Exhibit 10.1

CEMPRA, INC.

CEMPRA PHARMACEUTICALS, INC.

CEM-102 PHARMACEUTICALS, INC.

LOAN AND SECURITY AGREEMENT

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This LOAN AND SECURITY AGREEMENT (this “Agreement”) is entered into as of
July 10, 2015, by and among COMERICA BANK (“Bank”) and CEMPRA, INC., a Delaware
corporation (“Cempra”), CEMPRA PHARMACEUTICALS, INC., a Delaware corporation
(“Cempra Pharm”) and CEM-102 PHARMACEUTICALS, INC., a Delaware corporation
(“CEM-102”) (Cempra, Cempra Pharm and CEM-102 are each a “Borrower”, and
collectively, “Borrowers”). For the avoidance of doubt any reference in this
Agreement to a “Borrower” shall include, effective as of the date such Person
becomes a Borrower, any Person that becomes a Borrower after the Closing Date by
virtue of a duly executed amendment to this Agreement.

RECITALS

Borrowers wish to obtain credit from time to time from Bank, and Bank desires to
extend credit to Borrowers. This Agreement sets forth the terms on which Bank
will advance credit to Borrowers, and Borrowers will repay the amounts owing to
Bank.

AGREEMENT

The parties agree as follows:

 

  1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, all capitalized terms shall have the
definitions set forth on Exhibit A. Any term used in the Code and not defined
herein shall have the meaning given to the term in the Code.

1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A
shall be construed in accordance with GAAP and all calculations shall be made in
accordance with GAAP. The term “financial statements” shall include the
accompanying notes and schedules.

 

  2. LOAN AND TERMS OF PAYMENT.

2.1 Credit Extensions.

(a) Promise to Pay. Borrowers promise to pay to Bank, in lawful money of the
United States, the aggregate unpaid principal amount of all Credit Extensions
made by Bank to Borrowers, together with interest on the unpaid principal amount
of such Credit Extensions at rates in accordance with the terms hereof.

(b) Advances Under Revolving Line.

(i) Amount. Subject to and upon the terms and conditions of this Agreement and
provided that Borrower has first received FDA Approval, Borrowers may request
Advances in an aggregate outstanding amount not to exceed the Availability
Amount minus the principal amount of the Growth Capital Advance, if any, that
has been converted pursuant to Section 2.1(c). Except as set forth in the
Pricing Addendum amounts borrowed pursuant to this Section 2.1(b) may be repaid
and reborrowed at any time without penalty or premium prior to the Revolving
Maturity Date, at which time all Advances under this Section 2.1(b) (including
for the avoidance of doubt any Growth Capital Advance converted pursuant to
Section 2.1(c)(ii)) shall be immediately due and payable.

(ii) Form of Request. Whenever a Borrower desires an Advance, such Borrower will
notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific Time (12:00 p.m. Pacific Time for wire transfers), on the Business Day
that the Advance is to be made. Each such notification shall be promptly
confirmed by a Loan Advance/Paydown Request Form in substantially the form of
Exhibit C. Bank is authorized to make Advances under this Agreement, based upon
instructions received from a Responsible Officer, or without instructions if in
Bank’s reasonable determination such Advances are necessary to meet Obligations
which have become due and remain unpaid. Bank shall be entitled to rely on any
facsimile or telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer, and Borrowers shall indemnify and

 

 

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hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance. Unless Borrower otherwise instructs Bank, Bank will credit the amount
of Advances made under this Section 2.1(b) to a Borrower’s deposit account with
Bank.

(c) Growth Capital Advance.

(i) Subject to and upon the terms and conditions of this Agreement, Borrowers
may request a single term loan (the “Growth Capital Advance”) on the Closing
Date in an aggregate amount not to exceed the Growth Capital Line. Borrowers
shall use the first proceeds of the Growth Capital Advance to repay all
Indebtedness owing by Borrowers to Hercules and any remaining balance for
general working capital purposes.

(ii) Interest shall accrue from the date of the Growth Capital Advance at the
rate specified in the Pricing Addendum, and shall be payable in accordance with
Section 2.3(b) and on the terms set forth in the Pricing Addendum. Any portion
of the Growth Capital Advance that is outstanding on April 30, 2016 shall be
payable in thirty six (36) equal monthly installments of principal, plus all
accrued interest, beginning on May 1, 2016 and continuing on the same day of
each month thereafter until paid in full. Except as set forth in the Pricing
Addendum, Borrowers may prepay the Growth Capital Advance in full without
penalty or premium. Once repaid the Growth Capital Advance may not be
reborrowed. Notwithstanding the foregoing, after FDA Approval and prior to the
Revolving Maturity Date, subject to availability under the Revolving Line and
the Borrowing Base Borrowers may, by providing irrevocable written notice (the
“Conversion Notice”) to Bank, which notice shall be signed by a Borrower, elect
to convert the entire outstanding principal amount of the Growth Capital Advance
to an Advance under the Revolving Line (the “Conversion”) provided that it shall
be a condition precedent to the Conversion that the principal amount of the
Growth Capital Advance being converted is less than the Availability Amount.

(iii) Borrowers shall notify Bank (which notice shall be irrevocable) by
facsimile transmission to be received no later than 3:00 p.m. Pacific time one
(1) Business Day before the Closing Date of Borrowers request for the Growth
Capital Advance. Such notice shall be substantially in the form of Exhibit C.
The notice shall be signed by a Responsible Officer. Bank shall be entitled to
rely on any facsimile or telephonic notice given by a person who Bank reasonably
believes to be a Responsible Officer, and Borrowers shall indemnify and hold
Bank harmless for any damages or loss suffered by Bank as a result of such
reliance. Bank will disburse the Growth Capital Advance pursuant to the
instructions received from Borrowers.

2.2 Overadvances. If at any time the aggregate amount of the outstanding
Advances plus the principal amount of the Growth Capital Advance that has been
converted pursuant to Section 2.1(c)(ii) exceeds the lesser of the Revolving
Line or the Borrowing Base, Borrowers shall immediately pay to Bank, in cash,
the amount of such excess.

2.3 Interest Rates, Payments, and Calculations.

(a) Interest Rates.

(i) Advances. The Advances shall bear interest, on the outstanding daily balance
thereof, on the terms set forth in the Pricing Addendum.

(ii) Growth Capital Advance. The Growth Capital Advance shall bear interest, on
the outstanding daily balance thereof, on the terms set forth in the Pricing
Addendum.

(b) Payments. Bank shall, at its option, charge such interest, all Bank
Expenses, and all Periodic Payments against any of a Borrower’s deposit accounts
at Bank or against the Revolving Line, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. Any interest
not paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder. Payments hereunder shall be made via auto debit from a Borrower’s
deposit account at Bank.

 

 

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2.4 Crediting Payments. Prior to the occurrence of an Event of Default, Bank
shall credit a wire transfer of funds, check or other item of payment to such
deposit account or Obligation as Borrower specifies. After the occurrence and
during the continuance of an Event of Default, Bank shall have the right, in its
sole discretion, to immediately apply any wire transfer of funds, check, or
other item of payment Bank may receive to conditionally reduce Obligations, but
such applications of funds shall not be considered a payment on account unless
such payment is of immediately available federal funds or unless and until such
check or other item of payment is honored when presented for payment.
Notwithstanding anything to the contrary contained herein, any wire transfer or
payment received by Bank after 12:00 noon Pacific Time shall be deemed to have
been received by Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to Bank under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable for
the period of such extension.

2.5 Fees and Bank Expenses. Borrowers shall pay to Bank the following:

(a) Growth Capital Facility Fee. On or prior to the Closing Date, a Growth
Capital facility fee equal to One Hundred Thousand Dollars ($100,000), which
shall be nonrefundable (receipt of which Bank acknowledges as of the Closing
Date);

(b) Revolving Line Facility Fee. On or prior to the Closing Date, a Revolving
Line facility fee equal to One Hundred Eighty Seven Thousand Five Hundred
Dollars ($187,500), which shall be nonrefundable;

(c) Unused Facility Fee. Beginning upon FDA Approval and at all times
thereafter, a quarterly Unused Facility Fee equal to one quarter of one percent
(0.25%) per annum of the difference between the Revolving Line and the average
outstanding principal balance of the Advances during the applicable calendar
quarter, which fee shall be payable in arrears within five (5) days of the last
day of each such calendar quarter and shall be nonrefundable; and

(d) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the
Closing Date, and, after the Closing Date, all Bank Expenses, as and when they
become due.

2.6 Term. This Agreement shall become effective on the Closing Date and, subject
to Section 13.7, shall continue in full force and effect for so long as any
Obligations remain outstanding or Bank has any obligation to make Credit
Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.

 

  3. CONDITIONS OF LOANS.

3.1 Conditions Precedent to Initial Credit Extension. Except with respect to
subparagraph (h) below which shall apply only to the initial Advance or a
Conversion, the obligation of Bank to make the initial Credit Extension is
subject to the condition precedent that Bank shall have received, in form and
substance satisfactory to Bank, the following:

(a) this Agreement and the other Loan Documents required by Bank;

(b) an officer’s certificate of each Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement and the
other Loan Documents;

(c) the Pricing Addendum;

(d) a financing statement (Form UCC-1) for each Borrower;

(e) agreement to furnish insurance;

 

 

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(f) payment of the fees and Bank Expenses then due as specified in Section 2.5;

(g) current SOS Reports indicating that except for Permitted Liens, there are no
other security interests or Liens of record in the Collateral;

(h) as a condition to the initial Advance or, if earlier, a Conversion pursuant
to Section 2.1(c)(ii), an audit of the Collateral, the results of which shall be
satisfactory to Bank (the “Initial Audit”);

(i) a payoff letter, duly executed by Hercules;

(j) current financial statements in accordance with Section 6.2, and such other
updated financial information as Bank may reasonably request;

(k) current Compliance Certificate in accordance with Section 6.2;

(l) a Collateral Information Certificate;

(m) an Automatic Loan Payment Authorization; and

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

3.2 Post-Closing Conditions. Unless otherwise provided in writing, Bank shall
have received, in form and substance satisfactory to Bank: (a) within five
(5) days after the Closing Date, original signatures to each of the Loan
Documents.

3.3 Conditions Precedent to all Credit Extensions. The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is further
subject to the following conditions:

(a) timely receipt by Bank of the Loan Advance/Paydown Request Form as provided
in Section 2.1;

(b) there has occurred no circumstance or circumstances that could reasonably be
expected to have a Material Adverse Effect; and

(c) the representations and warranties contained in Article 5 shall be true and
correct in all material respects on and as of the date of such Loan
Advance/Paydown Request Form and on the effective date of each Credit Extension
as though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrowers on the date of such
Credit Extension as to the accuracy of the facts referred to in this
Section 3.3.

 

  4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Each Borrower grants and pledges to Bank a
continuing security interest in the Collateral to secure prompt repayment of any
and all Obligations and to secure prompt performance by Borrowers of each of
their covenants and duties under the Loan Documents. Except as set forth in the
Schedule and for properly perfected Permitted Liens described in subclause
(c) of the defined term “Permitted Lien”, such security interest constitutes a
valid, first priority security interest in the presently existing Collateral,
and will constitute a valid, first priority security interest in later-acquired
Collateral. Notwithstanding any termination of this Agreement, Bank’s Lien on
the Collateral shall remain in effect for so long as any Obligations (other than
contingent indemnification obligations) are outstanding.

 

 

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4.2 Perfection of Security Interest. Each Borrower authorizes Bank to file at
any time financing statements, continuation statements, and amendments thereto
that (i) either specifically describe the Collateral or describe the Collateral
as all assets of a Borrower of the kind pledged hereunder, and (ii) contain any
other information required by the Code for the sufficiency of filing office
acceptance of any financing statement, continuation statement, or amendment,
including whether a Borrower is an organization, the type of organization and
any organizational identification number issued to a Borrower, if applicable.
Any such financing statements may be filed by Bank at any time in any
jurisdiction whether or not Division 9 of the Code is then in effect in that
jurisdiction. Each Borrower shall from time to time endorse and deliver to Bank,
at the request of Bank, all Negotiable Collateral and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfection of Bank’s security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
Borrowers shall have possession of the Collateral, except where expressly
otherwise provided in this Agreement or where Bank chooses to perfect its
security interest by possession in addition to the filing of a financing
statement in order to ensure its first priority Lien in such Collateral. Where
Eligible Inventory is in possession of a third party bailee, Borrowers shall
take such steps as Bank reasonably requests for Bank to obtain an
acknowledgment, in form and substance satisfactory to Bank, of the bailee that
the bailee holds such Eligible Inventory for the benefit of Bank. Where
Collateral consisting of investment property, deposit accounts, securities
accounts, letter-of-credit rights or electronic chattel paper (as such items and
the term “control” are defined in Division 9 of the Code) are in possession of
or maintained by any Person other than Bank Borrowers shall take such steps as
Bank reasonably requests for Bank to obtain “control” of such Collateral, by
causing the securities intermediary or depositary institution or issuing bank to
execute a control agreement in form and substance satisfactory to Bank. No
Borrower will create any chattel paper without placing a legend on the chattel
paper acceptable to Bank indicating that Bank has a security interest in the
chattel paper.

4.3 Right to Inspect. Bank (through any of its officers, employees, or agents)
shall have the right, upon reasonable prior notice, from time to time during a
Borrower’s usual business hours but no more than once every six (6) months
(unless an Event of Default has occurred and is continuing), to inspect a
Borrower’s Books and to make copies thereof and, after the Initial Audit, to
check, test, and appraise the Collateral in order to verify a Borrower’s
financial condition or the amount, condition of, or any other matter relating
to, the Collateral.

 

  5. REPRESENTATIONS AND WARRANTIES.

Each Borrower represents and warrants as follows:

5.1 Due Organization and Qualification. Borrower and each Subsidiary is an
entity duly existing under the laws of the jurisdiction in which it is organized
and qualified and licensed to do business in any state in which the conduct of
its business or its ownership of property requires that it be so qualified,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.

5.2 Due Authorization; No Conflict. The execution, delivery, and performance of
the Loan Documents are within Borrower’s powers, have been duly authorized, and
are not in conflict with nor constitute a breach of any provision contained in
Borrower’s organizational documents, nor will they constitute an event of
default under any material agreement by which Borrower is bound. Borrower is not
in default under any agreement by which it is bound, except to the extent such
default would not reasonably be expected to cause a Material Adverse Effect.

5.3 Collateral. Borrower has rights in or the power to transfer the Collateral,
and its title to the Collateral is free and clear of Liens, adverse claims, and
restrictions on transfer or pledge (other than non-assignment clauses rendered
unenforceable under the Code, including, without limitation, Sections 9406 and
9408 of the Code) except for Permitted Liens. The Eligible Accounts are bona
fide existing obligations. The property or services giving rise to such Eligible
Accounts has been delivered or rendered to the account debtor or its agent for
immediate shipment to and unconditional acceptance by the account debtor.
Borrower has not received notice of an actual or imminent Insolvency Proceeding
of any account debtor whose accounts are included in any Borrowing Base
Certificate as an Eligible Account. No licenses or agreements giving rise to
such Eligible Accounts is with any Prohibited Territory or with any Person
organized under or doing business in a Prohibited Territory. All Inventory is in
all material respects of good and merchantable quality, free from all material
defects, except for Inventory for which adequate reserves have been made. For
any item of Inventory consisting of “Eligible Inventory” in any

 

 

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Borrowing Base Certificate, such Inventory (i) consists of finished goods;
(ii) meets all applicable governmental standards, if any; (iii) is not subject
to any Liens, except the first priority Liens granted or in favor of Bank under
this Agreement and Permitted Liens and (iv) is held at Borrower’s headquarters
or a location(s) subject to a landlord waiver or bailee waiver in favor of Bank
in form reasonably satisfactory to Bank. Except as set forth in the Schedule,
none of the Collateral consisting of investment property or deposit accounts is
maintained or invested with a Person other than Bank or Bank’s Affiliates.

5.4 Intellectual Property. Borrower is the sole owner of, or otherwise has the
right to use, the Intellectual Property, except for licenses granted by Borrower
to its customers in the ordinary course of business. To the best of Borrower’s
knowledge, each of the material Copyrights, Trademarks and Patents is valid and
enforceable, and no part of the Intellectual Property has been judged invalid or
unenforceable, in whole or in part, and no claim has been made to Borrower 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 cause a
Material Adverse Effect. Other than this Agreement or as set forth on the
Schedule, Borrower is not a party to, or bound by, any agreement that restricts
the grant by Borrower of a security interest in the Intellectual Property.

5.5 Name; Location of Chief Executive Office; Location of Inventory and
Equipment. Except as disclosed in the Schedule, Borrower has not done business
in the last five (5) years under any name other than that specified on the
signature page hereof, and its exact legal name is as set forth in the first
paragraph of this Agreement. The chief executive office of Borrower is located
at the address indicated in Section 10 hereof. Except as disclosed in the
Schedule, all Collateral of Borrower is located at the address indicated in
Section 10 hereof.

5.6 Actions, Suits, Litigation, or Proceedings. Except as set forth in the
Schedule, there are no actions, suits, litigation or proceedings, at law or in
equity, pending by or against Borrower or any Subsidiary before any court,
administrative agency, or arbitrator in which a likely adverse decision could
reasonably be expected to have a Material Adverse Effect.

5.7 No Material Adverse Change in Financial Statements. All consolidated and
consolidating financial statements related to Borrower and any Subsidiary that
are delivered by Borrower to Bank fairly present in all material respects
Borrower’s consolidated and consolidating financial condition as of the date
thereof and Borrower’s consolidated and consolidating results of operations for
the period then ended. There has not been a material adverse change in the
consolidated or in the consolidating financial condition of Borrower since the
date of the most recent of such financial statements submitted to Bank.

5.8 Solvency, Payment of Debts. Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; and Borrower is not left with unreasonably small capital after the
transactions contemplated by this Agreement.

5.9 Compliance with Laws and Regulations. Borrower and each Subsidiary have met
the applicable minimum funding requirements of ERISA with respect to any
employee benefit plans subject to ERISA. No event has occurred resulting from
Borrower’s failure to comply with ERISA that is reasonably likely to result in
Borrower’s incurring any liability that could reasonably be expected to have a
Material Adverse Effect. Borrower is not an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations T, U, and
X of the Board of Governors of the Federal Reserve System). Borrower has
complied in all material respects with all the provisions of the Federal Fair
Labor Standards Act. Borrower has complied in all material respects with all
environmental laws, regulations and ordinances. Borrower has not violated any
statutes, laws, ordinances or rules applicable to it, the violation of which
could reasonably be expected to have a Material Adverse Effect. Borrower and
each Subsidiary have filed or caused to be filed all tax returns required to be
filed, and have paid, or have made adequate provision for the payment of, all
taxes reflected therein except those being contested in good faith with adequate
reserves under GAAP or where the failure to file such returns or pay such taxes
could not reasonably be expected to have a Material Adverse Effect.

 

 

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5.10 Investments. Borrower does not own any Equity Interests of any Person,
except for Permitted Investments.

5.11 Government Consents. Borrower and each Subsidiary have obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower’s business as currently conducted,
except where the failure to do so would not reasonably be expected to cause a
Material Adverse Effect.

5.12 Restricted Agreements. Except as disclosed on the Schedule or as timely
disclosed in writing to Bank pursuant to Section 6.9, Borrower is not a party
to, nor is bound by, any Restricted Agreement.

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

5.14 No Material Adverse Effect. No Material Adverse Effect or event reasonably
expected to cause a Material Adverse Effect has occurred.

 

  6. AFFIRMATIVE COVENANTS.

Each Borrower covenants that, until payment in full of all outstanding
Obligations (other than inchoate indemnity Obligations), and for so long as Bank
may have any commitment to make a Credit Extension hereunder, such Borrower
shall do all of the following:

6.1 Good Standing and Government Compliance. Borrower shall maintain its and
each of its Subsidiaries’ organizational existence and good standing in the
jurisdiction of its organization, shall maintain qualification and good standing
in each other jurisdiction in which the failure to so qualify would reasonably
be expected to have a Material Adverse Effect, and shall furnish to Bank the
organizational identification number issued to Borrower by the authorities of
the Borrower State, if applicable. Borrower shall meet, and shall cause each
Subsidiary to meet, any applicable minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. Borrower shall comply in
all material respects with all applicable Environmental Laws, and maintain all
material permits, licenses and approvals required thereunder where the failure
to do so would reasonably be expected to have a Material Adverse Effect.
Borrower shall comply, and shall cause each Subsidiary to comply, with all
statutes, laws, ordinances and government rules and regulations to which it is
subject, and shall maintain, and shall cause each of its Subsidiaries to
maintain, in force all licenses, approvals and agreements, the loss of which or
failure to comply with which would reasonably be expected to have a Material
Adverse Effect.

6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank:
(i) as soon as available, but in any event within thirty (30) days after the end
of each calendar month, a company prepared consolidated and consolidating
balance sheet, income statement, and statement of cash flows covering Borrower’s
operations during such period, in a form reasonably acceptable to Bank and
certified by a Responsible Officer; (ii) as soon as available, but in any event
within one hundred eighty (180) days after the end of Borrower’s fiscal year,
audited consolidated and consolidating financial statements of Borrower prepared
in accordance with GAAP, consistently applied, together with an opinion which is
unqualified (including no going concern comment or qualification) or otherwise
consented to in writing by Bank on such financial statements of an independent
certified public accounting firm reasonably acceptable to Bank; (iii) if
applicable, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and all reports on Forms 10-K and 10-Q filed with the Securities and
Exchange Commission; (iv) promptly upon receipt of notice thereof, a report of
any legal actions pending or threatened against Borrower or any Subsidiary that
would reasonably be expected to result in damages or costs to Borrower or any
Subsidiary of Two Hundred Fifty Thousand Dollars ($250,000) or more;
(v) promptly upon receipt, each management letter prepared by Borrower’s
independent certified public accounting firm regarding Borrower’s management
control systems; (vi) as soon as available, but in

 

 

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any event within sixty (60) days after each fiscal year end, Borrower’s
financial and business projections and budget for the immediately following
year, with evidence of approval thereof by Borrower’s Board of Directors;
(vii) such budgets, sales projections, operating plans or other financial
information as Bank may reasonably request from time to time; and (viii) within
thirty (30) days of the last day of each fiscal quarter, a report signed by
Borrower, in form reasonably acceptable to Bank, listing any applications or
registrations that Borrower 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 Borrower’s Intellectual
Property.

(a) Beginning upon FDA Approval and at all times thereafter, within twenty
(20) days after the last day of each month, Borrower shall deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in substantially the
form of Exhibit D hereto, together with aged listings by invoice date of
accounts receivable and accounts payable and an inventory report in form
satisfactory to Bank.

(b) Within thirty (30) days after the last day of each month, Borrower shall
deliver to Bank with the monthly financial statements a Compliance Certificate
certified as of the last day of the applicable month and signed by a Responsible
Officer in substantially the form of Exhibit E hereto.

(c) Immediately upon becoming aware of the occurrence or existence of an Event
of Default hereunder, a written statement of a Responsible Officer setting forth
details of the Event of Default, and the action which Borrower has taken or
proposes to take with respect thereto.

(d) Bank shall have a right from time to time hereafter to audit Borrower’s
Accounts and appraise Collateral at Borrower’s expense, provided that after the
Initial Audit such audits will be conducted no more often than every six
(6) months unless an Event of Default has occurred and is continuing.

Borrower may deliver to Bank on an electronic basis any certificates, reports or
information required pursuant to this Section 6.2, and Bank shall be entitled to
rely on the information contained in the electronic files, provided that Bank in
good faith believes that the files were delivered by a Responsible Officer. If
Borrower delivers this information electronically, it shall also deliver to Bank
by U.S. Mail, reputable overnight courier service, hand delivery, facsimile or
.pdf file within five (5) Business Days of submission of the unsigned electronic
copy the certification of monthly financial statements, the intellectual
property report, the Borrowing Base Certificate and the Compliance Certificate,
each bearing the physical signature of the Responsible Officer.

6.3 Inventory; Returns. Borrower shall keep all Inventory in good and
merchantable condition, free from all material defects except for Inventory for
which adequate reserves have been made. Returns and allowances, if any, as
between Borrower and its account debtors shall be in the ordinary course of
Borrower’s business. Borrower shall promptly notify Bank of all returns and
recoveries and of all disputes and claims involving more than Two Hundred Fifty
Thousand Dollars ($250,000).

6.4 Taxes. Borrower shall make, and cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, including, but not limited
to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability,
and will execute and deliver to Bank, on demand, proof reasonably satisfactory
to Bank indicating that Borrower or a Subsidiary has made such payments or
deposits and any appropriate certificates attesting to the payment or deposit
thereof; provided that Borrower or a Subsidiary need not make any payment if the
amount or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by
Borrower.

6.5 Insurance.

(a) Borrower, at its expense, shall keep the Collateral insured against loss or
damage by fire, theft, explosion, sprinklers, and all other hazards and risks,
and in such amounts, as ordinarily insured against by other owners in similar
businesses conducted in the locations where Borrower’s business is conducted on
the date hereof. Borrower shall also maintain liability and other insurance in
amounts and of a type that are customary to businesses similar to Borrower’s.

(b) All such policies of insurance shall be in such form, with such companies,
and in such amounts as reasonably satisfactory to Bank. All policies of property
insurance shall contain a lender’s loss payable endorsement, in a form
satisfactory to Bank, showing Bank as loss payee, and all liability insurance
policies shall show Bank as an additional insured and specify that the insurer
must give at least twenty (20) days notice to Bank before canceling its policy
for any reason. Upon Bank’s request, Borrower shall deliver to Bank certified
copies of the policies of insurance and evidence of all premium payments. If no
Event of Default has occurred and is continuing, proceeds payable under any
casualty policy will, at Borrower’s option, be payable to Borrower to replace
the property subject to the claim, provided that any such replacement property
shall be deemed Collateral in which Bank has been granted a first priority
security interest subject to properly perfected Permitted Liens described in
subclause (c) of the defined term “Permitted Lien”. If an Event of Default has
occurred and is continuing, all proceeds payable under any such policy shall, at
Bank’s option, be payable to Bank to be applied on account of the Obligations.

 

 

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6.6 Accounts. Beginning thirty (30) days after the Closing Date and at all times
thereafter, Borrower shall maintain all of its primary depository, operating and
investment accounts with Bank (or with Bank Affiliates, subject to control
agreements in favor of Bank). Prior to maintaining any depository, operating
and/or investment account with a Person other than Bank, Borrower shall cause
such Person to to execute a control agreement in favor of Bank in form and
substance satisfactory to Bank.

6.7 Financial Covenants. Borrower shall, collectively with the other Borrowers
hereunder, at all times comply with the following covenants:

(a) Minimum Cash. Borrowers shall maintain a balance of unrestricted cash at
Bank of not less than the Minimum Cash Balance Amount. As used herein the
“Minimum Cash Balance Amount” means Fifteen Million Dollars ($15,000,000)
provided however that after the Qualifying Investment Event the “Minimum Cash
Balance Amount” means Ten Million Dollars ($10,000,000). As used herein the
“Qualifying Investment Event” means Borrowers have received, prior to
September 30, 2016, gross cash proceeds equal to at least One Hundred Fifty
Million Dollars ($150,000,000) from the sale or issuance of Borrowers’ equity
securities or from strategic or joint venture partners or from a combination of
such sources.

(b) Drug Development. Solithromycin shall remain in development or
commercialization by one or more of the Borrowers at all times.

6.8 Registration of Intellectual Property Rights.

(a) Borrower shall register or cause to be registered on an expedited basis (to
the extent not already registered) with the United States Patent and Trademark
Office or the United States Copyright Office, as the case may be, those
registrable intellectual property rights now owned or hereafter developed or
acquired by Borrower, to the extent that Borrower, in its reasonable business
judgment, deems it appropriate to so protect such intellectual property rights.

(b) Borrower shall, within thirty (30) days after the end of each quarter, give
Bank written notice of any applications or registrations of intellectual
property rights filed with the United States Patent and Trademark Office,
including the date of such filing and the registration or application numbers,
if any.

(c) Borrower shall, within thirty (30) days after the end of each quarter, give
Bank written notice of the filing of any applications or registrations with the
United States Copyright Office, including the title of such intellectual
property rights to be registered, as such title will appear on such applications
or registrations, and the date such applications or registrations will be filed.

(d) Borrower shall (i) protect, defend and maintain the validity and
enforceability of its Trademarks, Patents, and Copyrights, and trade secrets,
(ii) use commercially reasonable efforts to detect infringements of the
Trademarks, Patents and Copyrights and promptly advise Bank in writing of
material infringements detected and (iii) not allow any material Trademarks,
Patents or Copyrights to be abandoned, forfeited or dedicated to the public
without the written consent of Bank, which shall not be unreasonably withheld.

 

 

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6.9 Licenses. Prior to entering into or becoming bound by any material license
or agreement, Borrower shall provide written notice to Bank of the material
terms of such license or agreement with a description of its likely impact on
Borrower’s business or financial condition.

6.10 Landlord and Bailee Waivers. Borrower shall obtain (i) a landlord waiver in
form satisfactory to Bank, duly executed by the landlord at each location at
which Borrower leases real property that maintains Eligible Inventory, and
(ii) a bailee waiver or other similar agreement, in form satisfactory to Bank,
duly executed by any Person maintaining Borrower’s Eligible Inventory.

6.11 Formation or Acquisition of Subsidiaries. Notwithstanding and without
limiting the generality of the negative covenants contained in Sections 7.3 and
7.7 hereof, at the time that Borrower forms any direct or indirect Subsidiary or
acquires any direct or indirect Subsidiary after the Closing Date, Borrower
shall (a) cause such new Subsidiary to provide to Bank a secured guaranty or
joinder to this Agreement to cause such Subsidiary to become a guarantor or
co-borrower hereunder, together with such appropriate financing statements
and/or control agreements, all in form and substance satisfactory to Bank
(including being sufficient to grant Bank a first priority Lien (subject to
Permitted Liens) in and to the assets of such newly formed or acquired
Subsidiary), (b) provide to Bank appropriate certificates and powers and
financing statements, pledging all of the direct or beneficial ownership
interest in such new Subsidiary, in form and substance satisfactory to Bank, and
(c) provide to Bank all other documentation in form and substance satisfactory
to Bank, which in its reasonable judgment is appropriate with respect to the
execution and delivery of the applicable documentation referred to above. Any
document, agreement, or instrument executed or issued pursuant to this
Section 6.11 shall be a Loan Document.

6.12 Further Assurances. At any time and from time to time Borrower shall
execute and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.

 

  7. NEGATIVE COVENANTS.

Each Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until the outstanding Obligations (other than inchoate
indemnity Obligations) are paid in full or for so long as Bank may have any
commitment to make any Credit Extensions, no Borrower shall do any of the
following:

7.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of
(collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, or subject to Section 6.6, move
cash balances on deposit with Bank to accounts opened at another financial
institution, other than Permitted Transfers.

7.2 Change in Name, Location, Executive Office, or Executive Management; Change
in Business; Change in Fiscal Year; Change in Control. Change its name or the
Borrower State without twenty (20) days prior written notification to Bank, or
relocate its chief executive office without thirty (30) days prior written
notification to Bank; replace its chief executive officer or chief financial
officer without written notification to Bank within five (5) Business Days
thereof; engage in any business, or permit any of its Subsidiaries to engage in
any business, other than or reasonably related or incidental to the businesses
currently engaged in by Borrower; change its fiscal year end; have a Change in
Control.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations into another Borrower or
mergers or consolidations of a Subsidiary into another Subsidiary or into
Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the Equity Interests or property of another Person, or
enter into any agreement to do any of the same, except where (i) such
transactions do not in the aggregate exceed Two Hundred Fifty Thousand Dollars
($250,000) during any fiscal year, (ii) no Event of Default has occurred, is
continuing or would exist after giving effect to such transactions, (iii) such
transactions do not result in a Change in Control, and (iv) Borrower is the
surviving entity.

 

 

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7.4 Indebtedness. Create, incur, assume, guarantee or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness, or prepay any Indebtedness or take any actions which
impose on Borrower an obligation to prepay any Indebtedness, except Indebtedness
to Bank.

7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to any of
its property, or assign or otherwise convey any right to receive income,
including the sale of any Accounts, or permit any of its Subsidiaries so to do,
except for Permitted Liens, or covenant to any other Person that Borrower in the
future will refrain from creating, incurring, assuming or allowing any Lien with
respect to any of Borrower’s property.

7.6 Distributions. Pay any dividends or make any other distribution or payment
on account of or in redemption, retirement or purchase of any Equity Interests,
except that Borrower may (i) repurchase the Equity Interests of former
employees, directors or consultants pursuant to equity repurchase agreements as
long as an Event of Default does not exist prior to such repurchase or would not
exist after giving effect to such repurchase, and (ii) repurchase the Equity
Interests of former employees, directors or consultants pursuant to equity
repurchase agreements by the cancellation of indebtedness owed by such former
employees to Borrower regardless of whether an Event of Default exists.

7.7 Investments. Directly or indirectly acquire or own, or make any Investment
in or to any Person, or permit any of its Subsidiaries to do so, other than
Permitted Investments, or maintain or invest any of its investment property or
deposit accounts with a Person other than Bank or Bank’s Affiliates or permit
any Subsidiary to do so unless such Person has entered into a control agreement
with Bank, in form and substance satisfactory to Bank, or suffer or permit any
Subsidiary to be a party to, or be bound by, an agreement that restricts such
Subsidiary from paying dividends or otherwise distributing property to Borrower.
Further, Borrower shall not enter into any license or agreement with any
Prohibited Territory or with any Person organized under or doing business in a
Prohibited Territory.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower (other than
another Borrower) except for transactions that are in the ordinary course of
Borrower’s business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm’s length transaction with a
non-affiliated Person.

7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or
permit any of its Subsidiaries to make any such payment, except in compliance
with the terms of such Subordinated Debt and the terms of the subordination
agreement relating to such Subordinated Debt, or amend any provision of any
document evidencing such Subordinated Debt, except in compliance with the terms
of the subordination agreement relating to such Subordinated Debt, or amend any
provision affecting Bank’s rights contained in any documentation relating to the
Subordinated Debt without Bank’s prior written consent.

7.10 Inventory and Equipment. Store the Inventory with a bailee, warehouseman,
or similar third party unless the third party has been notified of Bank’s
security interest and Bank (a) has received an acknowledgment from the third
party that it is holding or will hold the Inventory for Bank’s benefit or (b) is
in possession of the warehouse receipt, where negotiable, covering such
Inventory. Except for Inventory sold in the ordinary course of business and
except for such other locations of which Borrower provides Bank prior written
notice, Borrower shall keep the Inventory and Equipment only at the location set
forth in Section 10, the current Schedule, and such other locations of which
Borrower gives Bank prior written notice.

7.11 No Investment Company; Margin Regulation. Become or be controlled by an
“investment company,” within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Credit Extension for such
purpose.

 

 

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  8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an Event of Default by
any Borrower under this Agreement:

8.1 Payment Default. If a Borrower fails to pay any of the Obligations when due;

8.2 Covenant Default.

(a) If a Borrower fails to perform any obligation under Article 6 (other than
Sections 6.3, 6.4, 6.8, 6.9, 6.10, 6.11 and 6.12) or violates any of the
covenants contained in Article 7 of this Agreement; or

(b) If a Borrower fails or neglects to perform any obligation under Sections
6.3, 6.4, 6.8, 6.9, 6.10, 6.11 and 6.12 or fails to perform or observe any other
material term, provision, condition, covenant contained in this Agreement, in
any of the Loan Documents, or in any other present or future agreement between a
Borrower and Bank and as to any default under such other term, provision,
condition or covenant that can be cured, has failed to cure such default within
fifteen (15) days after a Borrower receives notice thereof or any officer of a
Borrower becomes aware thereof; provided, however, that if the default cannot by
its nature be cured within the fifteen (15) day period or cannot after diligent
attempts by a Borrower be cured within such fifteen (15) day period, and such
default is likely to be cured within a reasonable time, then such Borrower shall
have an additional reasonable period (which shall not in any case exceed thirty
(30) days) to attempt to cure such default, so long as such Borrower continues
to diligently attempt to cure such default, and within such reasonable time
period the failure to have cured such default shall not be deemed an Event of
Default but no Credit Extensions will be made;

8.3 Material Adverse Change. If there occurs any circumstance or circumstances
that could reasonably be expected to have a Material Adverse Effect.

8.4 Attachment. If any material portion of a Borrower’s and/or its Subsidiaries
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any trustee, receiver or person
acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within five
(5) days, or if a Borrower and/or its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs, or if a judgment or other claim becomes a
lien or encumbrance upon any material portion of a Borrower’s and/or its
Subsidiaries assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of a Borrower’s and/or its Subsidiaries assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within five (5) days after a Borrower and/or its Subsidiaries receives notice
thereof, provided that none of the foregoing shall constitute an Event of
Default where such action or event is stayed or an adequate bond has been posted
pending a good faith contest by a Borrower and/or its Subsidiaries (provided
that no Credit Extensions will be made during such cure period);

8.5 Insolvency. If a Borrower and/or its Subsidiaries becomes insolvent, or if
an Insolvency Proceeding is commenced by a Borrower and/or its Subsidiaries, or
if an Insolvency Proceeding is commenced against a Borrower and/or its
Subsidiaries and is not dismissed or stayed within forty five (45) days
(provided that no Credit Extensions will be made prior to the dismissal of such
Insolvency Proceeding);

8.6 Other Agreements. If there is a default or other failure to perform in any
agreement to which a Borrower and/or its Subsidiaries is a party with a third
party or parties resulting in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000) or that would reasonably
be expected to have a Material Adverse Effect; provided, however, that the Event
of Default under this Section 8.6 caused by the occurrence of a breach or other
failure to perform under such other agreement shall be cured or waived for
purposes of this Agreement upon Bank receiving a copy of a written waiver of
default or notice of cure executed by the party asserting such breach or default
under such other agreement, if at the time of such cure or waiver under such
other agreement (x) Bank has not declared an Event of Default under this
Agreement and/or exercised any rights with respect thereto; (y) any such cure or
waiver does not result in an Event of Default under any provision of this
Agreement (other than this Section 8.6) or any Loan Document; and (z) in
connection with any such cure or waiver under such other agreement, the terms of
any agreement with such third party are not modified or amended in any manner
which could in the good faith business judgment of Bank be materially less
advantageous to Borrower;

 

 

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8.7 Subordinated Debt. If a Borrower and/or its Subsidiaries makes any payment
on account of Subordinated Debt, except to the extent the payment is allowed
under any subordination agreement entered into with Bank;

8.8 Judgments; Settlements. If one or more (a) judgments, orders, decrees or
arbitration awards requiring a Borrower and/or its Subsidiaries to pay an
aggregate amount of Two Hundred Fifty Thousand Dollars ($250,000) or greater
shall be rendered against a Borrower and/or its Subsidiaries and the same shall
not have been vacated or stayed within fifteen (15) days thereafter (provided
that no Credit Extensions will be made prior to such matter being vacated or
stayed); or (b) settlements is agreed upon by a Borrower and/or its Subsidiaries
for the payment by a Borrower and/or its Subsidiaries of an aggregate amount of
Two Hundred Fifty Thousand Dollars ($250,000) or greater or that could
reasonably be expected to have a Material Adverse Effect.

8.9 Solithromycin. If at any time Solithromycin fails to remain in development
or commercialization by one or more of the Borrowers.

8.10 Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or any
other Loan Document.

 

  9. BANK’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by each Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable (provided that
upon the occurrence of an Event of Default described in Section 8.5
(insolvency), all Obligations shall become immediately due and payable without
any action by Bank);

(b) Cease advancing money or extending credit to or for the benefit of a
Borrower under this Agreement or under any other agreement between a Borrower
and Bank;

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

(d) Make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to assemble the Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Each Borrower authorizes Bank to enter
the premises where the Collateral is located, to take and maintain possession of
the Collateral, or any part of it, and to pay, purchase, contest, or compromise
any encumbrance, charge, or lien which in Bank’s determination appears to be
prior or superior to its security interest and to pay all expenses incurred in
connection therewith. With respect to any of a Borrower’s owned premises, each
Borrower hereby grants Bank a license to enter into possession of such premises
and to occupy the same, without charge, in order to exercise any of Bank’s
rights or remedies provided herein, at law, in equity, or otherwise;

(e) Set off and apply to the Obligations any and all (i) balances and deposits
of a Borrower held by Bank, and (ii) indebtedness at any time owing to or for
the credit or the account of a Borrower held by Bank;

 

 

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(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Collateral.
Bank is hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, a Borrower’s labels,
patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks, service marks, and advertising matter, or any property of a similar
nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with Bank’s
exercise of its rights under this Section 9.1, a Borrower’s rights under all
licenses and all franchise agreements shall inure to Bank’s benefit;

(g) Sell the Collateral at either a public or private sale, or both, by way of
one or more contracts or transactions, for cash or on terms, in such manner and
at such places (including a Borrower’s premises) as Bank determines is
commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Bank deems appropriate. Bank may sell the Collateral without
giving any warranties as to the Collateral. Bank may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. If Bank
sells any of the Collateral upon credit, Borrowers will be credited only with
payments actually made by the purchaser, received by Bank, and applied to the
indebtedness of the purchaser. If the purchaser fails to pay for the Collateral,
Bank may resell the Collateral and Borrowers shall be credited with the proceeds
of the sale;

(h) Bank may credit bid and purchase at any public sale;

(i) Apply for the appointment of a receiver, trustee, liquidator or conservator
of the Collateral, without notice and without regard to the adequacy of the
security for the Obligations and without regard to the solvency of a Borrower,
any guarantor or any other Person liable for any of the Obligations; and

(j) Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrowers.

Bank may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

9.2 Power of Attorney. Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Bank
(and any of Bank’s designated officers, or employees) as Borrower’s true and
lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank’s security interest in the Accounts; (b) endorse
Borrower’s name on any checks or other forms of payment or security that may
come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower’s policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; and
(g) file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral without the
signature of Borrower where permitted by law; provided Bank may exercise such
power of attorney to sign the name of Borrower on any of the documents described
in clause (g) above, regardless of whether an Event of Default has occurred. The
appointment of Bank as Borrower’s attorney in fact, and each and every one of
Bank’s rights and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully repaid and performed and Bank’s
obligation to provide advances hereunder is terminated.

9.3 Accounts Collection. At any time after the occurrence and during the
continuation of an Event of Default, Bank may notify any Person owing funds to a
Borrower of Bank’s security interest in such funds and verify the amount of such
Account. Borrowers shall collect all amounts owing to Borrowers for Bank,
receive in trust all payments as Bank’s trustee, and immediately deliver such
payments to Bank in their original form as received from the account debtor,
with proper endorsements for deposit.

9.4 Bank Expenses. If a Borrower fails to pay any amounts or furnish any
required proof of payment due to third persons or entities, as required under
the terms of this Agreement, then Bank may do any or all of the following after
reasonable notice to Borrowers: (a) make payment of the same or any part
thereof; (b) set up

 

 

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such reserves under the Revolving Line as Bank deems necessary to protect Bank
from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in Section 6.5 of this Agreement, and take any
action with respect to such policies as Bank deems prudent. Any amounts so paid
or deposited by Bank shall constitute Bank Expenses, shall be due and payable
upon demand by Bank, and if not promptly paid shall bear interest at the then
applicable rate hereinabove provided, and shall be secured by the Collateral.
Any payments made by Bank shall not constitute an agreement by Bank to make
similar payments in the future or a waiver by Bank of any Event of Default under
this Agreement.

9.5 Bank’s Liability for Collateral. Bank has no obligation to clean up or
otherwise prepare the Collateral for sale. All risk of loss, damage or
destruction of the Collateral shall be borne by Borrower.

9.6 No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy
the Obligations by collecting them from any other Person liable for them and
Bank may release, modify or waive any collateral provided by any other Person to
secure any of the Obligations, all without affecting Bank’s rights against
Borrower. Borrower waives any right it may have to require Bank to pursue any
other Person for any of the Obligations.

9.7 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or remedy shall be
deemed an election, and no waiver by Bank of any Event of Default on Borrower’s
part shall be deemed a continuing waiver. No delay by Bank shall constitute a
waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank and then shall be
effective only in the specific instance and for the specific purpose for which
it was given. Each Borrower expressly agrees that this Section 9.7 may not be
waived or modified by Bank by course of performance, conduct, estoppel or
otherwise.

9.8 Demand; Protest. Except as otherwise provided in this Agreement, each
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment and any other notices relating to the
Obligations.

 

  10. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
facsimile to Borrowers or to Bank, as the case may be, at its addresses set
forth below:

 

If to Borrowers: CEMPRA, INC. CEMPRA PHARMACEUTICALS, INC. CEM-102
PHARMACEUTICALS, INC. 6320 Quadrangle Drive, Suite 360 Chapel Hill, NC 27517
Attn: Mark Hahn, Chief Financial Officer FAX: (        )                     
Email: mhahn@cempra.com If to Bank: Comerica Bank M/C 7578 39200 Six Mile Rd.
Livonia, MI 48152 Attn: National Documentation Services Email:

 

 

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with a copy to: Comerica Bank 250 Lytton Avenue, 3rd Floor Palo Alto, CA 94301
Attn: Angela Ong FAX: (650) 462-6049 Email:

The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

 

  11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Each Borrower and Bank hereby submits to the exclusive
jurisdiction of the State and Federal courts located in the State of California.
THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL
ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT
PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO
CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE
EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES.

 

  12. REFERENCE PROVISION.

12.1 In the event the Jury Trial Waiver set forth above is not enforceable, the
parties elect to proceed under this Judicial Reference Provision.

12.2 With the exception of the items specified in Section 12.3, below, any
controversy, dispute or claim (each, a “Claim”) between the parties arising out
of or relating to this Agreement or any other document, instrument or agreement
between the undersigned parties (collectively in this Section, the “Comerica
Documents”), will be resolved by a reference proceeding in California in
accordance with the provisions of Sections 638 et seq. of the California Code of
Civil Procedure (“CCP”), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether the Claim is
subject to the reference proceeding. Except as otherwise provided in the
Comerica Documents, venue for the reference proceeding will be in the Superior
Court in the County where the real property involved in the action, if any, is
located or in a County where venue is otherwise appropriate under applicable law
(the “Court”).

12.3 The matters that shall not be subject to a reference are the following:
(i) foreclosure of any security interests in real or personal property,
(ii) exercise of selfhelp remedies (including, without limitation, set-off),
(iii) appointment of a receiver and (iv) temporary, provisional or ancillary
remedies (including, without limitation, writs of attachment, writs of
possession, temporary restraining orders or preliminary injunctions). This
Agreement does not limit the right of any party to exercise or oppose any of the
rights and remedies described in clauses (i) and (ii) or to seek or oppose from
a court of competent jurisdiction any of the items described in clauses
(iii) and (iv). The exercise of, or opposition to, any of those items does not
waive the right of any party to a reference pursuant to this Agreement.

12.4 The referee shall be a retired Judge or Justice selected by mutual written
agreement of the parties. If the parties do not agree within ten (10) days of a
written request to do so by any party, then, upon request of any party, the
referee shall be selected by the Presiding Judge of the Court (or his or her
representative). A request for appointment of a referee may be heard on an ex
parte or expedited basis, and the parties agree that irreparable harm would
result if ex parte relief is not granted.

12.5 The parties agree that time is of the essence in conducting the reference
proceedings. Accordingly, the referee shall be requested, subject to change in
the time periods specified herein for good cause

 

 

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shown, to (i) set the matter for a status and trial-setting conference within
fifteen (15) days after the date of selection of the referee, (ii) if
practicable, try all issues of law or fact within one hundred twenty (120) days
after the date of the conference and (iii) report a statement of decision within
twenty (20) days after the matter has been submitted for decision.

12.6 The referee will have power to expand or limit the amount and duration of
discovery. The referee may set or extend discovery deadlines or cutoffs for good
cause, including a party’s failure to provide requested discovery for any reason
whatsoever. Unless otherwise ordered based upon good cause shown, no party shall
be entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery shall
be responded to within fifteen (15) days after service. All disputes relating to
discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding.

12.7 Except as expressly set forth in this Agreement, the referee shall
determine the manner in which the reference proceeding is conducted including
the time and place of hearings, the order of presentation of evidence, and all
other questions that arise with respect to the course of the reference
proceeding. All proceedings and hearings conducted before the referee, except
for trial, shall be conducted without a court reporter, except that when any
party so requests, a court reporter will be used at any hearing conducted before
the referee, and the referee will be provided a courtesy copy of the transcript.
The party making such a request shall have the obligation to arrange for and pay
the court reporter. Subject to the referee’s power to award costs to the
prevailing party, the parties will equally share the cost of the referee and the
court reporter at trial.

12.8 The referee shall be required to determine all issues in accordance with
existing case law and the statutory laws of the State of California. The rules
of evidence applicable to proceedings at law in the State of California will be
applicable to the reference proceeding. The referee shall be empowered to enter
equitable as well as legal relief, enter equitable orders that will be binding
on the parties and rule on any motion which would be authorized in a court
proceeding, including without limitation motions for summary judgment or summary
adjudication. The referee shall issue a decision at the close of the reference
proceeding which disposes of all claims of the parties that are the subject of
the reference. Pursuant to CCP § 644, such decision shall be entered by the
Court as a judgment or an order in the same manner as if the action had been
tried by the Court and any such decision will be final, binding and conclusive.
The parties reserve the right to appeal from the final judgment or order or from
any appealable decision or order entered by the referee. The parties reserve the
right to findings of fact, conclusions of laws, a written statement of decision,
and the right to move for a new trial or a different judgment, which new trial,
if granted, is also to be a reference proceeding under this provision.

12.9 If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties
that would otherwise be determined by reference procedure will be resolved and
determined by arbitration. The arbitration will be conducted by a retired judge
or Justice, in accordance with the California Arbitration Act §1280 through
§1294.2 of the CCP as amended from time to time. The limitations with respect to
discovery set forth above shall apply to any such arbitration proceeding.

12.10 THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND
CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND
NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH
COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND
FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL
APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF
OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE OTHER COMERICA DOCUMENTS.

 

  13. GENERAL PROVISIONS.

13.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties and
shall bind all persons who become bound as a debtor to this Agreement; provided,
however, that neither this Agreement nor any rights hereunder may be assigned by
any Borrower without Bank’s prior written consent, which consent may be granted
or withheld in Bank’s sole discretion. Bank shall have the right without the
consent of or notice to any Borrower to sell, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits hereunder.

 

 

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13.2 Indemnification. BORROWERS SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS BANK
AND ITS OFFICERS, EMPLOYEES, AND AGENTS AGAINST: (A) ALL OBLIGATIONS, DEMANDS,
CLAIMS, AND LIABILITIES CLAIMED OR ASSERTED BY ANY OTHER PARTY IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND/OR THE LOAN DOCUMENTS;
AND (B) ALL LOSSES OR BANK EXPENSES IN ANY WAY SUFFERED, INCURRED, OR PAID BY
BANK, ITS OFFICERS, EMPLOYEES AND AGENTS AS A RESULT OF OR IN ANY WAY ARISING
OUT OF, FOLLOWING, OR CONSEQUENTIAL TO TRANSACTIONS BETWEEN BANK AND BORROWER
WHETHER UNDER THIS AGREEMENT, OR OTHERWISE (INCLUDING WITHOUT LIMITATION
REASONABLE ATTORNEYS FEES AND EXPENSES), EXCEPT FOR LOSSES CAUSED BY BANK’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

13.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

13.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

13.5 Amendments in Writing, Integration. All amendments to or terminations of
this Agreement or the other Loan Documents must be in writing signed by the
parties. All prior agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the subject matter of
this Agreement and the other Loan Documents, if any, are merged into this
Agreement and the Loan Documents.

13.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.

13.7 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
(other than inchoate indemnification Obligations) remain outstanding or Bank has
any obligation to make any Credit Extension to Borrower. The obligations of
Borrowers to indemnify Bank with respect to the expenses, damages, losses, costs
and liabilities described in Section 13.2 shall survive until all applicable
statute of limitations periods with respect to actions that may be brought
against Bank have run.

13.8 Confidentiality. In handling any confidential information, Bank and all
employees and agents of Bank shall exercise the same degree of care that Bank
exercises with respect to its own proprietary information of the same types to
maintain the confidentiality of any non-public information thereby received or
received pursuant to this Agreement except that disclosure of such information
may be made (i) to the parent, subsidiaries, or Affiliates and service providers
of Bank on a need-to-know basis in connection with such party’s responsibilities
with respect to this Agreement and the other Loan Documents, (ii) to prospective
transferees, participants, or purchasers of any interest in the Obligations,
(iii) as required by law, regulations, rule or order, subpoena, judicial order
or similar order, (iv) as may be required in connection with the examination,
audit or similar investigation of Bank, (v) to Bank’s accountants, auditors and
regulators, and (vi) as Bank may determine in connection with the enforcement of
any remedies hereunder hereunder; provided that with respect to disclosures
under subparagraphs (i), (ii) and (v), only if the recipient of such non-public
information is informed of and agrees to be bound by the confidentiality
provisions of this Section 13.8 or is otherwise subject to confidentiality
restrictions that reasonably protect against the disclosure of non-public
information. Confidential information hereunder shall not include information
that either: (a) is in the public domain or in the knowledge or possession of
Bank when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a
third party, provided Bank does not have actual knowledge that such third party
is prohibited from disclosing such information.

 

 

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In the event that Bank is required or receives a demand to disclose under
subparagraphs (iii) or (iv) of the preceding paragraph, it will use reasonable
efforts to promptly notify the Borrowers thereof, to the extent permitted under
applicable law, in order to enable the Borrowers to seek a protective order or
other appropriate remedy. In the event that no such protective order or other
remedy is obtained, Bank agrees that it shall furnish only that portion of the
confidential information that it is advised by counsel is required by law. Bank
shall comply with the restrictions imposed by the United States securities laws
on the purchase or sale of securities by any person who has received material,
non-public information from the issuer of such securities.

 

  14. CO-BORROWER PROVISIONS.

14.1 Primary Obligation. This Agreement is a primary and original obligation of
each Borrower and shall remain in effect notwithstanding future changes in
conditions, including any change of law or any invalidity or irregularity in the
creation or acquisition of any Obligations or in the execution or delivery of
any agreement between Bank and any Borrower. Each Borrower shall be liable for
existing and future Obligations as fully as if all of all Credit Extensions were
advanced to such Borrower. Bank may rely on any certificate or representation
made by any Borrower as made on behalf of, and binding on, all Borrowers,
including without limitation Loan Advance/Paydown Request Forms, Borrowing Base
Certificates and Compliance Certificates. Furthermore, the successful operation
of each Borrower is dependent on the continued successful performance of the
integrated group of Borrowers, such that each Borrower will benefit from any
Credit Extensions Bank makes to another Borrower.

14.2 Enforcement of Rights. Borrowers are jointly and severally liable for the
Obligations and Bank may proceed against one or more of the Borrowers to enforce
the Obligations without waiving its right to proceed against any of the other
Borrowers.

14.3 Borrowers as Agents. Each Borrower appoints each of the other Borrowers as
its agent with all necessary power and authority to give and receive notices,
certificates or demands for and on behalf of all Borrowers, to act as disbursing
agent for receipt of any Credit Extensions on behalf of each Borrower and to
apply to Bank on behalf of each Borrower for Credit Extensions, any waivers and
any consents. This authorization cannot be revoked, and Bank need not inquire as
to each Borrower’s authority to act for or on behalf of any other Borrower.

14.4 Subrogation and Similar Rights. Notwithstanding any other provision of this
Agreement or any other Loan Document, each Borrower irrevocably waives all
rights that it may have at law or in equity (including, without limitation, any
law subrogating the Borrower to the rights of Bank under the Loan Documents) 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 the Borrower with
respect to the Obligations in connection with the Loan Documents 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 the Borrower
with respect to the Obligations in connection with the Loan Documents or
otherwise. Any agreement providing for indemnification, reimbursement or any
other arrangement prohibited under this Section 14.4 shall be null and void. If
any payment is made to a Borrower in contravention of this Section 14.4, such
Borrower shall hold such payment in trust for Bank and such payment shall be
promptly delivered to Bank for application to the Obligations, whether matured
or unmatured.

14.5 Waivers of Notice. Except as otherwise provided in this Agreement, each
Borrower waives notice of acceptance hereof; notice of the existence, creation
or acquisition of any of the Obligations; notice of an Event of Default; notice
of the amount of the Obligations outstanding at any time; notice of intent to
accelerate; notice of acceleration; notice of any adverse change in the
financial condition of any other Borrower or of any other fact that might
increase the Borrower’s risk; presentment for payment; demand; protest and
notice thereof as to any instrument; default; and all other notices and demands
to which the Borrower would otherwise be entitled. Each Borrower waives any
defense arising from any defense of any other Borrower, or by reason of the
cessation from any cause whatsoever of the liability of any other Borrower.
Bank’s failure at any time to require strict performance by any Borrower of any
provision of the Loan Documents shall not waive, alter or diminish any right of
Bank thereafter to demand strict compliance and performance therewith. Nothing
contained herein shall prevent Bank from foreclosing on the Lien of any deed of
trust, mortgage or other security instrument, or exercising any rights available
thereunder, and the exercise of any such rights shall not constitute a legal or
equitable discharge of any Borrower. Each Borrower also waives any defense
arising from any act or omission of Bank that changes the scope of the
Borrower’s risks hereunder.

 

 

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14.6 Subrogation Defenses. Each Borrower hereby waives any defense based on
impairment or destruction of its subrogation or other rights against any other
Borrower and waives all benefits which might otherwise be available to it under
California Civil Code Sections 2799, 2808, 2809, 2810, 2815, 2819, 2820, 2821,
2822, 2838, 2839, 2845, 2847, 2848, 2849, 2850, 2899 and 3433 and California
Code of Civil Procedure Sections 580a, 580b, 580d and 726, as those statutory
provisions are now in effect and hereafter amended, and under any other similar
statutes now and hereafter in effect.

14.7 Right to Settle, Release.

(a) The liability of Borrowers hereunder shall not be diminished by (i) any
agreement, understanding or representation that any of the Obligations is or was
to be guaranteed by another Person or secured by other property, or (ii) any
release or unenforceability, whether partial or total, of rights, if any, which
Bank may now or hereafter have against any other Person, including another
Borrower, or property with respect to any of the Obligations.

(b) Without affecting the liability of any Borrower hereunder, Bank may
(i) compromise, settle, renew, extend the time for payment, change the manner or
terms of payment, discharge the performance of, decline to enforce, or release
all or any of the Obligations with respect to a Borrower, (ii) grant other
indulgences to a Borrower in respect of the Obligations, (iii) modify in any
manner any documents relating to the Obligations with respect to a Borrower,
(iv) release, surrender or exchange any deposits or other property securing the
Obligations, whether pledged by a Borrower or any other Person, or
(v) compromise, settle, renew, or extend the time for payment, discharge the
performance of, decline to enforce, or release all or any obligations of any
guarantor, endorser or other Person who is now or may hereafter be liable with
respect to any of the Obligations.

14.8 Subordination. All indebtedness of a Borrower now or hereafter arising held
by another Borrower is subordinated to the Obligations and the Borrower holding
the indebtedness shall take all actions reasonably requested by Lender to
effect, to enforce and to give notice of such subordination.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES FOLLOW]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

CEMPRA, INC. By:

 

Name:

 

Title:

 

CEMPRA PHARMACEUTICALS, INC. By:

 

Name:

 

Title:

 

CEM-102 PHARMACEUTICALS, INC. By:

 

Name:

 

Title:

 

COMERICA BANK By:

 

Name:

 

Title:

 

 

 

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EXHIBIT A

DEFINITIONS

“Accounts” mean all presently existing and hereafter arising accounts, contract
rights, payment intangibles and all other forms of obligations owing to
Borrowers arising out of the sale or lease of goods (including, without
limitation, the licensing of software and other technology) or the rendering of
services by Borrowers and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by
Borrowers and each Borrower’s Books relating to any of the foregoing.

“Advance” or “Advances” mean a cash advance or cash advances under the Revolving
Line.

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners.

“Availability Amount” is (a) the lesser of (i) the Revolving Line or (ii) the
amount available under the Borrowing Base minus (b) the outstanding principal
balance of any Advances.

“Bank Expenses” mean all reasonable out-of-pocket costs or expenses of Bank, or
any other holder or owner of the Loan Documents (including, without limit, court
costs, legal expenses and reasonable attorneys’ fees and expenses, whether
generated in-house or by outside counsel, whether or not suit is instituted,
and, if suit is instituted, whether at trial court level, appellate court level,
in a bankruptcy, probate or administrative proceeding or otherwise) incurred in
connection with the preparation, negotiation, execution, delivery, amendment,
administration, and performance, or incurred in collecting, attempting to
collect under the Loan Documents or the Obligations, or incurred in defending
the Loan Documents, or incurred in any other matter or proceeding relating to
the Loan Documents or the Obligations; and reasonable Collateral audit fees not
to exceed Fifteen Thousand Dollars ($15,000) per audit conducted pursuant to
Section 6.2 of this Agreement.

“Board of Directors” means the Board of Directors of a Borrower.

“Borrower State” means Delaware, the state under whose laws each Borrower is
organized.

“Borrower’s Books” mean all of a Borrower’s books and records including:
ledgers; records concerning Borrower’s assets or liabilities, the Collateral,
business operations or financial condition; and all computer programs, or tape
files, and the equipment, containing such information.

“Borrowing Base” means, as of any date of determination, an amount equal to
(a) eighty percent (80%) of Eligible Accounts, plus (b) seventy five percent
(75%) of the value of Borrowers’ Eligible Inventory, which shall not exceed
fifty percent (50%) of the Revolving Line; in each case as determined by Bank
with reference to the most recent Borrowing Base Certificate delivered by
Borrowers.

“Borrowing Base Certificate” means the certificate substantially in the form
attached hereto as Exhibit D.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of California are authorized or required to close.

“Change in Control” shall mean any transaction or series of related transactions
in which any “person” or “group” (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of a sufficient number of shares of all classes of Equity
Interests then outstanding of any Borrower ordinarily entitled to vote in the
election of directors, empowering such “person” or “group” to elect a majority
of the Board of Directors of such Borrower, who did not have such power before
such transaction.

“Closing Date” means the date of this Agreement.

 

 

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“Code” means the California Uniform Commercial Code as amended or supplemented
from time to time.

“Collateral” means the property described on Exhibit B attached hereto and all
Negotiable Collateral to the extent not described on Exhibit B, except to the
extent (i) any such property is nonassignable 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, Sections 9406 and 9408 of the Code), (ii) the granting of a security
interest in such property 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, or (iii) any such property
constitutes the Equity Interests of a controlled foreign corporation (as defined
in the IRC), in excess of sixty-five percent (65%) of the voting power of all
classes of Equity Interests of such controlled foreign corporation entitled to
vote.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued or provided for the account
of that Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest rate
collar agreement, or other agreement or arrangement designed to protect such
Person against fluctuation in interest rates, currency exchange rates or
commodity prices; provided, however, that the term “Contingent Obligation” shall
not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by Bank in good faith; provided, however, that such amount shall not
in any event exceed the maximum amount of the obligations under the guarantee or
other support arrangement.

“Copyrights” mean any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held.

“Credit Extension” means each Advance, the Growth Capital Advance or any other
extension of credit by Bank to or for the benefit of a Borrower hereunder.

“Dollars” mean lawful money of the United States.

“Eligible Accounts” mean those billed trade Accounts that arise in the ordinary
course of a Borrower’s business that comply with all of a Borrower’s
representations and warranties to Bank set forth in Section 5.3; provided, that
Bank may change the standards of eligibility by giving a Borrower thirty
(30) days prior written notice. Unless otherwise agreed to by Bank, Eligible
Accounts shall not include the following:

 

(a) Accounts that the account debtor has failed to pay in full within ninety
(90) days of invoice date;

 

(b) Credit balances over ninety (90) days;

 

(c) Accounts with respect to an account debtor, twenty-five percent (25%) of
whose Accounts the account debtor has failed to pay within ninety (90) days of
invoice date;

 

(d) Accounts with respect to an account debtor, including Subsidiaries and
Affiliates, whose total obligations to Borrowers exceed twenty-five percent
(25%) of all Accounts, to the extent such obligations exceed the aforementioned
percentage, except as approved in writing by Bank;

 

(e) Accounts with respect to which the account debtor does not have its
principal place of business in the United States, except for Eligible Foreign
Accounts;

 

 

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(f) Accounts with respect to which the account debtor is the United States or
any department, agency, or instrumentality of the United States;

 

(g) Accounts with respect to which a Borrower is liable to the account debtor
for goods sold or services rendered by the account debtor to such Borrower, but
only to the extent of any amounts owing to the account debtor against amounts
owed to such Borrower;

 

(h) Accounts with respect to which goods are placed on consignment, guaranteed
sale, sale or return, sale on approval, bill and hold, demo or promotional, or
other terms by reason of which the payment by the account debtor may be
conditional;

 

(i) Accounts with respect to which the account debtor is an individual, officer,
employee, agent or Affiliate of a Borrower;

 

(j) Accounts that are billed in advance, payable on delivery, have not yet been
billed to the account debtor, progress billings, or that relate to deposits
(such as good faith deposits) or other property of the account debtor held by a
Borrower for the performance of services or delivery of goods which such
Borrower has not yet performed or delivered;

 

(k) Accounts with respect to which the account debtor disputes liability or
makes any claim with respect thereto as to which Bank believes, in its sole
discretion, that there may be a basis for dispute (but only to the extent of the
amount subject to such dispute or claim), or is subject to any Insolvency
Proceeding, or becomes insolvent, or goes out of business;

 

(l) Accounts the collection of which Bank reasonably determines after inquiry
and consultation with a Borrower to be doubtful; and

 

(m) Retentions and hold-backs.

“Eligible Foreign Accounts” mean Accounts with respect to which the account
debtor does not have its principal place of business in the United States and is
not located in an OFAC sanctioned country and that are (i) supported by one or
more letters of credit in an amount and of a tenor, and issued, advised and/or
confirmed by a financial institution, acceptable to Bank, (ii) insured by the
Export Import Bank of the United States, (iii) generated by an account debtor
with its principal place of business in Canada, provided that the Bank has
perfected its security interest in the appropriate Canadian province, or
(iv) approved by Bank on a case-by-case basis. All Eligible Foreign Accounts
must be calculated in U.S. Dollars.

“Eligible Inventory” means sellable finished goods inventory of Borrowers
consisting of 200 count bottles and 5-day S-Pack (or equivalent) and IV vials or
bags held at Borrower-operated facilities with signed landlord waivers in form
satisfactory to Bank in place, or at third-party logistics facilities with
signed bailee waivers in place in form satisfactory to Bank provided that for
the avoidance of doubt Eligible Inventory shall not, in any event, include the
following: (i) in process inventory, (ii) in transit inventory, (iii) slow
moving or obsolete inventory, (iv) custom inventory, (v) inventory on
consignment, (vi) inventory located outside the United States, and
(vii) packaging and shipping materials.

“Environmental Laws” mean all laws, rules, regulations, orders and the like
issued by any federal state, local foreign or other governmental or
quasi-governmental authority or any agency pertaining to the environment or to
any hazardous materials or wastes, toxic substances, flammable, explosive or
radioactive materials, asbestos or other similar materials.

“Equipment” means all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which a Borrower has any interest.

“Equity Interests” means, with respect to any Person, the capital stock,
partnership or limited liability company interest, or other equity securities or
equity ownership interests of such Person.

 

 

Comerica Bank - Loan and Security Agreement                     July 10, 2015

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“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

“Event of Default” has the meaning assigned in Article 8.

“FDA Approval” means Bank has received evidence satisfactory to Bank that
Borrower has received approval by the U.S. Food and Drug Administration agency
of the U.S. Department of Health and Human Services (the “FDA”) of the New Drug
Application filed for solithromycin.

“GAAP” means generally accepted accounting principles, consistently applied, as
in effect from time to time in the United States.

“Growth Capital Advance” has the meaning assigned in Section 2.1(c).

“Growth Capital Line” means a Credit Extension of up to Twenty Million Dollars
($20,000,000).

“Growth Capital Maturity Date” means April 1, 2019.

“Hercules” means Hercules Capital, together with any and all Affiliates,
successors and/or assigns, including without limitation HERCULES TECHNOLOGY
GROWTH CAPITAL, INC. and HERCULES CAPITAL FUNDING TRUST 2012-1.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations, if any.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

Intellectual Property” means any Copyrights, Patents, Trademarks, servicemarks
and applications therefor and reissuances, extensions or renewals thereof,
license agreements, trade secrets, inventions, clinical and non-clinical data,
know-how, mask works, trade names, rights of use of any domain names or any
similar rights, now owned or hereafter acquired, and goodwill associated with
any of the foregoing or any claims for damages by way of any past, present and
future infringement of any of the foregoing.

“Inventory” means all present and future inventory in which a Borrower has any
interest.

“Investment” means any beneficial ownership (including Equity Interests) of any
Person, or any loan, advance or capital contribution to any Person.

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

“Loan Documents” mean, collectively, this Agreement, the Pricing Addendum, any
guaranty, any note or notes executed by a Borrower, and any other document,
instrument or agreement entered into in connection with this Agreement, all as
amended or extended from time to time.

“Material Adverse Effect” means (i) a material adverse change in the Borrowers’
prospects, business or financial condition, taken as a whole, or (ii) a material
impairment in the prospect of repayment of all or any portion of the Obligations
or in otherwise performing the Borrowers’ obligations under the Loan Documents,
or (iii) a material impairment in the perfection, value or priority of Bank’s
security interests in the Collateral.

 

 

Comerica Bank - Loan and Security Agreement                     July 10, 2015

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“Negotiable Collateral” means all of a Borrower’s present and future letters of
credit of which it is a beneficiary, drafts, instruments (including promissory
notes), securities, documents of title, and chattel paper, and a Borrower’s
Books relating to any of the foregoing.

“Obligations” mean all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by a Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from a Borrower to others that Bank may have obtained by assignment or
otherwise.

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

“Periodic Payments” mean all installments or similar recurring payments that a
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between a Borrower and Bank.

“Permitted Indebtedness” mean:

 

(a) Indebtedness of a Borrower in favor of Bank arising under this Agreement or
any other Loan Document;

 

(b) Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c) Indebtedness not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate outstanding at any time secured by a lien described in clause
(c) of the defined term “Permitted Liens,” provided such Indebtedness does not
exceed the lesser of the cost or fair market value of the equipment financed
with such Indebtedness;

 

(d) Subordinated Debt;

 

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

 

(f) Indebtedness that constitutes a Permitted Investment;

 

(g) reimbursement obligations in an amount not to exceed Two Hundred Fifty
Thousand Dollars ($250,000) at any time outstanding in connection with letters
of credit issued on behalf of a Borrower that are secured by cash or cash
equivalents in an amount not to exceed Two Hundred Fifty Thousand Dollars
($250,000) at any time;

 

(h) other Indebtedness in an amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000) at any time outstanding; and

 

(i) Extensions, refinancings and renewals of any items of Permitted
Indebtedness, provided that the principal amount is not increased or the terms
modified to impose more burdensome terms upon such Borrower or its Subsidiary,
as the case may be.

“Permitted Investments” mean:

 

(a) Investments existing on the Closing Date disclosed in the Schedule;

 

(b) (i) Marketable direct obligations issued or unconditionally guaranteed by
the United States or any agency or any State thereof maturing within one
(1) year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one (1) year from the date of creation thereof and currently having
rating of at least A-2 or P-2 from either Standard & Poor’s Rating Service or
Moody’s Investors Service, Inc., (iii) Bank’s certificates of deposit maturing
no more than one (1) year from the date of investment therein, and (iv) Bank’s
money market accounts and deposit accounts;

 

 

Comerica Bank - Loan and Security Agreement                     July 10, 2015

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(c) Repurchases of Equity Interests from former employees, directors, or
consultants of a Borrower under the terms of applicable equity repurchase
agreements (i) in an aggregate amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000) in any fiscal year, provided that no Event of Default has
occurred, is continuing or would exist after giving effect to the repurchases,
or (ii) in any amount where the consideration for the repurchase is the
cancellation of indebtedness owed by such former employees, directors or
consultants to a Borrower regardless of whether an Event of Default exists;

 

(d) Investments accepted in connection with Permitted Transfers;

 

(e) Investments of Subsidiaries in or to other Subsidiaries or a Borrower and
Investments among Borrowers;

 

(f) (i) Investments not to exceed Five Hundred Thousand Dollars ($500,000) in
the aggregate in any fiscal year consisting of travel advances and employee
relocation loans and other employee loans and advances in the ordinary course of
business, and (ii) Investments not to exceed Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate in any fiscal year consisting of loans to employees,
officers or directors relating to the purchase of Equity Interests of a Borrower
or its Subsidiaries pursuant to employee equity purchase agreements approved by
a Borrower’s Board of Directors;

 

(g) 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 a Borrower’s business;

 

(h) Investments consisting of notes 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 subparagraph (h) shall not
apply to Investments of a Borrower in any Subsidiary;

 

(i) Investments constituting mergers and acquisitions permitted under
Section 7.3; and

 

(j) Joint ventures or strategic alliances in the ordinary course of a Borrower’s
business consisting of the licensing of technology in the ordinary course of
business, the development of technology or the providing of technical support,
in each case in the ordinary course of business, and provided that in all cases
any cash Investments by a Borrower do not exceed One Hundred Thousand Dollars
($100,000) in the aggregate in any fiscal year.

“Permitted Liens” mean:

 

(a) Any Liens existing on the Closing Date and disclosed in the Schedule
(excluding Liens to be satisfied with the proceeds of the Growth Capital
Advance) or arising under this Agreement or the other Loan Documents;

 

(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which a Borrower maintains adequate reserves, provided the
same have no priority over any of Bank’s security interests;

 

(c) Liens securing Indebtedness not to exceed Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate (i) upon or in any Equipment acquired or held by a
Borrower or any of its Subsidiaries to secure the purchase price of such
Equipment or indebtedness incurred solely for the purpose of financing the
acquisition or lease of such Equipment, or (ii) existing on such Equipment at
the time of its acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds of such
Equipment;

 

 

Comerica Bank - Loan and Security Agreement                     July 10, 2015

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(d) Liens incurred in connection with the extension, renewal or refinancing of
the indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal or replacement Lien shall be
limited to the property encumbered by the existing Lien and the principal amount
of the indebtedness being extended, renewed or refinanced does not increase;

 

(e) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.4 (attachment) or 8.8
(judgments/settlements);

 

(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 do not attach to Eligible Inventory and 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) leases or subleases of real property granted in the ordinary course of
Borrower’s business (or, if referring to another Person, in the ordinary course
of such Person’s business);

 

(i) licenses described in subclause (b) of the defined term “Permitted Transfer”
or in subclause (j) of the defined term “Permitted Investments;

 

(j) Liens in favor of other financial institutions arising in connection with
Borrower’s deposit accounts held at such institutions (subject to and in
accordance with this Agreement) to secure standard fees for deposit services
charged by, but not financing made available by such institutions, provided that
Bank has a first priority perfected security interest in the amounts held in
such deposit accounts.

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition
by a Borrower or any Subsidiary of:

 

(a) Inventory in the ordinary course of business;

 

(b) Licenses and similar arrangements entered into by a Borrower in the ordinary
course of business for the use of the property of such Borrower in the ordinary
course of business;

 

(c) Worn-out, obsolete, or surplus Equipment;

 

(d) Transfers that are explicitly permitted by Section 7; or

 

(e) Other assets of Borrower or its Subsidiaries that do not in the aggregate
exceed Two Hundred Fifty Thousand Dollars ($250,000) during any fiscal year.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

“Pricing Addendum” means that certain Prime Reference Rate Addendum, dated as of
the Closing Date, by and between Borrowers and Bank (as the same may be amended
and/or restated from time to time).

“Prohibited Territory” means any person or country listed by the Office of
Foreign Assets Control of the United States Department of Treasury as to which
transactions between a United States Person and that territory are prohibited.

 

 

Comerica Bank - Loan and Security Agreement                     July 10, 2015

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“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of a Borrower.

“Restricted Agreement” is any material license or other material agreement
(other than over-the-counter software that is commercially available to the
public and “open source” licenses) to which a Borrower is a party or under which
a Borrower is bound (including licenses and agreements under which a Borrower is
the licensee): (a) that prohibits or otherwise restricts a Borrower from
assigning to Bank, or granting to Bank a Lien in, a Borrower’s interest in such
license or agreement, the rights arising thereunder or any other property, or
(b) for which a default under or termination of such license or contract would
interfere with the Bank’s right to use, license, sell or collect any Collateral
or otherwise exercise its rights and remedies with respect to the Collateral
under the Loan Documents or applicable law.

“Revolving Line” means a Credit Extension of up to Ten Million Dollars
($10,000,000) provided however that if, after FDA Approval, Borrowers elect to
convert the Growth Capital Advance pursuant to and subject to
Section 2.1(c)(ii), “Revolving Line” means a Credit Extension of up to Twenty
Five Million Dollars ($25,000,000).

“Revolving Maturity Date” means December 31, 2017.

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

“SOS Reports” mean the official reports from the Secretaries of State of each
Borrower State and other applicable federal, state or local government offices
identifying all current security interests filed in the Collateral and Liens of
record as of the date of such report.

“Subordinated Debt” means any debt incurred by a Borrower that is subordinated
in writing to the debt owing by a Borrower to Bank on terms reasonably
acceptable to Bank (and identified as being such by a Borrower and Bank).

“Subsidiary” means any corporation, partnership or limited liability company or
joint venture in which (i) any general partnership interest or (ii) more than
fifty percent (50%) of the Equity Interests of which by the terms thereof
ordinary voting power to elect the Board of Directors, managers or trustees of
the entity, at the time as of which any determination is being made, is owned by
a Borrower, either directly or through an Affiliate.

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

“United States” means the United States of America.

 

 

Comerica Bank - Loan and Security Agreement                     July 10, 2015

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DEBTORS: CEMPRA, INC. CEMPRA PHARMACEUTICALS, INC. CEM-102 PHARMACEUTICALS, INC.
SECURED PARTY: COMERICA BANK

EXHIBIT B

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

Collateral shall mean all personal property of Debtor including, without
limitation, all of the following property Debtor now or later owns or has an
interest in, wherever located:

All personal property of Debtor of every kind, whether presently existing or
hereafter created or acquired, and wherever located, including but not limited
to: (a) all accounts (including health-care-insurance receivables), chattel
paper (including tangible and electronic chattel paper), deposit accounts,
documents (including negotiable documents), equipment (including all accessions
and additions thereto), general intangibles (including payment intangibles and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;
and (b) any and all cash proceeds and/or noncash proceeds thereof, including,
without limitation, insurance proceeds, and all supporting obligations and the
security therefor or for any right to payment. All terms above have the meanings
given to them in the California Uniform Commercial Code, as amended or
supplemented from time to time.

Notwithstanding the foregoing, the Collateral shall not include the equity
interests of any Subsidiary or the Intellectual Property of Debtor; provided,
however, that the Collateral shall include all accounts and general intangibles
that consist of rights to payment from the sale, licensing or disposition of all
or any part of, or rights in, the Intellectual Property (the “Rights to
Payment”). Notwithstanding the foregoing, if a judicial authority (including a
U.S. Bankruptcy Court) holds that a security interest in the underlying
Intellectual Property is necessary to have a security interest in the Rights to
Payment, then the Collateral shall automatically, and effective as of July 10,
2015, include the Intellectual Property to the extent necessary to permit
perfection of Bank’s security interest in the Rights to Payment.

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Omitted Exhibits and Attachments*

 

Exhibit C Form of Loan Advance/Paydown Request Form Exhibit D Form of Borrowing
Base Certificate Exhibit E Form of Compliance Certificate Attachments: Form of
Disbursement Instructions USA Patriot Act Notice of Customer Identification Form
of Corporate Resolutions and Incumbency Certification Form of Automatic Loan
Payment Authorization Form of Agreement to Furnish Insurance to Loan and
Security Agreement

 

* The listed exhibits and attachments have been omitted from this Exhibit 10.1
pursuant to Item 601(b)(2) of Regulation S-K. Cempra, Inc. hereby undertakes to
furnish supplementally copies of any of the omitted exhibits and attachments
upon request by the SEC.