth in
the next paragraph.

      Confidential Information does not include information which (a) was known
to the Consultant at the time it was disclosed, other than by previous
disclosure by the Company; (b) is at the time of disclosure or later becomes
publicly known under circumstances involving no breach of this Agreement; (c) is
made available to the Consultant by a third party who did not derive it from the
Company and who imposes no obligation of confidence on the Consultant: or (d) is
required to be disclosed by a governmental authority or by order of a court of
competent jurisdiction, provided that such disclosure is subject to all
available protection and reasonable advance notice is given to the Company.

      6.3 Consultant Acknowledgement. During the course of performing the
Services, Consultant may become aware of or have access to Confidential
Information and/or Materials. Consultant acknowledges the Company is and shall
at all times remain the sole owner of the Confidential Information and
Materials.

      6.4 Nondisclosure and Nonuse of Confidential Information and Materials.
The Consultant shall not directly or indirectly publish, disseminate or
otherwise disclose, deliver or make available to any third party any
Confidential Information, Materials or Third Party Confidential Information,
other than in furtherance of the purposes of this Agreement, and only then with
the prior written consent of the Company; nor will the Consultant use such
Confidential Information, Materials or Third Party Confidential Information for
the Consultant's own benefit or for the benefit of any other third party.

      6.5 Publications. The Consultant agrees to submit to the Company a copy of
any proposed manuscript or other materials to be published or otherwise publicly
disclosed which contains information describing or deriving from those
activities within the Field with respect to which the Consultant has actually
performed Services for the Company prior to publication to enable the Company to
determine if patentable Inventions or Confidential Information of the Company
would be disclosed. The Company shall have a 45-day period in which to make such
determination. The Consultant shall cooperate with the Company in this respect
and shall delete from the manuscript or other disclosure any Confidential
Information if requested by the Company and shall assist the Company in filing
for patent protection for any patentable Inventions prior to publication or
other disclosure.

      6.6 Use and Return of the Confidential Information and Material. The
Consultant shall exercise all commercially reasonable precautions to protect the
integrity and confidentiality of the Confidential Information, Materials and
Third Party Confidential Information. The Consultant acknowledges that the use
of Materials is at the sole risk of the Consultant, and agrees to use the
Materials in accordance and compliance with any and all appropriate guidelines
or regulations established by any governmental authority. The Consultant will
not remove any Confidential Information or copies thereof or physical samples of
Materials from the Company's

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premises except to the extent necessary to perform the Services. Upon
termination of this Agreement, and in any case upon the Company's request, the
Consultant shall return immediately to the Company all copies and other tangible
manifestations of Confidential Information and all Materials then in the
Consultant's possession or control. The Consultant shall return any Third Party
Confidential Information upon request of the third party or the Company. .

7.    TERMINATION

      7.1 Early Termination for Failure to Close Equity Financing. In the event
that the Company fails to consummate an equity financing raising at least
$10,000,000 on or prior to October 31, 2001, the Company may in its discretion
terminate this Agreement upon no less than thirty (30) days' prior written
notice given to the Consultant no later than November 30, 2001.

      7.2 Early Termination by the Consultant. The Consultant may terminate this
Agreement at any time without cause upon written notice to the Company.

      7.3 Early Termination by Either Party for Breach. In the event of any
material breach of this Agreement by either party that is not cured within ten
(10) days after written notice from the non-breaching party, the non-breaching
party may terminate this Agreement by giving written notice to the breaching
party; provided that (a) if such breach is incapable of being cured, this
Agreement shall terminate immediately upon such notice and (b) if such breach is
capable of being cured but cannot be cured within such 10-day period and the
breaching party has promptly commenced action to cure such breach and is
diligently prosecuting such cure, such breach shall not constitute grounds for
termination unless it is not cured within ninety (90) days after the
non-breaching party's notice of such breach.

      7.4 Early Termination for Conflicting Research. In the event that
Consultant gives notice of his intent to perform research which is sponsored by
a third party commercial entity and in the Field pursuant to Section 1.4 above,
the Company may, at its option, terminate this Agreement upon not less than ten
(10) days' prior written notice to the Consultant given within thirty (30) days
after the Consultant's notice.

      7.5 Early Termination due to Death or Disability. This Agreement shall
terminate upon the death of the Consultant or upon 30 days' written notice from
either party in the event of the Consultant's Disability. As used herein,
"Disability" means the Consultant's inability by reason of physical or mental
impairment to perform the services contemplated herein for ninety (90) or more
days within any six-month period.

      7.6 Effect of Termination. Termination of this Agreement shall not affect
any liabilities accrued hereunder through the date of termination. The
provisions of Sections l.4(a), 5, 6, 7.6, and 8 shall survive termination;
provided that the Consultant's obligations under Sections 6.4 and 6.5 shall
survive for only five (5) years following termination. In the event this
Agreement is terminated after vesting and repurchase restrictions have been
imposed upon any shares of the Company's capital stock owned by the Consultant,
if and to the extent provided in a separate Restricted Stock Agreement between
Consultant and the Company, termination of this

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Agreement shall result in termination of vesting of, and/or the imposition of
repurchase rights with respect to, certain shares held by the Consultant.

8.    MISCELLANEOUS

      8.1 Status. The Company and the Consultant agree that the Consultant will
be an independent contractor for all purposes, including but not limited to
payroll and tax purposes, and that the Consultant shall not, as a result of the
relationship established by this Agreement, in any way represent himself to be
an employee, partner, joint venturer or agent with or of the Company.

      8.2 Publicity. Subject to the policies of the Institution, Consultant
consents to the use by the Company of his name and likeness in written materials
or oral presentations to current or prospective customers, investors or others,
provided that such materials or presentations accurately and appropriately
describe the nature of Consultant's relationship with or contribution to the
Company, and further provided that Company shall have provided Consultant a
reasonable prior opportunity to review and comment thereon.

      8.3 Notice. All notices hereunder shall be in writing and shall be given
to the other party at the address or facsimile number set forth below, or at
such other address or facsimile number as either may specify in writing to the
other. All notices shall be effective when deposited in the United States mail
with proper postage for first class registered or certified mail, return receipt
requested, or when delivered personally or dispatched by facsimile, addressed:

If to the Company:                  CTI
                                    PMB 461 One Kendall Square
                                    Bldg 600
                                    Cambridge, MA 02139
                                    Facsimile:__________________

If to the Consultant:               Kevin J.  Tracey
                                    17 Highview Avenue
                                    Old Greenwich, CT 06870
                                    Facsimile:_____________________

      8.4 Assignment. This Agreement, and the rights and obligations hereunder,
may not be assigned or transferred by either party without the prior written
consent of the other party; provided that the Company may assign this Agreement
to any successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company, but only if the Company obtains the agreement of such successor to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

      8.5 Entire Agreement. This Agreement constitutes the entire agreement of
the parties, and supersedes all previous written or oral representations,
agreements and

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understandings between the Company and the Consultant, with regard to the
subject matter hereof. This Agreement may be amended or extended only by a
writing signed by both parties.(1)

      8.6 Applicable Law. This Agreement shall be governed by, and construed in
accordance with the law of The Commonwealth of Massachusetts without regard to
any choice of law principle that would dictate the application of the law of
another jurisdiction.

      8.7 Consent to Jurisdiction. The parties to this Agreement hereby
irrevocably consent and submit to the exclusive jurisdiction of any Commonwealth
of Massachusetts or Federal court sitting in Boston in any action or proceeding
of any type whatsoever arising out of or relating to this Agreement.

      The parties hereby cause this Agreement to be signed as an instrument
under seal.

                                         CRITICAL THERAPEUTICS, INC.

                                         By: /s/ H. Shaw Warren M.D.
                                             -----------------------------------
                                         Name:  H. Shaw Warren M.D.
                                         Title:  Chairman, Board

                                         CONSULTANT:

                                         /s/ Kevin J. Tracey, M.D.
                                         ---------------------------------------
                                         Kevin J.  Tracey, M.D.

--------

1     N.B. Amendment is also restricted by Section 4,4(b) of the Company's
      June____, 2001 Investor Rights Agreement.

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                                    EXHIBIT A

                                  CONFIDENTIAL

                    PREEXISTING RESTRICTIONS AND OBLIGATIONS:

         Consultant is party to a Consulting Agreement with CoAxia, Inc.

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                           CRITICAL THERAPEUTICS, INC.

                                 AMENDMENT NO. 1

                                       TO

                              CONSULTING AGREEMENT

      This Amendment No. 1 dated January 16, 2003 (the "Amendment") to the
Consulting Agreement dated January 31, 2001 (the "Agreement") between Critical
Therapeutics, Inc., a Delaware corporation (the "Company"), and Kevin J. Tracey
(the "Consultant") is hereby entered into by the Company and the Consultant.
Except as set forth below, the Agreement shall remain in full force and effect.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Agreement.

      WHEREAS, the Company has been granted a license under certain North Shore
- Long Island Jewish Research Institute patent rights and technology relating to
vagal stimulation;

      WHEREAS, the Consultant has provided and shall continue to provide
services related to the development of the vagal stimulation technology; and

      WHEREAS, the Company and the Consultant desire to amend the Agreement to
provide for additional compensation to the Consultant in connection with the
licensing and continued development of the vagal stimulation technology.

      NOW, THEREFORE, for valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:

      1. Acting in accordance with Section 8.5 of the Agreement, the Agreement
is hereby amended as follows:

                  a. Section 2 shall be deleted in its entirety and a new
            Section 2 shall be inserted in lieu thereof which shall read as
            follows:

                        "Subject to Section 7, this Agreement will be for a term
                  beginning as of January 31, 2001 and ending on January 31,
                  2007."

                  b. Subsection 3.1 shall be deleted in its entirety and a new
            Subsection 3.1 shall be inserted in lieu thereof which shall read as
            follows:

                        "Compensation. As full compensation for the Services,
                  the Company shall pay the Consultant (i) $75,000 during the
                  first year of this Agreement, (ii) $137,250 during the second
                  year of this Agreement, (iii) $139,567.50 during the third
                  year of this Agreement, (iv) $141,954.53 during the fourth
                  year of this

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            Agreement, (v) $144,413.17 during the fifth year of this Agreement
            and (vi) $146,945.57 during the sixth year of this Agreement. Such
            fees shall be payable semi-monthly in arrears in accordance with the
            Company's regular payroll practices."

                  c. A new Subsection 3.3 is added after Subsection 3.2 and
            reads as follows:

                  "3.3 Royalties. The Company shall pay royalties to the
            Consultant of:

            (a) for Products resulting directly from medicinal chemistry work
      performed by the Consultant's laboratory:

                  (i) one percent (1%) on Net Sales by the Company or its
      Affiliates; and

                  (ii) five percent (5%) of royalty payments received from third
      parties by the Company or its Affiliates;

            (b) for Products not resulting directly from medicinal chemistry
      work performed by the Consultant's laboratory:

                  (i) one-half percent (0.5%) on Net Sales by the Company or its
      Affiliates; and

                  (ii) two and one-half percent (2.5%) of royalty payments
      received from third parties by the Company or its Affiliates.

            (c) For purposes of this Subsection 3.3, the following terms shall
      have the meanings specified below:

                  (i) "Affiliate" shall mean any corporation or other entity
      which controls, is controlled by, or is under common control with a party
      to this Agreement. A corporation or other entity shall be regarded as in
      control of another corporation or entity if it owns or directly or
      indirectly controls more than fifty percent (50%) of the voting stock or
      other ownership interest of the other corporation or entity, or if it
      possesses, directly or indirectly, the power to direct or cause the
      direction of the management and policies of the corporation or other
      entity or the power to elect or appoint fifty percent (50%) or more of the
      members of the governing body of the corporation or other entity.

                  (ii) "Net Sales" shall mean the gross amount billed or
      invoiced and received by the Company or its Affiliates (but not
      sublicensees) for sale or other disposition of Product(s) to independent
      third parties, less the following: (A) customary trade, quantity, or cash
      discounts to the extent actually allowed and taken; (B) amounts repaid and
      credited by reason of rejection or return; and (C) to the extent
      separately stated on purchase orders, invoices, or other documents of
      sale, any taxes or other governmental charges levied on production, sale,
      transportation, delivery, or use of the Product that is paid by or on
      behalf of the Company and its Affiliates. Net Sales will be determined

<PAGE>

      from the books and records of the Company and its Affiliates maintained in
      accordance with generally accepted accounting principles, consistently
      applied.

                  (iii) "Product(s)" shall mean any product (A) covered by a
      patent owned and/or controlled by the Institute related to vagal
      stimulation technology under which the Company has been licensed; or (B)
      made by a process covered by a patent owned and/or controlled by the
      Institution related to vagal stimulation technology under which the
      Company has been licensed."

      2. The Agreement, as supplemented and modified by this Amendment, together
with the other writings referred to in the Agreement or delivered pursuant
thereto which form a part thereof, contains the entire agreement among the
parties with respect to the subject matter thereof and amends, restates and
supersedes all prior and contemporaneous arrangements or understandings with
respect thereto.

      3. Upon the effectiveness of this Amendment, on and after the date hereof,
each reference in the Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import, and each reference in the other documents
entered into in connection with the Agreement, shall mean and be a reference to
the Agreement as amended hereby. Except as specifically amended above, the
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.

      4. This Amendment shall be governed by, and construed in accordance with,
the law of The Commonwealth of Massachusetts without regard to any choice of law
principle that would dictate the application of the law of another jurisdiction.

      5. This Amendment may be executed in counterparts, and each such
counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.

         [The remainder of this page has intentionally been left blank.]

<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Consulting Agreement as of the day and year first above written.

                                         CRITICAL THERAPEUTICS, INC.

                                         By: /s/ Paul Rubin
                                             -----------------------------------
                                         Name:
                                         Title:

                                         CONSULTANT

                                         /s/ Kevin J. Tracey
                                         ---------------------------------------
                                         Kevin J.  Tracey<PAGE>
                                                                   EXHIBIT 10.18

                           LOAN AND SECURITY AGREEMENT

      THIS LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of June 28,
2002, 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 CRITICAL THERAPEUTICS, INC., a
Delaware corporation ("Borrower"), provides the terms on which Bank shall lend
to Borrower and Borrower shall repay Bank. The parties agree as follows:

      1 ACCOUNTING AND OTHER TERMS

      Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document. Capitalized terms in this Agreement
shall have the meanings set forth in Section 13.

      2 LOAN AND TERMS OF PAYMENT

      2.1 PROMISE TO PAY. Borrower hereby unconditionally promises to pay Bank
the unpaid principal amount of all Credit Extensions and interest on the unpaid
principal amount of the Credit Extensions as and when due in accordance with
this Agreement.

      2.1.1 VENTURE EQUIPMENT FACILITY.

            (a) Subject to the terms and conditions of this Agreement, Bank
agrees to lend to Borrower, from time to time prior to the Commitment
Termination Date, equipment advances (each an "Equipment Advance" and
collectively the "Equipment Advances") in an aggregate amount not to exceed the
Committed Equipment Line. When repaid, the Equipment Advances may not be
re-borrowed. The proceeds of the Equipment Advances shall be used solely (i) to
reimburse Borrower for the purchase of Eligible Equipment purchased within
ninety (90) days (determined based upon the applicable invoice date of such
Eligible Equipment) of the Equipment Advance and to purchase new Eligible
Equipment, and (ii) to reimburse Borrower for Leasehold Improvements. Bank's
obligation to lend hereunder shall terminate on the earlier of (i) the
occurrence and continuance of an Event of Default, or (ii) the Commitment
Termination Date. For purposes of this Section, except as provided below, the
minimum amount of each Equipment Advance is Fifty Thousand Dollars ($50,000.00).
Notwithstanding the foregoing, the initial Equipment Advance hereunder (which
may be at an amount less than $50,000.00) may be used to reimburse Borrower for
Eligible Equipment purchased on or after January 1, 2002 (the "Initial Equipment
Advance") provided that the Initial Equipment Advance is requested on or before
thirty (30) days from the Closing Date. The Borrower may only request six (6)
Equipment Advances for the finance of Eligible Equipment (and Other Equipment
under the terms of this Agreement), and may only request six (6) Equipment
Advances for the finance Leasehold Loans. Borrower shall designate at the time
of each Equipment Advance request
<PAGE>
whether such Equipment Advance shall finance Eligible Equipment (and Other
Equipment under the terms of this Agreement) or Leasehold Loans.

            (b) To obtain an Equipment Advance, Borrower shall deliver to Bank a
completed supplement in substantially the form attached as EXHIBIT B ("Loan
Supplement"), together with Annex A to the applicable Loan Supplement describing
the Financing Equipment and such additional information as Bank may reasonably
request at least five (5) Business Days before the proposed funding date (the
"Funding Date"). On each Funding Date. Bank shall specify in the Loan Supplement
for each Equipment Advance, the Basic Rate, and the Payment Dates. If Borrower
satisfies the conditions of each Equipment Advance, Bank shall disburse such
Equipment Advance by internal transfer to Borrower's deposit account with Bank.
Each Equipment Advance may not exceed 100% of the Original Stated Cost of the
Financed Equipment or 100% of the documented costs of Leasehold Improvements.

      2.1.2 UNDISBURSED CREDIT EXTENSIONS. The Bank's obligation to lend the
undisbursed portion of the Credit Extensions shall terminate if there has been a
Material Adverse Change, or a material adverse change in the prospects of
Borrower, whether or not arising from transactions in the ordinary course of
business, or there has been any material adverse deviation by Borrower from the
most recent business plan of Borrower presented to and accepted by Bank prior to
the execution of this Agreement.

      2.2 INTEREST RATE; PAYMENTS.

            (a) Principal and Interest Payments On Payment Dates. Borrower shall
repay each Equipment Advance pursuant to the terms set forth in the
corresponding Loan Supplement. For each Equipment Advance, Borrower shall make
equal monthly payments of principal and interest, in advance, calculated by the
Bank based upon: (1) the amount of the Equipment Advance, (2) the Basic Rate,
and (3) an amortization schedule equal to the Repayment Period (individually,
the "Scheduled Payment", and collectively, "Scheduled Payments"), on the first
Business Day of the month following the month in which the Funding Date occurs
(or commencing on the Funding Date if the Funding Date is the first Business Day
of the month) with respect to such Equipment Advance and continuing thereafter
during the Repayment Period on the first Business Day of each successive
calendar month (each a "Payment Date"). All unpaid principal and accrued
interest is due and payable in full on the last Payment Date with respect to
such Equipment Advance. Payments received after 12:00 noon Eastern time are
considered received at the opening of business on the next Business Day. An
Equipment Advance may only be prepaid in accordance with Sections 2.2(e) and
2.2(g).

            (b) Interest Rate. Equipment Advances under the Committed Equipment
Line shall accrue interest on the unpaid principal amount of each Equipment
Advance until the Equipment Advance has been paid in full, at the per annum rate
of interest equal to the Basic Rate fixed as of the Funding Date for each
Equipment Advance in accordance with the definition of the Basic Rate. Any
amounts outstanding during the continuance of an Event of Default shall bear
interest at a per annum rate equal to the Prime Rate plus five percent (5%)(the
"Default Rate").

                                       2
<PAGE>
            (c) Interim Payment. In addition to the Scheduled Payments, on the
Funding Date for each Equipment Advance (unless the Funding Date is the first
Business Day of the month) Borrower shall pay to the Bank, an amount (the
"Interim Payment") equal to (i) the subject Equipment Advance multiplied by (ii)
the sum of the Basic Rate (as of the date of such Equipment Advance) plus Two
Percent (2%), divided by (iii) 360 days and then multiplied by (iv) the number
of days from the actual Funding Date of the Equipment Advance until the first
day of the month following such Equipment Advance.

            (d) Final Payment. On the Maturity Date with respect to each
Equipment Advance, Borrower shall pay, in addition to the unpaid principal and
accrued interest and all other amounts due on such date with respect to such
Equipment Advance, an amount equal to the Final Payment.

            (e) Prepayment Upon an Event of Loss. If any Financed Equipment is
subject to an Event of Loss and Borrower is required to or elects to prepay the
Equipment Advance with respect to such Financed Equipment pursuant to Section
6.8, then such Equipment Advance shall be prepaid to the extent and in the
manner provided in such section.

            (f) Mandatory Prepayment Upon an Acceleration. If the Equipment
Advances are accelerated following the occurrence of an Event of Default or
otherwise, Borrower shall immediately pay to Bank an amount equal to the sum of:
(i) all outstanding principal plus accrued interest, (ii) the Final Payment plus
(iii) all other sums, if any, that shall have become due and payable, including
interest at the Default Rate with respect to any past due amounts.

            (g) Permitted Prepayment of Loans. Borrower shall have the option to
prepay any of the Equipment Advances advanced by Bank under this Agreement,
provided Borrower (i) provides written notice to Bank of its election to prepay
the Equipment Advances at least five (5) days prior to such prepayment, and (ii)
pays, on the date of such prepayment (A) all outstanding principal plus accrued
interest, (B) the Final Payment plus (C) all other sums, if any, that shall have
become due and payable pursuant to the terns hereof, including interest at the
Default Rate with respect to any past due amounts.

      2.3 FEES. Borrower shall pay to Bank:

            (a) Final Payment. The Final Payment; and

            (b) Bank Expenses. All Bank Expenses (including reasonable
attorneys' fees and expenses incurred through and after the Closing Date) when
due.

      2.4 ADDITIONAL COSTS. If any new law or regulation increases Bank's costs
or reduces its income for any loan, Borrower shall pay the increase in cost or
reduction in income or additional expense; provided, however, that Borrower
shall not be liable for any amount attributable to any period before 180 days
prior to the date Bank notifies Borrower of such increased costs. Bank agrees
that it shall allocate any increased costs among its customers similarly
affected in good faith and in a manner consistent with Bank's customary
practice.

      3 CONDITIONS OF LOANS

                                       3
<PAGE>
      3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION. The obligation of
Bank to make the initial Credit Extension is subject to the condition precedent
that Bank shall have received, in form and substance satisfactory to Bank, the
following:

            (a) this Agreement;

            (b) a certificate of the Secretary of Borrower with respect to
      articles, bylaws, incumbency and resolutions authorizing the execution and
      delivery of this Agreement;

            (c) Negative Pledge Agreement covering Intellectual Property;

            (d) landlord's waiver;

            (e) a legal opinion of Borrower's counsel, in form and substance
      acceptable to Bank;

            (f) Warrant to Purchase Stock;

            (g) financing statements (Forms UCC-1);

            (h) Account Control Agreement/ Investment Account Control Agreement

            (i) insurance certificate;

            (j) payment of Bank Expenses then due pursuant to the terms hereof,

            (k) Certificate of Foreign Qualification (if applicable);

            (1) Certificate of Good Standing/Legal Existence; and

            (m) such other documents, and completion of such other matters, as
      Bank may reasonably deem necessary or appropriate.

      3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS. Bank's obligations to
make each Credit Extension, including the initial Credit Extension, is subject
to the following:

      (a) timely receipt of a completed Loan Supplement: and

      (b) the representations and warranties in Section 5 must be materially
true on the date of the Loan Supplement and on the effective date of each Credit
Extension (except to the extent such representation or warranty relates to a
specific prior date) and no Event of Default shall have occurred and be
continuing as of such effective date, or result from the Credit Extension. Each
Credit Extension is Borrower's representation and warranty on that date that the
representations and warranties in Section 5 remain true.

      4 CREATION OF SECURITY INTEREST

      4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants Bank, to secure the
payment and performance in full of all of the Obligations and the performance of
each of Borrower's

                                       4
<PAGE>
duties under the Loan Documents, a continuing security interest in, and pledges
and assigns to the Bank, the Collateral, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof. Borrower
warrants and represents that the security interest granted herein shall be a
first priority security interest in the Collateral. During the existence of the
Event of Default, Bank may place a "hold" on any deposit account pledged as
Collateral.

Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is bound by, any material license or other material agreement with respect to
which the Borrower is the licensee that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower's interest in such
material license or material agreement or any other property. Borrower shall not
enter into, or become bound by, any such license or agreement which is
reasonably likely to have a material impact on Borrower's business or financial
condition, unless Borrower provides Bank with written notice within five (5)
Business Days after entering into such agreement. Borrower shall take such steps
as Bank reasonably requests to obtain the consent of, or waiver by, any person
whose consent or waiver is necessary for all such licenses or contract rights to
be deemed "Collateral" and for Bank to have a security interest in it that might
otherwise be restricted or prohibited by law or by the terms of any such license
or agreement, whether now existing or entered into in the future.

Notwithstanding the foregoing provisions of this Section 4, the within grant of
a security interest shall not extend to, and the term "Collateral" shall not
include Restricted Collateral, to the extent that (i) such Restricted Collateral
is not assignable or capable of being encumbered as a matter of law or under the
terms of the Restricted Collateral (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the consent of
the non-Borrower parties to the Restricted Collateral and (ii) such consent has
not been obtained; provided, however, that the foregoing grant of security
interest shall extend to, and the term "Collateral" shall include, (A) any and
all proceeds of such agreement to the extent that the assignment or encumbering
of such proceeds is not so restricted as a matter o f law or under the terms of
such agreement (but solely to the extent that any such restriction shall be
enforceable under applicable law) and (B) any agreement constituting Restricted
Collateral upon consent thereto being obtained from the non-Borrower parties to
such agreement (but Borrower shall have no obligation to obtain any such
consent).

"Restricted Collateral" shall mean: licenses in which the Borrower is the
licensee which govern the use of any other party's intellectual property.

Borrower agrees that any disposition of the Collateral in violation of this
Agreement, by either the Borrower or any other Person, shall be deemed to
violate the rights of the Bank under the Code. If the Agreement is terminated,
Bank's lien and security interest in the Collateral shall continue until
Borrower fully satisfies its Obligations. If Borrower shall at any time, acquire
a commercial tort claim, Borrower shall promptly notify Bank in a writing signed
by Borrower of the brief details thereof and grant to Bank in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
Bank.

      5 REPRESENTATIONS AND WARRANTIES

                                       5
<PAGE>
      Borrower represents and warrants as follows:

      5.1 DUE ORGANIZATION AND AUTHORIZATION. Borrower and each Subsidiary is
validly existing and in good standing in its state of formation and qualified to
do business in, and in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be qualified except where
the failure to do so could not reasonably be expected to cause a Material
Adverse Change. In connection with this Agreement, the Borrower delivered to the
Bank a certificate signed by the Borrower and entitled "Perfection Certificate".
The Borrower represents and warrants to the Bank that: (a) the Borrower's exact
legal name is that indicated on the Perfection Certificate and on the signature
page hereof; and (b) the Borrower is an organization of the type. and is
organized in the jurisdiction, set forth in the Perfection Certificate; and (c)
the Perfection Certificate accurately sets forth the Borrower's organizational
identification number or accurately states that the Borrower has none; and (d)
the Perfection Certificate accurately sets forth the Borrower's place of
business, or, if more than one, its chief executive office as well as the
Borrower's mailing address if different, and (e) all other information set forth
on the Perfection Certificate pertaining to the Borrower is accurate and
complete. If the Borrower does not now have an organizational identification
number, but later obtains one, Borrower shall forthwith notify the Bank of such
organizational identification number.

      The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's certificate of
incorporation, as may be amended, and by-laws, nor constitute an event of
default under any material agreement by which Borrower is bound. Borrower is not
in default under any agreement to which or by which it is bound in which the
default could reasonably be expected to cause a Material Adverse Change.

      5.2 COLLATERAL. Borrower has good title to the Collateral, free of Liens
except Permitted Liens. Borrower has no deposit account, other than the deposit
accounts with Bank and deposit accounts described in the Perfection Certificate
delivered to the Bank in connection herewith. The Accounts are bona fide,
existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and
unconditional acceptance by the account debtor. The Collateral is not in the
possession of any third party bailee (such as a warehouse). In the event that
Borrower, after the date hereof, intends to store or otherwise deliver any
portion of the Collateral to a bailee, then Borrower will first receive the
written consent of Bank and such bailee must acknowledge in writing that the
bailee is holding such Collateral for the benefit of Bank. Borrower has no
knowledge of any actual or imminent Insolvency Proceeding of any account debtor
whose accounts are an Eligible Account in any Borrowing Base Certificate. All
Inventory is in all material respects of good and marketable quality, free from
material defects.

      5.3 LITIGATION. Except as shown in the Perfection Certificate, there are
no actions or proceedings pending or, to the knowledge of Borrower's Responsible
Officers, threatened by or against Borrower or any Subsidiary in which an
adverse decision could reasonably be expected to cause a Material Adverse
Change.

      5.4 NO MATERIAL DEVIATION IN FINANCIAL STATEMENTS. All consolidated
financial statements for Borrower and any Subsidiary delivered to Bank fairly
present in all material

                                       6
<PAGE>
respects Borrower's consolidated financial condition and Borrower's consolidated
results of operations at the dates and for the periods indicated. There has not
been any material deterioration in Borrower's consolidated financial condition
since the date of the most recent financial statements submitted to Bank.

      5.5 SOLVENCY. Borrower is able to pay its debts (including trade debts) as
they mature.

      5.6 REGULATORY COMPLIANCE. Borrower is not an "investment company" or a
company "controlled" by an "investment company" under the Investment Company
Act. Borrower is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). Borrower has complied in all material respects with the Federal
Fair Labor Standards Act. Borrower has not violated any laws, ordinances or
rules. the violation of which could reasonably be expected to cause a Material
Adverse Change. None of Borrower's or any Subsidiary's properties or assets has
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous Persons, in disposing, producing, storing, treating, or transporting
any hazardous substance other than legally. Borrower and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes except those being contested in good faith with adequate
reserves under GAAP. Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all government authorities that are necessary to continue
its business as currently conducted except where the failure to make such
declarations; notices or filings would not reasonably be expected to cause a
Material Adverse Change.

      5.7 SUBSIDIARIES. Borrower does not own any stock, partnership interest or
other equity securities except for Permitted Investments.

      5.8 FULL DISCLOSURE. No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank
taken together with all such written certificates and written statements given
to Bank contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower in good faith and based upon reasonable
assumptions are not viewed as facts and that actual results during the period or
periods covered by such projections and forecasts may differ from the projected
or forecasted results).

      6 AFFIRMATIVE COVENANTS

      Borrower shall do all of the following:

      6.1 GOVERNMENT COMPLIANCE. Borrower shall maintain its and all
Subsidiaries' legal existence and good standing in its jurisdiction of formation
and maintain qualification in each jurisdiction in which the failure to so
qualify would reasonably be expected to have a material adverse effect on
Borrower's business or operations. Borrower shall comply, and have each
Subsidiary comply, with all laws, ordinances and regulations to which it is
subject,

                                       7
<PAGE>
noncompliance with which could have a material adverse effect on Borrower's
business or operations or be expected to cause a Material Adverse Change.

      6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

            (a) 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.

      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).

      6.4 TAXES. Borrower shall make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments (other
than taxes and assessments which Borrower is contesting in good faith, with
adequate reserves maintained in accordance with GAAP) and will deliver to Bank,
on demand, appropriate certificates attesting to such payments.

      6.5 INSURANCE. Borrower shall keep its business and the Collateral insured
for risks and in amounts, standard for Borrower's industry, and as Bank may
reasonably request in Bank's reasonable discretion. Insurance policies shall be
in a form, with companies, and in amounts that are satisfactory to Bank. All
property policies with respect to the Collateral shall have a lender's loss
payable endorsement showing Bank as an additional loss payee and all liability
policies shall show the Bank as an additional insured and all policies shall
provide that the insurer must Olive Bank at least twenty (20) days notice before
canceling its policy. At Bank's request, Borrower shall deliver certified copies
of policies and evidence of all premium payments. Proceeds payable under any
policy shall, at Banks option, be payable to Bank on account of the Obligations.
Notwithstanding the foregoing and subject to Section 6.8, so long as no Event of
Default has occurred and is continuing, Borrower shall have the option of
applying the proceeds

                                       8
<PAGE>
of any casualty policy up to $125,000.00, in the aggregate, toward the
replacement or repair of destroyed or damaged property; provided that (i) any
such replaced or repaired property (a) shall be of equal or like value as the
replaced or repaired Collateral and (b) shall be deemed Collateral in which Bank
has been granted a first priority security interest and (ii) after the
occurrence and during the continuation of an Event of Default all proceeds
payable under such casualty policy shall, at the option of the Bank, be payable
to Bank on account of the Obligations. If Borrower fails to obtain insurance as
required under Section 6.5 or to pay any amount or furnish any required proof of
payment to third persons and the Bank, Bank may make all or part of such payment
or obtain such insurance policies required in Section 6.5, and take any action
under the policies Bank deems prudent.

      6.6 ACCOUNTS. In order to permit the Bank to monitor the Borrower's
financial performance and condition, Borrower, and all Borrower's Subsidiaries,
shall maintain Borrower's, and such Subsidiaries, primary depository, operating
and securities accounts with Bank and a majority of the Borrower's or such
Subsidiaries cash or securities in excess of that amount used for Borrower's or
such Subsidiaries operations shall be maintained or administered through the
Bank. Any Guarantor shall maintain all depository, operating and securities
accounts with Bank. Borrower shall identify to Bank, in writing, any bank or
securities account opened by Borrower with any institution other than Bank. In
addition, for each such account that the Borrower at any time opens or
maintains, Borrower shall, at the Bank's request and option, pursuant to an
agreement in form and substance acceptable to the Bank, cause the depositary
bank or securities intermediary to agree that such account is the collateral of
the Bank pursuant to the terms hereunder. The provisions of this paragraph shall
not apply to deposit accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of the Borrower's
employees.

      6.7 FURTHER ASSURANCES. Borrower shall execute any further instruments and
take further action as Bank reasonably requests to perfect or continue Bank's
security interest in the Collateral or to effect the purposes of this Agreement.

      6.8 LOSS; DESTRUCTION; OR DAMAGE. Borrower shall bear the risk of the
Financed Equipment being lost, stolen, destroyed, or damaged. If during the term
of this Agreement any item of Financed Equipment becomes obsolete or is lost,
stolen, destroyed, damaged beyond repair, rendered permanently unfit for use, or
seized by a governmental authority for any reason for a period equal to at least
the remainder of the term of this Agreement (an "Event of Loss"), then in each
case, Borrower:

            (a) prior to the occurrence of an Event of Default, at Borrower's
option, shall (i) pay to Bank on account of the Obligations all accrued interest
to the date of the prepayment, plus all outstanding principal, plus the Final
Payment, each with respect to such item of Financed Equipment subject to an
Event of Loss; or (ii) repair or replace any Financed Equipment subject to an
Event of Loss provided the repaired or replaced Financed Equipment is of equal
or like value to the Financed Equipment subject to an Event of Loss and provided
further that Bank has a first priority perfected security interest in such
repaired or replaced Financed Equipment.

            (b) during the continuance of an Event of Default, on or before the
next Payment Date following such Event of Loss. for each such item of Financed
Equipment subject

                                       9
<PAGE>
to such Event of Loss, Borrower shall, at Bank's option, pay to Bank an amount
equal to the sum of: (i) all outstanding principal plus accrued interest with
respect to such item of Financed Equipment subject to an Event of Loss, (ii) the
Final Payment with respect to such item of Financed Equipment subject to an
Event of Loss, plus (iii) all other sums, if any, that shall have become due and
payable, including interest at the Default Rate with respect to any past due
amounts.

      7 NEGATIVE COVENANTS

      Borrower shall not do any of the following without the Bank's prior
written consent which shall not be unreasonably withheld.

      7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of
(collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all
or an part of its business or property, except for Transfers (1) of Inventory in
the ordinary course of business: (ii) of exclusive and non-exclusive licenses,
partnerships, joint ventures and similar arrangements for the use of the
property of Borrower or its Subsidiaries in the ordinary course of business; or
(iii) of worn-out or obsolete Equipment.

      7.2 CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.
Engage in or permit any of its Subsidiaries to engage in any business other than
the businesses currently engaged in by Borrower or have a material change in its
ownership (other than by the sale of Borrower's equity securities in a public
offering or to venture capital investors), or management such that either of the
individuals holding the following positions as of the Closing Date is no longer
actively involved in the senior management of the Borrower on a full tune basis,
and a replacement, satisfactory to the Bank is not made within ten (10) Business
Days of such change:(i) Chief Executive Officer, or (ii) Chief Technical
Officer. Borrower shall not, without at least thirty (30) days prior written
notice to Bank: (i) relocate its chief executive office, or (ii) change its
jurisdiction of organization, or (iii) change its organizational structure or
type, or (iv) change its legal name, or (v) change any organizational number (if
any) assigned by its jurisdiction of organization. The Borrower shall provide
written notice to Bank within five (5) days of adding any new offices or
business locations (unless such new offices or business locations contain less
than Ten Thousand Dollars ($10,000.0) in Borrower's assets or property).

      7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with any other Person, or acquire, or
permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person. A Subsidiary may merge or
consolidate into another Subsidiary or into Borrower.

      7.4 INDEBTEDNESS. Create, incur, assume, or be liable for any
Indebtedness, or permit any Subsidiary to do so, other than Permitted
Indebtedness.

      7.5 ENCUMBRANCE. Create, incur, or allow any Lien on any of its property,
or assign or convey any right to receive income, including the sale of any
Accounts, or permit any of its Subsidiaries to do so, except for Permitted
Liens, or permit any Collateral not to be subject to the first priority security
interest granted herein. The Collateral may also be subject to Permitted Liens.

                                      10
<PAGE>
      7.6 DISTRIBUTIONS; INVESTMENTS. (i) Directly or indirectly acquire or own
any Person, or make any Investment in any Person, other than Permitted
Investments, or permit any of its Subsidiaries to do so; or (ii) pay any
dividends or make any distribution or payment or redeem, retire or purchase any
capital stock. Borrower may enter into employee stock or option plan approved by
the Board of Directors from time to time.

      7.7 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter or permit
any material transaction with any Affiliate, except transactions that are in the
ordinary course of Borrower's business, upon fair and reasonable terms that are
no less favorable to Borrower than would be obtained in an arm's length
transaction with a non-affiliated Person.

      7.8 SUBORDINATED DEBT. Make or permit any payment on any Subordinated
Debt, except under the terms of the Subordinated Debt, or amend any provision in
any document relating to the Subordinated Debt, without Bank's prior written
consent.

      7.9 COMPLIANCE. Become an "investment company" or a company controlled by
an "investment company'", under the Investment Company Act of 1940 or undertake
as one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction. as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.

      8 EVENTS OF DEFAULT

      Any one of the following is an Event of Default:

      8.1 PAYMENT DEFAULT. Borrower fails to pay any of the Obligations within
three (3) Business Days after their due date. During the additional period the
failure to cure the default is not an Event of Default (but no Credit Extension
shall be made during the cure period);

      8.2 COVENANT DEFAULT. Borrower does not perform any obligation in Section
6 or violates any covenant in Section 7 or does not perform or observe any other
material term, condition or covenant in this Agreement, any Loan Documents, or
in any agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within ten
(10) days after it occurs, or if the default cannot be cured within ten (10)
days or cannot be cured after Borrower's attempts in the ten (10) day period,
and the default may be cured within a reasonable time, then Borrower shall have
additional time, (of not more than thirty (30) days) to attempt to cure the
default. Grace periods provided under this section shall not apply, among other
things, to financial covenants or any other covenants that are required to be
satisfied, completed or tested by a date certain. During the additional period
the failure to cure the default is not an Event of Default (but no Credit
Extensions shall be made during the cure period);

      8.3   MATERIAL ADVERSE CHANGE.  A Material Adverse Change occurs;

                                       11
<PAGE>
      8.4 ATTACHMENT. (i) Any material portion of Borrower's assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in twenty (20) days; (ii) the service
of process upon the Borrower seeking to attach, by trustee or similar process
any funds of the Borrower on deposit with the Bank; (iii) Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business; (iv) a judgment or other claim becomes a Lien on a material portion of
Borrower's assets; or (v) a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within twenty
(20) days after Borrower receives notice. These are not Events of Default if
stayed or if a bond is posted pending contest by Borrower (but no Credit
Extensions shall be made during the cure period);

      8.5 INSOLVENCY. (i) Borrower becomes insolvent; (ii) Borrower begins an
Insolvency Proceeding; or (iii) an Insolvency Proceeding is begun against
Borrower and not dismissed or stayed within forty-five (45) days (but no Credit
Extensions shall be made before any Insolvency Proceeding is dismissed);

      8.6 OTHER AGREEMENTS. If there is a default in any agreement to which
Borrower is a party with a third party or parties resulting in a right by such
third party or parties, whether or not exercised, to accelerate the maturity of
any Indebtedness in an amount in excess of One Hundred Thousand Dollars
($100,000) or that could result in a Material Adverse Change;

      8.7 JUDGMENTS. If a judgment or judgments for the payment of money in an
amount individually or in the aggregate, of at least Two Hundred Thousand
Dollars ($200,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment);

      8.8 MISREPRESENTATIONS. If Borrower or any Person acting for Borrower
makes any material misrepresentation or material misstatement in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.

      8.9 GUARANTY. (i) Any guaranty of any Obligations terminates or ceases for
any reason to be in full force; or (ii) any Guarantor does not perform any
obligation under any guaranty of the Obligations; or (iii) any material
misrepresentation or material misstatement exists now or later in any warranty
or representation in any guaranty of the Obligations or in any certificate
delivered to Bank in connection with the guaranty; or (iv) any circumstance
described in Section 7, or Sections 8.4, 8.5 or 8.7 occurs to any Guarantor, or
(v) the death, liquidation, winding up, termination of existence, or insolvency
of any Guarantor.

      9 BANK'S RIGHTS AND REMEDIES

      9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues
Bank may, without notice or demand, do any or all of the following:

            (a) Declare all Obligations immediately due and payable (but if an
      Event of Default described in Section 8.5 occurs all Obligations are
      immediately due and payable without any action by Bank);

                                       12
<PAGE>
            (b) Stop advancing money or extending credit for Borrower's benefit
      under this Agreement or under any other agreement between Borrower and
      Bank;

            (c) Settle or adjust disputes and claims directly with account
      debtors for amounts, on terms and in any order that Bank considers
      advisable;

            (d) Make any payments and do any acts it considers necessary or
      reasonable to protect its security interest in the Collateral. Borrower
      shall assemble the Collateral if Bank requests and make it available as
      Bank designates. Bank may enter premises where the Collateral is located,
      take and maintain possession of any part of the Collateral, and pay,
      purchase, contest, or compromise any Lien which appears to be prior or
      superior to its security interest and pay all expenses incurred. Borrower
      grants Bank a license to enter and occupy any of its premises, without
      charge, to exercise any of Bank's rights or remedies;

            (e) Apply to the Obligations any (i) balances and deposits of
      Borrower it holds, or (ii) any amount held by Bank owing to or for the
      credit or the account of Borrower;

            (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
      for sale, advertise for sale, and sell the Collateral. Subject to the
      rights of third parties, Bank is granted a non-exclusive, royalty-free
      license or other right, effective during the existence of an Event of
      Default, to use, without charge, Borrower's labels, patents, copyrights,
      mask works, rights of use of any name, trade secrets, trade names,
      trademarks, service marks, and advertising matter, or any similar property
      as it pertains to the Collateral, in completing production of, advertising
      for sale, and selling any Collateral and, in connection with Bank's
      exercise of its rights under this Section, subject to the rights of third
      parties, Borrower's rights under all licenses and all franchise agreements
      inure to Bank's benefit; and

            (g) Dispose of the Collateral according to the Code.

      9.2 POWER OF ATTORNEY. Borrower hereby irrevocably appoints Bank as its
lawful attorney-in-fact, to be effective upon the occurrence and during the
continuance of an Event of Default, to: (i) endorse Borrower's name on any
checks or other forms of payment or security; (ii) sign Borrower's name on any
invoice or bill of lading for any Account or drafts against account debtors;
(iii) settle and adjust disputes and claims about the Accounts directly with
account debtors, for amounts and on terms Bank determines reasonable; (iv) make,
settle. and adjust all claims under Borrower's insurance policies; and (v)
transfer the Collateral into the name of Bank or a third party as the Code
permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign
Borrower's name on any documents necessary to perfect or continue the perfection
of any security interest regardless of whether an Event of Default has occurred
until all Obligations have been satisfied in full and Bank is under no further
obligation to make Credit Extensions hereunder. Bank's foregoing appointment as
Borrower's attorney in fact, and all of Bank's rights and powers, coupled with
an interest, are irrevocable until all Obligations have been fully repaid and
performed and Bank's obligation to provide Credit Extensions terminates.

                                       13
<PAGE>
      9.3 ACCOUNTS COLLECTION. In the event that an Event of Default occurs and
is continuing, Bank may notify any Person owing Borrower money of Bank's
security interest in the funds and verify and/or collect the amount of the
Account. After the occurrence of an Event of Default. any amounts received by
Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank,
Borrower shall immediately deliver such receipts to Bank in the form received
from the account debtor, with proper endorsements for deposit.

      9.4 BANK EXPENSES. Any amounts paid by Bank as provided herein are Bank
Expenses and are immediately due and payable, and shall bear interest at the
then applicable rate and be secured by the Collateral. No payments by Bank shall
be deemed an agreement to make similar payments in the future or Bank's waiver
of any Event of Default.

      9.5 BANK'S LIABILITY FOR COLLATERAL. So long as the Bank complies with
reasonable banking practices regarding the safekeeping of collateral, the Bank
shall not be liable or responsible for: (a) the safekeeping of the Collateral;
(b) any loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the
Collateral (except to the extent such loss, damage or destruction is caused by
Bank's gross negligence or willful misconduct).

      9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this Agreement,
the Loan Documents, and all other agreements are cumulative. Bank has all rights
and remedies provided under the Code, by law, or in equity. Bank's exercise of
one right or remedy is not an election, and Bank's waiver of any Event of
Default is not a continuing waiver. Bank's delay is not a waiver, election, or
acquiescence. No waiver hereunder shall be effective unless signed by Bank and
then is only effective for the specific instance and purpose for which it was
given.

      9.7 DEMAND WAIVER. Borrower waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

      10 NOTICES

      All notices or demands by any party to this Agreement or any other related
agreement must be in writing and be personally delivered or sent by an overnight
delivery service, by certified mail, postage prepaid, return receipt requested,
or by telefacsimile at the addresses listed below. Either Bank or Borrower may
change its notice address by giving the other written notice.

<TABLE>
<S>                                <C>
            If to Borrower:        Critical Therapeutics, Inc.
                                   675 Massachusetts Avenue, 14th
                                   Floor
                                   Cambridge, Massachusetts 02139
                                   Attn:  President
                                   FAX:

            with a copy to:        Hale and Dorr LLP
</TABLE>

                                       14
<PAGE>
<TABLE>
<S>                                <C>
                                   60 State Street
                                   Boston, Massachusetts 02109
                                   Attn.:  Steven Singer, Esquire
                                   FAX: (617)526-5000

            If to Bank:            Silicon Valley Bank
                                   One Newton Executive Park, Suite 200
                                   2221 Washington Street
                                   Newton, Massachusetts 02462
                                   Attn:  R. Bryan Jadot
                                   Fax: (617) 969-4395

            with a copy to:        Riemer & Braunstein LLP
                                   Three Center Plaza
                                   Boston, Massachusetts 02108
                                   Attn:  David A. Ephraim, Esquire
                                   FAX:  (617) 880-3456
</TABLE>

      11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

      Massachusetts law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Massachusetts; provided, however, that if for
any reason Bank cannot avail itself of such courts in the Commonwealth of
Massachusetts, Borrower accepts jurisdiction of the courts and venue in Santa
Clara County, California. NOTWITHSTANDING THE FOREGOING, THE BANK SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN
THE COURTS OF ANY OTHER JURISDICTION WHICH THE BANK DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE THE
BANK'S RIGHTS AGAINST THE BORROWER OR ITS PROPERTY.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

      12 GENERAL PROVISIONS

      12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit
of the successors and permitted assigns of each party. Borrower may not assign
this Agreement or any rights or Obligations under it without Bank's prior
written consent which may be granted or withheld in Bank's discretion. Bank has
the right, without the consent of or notice to Borrower,

                                       15
<PAGE>
to sell, transfer, negotiate, or grant participation in all or any part of, or
any interest in, Bank's obligations, rights and benefits under this Agreement,
the Loan Documents or any related agreement.

      12.2 INDEMNIFICATION. Borrower hereby indemnifies, defends and holds the
Bank and its officers, employees and agents harmless against: (a) all
obligations, demands, claims, and liabilities asserted by any other party in
connection with the transactions contemplated by the Loan Documents; and (b) all
losses or Bank Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable
attorneys' fees and expenses), except for losses caused by Bank's gross
negligence or willful misconduct.

      12.3 RIGHT OF SET-OFF. Borrower and any guarantor hereby grant to Bank, a
lien, security interest and right of setoff as security for all Obligations to
Bank, whether now existing or hereafter arising upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of the Bank or in
transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice. Bank may set off
the same or any part thereof and apply the same to any liability or obligation
of Borrower and any guarantor even though unmatured and regardless of the
adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO
REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWER
OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

      12.4 TIME OF ESSENCE. Time is of the essence for the performance of all
Obligations in this Agreement.

      12.5 SEVERABILITY OF PROVISION. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.

      12.6 AMENDMENTS IN WRITING; INTEGRATION. All amendments to this Agreement
must be in writing signed by both Bank and Borrower. This Agreement and the Loan
Documents represent the entire agreement about this subject matter, and
supersede prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement and the Loan Documents merge
into this Agreement and the Loan Documents.

      12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, are an original, and all taken together, constitute
one Agreement.

      12.8 SURVIVAL. All covenants, representations and warranties made in this
Agreement continue in full force while any Obligations remain outstanding. The
obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the
statute of limitations with respect to such claim or cause of action shall have
run.

                                       16
<PAGE>
      12.9 CONFIDENTIALITY. In handling any confidential information, Bank shall
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (i) to Bank's
subsidiaries or affiliates in connection with their business with Borrower
(provided, however, that such subsidiary or affiliate shall comply with the
terms of this provision); (ii) to prospective transferees or purchasers of any
interest in the Credit Extensions (provided, however, that such prospective
transferee or purchaser shall comply with the terms of this provision); (iii) as
required by law, regulation, subpoena, or other order, (iv) as required in
connection with Bank's examination. or audit; and (v) as Bank considers
appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public
domain or in Bank's possession when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank; or (b) is disclosed to Bank by a third
party, if Bank does not know that the third party is prohibited from disclosing
the information.

      13 DEFINITIONS

      13.1 DEFINITIONS.

      "ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing, as such definition may be amended from time to time according to the
Code.

      "AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

      "BANK EXPENSES" are all audit fees (not to exceed once per year prior to
an Event of Default) and expenses and reasonable costs or expenses (including
reasonable attorneys' fees and expenses) for preparing, negotiating, defending
and enforcing the Loan Documents (including appeals or Insolvency Proceedings).

      "BASIC RATE" is as of the Funding Date the per annum rate of interest
(based on a year of 360 days) equal to (i) for the Leasehold Loans, a per annum
rate equal to the Prime Rate, and (ii) for all other Equipment Advances a per
annum rate of interest equal to the Prime Rate, plus one percent (1.0%).

      "BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

      "BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

      "CLOSING DATE" is the date of this Agreement.

                                       17
<PAGE>
      "CODE" is the Uniform Commercial Code as adopted in Massachusetts, as
amended and as may be amended and in effect from time to time.

      "COLLATERAL" is any and all properties, rights and assets of the Borrower
(excluding Intellectual Property, as defined herein) granted by the Borrower to
Bank or arising under the Code, now, or in the future, in which the Borrower
obtains an interest, or the power to transfer rights, including, without
limitation, the property described on EXHIBIT A.

      "COMMITTED EQUIPMENT LINE" is an Equipment Advance or Equipment Advances
of up to Two Million Two Hundred and Fifty Thousand Dollars ($ 2,250,000.00) to
finance Eligible Equipment and Other Equipment, and Seven Hundred and Fifty
Thousand Dollars ($750,000.00) for Leasehold Loans.

      "COMMITMENT TERMINATION DATE" shall mean December 31, 2002.

      "CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

      "CREDIT EXTENSION" is each Equipment Advance or any other extension of
credit by Bank for Borrower's benefit.

      "ELIGIBLE EQUIPMENT" is (a) general purpose computer equipment, office
equipment, fixtures, test and laboratory equipment, furnishings, subject to the
limitations set forth herein, and (b) Other Equipment that complies with all of
Borrower's representations and warranties to Bank and which is reasonably
acceptable to Bank in all respects.

      "EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

      "EQUIPMENT ADVANCE" is defined in Section 2.1.1(a).

      "ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.

      "EVENT OF LOSS" is defined in Section 6.8.

                                       18
<PAGE>
      "FINAL PAYMENT" is a payment (in addition to and not a substitution for
the regular monthly payments of principal plus accrued interest) due on the
Maturity Date for Such Equipment Advance equal to the Loan Amount for such
Equipment Advance multiplied by the Final Payment Percentage.

      "FINAL PAYMENT PERCENTAGE" is (i) for Leasehold Loans seven percent
(7.0%), and (ii) for all other Equipment Advances, eight and one-half of one
percent (8.5%).

      "FINANCED EQUIPMENT" is all present and future Eligible Equipment in which
Borrower has any interest, the purchase of which is financed by an Equipment
Advance.

      "FUNDING DATE" is any date on which an Equipment Advance is made to or on
account of Borrower.

      "GAAP" is generally accepted accounting principles.

      "GUARANTOR" is any present or future guarantor of the Obligations.

      "INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

      "INITIAL EQUIPMENT ADVANCE" is defined in Section 2.1.1(a).

      "INSOLVENCY PROCEEDING" is any proceeding by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

      "INTELLECTUAL PROPERTY" is any copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, now owned or later acquired;
any patents, trademarks, service marks and applications therefor; any trade
secret rights, including any rights to unpatented inventions, now owned or
hereafter acquired.

      "INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

      "INVESTMENT" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

                                       19
<PAGE>
      "LEASEHOLD IMPROVEMENTS" means leasehold improvements made to the real
estate premises leased by borrower, which improvements are either fixtures or
tenant build-out of the real estate premises.

      "LEASEHOLD LOANS" means the Equipment Advances made hereunder relating to
Leasehold Improvements acceptable to the Bank (excluding Leasehold Improvements
financed under Other Equipment), the cost of which improvements were paid by
Borrower not more than sixty (60) days prior to the Funding Date of the
Equipment Advance.

      "LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

      "LOAN AMOUNT" in respect of each Equipment Advance is the original
principal amount of such Equipment Advance.

      "LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or Guarantor, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with
this Agreement, all as amended, extended or restated.

      "MATERIAL ADVERSE CHANGE " is: (i) A material impairment in the
perfection or priority of Bank's security interest in the Collateral or in
the value of such Collateral: (ii) a material adverse change in the
business.  operations, or condition (financial or otherwise) of the
Borrower; or (iii) a material impairment of the prospect of repayment of
any portion of the Obligations.

      "MATURITY DATE" is with respect to each Equipment Advance, the last day of
the Repayment Period for such Equipment Advance, or if earlier, the date of
prepayment or the date of acceleration of such Equipment Advance by Bank
following an Event of Default.

      "OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including letters of credit, cash
management services, and foreign exchange contracts, if any, and including
interest accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.

      "ORIGINAL STATED COST" is (i), the original cost to the Borrower of the
item of new Equipment net of any and all freight, installation, tax, or (ii) the
fair market value assigned to such item of used Equipment by mutual agreement of
Borrower and Bank at the time of making of the Equipment Advance.

      "OTHER EQUIPMENT" is leasehold improvements, transferable software
licenses, and soft costs approved by the Bank, including sales tax, freight and
installation expenses. Unless otherwise agreed to by Bank, not more than 25% of
the proceeds of the Committed Equipment Line shall be used to finance Other
Equipment (which limitation is exclusive of Equipment Advances for Leasehold
Loans).

      "PAYMENT DATE" is defined in Section 2.2(a).

                                       20
<PAGE>
            "PERMITTED INDEBTEDNESS" is:

            (a)   Borrower's indebtedness to Bank under this Agreement or
      the Loan Documents;

            (b)   Indebtedness existing on the Closing Date and shown on
      the Perfection Certificate;

            (c)   Subordinated Debt;

            (d)   Indebtedness to trade creditors incurred in the ordinary
      course of business; and

            (e)   Indebtedness secured by Permitted Liens; and

            (f) Extensions, refinancings, modifications, amendments and
      restatements of any items of Permitted Indebtedness (a) through (f) above,
      provided that the principal amount thereof is not increased or the terms
      thereof are not modified to impose more burdensome terms upon Borrower or
      its Subsidiary, as the case may be.

            "PERMITTED INVESTMENTS" are:

            (a)   Investments shown on the Perfection Certificate and
      existing on the Closing Date; and

            (b) (i) marketable direct obligations issued or unconditionally
      guaranteed by the United States or its agency or any state maturing within
      1 year from its acquisition, (ii) commercial paper maturing no more than 1
      year after its creation and having the highest rating from either Standard
      & Poor's Corporation or Moody's Investors Service. Inc., (iii) Bank's
      certificates of deposit issued maturing no more than I year after issue,
      (iv) any other investments administered through the Bank.

            "PERMITTED LIENS" are:

            (a) Liens existing on the Closing Date and shown on the Perfection
      Certificate or arising under this Agreement or other Loan Documents;

            (b) Liens for taxes, fees, assessments or other government charges
      or levies, either not delinquent or being contested in good faith and for
      which Borrower maintains adequate reserves on its Books, if they have no
      priority over any of Bank's security interests;

            (c) Purchase money Liens in an amount not greater than One Million
      Dollars ($1,000,000.00) in the aggregate during any fiscal year: (i) on
      Equipment acquired or held by Borrower incurred for financing the
      acquisition of the Equipment, or (ii) existing on equipment when acquired,
      if the Lien is confined to the property and improvements and the proceeds
      of the equipment;

                                       21
<PAGE>
            (d) Leases or subleases and exclusive and non-exclusive licenses or
      sub licenses, partnerships, joint ventures and similar arrangements
      granted by Borrower in the ordinary course of Borrower's business,
      consistent with the terms of Section 4.1;

            (e) Carriers', warehousemen's, mechanics', materialmen's repairmen's
      or other like liens arising in the ordinary course of business which are
      not overdue for a period of more than ninety (90) days or which are being
      contested in good faith by appropriate proceedings if they have no
      priority over any of Bank's security interest; and

            (f) Liens incurred in the extension, renewal or refinancing of the
      indebtedness secured by Liens described in (a) through (c), but any
      extension, renewal or replacement Lien must be limited to the property
      encumbered by the existing Lien and the principal amount of the
      indebtedness may not increase.

            "PERSON" is any individual, sole proprietorship, partnership,
limited liability company, joint venture, company, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

            "PRIME RATE" is Bank's most recently announced "prime rate," even if
it is not Bank's lowest rate.

            "REPAYMENT PERIOD" as to each Equipment Advance, is a period of time
equal to forty eight (48) consecutive months commencing on the first Business
Day of the month following the month in which the Funding Date occurs, except
for Leasehold Loans, which shall be a period equal to twenty four (24)
consecutive months commencing on the first Business Day of the month following
the month in which the Funding Date occurs.

            "RESPONSIBLE OFFICER" is each of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.

            "SCHEDULED PAYMENT" is defined in Section 2.2(a).

            "SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's debt to Bank (pursuant to a subordination agreement entered into
between the Bank, the Borrower and the subordinated creditor), on terns
acceptable to Bank.

            "SUBSIDIARY" is any Person, corporation, partnership, limited
liability company, joint venture, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled.
directly or indirectly, by the Person or one or more Affiliates of the Person.

                  [Remainder of Page Intentionally Left Blank]

                                       22
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first above written.

BORROWER:

CRITICAL THERAPEUTICS, INC.

By /s/Christopher Mirabelli
   ---------------------------------------

Name: Christopher Mirabelli
      ------------------------------------

Title:  President
        ----------------------------------

BANK:

SILICON VALLEY BANK, d/b/a
SILICON VALLEY EAST

By /s/R. Bryan Jadot
   --------------------------------------

Name: R. Bryan Jadot
      -----------------------------------

Title: Vice President
       ----------------------------------

SILICON VALLEY BANK

By /s/Maggie Garcia
   --------------------------------------

Name: Maggie Garcia
      -----------------------------------

Title: AVP
       ----------------------------------
       (Signed in Santa Clara County, California)

                                       23
<PAGE>

                                    EXHIBIT A

         The Collateral consists of all right, title and interest of Borrower in
and to the following:

         All goods, equipment, inventory, contract rights or rights to payment
of money, license agreements, franchise agreements, general intangibles
(including payment intangibles), accounts (including health-care receivables),
documents, instruments (including any promissory notes), chattel paper (whether
tangible or electronic), cash, deposit accounts, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a writing),
commercial tort claims, securities, and all other investment property supporting
obligations, and financial assets, whether now owned or hereafter acquired,
wherever located; and

         All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions,
attachments, accessories, accessions and improvements to and replacements,
products, proceeds and insurance proceeds of any or all of the foregoing.

Notwithstanding the foregoing provisions, the within grant of a security
interest shall not extend to, and the tern "Collateral" shall not include
Restricted Collateral, to the extent that (i) such Restricted Collateral is not
assignable or capable of being encumbered as a matter of law or under the terms
of the Restricted Collateral (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
non-Borrower parties to the Restricted Collateral and (ii) such consent has not
been obtained; provided, however, that the foregoing grant of security interest
shall extend to, and the term "Collateral" shall include, (A) any and all
proceeds of such agreement to the extent that the assignment or encumbering of
such proceeds is not so restricted as a matter of law or under the terms of such
agreement (but solely to the extent that any such restriction shall be
enforceable under applicable law) and (B) any agreement constituting Restricted
Collateral upon consent thereto being obtained from the non-Borrower parties to
such agreement (but Borrower shall have no obligation to obtain any such
consent).

"Restricted Collateral" shall mean: licenses in which the Borrower is the
licensee which govern the use of any other party's intellectual property.

         The Collateral does not include:

         Any copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work, whether
published or unpublished, now owned or later acquired; any patents, trademarks,
service marks and applications therefor; any trade secret rights, including any
rights to unpatented inventions, now owned or hereafter acquired.
Notwithstanding the foregoing, the Collateral shall include all accounts,
license and royalty fees and other revenues, proceeds, or income arising out of
or relating to any of the foregoing intellectual property.

                                       24
<PAGE>
                                    EXHIBIT B

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                        LOAN AGREEMENT SUPPLEMENT No. [ ]

         LOAN AGREEMENT SUPPLEMENT No. [ ], dated __________, 200_
("Supplement"), to the Loan and Security Agreement dated as of _________, 2002
(the "Loan Agreement) by and between the undersigned Critical Therapeutics, Inc.
("Borrower"), and Silicon Valley Bank ("Bank").

         Capitalized terms used herein but not otherwise defined herein are used
with the respective meanings given to such terns in the Loan Agreement.

To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Bank, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto. The proceeds of the Loan should be transferred to Borrower's account
with Bank set forth below:

          Bank Name:        Silicon Valley Bank
          Account No.:
                            -------------------

Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and shall be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

         This Supplement is delivered as of this day and year first above
written.

SILICON VALLEY BANK                          CRITICAL THERAPEUTICS, INC.

By:                                          By:
      -------------------------------------            -------------------------
Name:                                        Name:
      -------------------------------------            -------------------------
Title:                                       Title:
      -------------------------------------            -------------------------

                                       25
<PAGE>
Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule

                                       26
<PAGE>
                              ANNEX A TO EXHIBIT B

         The Financed Equipment being financed with the Equipment Advance which
this Loan Agreement Supplement is being executed is listed below. Upon the
funding of such Equipment Advance, this schedule automatically shall be deemed
to be a part of the Collateral.

Description of Equipment   Make   Model     Serial #        Invoice #

                                       27
<PAGE>
                              ANNEX B TO EXHIBIT B

                           LOAN TERMS SCHEDULE #_____

Select One:

___ "Eligible Equipment" or "Other Equipment"

___ "Leasehold Loans"

Loan Funding Date:  ____________, 200_

Original Loan Amount: $_______

Interest Rate:  _______%

Scheduled Payment Dates and Amounts*:

    One (1) payment of $______ due __________________
    ______ payment of $______ due monthly in advance from _______ through _____.
    One (1) payment of $______ due __________________

Maturity Date:  _______

Final Payment: An additional amount equal to the Final Payment
               Percentage multiplied by the Loan Amount, shall be
               paid on the Maturity Date with respect to such Loan.

Payment No.       Payment Date

1**
2
3
4
---
35
[36]

....

*/ The amount of each Scheduled Payment shall change as the Loan Amount changes.

**/ Forty-Eight (48) months for Eligible Equipment and Other Equipment and
Twenty-Four (24) months for Leasehold Loans

                                       28
<PAGE>
                                    EXHIBIT C

                             COMPLIANCE CERTIFICATE

TO:      SILICON VALLEY BANK

FROM:    CRITICAL THERAPEUTICS, INC.

         The undersigned authorized officer of Critical Therapeutics, Inc.
certifies that under the teens 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.

<TABLE>
<CAPTION>
REPORTING COVENANT                                 REQUIRED                                  COMPLIES
------------------                                 --------                                  --------
<S>                                                <C>                                       <C>
Monthly financial statements with CC               Monthly within 30 days                    Yes      No
Annual (CPA Audited)                               FYE within 120 days                       Yes      No
Annual Budgets                                     FYE with 15 days of Board Approval        Yes      No
</TABLE>

COMMENTS REGARDING EXCEPTIONS:  See Attached.

Sincerely,                                                       BANK USE ONLY

                                                 Received by:
------------------------------------                          ------------------
Signature                                                     AUTHORIZED SIGNER

                                                 Date:
------------------------------------                       ---------------------
Title
                                                 Verified:
                                                           ---------------------
                                                              AUTHORIZED SIGNER
------------------------------------
Date
                                                 Date:
                                                       -------------------------

                                       29
<PAGE>
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT AND LAWS OR, SUBJECT TO SECTION 5.3 HEREOF, AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL. THAT SUCH
REGISTRATION IS NOT REQUIRED.

                            WARRANT TO PURCHASE STOCK

Issuer:  Critical Therapeutics, Inc., a Delaware corporation
Number of Shares:  90,000, subject to adjustment
Class of Stock:  Series A Convertible Preferred Stock, $.001 par value per share
Exercise Price:  $1.00, subject to adjustment
Issue Date:  June 28, 2002
Expiration Date:  June 28, 2012

         FOR THE AGREED UPON VALUE of $1.00, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
this Warrant is issued to SILICON VALLEY BANK (together with its successors and
permitted assigns, "Holder") by Critical Therapeutics, Inc., a Delaware
corporation (the "Company").

         Subject to the terms and conditions hereinafter set forth, the Holder
is entitled upon surrender of this Warrant and the duly executed subscription
form annexed hereto as Appendix 1, at the office of the Company, 675
Massachusetts Avenue, 14th Floor, Cambridge, Massachusetts 02139 or such other
office as the Company shall notify the Holder of in writing, to purchase from
the Company up to Ninety Thousand (90,000) fully paid and non-assessable shares
(the "Shares") of the Company's Series A Convertible Preferred Stock, $.001 par
value per share (the "Class"), at a purchase price per Share of One Dollar
($1.00) (the "Exercise Price"). This Warrant may be exercised in whole or in
part at any time and from time to time until 5:00 PM, Eastern time, on the
Expiration Date set forth above, and shall be void thereafter. Until such time
as this Warrant is exercised in full or expires, the Exercise Price and the
number Shares are subject to adjustment from time to time as hereinafter
provided.

         Notwithstanding the foregoing definition of Class, upon and after the
automatic or voluntary conversion, redemption or retirement of all (but not less
than all) of the outstanding shares of such Class, including without limitation
upon the Company's initial registered underwritten public offering and sale of
its securities ("IPO"), then from and after the date upon which all such
outstanding shares have been so converted, redeemed or retired, "Class" shall
mean the Company's common stock, $.001 par value per share ("Common Stock"), and
this Warrant shall be exercisable for such number of shares of Common Stock as
shall equal the number of shares of Common Stock into which the Shares would
have been converted pursuant to the Company's Certificate of Incorporation, as
amended, including without limitation the Certificate of Designation. if any.
applicable to the same class or series of preferred stock as the Shares (the
"Certificate") had the Shares been issued and outstanding immediately prior to
such conversion, redemption or retirement. and the Exercise Price shall be the
Common Stock
<PAGE>
conversion price as determined pursuant to the Certificate immediately prior to
such conversion, redemption or retirement (all subject to further adjustment as
provided herein).

ARTICLE 1.  EXERCISE.

                  1.1 Method of Exercise. Holder may exercise this Warrant by
delivering this Warrant together with a duly executed Notice of Exercise in
substantially the form attached as Appendix 1 hereto to the principal office of
the Company. Unless Holder is exercising the conversion right set forth in
Section 1.2, Holder shall also deliver to the Company a check for the aggregate
Exercise Price for the Shares being purchased.

                  1.2 Conversion Right. In lieu of exercising this Warrant as
specified in Section 1.1, Holder may from time to time convert this Warrant, in
whole or in part, into a number of Shares determined as follows:

                           X = Y (A-B)/A

         where:
                           X = the number of Shares to be issued to the Holder.

                           Y = the number of Shares with respect to
                           which this Warrant is being exercised
                           (which shall include both the number of
                           Shares issued to the Holder and the
                           number of Shares subject to the portion
                           of the Warrant being cancelled in payment
                           of the aggregate Exercise Price).

                           A = the Fair Market Value (as determined
                           pursuant to Section 1.3 below) of one
                           Share.

                           B = the Exercise Price then in effect.

                  1.3 Fair Market Value.

                     1.3.1 If shares of the Class (or shares of the Company's
stock into which shares of the Class are convertible or exchangeable) are traded
on a nationally recognized securities exchange or over the counter market, the
fair market value of a Share shall be the closing price of a share of the Class
(or the closing price of a share of the Company's stock for which shares of the
Class are convertible or exchangeable) reported for the business day immediately
preceding the date of Holder's Notice of Exercise to the Company.

                     1.3.2 If shares of the Class (or shares of the Company's
stock into which shares of the Class are convertible or exchangeable) are not
traded on a nationally recognized securities exchange or over the counter
market, the Board of Directors of the Company shall determine fair market value
in its reasonable good faith judgment.

                  1.4 Delivery of Certificate and New Warrant. Promptly after
Holder exercises or converts this Warrant, the Company at its sole expense shall
promptly deliver to Holder (i)

                                     - 2 -
<PAGE>
certificates for the Shares acquired upon such
exercise, and (ii) if this Warrant has not been fully exercised or converted and
has not expired, a new warrant of like tenor representing the Shares for which
this Warrant is still exercisable.

                  1.5 Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.

                  1.6 Assumption on Sale, Merger or Consolidation of the
Company.

                     1.6.1. "Acquisition". For the purpose of this Warrant,
"Acquisition" means any sale, assignment, transfer, exclusive license, or other
disposition of all or substantially all of the assets of the Company, or any
acquisition, reorganization, consolidation, or merger of the Company where the
holders of the Company's outstanding voting equity securities immediately prior
to the transaction beneficially own less than a majority of the outstanding
voting equity securities of the surviving or successor entity immediately
following the transaction.

                     1.6.2. Assumption of Warrant. Upon the closing of any
Acquisition (other than an Acquisition in which the consideration received by
the Company's stockholders consists solely of cash), and as a condition
precedent thereto, the successor or surviving entity shall assume the
obligations of this Warrant, and this Warrant shall be exercisable for the same
securities and property as would be payable for the Shares issuable upon
exercise of the unexercised portion of this Warrant as if such Shares were
outstanding on the record date for the Acquisition and subsequent closing. The
Exercise Price shall be adjusted accordingly, and the Exercise Price and number
and class of Shares shall continue to be subject to adjustment from time to time
in accordance with the provisions hereof.

ARTICLE 2.  ADJUSTMENTS TO THE SHARES.

                  2.1 Stock Dividends, Splits, Etc. If the Company declares or
pays a dividend on the outstanding shares of the Class, payable in shares of the
Class, Common. Stock or other securities, or subdivides the outstanding Common
Stock into a greater amount of Common Stock or the outstanding shares of the
Class into a greater number of shares of the Class, or subdivides the shares of
the Class in a transaction that increases the amount of Common Stock into which
such shares are convertible, then upon exercise of this Warrant, for each Share
acquired, Holder shall receive, without additional cost to Holder, the total
number and kind of securities to which Holder would have been entitled had
Holder owned the Shares of record as of the date the dividend or subdivision
occurred.

                  2.2 Reclassification, Exchange or Substitution. Upon any
reclassification, exchange, substitution, reorganization or other event that
results in a change of the number and/or class of the securities issuable upon
exercise or conversion of this Warrant, Holder shall be entitled to receive,
upon exercise or conversion of this Warrant, the number and kind of

                                     - 3 -
<PAGE>
securities and property that Holder would have received for the Shares if this
Warrant had been exercised immediately before such reclassification, exchange,
substitution, reorganization or other event. The Company or its successor shall
promptly issue to Holder a new warrant of like tenor for such new securities or
other property. The new warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article 2 including, without limitation, adjustments to the Exercise Price and
to the number of securities or property issuable upon exercise of the new
warrant. The provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, reorganizations or other events.

                  2.3 Adjustments for Combinations, Etc. If the outstanding
shares of the Class are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares, the Exercise Price shall be
proportionately increased and the number of Shares issuable upon exercise or
conversion of this Warrant shall be proportionately decreased.

                  2.4 No Impairment. The Company shall not, by amendment of the
Certificate or its by-laws or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this Article 2 and in taking all such action as may be necessary or appropriate
to protect Holder's rights under this Article against impairment.

                  2.5 Adjustments for Dilutive Issuances. The number of shares
of Common Stock for which the Shares are convertible shall be adjusted from time
to time in accordance with Section C.4(d) of Article FOURTH of the Certificate
as if the Shares were issued and outstanding on and as of the date of any such
required adjustment

                  2.6 Fractional Shares. No fractional Shares shall be issuable
upon exercise or conversion of the Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional Share interest
arises upon any exercise or conversion of this Warrant, the Company shall
eliminate such fractional Share interest by paying Holder an amount computed by
multiplying such fractional interest by the Fair Market Value (determined in
accordance with Section 1.3 above) of one Share.

                  2.7 Certificate as to Adjustments. Upon each adjustment of the
Exercise Price, number of class of Shares or number of shares of Common Stock or
other securities for which the Shares are convertible or exchangeable, the
Company at its expense shall promptly compute such adjustment, and furnish
Holder with a certificate of its chief financial officer setting forth such
adjustment and the facts upon which such adjustment is based. The Company shall
at any time and from time to time, upon written request, furnish Holder with a
certificate setting forth the Exercise Price, number and class of Shares and
conversion ratio in effect upon the date thereof and the series of adjustments
leading to such Exercise Price, number and class of Shares and conversion ratio.

ARTICLE 3.  REPRESENTATIONS AND COVENANTS OF THE COMPANY.

                                     - 4 -
<PAGE>
                  3.1 Representations and Warranties. The Company hereby
represents and warrants to the Holder as follows:

                     (a) All Shares which may be issued upon the due exercise of
this Warrant. and all Common Stock or other securities, if any, issuable upon
due conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.

                     (b) The Company covenants that it shall at all times cause
to be reserved and kept available out of its authorized and unissued shares such
number of shares of its Series A Convertible Preferred Stock and shares of its
Common Stock and other securities as will be sufficient to permit the exercise
in full of this Warrant and the conversion of the Shares into shares of Common
Stock or such other securities.

                     (c) On and as of the date hereof, (i) $1.00 is the lowest
price per share for which shares of the Class have been sold or issued by the
Company, and the lowest exercise or conversion price per share for which shares
of the Class may be purchased or acquired upon the exercise or conversion of
outstanding securities exercisable or convertible by their terms for shares of
the Class, and (ii) the Common Stock conversion price in effect for shares of
the Class as determined pursuant to the Certificate is $1.00.

                     (d) The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire the Shares, have been
duly authorized by all necessary corporate action on the part of the Company,
and this Warrant is not inconsistent with the Certificate and/or the Company's
by-laws, does not contravene any law or governmental rule, regulation or order
applicable to it, does not and will not contravene any provision of, or
constitute a default under, any material indenture. mortgage, contract or other
instrument to which it is a party or by which it is bound, and constitutes a
legal, valid and binding agreement of the Company, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors rights and to general equity principles.

                  3.2 Notice of Certain Events. If the Company proposes at any
time (a) to declare any dividend or distribution upon any of its capital stock,
whether in cash, property. stock. or other securities and whether or not a
regular cash dividend; (b) to offer for subscription pro rata to the holders of
shares of the Class any additional shares of stock of any class or series or
other rights: (c) to effect any reclassification or recapitalization of any of
its securities:, or (d) to merge or consolidate with or into any other
corporation, or sell, lease, license, or convey all or substantially all of its
assets, or to liquidate, dissolve or wind up; then, in connection with each such
event. the Company shall give Holder (1) at least 10 days prior written notice
of the date on which a record will be taken for such dividend, distribution, or
subscription rights (and specifying the date on which the holders of securities
of the Company shall be entitled to receive such dividend, distribution or
rights) or for determining rights to vote, if any, in respect of the matters
referred to in (c) and (d) above; and (2) in the case of the matters referred to
in (c) and (d) above at least 10 days prior written notice of the date when the
same will take place (and

                                     - 5 -
<PAGE>
specifying the date on which the holders of securities of the Company will be
entitled to exchange their securities of the Company for securities or other
property deliverable upon the occurrence of such event).

                  3.3 Registration Under Securities Act of 1933, as amended. The
shares of Common Stock issuable upon conversion of the Shares (and the Shares,
at all times when the Class is Common Stock) shall have certain incidental or
"piggyback" registration rights pursuant to, and as set forth in, that certain
Investor Rights Agreement dated as of July 6, 2001 among the Company and the
other parties named therein. The Company shall execute and deliver an amendment
or joinder agreement with Holder for the purpose of effecting the foregoing
grant of registration rights. The Company represents and warrants to Holder that
the Company's foregoing grant of registration rights and its execution, delivery
and performance of the aforementioned amendment or joinder agreement (a) have
been duly authorized by all necessary corporate action of the Company's Board of
Directors and shareholders, (b) will not violate the Certificate or the
Company's by-laws, each as amended, (c) will not violate or cause a breach or
default (or an event which with the passage of time or the giving of notice or
both, would constitute a breach or default) under any agreement, instrument,
mortgage, deed of trust or other arrangement to which the Company is a party or
by which it or any of its assets is subject or bound, and (d) do not require the
approval, consent or waiver of or by any shareholder, registration rights holder
or other third party which approval, consent or waiver has not been obtained as
of the date of issuance of this Warrant.

ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. Holder represents and
warrants to the Company as follows:

                  4.1 Purchase for Own Account. Subject to Silicon Valley Bank's
right to transfer this Warrant and the Shares (and/or the securities, if any,
issued and issuable upon conversion of the Shares) to its parent corporation
Silicon Valley Bancshares and/or any other affiliate, this Warrant and the
Shares to be acquired upon exercise hereof will be acquired for investment for
Holder's account, not as nominee or agent, and not with a view to sale or
distribution in violation of applicable federal and state securities laws.

                  4.2 Investment Experience. Holder understands that the
purchase of this Warrant and the Shares covered hereby involves substantial
risk. Holder (a) has experience as an investor in unregistered securities, (b)
has sufficient knowledge and experience in financial and business affairs that
it evaluate the risks and merits of its investment in this Warrant and the
Shares. (c) can bear the economic risk of such Holder's investment in this
Warrant and the Shares, and (d) has made such inquiry concerning the Company and
its business and personnel as it has deemed appropriate.

                  4.3 Accredited Investor. Holder is an "accredited investor" as
such term is defined in Regulation D under the Securities Act of 1933, as
amended.

ARTICLE 5.  MISCELLANEOUS.

                  5.1 Automatic Conversion upon Expiration. In the event that,
upon the Expiration Date, the Fair Market Value of one Share (or other security
issuable upon the exercise

                                     - 6 -
<PAGE>
hereof) as determined in accordance with Section 1.3 above is greater than the
Exercise Price in effect on such date, then this Warrant shall automatically be
deemed on and as of such date to be converted pursuant to Section 1.2 above as
to all Shares (or such other securities) for which it shall not previously have
been exercised or converted, and the Company shall promptly deliver a
certificate representing the Shares (or such other securities) issued upon such
conversion to the Holder.

                  5.2 Legends. This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:

                  THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT
                  BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
                  REGISTRATION THEREOF UNDER SUCH ACT AND LAWS OR, SUBJECT TO
                  SECTION 5.3 OF THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED
                  BY THE CORPORATION TO SILICON VALLEY BANK DATED AS OF June 28,
                  2002, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
                  CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
                  REQUIRED.

                  5.3 Compliance with Securities Laws on Transfer. This Warrant
and the Shares (and the securities, if any, issued and issuable upon conversion
of the Shares) may not be transferred or assigned in whole or in part without
compliance with applicable federal and state securities laws by the transferor
and the transferee (including, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company, as reasonably requested by the Company), provided that the transferee
agrees in writing to be subject to the terms of this Section 5.2. The Company
shall not require Holder to provide an opinion of counsel if the transfer is to
Silicon Valley Bancshares or other affiliate of Holder, provided that the
transferee agrees in writing, upon the Company's request. to be subject to the
terms of this Section 5.2.

                  5.4 Transfer Procedure. Following its receipt of this executed
Warrant, Silicon Valley Bank will transfer same in whole or in part to its
parent corporation Silicon Valley Bancshares, and thereafter Holder and/or
Silicon Valley Bancshares may, subject to Section 5.3 above, transfer all or
part of this Warrant and/or the Shares (or the securities, if any, issued and
issuable upon conversion of the Shares) at any time and from time to time by
giving the Company notice of the portion of the Warrant and/or Shares (or the
securities, if any, issued and issuable upon conversion of the Shares) being
transferred setting forth the name, address and taxpayer identification number
of the transferee and surrendering this Warrant to the Company for reissuance to
the transferee(s) (and Holder if applicable); provided, that at all times prior
to the Company's IPO, Holder shall not, without the prior written consent of the
Company, transfer this Warrant (or any part hereof), any Shares, or any
securities issued or issuable upon

                                     - 7 -
<PAGE>
conversion of the Shares, to any person who directly competes with the Company,
unless such transfer is in connection with an Acquisition of the Company by any
such person.

                  5.5 Notices. All notices and other communications from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
when given personally, or mailed by first-class registered or certified mail,
postage prepaid, or sent via reputable overnight courier service, fee prepaid,
at such address as may have been furnished to the Company or the Holder, as the
case may be, in writing by the Company or such holder from time to time, but in
all cases, unless instructed in writing otherwise, the Company shall deliver a
copy of all notices to Holder to Silicon Valley Bank, Treasury Department, 3003
Tasman Drive, HA 200, Santa Clara, California 95054.

                  5.6 Waiver. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.

                  5.7 Attorneys Fees. In the event of any dispute between the
parties concerning the terms and provisions of this Warrant, the party
prevailing in such dispute shall be entitled to collect from the other party all
costs incurred in such dispute, including reasonable attorneys' fees.

                  5.8 Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts,
without giving effect to its principles regarding conflicts of law.

                  5.9 No Rights as a Shareholder. Except as specifically
provided in this Warrant, Holder shall have no rights as a shareholder of the
Company in respect of the Shares issuable hereunder unless and until Holder
exercises this Warrant as to all or any of such Shares.

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

                                     - 8 -
<PAGE>
         IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase
Stock to be executed as an instrument under seal by its duly authorized
representative as of the date first above written.

WITNESS:                                   "COMPANY"

                                           CRITICAL THERAPEUTICS, INC.
By:      /s/Edith Estabrook                By:      /s/Christopher Mirabelli
   ---------------------------                    ------------------------------
Name:                                      Name:
Title:                                     Title:  President

                                     - 9 -
<PAGE>
                                   APPENDIX 1

                               NOTICE OF EXERCISE

         1. The undersigned hereby elects to purchase       shares of the
           stock of          pursuant to Section 1.1 of the attached Warrant,
and tenders herewith payment of the Exercise Price of such shares in full.

         1. The undersigned hereby elects to convert the attached Warrant into
Shares in the manner specified in Section 1.2 of the attached Warrant. This
conversion is exercised with respect to           of shares of the
Stock of           .

         [Strike paragraph that does not apply.]

         2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:

                               -------------------------
                                     (Name)

                               -------------------------

                               -------------------------
                                    (Address)

         3. The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.

                                   -------------------------------------
                                   (Signature)

--------------------
         (Date)

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