LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT (as amended, restated, supplemented or
otherwise modified from time to time, this “Agreement”) dated as of July 19,
2019 (the “Closing Date”) is entered into among EVELO BIOSCIENCES, INC., a
Delaware corporation (“Borrower Representative”), and each other Person party
hereto as a borrower from time to time (collectively, “Borrowers”, and each, a
“Borrower”), K2 HEALTHVENTURES LLC and any other lender from time to time party
hereto (collectively, “Lenders”, and each, a “Lender”), K2 HEALTHVENTURES LLC,
as administrative agent for Lenders (in such capacity, together with its
successors, “Administrative Agent”), and ANKURA TRUST COMPANY, LLC, as
collateral agent for Lenders (in such capacity, together with its successors,
“Collateral Trustee”).
AGREEMENT
Borrower Representative, each Borrower from time to time party hereto,
Administrative Agent, Collateral Trustee and Lenders hereby agree as follows:
1.ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement shall be construed in accordance
with GAAP, and calculations and determinations shall be made following GAAP,
consistently applied. Capitalized terms not otherwise defined in this Agreement
shall have the meanings set forth on Exhibit A. 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. 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. Unless otherwise specified, all references in this
Agreement or any Annex or Schedule hereto to a “Section,” “subsection,”
“Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section,
subsection, Exhibit, Annex, or Schedule in or to this Agreement. For purposes of
the Loan Documents, whenever a representation or warranty is made to a Person’s
knowledge or awareness, knowledge or awareness means the actual knowledge, after
reasonable investigation, of any Responsible Officer of such Person.
2.    LOAN AND TERMS OF PAYMENT
2.1    Promise to Pay. Each Borrower hereby unconditionally promises to pay each
Lender, ratably, the outstanding principal amount of all Loans, accrued and
unpaid interest, fees and charges thereon and to pay all Obligations as and when
due in accordance with this Agreement.
2.2    Availability and Repayment of the Loans.
(a)    Availability.
(i)    Subject to the terms and conditions of this Agreement, each Lender
agrees, severally and not jointly, to make to Borrowers an advance on the
Closing Date in principal amount equal to its First Tranche Term Loan Commitment
(the “First Tranche Term Loans”). Lenders’ commitments to make the First Tranche
Term Loans shall terminate upon the funding of the First Tranche Term Loans on
the Closing Date.
(ii)    Subject to the terms and conditions of this Agreement, each Lender
agrees, severally and not jointly, to make to Borrowers an advance during the
Second Tranche Availability Period in principal amount equal to its Second
Tranche Term Loan Commitment (the “Second Tranche Term Loans”). Lenders’
commitments to make the Second Tranche Term Loans shall terminate upon the
earlier of (i) the end of the Second Tranche Availability Period, and (ii) the
date the Second Tranche Term Loans have been funded.
(iii)    Subject to the Third Tranche Milestone and the terms and conditions of
this Agreement, each Lender agrees, severally and not jointly, to make to
Borrowers an advance during the Third Tranche Availability Period in principal
amount equal to its Third Tranche Term Loan Commitment (the “Third Tranche Term
Loans”, and together with the First Tranche Term Loan, and the Second Tranche
Term Loan, collectively, the “Term Loans”, and each, a “Term Loan”). Lenders’
commitment to make the Third Tranche Term Loans shall terminate upon the earlier
of (i) the end of the Third Tranche Availability Period, and (ii) the date that
Third Tranche Term Loans have been funded.

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Borrowers shall use the proceeds of the Term Loans (i) to repay existing
outstanding Indebtedness of Borrower Representative owing to Pacific Western
Bank, and (ii) for working capital. Once repaid, the Term Loans may not be
reborrowed.
(b)    Repayment. Commencing on the Amortization Date, and continuing thereafter
on the each Payment Date through the Term Loan Maturity Date, Borrowers shall
make consecutive equal monthly payments of equal principal and accrued and
unpaid interest, which would fully amortize the principal amount of the Term
Loans and accrued interest thereon by the Term Loan Maturity Date, provided that
if the Applicable Rate is adjusted in accordance with its terms, the
amortization schedule and the required monthly installment shall be recalculated
based on the adjusted Applicable Rate and the remaining number of Payment Dates
through the Term Loan Maturity Date. Any and all unpaid Obligations, including
principal and accrued and unpaid interest in respect of the Term Loans, the fees
and payments due pursuant to the Fee Letter, and other fees and other sums, if
any, shall be due and payable in full on the Term Loan Maturity Date. The Term
Loans may only be prepaid in accordance with Sections 2.2(c) or (d).
(c)    Mandatory Prepayment Upon an Acceleration. If the Loans are accelerated
following the occurrence and during the continuance of an Event of Default,
Borrowers shall immediately pay to Lenders, an amount equal to the sum of:
(i)    all outstanding principal plus accrued and unpaid interest thereon, plus
(ii)    any fees or payments then due pursuant to the Fee Letter, 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.
(d)    Permitted Prepayment of Loans. Borrowers shall have the option to prepay
all, but not less than all, of the Loans, provided Borrowers provide written
notice to Administrative Agent of its election to prepay the Loans at least ten
(10) Business Days prior to such prepayment, and pay, on the date of such
prepayment, to Lenders, ratably, an amount equal to the sum of:
(i)    all outstanding principal plus accrued and unpaid interest thereon, plus
(ii)    any fees or payments then due pursuant to the Fee Letter, 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.
2.3    Payment of Interest.
(a)    Interest Rate. Subject to Section 2.3(b), the outstanding principal
amount of the Loans shall accrue interest from and after its Funding Date, at
the Applicable Rate, and Borrowers shall pay such interest monthly in arrears on
each Payment Date commencing on September 1, 2019.
(b)    Default Rate. Immediately upon the occurrence and during the continuance
of an Event of Default, unless Administrative Agent elects otherwise,
Obligations shall bear interest at a rate per annum which is five percentage
points (5.0%) above the rate that is otherwise applicable thereto (the “Default
Rate”). Reasonable and documented out-of-pocket fees and expenses which are
required to be paid by Borrowers pursuant to the Loan Documents (including,
without limitation, Lender Expenses, subject to the terms of the Fee Letter) 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 2.3(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 pursuant to the
Loan Documents. Each Borrower agrees that interest at the Default Rate is a
reasonable calculation of Lenders’ lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an Event of Default.
(c)    Payment; Interest Computation. Interest is payable monthly in arrears on
the Payment Date of the following month 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 3:00 p.m. Eastern time on any day shall be
deemed received at

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the opening of business on the next Business Day, and (ii) the date of the
making of any Loan shall be included and the date of payment shall be excluded.
Changes to the Applicable Rate based on changes to the Prime Rate, shall be
effective as of the date, and to the extent, of such change.
(d)    Maximum Interest. Notwithstanding any provision in this Agreement or any
other Loan Document, it is the parties’ intent not to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law that a court of competent jurisdiction shall deem applicable hereto (the
“Maximum Rate”). If a court of competent jurisdiction shall finally determine
that a Borrower has actually paid to or for the benefit of Lenders an amount of
interest in excess of the amount that would have been payable if all of the
Obligations had at all times borne interest at the Maximum Rate, then such
excess interest actually paid by Borrowers shall be applied as follows: first,
to the payment of principal outstanding in respect of the Loans; second, after
all principal is repaid, to the payment of accrued interest, third, to the
payment of Lender Expenses and any other Obligations; and fourth, after all
Obligations are repaid, the excess (if any) shall be refunded to Borrowers or
paid to whomsoever may be legally entitled thereto, provided that amounts
payable to Lenders, shall be paid ratably.
2.4    Fees and Charges. Borrowers shall pay to Lenders, ratably:
(a)    Fees. The fees as and when due in accordance with the Fee Letter;
(b)    Expenses. All Lender Expenses (including reasonable and documented
out-of-pocket attorneys’ fees and expenses for documentation and negotiation of
this Agreement and the other Loan Documents) incurred through and after the
Closing Date, when due (or, if no stated due date, within two (2) Business Days
after demand by Administrative Agent), subject to the terms of the Fee Letter.
2.5    Payments; Application of Payments; Automatic Payment Authorization.
(a)    All payments to be made by Borrowers under any Loan Document, including
payments of principal and interest and all fees, charges, expenses, indemnities
and reimbursements, shall be made in immediately available funds in Dollars,
without setoff, recoupment or counterclaim, before 3:00 p.m. Eastern Time on the
date when due. Payments of principal and/or interest received after 3:00 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)    No Borrower shall have a right to specify the order or the loan accounts
to which a Lender shall allocate or apply any payments made by a Borrower to or
for the benefit of such Lender or otherwise received by such Lender under this
Agreement when any such allocation or application is not expressly specified
elsewhere in this Agreement.
(c)    Administrative Agent, on behalf of Lenders, may initiate debit entries to
any Deposit Accounts as authorized on the Automatic Payment Authorization for
principal and interest payments or any other Obligations when due; provided,
however, that so long as no Event of Default has occurred and is continuing,
Administrative Agent shall provide Borrower Representative with prior written
notice before debiting Borrowers’ deposit accounts for amounts other than
principal, interest and payments of regularly scheduled fees. These debits shall
not constitute a set-off. If the ACH payment arrangement is terminated for any
reason, Borrowers shall make all payments due hereunder at the applicable
address specified in Section 10, or as otherwise notified by Administrative
Agent in writing.
(d)    Borrowers, Administrative Agent, Collateral Trustee and each Lender
hereby agree to the terms and conditions set forth on Schedule 3 hereto.
2.6    Promissory Notes. Borrowers agree that: (a) upon written notice by or on
behalf of any Lender to Borrowers that a promissory note or other evidence of
indebtedness is requested by such Lender to evidence the Loans and other
Obligations owing or payable to, or to be made by, such Lender, Borrowers shall
promptly (and in any event within three (3) Business Days of any such request)
execute and deliver to such Lender an appropriate promissory note, in
substantially the form attached hereto as Exhibit G, and (b) upon any Lender’s
written request, and in any event within three (3) Business Days of any such
request, the Borrowers shall execute and deliver to such Lender new notes and/or
divide the notes in exchange for then existing notes in such smaller amounts or
denominations as such Lender shall specify in its sole and absolute discretion;
provided, that the aggregate principal amount of such new notes shall

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not exceed the aggregate principal amount of the applicable Loans made by such
Lender; provided, further, that such promissory notes that are to be replaced
shall then be deemed no longer outstanding hereunder and replaced by such new
notes and returned to the Borrowers within a reasonable period of time after
such Lender’s receipt of the replacement notes. Regardless whether or not any
such promissory notes are issued, this Agreement shall evidence the Loans and
other Obligations owing or payable by Borrowers to each Lender.
3.    CONDITIONS OF LOANS
3.1    Conditions Precedent to Initial Loan. Each Lender’s obligation to make
the initial Loan is subject to the condition precedent that Lender shall have
received, in form and substance satisfactory to Administrative Agent, such
documents, and completion of such other matters, as Administrative Agent may
reasonably deem necessary or appropriate, including, without limitation:
(a)    duly executed signatures to this Agreement;
(b)    duly executed signatures to the Fee Letter;
(c)    a certificate of Borrower, duly executed by a Responsible Officer,
certifying and attaching (i) the Operating Documents, (ii) resolutions duly
approved by the Board, (iii) any resolutions, consent or waiver duly approved by
the requisite holders of Borrower’s Equity Interests, if applicable (or
certifying that no such resolutions, consent or waiver is required), and (iv) a
schedule of incumbency;
(d)    a payoff letter with respect to Indebtedness outstanding as of the
Closing Date to Pacific Western Bank, together with all documents reasonably
required in connection with the payoff and release of security interests;
(e)    the Perfection Certificate of Borrower Representative, together with the
duly executed signature thereto;
(f)    evidence satisfactory to Lender, that the insurance policies and
endorsements required by Section 6.5 are in full force and effect;
(g)    the original stock certificates representing any Shares, if any, together
with a stock power or other appropriate instrument of transfer, duly executed by
the holder of record of such Shares and in blank;
(h)    a legal opinion of counsel to Borrower Representative; and
(i)    payment of the fees then due in accordance with the Fee Letter.
3.2    Conditions Precedent to all Loans. Each Lender’s obligations to make each
Loan is subject to the following conditions precedent:
(a)    except for the Term Loan made on the Closing Date, timely receipt of an
executed Loan Request by Administrative Agent;
(b)    the representations and warranties in this Agreement and the other Loan
Documents made by the Loan Parties shall be true, accurate, and complete in all
material respects on the date of the Loan Request and on the Funding Date of
each Loan; 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;
(c)    no Default or Event of Default shall have occurred and be continuing or
result from the Loan; and
(d)    there has not been any event or circumstance that has had or would
reasonably be expected to have a Material Adverse Effect, as determined by
Administrative Agent in Administrative Agent’s good faith discretion.

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3.3    Covenant to Deliver.
(a)    Borrowers agree to deliver each item required to be delivered under this
Agreement as a condition precedent to any Loan. Borrowers expressly agree that a
Loan made prior to the receipt of any such item shall not constitute a waiver by
Administrative Agent of a Borrower’s obligation to deliver such item, and the
making of any Loan in the absence of a required item shall be in Administrative
Agent’s sole discretion.
(b)    Borrower agrees to deliver the items set forth on Schedule 2 hereto
within the timeframe set forth therein (or by such other date as Administrative
Agent may approve in writing), in each case, in form and substance reasonably
acceptable to Administrative Agent.
3.4    Procedures for Borrowing. Other than for the First Tranche Term Loans, to
obtain a Loan, Borrowers shall deliver a completed Loan Request to
Administrative Agent (which may be delivered by email) no later than 3:00 p.m.
Eastern Time, ten (10) Business Days prior to the date such Loan is requested to
be made. On the Funding Date, each applicable Lender shall fund the applicable
Loan in the manner requested by the Loan Request, provided that each of the
conditions precedent to such Loan are satisfied.
4.    CREATION OF SECURITY INTEREST
4.1    Grant of Security Interest. Each Borrower hereby grants to Collateral
Trustee, for the ratable benefit of Lenders, to secure the payment in full of
all of the Obligations, a continuing security interest in, and pledges to
Collateral Trustee, the Collateral, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof. If this
Agreement is terminated, Collateral Trustee’s Lien in the Collateral shall
continue until the Obligations (other than contingent indemnification
obligations as to which no claim has been asserted or is known to exist) are
repaid in full in cash.
4.2    Priority of Security Interest. Each 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 to Permitted Liens; provided that, with respect to priority, only such
Permitted Liens that are permitted pursuant to the terms of this Agreement to
have superior priority to Collateral Trustee’s Lien under this Agreement). If a
Borrower shall acquire a commercial tort claim with a potential recovery in
excess of One Hundred Thousand Dollars ($100,000), Borrowers shall promptly
notify Administrative Agent in writing and deliver such other information and
documents as Administrative Agent may require to take any further action
necessary or advisable to perfect Collateral Trustee’s Lien in such commercial
tort claim. If a Borrower shall acquire a certificate with respect to Shares or
any instrument, such Borrower shall promptly notify Administrative Agent and
Collateral Trustee and deliver the same together with a stock power or
instrument of transfer and any necessary endorsement, all in form satisfactory
to Collateral Trustee.
4.3    Authorization to File Financing Statements. Each Borrower hereby
authorizes Collateral Trustee or its designee (or the Administrative Agent, on
behalf of the Collateral Trustee) to file at any time financing statements,
continuation statements and amendments thereto with all appropriate
jurisdictions to perfect or protect Collateral Trustee’s interest or rights
hereunder.
4.4    Pledge of Collateral. Each Borrower hereby pledges, assigns and grants to
Collateral Trustee a security interest in all the Equity Interests in which such
Borrower has any interest, including the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing,
in each case to the extent the foregoing constitutes Collateral hereunder, as
security for the performance of the Obligations. On the Closing Date or as
required pursuant to Section 6.11, the certificate or certificates for such
Equity Interests, to the extent certificated, will be delivered to Collateral
Trustee, accompanied by a stock power or other appropriate instrument of
assignment duly executed in blank. To the extent required by the terms and
conditions governing the Equity Interests in which a Borrower has an interest,
such Borrower shall cause the books of each Person whose Equity Interests are
part of the Collateral and any transfer agent to reflect the pledge of the
Equity Interests. Upon the occurrence and during the continuance of an Event of
Default hereunder, Collateral Trustee may effect the transfer of any securities
included in the Collateral (including but not limited to the Equity Interests)
into the name of Collateral Trustee and cause new certificates representing such
securities to be issued in the name of Collateral Trustee or its transferee.
Each Borrower will execute and deliver such documents, and take or cause to be
taken such actions, as Administrative Agent may reasonably request to perfect or
continue the perfection of Collateral Trustee’s security interest in the Equity
Interests. Unless an Event of Default shall have occurred and be continuing, (x)
each Borrower

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shall be entitled to exercise any voting rights with respect to the Equity
Interests in which it has an interest and to give consents, waivers and
ratifications in respect thereof, provided that: no such notice shall be
required if a Borrower has commenced an Insolvency Proceeding and, in any event,
no vote shall be cast or consent, waiver or ratification given or action taken
which would be inconsistent with any of the terms of this Agreement or which
would constitute or create any violation of any of such terms; and (y) each
Borrower and its Subsidiaries may pay any dividends or make any distribution or
payment or redeem, retire or purchase any Equity Interests not otherwise
prohibited by the terms of this Agreement. All such rights to vote and give
consents, waivers and ratifications, as well as pay any dividends or make any
distribution or payment or redeem, retire or purchase any Equity Interests,
shall terminate upon the occurrence and during the continuance of an Event of
Default.
5.    REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1    Due Organization, Authorization; Power and Authority.
(a)    Each Loan Party and each of its Subsidiaries are duly existing and in
good standing as a Registered Organization in their respective jurisdictions of
formation and are qualified and licensed to do business and are in good standing
in any other jurisdiction in which the conduct of their respective business or
ownership of property require that they be qualified except where the failure to
do so would not reasonably be expected to have a Material Adverse Effect. In
connection with this Agreement, Borrower Representative has delivered to
Administrative Agent a completed certificate signed by Borrower Representative
entitled “Perfection Certificate” (it being understood and agreed that the Loan
Parties may from time to time update certain information in the Perfection
Certificate after the Closing Date by delivering a new Perfection Certificate or
by disclosing such updates on a Compliance Certificate to the extent such
updates are resulting from actions, transactions, circumstances or events not
prohibited by or that do not require the consent of Administrative Agent
pursuant to the terms of this Agreement, and all references in this Agreement to
“Perfection Certificate” shall hereinafter be deemed to be a reference to the
new Perfection Certificate). Except to the extent Borrower Representative has
provided notice of a legal name change in accordance with Section 7.2, (i) each
Loan Party’s exact legal name is that indicated on the Perfection Certificate
and on the signature page hereof; (ii) each Loan Party is an organization of the
type and is organized in the jurisdiction set forth in the Perfection
Certificate; (iii) the Perfection Certificate accurately sets forth each Loan
Party’s organizational identification number or accurately states that such Loan
Party has none; (iv) the Perfection Certificate accurately sets forth each Loan
Party’s place of business, or, if more than one, its chief executive office as
well as such Loan Party’s mailing address (if different than its chief executive
office); (v) except as set forth in the Perfection Certificate, each Loan Party
(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 (vi) all other
information set forth on the Perfection Certificate pertaining to each Loan
Party and each of its Subsidiaries is accurate and complete in all material
respects (it being understood and agreed that each Loan Party may from time to
time update certain information in the Perfection Certificate after the Closing
Date to the extent permitted by one or more specific provisions in this
Agreement).
(b)    The execution, delivery and performance by each Loan Party of the Loan
Documents to which it is a party have been duly authorized, and do not (i)
conflict with such Loan Party’s Operating Documents or other organizational
documents, (ii) contravene, conflict with, constitute a default under or violate
any material Requirement of Law, (iii) contravene, conflict or violate any
material applicable order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority by which such Loan Party 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
such Loan Party is bound. No Loan Party is in default under any agreement to
which it is a party or by which it is bound in which the default would
reasonably be expected to have a Material Adverse Effect.
5.2    Collateral.
(a)    Each Loan Party 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.

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(b)    Except for the Collateral Accounts described in the Perfection
Certificate or in a notice timely delivered pursuant to Section 6.6, no Loan
Party has any Collateral Accounts at or with any bank, broker or other financial
institution, and each Loan Party has taken such actions as are necessary to give
Collateral Trustee a perfected security interest therein as required pursuant to
the terms of Section 6.6(b). To the knowledge of Borrower, the Accounts are bona
fide, existing obligations of the Account Debtors.
(c)    The Collateral is located only at the locations identified in the
Perfection Certificate and other Permitted Locations. The Collateral is not in
the possession of any third party bailee (such as a warehouse) except as
otherwise provided in the Perfection Certificate or as disclosed in writing
pursuant to Section 6.12.
(d)    Each Loan Party is the sole owner of the material Intellectual Property
which it owns or purports to own except for (i) licenses permitted hereunder or
granted to customers in the Ordinary Course of Business, (ii) open-source
software, (iii) over-the-counter software that is commercially available to the
public, (iv) material Intellectual Property licensed to such Loan Party and
noted on the Perfection Certificate or as disclosed pursuant to Section 6.7(b),
and (v) immaterial Intellectual Property licensed to such Loan Party. Each
Patent (other than patent applications) which it owns or purports to own and
which is material to such Loan Party’s business is valid and enforceable, and no
part of the Intellectual Property which a Loan Party owns or purports to own and
which is material to the Loan Parties’ business, to their knowledge, has been
judged invalid or unenforceable, in whole or in part. To the best of each
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. Except as
noted on the Perfection Certificate or as disclosed pursuant to Section 6.7(b),
no Loan Party is a party to, nor is it bound by, any Restricted License. No
Subsidiary which is not a Loan Party owns any Intellectual Property which is
material to the business of Borrowers as a whole. It will not be necessary to
use any inventions of any of such Loan Party’s employees or consultants (or
Persons it currently intends to hire) made prior to their employment by such
Loan Party. Each current and prior employee, consultant or other Affiliate
thereof has entered into an invention assignment agreement or similar agreement
with such Loan Party with respect to all intellectual property rights he or she
owns that are related to the Loan Parties’ business.
5.3    Accounts; Material Agreements. The Accounts are bona fide existing
obligations. The property or services giving rise to such Accounts have been
delivered or rendered. No Borrower has received any notice of actual or imminent
insolvency of an Account Debtor. The material licenses and agreements to which
any Loan Party or any of its Subsidiaries is a party is in good standing and in
full force and effect and no Loan Party is in material breach with respect
thereto. No material customer or supplier has terminated, significantly reduced
or communicated its intent to do so to any Loan Party or any of its
Subsidiaries.
5.4    Litigation and Proceedings. Except as set forth in the Perfection
Certificate or as disclosed in writing pursuant to Section 6.2, there are no
actions, suits, litigations or proceedings, at law or in equity, pending, or, to
the knowledge of any Responsible Officer, threatened in writing, by or against
any Loan Party or any of its Subsidiaries, officers or directors, (a) as of the
Closing Date, involving more than, individually or in the aggregate for all
related proceedings, One Hundred Thousand Dollars ($100,000), or (b) in which
any adverse decision has had or would reasonably be expected to have any
Material Adverse Effect.
5.5    Financial Statements; Financial Condition. All consolidated and
consolidating financial statements for the Loan Parties and each of their
Subsidiaries delivered to Administrative Agent fairly present in all material
respects the consolidated and consolidating financial condition and results of
operations of the Loan Parties and each of their Subsidiaries as of the
respective dates and for the respective periods then ended, and there are no
material liabilities (including any contingent liabilities) which are not
reflected in such financial statements. There has not been any material
deterioration in the consolidated and consolidating financial condition of the
Loan Parties since the date of the most recent financial statements submitted to
Administrative Agent.
5.6    Solvency. The fair salable value of the assets (including goodwill minus
disposition costs) of the Loan Parties and each of their Subsidiaries, on a
consolidated basis, exceeds the fair value of liabilities of the Loan Parties’
and each of their Subsidiaries, on a consolidated basis; no Loan Party is left
with unreasonably small capital after the transactions in this Agreement; and
each Loan Party is able to pay its debts (including trade debts) as they mature.
5.7    Consents; Approvals. Each Loan Party and each of its Subsidiaries have
obtained all third party consents, approvals, waivers, made all declarations or
filings with, given all notices to, and obtained all consents,

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licenses, permits or other approvals from all Governmental Authorities that are
necessary (i) to enter into the Loan Documents to which it is a party and
consummate the transactions contemplated thereby, and (ii) to continue their
respective businesses as currently conducted, except (with respect to this
clause (ii)) where failure to do so would not reasonably be expected to result
in a Material Adverse Effect.
5.8    Subsidiaries; Investments. No Loan Party has any Subsidiaries, except as
noted on the Perfection Certificate or as disclosed to Administrative Agent
pursuant to Section 6.11 below. No Loan Party owns any stock, partnership, or
other ownership interest or other Equity Interests except for Permitted
Investments.
5.9    Tax Returns and Payments. Each Loan Party and each of its Subsidiaries
have timely filed or caused to be filed all required federal income tax returns
and material foreign, state and local tax returns and reports (or appropriate
extensions therefor), and such Loan Party and each of its Subsidiaries has
timely paid, or have made adequate provision for the payment of all foreign,
federal, state and local Taxes, assessments, deposits and contributions owed by
such Loan Party or such Subsidiary, as applicable, 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) where failure to do so would not
reasonably be expected to result in a Material Adverse Effect. No Borrower is
aware of any claims or adjustments proposed for any prior tax years of any
Borrower or any of its Subsidiaries which would result in a material amount of
additional Taxes becoming due and payable by a Borrower or any of its
Subsidiaries.
5.10    Shares. Such Borrower has full power and authority to create a first
lien on the Shares and no disability or contractual obligation exists that would
prohibit such Borrower from pledging the Shares pursuant to this Agreement.
There are no subscriptions, warrants, rights of first refusal or other
restrictions on transfer relative to, or options exercisable with respect to the
Shares. The Shares have been and will be duly authorized and validly issued, and
are fully paid and non‑assessable. The Shares are not the subject of any present
or threatened suit, action, arbitration, administrative or other proceeding, and
such Borrower knows of no reasonable grounds for the institution of any such
proceedings.
5.11    Compliance with Laws.
(a)    No Loan Party or Subsidiary of a Loan Party is an “investment company” or
an “affiliated person” of, or “promoter” or “principal underwriter” for, an
“investment company”, as such terms are defined in the Investment Company Act of
1940 as amended.
(b)    No Loan Party or Subsidiary of a Loan Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of “purchasing” or “carrying” any “margin
security” as such terms are defined in Regulation U of the Federal Reserve Board
as now and from time to time hereafter in effect (such securities being referred
to herein as “Margin Stock”). None of the proceeds of the Loans or other
extensions of credit under this Agreement have been (or will be) used, directly
or indirectly, for the purpose of purchasing or carrying any Margin Stock, for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry any Margin Stock or for any other purpose which
might cause any of the Loans or other extensions of credit under this Agreement
to be considered a “purpose credit” within the meaning of Regulation T, U or X
of the Federal Reserve Board.
(c)    No Loan Party has taken or permitted to be taken any action which might
cause any Loan Document to which it is a party to violate any regulation of the
Federal Reserve Board. Neither the making of the Loans hereunder nor Borrowers’
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto. No Loan Party, nor any of its
Subsidiaries, nor any Affiliate of any Loan Party or of any Subsidiary, nor any
present holder of Equity Interests of any of the foregoing (i) is a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control of the United States
Department of Treasury (“OFAC”) or in Section 1 of the Anti-Terrorism Order or
similar sanctions laws of any other Governmental Authority including of any
other applicable jurisdiction, (ii) is a citizen or resident of any country that
is subject to embargo or trade sanctions enforced by OFAC, (iii) is, or will
become, a Person whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of the Anti-Terrorism Order, or (iv) engages in
any dealings or transactions, or is otherwise associated, with any such Person.

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(d)    Each Loan Party and its Subsidiaries are in compliance, in all material
respects, with the USA Patriot Act. No part of the proceeds from the Loans made
hereunder has been (or will be) used, directly or indirectly, for any payments
to any governmental official or employee, political party, official of a
political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.
(e)    No Reportable Event or Prohibited Transaction, as defined in ERISA has
occurred or is reasonably expected to occur, and no Loan Party has failed to
meet the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. No Loan Party has violated any applicable
environmental laws in any material respect, maintains any properties or assets
which have been designated in any manner pursuant to any environmental
protection statute as a hazardous materials disposal site, or has received any
notice, summons, citation or directive from the Environmental Protection Agency
or any other similar Governmental Authority.
5.12    Products. A complete and accurate list of the Products material to the
Loan Parties’ business, is set forth on the Perfection Certificate, as updated
from time to time pursuant to the Compliance Certificate. The Loan Parties and
each of its Subsidiaries hold all material required Governmental Approvals
required for the testing, manufacturing, marketing or sale of the Products, a
list of which is set forth on the Perfection Certificate, and all such material
Governmental Approvals are in full force and effect. There are no proceedings in
progress, pending or, to such Loan Party’s knowledge, threatened, that may
result in revocation, cancellation, suspension, rescission or any adverse
modification of any such material Governmental Approval which would reasonably
be expected to result in a Material Adverse Effect, nor, to the best of the
knowledge, information and belief of such Loan Party, after due inquiry, are
there any facts upon which proceedings could reasonably be based. Without
limitation of the foregoing:
(a)    With respect to any Product material to the Loan Parties’ business being
tested or manufactured, each Loan Party and each of its Subsidiary has received,
and such Product is the subject of, all material Governmental Approvals needed
in connection with the testing or manufacture of such Product as such testing is
currently being conducted by or on behalf of a Loan Party or any of its
Subsidiaries, and neither any Loan Party nor any of its Subsidiaries has
received any notice from any applicable Governmental Authority, that such
Governmental Authority is conducting an investigation or review of (i) any Loan
Party’s or any of its Subsidiary’s manufacturing facilities and processes for
such Product which have disclosed any material deficiencies or violations of any
Requirement of Law or the Governmental Approvals related to the manufacture of
such Product, or (ii) any such Governmental Approval or that any such
Governmental Approval has been revoked or withdrawn, nor has any such
Governmental Authority issued any order or recommendation stating that the
development, testing and/or manufacturing of such Product should cease, in each
case, which would reasonably be expected to result in a Material Adverse Effect.
(b)    With respect to any Product material to the Loan Parties’ business
marketed or sold by a Loan Party or any of its Subsidiaries, such Loan Party or
such Subsidiary, as applicable, has received, and such Product is the subject
of, all material Governmental Approvals needed in connection with the marketing
and sales of such Product as currently being marketed or sold, and no Loan Party
nor any of its Subsidiary has received any notice from any applicable
Governmental Authority, that such Governmental Authority is conducting an
investigation or review of any such Governmental Approval or approval or that
any such Governmental Approval has been revoked or withdrawn, nor has any such
Governmental Authority issued any order or recommendation stating that such
marketing or sales of such Product cease or that such Product be withdrawn from
the marketplace, in each case, which would reasonably be expected to result in a
Material Adverse Effect;
(c)    There have been no adverse clinical test results in connection with a
Product which have or would reasonably be expected to have a Material Adverse
Effect; and
(d)    There have been no Product recalls or voluntary Product withdrawals from
any market.
5.13    Full Disclosure. No written representation, warranty or other statement
of a Loan Party or any of its Subsidiaries in any certificate or written
statement by or on behalf of a Loan Party or any of its Subsidiaries in
connection with this Agreement, as of the date such representation, warranty, or
other statement was made, taken together with all such written certificates and
written statements given, 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 written statements not misleading in light of the circumstances
under which they were made (it being recognized that the projections and
forecasts provided by any Loan Party in good faith and based upon reasonable
assumptions are not viewed as facts and

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that actual results during the period or periods covered by such projections and
forecasts may differ from the projected or forecasted results).
6.    AFFIRMATIVE COVENANTS
Each Borrower shall, and shall cause each Loan Party to, do all of the
following:
6.1    Government Compliance. Except as otherwise permitted by Section 7.3,
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; comply, and cause each Subsidiary to comply,
with all laws, ordinances and regulations to which it is subject except where a
failure to do so would not reasonably be expected to have a Material Adverse
Effect; obtain all of the Governmental Approvals required in connection with
such Loan Party’s business and for the performance by each Loan Party of its
obligations under the Loan Documents to which it is a party and the grant of a
security interest in accordance therewith, and comply with all terms and
conditions with respect to such Governmental Approvals.
6.2    Financial Statements, Reports, Certificates. Provide Administrative Agent
with the following:
(a)    Monthly Financial Statements. Within thirty (30) days after the last day
of each month, a company prepared consolidated and consolidating balance sheet
and income statement covering the Loan Parties and each of their Subsidiaries’
operations for such month, in a form reasonably acceptable to Administrative
Agent, certified by a Responsible Officer as having been prepared in accordance
with GAAP, consistently applied, except for the absence of footnotes, and
subject to normal quarter-end and year-end adjustments.
(b)    Quarterly Financial Statements. Within forty-five (45) days after the
last day of each fiscal quarter, a company prepared consolidated and
consolidating balance sheet, income statement and statement of cash flows
covering the Loan Parties and each of their Subsidiaries’ operations for such
fiscal quarter, in form acceptable to Administrative Agent, certified by a
Responsible Officer as having been prepared in accordance with GAAP,
consistently applied, except for the absence of footnotes, and subject to normal
quarter-end and year-end adjustments.
(c)    Compliance Certificates. Together with the monthly financial statements,
a duly completed Compliance Certificate signed by a Responsible Officer,
certifying that as of the end of such period, the Loan Parties were in full
compliance with all of the terms and conditions of this Agreement.
(d)    Annual Operating Budget and Financial Projections. Within thirty (30)
days after the end of each fiscal year of Borrower Representative (and promptly
and within five (5) Business Days of Board approval of any material modification
thereto), an annual operating budget, on a consolidated and consolidating basis
(including income statements, balance sheets and cash flow statements, by month)
for the upcoming fiscal year of Borrower Representative, together with any
related business forecasts used in the preparation thereof.
(e)    Annual Audited Financial Statements. As soon as available, but no later
than ninety (90) days after the last day of Borrower Representative’s fiscal
year, audited consolidated financial statements prepared in accordance with
GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Administrative Agent, provided that the inclusion of
explanatory language casting doubt on Borrower Representative’s ability to
continue as a going concern due to the need to raise additional financing or
refinance Indebtedness shall not cause such financial statements to be
considered “qualified” for purposes of this subsection (e).
(f)    Other Statements. Within five (5) Business Days of delivery, copies of
all statements, reports and notices generally made available to all holders of
Subordinated Debt.
(g)    SEC Filings. Within five (5) Business Days of filing, copies of all
periodic and other reports, proxy statements and other materials filed by
Borrower Representative with the Securities and Exchange Commission. Documents
required to be delivered pursuant to the terms of this Agreement, including but
not limited to Sections 6.2(b), (e), and (g), (to the extent any such documents
are included in materials otherwise filed with the Securities and Exchange
Commission) may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date on which Borrower Representative posts such
documents or a link thereto on Borrower Representative’s website on the internet
at Borrower Representative’s website address.

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(h)    Legal Action Notice. A prompt report of any legal actions pending or
threatened in writing against any Loan Party or any of its Subsidiaries that
could result in damages or costs to any Loan Party or any of its Subsidiaries,
individually or in the aggregate for all related proceedings, of Five Hundred
Thousand Dollars ($500,000) or more, or of any Loan Party or any of its
Subsidiaries taking or threatening legal action against any third person with
respect to a material claim, and with respect to any pending action or
threatened action, a prompt report of any material development with respect
thereto.
(i)    Intellectual Property Report. Together with the Compliance Certificate
delivered at the end of each calendar quarter, a report in form reasonably
acceptable to Administrative Agent, listing any applications or registrations
that any Loan Party or any of its Subsidiaries has made or filed in respect of
any Patents, Copyrights or Trademarks and the status of any outstanding
applications or registrations, as well as any material change in any Loan Party
or any of its Subsidiaries’ Intellectual Property.
(j)    Aging Reports; Other Reports and Information. Together with the monthly
financial reports, reports as to the following, in form acceptable to
Administrative Agent: accounts receivable and accounts payable aging, and any
other information related to the financial or business condition of any Loan
Party as and when reasonably requested by Administrative Agent.
(k)    Bank Account Statements. Upon request of Administrative Agent, together
with the monthly financial statements delivered in accordance with subsection
(a) above or concurrently with receipt by any Loan Party of such documentation
from the applicable depository bank, a copy of the most recent account
statement, with transaction detail, for each Deposit Account or Securities
Account of a Loan Party or any of its Subsidiaries, or within three (3) Business
Days, upon Administrative Agent’s request, evidence satisfactory to
Administrative Agent of the balance maintained in any such Deposit Account or
Securities Account.
(l)    Product Related. Within five (5) Business Days of receipt copies of all
material correspondence, reports, documents and other filings with any
Governmental Authority that would reasonably be expected to have a material
adverse effect on any Governmental Approvals required for the manufacturing,
marketing, testing or sale of Products or which would have a Material Adverse
Effect.
(m)    Foreign Subsidiary Pledge. Annually, no later than the date annual
financial statements in accordance with subsection (e) above are delivered, an
update with respect to Borrower Representative’s determination as to whether the
pledge of more than 65% of the Voting Stock of any of its Foreign Subsidiaries
would reasonably be expected to result in a material adverse tax consequence to
Borrowers, in Borrower Representative’s determination.
6.3    Inventory; Returns. Keep all Inventory in all material respects in good
and marketable condition, free from material defects except for (a) Excluded
Inventory and Equipment, and (b) Inventory and Equipment (i) sold in the
Ordinary Course of Business, and (ii) for which adequate reserves have been
made, in all cases as to which Borrowers give prior written notice. Returns and
allowances between a Loan Party and its Account Debtors shall follow such Loan
Party’s customary practices as they exist at the Closing Date or as is standard
in the industry. Borrower Representative shall promptly notify Administrative
Agent of all returns, recoveries, disputes and claims that involve more than
Five Hundred Thousand Dollars ($500,000).
6.4    Taxes; Pensions. Timely file, and cause each of its Subsidiaries to
timely file or cause to file, all required federal income tax returns and
material foreign, state and local tax returns and reports (or appropriate
extensions therefor) and timely pay, or make adequate provision for the payment
of, and require each of its Subsidiaries to timely pay, or make adequate
provision for the payment of, all foreign, federal, state and local Taxes,
assessments, deposits and contributions owed by such Loan Party and each of its
Subsidiaries, except for as otherwise permitted under the terms of Section 5.8,
and shall deliver to Administrative Agent, on reasonable 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, and cause each Subsidiary to keep, its business and the Collateral
insured for risks and in amounts standard for companies in the Loan Parties’
industry and location. Insurance policies shall be in a form, with financially
sound and reputable insurance companies that are not Affiliates of any Loan
Party, and in amounts that are reasonably satisfactory to Administrative Agent.

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(b)    Ensure that proceeds payable under any property policy with respect to
Collateral are, at Administrative Agent’s option, payable to Collateral Trustee,
for the ratable benefit of Lenders, on account of the Obligations. To that end,
all property policies shall have a lender’s loss payable endorsement showing
Collateral Trustee as lender loss payable, all liability policies shall show, or
have endorsements showing, Collateral Trustee as an additional insured, in each
case, in form satisfactory to Collateral Trustee and as set forth on Exhibit E.
(c)    Notwithstanding the foregoing, (a) so long as no Event of Default has
occurred and is continuing, the Loan Parties shall have the option of applying
the proceeds of any casualty policy up to Five Hundred Thousand Dollars
($500,000), in the aggregate per fiscal year, toward the prompt replacement or
repair of destroyed or damaged property; provided that any such replaced or
repaired property (i) shall be of equal or like value as the replaced or
repaired Collateral and (ii) shall be Collateral in which Collateral Trustee has
been granted a first priority security interest and (b) after the occurrence and
during the continuance of an Event of Default, all such proceeds shall, at the
option of Administrative Agent, be payable to Collateral Trustee, for the
ratable benefit of Lenders, on account of the Obligations.
(d)    At Administrative Agent’s request, Borrower Representative 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 Collateral Trustee, that it will endeavor to give
Collateral Trustee thirty (30) days prior written notice before any such policy
or policies shall be canceled (or ten (10) days’ notice for cancellation for
non-payment of premiums).
(e)    If any Loan Party fails to obtain insurance as required under this
Section 6.5 or to pay any amount or furnish any required proof of payment upon
Administrative Agent’s request, Collateral Trustee 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 as Administrative Agent deems prudent or may
direct.
6.6    Deposit and Securities Accounts.
(a)    Maintain Collateral Accounts only at the banks and other financial
institutions identified in the Perfection Certificate or as disclosed pursuant
to a notice timely delivered pursuant to subsection (b) below. Borrowers shall
further maintain an ACH payment structure in favor of Administrative Agent,
satisfactory to Administrative Agent.
(b)    Provide Administrative Agent ten (10) Business Days prior written notice
before establishing any Collateral Account at or with any bank, broker or other
financial institution, and upon opening such account, provide Administrative
Agent with a written notice identifying the name, address of each bank or other
institution, the name in which the account is held, a description of the purpose
of the account, and the complete account number therefor. For each Collateral
Account that any Loan Party at any time maintains, Borrowers shall cause the
applicable bank, broker or financial institution at or with which any Collateral
Account is maintained to execute and deliver an Account Control Agreement or
other appropriate instrument with respect to such Collateral Account to perfect
Collateral Trustee’s Lien in such Collateral Account in accordance with the
terms hereunder.
6.7    Intellectual Property.
(a)    Protect, defend and maintain the validity and enforceability of its
Intellectual Property material to its business; promptly advise Administrative
Agent 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 material to its business; not suffer any material claim of
infringement that would reasonably be expected to have a Material Adverse Effect
unless such claim is dismissed within thirty (30) Business Days from initiation
thereof or Borrowers have demonstrated to Administrative Agent’s satisfaction
that such proceedings are without merit and adequate reserves have been taken;
and not allow any Intellectual Property material to the Loan Parties’ business
to be abandoned, forfeited or dedicated to the public without Administrative
Agent’s written consent.
(b)    Provide written notice to Administrative Agent within ten (10) Business
Days of any Loan Party entering or becoming bound by any Restricted License,
and, at the request of Administrative Agent, use commercially reasonable efforts
to obtain, or cause such Loan Party to ensure that such Restricted License can
be sold together with the assets of such Loan Party in a transaction resulting
in a Change in Control, subject to customary exclusions regarding transfers to
competitors of the applicable licensor party to such Restricted License.

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6.8    Litigation Cooperation. From the Closing Date and continuing through the
termination of this Agreement, make available to Administrative Agent,
Collateral Trustee and any Lender, without expense to Administrative Agent,
Collateral Trustee or such Lender, as applicable, on reasonable prior notice and
at reasonable times and intervals, each Loan Party and its officers, employees
and agents and each Loan Party’s books and records, subject to any applicable
confidentiality obligations of Borrower, to the extent that Administrative
Agent, Collateral Trustee or such Lender may deem them reasonably necessary to
prosecute or defend any third-party suit or proceeding instituted by or against
Administrative Agent, Collateral Trustee or such Lender with respect to any
Collateral or relating to such Loan Party.
6.9    Access to Collateral; Books and Records. Allow Administrative Agent,
Collateral Trustee, or its respective agents, to inspect the Collateral and
audit and copy such Loan Party’s Books in accordance with Section 6.13. Such
inspections or audits shall be conducted no more often than once every twelve
(12) months unless an Event of Default has occurred and is continuing in which
case such inspections and audits shall occur as often as Administrative Agent
shall determine is necessary. The foregoing inspections and audits of
Administrative Agent and its respective agents only shall be at Borrowers’
expense.
6.10    [Reserved.]
6.11    Joinder of Subsidiaries; MSC Subsidiary.
(a)    No later than thirty (30) Business Days after such time as a Loan Party
or any of its Subsidiaries forms or acquires any direct or indirect Subsidiary
after the Closing Date: (a) promptly, and in any event within ten (10) Business
Days of creation, acquisition or request, as applicable, provide written notice
to Administrative Agent together with certified copies of the Operating
Documents for such Subsidiary, and (b) promptly, and in any event within thirty
(30) Business Days of formation or creation, or upon Administrative Agent’s
request, as applicable: (i) take all such action as may be reasonably required
by Administrative Agent to cause the applicable Subsidiary to, in case of a
Domestic Subsidiary (other than the MSC Subsidiary), either (A) provide a
joinder to this Agreement pursuant to which such Subsidiary becomes a Loan Party
hereunder, or (B) guarantee the Obligations of Borrowers under the Loan
Documents and grant a security interest in and to the collateral of such
Subsidiary (substantially as described on Exhibit B), in each case together with
such Account Control Agreements and other documents, instruments and agreements
reasonably requested by Administrative Agent, all in form and substance
satisfactory to Administrative Agent (including being sufficient to grant
Collateral Trustee a first priority Lien, subject to Permitted Liens in and to
the assets of such Subsidiary), and (ii) and to pledge all of the direct or
beneficial Equity Interests in such Subsidiary constituting Collateral
hereunder. Any document, agreement, or instrument executed or issued pursuant to
this Section 6.11 shall be a Loan Document.
(b)    Borrowers shall not permit Subsidiaries (other than the MSC Subsidiary)
which are not Loan Parties, in the aggregate to maintain (i) cash and other
assets with an aggregate value for all such Subsidiaries in excess of 10% of
consolidated assets, (ii) revenue (other than inter-company revenue) in excess
of 10% of consolidated revenues for any twelve month period then ended, (iii)
any Intellectual Property which is material to the business of Borrowers as a
whole, or (iv) any contracts which are material to the business of Borrowers as
a whole, without causing one or more of such Subsidiaries to enter into a
joinder or guaranty in form satisfactory to Administrative Agent with respect to
the Obligations as Administrative Agent may request within thirty (30) Business
Days (or such other period as Administrative Agent may agree in writing) such
that compliance with clauses (i) through (iv) shall be restored.
(c)    At any time that the MSC Subsidiary maintains assets, Borrowers shall
cause the MSC Investment Conditions to be met.
6.12    Property Locations.
(a)    Provide to Administrative Agent at least ten (10) Business Days’ prior
written notice before adding any new offices or business or Collateral
locations, including warehouses (unless such new offices or business or
Collateral locations qualify as Excluded Locations).
(b)    With respect to any property or assets of a Loan Party located with a
third party, including a bailee, datacenter or warehouse (other than Excluded
Locations), Borrowers shall use commercially reasonable efforts to cause such
third party to execute and deliver a Collateral Access Agreement for such
location, including an

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acknowledgment from each of the third parties that it is holding or will hold
such property, subject to Collateral Trustee’s security interest.
(c)    With respect to any property or assets of a Loan Party located on leased
premises (other than Excluded Locations), Borrowers shall use commercially
reasonable efforts to cause such third party to execute and deliver a Collateral
Access Agreement for such location.
6.13    Management Rights. Any representative of Administrative Agent shall have
the right to meet with management and officers of Borrowers to discuss such
books of account and records. In addition, Administrative Agent shall be
entitled at reasonable times and intervals to consult with and advise the
management and officers of Borrowers concerning significant business issues
affecting Borrowers. Such consultations shall not unreasonably interfere with
any Loan Party’s business operations.
6.14    Right to Invest. Lenders or their respective assignees or nominees shall
have the right, in their discretion, to participate in an aggregate amount up to
$5,000,000 in up to three (3) Qualified Financings consummated after the Closing
Date, on the same terms, conditions and pricing afforded to others participating
in any such Qualified Financing, provided that the minimum aggregate investment
by Lender and its assignees or nominees for each Qualified Financing shall be
$1,500,000. Borrower Representative shall use commercially reasonable efforts to
provide written notice to Administrative Agent at least five (5) Business Days
prior to the consummation of each Qualified Financing, and if a Lender desires
to exercise its right to participate in such Qualified Financing, such Lender
shall cooperate to consummate its investment in such closing promptly upon
receipt of documentation with respect thereto. Without limiting the generality
of the foregoing, Borrower Representative will obtain all such required material
authorizations, exemptions or consents from any third party or any Governmental
Authority having jurisdiction thereof as may be necessary to enable Borrower
Representative to perform its obligations under this Agreement.
6.15     Further Assurances. Execute any further instruments and take further
action as Administrative Agent or Collateral Trustee reasonably request to
perfect or continue Collateral Trustee’s Lien in the Collateral or to effect the
purposes of this Agreement.
7.    NEGATIVE COVENANTS
No Borrower shall, or shall cause or permit any of its Subsidiaries to, do any
of the following:
7.1    Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose
of (collectively, “Transfer”) all or any part of its business or property,
except for Permitted Transfers.
7.2    Changes in Business, Management, Ownership, or Business Locations.
(a) Engage in any business other than the businesses currently engaged in by
such Person, as applicable, or reasonably related thereto; (b) cease doing
business, or liquidate or dissolve; (c) permit or suffer a Change in Control
(except as expressly permitted by Section 7.3); or (d) without at least ten (10)
Business Days prior written notice to Administrative Agent (i) change its
jurisdiction of organization, (ii) change its organizational structure or type,
(iii) change its legal name, or (iv) change its organizational number (if any)
assigned by its jurisdiction of organization.
7.3    Mergers or Acquisitions. Merge or consolidate with any other Person
(except if concurrently with, and as a condition to the effectiveness of, the
closing of such merger or consolidation, the Obligations (other than contingent
indemnification obligations as to which no claim has been asserted or is known
to exist) shall be repaid in full, in cash), or acquire all or substantially all
of the capital stock or property of another Person or business line of another
Person (including, without limitation, by the formation of any Subsidiary). For
the avoidance of doubt, any Borrower may create a Subsidiary as provided in the
definition of Permitted Investments.
7.4    Indebtedness. Create, incur, assume, or be liable for any Indebtedness,
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, except for Permitted Liens, or otherwise permit any Collateral not
to be subject to the first priority security interest granted herein, except in
connection with Permitted Liens permitted to have priority over Collateral
Trustee’s Lien.

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7.6    Maintenance of Collateral Accounts. Maintain any Collateral Account
except pursuant to the terms of Section 6.6(b).
7.7    Distributions; Investments. (a) Pay any dividends or make any
distribution or payment or redeem, retire or purchase any Equity Interests
provided that (i) Borrower Representative may convert any of its convertible
Equity Interests (including warrants) into other Equity Interests issued by
Borrower Representative pursuant to the terms of such convertible securities or
otherwise in exchange thereof, (ii) Borrower Representative may convert
Subordinated Debt issued by Borrower Representative into Equity Interests issued
by Borrower Representative pursuant to the terms of such Subordinated Debt and
to the extent permitted under the terms of the applicable subordination or
intercreditor agreement; (iii) any Borrower or Subsidiary thereof may pay
dividends solely in Equity Interests of such Borrower or Subsidiary; (iv)
Borrower Representative may make cash payments in lieu of fractional shares; (v)
Borrower Representative may repurchase the Equity Interests issued by Borrower
Representative pursuant to stock repurchase agreements approved by Borrower
Representative’s Board, provided that the aggregate amount of all such
repurchases does not exceed Five Hundred Thousand Dollars ($500,000) per fiscal
year; (vi) Borrower Representative may repurchase the Equity Interests issued by
Borrower Representative pursuant to stock repurchase agreements approved by
Borrower Representative’s Board where the consideration for the repurchase is
the cancellation of indebtedness owed by such former employees, consultants or
directors to Borrower Representative regardless of whether an Event of Default
exists; (vii) purchase Equity Interests in connection with the exercise of stock
options or stock appreciation by way of a cashless exercise, provided that the
aggregate amount of all such repurchases does not exceed Five Hundred Thousand
Dollars ($500,000) per fiscal year; and (viii) purchase fractional shares of
Equity Interests arising out of stock dividends, splits or combinations or
business combinations, provided that the aggregate amount of all such
repurchases does not exceed Fifty Thousand Dollars ($50,000) per fiscal year; or
(b) directly or indirectly make any Investment (including, without limitation,
by the formation of any Subsidiary), other than Permitted Investments.
Notwithstanding the foregoing, Loan Parties shall be permitted to make the
repurchases, payments or distributions expressly permitted pursuant to clause
(v) above only if, at such time, and immediately after giving effect thereto:
(i) no Default or Event of Default, exists or could reasonably be expected to
occur, (ii) Borrower Representative and its Subsidiaries, on a consolidated
basis, are solvent, and (iii) such payment or distribution is permitted under
and is made in compliance with all applicable laws.
7.8    Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of a Loan Party, except for
(a) transactions that are in the Ordinary Course of Business and on fair and
reasonable terms that are no less favorable to such Person than would be
obtained in an arm’s length transaction with a non-affiliated Person; (b) bona
fide rounds of Subordinated Debt or equity financing by existing investors in
Borrower Representative for capital raising purposes, (c) reasonable and
customary director, officer and employee compensation and other customary
benefits including retirement, health, stock option and other benefit plans and
indemnification arrangements approved by Borrower Representative’s Board, and
(d) distributions permitted under Section 7.7.
7.9    Subordinated Debt. (a) Make or permit any payment on any Subordinated
Debt, except as permitted pursuant to 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 the Obligations.
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 Loan for that purpose; take
any action or fail to take any action (or suffer any other Person to do so), to
the extent the same would cause the representations set forth in Section 5.11(c)
to be untrue; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail
to comply with the Federal Fair Labor Standards Act or violate any other law or
regulation, if the violation would reasonably be expected to have a Material
Adverse Effect; 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 a Loan Party or any of its
Subsidiaries, including any material liability to the Pension Benefit Guaranty
Corporation or its successors or any other governmental agency.
8.    EVENTS OF DEFAULT

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Any one of the following shall constitute an event of default (an “Event of
Default”) under this Agreement:
8.1    Payment Default. Any Loan Party fails to pay any Obligations after such
Obligations are due and payable.
8.2    Covenant Default.
(a)    A Borrower fails or neglects to perform any obligation in Sections
3.3(b), 6.2, 6.4, 6.5, or 6.6, or violates any covenant in Section 7; or
(b)    A Loan Party fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant or agreement contained in this Agreement or
any Loan Documents to which it is a party, 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
fifteen (15) Business Days after the occurrence thereof.
8.3    Material Adverse Effect. An event or circumstance has occurred which
would reasonably be expected to have a Material Adverse Effect.
8.4    Attachment; Levy; Restraint on Business.
(a)    (i) The service of process seeking to attach, by trustee or similar
process, any material portion of funds of the Loan Parties and their
Subsidiaries, taken as a whole, or (ii) a notice of Lien or levy is filed
against any material portion of the assets of the Loan Parties and their
Subsidiaries, taken as a whole, by any Governmental Authority, and the same
under clauses (i) and (ii) hereof are not, within ten (10) Business Days after
the occurrence thereof, discharged or stayed (whether through the posting of a
bond or otherwise); provided, however, no Loans shall be made during any ten
(10) Business Day cure period; or (i) any material portion of the assets of the
Loan Parties and their Subsidiaries, taken as a whole, is attached, seized,
levied on, or comes into possession of a trustee or receiver, or (ii) any court
order enjoins, restrains, or prevents the Loan Parties and their Subsidiaries,
taken as a whole, from conducting all or any material part of its business.
8.5    Insolvency. (a) A Loan Party or any of its Subsidiaries, as a whole, is
unable to pay its debts (including trade debts) as they become due or otherwise
becomes insolvent, the realizable value of the Loan Parties’ assets is less than
the aggregate sum of its liabilities, or the Loan Parties; (b) a Loan Party or
any of its Subsidiaries begins an Insolvency Proceeding; or (c) an Insolvency
Proceeding is begun against a Loan Party or any of its Subsidiaries and is not
dismissed or stayed within forty-five (45) days (but no Loans shall be made
while any of the conditions described in this Section 8.5 exist and/or until any
Insolvency Proceeding is dismissed).
8.6    Other Agreements. There is, under any agreement to which a Loan Party or
any of its Subsidiaries 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 Five Hundred Thousand Dollars
($500,000) (except if such third party is restricted from accelerating the
maturity of such Indebtedness, including pursuant to the terms of a
subordination or similar agreement entered into with respect to the
Obligations); or (b) any breach or Default by a Loan Party or a Subsidiary of
such Loan Party, the result of which would have a Material Adverse Effect.
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 One Million Dollars ($1,000,000) shall be rendered
against a Loan Party or any of its Subsidiaries by any Governmental Authority,
and the same are not, within ten (10) Business Days after the entry, assessment
or issuance thereof, vacated, or after execution thereof, stayed or bonded
pending appeal, (provided that no Loans will be made prior to the vacation,
stay, or bonding of such fine, penalty, judgment, order or decree).
8.8    Misrepresentations. Any Loan Party or any Person acting for such Loan
Party makes any representation, warranty, or other statement now or later in
this Agreement, any Loan Document to which it is a party or in any writing
delivered to Administrative Agent, Collateral Trustee or any Lender or to induce
Administrative Agent, Collateral Trustee or any Lender to enter this Agreement
or any Loan Document to which it is a party, and such representation, warranty,
or other statement is incorrect, when taken as a whole, in any material respect
when made.

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8.9    Subordinated Debt. Any Subordination Agreement governing any Subordinated
Debt shall for any reason be revoked or invalidated or otherwise cease to be in
full force and effect (other than in accordance with its terms), any party
thereto (other than Administrative Agent, Collateral Trustee or any Lender)
shall be in breach thereof or contest in any manner the validity or
enforceability thereof or deny that it has any further obligation thereunder, or
the Obligations shall for any reason not have the priority contemplated by this
Agreement.
8.10    Governmental Approval. Any Governmental Approval shall have been
revoked, rescinded, suspended, modified in an adverse manner or not renewed for
a full term, and such revocation, rescission, suspension, modification or
non-renewal has, or would have, a Material Adverse Effect.
8.11    Guaranty. Any guaranty of any Obligations terminates or ceases for any
reason to be in full force and effect.
9.    COLLATERAL TRUSTEE’S RIGHTS AND REMEDIES
9.1    Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Collateral Trustee is entitled, at the direction of
Administrative Agent, subject to the terms of the Collateral Trust Agreement,
without notice or demand, to 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 Collateral Trustee);
(b)    stop advancing money or extending credit for any Borrower’s benefit under
this Agreement (and each Lender’s Commitment shall be deemed terminated as long
as an Event of Default has occurred and is continuing);
(c)    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
Administrative Agent may determine is advisable, and notify any Person owing a
Borrower money of Collateral Trustee’s security interest in such funds;
(d)    make any payments and do any acts it considers necessary or reasonable to
protect the Collateral and/or its security interest in the Collateral;
(e)    ratably apply to the Obligations any amount held by Collateral Trustee
owing to or for the credit or the account of a Borrower;
(f)    ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell the Collateral;
(g)    deliver a notice of exclusive control, any entitlement order, or other
directions or instructions pursuant to any Account Control Agreement or similar
agreements providing control of any Collateral;
(h)    demand and receive possession of any Borrower’s Books; and
(i)    exercise all rights and remedies available to Collateral Trustee 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).
Borrowers shall assemble the Collateral if Collateral Trustee requests and make
it available as Collateral Trustee designates. Collateral Trustee 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. Solely upon the occurrence and continuation of an Event of Default,
each Borrower shall grant Collateral Trustee a license to enter and occupy any
of its premises, without charge, to exercise any of Collateral Trustee’s rights
or remedies. Solely upon the occurrence and continuation of an Event of Default,
Collateral Trustee shall be deemed to have been granted (without any further
action by any party) a non-exclusive, royalty-free license or other right to
use, without charge, a 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

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as it pertains to the Collateral, in completing production of, advertising for
sale, and selling any Collateral and, in connection with Collateral Trustee’s
exercise of its rights under this Section, a Borrower’s rights under all
licenses and all franchise agreements inure to Collateral Trustee’s benefit. If,
after the acceleration of the Indebtedness, an Loan Party receives proceeds of
Collateral, such Borrower shall (or shall cause the applicable Loan Party) to
deliver such proceeds to Collateral Trustee, for the ratable benefit of Lenders,
to be applied to the Obligations.
9.2    Power of Attorney. Each Borrower hereby irrevocably appoints Collateral
Trustee (and any of Collateral Trustee’s partners, managers, officers, agents or
employees) as its lawful attorney-in-fact, with full power of substitution,
exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) send requests for verification of Accounts or notify Account
Debtors of Collateral Trustee’s security interest and Liens in the Collateral;
(b) endorse such Borrower’s name on any checks or other forms of payment or
security; (c) sign such Borrower’s name on any invoice or bill of lading for any
Account or drafts against Account Debtors schedules and assignments of Accounts,
verifications of Accounts, and notices to Account Debtors; (d) settle and adjust
disputes and claims about the Accounts directly with Account Debtors, for
amounts and on terms Administrative Agent or Collateral Trustee determine
reasonable; (e) make, settle, and adjust all claims under such Borrower’s
insurance policies; (f) 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;
(g) transfer the Collateral into the name of Collateral Trustee or a third party
as the Code permits; and (h) dispose of the Collateral. Each Borrower further
hereby appoints Collateral Trustee (and any of Collateral Trustee’s partners,
managers, officers, agents or employees) as its lawful attorney-in-fact, with
full power of substitution, regardless of whether or not an Event of Default has
occurred or is continuing to: (i) sign such Borrower’s name on any documents and
other Security Instruments necessary to perfect or continue the perfection of,
or maintain the priority of, Collateral Trustee’s security interest in the
Collateral; and (ii) take any and all such actions as Collateral Trustee may
reasonably determine to be necessary or advisable for the purpose of
maintaining, preserving or protecting the Collateral or any of the rights,
remedies, powers or privileges of Collateral Trustee under this Agreement or the
other Loan Documents. Collateral Trustee’s foregoing appointment as each
Borrower’s attorney in fact, and all of Collateral Trustee’s rights and powers,
coupled with an interest, are irrevocable until all Obligations (other than
contingent indemnification obligations as to which no claim has been asserted or
is known to exist) have been fully repaid, in cash, and otherwise fully
performed and all commitments to make Loans hereunder have been terminated.
9.3    Protective Payments. If a 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 such Borrower is obligated to pay under this Agreement or any other
Loan Document or which may be required to preserve the Collateral, Collateral
Trustee may obtain such insurance or make such payment, and all amounts so paid
by Collateral Trustee are Lender Expenses and immediately due and payable,
bearing interest at the then highest rate applicable to the Obligations, and
secured by the Collateral. Collateral Trustee will make reasonable efforts to
provide Borrower Representative with notice of Collateral Trustee obtaining such
insurance at the time it is obtained or within a reasonable time thereafter. No
payments by Collateral Trustee are deemed an agreement to make similar payments
in the future or Collateral Trustee’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, Collateral Trustee shall have the right to apply
in any order any funds in its possession, whether payments, proceeds realized as
the result of any collection of Accounts or other disposition of the Collateral,
or otherwise, to the Obligations, for the ratable benefit of Lenders. Collateral
Trustee shall pay any surplus to Borrowers by credit to the Deposit Account
designated by Borrowers or as directed by a court of competent jurisdiction.
Borrowers shall remain liable to Collateral Trustee and Lenders for any
deficiency. If Collateral Trustee, directly or indirectly, enters into a
deferred payment or other credit transaction with any purchaser at any sale of
Collateral, Collateral Trustee may, at the direction of Administrative Agent,
either reduce the Obligations by the principal amount of the purchase price or
defer the reduction of the Obligations until the actual receipt by Collateral
Trustee of cash or immediately available funds therefor.
9.5    Collateral Trustee’s Liability for Collateral. So long as Collateral
Trustee complies with reasonable secured lender practices regarding the
safekeeping of the Collateral in the possession or under the control of
Collateral Trustee, Collateral Trustee 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. Borrowers bear all risk of
loss, damage or destruction of the Collateral.

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9.6    No Waiver; Remedies Cumulative. Any failure by Administrative Agent,
Collateral Trustee or any Lender, at any time or times, to require strict
performance by each Borrower of any provision of this Agreement or any other
Loan Document shall not waive, affect, or diminish any right of Administrative
Agent, Collateral Trustee or any Lender thereafter to demand strict performance
and compliance herewith or therewith. Collateral Trustee’s rights and remedies
under this Agreement and the other Loan Documents are cumulative. Collateral
Trustee has all rights and remedies provided under the Code, by law, or in
equity. Collateral Trustee or any Lender’s exercise of one right or remedy is
not an election and shall not preclude Collateral Trustee or any Lender from
exercising any other remedy under this Agreement or other remedy available at
law or in equity, and any waiver of any Event of Default is not a continuing
waiver. Any delay in exercising any remedy is not a waiver, election, or
acquiescence.
9.7    Demand Waiver. Each Borrower waives presentment, demand, notice of
default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension, or renewal of accounts, documents, instruments or chattel
paper.
9.8    Shares. Each Borrower recognizes that Collateral Trustee may be unable to
effect a public sale of any or all the Shares, by reason of certain prohibitions
contained in federal securities laws and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Borrower acknowledges
and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Collateral Trustee shall be under no
obligation to delay a sale of any of the Shares for the period of time necessary
to permit the issuer thereof to register such securities for public sale under
federal securities laws or under applicable state securities laws, even if such
issuer would agree to do so.
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 confirmation of receipt, when sent by
electronic mail 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, or email address indicated below.
Administrative Agent, Collateral Trustee, Lenders and Borrowers may change their
respective mailing or electronic mail addresses by giving the other party
written notice thereof in accordance with the terms of this Section 10.

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If to Borrowers:
EVELO BIOSCIENCES, INC.
620 Memorial Drive, Suite 500 West
Cambridge, MA 02139
Attention: Daniel Char and Jonathan Poole
Emails: dchar@evelobio.com; jonathan@evelobio.com 
 
 
If to Collateral Trustee:
ANKURA TRUST COMPANY, LLC
140 Sherman Street, Fourth Floor
Fairfield, CT 06824
Attention: Lisa Price
Email: Lisa.Price@ankura.com 
 
 
If to Administrative Agent or Lenders:
K2 HEALTHVENTURES LLC
885 Boylston Street, 10th Floor
Boston, MA 02116
For Loan Requests, monthly reporting, Compliance Certificates and other regular
reporting deliverables:
Attention: Finance
Email: finance@k2hv.com; parag@k2hv.com; austin@k2hv.com 

For all other notices:
Attention: Legal Notices
Email: legal@k2hv.com 

With a copy to (but not constituting notices, and excluding Loan Requests,
Compliance Certificates and regular reporting deliverables):
COOLEY LLP
3175 Hanover Street
Palo Alto, CA 94304-1105
Attention: Cynthia Bai
Email: cbai@cooley.com 

 
11.    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
Except as otherwise expressly provided in any of the Loan Documents, this
Agreement and the other Loan Documents shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of law that would result in the application of any laws other than
those of the State of New York. Each Borrower hereby submits to the exclusive
jurisdiction of the State and Federal courts in New York County, City of New
York, New York; provided, however, that nothing in this Agreement shall be
deemed to operate to preclude Collateral Trustee 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 Administrative Agent, Collateral Trustee or any Lender. Each
Borrower expressly submits and consents in advance to such jurisdiction in any
action or suit commenced in any such court, and each 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. Each 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 such
Borrower at the address set forth in, or subsequently provided by such Borrower
in accordance with, Section 10 and that service so made shall be deemed
completed upon the earlier to occur of Borrowers’ actual receipt thereof or
three (3) Business Days after deposit in the U.S. mails, proper postage prepaid.
Each Borrower hereby expressly waives any claim to assert that the laws of any
other jurisdiction govern this Agreement.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
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 THE PARTIES TO ENTER INTO THIS AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT OR ANYWHERE
ELSE, EACH BORROWER AGREES THAT IT SHALL NOT SEEK FROM ADMINISTRATIVE AGENT,
COLLATERAL TRUSTEE OR ANY LENDER UNDER ANY THEORY OF

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LIABILITY (INCLUDING ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL
OR PUNITIVE DAMAGES. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
This Section 11 shall survive the termination of this Agreement.
12.    GENERAL PROVISIONS
12.1    Termination Prior to Term Loan Maturity Date; Survival; Release of
Collateral. 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 (other than contingent indemnification obligations as to
which no claim has been asserted or is known to exist and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been satisfied in full, in cash and all commitments to extend credit pursuant to
this Agreement have terminated (such date, the “Discharge Date”). So long as
Borrowers have repaid in cash in full the Obligations (other than contingent
indemnification obligations as to which no claim has been asserted or is known
to exist and any other obligations which, by their terms, are to survive the
termination of this Agreement), this Agreement and any remaining commitments to
extend credit may be terminated prior to the Term Loan Maturity Date by
Borrowers, by written notice of termination to Lenders. Those obligations that
are expressly specified in this Agreement as surviving this Agreement’s
termination shall continue to survive notwithstanding this Agreement’s
termination. Promptly after the Discharge Date, Lenders shall direct Collateral
Trustee to deliver evidence of the release of Collateral.
12.2    Successors and Assigns.
(a)    Successors and Assigns Generally. This Agreement binds and is for the
benefit of the successors and permitted assigns of each party. No Borrower may
assign this Agreement or any rights or obligations under it without Lenders’
prior written consent (which may be granted or withheld in each Lender’s
reasonable discretion). Each Lender has the right, without the consent of or
notice to Borrowers, to sell, transfer, assign, negotiate, or grant
participation in all or any part of, or any interest in, such Lender’s
obligations, rights, and benefits under this Agreement and the other Loan
Documents.
(b)    Assignment by Lenders. Each Lender may at any time assign to one or more
eligible assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its commitment and the Loans at the
time owing to it), subject to any restrictions on such assignment set forth in
the other Loan Documents.
(c)    Notwithstanding the foregoing, prior to the occurrence of an Event of
Default that is continuing or as required by applicable law or any Governmental
Authority having jurisdiction, Administrative Agent and each Lender shall not
assign any interest in the Loan Documents to any Person who in the reasonable
estimation of Administrative Agent is (a) a direct competitor of the Loan
Parties, whether as an operating company or direct or indirect parent with
voting control over such operating company, or (b) a vulture fund or distressed
debt fund, provided that the foregoing shall not operate to restrict any
acquisition, merger or other consolidation of any Lender with another Person or
any assignment in connection with a sale or other transfer of all or any
material part of the loan portfolio of any Lender.
(d)    Administrative Agent, acting solely for this purpose as an agent of the
Loan Parties, shall maintain at one of its offices in the United States a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts (and stated interest) of the Term Loans
owing to each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive absent manifest
error, and the Loan Parties, Administrative Agent and the Lenders shall treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Loan Parties, any Lender and the Collateral
Trustee at any reasonable time and from time to time upon reasonable prior
notice. Each Lender that sells a participation shall, acting solely for this
purpose as a non-fiduciary agent of the Loan Parties, maintain a register on
which it enters the name and address of each participant and the principal
amounts (and stated interest) of each participant’s interest in the Term Loans
or other obligations under the Loan Documents (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register (including the identity of any participant or any
information relating to a participant’s interest in any commitments, loans or
its other obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such commitment, loan
or other obligation is in registered form under Section 5f.103-1(c) of the
United States Treasury Regulations. The entries in the Participant

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Register shall be conclusive absent manifest error, and such Lender shall treat
each Person whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement notwithstanding any notice
to the contrary. For the avoidance of doubt, Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a
Participant Register.
12.3    Indemnification. Each Borrower agrees to indemnify, defend and hold
Administrative Agent, Collateral Trustee and each Lender and their respective
directors, officers, employees, agents, attorneys, or any other Person
affiliated with or representing Lender (each, an “Indemnified Person”) harmless
against: (i) all obligations, demands, claims, and liabilities (including such
claims, costs, expenses, damages and liabilities based on liability in tort,
including strict liability in tort) (collectively, “Claims”) claimed or asserted
by any other party in connection with the transactions contemplated by the Loan
Documents; and (ii) all reasonable and documented out-of-pocket losses or
expenses (including Lender Expenses) in any way suffered, incurred, or paid by
such Indemnified Person as a result of, following from, consequential to, or
arising from transactions among Administrative Agent, Collateral Trustee,
Lenders and Borrowers (including reasonable and documented out-of-pocket
attorneys’ fees and expenses), except for Claims and/or losses to the extent
directly caused by such Indemnified Person’s gross negligence or willful
misconduct. Each Borrower agrees to pay, and to save Administrative Agent,
Collateral Trustee and each Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other similar Taxes (other than Indemnified Taxes and Excluded Taxes (as defined
in Schedule 3)) that may be payable or determined to be payable with respect to
any of the Collateral or this Agreement. This Section 12.3 shall survive until
all statutes of limitation with respect to the Claims, losses, and reasonable
and documented out-of-pocket expenses for which indemnity is given shall have
run.
12.4    Borrower Liability. If any Person is joined to this Agreement as a
Borrower, the following provisions shall apply: Each Borrower hereunder shall be
jointly and severally obligated to repay all Loans made hereunder, regardless of
which Borrower actually receives said Loan, as if each Borrower hereunder
directly received all Loans. Each Borrower waives (a) any suretyship defenses
available to it under the Code or any other applicable law, and (b) any right to
require Collateral Trustee to: (i) proceed against any Borrower or any other
person; (ii) proceed against or exhaust any security; or (iii) pursue any other
remedy. Collateral Trustee may exercise or not exercise any right or remedy it
has against any Borrower or any security it holds (including the right to
foreclose by judicial or non-judicial sale) without affecting any Borrower’s
liability. Notwithstanding any other provision of this Agreement or other
related document, each Borrower irrevocably waives all rights that it may have
at law or in equity (including, without limitation, any law subrogating Borrower
to the rights of Collateral Trustee under this Agreement) to seek contribution,
indemnification or any other form of reimbursement from any other Borrower, or
any other Person now or hereafter primarily or secondarily liable for any of the
Obligations, for any payment made by such Borrower with respect to the
Obligations in connection with this Agreement or otherwise and all rights that
it might have to benefit from, or to participate in, any security for the
Obligations as a result of any payment made by Borrower with respect to the
Obligations in connection with this Agreement or otherwise. Any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section shall be null and void. If any payment is made to a Borrower
in contravention of this Section, such Borrower shall hold such payment in trust
for Lenders and such payment shall be promptly delivered to Collateral Trustee,
for the ratable benefit of Lenders, for application to the Obligations, whether
matured or unmatured.
12.5    Time of Essence. Time is of the essence for the performance of all
Obligations in this Agreement.
12.6    Severability of Provisions. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any
provision.
12.7    Correction of Loan Documents. Administrative Agent may correct patent
errors and fill in any blanks in the Loan Documents consistent with the
agreement of the parties so long as Administrative Agent provides the Loan
Parties with written notice of such correction and allows the Loan Parties at
least ten (10) Business Days to object to such correction. In the event of such
objection, such correction shall not be made except by an amendment signed by
both Administrative Agent and the Loan Parties.
12.8    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 effective except, pursuant to an
agreement in writing by the parties thereto, and in case of this Agreement,
pursuant to an agreement in writing entered into by Borrowers, Administrative
Agent, the Required Lenders and Collateral Trustee, provided that Collateral
Trustee’s approval shall not be required for any amendment or supplement that
has the effect solely of

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(i) adding or maintaining Collateral, securing additional Obligations that are
otherwise permitted by the terms of this Agreement to be secured by the
Collateral or preserving, perfecting or establishing the priority of the Liens
thereon or the rights of Collateral Trustee therein; (ii) curing any ambiguity,
defect or inconsistency; (iii) providing for the assumption of a Borrower’s or
Guarantor’s Obligations under any Loan Document in the case of a merger or
consolidation or sale of all or substantially all of the assets of the Borrower
or such Guarantor, as applicable; (iv) making any change that would provide any
additional rights or benefits to the Administrative Agent, any Lender or
Collateral Trustee or that does not adversely affect the legal rights under this
Agreement or any other Loan Document of Collateral Trustee; or (v) to the extent
the Collateral Trust Agreement provides that Collateral Trustee’s approval is
not required. 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 among the parties
about the subject matter of the Loan Documents merge into the Loan Documents.
12.9    Counterparts; Electronic Execution of Documents. This Agreement and any
other Loan Documents, except to the extent otherwise required pursuant to the
terms thereof, 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. 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. Delivery of an executed counterpart of a
signature page of any Loan Document by electronic means including by email
delivery of a “.pdf” format data file shall be effective as delivery of an
original executed counterpart of such Loan Document.
12.10    Confidentiality. In handling any confidential information,
Administrative Agent, Collateral Trustee and each Lender agree to exercise the
same degree of care that it exercises for its own proprietary information, but
disclosure of information may be made: (a) to its Subsidiaries or Affiliates,
provided that such entities are bound by the same non-use and non-disclosure
obligations set forth in this Section 12.10; (b) to prospective transferees or
purchasers of any interest in the Loans (provided that any prospective
transferee or purchaser shall have entered into an agreement containing
provisions substantially the same as to the terms set forth in this Section
12.10); (c) as required by law, regulation, subpoena, or other order and in
connection with reporting obligations applicable to Administrative Agent,
Collateral Trustee or such Lender, including pursuant to the Securities Exchange
Act of 1934, as amended; (d) to Administrative Agent, Collateral Trustee or such
Lender’s regulators or as otherwise required in connection with any examination
or audit; (e) as Administrative Agent, Collateral Trustee or such Lender
considers appropriate in connection with the exercise of remedies with respect
to the Obligations; and (f) to third-party service providers of Administrative
Agent, Collateral Trustee or such Lender so long as such service providers are
bound by confidentiality terms not more permissive than the terms hereof.
Confidential information does not include information that is either: (i) in the
public domain or in Administrative Agent, Collateral Trustee or any Lender’s
possession when disclosed to Administrative Agent, Collateral Trustee or such
Lender, as applicable, or becomes part of the public domain (other than as a
result of its disclosure by Administrative Agent, Collateral Trustee or such
Lender in violation of this Agreement) after disclosure to Administrative Agent,
Collateral Trustee or such Lender, as applicable; or (ii) disclosed to
Administrative Agent, Collateral Trustee or such Lender by a third party, if
Administrative Agent, Collateral Trustee or such Lender, as applicable, does not
know that the third party is prohibited from disclosing the information. The
provisions of this paragraph shall survive the termination of this Agreement.
12.11    Borrower Representative. Each of the Borrowers hereby appoints Borrower
Representative to act as its exclusive agent for all purposes under the Loan
Documents to which it is a party (including, without limitation, with respect to
all matters related to the borrowing and repayment of any Loan). Each of the
Borrowers acknowledges and agrees that (a) Borrower Representative may execute
such documents on behalf of any Borrower as Borrower Representative deems
appropriate in its sole discretion and each Borrower shall be bound by and
obligated by all of the terms of any such document executed by Borrower
Representative on its behalf, (b) any notice or other communication delivered
hereunder to Borrower Representative shall be deemed to have been delivered to
each Borrower and (c) Administrative Agent, Collateral Trustee and any Lender
shall accept (and shall be permitted to rely on) any document or agreement
executed by Borrower Representative on behalf of Borrowers (or any of them).
Borrower

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must act through the Borrower Representative for all purposes under this
Agreement and the other Loan Documents to which it is a party. Notwithstanding
anything contained herein to the contrary, to the extent any provision in this
Agreement requires any Borrower to interact in any manner with Administrative
Agent, Collateral Trustee or any Lender, such Borrower shall do so through
Borrower Representative.
12.12    [Reserved.]
12.13    Captions. The headings used in this Agreement are for convenience only
and shall not affect the interpretation of this Agreement.
12.14    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.
12.15    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.
12.16    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.
12.17    Appointment of Collateral Trustee. Each Lender hereby appoints
Collateral Trustee to act on behalf of Lenders as collateral agent under this
Agreement and the other Loan Documents, and to hold and enforce any and all
Liens on Collateral granted by any of the Loan Parties to secure any of the
Obligations, all in accordance with the terms of the Collateral Trust Agreement.
The provisions of this Section 12.17 are solely for the benefit of Collateral
Trustee and Lenders and no Loan Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. The Collateral
Trustee may resign or be removed or replaced, and a successor Collateral Trustee
may be appointed in accordance with the terms and subject to the conditions of
the Collateral Trust Agreement.
12.18    Appointment of Administrative Agent.
(a)    Each Lender hereby appoints Administrative Agent to act on behalf of
Lenders as administrative agent under this Agreement and the other Loan
Documents. The provisions of this Section 12.18 are solely for the benefit of
Administrative Agent and Lenders and no Loan Party nor any other Person shall
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, Administrative Agent
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Loan Party or any other Person.
Administrative Agent shall not have any duties or responsibilities except for
those expressly set forth in this Agreement and the other Loan Documents,
together with such powers as are reasonably related thereto. The duties of
Administrative Agent shall be mechanical and administrative in nature and
Administrative Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender.
(b)    If Administrative Agent shall request instructions from Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or any other Loan Document, then Administrative Agent shall be
entitled to refrain from such act or taking such action unless and until it
shall have received instructions from the Required Lenders, and Administrative
Agent shall incur no liability to any Person by reason of so refraining.
Administrative Agent shall be fully justified in failing or refusing to take any
action hereunder or under any other Loan Document for any reason. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against Administrative Agent as a result of Administrative Agent’s acting or
refraining from acting hereunder or under any other Loan Document in accordance
with the instructions of Lenders.
(c)    Administrative Agent may perform any and all of its duties and exercise
its rights and powers hereunder by or through any one or more sub‑agent s
appointed by Administrative Agent. Administrative Agent and any such sub‑agent
may perform any and all of its duties and exercise its rights and powers by or
through their respective and their respective related parties. The exculpatory
provisions of this Section 12.18 shall apply to any such sub‑agent

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and to the related parties of such Administrative Agent and any such sub‑agent.
No Administrative Agent shall be responsible for the negligence or misconduct of
any sub-agent except to the extent that a court of competent jurisdiction
determines in a final and non-appealable judgment that such Administrative Agent
acted with gross negligence or willful misconduct in the selection of such
sub‑agents.
(d)    Neither Administrative Agent nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages solely caused by
its or their own gross negligence or willful misconduct as finally determined by
a court of competent jurisdiction. Without limitation of the generality of the
foregoing, Administrative Agent: (i) may consult with legal counsel, independent
chartered accountants and other experts and consultants selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants, experts or consultants;
(ii) makes no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or representations made
in or in connection with this Agreement or the other Loan Documents; (iii) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Loan Party or to inspect the Collateral (including
the books and records) of any Loan Party; (iv) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement or the other Loan Documents
by acting upon any notice, consent, certificate or other instrument or writing
(which may be by email, telecopy, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
(e)    With respect to its Commitments and Loans hereunder, Administrative Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise the same as though it were not
Administrative Agent; and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include Administrative Agent in its individual capacity (to
the extent it holds any Obligations owing to Lenders or Commitments hereunder).
Administrative Agent and each of its Affiliates may lend money to, invest in,
and generally engage in any kind of business with, any Loan Party, any of their
Affiliates and any Person who may do business with or own securities of any Loan
Party or any such Affiliate, all as if Administrative Agent was not
Administrative Agent and without any duty to account therefor to Lenders.
Administrative Agent and its Affiliates may accept fees and other consideration
from any Loan Party for services in connection with this Agreement or otherwise
without having to account for the same to Lenders.
(f)    Each Lender acknowledges that it has, independently and without reliance
upon Administrative Agent or any other Lender, made its own credit and financial
analysis of the Loan Parties and its own decision to enter into this Agreement.
Each Lender also acknowledges that it will, independently and without reliance
upon Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to, and waives any claim based upon, such conflict of interest.
(g)    Each Lender agrees to indemnify Administrative Agent (to the extent not
reimbursed by Loan Parties and without limiting the obligations of Loan Parties
hereunder), ratably according to its respective Pro Rata Share, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted by Administrative Agent
in connection therewith; provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from Administrative Agent’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Without limiting the foregoing,
each Lender agrees to reimburse Administrative Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable and
documented counsel fees) incurred by Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Loan Document, to the extent that Administrative Agent is not
reimbursed for such expenses by the Loan Parties.

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(h)    Administrative Agent may resign at any time by giving not less than
thirty (30) days’ prior written notice thereof to Lenders, Collateral Trustee
and Borrowers. Upon any such resignation, Lenders shall have the right to
appoint a successor Administrative Agent. If no successor Administrative Agent
shall have been so appointed by Lenders and shall have accepted such appointment
within thirty (30) days after Administrative Agent’s giving notice of
resignation, then Administrative Agent may, on behalf of Lenders, appoint a
successor Administrative Agent, which shall be a Lender, if a Lender is willing
to accept such appointment, or otherwise shall be a commercial bank or financial
institution or a subsidiary of a commercial bank or financial institution if
such commercial bank or financial institution has combined capital of at least
$300,000,000. If no successor Administrative Agent has been appointed pursuant
to the foregoing, by the 30th day after the date such notice of resignation was
given by the resigning Administrative Agent, such resignation shall become
effective and Lenders shall thereafter perform all the duties of Administrative
Agent hereunder until such time, if any, as Lenders appoint a successor
Administrative Agent as provided above. Upon the acceptance of any appointment
as Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Administrative Agent.
Upon the earlier of the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent or the effective date of the
resigning Administrative Agent’s resignation, the resigning Administrative Agent
shall be discharged from its duties and obligations under this Agreement and the
other Loan Documents, except that any indemnity, expense reimbursement or other
rights in favor of such resigning Administrative Agent shall continue. After any
resigning Administrative Agent’s resignation hereunder, the provisions of this
Section 12.17 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents. Notwithstanding the foregoing, as long as K2
HealthVentures LLC is a Lender pursuant to this Agreement, K2 HealthVentures LLC
shall not resign as Administrative Agent unless a successor Administrative Agent
is appointed concurrently with such resignation, which successor Administrative
Agent shall have the wherewithal to perform, and shall succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Administrative Agent under this Agreement and the other Loan Documents.
(i)    In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default, with the prior written consent of
Administrative Agent, each Lender and each holder of any Obligation is hereby
authorized at any time or from time to time, without notice to any Loan Party or
to any other Person, any such notice being hereby expressly waived, to set off
and to appropriate and to apply any and all balances held by it at any of its
offices for the account of any Loan Party or any Subsidiary of a Loan Party
(regardless of whether such balances are then due to such Loan Party or such
Subsidiary) and any other properties or assets any time held or owing by that
Lender or that holder to or for the credit or for the account of any Loan Party
or any Subsidiary of a Loan Party against and on account of any of the
Obligations which are not paid when due. Any Lender or holder of any Obligation
exercising a right to set off or otherwise receiving any payment on account of
the Obligations in excess of its Pro Rata Share thereof in accordance with the
terms of this Agreement relating to the priority of the repayment of the
Obligations shall purchase for cash (and the other Lenders or holders shall
sell) such participations in each such other Lender’s or holder’s Pro Rata Share
of the Obligations as would be necessary to cause such Lender to share the
amount so set off or otherwise received with each other Lender or holder in
accordance with their respective Pro Rata Shares and in accordance with the
terms of this Agreement relating to the priority of the repayment of the
Obligations. Each Loan Party agrees, to the fullest extent permitted by law,
that (i) any Lender or holder may exercise its right to set off with respect to
amounts in excess of its Pro Rata Share of the Obligations and may sell
participations in such amount so set off to other Lenders and holders and
(ii) any Lender or holders so purchasing a participation in the Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
set‑off, bankers’ Lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of the
Loans and the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the set-off amount or
payment otherwise received is thereafter recovered from Lender that has
exercised the right of set-off, the purchase of participations by that Lender
shall be rescinded and the purchase price restored without interest.
(j)    Nothing in this Agreement or the other Loan Documents shall be deemed to
require Administrative Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights that the Borrowers may have against any Lender as a
result of any default by such Lender hereunder. To the extent that
Administrative Agent advances funds to the Borrowers on behalf of any Lender and
is not reimbursed therefor on the same Business Day as such advance is made,
Administrative Agent shall be entitled to retain for its account all interest
accrued on such advance until reimbursed by the applicable Lender.

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(k)    If Administrative Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be received
by Administrative Agent from Borrowers and such related payment is not received
thereby, then Administrative Agent will be entitled to recover such amount from
such Lender on demand without set‑off, counterclaim or deduction of any kind.
(l)    If Administrative Agent determines at any time that any amount received
thereby under this Agreement shall be returned to Borrowers or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Loan Document,
Administrative Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Administrative Agent on
demand any portion of such amount that Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as Administrative
Agent is required to pay to Borrowers or such other Person, without set‑off,
counterclaim or deduction of any kind.
(m)    Administrative Agent will use reasonable efforts to provide Lenders with
any written notice of Event of Default received by Administrative Agent from, or
delivered by Administrative Agent to, any Loan Party; provided, however, that
Administrative Agent shall not be liable to any Lender for any failure to do so,
except to the extent that such failure is attributable solely to Administrative
Agent’s gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.
(n)    Anything in this Agreement or any other Loan Document to the contrary
notwithstanding, each Lender hereby agrees with each other Lender and with
Administrative Agent that no Lender shall take any action to protect or enforce
its rights arising out of this Agreement or any other Loan Document (including
exercising any rights of set-off) without first obtaining the prior written
consent of the Required Lenders, it being the intent of Lenders that any such
action to protect or enforce rights under this Agreement and the other Loan
Documents shall be taken in concert and at the direction or with the consent of
Administrative Agent at the request of Required Lenders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the Closing Date.
 
BORROWER REPRESENTATIVE:
 
EVELO BIOSCIENCES, INC.
By   /s/ Jonathan Poole   
Name: Jonathan Poole   
Title: Chief Financial Officer and Treasurer   

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[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

 
COLLATERAL TRUSTEE:
ANKURA TRUST COMPANY, LLC
By   /s/ Lisa J. Price   
Name: Lisa J. Price   
Title: Managing Director   

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[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

 
ADMINISTRATIVE AGENT:
K2 HEALTHVENTURES LLC
By   /s/ Parag Shah   
Name: Parag Shah   
Title: CEO   

 
LENDER:
K2 HEALTHVENTURES LLC
By   /s/ Parag Shah   
Name: Parag Shah   
Title: CEO   

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EXHIBIT A
DEFINITIONS
As used in this Agreement, the following capitalized terms have the following
meanings:
“Account” means 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 a Borrower.
“Account Control Agreement” means any control agreement entered into among the
depository institution at which a Loan Party maintains a Deposit Account or the
securities intermediary or commodity intermediary at which a Loan Party
maintains a Securities Account or a Commodity Account, one or more Loan Parties,
and Collateral Trustee pursuant to which Collateral Trustee, for the benefit of
Lenders, obtains control (within the meaning of the Code) over such Deposit
Account, Securities Account, or Commodity Account.
“Account Debtor” means any “account debtor” as defined in the Code with such
additions to such term as may hereafter be made.
“Affiliate” means, 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” has the meaning set forth in the preamble of this Agreement.
“Amortization Date” means March 1, 2022, provided that if (i) no Event of
Default has occurred and is continuing, and (ii) the Third Tranche Term Loan
Commitment has been fully funded, the Amortization Date shall be September 1,
2022.
“Anti-Terrorism Order” means Executive Order No. 13,224 as of September 24,
2001, Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49,079 (2001), as
amended.
“Applicable Rate” means a variable annual rate equal to the greater of (i)
8.65%, and (ii) the sum of (A) the Prime Rate, plus (B) 3.15%.
“Automatic Payment Authorization” means the Automatic Payment Authorization in
substantially the form of Exhibit F.
“Board” means, with respect to any Person, the board of directors, board of
managers, managers or other similar bodies or authorities performing similar
governing functions for such Person.
“Borrower” and “Borrowers” has the meaning set forth in the preamble hereof.
“Borrower Representative” has the meaning set forth in the preamble hereof.
“Borrowers’ Books” are all of each Borrower’s books and records including
ledgers, federal and state tax returns, records regarding such Borrower’s assets
or liabilities, the Collateral, business operations or financial condition, and
all computer programs or storage or any equipment containing such information.
“Business Day” means any day that is not a Saturday, Sunday or a day on which
commercial banks in the State of New York are required or permitted to be
closed.

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“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.; (c) certificates of deposit issued by
any bank with assets of at least $500,000,000 maturing no more than one year
from the date of investment therein; and (d) money market funds at least
ninety-five percent (95%) of the assets of which constitute Cash Equivalents of
the kinds described in clauses (a) through (c) of this definition.
“Change in Control” means any of the following (or any combination of the
following) whether arising from any single transaction event or series of
related transactions or events that, individually or in the aggregate, result
in: (a) the holders of Borrower Representative’s Equity Interests who were
holders of Equity Interest as of the Closing Date, ceasing to own at least
fifty-one percent (51%) of the Voting Stock of Borrower Representative; (b) any
“person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becoming the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of a sufficient number of Equity Interests of Borrower Representative ordinarily
entitled to vote in the election of directors, empowering such “person” or
“group” to elect a majority of the members of the Board of Borrower
Representative, who did not have such power before such transaction; (c) the
Transfer of all or substantially all assets of Borrowers; or (d) Borrower
Representative ceasing to own and control, directly or indirectly, all of the
Equity Interests in each of its Subsidiaries or failing to have the power to
direct or cause the direction of the management and policies of each such
Subsidiary.
“Claims” has the meaning set forth in Section 12.3.
“Closing Date” has the meaning set forth in the preamble hereof.
“CMO” shall mean a contract manufacturing organization.
“Code” means the Uniform Commercial Code, as the same may, from time to time, be
enacted and in effect in the State of New York; 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, Collateral Trustee’s Lien on any Collateral is governed by the
Uniform Commercial Code in effect in a jurisdiction other than the State of New
York, 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” means any and all properties, rights and assets of each Borrower
described on Exhibit B, and any collateral securing the Obligations pursuant to
any guaranty or pursuant to any other Loan Document to which each Borrower is a
party.
“Collateral Access Agreement” means an agreement with respect to a Loan Party’s
leased location or bailee location, in each case in form and substance
reasonably satisfactory to Administrative Agent and Collateral Trustee.
“Collateral Account” means, other than any Excluded Account, any Deposit
Account, Securities Account, or Commodity Account of a Loan Party.
“Collateral Trust Agreement” means that certain Collateral Trust Agreement,
dated as of the Closing Date, by and among Collateral Trustee and Lenders, as
amended, restated, supplemented or otherwise modified from time to time.
“Collateral Trustee” has the meaning set forth in the preamble of this
Agreement.

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“Commitment” means, as to any Lender, the aggregate principal amount of Loans
committed to be made by such Lender, as set forth on Schedule 1 hereto.
“Commodity Account” means any “commodity account” as defined in the Code with
such additions to such term as may hereafter be made.
“Compliance Certificate” means that certain certificate in the form attached
hereto as Exhibit D.
“Contingent Obligation” means, 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, 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; provided that,
“Contingent Obligation” shall 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.
“Copyrights” means any and all copyright rights, copyright applications,
copyright registrations and like protections of a Person in each work of
authorship and derivative work thereof, whether published or unpublished and
whether or not the same also constitutes a trade secret.
“CRO” shall mean a contract research organization.
“CTA” means an application for a Clinical Trial Authorisation submitted to the
United Kingdom Medicine and Healthcare Products Regulatory Agency, or any
similar application submitted to any Governmental Authority, which if authorized
or approved, would permit the initiation of clinical trials of an
investigational drug or biological product.
“Default” means any circumstance, event or condition that, with the giving of
any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” has the meaning set forth in Section 2.3(b).
“Deposit Account” means any “deposit account” as defined in the Code with such
additions to such term as may hereafter be made, and includes any checking
account, savings account or certificate of deposit.
“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.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
the United States or any state or territory thereof.
“Equipment” means 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.
“Equity Interests” means, with respect to any Person, any of the shares of
capital stock of (or other ownership, membership or profit interests in) such
Person, any of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership,
membership or profit interests in) such Person, any of the securities
convertible into or exchangeable for shares of capital stock of (or other
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profit interests in) such Person or warrants, rights or options for the purchase
or acquisition from such Person of such shares (or such other interests), and
any of the other ownership, membership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, and its
regulations.
“Event of Default” has the meaning set forth in Section 8.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Excluded Account” means (i) Deposit Accounts exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit
of a Borrower’s employees and identified to Bank by Borrower Representative as
such, provided that the aggregate balance maintained therein shall not exceed an
amount equal to 150% of the aggregate amount of such payments to be paid in the
then-next payroll period; and (ii) Deposit Accounts exclusively used for cash
collateral and identified to Administrative Agent as such, securing
reimbursement obligations in connection with Permitted Indebtedness.
“Excluded Inventory and Equipment” means any Inventory or Equipment held by a
CMO or CRO.
“Excluded Locations” means the following locations where Collateral may be
located from time to time: (a) locations where mobile office equipment (e.g.
laptops, mobile phones and the like) may be located with employees in the
Ordinary Course of Business, (b) any CMO or CRO, and (c) other locations where,
in the aggregate for all such locations, less than Five Hundred Thousand Dollars
($500,000) of Collateral is located.
“FDA” means the U.S. Food and Drug Administration or any successor thereto or
any other comparable Governmental Authority.
“Federal Reserve Board” means the Board of Governors of the Federal Reserve
System, or any successor thereto.
“Fee Letter” means that certain letter agreement, dated as of the date hereof,
by and among Borrower, Administrative Agent and Lenders, as amended, restated,
supplemented or otherwise modified from time to time.
“First Tranche Term Loan Commitment” means, as to any Lender, the aggregate
principal amount of First Tranche Term Loans committed to be made by such
Lender, as set forth on Schedule 1 hereto.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“Funding Date” means any date on which a Loan is made to or for the account of a
Borrower which shall be a Business Day.
“GAAP” means 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,
provided, however, that if there occurs after the Closing Date any change in
GAAP that affects in any respect the calculation of any covenant or threshold in
this Agreement, Lenders and Borrowers shall negotiate in good faith amendments
to the provisions of this Agreement that relate to the calculation of such
covenant or threshold with the intent of having the respective positions of
Lender and Borrowers after such change in GAAP conform as nearly as possible to
their respective positions as of the Closing Date, and, until any such
amendments have been agreed upon, such covenants and thresholds shall be
calculated as if no such change in GAAP has occurred.

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“General Intangibles” means all “general intangibles” as defined in the Code in
effect on the Closing Date 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” means 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, including for the testing, manufacturing, marketing and
sales of its Product.
“Governmental Authority” means 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.
“Guarantor” means any Person providing a Guaranty with respect to the
Obligations or providing collateral, security or other credit support for all or
any portion of the Obligations.
“Guaranty” means any guarantee of all or any part of the Obligations, as the
same may from time to time be amended, restated, modified or otherwise
supplemented.
“IND” means an Investigational New Drug Application submitted to the FDA
pursuant to 21 C.F.R. § 312 (or its successor regulation), and any supplements,
amendments, variations, extensions and renewals thereof.
“Indebtedness” means (a) indebtedness for borrowed money or the deferred price
of property or services, (b) any reimbursement and other obligations for surety
bonds and letters of credit, (c) obligations evidenced by notes, bonds,
debentures or similar instruments, (d) capital lease obligations, and (e)
Contingent Obligations.
“Indemnified Person” has the meaning set forth in Section 12.3.
“Insolvency Proceeding” means 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 Loan Party (or, as
applicable, any of its Subsidiaries), all of such Loan Party’s or Subsidiary’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.

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“Inventory” means all “inventory” as defined in the Code in effect on the
Closing Date with such additions to such term as may hereafter be made.
“Investment” means any beneficial ownership interest in any Person (including
stock, partnership interest or other securities or Equity Interests), and any
loan, advance or capital contribution to any Person, or the acquisition of all
or substantially all of the assets or properties of another Person.
“Lender” has the meaning set forth in the preamble hereof.
“Lender Expenses” means all reasonable and documented out-of-pocket audit fees
and expenses, costs, and expenses (including reasonable and documented
out-of-pocket attorneys’ fees and expenses) of Administrative Agent or Lenders
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 a Loan
Party, including all costs, expenses and other amounts required to be paid by
any Lender or the Administrative Agent in accordance with the Collateral Trust
Agreement.
“Lien” means 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” means, collectively, this Agreement and any schedules,
exhibits, certificates, notices, and any other documents related to this
Agreement, the Fee Letter, the Collateral Trust Agreement, the Automatic Payment
Authorization, the Account Control Agreements, the Collateral Access Agreements,
any Subordination Agreement, any note, or notes or guaranties executed by a Loan
Party, and any other present or future agreement by a Loan Party with or for the
benefit of Collateral Trustee or any Lender in connection with this Agreement,
all as amended, modified, supplemented, extended or restated from time to time.
“Loan Party” or “Loan Parties” means, each Borrower from time to time party
hereto, and any Guarantor, if any.
“Loan Request” means a request for a Loan pursuant to this Agreement in
substantially the form attached hereto as Exhibit C.
“Loans” means, collectively, the Term Loans, and any other loan from time to
time made under this Agreement, and “Loan” means any of the foregoing.
“Margin Stock” has the meaning set forth in Section 5.11(b).
“Material Adverse Effect” means (a) a material impairment in the perfection or
priority of the Lien in the Collateral pursuant to the Loan Documents to which
the Loan Parties are a party or in the value of the Collateral; or (b) a
material adverse effect upon: (i) the business, operations, properties, assets
or financial condition of the Loan Parties as a whole, or (ii) the prospect of
repayment of any part of the Obligations; or (iii) the ability to enforce any
rights or remedies with respect to any Obligations, in each case, as determined
by Administrative Agent, provided that any single failure in a clinical trial
shall not, in and of itself, be deemed a Material Adverse Effect.
“Maximum Rate” has the meaning set forth in Section 2.3(d) hereof.
“MSC Investment Conditions” means that, as of any date of determination,
Borrowers, in the aggregate, maintain Unrestricted Cash in an amount equal to or
greater than the lesser of (i) 110% of the aggregate outstanding principal
amount of all Loans or (ii) all Unrestricted Cash of Loan Parties and each of
its Subsidiaries, on a consolidated basis (excluding amounts expressly permitted
to be transferred to Subsidiaries in accordance with clause (d)(iii) of the
defined term “Permitted Investments”), unless compliance with the foregoing
condition is waived in writing from time to time by Administrative Agent with
respect to specified periods, in Administrative Agent’s sole discretion.

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“MSC Subsidiary” means a wholly-owned Subsidiary incorporated in the
Commonwealth of Massachusetts or the State of Delaware for the purpose of
holding Investments as a Massachusetts security corporation under 830 CMR
63.38B.1 of the Massachusetts tax code and applicable regulations (as the same
may be amended, modified or replaced from time to time).
“Obligations” means all of Borrowers’ and each other Loan Party’s obligations to
pay the Loans when due, including principal, interest, fees, Lender Expenses,
the fees pursuant to the Fee Letter, and any other amounts due to be paid by a
Borrower or Loan Party, and each Borrower’s and Loan Party’s obligation to
perform its duties under the Loan Documents, and any other debts, liabilities
and other amounts any Borrower or Loan Party owes to any Lender at any time,
whether under the Loan Documents to which it is a party or otherwise, including,
without limitation, interest or Lender Expenses accruing after Insolvency
Proceedings begin (whether or not allowed), and any debts, liabilities, or
obligations of any Borrower or Loan Party assigned to any Lender, which shall be
treated as secured or administrative expenses in the Insolvency Proceedings to
the extent permitted by applicable law. Notwithstanding the foregoing,
“Obligations” shall not include obligations arising any right to invest
(including any obligations under Section 6.14), any warrants or any other equity
instruments.
“OFAC” has the meaning set forth in Section 5.11(c).
“Operating Documents” means, for any Person, such Person’s formation documents,
as certified by the Secretary of State (or equivalent agency) of such Person’s
jurisdiction of formation, organization or incorporation on a date that is no
earlier than thirty (30) days prior to the Closing 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 operating
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, restatements and modifications thereto.
“Ordinary Course of Business” means, in respect of any transaction involving any
Person, the ordinary course of such Person’s business as conducted by any such
Person in accordance with (a) the usual and customary customs and practices in
the kind of business in which such Person is engaged, and (b) the past practice
and operations of such Person, and in each case, undertaken by such Person in
good faith and not for purposes of evading any covenant or restriction in any
Loan Document.
“Patents” means all patents, patent applications and like protections of a
Person including without limitation improvements, divisions, continuations,
renewals, reissues, extensions and continuations-in-part of the same and all
rights therein provided by international treaties or conventions.
“Payment Date” means the first calendar day of each month.
“Perfection Certificate” has the meaning set forth in Section 5.1.
“Permitted Indebtedness” means:
(a)    each Loan Party’s Indebtedness under this Agreement and the other Loan
Documents;
(b)    Indebtedness existing on the Closing Date and shown on the Perfection
Certificate, provided that (i) to the extent the amount of such type of
Indebtedness is limited pursuant to a clause of this defined term, amounts
existing on the Closing Date or any permitted refinancing thereof shall count
towards such limit, (ii) to the extent such Indebtedness is required to be
repaid concurrent with the effectiveness of this Agreement, in accordance with a
payoff letter delivered as a condition to closing, such Indebtedness shall not
constitute Permitted Indebtedness after such repayment, and (iii) to the extent
any such Indebtedness is required to be made subject to the terms of a
Subordination Agreement as of the Closing Date or thereafter, pursuant to the
terms of this Agreement, such Indebtedness shall be permitted only to the extent
the applicable Subordination Agreement is in effect;
(c)    Subordinated Debt;

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(d)    unsecured Indebtedness to trade creditors incurred in the Ordinary Course
of Business;
(e)    Indebtedness pursuant to corporate credit cards in an aggregate principal
amount outstanding not to exceed $500,000 at any time;
(f)    Indebtedness incurred as a result of endorsing negotiable instruments
received in the Ordinary Course of Business;
(g)    Indebtedness secured by Liens permitted under clause (c) of the
definition of “Permitted Liens” hereunder;
(h)    Reimbursement obligations arising from letters of credit issued by
financial institutions incurred in the Ordinary Course of Business provided that
the aggregate amount of such obligations shall not exceed Two Million Five
Hundred Thousand Dollars ($2,500,000);
(i)    foreign exchange hedging arrangements with financial institutions entered
into in the Ordinary Course of Business and not for speculative purposes;
(j)    Indebtedness not otherwise permitted pursuant to this defined term, in an
aggregate amount outstanding not to exceed Five Hundred Thousand Dollars
($500,000); and
(k)    extensions, refinancings, modifications, amendments and restatements of
any items of Permitted Indebtedness described in clause (b) above, provided that
the principal amount thereof is not increased or the terms thereof are not
modified to impose more burdensome terms upon a Borrower or any of its
Subsidiaries, as the case may be.
“Permitted Investments” means:
(a)    Investments (including, without limitation, Subsidiaries) existing on the
Closing Date and shown on the Perfection Certificate;
(b)    (i) Investments consisting of Cash Equivalents, and (ii) any Investments
permitted by Borrower Representative’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 Lenders;
(c)    Investments permitted under Sections 7.3 or 7.7 (including without
limitation Investments consisting of repurchases of Borrower Representative’s
Equity Interests from former employees, officers and directors of Borrower
Representative to the extent permitted under Section 7.7);
(d)    Investments
(i)    among Loan Parties,
(ii)    by Subsidiaries which are not Loan Parties in other Subsidiaries which
are not Loan Parties or in a Loan Party, and
(iii)    by Loan Parties in Subsidiaries which are not Loan Parties, subject to
compliance with Section 6.11(b);
(e)    Investments not to exceed Five Hundred Thousand Dollars ($500,000)
outstanding in the aggregate at any time consisting of (i) travel advances and
employee relocation loans and other employee loans and advances in the Ordinary
Course of Business, and (ii) loans not involving the net transfer of cash
proceeds to employees, officers or directors relating to the purchase of Equity
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Representative pursuant to employee stock purchase plans or other similar
agreements approved by Borrower Representative’s Board;
(f)    Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the Ordinary Course of Business;
(g)    Investments consisting of Deposit Accounts in which Collateral Trustee
has a perfected security interest (solely to the extent required under Section
6.6);
(h)    Investments in the MSC Subsidiary, so long as an Event of Default has
occurred and is continuing at the time of such Investment or would result
immediately from such Investment, provided that the MSC Investment Conditions
are satisfied;
(i)    Investments not otherwise permitted pursuant to this defined term, in an
aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000) per
fiscal year;
(j)    Investments consisting of accounts receivable of, or prepaid royalties
and other credit extensions, to customers and suppliers who are not Affiliates,
in the Ordinary Course of Business; provided that this subsection (h) shall not
apply to Investments of a Loan Party in any Subsidiary;
(k)    Investments accepted in connection with Permitted Transfers; and
(l)    Investments in joint ventures or strategic alliances (i) in the Ordinary
Course of Business consisting of the non-exclusive licensing of technology, the
development of technology or the providing of technical support, provided that
any cash Investments by any Loan Party or a Subsidiary do not exceed Five
Hundred Thousand Dollars ($500,000) in the aggregate in any fiscal year; and
(ii) by any Loan Party or a Subsidiary of property permitted to be transferred
under Section 7.1 in connection with joint ventures or strategic alliances or
collaborations of any Loan Party or a Subsidiary.
“Permitted Liens” means:
(a)    Liens arising under this Agreement and the other Loan Documents;
(b)    Liens existing on the Closing Date and shown on the Perfection
Certificate, provided that (i) to the extent the amount of Indebtedness secured
by such type of Lien is limited pursuant to a clause of this defined term,
amounts existing on the Closing Date or any permitted refinancing thereof shall
count towards such limit, (ii) to the extent the Indebtedness secured by such a
Lien is required to be repaid on the Closing Date, in accordance with a payoff
letter delivered as a condition to closing, such Lien shall not constitute
Permitted Lien after the repayment of the associated Indebtedness, and (iii) to
the extent any such Lien is required to be made subject to the terms of a
Subordination Agreement as of the Closing Date or thereafter, pursuant to the
terms of this Agreement, such Lien shall be permitted only to the extent the
applicable Subordination Agreement is in effect;
(c)    purchase money Liens (i) on Equipment (other than Equipment considered
Excluded Inventory and Equipment) acquired or held by a Loan Party or Subsidiary
thereof incurred for financing the acquisition of such Equipment, securing no
more than Five Hundred Thousand Dollars ($500,000) in the aggregate amount
outstanding, (ii) existing on Equipment (other than Equipment considered
Excluded Inventory and Equipment) when acquired, if the Lien is confined to the
property and improvements and the proceeds of such Equipment, securing no more
than Five Hundred Thousand Dollars ($500,000) in the aggregate amount
outstanding, or (iii) on Equipment considered Excluded Inventory and Equipment
acquired or held by a Loan Party or Subsidiary thereof incurred for financing
the acquisition of such Equipment or existing on such Equipment when acquired,
if the Lien is confined to the property and improvements and the proceeds of
such Equipment;

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(d)    Liens for Taxes, fees, assessments or other government charges or levies,
either (i) not yet delinquent or (ii) being contested in good faith and for
which such Loan Party or Subsidiary maintains adequate reserves on its books;
(e)    leases or subleases of real property granted in the Ordinary Course of
Business of such Person, and leases, subleases, licenses or sublicenses of
personal property (other than Intellectual Property) granted in the Ordinary
Course of Business of such Person;
(f)    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 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;
(g)    Liens to secure payment of workers’ compensation, employment insurance,
old-age pensions, social security and other like obligations incurred in the
Ordinary Course of Business (other than Liens imposed by ERISA);
(h)    deposits or pledges of cash to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, surety and appeal bonds and
other obligations of a like nature arising in the Ordinary Course of Business,
in an aggregate amount not exceeding Two Hundred Fifty Thousand Dollars
($250,000) at any time;
(i)    Liens arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default;
(j)    Liens in favor of other financial institutions arising in connection with
a Deposit Account or Securities Account of a Loan Party or Subsidiary thereof
held at such institutions, provided that Collateral Trustee has a perfected
security interest in such Deposit Account, or the securities maintained therein
and Collateral Trustee has received an Account Control Agreement with respect
thereto to the extent required pursuant to Section 6.6 of this Agreement;
(k)    licenses of Intellectual Property which constitute a Permitted Transfer;
(l)    Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in clause (b), 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;
(m)    Liens on cash collateral securing Indebtedness described in clause (g) of
the defined term “Permitted Indebtedness”, provided that the aggregate amount
encumbered shall not exceed Five Hundred Thousand Dollars ($500,000); and
(n)    Liens on cash collateral maintained in a separate Collateral Account
maintained exclusively for such purpose and identified to Administrative Agent
as such, securing reimbursement obligations in connection with letters of credit
permitted under clause (h) of the definition of “Permitted Indebtedness”,
provided that, the aggregate amount of such cash collateral does not exceed Two
Million Five Hundred Thousand Dollars ($2,500,000).
“Permitted Locations” means, collectively, the following locations where
Collateral may be located from time to time: (a) locations identified in the
Perfection Certificate, (b) locations with respect to which Borrowers have
complied with the requirements of Section 6.12, and (c) the Excluded Locations.
“Permitted Transfers” means

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(a)    sales of Inventory (including but not limited to Inventory considered
Excluded Inventory and Equipment) by a Loan Party or any of its Subsidiaries in
the Ordinary Course of Business;
(b)    non-exclusive licenses and similar arrangements for the use of
Intellectual Property of a Loan Party or any of its Subsidiaries in the Ordinary
Course of Business, and licenses that could not result in a legal transfer of
title of the licensed property but that may be exclusive with respect to
territory only as to specific geographical regions outside of the United States
or exclusive globally with respect to specific indications;
(c)    dispositions of worn-out, obsolete or surplus Equipment (including but
not limited to Equipment considered Excluded Inventory and Equipment) in the
Ordinary Course of Business;
(d)    Transfers consisting of the granting of Permitted Liens and the making of
Permitted Investments;
(e)    the use or transfer of money or Cash Equivalents in the Ordinary Course
of Business in a manner that is not prohibited by the Loan Documents; and
(f)    other Transfers of assets having a fair market value of not more than
Five Hundred Thousand Dollars ($500,000) per fiscal year.
“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.
“Prime Rate” means, at any time, the greater of (i) the rate of interest noted
in The Wall Street Journal, Money Rates section, as the “Prime Rate”, and (ii)
5.50%. In the event that The Wall Street Journal quotes more than one rate, or a
range of rates, as the Prime Rate, then the Prime Rate shall mean the average of
the quoted rates. In the event that The Wall Street Journal ceases to publish a
Prime Rate, then the Prime Rate shall be the average of the three (3) largest
U.S. money center commercial banks, as determined by Lenders.
“Pro Rata Share” means, with respect to any Lender and as of any date of
determination, the percentage obtained by dividing (i) the aggregate Commitments
of such Lender by (ii) the aggregate Commitments of all Lenders provided, that
to the extent any Commitment has expired or been terminated, with respect to
such Commitment, the applicable outstanding balance of the Loans made pursuant
to such Commitment held by such Lender and all the Lenders, respectively, shall
be used in lieu of the amount of such Commitment, provided further, that with
respect to all matters relating to a particular Loan, the Commitment or
outstanding balance of the applicable Loan, shall be used in lieu of the
aggregate Commitment or outstanding balance of all Loans in the foregoing
calculation. “Ratable” and related terms shall mean, determined by reference to
such Lender’s Pro Rata Share.
“Products” means any products material to the Loan Parties’ business
manufactured, sold, developed, tested or marketed by a Loan Party or any of its
Subsidiaries, provided that Products shall not include product candidates in
preclinical development and for which a CTA is not required by any Requirement
of Law.
“Qualified Financing” means the next offering of common stock, convertible
preferred stock or other equity securities (or instruments exercisable for, or
convertible into, shares of common stock, convertible preferred stock or other
equity securities) of Borrower Representative consummated after the Closing Date
that is broadly marketed and offered to multiple investors.
“Registered Organization” means any “registered organization” as defined in the
Code with such additions to such term as may hereafter be made.

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“Required Lenders” means, as of any date of determination, Lenders holding more
than 50% of the sum of aggregate principal amount of all Loans outstanding and
the aggregate amount of all unfunded commitments to make Loans, at such date of
determination.
“Requirement of Law” means 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” means with respect to any Person, any of the Chief
Executive Officer, President, Chief Operating Officer, Chief Financial Officer,
Vice President of Finance, or the Controller of such Person, as well as any
other officer or employee identified as in the Secretary’s Certificate delivered
by Borrower Representative to Administrative Agent. Unless the context otherwise
requires, each reference to a Responsible Officer herein shall be a reference to
a Responsible Officer of Borrower Representative.
“Restricted License” means any material in-bound license or other similar
material agreement (other than ordinary course customer contracts, off the shelf
software licenses, licenses that are commercially available to the public, and
open source licenses) to which a Loan Party or Subsidiary is a party (a) that
prohibits or otherwise restricts such Loan Party or Subsidiary from granting a
security interest in its interest in such license or agreement or in any other
property, or (b) for which a default under, or termination of which, could
reasonably be expected to interfere with Collateral Trustee’s right to sell any
Collateral.
“Second Tranche Availability Period” means the period commencing on December 1,
2019 and ending June 1, 2020, inclusive.
“Second Tranche Term Loan” has the meaning set forth in Section 2.2(a).
“Second Tranche Term Loan Commitment” means, as to any Lender, the aggregate
principal amount of Second Tranche Term Loans committed to be made by such
Lender, as set forth on Schedule 1 hereto.
“Securities Account” means any “securities account” as defined in the Code with
such additions to such term as may hereafter be made.
“Security Instrument” means any security agreement, assignment, pledge
agreement, financing or other similar statement or notice, continuation
statement, other agreement or instrument, or any amendment or supplement to any
thereof, creating, governing or providing for, evidencing or perfecting any
security interest or Lien.
“Shares” means all of the issued and outstanding Equity Interests owned or held
of record by a Loan Party or other Loan Party in each of its Subsidiaries,
except as expressly excluded from Collateral.
“Subordinated Debt” means Indebtedness incurred by a Loan Party on terms and to
holders reasonably acceptable to Administrative Agent and that is subordinated
in writing to all of the Obligations, pursuant to a Subordination Agreement.
“Subordination Agreement” means any subordination agreement in form and
substance satisfactory to Administrative Agent entered into from time to time
with respect to Subordinated Debt.
“Subsidiary” means, with respect to any Person, any corporation, partnership,
limited liability company or joint venture in which (i) any general partnership
interest or (ii) more than fifty percent (50%) of the stock, limited liability
company interest, joint venture interest or other Equity Interest which by the
terms thereof has the ordinary voting power to elect the Board of that Person,
at the time as of which any determination is being made, is owned or controlled
by such Person, directly or indirectly. Unless the context otherwise requires,
each reference to a Subsidiary herein shall be a reference to a Subsidiary of
Borrower.

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“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.
“Term Loan” and “Term Loans” each, have the meaning set forth in Section 2.2
hereof.
“Term Loan Maturity Date” means August 1, 2024.
“Third Tranche Availability Period” means the period commencing on the date the
Third Tranche Milestone is met, and ending January 15, 2021, inclusive.
“Third Tranche Milestone” means that (i) the First Tranche Term Loan Commitment
and Second Tranche Term Loan Commitment shall have been funded in full, and (ii)
Borrowers shall have demonstrated positive Phase 2 clinical results (interim or
final) in a product candidate that is progressing in human clinical trials and
have at least two (2) distinct product candidates in human clinical trials under
active IND or CTA applications, in each case, as determined by Administrative
Agent in its good faith business judgment.
“Third Tranche Term Loan” has the meaning set forth in Section 2.2(a).
“Third Tranche Term Loan Commitment” means, as to any Lender, the aggregate
principal amount of Third Tranche Term Loans committed to be made by such
Lender, as set forth on Schedule 1 hereto.
“Trademarks” means any trademark and servicemark rights of a Person, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business connected with and
symbolized by such trademarks.
“Transfer” means defined in Section 7.1.
“UK Subsidiary” means a Subsidiary of Borrower Representative organized under
the laws of England and Wales.
“Unrestricted Cash” means, as of any date of determination, the aggregate amount
of unrestricted cash held by Loan Parties in Collateral Accounts subject to an
Account Control Agreement in favor of Collateral Trustee.
“Voting Stock” means, with respect to any Person, all classes of Equity
Interests issued by such Person the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors or
managers (or Persons performing similar functions) of such Person, even though
the right so to vote has been suspended by the happening of such a contingency.

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EXHIBIT B
COLLATERAL DESCRIPTION
The Collateral consists of all of each Borrower’s right, title and interest in
and to the following personal property wherever located, whether now owned or
existing or hereafter acquired, created or arising:
All goods, Accounts (including health-care receivables), Equipment, Inventory,
contract rights or rights to payment of money, leases, license agreements,
franchise agreements, General Intangibles, commercial tort claims, documents,
instruments (including any promissory notes), chattel paper (whether tangible or
electronic), cash, deposit accounts, fixtures, letters of credit rights (whether
or not the letter of credit is evidenced by a writing), securities, and all
other investment property, supporting obligations, and financial assets, whether
now owned or hereafter acquired, wherever located; and all such 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 (both cash
and non-cash) and insurance proceeds of any or all of the foregoing.
Notwithstanding the foregoing, the Collateral does not include:
(i)    any Intellectual Property; provided further, however, that at all times
the Collateral shall include all Accounts and all proceeds of the foregoing. 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 thereof,
then the Collateral shall automatically, and effective as of the Closing Date,
include such Intellectual Property to the extent necessary to permit perfection
of Bank’s security interest in such Accounts and such other property of such
Borrower that are proceeds thereof;
(ii)    with respect to any Foreign Subsidiary, to the extent Borrower
Representative has determined that the pledge of more than 65% of the Voting
Stock of such Subsidiary would reasonably be expected to result in a material
adverse tax consequence to Borrowers, and for as long as such consequence would
reasonably be expected by Borrower Representative to result, such portion of the
Voting Stock of such Subsidiary, which, if excluded from Collateral, would avoid
such material adverse tax consequence, provided the excluded portion shall not
exceed 35% of the Voting Stock of such Subsidiary;
(iii)    any interest of Borrower as a lessee or sublessee under a real property
lease;
(iv)    property (including any attachments, accessions or replacements) that is
subject to an Equipment lien, if the grant of a security interest with respect
to such property would be prohibited by the agreement creating such lien or
would otherwise constitute a default thereunder, provided, that such property
will be deemed “Collateral” hereunder upon the termination and release of such
lien;
(v)    property that is non-assignable by its terms without the consent of the
licensor thereof or another party (but only to the extent such prohibition on
transfer is enforceable under applicable law, including, without limitation,
§25-9-406 and §25-9-408 of the Code); and
(vi)    property for which the granting of a security interest therein is
contrary to applicable law, provided that upon the cessation of any such
restriction or prohibition, such property shall automatically become part of the
Collateral.

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EXHIBIT C
LOAN REQUEST
Date:    

Reference is made to that certain Loan and Security Agreement, dated July 19,
2019 (as amended, restated, supplemented or otherwise modified, from time to
time, the “Agreement”), among EVELO BIOSCIENCES, INC., a Delaware corporation
(“Borrower Representative”), and each other Person party thereto as a borrower
from time to time (collectively, “Borrowers”, and each, a “Borrower”), K2
HEALTHVENTURES LLC and any other lender from time to time party thereto
(collectively, “Lenders”, and each, a “Lender”), K2 HEALTHVENTURES LLC, as
administrative agent for Lenders (in such capacity, and together with its
successors, “Administrative Agent”), and ANKURA TRUST COMPANY, LLC, as
collateral agent for Lenders (in such capacity, together with its successors,
“Collateral Trustee”). Capitalized terms have meanings as defined in the
Agreement.
Borrower Representative hereby requests a Loan in the amount of $[    ] on
[    ] (the “Funding Date”) pursuant to the Agreement, and authorizes Lenders
to:
(a)Wire Funds to:
Bank:
 
Address:
 
 
 
ABA Number:
 
Account Number:
 
Account Holder:
 

(b)Deduct amounts from the foregoing advance to be applied to Lender Expenses
and outstanding fees then due as set forth on the attached Schedule 1.
Borrower Representative represents that each of the conditions precedent to the
Loans set forth in the Agreement are satisfied and shall be satisfied on the
Funding Date, including but not limited to: (i)  the representations and
warranties set forth in the Agreement and in the other Loan Documents to which
it is a party are and shall be true and correct in all material respects on and
as of the Funding Date with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly relate
to an earlier date (in which case they remain true and correct in all material
respects as of such earlier date); provided, however, that such materiality
qualifiers shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof, (ii) no
Default or Event of Default has occurred and is continuing, and (iii) no event
that has had or would reasonably be expected to have a Material Adverse Effect
has occurred and is continuing. [Borrower Representative certifies that the
Third Tranche Milestone has been achieved and any supporting documents requested
by Administrative Agent in connection therewith have been provided to
Administrative Agent.]
Borrower Representative agrees to notify Lenders promptly before the Funding
Date if any of the matters which have been represented above shall not be true
and correct in all material respects on the Funding Date and if Lenders have
received no such notice before the Funding Date then the statements set forth
above shall be deemed to have been made and shall be deemed to be true and
correct in all material respects as of the Funding Date.
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[SIGNATURE PAGE TO LOAN REQUEST]
This Loan Request is hereby executed as of the date first written above.
BORROWER REPRESENTATIVE:
EVELO BIOSCIENCES, INC.
By:
Name:
Title:    

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EXHIBIT D
COMPLIANCE CERTIFICATE
TO: K2 HEALTHVENTURES LLC, as Administrative Agent Date:    
FROM: EVELO BIOSCIENCES, INC.

Reference is made to that certain Loan and Security Agreement, dated July 19,
2019 (as amended, restated, supplemented or otherwise modified, from time to
time, the “Agreement”), among EVELO BIOSCIENCES, INC., a Delaware corporation
(“Borrower Representative”), and each other Person party thereto as a borrower
from time to time (collectively, “Borrowers”, and each, a “Borrower”), K2
HEALTHVENTURES LLC and any other lender from time to time party thereto
(collectively, “Lenders”, and each, a “Lender”), K2 HEALTHVENTURES LLC, as
administrative agent for Lenders (in such capacity, and together with its
successors, “Administrative Agent”), and ANKURA TRUST COMPANY, LLC, as
collateral agent for Lenders (in such capacity, together with its successors,
“Collateral Trustee”). Capitalized terms have meanings as defined in the
Agreement.
The undersigned authorized officer of Borrower Representative, solely in his or
her capacity as an officer of Borrower Representative and not in his or her
individual capacity, hereby certifies in accordance with the terms of the
Agreement as follows:
(1) Each Borrower is in compliance for the period ending              with all
covenants set forth in the Agreement; (2) no Event of Default has occurred and
is continuing; and (3) the representations and warranties in the Agreement are
true and correct in all material respects on this date; 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.
The undersigned certifies that all financial statements delivered herewith are
prepared in accordance with GAAP (other than, with respect to unaudited
financials for the absence of footnotes and being subject to normal year-end
adjustments), consistently applied from one period to the next. Capitalized
terms used but not otherwise defined herein shall have the meanings given them
in the Agreement.

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Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenants
Required
Complies
Monthly financial statements and Compliance Certificate
Monthly, within 30 days
Yes No
A/R and A/P Aging Reports
Together with monthly financial statements (upon request)
Yes No
Quarterly financial statements
Quarterly, within 45 days (deemed delivered by posting/linking related SEC
filing to/on Borrower Representative’s website)
Yes No
Annual Projections
Annually, within 30 days of fiscal year end or within 5 Business Days of any
Board approval of a material update thereto
Yes No
Annual audited financial statements and any management letters
Annually, within 90 days of fiscal year end (deemed delivered by posting/linking
related SEC filing to/on Borrower Representative’s website)
Yes No
Statements, reports and notices to Subordinated Debt holders
Within 5 Business Days of delivery
Yes No
SEC filings
Within 5 Business Days after filing with SEC (deemed delivered by posting
to/linking on Borrower Representative’s website)
Yes No
Legal action notices and updates (claims over $500,000)
Promptly
Yes No
IP report
At the end of each calendar quarter
Yes No
Bank account statements (with transaction detail)
Together with monthly financial statements (upon request) or when received
Yes No
Product related material correspondence, reports, documents and other filings
Within 5 Business Days after receipt
Yes No

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Other Covenants
Required
Actual
Complies
Equipment financing Indebtedness (not existing on such Equipment when acquired
or Equipment considered Excluded Inventory and Equipment)
Not to exceed $500,000 outstanding
$
Yes No
Cash repurchases of stock from former employees, officers and directors (not
including cancellation of Indebtedness)

Not to exceed $500,000 per fiscal year in cash
$
Yes No
Deposits or pledges for bids, tenders, contracts, leases, surety or appeal bonds
Not to exceed $250,000 at any time
$
Yes No
Letter of credit reimbursement obligations and associated cash collateral
Not to exceed $2,500,000 at any time
$
Yes No

Investments (i) among Loan Parties, (ii) by Subsidiaries which are not
Other Matters
Please list any SEC filings made since the most recently delivered Compliance
Certificate: [ ] None

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

 
 
Has any Borrower changed its legal name, jurisdiction of organization or chief
executive office? If yes, please complete details below:

_______________________________________________________________________

Yes
No
Have any new Subsidiaries been formed? If yes, please provide complete schedule
below.

Yes
No

Legal Name of Subsidiary
Jurisdiction of Organization
Holder of Subsidiary Equity Interests
Equity Interests Certificated? (Y/N)
Jurisdiction
 
 
 
 
 
 
 
 
 
 

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Do Subsidiaries which are not Loan Parties maintain (i) cash and other assets
with an aggregate value for all such Subsidiaries in excess of 10% of
consolidated assets, (ii) revenue in excess of 10% of consolidated revenues for
any twelve month period then ended, (iii) any Intellectual Property which is
material to the business of Borrowers as a whole, or (iv) any contracts which
are material to the business of Borrowers as a whole? If yes, please attach
relevant details.

Yes
No

Have any new Deposit Accounts or Securities Accounts been opened? If yes, please
complete schedule below.

Yes
No

Accountholder
Deposit Account / Intermediary
Address
Account Number
Account Control Agreement in place? (Y/N)
 
 
 
 
 
 
 
 
 
 

Is there any new Product material to the Loan Parties’ business not previously
disclosed on the Perfection Certificate or any prior Compliance Certificate? If
yes, please complete details below:

_______________________________________________________________________

Yes
No
Has any Loan Party entered into a Restricted License? If yes, please describe
below:
_______________________________________________________________________

Yes
No

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

EVELO BIOSCIENCES, INC.
By:    
Name:    
Title:    

 

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EXHIBIT E
REQUIREMENTS FOR INSURANCE DOCUMENTATION
Contact Information for Insurance Documentation:
Ankura Trust Company, LLC, as Collateral Agent 
140 Sherman Street, Fourth Floor
Fairfield, CT 06824
Attention: Lisa Price
 

Document Requirements:
DOCUMENT
REQUIREMENT
1.    Certificate of Liability Insurance (ACORD FORM 25)
•    Ankura Trust Company, LLC and its successors and assigns, as collateral
agent, to be designated as “Additional Insured”.
•    Ankura Trust Company, LLC name and address to be listed as Certificate
Holder.
2.    General Liability Endorsement (Additional Insured Endorsement)

•    Ankura Trust Company, LLC and its successors and assigns, as collateral
agent, to be named in additional insured endorsement.
3.    Evidence of Commercial Property Insurance (ACORD FORM 28)
•    All-risk commercial property insurance incurring all of each Borrower’s
property
•    Ankura Trust Company, LLC and its successors and assigns, as collateral
agent, to be designated as “Lender’s Loss Payable,” with Lender’s Loss
Payable provision designated.
•    Ankura Trust Company, LLC name and address to be designated in Name and
Address of Additional Interest.
•    Insured locations to include all locations of Borrowers listed in the
Perfection Certificate
4.    Commercial Property Endorsement (Lender’s Loss Payable Endorsement)

•    Ankura Trust Company, LLC and its successors and assigns, as collateral
agent, to be scheduled and designated as “Lender Loss Payable” by endorsement
•    Lender loss payable clause with stipulation that coverage will not be
cancelled without a minimum of 10 days’ prior written notice for non-payment of
premium, or 30 days for any other cancellation.

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EXHIBIT F
AUTOMATIC PAYMENT AUTHORIZATION
Effective as of July 19, 2019, EVELO BIOSCIENCES, INC., a Delaware corporation
(“Borrower Representative”) hereby authorizes K2 HEALTHVENTURES LLC (“K2”), or
any affiliate acting on its behalf pursuant to the Loan Agreement and the bank
or financial institution named below (“Bank”) to automatically debit through the
Automatic Clearing House (ACH) from, and initiate variable debit and/or credit
entries to, the deposit, checking or savings accounts as designated below
maintained in the name of a Borrower, and to cause electronic funds transfers to
an account of K2 to be applied to the payment of any and all amounts due under
the Loan and Security Agreement, dated July 19, 2019 (as amended, restated,
supplemented or otherwise modified, from time to time, the “Agreement”), among
EVELO BIOSCIENCES, INC., a Delaware corporation, and each Person party thereto
as a borrower from time to time (collectively, “Borrowers”, and each, a
“Borrower”), K2, and any other lender from time to time party thereto
(collectively, “Lenders”), and Ankura Trust Company, LLC, as collateral agent
for Lenders, the administrative agent party thereto, including without
limitation, principal, interest, and reasonable and documented out-of-pocket
fees, expenses and charges (including Lender Expenses) solely of Administrative
Agent and the Lenders, in accordance with the Agreement. Capitalized terms not
otherwise defined herein, have the meanings given in the Agreement.
This Authorization shall remain in effect until the Loan Agreement has been
terminated.
Bank:
 
Address:
 
 
 
ABA Number:
 
Account Number:
 
Account Holder:
 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

    
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[SIGNATURE PAGE TO AUTOMATIC PAYMENT AUTHORIZATION]
This Authorization is executed as of the date set forth above by the undersigned
authorized representative of Borrower Representative:
EVELO BIOSCIENCES, INC.
By:    
Name:    
Title:    

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EXHIBIT G
FORM OF
SECURED PROMISSORY NOTE
$[________________]
[_________, 20__]

FOR VALUE RECEIVED, the undersigned, EVELO BIOSCIENCES, INC., a Delaware
corporation, and each Person party thereto as a borrower from time to time
(collectively, “Borrowers”, and each, a “Borrower”), hereby unconditionally,
jointly and severally, promise to pay [__________________________] (together
with its successors and assigns, the “Holder”) at the times, in the amounts and
at the address set forth in the Loan and Security Agreement, dated as of July
19, 2019 (as amended, restated, supplemented or otherwise modified from time to
time, the “Loan Agreement”; capitalized terms used herein without definition
have the meanings assigned to such terms in the Loan Agreement), among
Borrowers, the Holder, any other lender from time to time party thereto
(collectively, “Lenders”), and ANKURA TRUST COMPANY, LLC, as collateral agent
for Lenders (in such capacity, “Collateral Trustee”), the lesser of (i) the
principal amount of [___________] Dollars ($[__________]) and (ii) the aggregate
outstanding principal amount of Loans made by the Holder to Borrowers according
to the terms of Section 2.2 of the Loan Agreement. Borrowers further, jointly
and severally, promise to pay interest in accordance with Section 2.3 of the
Loan Agreement. In no event shall interest hereunder exceed the maximum rate
permitted under applicable law. All payments of principal, interest and any
other amounts due shall be made as set forth in Section 2.5 of the Loan
Agreement.
The Obligations evidenced by this Secured Promissory Note (as amended, restated,
supplemented or otherwise modified from time to time, this “Note”) are subject
to acceleration in accordance with Section 9.1 of the Loan Agreement. Borrower
hereby waives presentment, demand, notice of default or dishonor, notice of
payment and nonpayment, protest and all other demands and notices in connection
with the execution, delivery, acceptance, performance, default or enforcement of
this Note.
This Note is secured by a security interest in the Collateral granted to
Collateral Trustee, for the ratable benefit of Lenders, pursuant to certain
other Loan Documents.
The terms of Section 11 are incorporated herein, mutatis mutandis.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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[SIGNATURE PAGE TO SECURED PROMISSORY NOTE]
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed and
delivered on the date set forth above by the duly authorized representative of
each Borrower.

 
EVELO BIOSCIENCES, INC.
By   
Name:    
Title:    

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SCHEDULE 1
COMMITMENTS

LENDER
FIRST TRANCHE TERM LOAN COMMITMENT
SECOND TRANCHE TERM LOAN COMMITMENT
THIRD TRANCHE TERM LOAN COMMITMENT
TOTAL COMMITMENTS
K2 HEALTHVENTURES LLC
$20,000,000.00
$10,000,000.00
$15,000,000.00
$45,000,000.00

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SCHEDULE 2
POST-CLOSING DELIVERIES
1.
Within 30 days of the Closing Date (or such later date as Administrative Agent
agrees to in its reasonable discretion), duly executed Collateral Access
Agreement(s) for such locations as Administrative Agent may require (other than
Excluded Locations), in accordance with Section 6.12 hereof.

2.
Within 30 days of the Closing Date (or such later date as Administrative Agent
agrees to in its reasonable discretion), the certificate(s) for any certificated
pledged Equity Interests, accompanied by a stock power or other appropriate
instrument of assignment duly executed in blank, in accordance with Sections 4.4
and 6.11 hereof.

3.
Within 30 days of the Closing Date (or such later date as Administrative Agent
agrees to in its reasonable discretion) duly executed signatures to the Account
Control Agreement(s) required in accordance with Section 6.6(b);

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SCHEDULE 3
TAXES; INCREASED COSTS

1.Defined Terms. For purposes of this Schedule 3:
(a)    “Connection Income Taxes” means Other Connection Taxes that are imposed
on or measured by net income (however denominated) or that are franchise Taxes
or branch profits Taxes.
(b)    “Excluded Taxes” means any of the following Taxes imposed on or with
respect to a Recipient or required to be withheld or deducted from a payment to
a Recipient, (i) Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each case, (A)
imposed as a result of such Recipient being organized under the laws of, or
having its principal office or, in the case of any Lender, its applicable
lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (B) that are Other Connection Taxes, (ii) in the case of
a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for
the account of such Lender with respect to an applicable interest in a Term Loan
or Commitment pursuant to a law in effect on the date on which (A) such Lender
acquires such interest in such Term Loan or Commitment or (B) such Lender
changes its lending office, except in each case to the extent that, pursuant to
Section 2 or Section 4 of this Schedule 3, amounts with respect to such Taxes
were payable either to such Lender’s assignor immediately before such Lender
became a party hereto or to such Lender immediately before it changed its
lending office, or to the extent arising from an assignment after the occurrence
and during the continuation of an Event of Default, (iii) Taxes attributable to
such Recipient’s failure to comply with Section 7 of this Schedule 3 and (iv)
any withholding Taxes imposed under FATCA.
(c)    “FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as
of the date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any
current or future regulations or official interpretations thereof, any
agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue
Code, and any fiscal or regulatory legislation, rules or practices adopted
pursuant to any intergovernmental agreement, treaty or convention among
Governmental Authorities and implementing such Sections of the Internal Revenue
Code.
(d)    “Foreign Lender” means a Lender that is not a U.S. Person.
(e)    “Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed
on or with respect to any payment made by or on account of any obligation of the
Loan Parties under any Loan Document and (ii) to the extent not otherwise
described in clause (i), Other Taxes.
(f)    “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended.
(g)    “IRS” means the United States Internal Revenue Service.
(h)    “Other Connection Taxes” means, with respect to any Recipient, Taxes
imposed as a result of a present or former connection between such Recipient and
the jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Term Loan or Loan
Document).
(i)    “Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.
(j)    “Recipient” means Administrative Agent, the Collateral Trustee or any
Lender, as applicable.

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(k)    “U.S. Person” means any Person that is a “United States person” as
defined in Section 7701(a)(30) of the Internal Revenue Code.
(l)    “Withholding Agent” means, individually, the Loan Parties and
Administrative Agent.
2.Payments Free of Taxes. Any and all payments by or on account of any
obligation of the Loan Parties under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable law. If
any applicable law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any
such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the Loan Parties shall be increased as necessary so that after such deduction
or withholding has been made (including such deductions and withholdings
applicable to additional sums payable under this Section 2 or Section 4 of this
Schedule 3) the applicable Recipient receives an amount equal to the sum it
would have received had no such deduction or withholding been made.
3.Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay
to the relevant Governmental Authority in accordance with applicable law, or at
the option of Administrative Agent, timely reimburse it for the payment of, any
Other Taxes.
4.Indemnification by the Loan Parties. The Loan Parties shall indemnify each
Recipient, within 10 days after demand therefor, for the full amount of any
Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under Section 2 of this Schedule 3 or this
Section 4) payable or paid by such Recipient or required to be withheld or
deducted from a payment to such Recipient and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the
Loan Parties by a Lender (with a copy to Administrative Agent), or by
Administrative Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.
5.Indemnification by the Lenders. Each Lender shall severally indemnify
Administrative Agent and Collateral Trustee, within 10 days after demand
therefor, for (a) any Indemnified Taxes attributable to such Lender (but only to
the extent that the Loan Parties have not already indemnified Administrative
Agent or Collateral Trustee for such Indemnified Taxes and without limiting the
obligation of the Loan Parties to do so), (b) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 12.2 of the Agreement
relating to the maintenance of a Participant Register and (c) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by
Administrative Agent or Collateral Trustee in connection with any Loan Document,
and any reasonable expenses arising therefrom or with respect thereto, whether
or not such Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to any Lender by Administrative Agent or Collateral Trustee,
as applicable, shall be conclusive absent manifest error. Each Lender hereby
authorizes Administrative Agent and Collateral Trustee to set off and apply any
and all amounts at any time owing to such Lender under any Loan Document or
otherwise payable by Administrative Agent or Collateral Trustee, as applicable,
to the Lender from any other source against any amount due to Administrative
Agent or Collateral Trustee under this Section 5.
6.Evidence of Payments. As soon as practicable after any payment of Taxes by the
Loan Parties to a Governmental Authority pursuant to the provisions of this
Schedule 3, the Loan Parties shall deliver to Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to Administrative Agent.
7.Status of Lenders.
(a)    Any Lender that is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under any Loan Document shall
deliver to the Loan Parties and Administrative Agent, at the time or

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times reasonably requested by the Loan Parties or Administrative Agent, such
properly completed and executed documentation reasonably requested by the Loan
Parties or Administrative Agent as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, any Lender, if
reasonably requested by the Loan Parties or Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Loan Parties or Administrative Agent as will enable the Loan Parties or
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements. Notwithstanding
anything to the contrary in the preceding two sentences, the completion,
execution and submission of such documentation (other than such documentation
set forth in Sections 7(b)(i), 7(b)(ii) and 7(b)(iv) of this Schedule 3) shall
not be required if in the Lender’s reasonable judgment such completion,
execution or submission would subject such Lender to any material unreimbursed
cost or expense or would materially prejudice the legal or commercial position
of such Lender.
(b)    Without limiting the generality of the foregoing, in the event that any
Loan Party is a U.S. Person,
(i)    any Lender that is a U.S. Person shall deliver to such Loan Party and
Administrative Agent on or prior to the date on which such Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of such Loan Party or Administrative Agent), executed copies
of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup
withholding tax;
(ii)    any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to such Loan Party and Administrative Agent (in such number of copies as
shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of such Loan Party or Administrative
Agent), whichever of the following is applicable:
A.    in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form
W-8BEN-E establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “interest” article of such tax treaty and (y)
with respect to any other applicable payments under any Loan Document, IRS Form
W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of,
U.S. federal withholding Tax pursuant to the “business profits” or “other
income” article of such tax treaty;
B.    executed copies of IRS Form W-8ECI;
C.    in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a
certificate, in form and substance reasonably acceptable to such Loan Party and
Administrative Agent, to the effect that such Foreign Lender (or other
applicable Person) is not a “bank” within the meaning of Section 881(c)(3)(A) of
the Internal Revenue Code, a “10 percent shareholder” of such Loan Party within
the meaning of Section 871(h)(3)(B) of the Internal Revenue Code, or a
“controlled foreign corporation” related to such Loan Party as described in
Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance
Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E;
or
D.    to the extent a Foreign Lender is not the beneficial owner, executed
copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS
Form W-8BEN-E, a U.S. Tax Compliance Certificate, IRS Form W-9, and/or other
certification documents from each beneficial owner, as applicable; provided that
if the Foreign Lender is a partnership and one or more direct or indirect
partners of such Foreign Lender are claiming the portfolio interest exemption,
such Foreign Lender may provide a U.S. Tax Compliance Certificate on behalf of
each such direct and indirect partner;
(iii)    any Foreign Lender shall, to the extent it is legally entitled to do
so, deliver to such Loan Party and Administrative Agent (in such number of
copies as shall be requested by the recipient) on or prior to the date

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on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the reasonable request of such Loan Party or
Administrative Agent), executed copies of any other form prescribed by
applicable law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit such Loan Party
or Administrative Agent to determine the withholding or deduction required to be
made; and
(iv)    if a payment made to a Lender under any Loan Document would be subject
to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as
applicable), such Lender shall deliver to such Loan Party and Administrative
Agent at the time or times prescribed by law and at such time or times
reasonably requested by such Loan Party or Administrative Agent such
documentation prescribed by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation
reasonably requested by such Loan Party or Administrative Agent as may be
necessary for such Loan Party and Administrative Agent to comply with their
obligations under FATCA and to determine that such Lender has complied with such
Lender’s obligations under FATCA or to determine the amount, if any, to deduct
and withhold from such payment. Solely for purposes of this clause (iv), “FATCA”
shall include any amendments made to FATCA after the date of this Agreement.
(c)    Each Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify the Loan Parties and
Administrative Agent in writing of its legal inability to do so.
8.Treatment of Certain Refunds. If any party determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which
it has been indemnified pursuant to the provisions of this Schedule 3 (including
by the payment of additional amounts pursuant to the provisions of this Schedule
3), it shall pay to the indemnifying party an amount equal to such refund (but
only to the extent of indemnity payments made under the provisions of this
Schedule 3 with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party and without
interest (other than any interest paid by the relevant Governmental Authority
with respect to such refund). Such indemnifying party, upon the request of such
indemnified party, shall repay to such indemnified party the amount paid over
pursuant to this Section 8 (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) in the event that such
indemnified party is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this Section 8, in no
event will the indemnified party be required to pay any amount to an
indemnifying party pursuant to this Section 8 the payment of which would place
the indemnified party in a less favorable net after-Tax position than the
indemnified party would have been in if the Tax subject to indemnification and
giving rise to such refund had not been deducted, withheld or otherwise imposed
and the indemnification payments or additional amounts with respect to such Tax
had never been paid. This Section 8 shall not be construed to require any
indemnified party to make available its Tax returns (or any other information
relating to its Taxes that it deems confidential) to the indemnifying party or
any other Person.
9.Increased Costs.     If any change in applicable law shall subject any
Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in
clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection
Income Taxes) on its loans, loan principal, commitments, or other obligations,
or its deposits, reserves, other liabilities or capital attributable thereto,
and the result shall be to increase the cost to such Recipient of making,
converting to, continuing or maintaining any Term Loan or of maintaining its
obligation to make any such Term Loan, or to reduce the amount of any sum
received or receivable by such Recipient (whether of principal, interest or any
other amount), then, upon the request of such Recipient, the Loan Parties will
pay to such Recipient such additional amount or amounts as will compensate such
Recipient for such additional costs incurred or reduction suffered.
10.Survival. Each party’s obligations under the provisions of this Schedule 3
shall survive the resignation or replacement of Administrative Agent or
Collateral Trustee or any assignment of rights by, or the replacement of, a
Lender, the termination of the Commitments and the repayment, satisfaction or
discharge of all obligations under any Loan Document.

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