Exhibit 10.15

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of August 21, 2014
(the “Effective Date”) between SILICON VALLEY BANK, a California corporation
with a loan production office located at 275 Grove Street, Suite 2-200, Newton,
Massachusetts 02466 (“Bank”), and DIMENSION 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. 
Notwithstanding the foregoing, all financial covenant calculations shall be
computed with respect to the Borrower only, and not on a consolidated basis. 
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in Section 13.  All other terms contained in this Agreement,
unless otherwise indicated, shall have the meaning provided by the Code to the
extent such terms are defined therein.

 

 

2.

LOAN AND TERMS OF PAYMENT

 

2.1          Promise to Pay.  Borrower hereby unconditionally promises to pay
Bank the outstanding principal amount of all Credit Extensions and accrued and
unpaid interest thereon as and when due in accordance with this Agreement.

 

2.1.1       Equipment Advances.

 

(a)           Availability.  Subject to the terms and conditions of this
Agreement, during the Draw Period, Bank shall make advances (each, an “Equipment
Advance” and, collectively, “Equipment Advances”) not exceeding the Equipment
Line.  Equipment Advances may only be used to finance Eligible Equipment
purchased within ninety (90) days (determined based upon the applicable invoice
date of such Eligible Equipment) before the date of each Equipment Advance.  No
Equipment Advance may exceed one hundred percent (100.0%) of the total invoice
for Eligible Equipment (excluding taxes, shipping, warranty charges, freight
discounts and installation expenses relating to such Eligible Equipment except
to the extent such are allowed to be financed pursuant hereto as Other
Equipment).  Unless otherwise agreed to by Bank, not more than twenty-five
percent (25.0%) of the proceeds of the Equipment Line shall be used to finance
Other Equipment.  Each Equipment Advance must be in an amount equal to the
lesser of One Hundred Thousand Dollars ($100,000.00) or the amount that has not
yet been drawn under the Equipment Line.  Borrower may only request three (3)
Equipment Advances hereunder.  Notwithstanding the foregoing, the initial
Equipment Advance (the “Initial Equipment Advance”) hereunder may be used to
reimburse Borrower for Eligible Equipment purchased within one hundred eighty
(180) days (determined based upon the applicable invoice date of such Eligible
Equipment) before the Effective Date, provided such Initial Equipment Advance is
made within ten (10) Business Days of the Effective Date.  After repayment, no
Equipment Advance may be reborrowed.

 

(b)           Interest Period.  Commencing on the first Payment Date of the
month following the month in which the Funding Date of the applicable Equipment
Advance occurs and continuing on each Payment Date thereafter, Borrower shall
make monthly payments of interest, in arrears, on the principal amount of each
Equipment Advance at the rate set forth in Section 2.2(a).

 

(c)           Repayment.  Commencing on the applicable Amortization Date, and
continuing on the Payment Date of each month thereafter, Borrower shall repay
each Equipment Advance in (i) thirty-six (36) equal monthly installments of
principal, plus (ii) monthly payments of accrued interest at the rate set forth
in Section 2.2(a).  All outstanding principal and accrued interest under each
Equipment Advance, and all other outstanding Obligations with respect to each
Equipment Advance, is due and payable in full on the applicable Equipment
Maturity Date.

 

 

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(d)           Mandatory Prepayment Upon an Acceleration.  If repayment on an
Equipment Advance is accelerated following the occurrence of an Event of
Default, Borrower shall immediately pay to Bank an amount equal to the sum of:
(i) all outstanding principal plus accrued and unpaid interest, (ii) the
Prepayment Premium, 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.

 

(e)           Permitted Prepayment of Equipment Advances.  Borrower shall have
the option to prepay all, but not less than all, 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 ten
(10) days prior to such prepayment, and (ii) pays, on the date of such
prepayment (A) all outstanding principal plus accrued and unpaid interest,
(B) the Prepayment Premium, plus (C) 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.

 

2.2          Payment of Interest on the Credit Extensions.

 

(a)           Interest Rate.  Subject to Section 2.2(b), the principal amount
outstanding for each Equipment Advance shall accrue interest at a fixed per
annum rate equal to two and one quarter of one percent (2.25%) above the Prime
Rate, which interest shall be determined by Bank on the Funding Date of the
applicable Equipment Advance and shall be payable monthly in accordance with
Section 2.2(c) below.

 

(b)           Default Rate.  Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest at a rate
per annum which is five percent (5.0%) above the rate that is otherwise
applicable thereto (the “Default Rate”).  Fees and expenses which are required
to be paid by Borrower pursuant to the Loan Documents (including, without
limitation, Bank Expenses) but are not paid when due shall bear interest until
paid at a rate equal to the highest rate applicable to the Obligations.  Payment
or acceptance of the increased interest rate provided in this Section 2.2(b) is
not a permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or remedies
of Bank.

 

(c)           Payment; Interest Computation.  Interest is payable monthly on the
Payment Date and shall be computed on the basis of a 360-day year for the actual
number of days elapsed.  In computing interest, (i) all payments received after
12:00 p.m.  Eastern time on any day shall be deemed received at the opening of
business on the next Business Day, and (ii) the date of the making of any Credit
Extension shall be included and the date of payment shall be excluded; provided,
however, that if any Credit Extension is repaid on the same day on which it is
made, such day shall be included in computing interest on such Credit Extension.

 

2.3          Fees.  Borrower shall pay to Bank:

 

(a)           Commitment Fee.  A fully earned, non-refundable commitment fee of
Five Thousand Dollars (5,000.00), on the Effective Date;

 

(b)           Prepayment Premium.  The Prepayment Premium, when due hereunder;
and

 

(c)           Bank Expenses.  All Bank Expenses (including reasonable attorneys’
fees and expenses for documentation and negotiation of this Agreement) incurred
through and after the Effective Date, when due (or, if no stated due date, upon
demand by Bank).

 

(d)           Fees Fully Earned.  Unless otherwise provided in this Agreement or
in a separate writing by Bank, Borrower shall not be entitled to any credit,
rebate, or repayment of any fees earned by Bank pursuant to this Agreement
notwithstanding any termination of this Agreement or the suspension or
termination of Bank’s obligation to make loans and advances hereunder.  Bank may
deduct amounts owing by Borrower under the clauses of this Section 2.3 pursuant
to the terms of Section 2.4(c).  Bank shall provide Borrower written notice of
deductions made from the Designated Deposit Account pursuant to the terms of the
clauses of this Section 2.3.

 

2.4          Payments; Application of Payments; Debit of Accounts.

 

 

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(a)           All payments to be made by Borrower under any Loan Document shall
be made in immediately available funds in Dollars, without setoff or
counterclaim, before 12:00 p.m. Eastern time on the date when due.  Payments of
principal and/or interest received after 12:00 p.m. Eastern time are considered
received at the opening of business on the next Business Day.  When a payment is
due on a day that is not a Business Day, the payment shall be due the next
Business Day, and additional fees or interest, as applicable, shall continue to
accrue until paid.

 

(b)           Bank has the exclusive right to determine the order and manner in
which all payments with respect to the Obligations may be applied.  Borrower
shall have no right to specify the order or the accounts to which Bank shall
allocate or apply any payments required to be made by Borrower to Bank or
otherwise received by Bank under this Agreement when any such allocation or
application is not specified elsewhere in this Agreement.

 

(c)           Bank may debit any of Borrower’s deposit accounts, including the
Designated Deposit Account, for principal and interest payments or any other
amounts Borrower owes Bank when due.  These debits shall not constitute a
set-off.

 

 

 

3.

CONDITIONS OF LOANS

 

3.1          Conditions Precedent to Initial Credit Extension.  Bank’s
obligation to make the initial Credit Extension is subject to the condition
precedent that Bank shall have received, in form and substance satisfactory to
Bank, such documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate, including, without limitation:

 

(a)           duly executed original signatures to the Loan Documents;

 

(b)           duly executed original signatures to the Control Agreement(s);

 

(c)           the Operating Documents and long-form good standing certificates
of Borrower certified by the Secretary of State (or equivalent agency) of
Borrower’s jurisdiction of organization or formation and each jurisdiction in
which Borrower is qualified to conduct business, each as of a date no earlier
than thirty (30) days prior to the Effective Date;

 

(d)           duly executed original signatures to the completed Borrowing
Resolutions for Borrower;

 

(e)           certified copies, dated as of a recent date, of financing
statement searches, as Bank may request, accompanied by written evidence
(including any UCC termination statements) that the Liens indicated in any such
financing statements either constitute Permitted Liens or have been or, in
connection with the initial Credit Extension, will be terminated or released;

 

(f)            the Perfection Certificate of Borrower, together with the duly
executed original signature thereto;

 

(g)           a landlord’s consent in favor of Bank for each of Borrower’s
leased locations by the respective landlord thereof, together with the duly
executed original signatures thereto;

 

(h)           evidence satisfactory to Bank that the insurance policies and
endorsements required by Section 6.5 hereof are in full force and effect,
together with appropriate evidence showing lender loss payable and/or additional
insured clauses or endorsements in favor of Bank; and

 

(i)            payment of the fees and Bank Expenses then due as specified in
Section 2.3 hereof.

 

 

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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 conditions precedent:

 

(a)           timely receipt of an executed Payment/Advance Form;

 

(b)           the representations and warranties in this Agreement shall be
true, accurate, and complete in all material respects on the date of the
Payment/Advance Form and on the Funding Date of each Credit Extension; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the Credit
Extension.  Each Credit Extension is Borrower’s representation and warranty on
that date that the representations and warranties in this Agreement remain true,
accurate, and complete in all material respects; provided, however, that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; and

 

(c)           There has not been any material impairment in the general affairs,
management, results of operation, financial condition or the prospect of
repayment of the Obligations, or any material adverse deviation by Borrower from
the most recent business plan of Borrower presented to and accepted by Bank.

 

3.3          Covenant to Deliver.  Borrower agrees to deliver to Bank each item
required to be delivered to Bank under this Agreement as a condition precedent
to any Credit Extension.  Borrower expressly agrees that a Credit Extension made
prior to the receipt by Bank of any such item shall not constitute a waiver by
Bank of Borrower’s obligation to deliver such item, and the making of any Credit
Extension in the absence of a required item shall be in Bank’s sole discretion.

 

3.4          Procedures for Borrowing.  Subject to the prior satisfaction of all
other applicable conditions to the making of a Credit Extension set forth in
this Agreement, to obtain a Credit Extension, Borrower shall notify Bank (which
notice shall be irrevocable) by electronic mail, facsimile, or telephone by
12:00 p.m. Eastern time two (2) Business Days before the proposed Funding Date
of the Credit Extension.  Together with any such electronic or facsimile
notification, Borrower shall deliver to Bank by electronic mail or facsimile a
completed Payment/Advance Form executed by a Responsible Officer or his or her
designee.  Bank may rely on any telephone notice given by a person whom Bank
believes is a Responsible Officer or designee.  Bank shall credit the Credit
Extensions to the Designated Deposit Account.  Bank may make Credit Extensions
under this Agreement based on instructions from a Responsible Officer or his or
her designee or without instructions if the Credit Extensions are necessary to
meet Obligations which have become due.

 

 

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, a continuing
security interest in, and pledges to Bank, the Collateral, wherever located,
whether now owned or hereafter acquired or arising, and all proceeds and
products thereof.

 

Borrower acknowledges that it previously has entered, and/or may in the future
enter, into Bank Services Agreements with Bank.  Regardless of the terms of any
Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank
thereunder shall be deemed to be Obligations hereunder and that it is the intent
of Borrower and Bank to have all such Obligations secured by the first priority
perfected security interest in the Collateral granted herein (subject only to
Permitted Liens that are permitted pursuant to the terms of this Agreement to
have superior priority to Bank’s Lien in this Agreement).

 

 

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If this Agreement is terminated, Bank’s Lien in the Collateral shall continue
until the Obligations (other than inchoate indemnity obligations) are repaid in
full in cash.  Upon payment in full in cash of the Obligations (other than
inchoate indemnity obligations) and at such time as Bank’s obligation to make
Credit Extensions has terminated, Bank shall, at the sole cost and expense of
Borrower, release its Liens in the Collateral and all rights therein shall
revert to Borrower.  In the event (x) all Obligations (other than inchoate
indemnity obligations), except for Bank Services, are satisfied in full, and
(y) this Agreement is terminated, Bank shall terminate the security interest
granted herein upon Borrower providing cash collateral acceptable to Bank in its
good faith business judgment for Bank Services, if any.  In the event such Bank
Services consist of outstanding Letters of Credit, Borrower shall provide to
Bank cash collateral in an amount equal to (x) if such Letters of Credit are
denominated in Dollars, then at least one hundred five percent (105.0%); and
(y) if such Letters of Credit are denominated in a Foreign Currency, then at
least one hundred ten percent (110.0%), of the Dollar Equivalent of the face
amount of all such Letters of Credit plus all interest, fees, and costs due or
to become due in connection therewith (as estimated by Bank in its business
judgment), to secure all of the Obligations relating to such Letters of Credit.

 

4.2          Priority of Security Interest.  Borrower represents, warrants, and
covenants that the security interest granted herein is and shall at all times
continue to be a first priority perfected security interest in the Collateral
(subject only to Permitted Liens that are permitted pursuant to the terms of
this Agreement to have superior priority to Bank’s Lien under this Agreement). 
If Borrower shall acquire a commercial tort claim, Borrower shall promptly
notify Bank in a writing signed by Borrower of the general 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 reasonably satisfactory to Bank.

 

4.3          Authorization to File Financing Statements.  Borrower hereby
authorizes Bank to file financing statements, without notice to Borrower, with
all appropriate jurisdictions to perfect or protect Bank’s interest or rights
hereunder, including a notice that any disposition of the Collateral, by either
Borrower or any other Person, shall be deemed to violate the rights of Bank
under the Code.  Such financing statements may indicate the Collateral as “all
assets of the Debtor” or words of similar effect, or as being of an equal or
lesser scope, or with greater detail, all in Bank’s discretion.

 

 

5.

REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as follows:

 

5.1          Due Organization, Authorization; Power and Authority.  Borrower is
duly existing and in good standing as a Registered Organization in its
jurisdiction of formation and is qualified and licensed to do business and is in
good standing in any jurisdiction 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 have a material adverse effect on
Borrower’s business.  In connection with this Agreement, Borrower has delivered
to Bank a completed certificate signed by Borrower, entitled “Perfection
Certificate”.  Borrower represents and warrants to Bank that (a) Borrower’s
exact legal name is that indicated on the Perfection Certificate and on the
signature page hereof; (b) Borrower is an organization of the type and is
organized in the jurisdiction set forth in the Perfection Certificate; (c) the
Perfection Certificate accurately sets forth Borrower’s organizational
identification number or accurately states that Borrower has none; (d) the
Perfection Certificate accurately sets forth Borrower’s place of business, or,
if more than one, its chief executive office as well as Borrower’s mailing
address (if different than its chief executive office); (e) Borrower (and each
of its predecessors) has not, in the past five (5) years, changed its
jurisdiction of formation, organizational structure or type, or any
organizational number assigned by its jurisdiction; and (f) all other
information set forth on the Perfection Certificate pertaining to Borrower and
each of its Subsidiaries is accurate and complete (it being understood and
agreed that Borrower may from time to time update certain information in the
Perfection Certificate after the Effective Date to the extent permitted by one
or more specific provisions in this Agreement) in all material respects.  If
Borrower is not now a Registered Organization but later becomes one, Borrower
shall promptly notify Bank of such occurrence and provide Bank with Borrower’s
organizational identification number.

 

 

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The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any
of Borrower’s organizational documents, (ii) contravene, conflict with,
constitute a default under or violate any material Requirement of Law,
(iii) contravene, conflict or violate any applicable order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority by
which Borrower or any of its Subsidiaries or any of their property or assets may
be bound or affected, (iv) require any action by, filing, registration, or
qualification with, or Governmental Approval from, any Governmental Authority
(except such Governmental Approvals which have already been obtained and are in
full force and effect), or (v) conflict with, contravene, constitute a default
or breach under, or result in or permit the termination or acceleration of, any
material agreement by which Borrower is bound.  Borrower is not in default under
any agreement to which it is a party or by which it is bound in which the
default could reasonably be expected to have a material adverse effect on
Borrower’s business.

 

5.2          Collateral.  Borrower has good title to, rights in, and the power
to transfer each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted Liens.  Borrower
has no Collateral Accounts at or with any bank or financial institution other
than Bank or Bank’s Affiliates except for the Collateral Accounts described in
the Perfection Certificate delivered to Bank in connection herewith and which
Borrower has taken such actions as are necessary to give Bank a perfected
security interest therein, pursuant to the term of Section 6.6(b).  The Accounts
are bona fide, existing obligations of the Account Debtors.

 

The Collateral is not in the possession of any third party bailee (such as a
warehouse) except as otherwise provided in the Perfection Certificate.  None of
the components of the Collateral shall be maintained at locations other than as
provided in the Perfection Certificate or as permitted pursuant to Section 7.2.

 

All Inventory is in all material respects of good and marketable quality, free
from material defects.

 

Borrower is the sole owner of the Intellectual Property which it owns or
purports to own except for (a) non-exclusive licenses granted to its customers
in the ordinary course of business, (b) (i) pursuant to that certain
Collaboration and License Agreement by and between Borrower and Bayer HealthCare
LLC, dated as of June 18, 2014 and (ii) pursuant to that certain Licensee
Agreement by and between Borrower and ReGenX Biosciences, LLC, dated as of
October 30, 2013, (c) over-the-counter software that is commercially available
to the public, and (d) material Intellectual Property licensed to Borrower and
noted on the Perfection Certificate.  Each Patent which it owns or purports to
own and which is material to Borrower’s business is valid and enforceable, and
no part of the Intellectual Property which Borrower owns or purports to own and
which is material to Borrower’s business has been judged invalid or
unenforceable, in whole or in part.  To the best of Borrower’s knowledge, no
claim has been made that any part of the Intellectual Property violates the
rights of any third party except to the extent such claim would not reasonably
be expected to have a material adverse effect on Borrower’s business.

 

Except as noted on the Perfection Certificate, Borrower is not a party to, nor
is it bound by, any Restricted License.

 

5.3          Litigation.  There are no actions or proceedings pending or, to the
knowledge of any Responsible Officer, threatened in writing by or against
Borrower or any of its Subsidiaries involving more than, individually or in the
aggregate, One Hundred Thousand Dollars ($100,000.00).

 

5.4          Financial Statements; Financial Condition.  All consolidated
financial statements for Borrower and any of its Subsidiaries delivered to Bank
fairly present (subject to normal fiscal year-end adjustments) in all material
respects Borrower’s consolidated financial condition and Borrower’s consolidated
results of operations.  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.  The fair salable value of Borrower’s consolidated assets
(including goodwill minus disposition costs) exceeds the fair value of
Borrower’s liabilities; Borrower is not left with unreasonably small capital
after the transactions in this Agreement; and Borrower is able to pay its debts
(including trade debts) as they mature.

 

 

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5.6          Regulatory Compliance.  Borrower is not an “investment company” or
a company “controlled” by an “investment company” under the Investment Company
Act of 1940, as amended.  Borrower is not engaged as one of its important
activities in extending credit for margin stock (under Regulations X, T and U of
the Federal Reserve Board of Governors).  Borrower (a) has complied in all
material respects with all Requirements of Law, and (b) has not violated any
Requirements of Law the violation of which could reasonably be expected to have
a material adverse effect on its business.  None of Borrower’s or any of its
Subsidiaries’ 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 of its Subsidiaries have 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
their respective businesses as currently conducted.

 

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

 

5.8          Tax Returns and Payments; Pension Contributions.  Borrower has
timely filed all required tax returns and reports, and Borrower has timely paid
all foreign, federal, state and local taxes, assessments, deposits and
contributions owed by Borrower except (a) to the extent such taxes are being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made therefor,
or (b) if such taxes, assessments, deposits and contributions do not,
individually or in the aggregate, exceed Five Thousand Dollars ($5,000.00).

 

To the extent Borrower defers payment of any contested taxes, Borrower shall
(i) notify Bank in writing of the commencement of, and any material development
in, the proceedings, and (ii) post bonds or take any other steps required to
prevent the governmental authority levying such contested taxes from obtaining a
Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower
is unaware of any claims or adjustments proposed for any of Borrower’s prior tax
years which could result in additional taxes becoming due and payable by
Borrower.  Borrower has paid all amounts necessary to fund all present pension,
profit sharing and deferred compensation plans in accordance with their terms,
and Borrower has not withdrawn from participation in, and has not permitted
partial or complete termination of, or permitted the occurrence of any other
event with respect to, any such plan which could reasonably be expected to
result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.

 

5.9          Use of Proceeds.  Borrower shall use the proceeds of the Credit
Extensions as working capital, to purchase Eligible Equipment, and to fund its
general business requirements and not for personal, family, household or
agricultural purposes.

 

5.10        Full Disclosure.  No written representation, warranty or other
statement of Borrower in any certificate or written statement given to Bank, as
of the date such representation, warranty, or other statement was made, 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).

 

5.11        Definition of “Knowledge.”  For purposes of the Loan Documents,
whenever a representation or warranty is made to Borrower’s knowledge or
awareness, to the “best of Borrower’s knowledge, or with a similar
qualification, knowledge or awareness means the actual knowledge, after
reasonable investigation, of any Responsible Officer.

 

 

6.

AFFIRMATIVE COVENANTS

 

Borrower shall do all of the following:

 

6.1          Government Compliance.

 

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(a)           Maintain its and all its Subsidiaries’ legal existence and good
standing in their respective jurisdictions 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, in all
material respects, with all laws, ordinances and regulations to which it is
subject.

 

(b)           Obtain all of the Governmental Approvals necessary for the
performance by Borrower of its obligations under the Loan Documents to which it
is a party and the grant of a security interest to Bank in all of its property. 
Borrower shall promptly provide copies of any such obtained Governmental
Approvals to Bank.

 

6.2          Financial Statements, Reports, Certificates.  Provide Bank with the
following:

 

(a)           Monthly Financial Statements.  As soon as available, but no later
than thirty (30) days after the last day of each month, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated
operations for such month certified by a Responsible Officer and in a form
acceptable to Bank (the “Monthly Financial Statements”);

 

(b)           Monthly Compliance Certificate.  Within thirty (30) days after the
last day of each month and together with the Monthly Financial Statements, a
duly completed Compliance Certificate signed by a Responsible Officer,
certifying that as of the end of such month, Borrower was in full compliance
with all of the terms and conditions of this Agreement, and setting forth
calculations showing compliance with the financial covenant set forth in this
Agreement and such other information as Bank may reasonably request;

 

(c)           Board Projections.  Within sixty (60) days following the end of
Borrower’s fiscal year, and contemporaneously with any updates or changes
thereto, annual Board-approved projections (reflecting projections on a
quarterly or monthly basis), in a form acceptable to Bank;

 

(d)           Annual Audited Financial Statements.  As soon as available, but no
later than one hundred eighty (180) days after the last day of Borrower’s fiscal
year, 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;

 

(e)           Other Statements.  Within five (5) days of delivery, copies of all
statements, reports and notices made available to Borrower’s security holders or
to any holders of Subordinated Debt;

 

(f)            SEC Filings.  In the event that Borrower becomes subject to the
reporting requirements under the Exchange Act within five (5) days of filing,
copies of all periodic and other reports, proxy statements and other materials
filed by Borrower with the SEC, any Governmental Authority succeeding to any or
all of the functions of the SEC or with any national securities exchange, or
distributed to its shareholders, as the case may be.  Documents required to be
delivered pursuant to the terms hereof (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date on which Borrower posts such documents, or provides a link thereto, on
Borrower’s website on the Internet at Borrower’s website address; provided,
however, Borrower shall promptly notify Bank in writing (which may be by
electronic mail) of the posting of any such documents;

 

(g)           Legal Action Notice.  A prompt report of any legal actions pending
or threatened in writing against Borrower or any of its Subsidiaries that could
reasonably be expected to result in damages or costs to Borrower or any of its
Subsidiaries of, individually or in the aggregate, Fifty Thousand Dollars
($50,000.00) or more; and

 

(h)           Other Financial Information.  Other financial information
reasonably requested by Bank.

 

 

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6.3          Inventory; Returns.  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 Effective Date.  Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims that involve more than One Hundred Thousand
Dollars ($100,000.00).

 

6.4          Taxes; Pensions.  Timely file, and require each of its Subsidiaries
to timely file, all required tax returns and reports and timely pay, and require
each of its Subsidiaries to timely pay, all foreign, federal, state and local
taxes, assessments, deposits and contributions owed by Borrower and each of its
Subsidiaries, except for deferred payment of any taxes contested pursuant to the
terms of Section 5.8 hereof, and shall deliver to Bank, on demand, appropriate
certificates attesting to such payments, and pay all amounts necessary to fund
all present pension, profit sharing and deferred compensation plans in
accordance with their terms.

 

6.5          Insurance.

 

(a)           Keep its business and the Collateral insured for risks and in
amounts standard for companies in Borrower’s industry and location and as Bank
may reasonably request.  Insurance policies shall be in a form, with financially
sound and reputable insurance companies that are not Affiliates of Borrower, and
in amounts that are satisfactory to Bank.  All property policies shall have a
lender’s loss payable endorsement showing Bank as lender loss payee.  All
liability policies shall show, or have endorsements showing, Bank as an
additional insured.  Bank shall be named as lender loss payee and/or additional
insured with respect to any such insurance providing coverage in respect of any
Collateral.

 

(b)           Ensure that proceeds payable under any property policy are, at
Bank’s option, payable to Bank on account of the Obligations.

 

(c)           At Bank’s request, Borrower shall deliver certified copies of
insurance policies and evidence of all premium payments.  Each provider of any
such insurance required under this Section 6.5 shall agree, by endorsement upon
the policy or policies issued by it or by independent instruments furnished to
Bank, that it will give Bank thirty (30) days prior written notice before any
such policy or policies shall be materially altered or canceled.  If Borrower
fails to obtain insurance as required under this Section 6.5 or to pay any
amount or furnish any required proof of payment to third persons and Bank, Bank
may make all or part of such payment or obtain such insurance policies required
in this Section 6.5, and take any action under the policies Bank deems prudent.

 

6.6          Operating Accounts.

 

(a)           Maintain a portion of its and its Subsidiaries’ operating,
depository and securities accounts with Bank and Bank’s Affiliates; provided
further that the aggregate cash balances maintained in such accounts in the name
of Borrower shall at all times be in an amount equal to or greater than the
Required Amount.

 

(b)           Provide Bank five (5) days prior written notice before
establishing any Collateral Account at or with any bank or financial institution
other than Bank or Bank’s Affiliates.  For each Collateral Account that Borrower
at any time maintains, Borrower shall cause the applicable bank or financial
institution (other than Bank) at or with which any Collateral Account is
maintained to execute and deliver a Control Agreement or other appropriate
instrument with respect to such Collateral Account to perfect Bank’s Lien in
such Collateral Account in accordance with the terms hereunder which Control
Agreement may not be terminated without the prior written consent of Bank.  The
provisions of the previous sentence 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 Borrower’s employees and identified to Bank by
Borrower as such.

 

6.7          Protection of Intellectual Property Rights.

 

 

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(a)           (i) Protect, defend and maintain the validity and enforceability
of its Intellectual Property; (ii) promptly advise Bank in writing of material
infringements or any other event that could reasonably be expected to materially
and adversely affect the value of its Intellectual Property; and (iii) not allow
any Intellectual Property material to Borrower’s business to be abandoned,
forfeited or dedicated to the public without Bank’s written consent.

 

(b)           Provide written notice to Bank within ten (10) days of entering or
becoming bound by any Restricted License (other than over-the-counter software
that is commercially available to the public).  Borrower shall take such steps
as Bank requests to obtain the consent of, or waiver by, any person whose
consent or waiver is necessary for (i) any Restricted License 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 Restricted
License, whether now existing or entered into in the future, and (ii) Bank to
have the ability in the event of a liquidation of any Collateral to dispose of
such Collateral in accordance with Bank’s rights and remedies under this
Agreement and the other Loan Documents.

 

6.8          Litigation Cooperation.  From the date hereof and continuing
through the termination of this Agreement, make available to Bank, without
expense to Bank, Borrower and its officers, employees and agents and Borrower’s
books and records, to the extent that Bank may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Bank with respect to any Collateral or relating to Borrower.

 

6.9          Access to Collateral; Books and Records.  Allow Bank, or its
agents, at reasonable times, on three (3) Business Days’ notice (provided no
notice is required if an Event of Default has occurred and is continuing), to
inspect the Collateral and audit and copy Borrower’s Books.  The foregoing
inspections and audits shall be at Borrower’s expense.

 

6.10        Further Assurances.  Execute any further instruments and take
further action as Bank reasonably requests to perfect or continue Bank’s Lien in
the Collateral or to effect the purposes of this Agreement.  Deliver to Bank,
within five (5) days after the same are sent or received, copies of all
correspondence, reports, documents and other filings with any Governmental
Authority regarding compliance with or maintenance of Governmental Approvals or
Requirements of Law or that could reasonably be expected to have a material
effect on any of the Governmental Approvals or otherwise on the operations of
Borrower or any of its Subsidiaries.

 

 

7.

NEGATIVE COVENANTS

 

Borrower shall not do any of the following without Bank’s prior written consent:

 

7.1          Dispositions.  Convey, sell, lease, transfer, assign, or otherwise
dispose of (collectively, “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business or property, except for Transfers
(a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete
Equipment (that does not constitute Financed Equipment) that is, in the
reasonable judgment of Borrower, no longer economically practicable to maintain
or useful in the ordinary course of business of Borrower; (c) consisting of
Permitted Liens and Permitted Investments; (d) consisting of the sale or
issuance of any stock of Borrower permitted under Section 7.2 of this Agreement;
(e) consisting of Borrower’s use or transfer of money or Cash Equivalents in a
manner that is not prohibited by the terms of this Agreement or the other Loan
Documents; and (f) of non-exclusive licenses, partnerships and joint ventures
for the use of the property of Borrower or its Subsidiaries in the ordinary
course of business and non-perpetual exclusive licenses that may be exclusive in
some respects, such as, by way of example with respect to field of use or
geographic territory, but that do not result in a legal transfer of title of the
licensed property.

 

7.2          Changes in Business, Management, Ownership, or Business Locations. 
(a) Engage in or permit any of its Subsidiaries to engage in any business other
than the businesses currently engaged in by Borrower and such Subsidiary, as
applicable, or reasonably related thereto; (b) liquidate or dissolve; or
(c) (i) fail to provide notice to Bank of any Key Person departing from or
ceasing to be employed by Borrower within five (5) days after such Key Person’s
departure from Borrower; or (ii) enter into any transaction or series of related
transactions in which the stockholders of Borrower who were not stockholders
immediately prior to the first such transaction own

 

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more than forty-nine percent (49.0%) of the voting stock of Borrower immediately
after giving effect to such transaction or related series of such transactions
(other than by the sale of Borrower’s equity securities in a public offering or
to venture capital or private equity investors so long as Borrower identifies to
Bank the venture capital or private equity investors at least seven (7) Business
Days prior to the closing of the transaction and provides to Bank a description
of the material terms of the transaction).

 

Borrower shall not, without at least thirty (30) days prior written notice to
Bank: (1) add any new offices or business locations, including warehouses
(unless such new offices or business locations contain less than Ten Thousand
Dollars ($10,000.00) in Borrower’s assets or property) or deliver any portion of
the Collateral valued, individually or in the aggregate, in excess of
Twenty-Five Thousand Dollars ($25,000.00) to a bailee at a location other than
to a bailee and at a location already disclosed in the Perfection Certificate,
(2) change its jurisdiction of organization, (3) change its organizational
structure or type, (4) change its legal name, or (5) change any organizational
number (if any) assigned by its jurisdiction of organization.  If Borrower
intends to deliver any portion of the Collateral valued, individually or in the
aggregate, in excess of Twenty-Five Thousand Dollars ($25,000.00) to a bailee,
and Bank and such bailee are not already parties to a bailee agreement governing
both the Collateral and the location to which Borrower intends to deliver the
Collateral, then Borrower will first receive the written consent of Bank, and
such bailee shall execute and deliver a bailee agreement in form and substance
satisfactory to Bank.

 

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 (including, without limitation, by
the formation of any Subsidiary).  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, allow, or suffer 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, permit any Collateral not to be subject to the first priority
security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any
Person which directly or indirectly prohibits or has the effect of prohibiting
Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a
security interest in or upon, or encumbering any of Borrower’s or any
Subsidiary’s Intellectual Property, except as is otherwise permitted in
Section 7.1 hereof and the definition of “Permitted Liens” herein.

 

7.6          Maintenance of Collateral Accounts.  Maintain any Collateral
Account except pursuant to the terms of Section 6.6(b) hereof.

 

7.7          Distributions; Investments.  (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any capital stock;
provided that (i) Borrower may convert any of its convertible securities into
other securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof, (ii) Borrower may pay dividends solely in common
stock; and (iii) Borrower may repurchase the stock of former employees,
directors or consultants pursuant to stock repurchase agreements so long as an
Event of Default does not exist at the time of such repurchase and would not
exist after giving effect to such repurchase; provided that the aggregate amount
of all such repurchases does not exceed Two Hundred Fifty Thousand Dollars
($250,000) per fiscal year; or (b) directly or indirectly make any Investment
(including, without limitation, by the formation of any Subsidiary) other than
Permitted Investments, or permit any of its Subsidiaries to do so.

 

7.8          Transactions with Affiliates.  Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower, except
for (a) 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,
(b) sales by Borrower of shares of its capital stock in venture capital
financings, (c) amendments, modification or restatements to, or transactions
contemplated by, the Borrower’s existing shareholder agreements as each may be
amended or modified from time to time, (d) compensation arrangements, including
equity grants, for services provided to the Borrower or any Subsidiary by

 

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any employee, consultant, director or otherwise, (e) repurchases of capital
stock of the Borrower or any Subsidiary from employees, officers, directors,
consultants or other persons performing services for the Borrower or any
subsidiary pursuant to agreements under which the Borrower has the option to
repurchase such shares upon the occurrence of certain events, such as the
termination of employment or service, or pursuant to a right of first refusal,
in each case ((a)-(e)), pursuant to the terms of this Agreement.

 

7.9          Subordinated Debt.  (a) Make or permit any payment on any
Subordinated Debt, except under the terms of the subordination, intercreditor,
or other similar agreement to which such Subordinated Debt is subject, or
(b) amend any provision in any document relating to the Subordinated Debt which
would increase the amount thereof, provide for earlier or greater principal,
interest, or other payments thereon, or adversely affect the subordination
thereof to Obligations owed to Bank.

 

7.10        Compliance.  Become an “investment company” or a company controlled
by an “investment company”, under the Investment Company Act of 1940, as
amended, or undertake as one of its important activities extending credit to
purchase or carry margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System), or use the proceeds of any Credit
Extension for that purpose; fail to (a) meet the minimum funding requirements of
ERISA, (b) prevent a Reportable Event or Prohibited Transaction, as defined in
ERISA, from occurring, or (c) comply with the Federal Fair Labor Standards Act,
the failure of any of the conditions described in clauses (a) through (c) which
could reasonably be expected to have a material adverse effect on Borrower’s
business; 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 permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to
withdraw from participation in, permit partial or complete termination of, or
permit the occurrence of any other event with respect to, any present pension,
profit sharing and deferred compensation plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension
Benefit Guaranty Corporation or its successors or any other governmental agency.

 

 

8.

EVENTS OF DEFAULT

 

Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:

 

8.1          Payment Default.  Borrower fails to (a) make any payment of
principal or interest on any Credit Extension when due, or (b) pay any other
Obligations within three (3) Business Days after such Obligations are due and
payable (which three (3) Business Day cure period shall not apply to payments
due on the applicable Equipment Maturity Date).  During the cure period, the
failure to make or pay any payment specified under clause (b) hereunder is not
an Event of Default (but no Credit Extension will be made during the cure
period);

 

8.2          Covenant Default.

 

(a)           Borrower fails or neglects to perform any obligation in
Sections 6.2, 6.4, 6.5, 6.6, 6.7, or 6.8(b), or violates any covenant in
Section 7; or

 

(b)           Borrower fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant or agreement contained in this Agreement or
any Loan Documents, and as to any default (other than those specified in this
Section 8) under such other term, provision, condition, covenant or agreement
that can be cured, has failed to cure the default within ten (10) days after the
occurrence thereof; provided, however, that if the default cannot by its nature
be cured within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is likely to
be cured within a reasonable time, then Borrower shall have an additional period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to cure the default
shall not be deemed an Event of Default (but no Credit Extensions shall be made
during such cure period).  Cure periods provided under this Section shall not
apply, among other things, to financial covenants or any other covenants set
forth in clause (a) above;

 

8.3          Material Adverse Change.  A Material Adverse Change occurs;

 

 

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8.4          Attachment; Levy; Restraint on Business.

 

(a)           (i) The service of process seeking to attach, by trustee or
similar process, any funds of Borrower or of any entity under the control of
Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed
against any of Borrower’s assets by any Governmental Authority, and the same
under subclauses (i) and (ii) hereof are not, within ten (10) days after the
occurrence thereof, discharged or stayed (whether through the posting of a bond
or otherwise); provided, however, no Credit Extensions shall be made during any
ten (10) day cure period; or

 

(b)           (i) any material portion of Borrower’s assets is attached, seized,
levied on, or comes into possession of a trustee or receiver, or (ii) any court
order enjoins, restrains, or prevents Borrower from conducting all or any
material part of its business.

 

8.5          Insolvency.  (a) Borrower is unable to pay its debts (including
trade debts) as they become due or otherwise becomes insolvent; (b) Borrower
begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and is not dismissed or stayed within thirty (30) days (but no
Credit Extensions shall be made while any of the conditions described in
clause (a) exist and/or until any Insolvency Proceeding is dismissed);

 

8.6          Other Agreements.  There is, under any agreement to which Borrower
is a party with a third party or parties, (a) any default resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount individually or in the aggregate in
excess of One Hundred Thousand Dollars ($100,000.00); or (b) any breach or
default by Borrower, the result of which could have a material adverse effect on
Borrower’s business;

 

8.7          Judgments; Penalties.  One or more fines, penalties or final
judgments, orders or decrees for the payment of money in an amount, individually
or in the aggregate, of at least Fifty Thousand Dollars ($50,000.00) (not
covered by independent third-party insurance as to which liability has been
accepted by such insurance carrier) shall be rendered against Borrower by any
Governmental Authority, and the same are not, within ten (10) days after the
entry, assessment or issuance thereof, discharged, satisfied, or paid, or after
execution thereof, stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay (provided that no Credit
Extensions will be made prior to the satisfaction, payment, discharge, stay, or
bonding of such fine, penalty, judgment, order or decree);

 

8.8          Misrepresentations.  Borrower or any Person acting for Borrower
makes any representation, warranty, or other statement now or later in this
Agreement, any Loan Document or in any writing delivered to Bank or to induce
Bank to enter this Agreement or any Loan Document, and such representation,
warranty, or other statement is incorrect in any material respect when made; or

 

8.9          Subordinated Debt.  Any document, instrument, or agreement
evidencing any Subordinated Debt shall for any reason be revoked or invalidated
or otherwise cease to be in full force and effect, any Person shall be in breach
thereof or contest in any manner the validity or enforceability thereof or deny
that it has any further liability or obligation thereunder, or the Obligations
shall for any reason be subordinated or shall not have the priority contemplated
by this Agreement; or

 

8.10        Governmental Approvals.  Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term or (b) subject to any decision by a
Governmental Authority that designates a hearing with respect to any
applications for renewal of any of such Governmental Approval or that could
result in the Governmental Authority taking any of the actions described in
clause (a) above, and such decision or such revocation, rescission, suspension,
modification or non-renewal (i) cause, or could reasonably be expected to cause,
a Material Adverse Change, or (ii) adversely affects the legal qualifications of
Borrower or any of its Subsidiaries to hold such Governmental Approval in any
applicable jurisdiction and such revocation, rescission, suspension,
modification or non-renewal could reasonably be expected to affect the status of
or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction.

 

 

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9.

BANK’S RIGHTS AND REMEDIES 

 

9.1          Rights and Remedies.  Upon the occurrence and during the
continuance of an Event of Default, 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);

 

(b)           stop advancing money or extending credit for Borrower’s benefit
under this Agreement or under any other agreement between Borrower and Bank;

 

(c)           demand that Borrower (i) deposit cash with Bank in an amount equal
to at least (A) one hundred five percent (105.0%) of the Dollar Equivalent of
the aggregate face amount of all Letters of Credit denominated in Dollars
remaining undrawn, and (B) one hundred ten percent (110.0%) of the Dollar
Equivalent of the aggregate face amount of all Letters of Credit denominated in
a Foreign Currency remaining undrawn, (plus, in each case, all interest, fees,
and costs due or to become due in connection therewith (as estimated by Bank in
its good faith business judgment)), to secure all of the Obligations relating to
such Letters of Credit, as collateral security for the repayment of any future
drawings under such Letters of Credit, and Borrower shall forthwith deposit and
pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to
be paid or payable over the remaining term of any Letters of Credit;

 

(d)           terminate any FX Contracts;

 

(e)           verify the amount of, demand payment of and performance under, and
collect any Accounts and General Intangibles, settle or adjust disputes and
claims directly with Account Debtors for amounts on terms and in any order that
Bank considers advisable, and notify any Person owing Borrower money of Bank’s
security interest in such funds;

 

(f)            make any payments and do any acts it considers necessary or
reasonable to protect the Collateral and/or 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;

 

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

 

(h)           ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sale, and sell the Collateral.  Bank is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name,
trade secrets, trade names, Trademarks, 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, Borrower’s rights under all licenses
and all franchise agreements inure to Bank’s benefit;

 

(i)            place a “hold” on any account maintained with Bank and/or deliver
a notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any Control Agreement or similar agreements providing
control of any Collateral;

 

(j)            demand and receive possession of Borrower’s Books; and

 

(k)           exercise all rights and remedies available to Bank under the Loan
Documents or at law or equity, including all remedies provided under the Code
(including disposal of the Collateral pursuant to the terms thereof).

 

 

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9.2          Power of Attorney.  Borrower hereby irrevocably appoints Bank as
its lawful attorney-in-fact, exercisable upon the occurrence and during the
continuance of an Event of Default, to: (a) endorse Borrower’s name on any
checks or other forms of payment or security; (b) sign Borrower’s name on any
invoice or bill of lading for any Account or drafts against Account Debtors;
(c) settle and adjust disputes and claims about the Accounts directly with
Account Debtors, for amounts and on terms Bank determines reasonable; (d) make,
settle, and adjust all claims under Borrower’s insurance policies; (e) pay,
contest or settle any Lien, charge, encumbrance, security interest, and adverse
claim in or to the Collateral, or any judgment based thereon, or otherwise take
any action to terminate or discharge the same; and (f) 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 Bank’s security
interest in the Collateral 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.

 

9.3          Protective Payments.  If Borrower fails to obtain the insurance
called for by Section 6.5 or fails to pay any premium thereon or fails to pay
any other amount which Borrower is obligated to pay under this Agreement or any
other Loan Document or which may be required to preserve the Collateral, Bank
may obtain such insurance or make such payment, and all amounts so paid by Bank
are Bank Expenses and immediately due and payable, bearing interest at the then
highest rate applicable to the Obligations, and secured by the Collateral.  Bank
will make reasonable efforts to provide Borrower with notice of Bank obtaining
such insurance at the time it is obtained or within a reasonable time
thereafter.  No payments by Bank are deemed an agreement to make similar
payments in the future or Bank’s waiver of any Event of Default.

 

9.4          Application of Payments and Proceeds Upon Default.  If an Event of
Default has occurred and is continuing, Bank shall have the right to apply in
any order any funds in its possession, whether from Borrower account balances,
payments, proceeds realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations.  Bank shall pay
any surplus to Borrower by credit to the Designated Deposit Account or to other
Persons legally entitled thereto; Borrower shall remain liable to Bank for any
deficiency.  If Bank, directly or indirectly, enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Bank
shall have the option, exercisable at any time, of either reducing the
Obligations by the principal amount of the purchase price or deferring the
reduction of the Obligations until the actual receipt by Bank of cash therefor.

 

9.5          Bank’s Liability for Collateral.  So long as Bank complies with
reasonable banking practices regarding the safekeeping of the Collateral in the
possession or under the control of Bank, 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.

 

9.6          No Waiver; Remedies Cumulative.  Bank’s failure, at any time or
times, to require strict performance by Borrower of any provision of this
Agreement or any other Loan Document shall not waive, affect, or diminish any
right of Bank thereafter to demand strict performance and compliance herewith or
therewith.  No waiver hereunder shall be effective unless signed by the party
granting the waiver and then is only effective for the specific instance and
purpose for which it is given.  Bank’s rights and remedies under this Agreement
and the other Loan Documents 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 shall not preclude Bank from exercising any other
remedy under this Agreement or other remedy available at law or in equity, and
Bank’s waiver of any Event of Default is not a continuing waiver.  Bank’s delay
in exercising any remedy is not a waiver, election, or acquiescence.

 

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.

 

 

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10.

NOTICES 

 

All notices, consents, requests, approvals, demands, or other communication by
any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served, given, or delivered: (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the U.S.
mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail or
facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email address indicated
below.  Bank or Borrower may change its mailing or electronic mail address or
facsimile number by giving the other party written notice thereof in accordance
with the terms of this Section 10.

 

If to Borrower:

Dimension Therapeutics, Inc.
840 Memorial Drive
Cambridge, Massachusetts 02139
Attn:
Fax:
Email:

 

 

If to Bank:

Silicon Valley Bank
275 Grove Street, Suite 2-200
Newton, Massachusetts 02466
Attn: Bill Howell
Fax:
Email: bhowell@svb.com

 

 

with a copy to

Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Attn: David A. Ephraim, Esquire
Fax: (617) 692-3455
Email: DEphraim@riemerlaw.com

 

 

11.

CHOICE OF LAW.  VENUE.  AND JURY TRIAL WAIVER

 

Except as otherwise expressly provided in any of the Loan Documents,
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 Boston, Massachusetts; provided, however,
that nothing in this Agreement shall be deemed to operate to preclude Bank from
bringing suit or taking other legal action in any other jurisdiction to realize
on the Collateral or any other security for the Obligations, or to enforce a
judgment or other court order in favor of Bank.  Borrower expressly submits and
consents in advance to such jurisdiction in any action or suit commenced in any
such court, and Borrower hereby waives any objection that it may have based upon
lack of personal jurisdiction, improper venue, or forum non conveniens and
hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court.  Borrower hereby waives personal service of the
summons, complaints, and other process issued in such action or suit and agrees
that service of such summons, complaints, and other process may be made by
registered or certified mail addressed to Borrower at the address set forth in,
or subsequently provided by Borrower in accordance with, Section 10 of this
Agreement and that service so made shall be deemed completed upon the earlier to
occur of Borrower’s actual receipt thereof or three (3) days after deposit in
the U.S. mails, proper postage prepaid.

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, 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.

 

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This Section 11 shall survive the termination of this Agreement.

 

 

12.

GENERAL PROVISIONS

 

12.1                        Termination Prior to Equipment Maturity Date;
Survival.  All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its terms
and all Obligations have been satisfied.  So long as Borrower has satisfied the
Obligations (other than inchoate indemnity obligations, and any other
obligations which, by their terms, are to survive the termination of this
Agreement, and any Obligations under Bank Services Agreements that are cash
collateralized in accordance with Section 4.1 of this Agreement), this Agreement
may be terminated prior to the Equipment Maturity Date by Borrower, effective
three (3) Business Days after written notice of termination is given to Bank. 
Those obligations that are expressly specified in this Agreement as surviving
this Agreement’s termination shall continue to survive notwithstanding this
Agreement’s termination.

 

12.2                        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,
to sell, transfer, assign, negotiate, or grant participation in all or any part
of, or any interest in, Bank’s obligations, rights, and benefits under this
Agreement and the other Loan Documents (other than the Warrant, as to which
assignment, transfer and other such actions are governed by the terms thereof).

 

12.3                        Indemnification.  Borrower agrees to indemnify,
defend and hold Bank and its directors, officers, employees, agents, attorneys,
or any other Person affiliated with or representing Bank (each, an “Indemnified
Person”) harmless against: (i) all obligations, demands, claims, and liabilities
(collectively, “Claims”) claimed or asserted by any other party in connection
with the transactions contemplated by the Loan Documents; and (ii) all losses or
expenses (including Bank Expenses) in any way suffered, incurred, or paid by
such Indemnified Person as a result of, following from, consequential to, or
arising from transactions between Bank and Borrower contemplated by the Loan
Documents (including reasonable attorneys’ fees and expenses), except for Claims
and/or losses directly caused by such Indemnified Person’s gross negligence or
willful misconduct.

 

This Section 12.3 shall survive until all statutes of limitation with respect to
the Claims, losses, and expenses for which indemnity is given shall have run.

 

12.4                        Time of Essence.  Time is of the essence for the
performance of all Obligations in this Agreement.

 

12.5                        Severability of Provisions.  Each provision of this
Agreement is severable from every other provision in determining the
enforceability of any provision.

 

12.6                        Correction of Loan Documents.  Bank may correct
patent errors and fill in any blanks in the Loan Documents consistent with the
agreement of the parties.

 

12.7                        Amendments in Writing; Waiver; Integration.  No
purported amendment or modification of any Loan Document, or waiver, discharge
or termination of any obligation under any Loan Document, shall be enforceable
or admissible unless, and only to the extent, expressly set forth in a writing
signed by the party against which enforcement or admission is sought.  Without
limiting the generality of the foregoing, no oral promise or statement, nor any
action, inaction, delay, failure to require performance or course of conduct
shall operate as, or evidence, an amendment, supplement or waiver or have any
other effect on any Loan Document.  Any waiver granted shall be limited to the
specific circumstance expressly described in it, and shall not apply to any
subsequent or other circumstance, whether similar or dissimilar, or give rise
to, or evidence, any obligation or commitment to grant any further waiver.  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 the Loan Documents merge into the Loan
Documents.

 

 

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12.8                        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, is an original, and all taken together,
constitute one Agreement.

 

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:
(a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates,
together with Bank, collectively, “Bank Entities”); (b) to prospective
transferees or purchasers of any interest in the Credit Extensions (provided,
however, Bank shall use its best efforts to obtain any prospective transferee’s
or purchaser’s agreement to the terms of this provision); (c) as required by
law, regulation, subpoena, or other order; (d) to Bank’s regulators or as
otherwise required in connection with Bank’s examination or audit; (e) as Bank
considers appropriate in exercising remedies under the Loan Documents; and
(f) to third-party service providers of Bank so long as such service providers
have executed a confidentiality agreement with Bank with terms no less
restrictive than those contained herein.  Confidential information does not
include information that is either: (i) in the public domain or in Bank’s
possession when disclosed to Bank, or becomes part of the public domain (other
than as a result of its disclosure by Bank in violation of this Agreement) after
disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does not
know that the third party is prohibited from disclosing the information.

 

Bank Entities may use anonymous forms of confidential information for aggregate
datasets, for analyses or reporting, and for any other uses not expressly
prohibited in writing by Borrower.  The provisions of the immediately preceding
sentence shall survive termination of this Agreement.

 

12.10                 Right of Set Off.  Borrower hereby grants to Bank, a lien,
security interest and right of set off 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 Bank
(including a Bank subsidiary) 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 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 BORROWER ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

12.11                 Electronic Execution of Documents.  The words “execution,”
“signed,” “signature” and words of like import in any Loan Document shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity and
enforceability as a manually executed signature or the use of a paper-based
recordkeeping systems, as the case may be, to the extent and as provided for in
any applicable law, including, without limitation, any state law based on the
Uniform Electronic Transactions Act.

 

12.12                 Captions.  The headings used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.

 

12.13                 Construction of Agreement.  The parties mutually
acknowledge that they and their attorneys have participated in the preparation
and negotiation of this Agreement.  In cases of uncertainty this Agreement shall
be construed without regard to which of the parties caused the uncertainty to
exist.

 

12.14                 Relationship.  The relationship of the parties to this
Agreement is determined solely by the provisions of this Agreement.  The parties
do not intend to create any agency, partnership, joint venture, trust, fiduciary
or other relationship with duties or incidents different from those of parties
to an arm’s-length contract.

 

 

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12.15                 Third Parties.  Nothing in this Agreement, whether express
or implied, is intended to: (a) confer any benefits, rights or remedies under or
by reason of this Agreement on any persons other than the express parties to it
and their respective permitted successors and assigns; (b) relieve or discharge
the obligation or liability of any person not an express party to this
Agreement; or (c) give any person not an express party to this Agreement any
right of subrogation or action against any party to this Agreement.

 

 

13.

DEFINITIONS

 

13.1                        Definitions.  As used in the Loan Documents, the
word “shall” is mandatory, the word “may” is permissive, the word “or” is not
exclusive, the words “includes” and “including” are not limiting, the singular
includes the plural, and numbers denoting amounts that are set off in brackets
are negative.  As used in this Agreement, the following capitalized terms have
the following meanings:

 

“Account” is any “account” as defined in the Code with such additions to such
term as may hereafter be made, and includes, without limitation, all accounts
receivable and other sums owing to Borrower.

 

“Account Debtor” is any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

 

“Affiliate” is, with respect to any Person, each other 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.

 

“Agreement” is defined in the preamble hereof.

 

“Amortization Date” means the first Payment Date following the six (6) month
anniversary of the Funding Date of such Equipment Advance.

 

“Authorized Signer” is any individual listed in Borrower’s Borrowing Resolution
who is authorized to execute the Loan Documents, including any Credit Extension
request, on behalf of Borrower.

 

“Bank” is defined in the preamble hereof.

 

“Bank Entities” is defined in Section 12.9.

 

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including
reasonable attorneys’ fees and expenses) for preparing, amending, negotiating,
administering, defending and enforcing the Loan Documents (including, without
limitation, those incurred in connection with appeals or Insolvency Proceedings)
or otherwise incurred with respect to Borrower.

 

“Bank Services” are any products, credit services, and/or financial
accommodations previously, now, or hereafter provided to Borrower or any of its
Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any
letters of credit, cash management services (including, without limitation,
merchant services, direct deposit of payroll, business credit cards, and check
cashing services), interest rate swap arrangements, and foreign exchange
services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”).

 

“Bank Services Agreement” is defined in the definition of Bank Services.

 

“Board” means Borrower’s board of directors.

 

“Borrower” is defined in the preamble hereof.

 

 

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“Borrower’s Books” are all Borrower’s books and records including ledgers,
federal and state tax returns, records regarding Borrower’s assets or
liabilities, the Collateral, business operations or financial condition, and all
computer programs or storage or any equipment containing such information.

 

“Borrowing Resolutions” are, with respect to any Person, those resolutions
adopted by such Person’s board of directors (and, if required under the terms of
such Person’s Operating Documents, stockholders) and delivered by such Person to
Bank approving the Loan Documents to which such Person is a party and the
transactions contemplated thereby, together with a certificate executed by its
secretary on behalf of such Person certifying (a) such Person has the authority
to execute, deliver, and perform its obligations under each of the Loan
Documents to which it is a party, (b) that set forth as a part of or attached as
an exhibit to such certificate is a true, correct, and complete copy of the
resolutions then in full force and effect authorizing and ratifying the
execution, delivery, and performance by such Person of the Loan Documents to
which it is a party, (c) the name(s) of the Person(s) authorized to execute the
Loan Documents, including any Credit Extension request, on behalf of such
Person, together with a sample of the true signature(s) of such Person(s), and
(d) that Bank may conclusively rely on such certificate unless and until such
Person shall have delivered to Bank a further certificate canceling or amending
such prior certificate.

 

“Business Day” is any day that is not a Saturday, Sunday or a day on which Bank
is closed, and if any determination of a “Business Day” shall relate to an FX
Contract, the term “Business Day” shall mean a day on which dealings are carried
on in the country of settlement of the Foreign Currency.

 

“Cash Burn” means, as of any date of determination, net cash used in operations,
as defined in GAAP and calculated consistent with the methodology and standards
employed by the Borrower in the preparation of Borrower’s Board approved plan
dated as of February 18, 2014.  Any subsequent Board approved plans or
amendments thereto shall not deviate from those methods and practices.

 

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1) year after its
creation and having the highest rating from either Standard & Poor’s Ratings
Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit
issued maturing no more than one (1) year after issue.

 

“Claims” is defined in Section 12.3.

 

“Code” is the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the Commonwealth of Massachusetts; provided, that, to
the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, or priority of, or
remedies with respect to, Bank’s Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the Commonwealth
of Massachusetts, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies and for purposes of definitions relating to such provisions.

 

“Collateral” is any and all properties, rights and assets of Borrower described
on Exhibit A.

 

“Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account.

 

“Commodity Account” is any “commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

 

“Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit B.

 

“Contingent Obligation” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (a) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation, in each
case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold
with recourse by that Person,

 

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or for which that Person is directly or indirectly liable; (b) any obligations
for undrawn letters of credit for the account of that Person; and (c) 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 any guarantee
or other support arrangement.

 

“Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities
Account or a Commodity Account, Borrower, and Bank pursuant to which Bank
obtains control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

 

“Copyrights” are any and all copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret.

 

“Credit Extension” is any Equipment Advance or any other extension of credit by
Bank for Borrower’s benefit.

 

“Currency” is coined money and such other banknotes or other paper money as are
authorized by law and circulate as a medium of exchange.

 

“Default Rate” is defined in Section 2.2(b).

 

“Deposit Account” is any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

 

“Designated Deposit Account” is the multicurrency account denominated in
Dollars, account number           , maintained by Borrower with Bank.

 

“Dollars,” “dollars” or use of the sign “$” means only lawful money of the
United States and not any other currency, regardless of whether that currency
uses the “$” sign to denote its currency or may be readily converted into lawful
money of the United States.

 

“Dollar Equivalent” is, at any time, (a) with respect to any amount denominated
in Dollars, such amount, and (b) with respect to any amount denominated in a
Foreign Currency, the equivalent amount therefor in Dollars as determined by
Bank at such time on the basis of the then-prevailing rate of exchange in
San Francisco, California, for sales of the Foreign Currency for transfer to the
country issuing such Foreign Currency.

 

“Draw Period” means the period of time commencing upon the Effective Date and
continuing through the earlier to occur of (a) January 31, 2015, or (b) an Event
of Default.

 

“Effective Date” is defined in the preamble hereof.

 

“Eligible Equipment” is the following to the extent it complies with all of
Borrower’s representations and warranties to Bank, is acceptable to Bank in all
respects, is located at 840 Memorial Drive, Cambridge, Massachusetts 02139 or
such other location of which Bank has approved in writing, and is subject to a
first priority Lien in favor of Bank: (a) new and used general purpose
equipment, computer equipment, office equipment, test and laboratory equipment,
furnishings, subject to the limitations set forth herein, and (b) Other
Equipment.

 

“Equipment” is all “equipment” as defined in the Code with such additions to
such term as may hereafter be made, and includes without limitation all
machinery, fixtures, goods, vehicles (including motor vehicles and trailers),
and any interest in any of the foregoing.

 

 

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“Equipment Advance” is defined in Section 2.1.1(a).

 

“Equipment Line” is an Equipment Advance or Equipment Advances in an aggregate
amount of up to One Million Seven Hundred Fifty Thousand Dollars
($1,750,000.00).

 

“Equipment Maturity Date” is the date which is thirty-five (35) months after the
first Payment Date with respect to such Equipment Advance.

 

“ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations.

 

“Event of Default” is defined in Section 8.

 

“Exchange Act” is the Securities Exchange Act of 1934, as amended.

 

“Financed Equipment” is all present and future Eligible Equipment in which
Borrower has any interest which is financed by an Equipment Advance.

 

“Foreign Currency” means lawful money of a country other than the United States.

 

“Funding Date” is any date on which a Credit Extension is made to or for the
account of Borrower which shall be a Business Day.

 

“FX Contract” is any foreign exchange contract by and between Borrower and Bank
under which Borrower commits to purchase from or sell to Bank a specific amount
of Foreign Currency on a specified date.

 

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

 

“General Intangibles” is all “general intangibles” as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be
made, and includes without limitation, all Intellectual Property, claims, income
and other tax refunds, security and other deposits, payment intangibles,
contract rights, options to purchase or sell real or personal property, rights
in all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.

 

“Governmental Approval” is any consent, authorization, approval, order, license,
franchise, permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any Governmental
Authority.

 

“Governmental Authority” is any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

 

“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.

 

“Indemnified Person” is defined in Section 12.3.

 

“Initial Equipment Advance” is defined in Section 2.1.1(a).

 

 

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“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” means, with respect to any Person, all of such Person’s
right, title, and interest in and to the following:

 

(a)                                 its Copyrights, Trademarks and Patents;

 

(b)                                 any and all trade secrets and trade secret
rights, including, without limitation, any rights to unpatented inventions,
know-how, operating manuals;

 

(c)                                  any and all source code;

 

(d)                                 any and all design rights which may be
available to such Person;

 

(e)                                  any and all claims for damages by way of
past, present and future infringement of any of the foregoing, with the right,
but not the obligation, to sue for and collect such damages for said use or
infringement of the Intellectual Property rights identified above; and

 

(f)                                   all amendments, renewals and extensions of
any of the Copyrights, Trademarks or Patents.

 

“Inventory” is all “inventory” as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes
without limitation all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products, including without
limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of
title representing any of the above.

 

“Investment” is any beneficial ownership interest in any Person (including
stock, partnership interest or other securities), and any loan, advance or
capital contribution to any Person.

 

“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is Thomas
Beck as of the Effective Date, and (b) Chief Financial Officer, who is James
Murphy as of the Effective Date.

 

“Letter of Credit” is a standby or commercial letter of credit issued by Bank
upon request of Borrower based upon an application, guarantee, indemnity, or
similar agreement.

 

“Lien” is a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

 

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits,
certificates, notices, and any other documents related to this Agreement, the
Warrant, the Perfection Certificate, any Bank Services Agreement, any
subordination agreement, any note, or notes or guaranties executed by Borrower,
and any other present or future agreement by Borrower with or for the benefit of
Bank in connection with this Agreement or Bank Services, all as amended,
restated, or otherwise modified.

 

“Material Adverse Change” is (a) a material impairment in the perfection or
priority of Bank’s Lien in the Collateral or in the value of such Collateral;
(b) a material adverse change in the business, operations, or condition
(financial or otherwise) of Borrower; and (c) a material impairment of the
prospect of repayment of any portion of the Obligations.

 

“Monthly Financial Statements” is defined in Section 6.2(a).

 

“Net Income” means, as calculated on a consolidated basis for Borrower and its
Subsidiaries for any period as at any date of determination, the net profit (or
loss), after provision for taxes, of Borrower and its Subsidiaries for such
period taken as a single accounting period.

 

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

 

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, fees, Bank Expenses, the Prepayment Premium, and other amounts
Borrower owes Bank now or later, whether under this Agreement, the other Loan
Documents (other than the Warrant), or otherwise, including, without limitation,
any interest accruing after Insolvency Proceedings begin and debts, liabilities,
or obligations of Borrower assigned to Bank, and to perform Borrower’s duties
under the Loan Documents (other than the Warrant).

 

“Operating Documents” are, for any Person, such Person’s formation documents, as
certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of organization on a date that is no earlier than thirty (30) days
prior to the Effective Date, and, (a) if such Person is a corporation, its
bylaws in current form, (b) if such Person is a limited liability company, its
limited liability company agreement (or similar agreement), and (c) if such
Person is a partnership, its partnership agreement (or similar agreement), each
of the foregoing with all current amendments or modifications thereto.

 

“Other Equipment” is leasehold improvements, transferable software licenses, and
other soft costs approved by Bank, including taxes, shipping, warranty charges,
freight discounts and installation expenses.

 

“Patents” means all patents, patent applications and like protections including
without limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

 

“Payment/Advance Form” is that certain form attached hereto as Exhibit C.

 

“Payment Date” is the first (1st) Business Day of each month.

 

“Perfection Certificate” is defined in Section 5.1.

 

“Permitted Indebtedness” is:

 

(a)                                 Borrower’s Indebtedness to Bank under this
Agreement and the other Loan Documents;

 

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

 

(c)                                  Subordinated Debt;

 

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

 

(e)                                  Indebtedness incurred as a result of
endorsing negotiable instruments received in the ordinary course of business;

 

(f)                                   Indebtedness secured by Liens permitted
under clauses (a) and (c) of the definition of “Permitted Liens” hereunder; and

 

(g)                                  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 (including, without limitation,
Subsidiaries) existing on the Effective Date and shown on the Perfection
Certificate;

 

(b)                                 Investments consisting of Cash Equivalents;

 

(c)                                  Investments permitted by Borrower’s
investment policy, as amended from time to time; provided that such investment
policy (and any such amendment thereto) has been approved in writing by Bank;

 

 

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

 

(d)                                 Investments consisting of (i) travel
advances and employee relocation loans and other employee loans and advances in
the ordinary course of business, and (ii) loans to employees, officers or
directors relating to the purchase of equity securities of Borrower or its
Subsidiaries pursuant to employee stock purchase plans or agreements approved by
Borrower’s Board;

 

(e)                                  Investments consisting of deposit accounts
in which Bank has a first priority perfected security interest; and

 

(f)                                   other Investments not otherwise permitted
by Section 7.7 not exceeding Fifty Thousand Dollars ($50,000.00) in the
aggregate outstanding at any time.

 

“Permitted Liens” are:

 

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

 

(b)                                 Liens for taxes, fees, assessments or other
government charges or levies, either (i) not due and payable or (ii) being
contested in good faith and for which Borrower maintains adequate reserves on
its Books; provided that no notice of any such Lien has been filed or recorded
under the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations adopted thereunder;

 

(c)                                  purchase money Liens or capital leases
(i) on Equipment (other than Financed Equipment) acquired or held by Borrower
incurred for financing the acquisition of the Equipment securing no more than
Fifty Thousand Dollars ($50,000.00) in the aggregate amount outstanding, or
(ii) existing on Equipment (other than Financed Equipment) when acquired, if the
Lien is confined to the property and improvements and the proceeds of the
Equipment;

 

(d)                                 Liens in favor of other financial
institutions arising in connection with Borrower’s deposit and/or securities
accounts held at such institutions; provided that Bank has a first priority
perfected security interest in the amounts held in such deposit and/or
securities accounts;

 

(e)                                  Liens of carriers, warehousemen, suppliers,
or other Persons that are possessory in nature arising in the ordinary course of
business so long as such Liens attach only to Inventory, securing liabilities in
the aggregate amount not to exceed One Hundred Thousand Dollars ($100,000.00)
and which are not delinquent or remain payable without penalty or which are
being contested in good faith and by appropriate proceedings which proceedings
have the effect of preventing the forfeiture or sale of the property subject
thereto;

 

(f)                                   Liens on cash collateral securing
reimbursement obligations to Bank under letters of credit in an amount not to
exceed One Hundred Fifty Thousand Dollars ($150,000.00).

 

(g)                                  Easements, reservations, rights-of-way,
restrictions, minor defects or irregularities in title and other similar charges
or encumbrances affecting real property not likely to result in a Material
Adverse Change;

 

(h)                                 non-exclusive licenses, partnerships and
joint ventures for the use of the property of Borrower or its Subsidiaries in
the ordinary course of business and other non-perpetual licenses that may be
exclusive in some respects, such as, by way of example with respect to field of
use or geographic territory, but that do not result in a legal transfer of title
of the licensed property; and

 

(i)                                     Liens incurred in the extension, renewal
or refinancing of the indebtedness secured by Liens described in (a) through
(h), 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.

 

 

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

 

“Prepayment Premium” is an additional fee payable to the Bank in amount equal
to:

 

(a)                                 for a prepayment of an Equipment Advance
made on or prior to the first (1st) anniversary of the Funding Date of such
Equipment Advance, three quarters of one percent (0.75%) of the principal amount
of such Equipment Advance outstanding as of the date immediately and prior to
such prepayment;

 

(b)                                 for a prepayment of an Equipment Advance
made after the first (1st) anniversary of the Funding Date of such Equipment
Advance, but on or prior to the second (2nd) anniversary of the Funding Date of
such Equipment Advance, one half of one percent (0.50%) of the principal amount
of such Equipment Advance outstanding as of the date immediately and prior to
such prepayment; and

 

(c)                                  for a prepayment of an Equipment Advance
made after the second (2nd) anniversary of the Funding Date of such Equipment
Advance, zero percent (0.0%) of the principal amount of such Equipment Advance
outstanding as of the date immediately and prior to such prepayment.

 

Notwithstanding the foregoing, Bank agrees to waive the Prepayment Premium if
Bank agrees to refinance and redocument this Agreement (in its sole and absolute
discretion) prior to the Equipment Maturity Date.

 

“Prime Rate” is the greater of (a) three and one quarter of one percent (3.25%),
or (b) the rate of interest per annum from time to time published in the money
rates section of The Wall Street Journal or any successor publication thereto as
the “prime rate” then in effect; provided that if such rate of interest, as set
forth from time to time in the money rates section of The Wall Street Journal,
becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall
mean the rate of interest per annum announced by Bank as its prime rate in
effect at its principal office in the State of California (such Bank announced
Prime Rate not being intended to be the lowest rate of interest charged by Bank
in connection with extensions of credit to debtors).

 

“Registered Organization” is any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

 

“Required Amount” means unrestricted and unencumbered cash maintained in
accounts in the name of Borrower at Bank and Bank’s Affiliates in an amount
equal to at least (i) the Twelve Month Cash Burn Amount, plus (ii) fifty percent
(50%) of all of Borrower’s and its Subsidiaries’ unrestricted and unencumbered
cash above the Twelve Month Cash Burn Amount.

 

“Requirement of Law” is as to any Person, the organizational or governing
documents of such Person, and any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

 

“Responsible Officer” is any of the Chief Executive Officer, President, Chief
Financial Officer and Controller of Borrower.

 

“Restricted License” is any material license or other agreement with respect to
which Borrower is the licensee (a) that prohibits or otherwise restricts
Borrower from granting a security interest in Borrower’s interest in such
license or agreement or any other property, or (b) for which a default under or
termination of could interfere with the Bank’s right to sell any Collateral.

 

“SEC” shall mean the Securities and Exchange Commission, any successor thereto,
and any analogous Governmental Authority.

 

“Securities Account” is any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.

 

“Subordinated Debt” is indebtedness incurred by Borrower subordinated to all of
Borrower’s now or hereafter indebtedness to Bank (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance satisfactory to
Bank entered into between Bank and the other creditor), on terms acceptable to
Bank.

 

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

 

 

“Subsidiary” is, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person.  Unless the context otherwise requires, each reference
to a Subsidiary herein shall be a reference to a Subsidiary of Borrower.

 

“Trademarks” means any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Borrower connected with
and symbolized by such trademarks.

 

“Transfer” is defined in Section 7.1.

 

“Twelve Month Cash Burn Amount” means, the projected Cash Burn for the following
twelve (12) months as of any date of determination and based upon Borrower’s
Board-approved plan consistent with the requirement in Section 6.2(c) of this
Agreement.

 

“Warrant” is that certain Warrant to Purchase Stock dated as of the Effective
Date between Borrower and Bank, as amended, modified, supplemented, or restated
from time to time.

 

[Signature page follows.]

 

 

 

 

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

 

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 Effective Date.

 

 

BORROWER:

 

 

 

 

DIMENSION THERAPEUTICS, INC.

 

 

 

 

 

 

 

By:

/s/ Thomas Beck

 

 

Name: Thomas Beck

 

 

Title: CEO and President

 

 

 

 

 

 

 

BANK:

 

 

 

 

SILICON VALLEY BANK

 

 

 

 

 

 

 

By:

/s/ Matthew Griffiths

 

 

Name: Matthew Griffiths

 

 

Title: Vice President

 

[Signature Page to Loan and Security Agreement]

 

 

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

 

EXHIBIT A

 

COLLATERAL DESCRIPTION

 

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

 

All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles (except as provided below), commercial
tort claims, documents, instruments (including any promissory notes), chattel
paper (whether tangible or electronic), cash, deposit accounts, certificates of
deposit, fixtures, letters of credit rights (whether or not the letter of credit
is evidenced by a writing), 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, the Collateral does not include any Intellectual
Property; provided, however, the Collateral shall include all Accounts and all
proceeds of Intellectual Property.  If a judicial authority (including a U.S.
Bankruptcy Court) would hold that a security interest in the underlying
Intellectual Property is necessary to have a security interest in such Accounts
and such property that are proceeds of Intellectual Property, then the
Collateral shall automatically, and effective as of the Effective Date, include
the Intellectual Property to the extent necessary to permit perfection of Bank’s
security interest in such Accounts and such other property of Borrower that are
proceeds of the Intellectual Property.

 

Pursuant to Section 7.5 of this Agreement and subject to any exceptions set
forth herein, Borrower has agreed not to encumber any of its Intellectual
Property without Bank’s prior written consent.

 

 

 

 

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

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

TO:

SILICON VALLEY BANK

Date:

 

FROM:

DIMENSION THERAPEUTICS, INC.

 

 

 

The undersigned authorized officer of DIMENSION THERAPEUTICS, INC. (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”):

 

(1) Borrower is in complete compliance for the period ending                 
with all required covenants except as noted below; (2) there are no Events of
Default; (3) all representations and warranties in the Agreement are true and
correct in all material respects on this date except as noted below; provided,
however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those
representations and warranties expressly referring to a specific date shall be
true, accurate and complete in all material respects as of such date;
(4) Borrower, and each of its Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state
and local taxes, assessments, deposits and contributions owed by Borrower except
as otherwise permitted pursuant to the terms of Section 5.8 of the Agreement;
and (5) no Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank.

 

Attached are the required documents supporting the certification.  The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.  The undersigned 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.  Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

 

Please indicate compliance status by circling Yes/No under “Complies” column.

 

Reporting Covenants

 

Required

 

Complies

 

 

 

 

 

Monthly financial statements with Compliance Certificate

 

Monthly within 30 days

 

Yes

No

Annual financial statement (CPA Audited)

 

FYE within 180 days

 

Yes

No

10-Q, 10-K and 8-K

 

Within 5 days after filing with SEC

 

Yes

No

Board-approved Projections

 

FYE within 60 days

 

Yes

No

 

 

 

 

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

 

 

Other Matters

 

 

 

Have there been any amendments of or other changes to the capitalization table
of Borrower and to the Operating Documents of Borrower or any of its
Subsidiaries? If yes, provide copies of any such amendments or changes with this
Compliance Certificate.

 

Yes

No

 

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

 

 

 

 

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

 

 

DIMENSION THERAPEUTICS, INC.

 

BANK USE ONLY

 

 

 

 

 

By:

 

 

Received by:

 

 

Name:

 

 

 

AUTHORIZED SIGNER

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Verified:

 

 

 

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

 

 

Compliance Status:

Yes

No

 

 

 

 

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

 

 

EXHIBIT C

 

LOAN PAYMENT/ADVANCE REQUEST FORM

 

DEADLINE FOR SAME DAY PROCESSING IS NOON EASTERN TIME

 

Fax To:

 

Date:

 

 

 

 

LOAN PAYMENT:

 

DIMENSION THERAPEUTICS, INC.

From Account #

 

 

To Account #

 

 

(Deposit Account #)

 

 

(Loan Account #)

 

 

 

 

 

Principal $

 

 

and/or Interest $

 

Authorized Signature:

 

 

Phone Number:

 

Print Name/Title:

 

 

 

 

 

 

 

 

 

LOAN ADVANCE:

 

 

Complete Outgoing Wire Request section below if all or a portion of the funds
from this loan advance are for an outgoing wire.

From Account #

 

 

To Account #

 

 

(Loan Account #)

 

 

(Deposit Account #)

Amount of Advance $

 

 

 

 

 

 

 

 

 

All Borrower’s representations and warranties in the Loan and Security Agreement
are true, correct and complete in all material respects on the date of the
request for an advance; provided, however, that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further
that those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such date:

 

 

 

 

 

Authorized Signature:

 

 

Phone Number:

 

Print Name/Title:

 

 

 

 

 

 

 

OUTGOING WIRE REQUEST:

 

 

Complete only if all or a portion of funds from the loan advance above is to be
wired.

Deadline for same day processing is noon, Eastern Time

 

 

 

 

 

Beneficiary Name:

 

 

Amount of Wire:  $

 

Beneficiary Bank:

 

 

Account Number:

 

City and State:

 

 

 

 

Beneficiary Bank Transit (ABA) #:

 

Beneficiary Bank Code (Swift, Sort, Chip, etc.):

 

 

 

 

 

 

 

 

(For International Wire Only)

Intermediary Bank:

 

 

Transit (ABA) #:

 

For Further Credit to:

 

 

 

 

Special Instruction:

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

By signing below, I (we) acknowledge and agree that my (our) funds transfer
request shall be processed in accordance with and subject to the terms and
conditions set forth in the agreements(s) covering funds transfer service(s),
which agreements(s) were previously received and executed by me (us).

 

 

 

 

 

Authorized Signature:

 

 

2nd Signature (if required):

 

Print Name/Title:

 

 

Print Name/Title:

 

Telephone #:

 

 

Telephone #:

 

 

 

 

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

 

 

CONSENT AND FIRST Amendment

to

Loan and security agreement

 

This Consent and First Amendment to Loan and Security Agreement (this
“Amendment”) is entered into this 23rd day of December, 2015, by and between
SILICON VALLEY BANK, a California corporation with a loan production office
located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”),
and DIMENSION THERAPEUTICS, INC., a Delaware corporation with an office located
at 840 Memorial Drive, Cambridge, Massachusetts 02139 (“Borrower”).

Recitals

A.Bank and Borrower have entered into that certain Loan and Security Agreement
dated as of August 21, 2014, (as the same may from time to time be amended,
modified, supplemented or restated, the “Loan Agreement”).  

B.Bank has extended credit to Borrower for the purposes permitted in the Loan
Agreement.  

C.Borrower has requested that Bank amend the Loan Agreement to make certain
revisions to the Loan Agreement as more fully set forth herein.

D.Bank has agreed to so amend certain provisions of the Loan Agreement, but only
to the extent, in accordance with the terms, subject to the conditions and in
reliance upon the representations and warranties set forth below.

Agreement

Now, Therefore, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1.Definitions.  Capitalized terms used but not defined in this Amendment shall
have the meanings given to them in the Loan Agreement.

2.Amendments to Loan Agreement.

2.1     Section 6.6 (Operating Accounts).  Section 6.6(a) is amended in its
entirety and replaced with the following:

“ (a)     Maintain all of its and all of its Subsidiaries’ (excluding Securities
Corp.) operating, depository and securities accounts with Bank and Bank’s
Affiliates, provided, further, Borrower (individually and not on a consolidated
basis) shall at all times have on deposit in operating, depository and
securities accounts maintained with Bank or Bank’s Affiliates, cash in an amount
equal to or greater than one hundred five percent (105.0%) of the
then-outstanding Obligations of Borrower to Bank.  Bank may restrict withdrawals
or transfers by or on behalf of Borrower that would violate this Section 6.6(a),
regardless of whether an Event of Default exists at such time.”

2.2     Section 7.7 (Distributions; Investments).  Section 7.7(b) is amended in
its entirety and replaced with the following:

“ (b)     directly or indirectly make any Investment (including, without
limitation, by the formation of any Subsidiary) other than Permitted
Investments, or permit any of its Subsidiaries (other than Securities Corp.) to
do so.”

 

 

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

 

 

2.3     Section 13.1 (Definitions).  The definition of Permitted Investments as
set forth in Section 13.1 of the Loan Agreement is amended by (i) deleting “and”
at the end of subsection (e), (ii) deleting “.” at the end of subsection (f) and
inserting “; and”, and (iii) inserting the following new subsection to appear as
subsection (g) thereof:

“ (g)     cash Investments by Borrower in Securities Corp.; provided that no
Event of Default has occurred and is continuing or would result from such
Investment.”

2.4     Section 13 (Definitions).  The following terms and their respective
definitions set forth in Section 13.1 are amended in their entirety and replaced
with the following:

“ “Collateral Account” is any Deposit Account, Securities Account, or Commodity
Account of Borrower.”

“ “Loan Documents” are, collectively, this Agreement and any schedules,
exhibits, certificates, notices, and any other documents related to this
Agreement, the Warrant, the Perfection Certificate, the Stock Pledge Agreement,
any Bank Services Agreement, any subordination agreement, any note, or notes or
guaranties executed by Borrower, and any other present or future agreement by
Borrower with or for the benefit of Bank in connection with this Agreement or
Bank Services, all as amended, restated, or otherwise modified.”

2.5     Section 13 (Definitions).  The following new terms and their definitions
are inserted to appear alphabetically in Section 13.1:

“ “Stock Pledge Agreement” means that certain Stock Pledge Agreement executed by
Borrower in favor of Bank dated as of December 23, 2015, as may be amended,
modified, supplemented or restated from time to time.”

“ “Securities Corp.” is Dimension Securities Corporation, a corporation
organized under the laws of the Commonwealth of Massachusetts and a Subsidiary
of Borrower.”

3.Limitation of Amendments.

3.1     The amendments set forth in Section 2, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (a) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document, or (b) otherwise prejudice any
right or remedy which Bank may now have or may have in the future under or in
connection with any Loan Document.

3.2     This Amendment shall be construed in connection with and as part of the
Loan Documents and all terms, conditions, representations, warranties, covenants
and agreements set forth in the Loan Documents, except as herein amended, are
hereby ratified and confirmed and shall remain in full force and effect.

4.Consent.  Borrower has notified Bank that Borrower intends to create the
Securities Corp. (the “Subsidiary Formation”).  Borrower has requested that Bank
consent to the Subsidiary Formation.  Bank hereby consents to the Subsidiary
Formation and agrees that the Subsidiary Formation shall not, in and of itself,
constitute an “Event of Default” under Section 7.3 (relative to mergers or
acquisitions), Section 7.7 (relative to distributions and Investments), or
Section 7.8 (relative to transactions with Affiliates) of the Loan
Agreement.  Borrower hereby acknowledges and agrees that nothing in this Section
or anywhere in this Amendment shall be deemed or otherwise construed as a waiver
by Bank of any of its rights and remedies pursuant to the Loan Documents,
applicable law or otherwise.

 

 

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

 

 

5.Representations and Warranties.  To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows: 

5.1      Immediately after giving effect to this Amendment (a) the
representations and warranties contained in the Loan Documents are true,
accurate and complete in all material respects as of the date hereof (except to
the extent such representations and warranties relate to an earlier date, in
which case they are true and correct in all material respects as of such date),
and (b) no Event of Default has occurred and is continuing;

5.2     Borrower has the power and authority to execute and deliver this
Amendment and to perform its obligations under the Loan Agreement, as amended by
this Amendment;

5.3     The organizational documents of Borrower delivered to Bank on the
Effective Date remain true, accurate and complete and have not been amended,
supplemented or restated and are and continue to be in full force and effect;

5.4     The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, have been duly authorized;

5.5     The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not and will not contravene (a) any law or regulation
binding on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or other
governmental or public body or authority, or subdivision thereof, binding on
Borrower, or (d) the organizational documents of Borrower;

5.6     The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its obligations under the Loan Agreement, as amended
by this Amendment, do not require any order, consent, approval, license,
authorization or validation of, or filing, recording or registration by Borrower
with, or exemption by any governmental or public body or authority, or
subdivision thereof, binding on Borrower, except as already has been obtained or
made; and

5.7     This Amendment has been duly executed and delivered by Borrower and is
the binding obligation of Borrower, enforceable against Borrower in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and by general equitable principles.

6.Updated Perfection Certificate.  Borrower has delivered an updated Perfection
Certificate in connection with this Amendment dated as of even date hereof (the
“Updated Perfection Certificate”), which Updated Perfection Certificate shall
supersede in all respects that certain Perfection Certificate dated as of August
21, 2014.  Borrower agrees that all references in the Loan Agreement to
“Perfection Certificate” shall hereinafter be deemed to be a reference to the
Updated Perfection Certificate.

7.Integration.  This Amendment 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 Amendment
and the Loan Documents merge into this Amendment and the Loan Documents.

8.Counterparts.  This Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

9.Effectiveness.  This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto and
(b) Borrower’s payment of Bank’s legal fees and expenses incurred in connection
with this Amendment.

[Signature page follows.]

 

 

 

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

 

 

In Witness Whereof, the parties hereto have caused this Amendment to be duly
executed and delivered as a sealed instrument under the laws of the Commonwealth
of Massachusetts as of the date first written above.

 

BANK

 

BORROWER

 

 

 

SILICON VALLEY BANK

 

DIMENSION THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Matthew Griffiths

 

By: 

/s/ Annalisa Jenkins

Name:

Matthew Griffiths

 

Name:

Annalisa Jenkins

Title:

Vice President

 

Title:

CEO

 

 

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

 

 

SECOND AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This Second Amendment to Loan and Security Agreement (this “Amendment”) is
entered into this 9th day of February, 2016 by and between SILICON VALLEY BANK
(“Bank”) and DIMENSION THERAPEUTICS, INC., Delaware corporation (“Borrower”)
whose address is 840 Memorial Drive, Cambridge, Massachusetts 02139.

RECITALS

A. Bank and Borrower have entered into that certain Loan and Security Agreement
dated as of August 21, 2014, as amended by that certain Consent and First
Amendment to Loan and Security Agreement by and between Borrower and Bank dated
as of December 23, 2015 (as the same may from time to time be further amended,
modified, supplemented or restated, the “Loan Agreement”).

B. Bank has extended credit to Borrower for the purposes permitted in the Loan
Agreement.

C. Borrower has requested that Bank amend the Loan Agreement to (i) extend a new
equipment facility to Borrower, (ii) revise the financial reporting requirements
and (iii) make certain other revisions to the Loan Agreement as more fully set
forth herein.

D. Bank has agreed to so amend certain provisions of the Loan Agreement, but
only to the extent, in accordance with the terms, subject to the conditions and
in reliance upon the representations and warranties set forth below.

AGREEMENT

Now, THEREFORE, in consideration of the foregoing recitals and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound, the parties hereto agree as
follows:

1. Definitions. Capitalized terms used but not defined in this Amendment shall
have the meanings given to them in the Loan Agreement.

2. Amendments to Loan Agreement.

2.1 Section 2.1.2 (2016 Equipment Advances). The Loan Agreement is amended by
inserting the following new provision to appear as Section 2.1.2 (2016 Equipment
Advances) thereof:

2.1.2 2016 Equipment Advances.

(a) Availability. Subject to the terms and conditions of this Agreement, during
the 2016 Draw Period, Bank shall make advances (each, a “2016 Equipment Advance”
and, collectively, the “2016 Equipment Advances”) not exceeding the 2016
Equipment Line. 2016 Equipment Advances may only be used to finance Eligible
Equipment purchased within ninety (90) days (determined based upon the
applicable invoice date of such Eligible Equipment) before the Funding Date of
each 2016 Equipment Advance. Notwithstanding the foregoing, the initial 2016
Equipment Advance (the “Initial 2016 Equipment Advance”) hereunder may be used
to reimburse Borrower for Eligible Equipment purchased within six (6) months
(determined based upon the applicable invoice date of such Eligible Equipment)
before the 2016 Amendment Date. No 2016 Equipment Advance may exceed one hundred
percent (100.0%) of the total invoice for Eligible Equipment (excluding taxes,
shipping, warranty charges, freight discounts and installation expenses relating
to such Eligible Equipment except to the extent such are allowed to be financed
pursuant hereto as Other Equipment). Unless otherwise agreed to by Bank, not
more than thirty percent (30.0%) of the proceeds of the 2016 Equipment Line
shall be used to finance Other Equipment. Each 2016 Equipment Advance must be in
an amount equal to at least the lesser of (i) Five Hundred Thousand Dollars
($500,000.00) or (ii) the amount that has not yet been drawn under the 2016
Equipment Line. Borrower may only request four (4) 2016 Equipment Advances
hereunder. After repayment, no 2016 Equipment Advance may be reborrowed.

 

 

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

 

 

(b) Interest Period. Commencing on the first (1st) Payment Date of the month
following the month in which the Funding Date of the applicable 2016 Equipment
Advance occurs and continuing on each Payment Date thereafter, Borrower shall
make monthly payments of interest, in arrears, on the principal amount of each
2016 Equipment Advance at the rate set forth in Section 2.2(a)(ii).

(c) Repayment. Commencing on the applicable 2016 Amortization Date, and
continuing on the Payment Date of each month thereafter, Borrower shall repay
each 2016 Equipment Advance in (i) thirty-six (36) equal monthly installments of
principal, plus (ii) monthly payments of accrued interest at the rate set forth
in Section 2.2(a)(ii). All outstanding principal and accrued interest under each
2016 Equipment Advance, and all other outstanding Obligations with respect to
each 2016 Equipment Advance, is due and payable in full on the applicable 2016
Equipment Maturity Date.

(d) Mandatory Prepayment Upon an Acceleration. If repayment of the 2016
Equipment Advances is accelerated by Bank following the occurrence and during
the continuance of an Event of Default, Borrower shall immediately pay to Bank
an amount equal to the sum of: (i) all outstanding principal plus accrued and
unpaid interest, (ii) the 2016 Prepayment Premium, (iii) the 2016 Final Payment,
plus (iv) all other sums, if any, that shall have become due and payable
hereunder with respect to the 2016 Equipment Advances, including interest at the
Default Rate with respect to any past due amounts.

(e) Permitted Prepayment of 2016 Equipment Advances. Borrower shall have the
option to prepay all, but not less than all, of the 2016 Equipment Advances
advanced by Bank under this Agreement, provided Borrower (i) provides written
notice to Bank of its election to prepay the 2016 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 and unpaid interest, (B)
the 2016 Prepayment Premium, (C) the 2016 Final Payment, plus (D) all other
sums, if any, that shall have become due and payable hereunder with respect to
the 2016 Equipment Advances, including interest at the Default Rate with respect
to any past due amounts.

2.2 Section 2.2(a) (Interest Rate). Section 2.2(a) is amended in its entirety
and replaced with the following:

(a) Interest Rate.

(i) Subject to Section 2.2(b), the principal amount outstanding for each
Equipment Advance shall accrue interest at a fixed per annum rate equal to two
and one quarter of one percent (2.25%) above the Prime Rate, which interest
shall be determined by Bank on the Funding Date of the applicable Equipment
Advance and shall be payable monthly in arrears in accordance with Section
2.2(c) below.

(ii) Subject to Section 2.2(b), the principal amount outstanding for each 2016
Equipment Advance shall accrue interest at a fixed per annum rate equal to one
half of one percent (0.50%) below the Prime Rate, which interest shall be
determined by Bank on the Funding Date of the applicable 2016 Equipment Advance
and shall be payable monthly in arrears in accordance with Section 2.2(c) below.

2.3 Section 2.3 (Fees). Section 2.3 is amended in its entirety and replaced with
the following:

2.3 Fees. Borrower shall pay to Bank:

(a) Commitment Fee. A fully earned, non-refundable commitment fee of Five
Thousand Dollars ($5,000.00), was paid on the Effective Date;

(b) Prepayment Premium. The Prepayment Premium, when due hereunder;

(c) 2016 Prepayment Premium. The 2016 Prepayment Premium, when due hereunder;

(d) 2016 Final Payment. The 2016 Final Payment, when due hereunder;

(e) Good Faith Deposit. Borrower has paid to Bank a deposit of Fifteen Thousand
Dollars ($15,000.00) (the “Good Faith Deposit”) to initiate Bank’s due diligence
review process. The Good Faith Deposit shall be utilized to pay Bank Expenses.

(f) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through
and after the Effective Date, when due (or, if no stated due date, upon demand
by Bank).

 

 

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

 

 

(g) Fees Fully Earned. Unless otherwise provided in this Agreement or in a
separate writing by Bank, Borrower shall not be entitled to any credit, rebate,
or repayment of any fees earned by Bank pursuant to this Agreement
notwithstanding any termination of this Agreement or the suspension or
termination of Bank’s obligation to make loans and advances hereunder. Bank may
deduct amounts owing by Borrower under the clauses of this Section 2.3 pursuant
to the terms of Section 2.4(c). Bank shall provide Borrower written notice of
deductions made from the Designated Deposit Account pursuant to the terms of the
clauses of this Section 2.3.

2.4 Section 6.2(a) (Quarterly Financial Statements). Section 6.2(a) is deleted
in its entirety and replaced with the following:

(a) Quarterly Financial Statements. As soon as available, but no later than
forty-five (45) days after the last day of each quarter, a company prepared
consolidated balance sheet and income statement covering Borrower’s consolidated
operations for such quarter certified by a Responsible Officer and in a form
acceptable to Bank (the “Quarterly Financial Statements”);

2.5 Section 6.2(b) (Quarterly Compliance Certificate). Section 6.2(b) is deleted
in its entirety and replaced with the following:

(d) Quarterly Compliance Certificate. Within forty-five (45) days after the last
day of each quarter and together with the Quarterly Financial Statements, a duly
completed Compliance Certificate signed by a Responsible Officer, certifying
that as of the end of such quarter, Borrower was in full compliance with all of
the terms and conditions of this Agreement and such other information as Bank
may reasonably request;

2.6 Section 6.2(c) (Board Projections). Section 6.2(c) is amended by deleting
the words “sixty (60)” appearing therein and inserting in lieu thereof the words
“forty-five (45)”.

2.7 Section 6.2(d) (Annual Audited Financial Statements). Section 6.2(d) is
amended by deleting the words “one hundred eighty (180) days after the last day
of Borrower’s fiscal year” appearing therein and inserting in lieu thereof the
words “one hundred fifty (150) days after the last day of Borrower’s fiscal
year, and contemporaneously with any filing of such statements with the SEC, and
at least annually,”.

2.8 Section 8.1 (Payment Default). Section 8.1 is amended by deleting the words
“Equipment Maturity Date” appearing therein and inserting in lieu thereof the
words “Maturity Date”.

2.9 Section 12.1 (Termination Prior to Equipment Maturity Date; Survival).
Section 12.1 is amended by (a) renaming Section 12.1 as “Termination Prior to
Maturity Date; Survival” and (b) deleting the words “Equipment Maturity Date”
appearing therein and inserting in lieu thereof the words “Maturity Date”.

2.10 Section 13 (Definitions). The following terms and their respective
definitions set forth in Section 13.1 are amended in their entirety and replaced
with the following:

“Credit Extension” is any Equipment Advance, 2016 Equipment Advance or any other
extension of credit by Bank for Borrower’s benefit.

“Eligible Equipment” is the following to the extent it complies with all of
Borrower’s representations and warranties to Bank, is acceptable to Bank in all
respects, is located at 840 Memorial Drive, Cambridge, Massachusetts 02139, 19
Presidential Way, Woburn, Massachusetts 01801, or such other location of which
Bank has approved in writing, and is subject to a first priority Lien in favor
of Bank: (a) for the Equipment Advances, (i) new and used general purpose
equipment, computer equipment, office equipment, test and laboratory equipment,
furnishings, subject to the limitations set forth herein, and (ii) Other
Equipment; and (b) for the 2016 Equipment Advances, (i) new and used computer
equipment, office equipment, laboratory equipment, research equipment and
process development equipment, subject to the limitations set forth herein, and
(ii) Other Equipment.

“Equipment Maturity Date” is, for each Equipment Advance, the date which is
thirty-five (35) months after the applicable Amortization Date for such
Equipment Advance.

“Obligations” are Borrower’s obligations to pay when due any debts, principal,
interest, fees, Bank Expenses, the Prepayment Premium, the 2016 Final Payment,
the 2016 Prepayment Premium, and other amounts Borrower owes Bank now or later,
whether under this Agreement, the other Loan Documents (other than the Warrant),
or otherwise, including, without limitation, any interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower
assigned to Bank, and to perform Borrower’s duties under the Loan Documents
(other than the Warrant).

 

 

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

 

 

 

2.11 Section 13.1 (Definitions). The Loan Agreement is amended by inserting the
following new terms and their respective definitions to appear alphabetically in
Section 13.1:

“2016 Amendment Date” is February 9, 2016.

“2016 Amortization Date” means, for each 2016 Equipment Advance, the first (1st)
Payment Date following the six (6) month anniversary of the Funding Date of such
2016 Equipment Advance.

“2016 Draw Period” means the period of time commencing upon the 2016 Amendment
Date and continuing through the earlier to occur of (a) June 30, 2017 or (b) an
Event of Default.

“2016 Equipment Advance” and “2016 Equipment Advances” are defined in Section
2.1.2(a).

“2016 Equipment Line” is a 2016 Equipment Advance or 2016 Equipment Advances in
an aggregate principal amount of up to Seven Million Dollars ($7,000,000.00).

“2016 Equipment Maturity Date” is, for each 2016 Equipment Advance, the date
which is thirty-five (35) months after the applicable 2016 Amortization Date for
such 2016 Equipment Advance.

“2016 Final Payment” is a payment (in addition to and not a substitution for the
regular monthly payments of principal plus accrued interest) equal to the
original principal amount of each 2016 Equipment Advance extended by Bank to
Borrower multiplied by the 2016 Final Payment Percentage, due on the earliest to
occur of (a) the applicable 2016 Equipment Maturity Date, (b) the acceleration
by Bank of the 2016 Equipment Advances pursuant to Section 9.1, (c) the
prepayment by Borrower of the 2016 Equipment Advances pursuant to Section
2.1.2(d) or 2.1.2(e), or (d) the termination of this Agreement.

“2016 Final Payment Percentage” is, for each 2016 Equipment Advance, six percent
(6.0%).

“2016 Prepayment Premium” is an additional fee payable to the Bank in amount
equal to:

(a) for a prepayment of the 2016 Equipment Advances made on or prior to the
second (2nd) anniversary of the 2016 Amendment Date, one percent (1.0%) of the
principal amount of the 2016 Equipment Advances outstanding as of the date
immediately and prior to such prepayment; and

(b) for a prepayment of the 2016 Equipment Advances made after the second (2nd)
anniversary of the 2016 Amendment Date, zero percent (0.0%) of the principal
amount of the 2016 Equipment Advances outstanding as of the date immediately and
prior to such prepayment.

Notwithstanding the foregoing, Bank agrees to waive the 2016 Prepayment Premium
if Bank closes on the refinance and redocumentation of the 2016 Equipment
Advances under another division of Bank (in its sole and absolute discretion)
prior to the applicable 2016 Equipment Maturity Date.

“Good Faith Deposit” is defined in Section 2.3(e).

“Initial 2016 Equipment Advance” is defined in Section 2.1.2(a).

“Maturity Date” means the Equipment Maturity Date and/or the 2016 Equipment
Maturity Date, as applicable.

“Quarterly Financial Statements” is defined in Section 6.2(a).

2.12 Exhibit B (Compliance Certificate). The Compliance Certificate appearing as
Exhibit B to the Loan Agreement is amended in its entirety and replaced with the
Compliance Certificate in the form of Schedule 1 attached hereto.

3. Limitation of Amendments.

3.1 The amendments set forth in Section 2 above are effective for the purposes
set forth herein and shall be limited precisely as written and shall not be
deemed to (a) be a consent to any amendment, waiver or modification of any other
term or condition of any Loan Document, or (b) otherwise prejudice any right or
remedy which Bank may now have or may have in the future under or in connection
with any Loan Document.

3.2 This Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.

 

 

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

 

 

4. Representations and Warranties. To induce Bank to enter into this Amendment,
Borrower hereby represents and warrants to Bank as follows:

 

4.1 Immediately after giving effect to this Amendment (a) the representations
and warranties contained in the Loan Documents are true, accurate and complete
in all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct in all material respects as of such date), and (b) no Event of
Default has occurred and is continuing;

4.2 Borrower has the power and authority to execute and deliver this Amendment
and to perform its obligations under the Loan Agreement, as amended by this
Amendment;

4.3 The organizational documents of Borrower delivered to Bank on the Effective
Date remain true, accurate and complete and have not been amended, supplemented
or restated and are and continue to be in full force and effect;

4.4 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;

4.5 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding on
or affecting Borrower, (b) any contractual restriction with a Person binding on
Borrower, (c) any order, judgment or decree of any court or other governmental
or public body or authority, or subdivision thereof, binding on Borrower, or (d)
the organizational documents of Borrower;

4.6 The execution and delivery by Borrower of this Amendment and the performance
by Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
Borrower, except as already has been obtained or made; and

4.7 This Amendment has been duly executed and delivered by Borrower and is the
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and by general equitable principles.

5. Ratification of Stock Pledge Agreement. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and conditions of a certain Stock
Pledge Agreement dated as of December 23, 2015 between Borrower and Bank (the
“Stock Pledge Agreement”), and acknowledges, confirms and agrees that the Stock
Pledge Agreement (a) contains an accurate and complete listing of all Shares (as
defined in the Stock Pledge Agreement), and (b) shall remain in full force and
effect. Borrower hereby grants Bank, to secure the payment and performance in
full of all the Obligations and the performance of each of Borrower’s duties
under the Loan Documents, a continuing security interest in, and pledges to
Bank, the Pledged Collateral (as defined in the Stock Pledge Agreement),
wherever located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof.

 

6. Ratification of Perfection Certificate. Borrower hereby ratifies, confirms
and reaffirms, all and singular, the terms and disclosures contained in a
certain Perfection Certificate dated as of December 23, 2015 between Borrower
and Bank, and acknowledges, confirms and agrees the disclosures and information
Borrower provided to Bank in said Perfection Certificate have not changed, as of
the date hereof.

7. Integration. This Amendment 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 Amendment
and the Loan Documents merge into this Amendment and the Loan Documents.

8. Counterparts. This Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.

9. Effectiveness. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Bank of this Amendment by each party hereto and (b)
Borrower’s payment of Bank’s legal fees and expenses incurred in connection with
this Amendment.

[Signature page follows.]

 

 

 

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

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts and delivered as of the date first written above.

 

 

 

 

 

 

 

 

BANK

 

BORROWER

 

SILICON VALLEY BANK

 

DIMENSION THERAPEUTICS, INC.

 

 

 

By:

 

/s/ Ryan Roller

 

By:

 

/s/ Annalisa Jenkins

Name:

 

Ryan Roller

 

Name:

 

Annalisa Jenkins

Title:

 

Vice President

 

Title:

 

CEO

 

 

 

 

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

 

 

Schedule 1

EXHIBIT B

COMPLIANCE CERTIFICATE

 

 

 

 

TO: SILICON VALLEY BANK

  

Date:                      

FROM: DIMENSION THERAPEUTICS, INC.

  

 

The undersigned authorized officer of DIMENSION THERAPEUTICS, INC. (“Borrower”)
certifies that under the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”):

(1) Borrower is in compliance for the period ending                with all
required covenants except as noted below; (2) there are no Events of Default;
(3) all representations and warranties in the Agreement are true and correct in
all material respects on this date except as noted below; provided, however,
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in
all material respects as of such date; (4) Borrower, and each of its
Subsidiaries, has timely filed all required tax returns and reports, and
Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise
permitted pursuant to the terms of Section 5.8 of the Agreement; and (5) no
Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Bank.

Attached are the required documents supporting the certification. The
undersigned certifies that these are prepared in accordance with GAAP
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The undersigned 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. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

 

 

 

 

 

Reporting Covenants

  

Required

  

Complies

Monthly financial statements with Compliance Certificate

  

Quarterly within 45 days

  

Yes    No

 

 

 

Annual financial statement (CPA Audited)

  

FYE within 150 days and contemporaneously with filing with the SEC

  

Yes    No

 

 

 

10-Q, 10-K and 8-K

  

Within 5 days after filing with SEC

  

Yes    No

 

 

 

Board-approved Projections

  

FYE within 45 days

  

Yes    No

 

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

 

 

Other Matters

 

 

 

 

Have there been any amendments of or other changes to the Operating Documents of

  

 

Borrower or any of its Subsidiaries? If yes, provide copies of any such
amendments or

  

Yes             No        

changes with this Compliance Certificate.

  

 

The following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)

      

 

  

 

  

 

Schedule 1

 

 

 

 

 

 

 

 

 

 

DIMENSION THERAPEUTICS, INC.

 

 

 

BANK USE ONLY

 

 

 

By:                                                             
                   

 

 

 

Received by:                                                                  

Name:                                                           
                

 

 

 

 

 

AUTHORIZED SIGNER

Title:                                                                   
          

 

 

 

Date:                                                         
                    

 

 

 

 

 

 

 

 

 

 

Verified:                                                                       

 

 

 

 

 

 

 

 

AUTHORIZED SIGNER

 

 

 

 

 

 

Date:                                                                  
          

 

 

 

 

 

 

 

 

 

 

Compliance Status: Yes    No