Exhibit 10.26

CONSENT AND SECOND AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

This Consent and Second Amendment to Loan and Security Agreement (this
“Amendment”) is entered into this 1st day of December, 2014, by and among
(i) TETRAPHASE PHARMACEUTICALS, INC., a Delaware corporation with offices
located at 480 Arsenal Street, Suite 110, Watertown, Massachusetts 02472
(“Tetraphase”), TETRAPHASE SECURITIES CORPORATION, a Massachusetts corporation
with offices located at 480 Arsenal Street, Suite 110, Watertown, Massachusetts
02472 (“Tetraphase Securities”; Tetraphase and Tetraphase Securities are
referred to herein, individually and collectively, jointly and severally, as
“Borrower”), (ii) SILICON VALLEY BANK, a California corporation with an office
located at 275 Grove Street, Suite 2-200, Newton, MA 02466 (“SVB”), (iii) OXFORD
FINANCE LLC, a Delaware limited liability company with an office located at 133
North Fairfax Street, Alexandria, Virginia 22314 (“Oxford”), (iv) each of the
other Lenders, listed on Schedule 1.1 hereof or otherwise a party thereto from
time to time, including SVB and Oxford in their capacities as Lenders, (each a
“Lender” and collectively, the “Lenders”), and (v) SVB, as agent (in such
capacity, the “Agent”) for the Lenders.

RECITALS

A. Lenders and Borrower have entered into that certain Loan and Security
Agreement dated as of May 16, 2011, as amended by that certain First Amendment
to Loan and Security Agreement dated as of December 20, 2012 (as the same may
from time to time be further amended, modified, supplemented or restated, the
“Loan Agreement”).

B. Each Lender extended credit to Borrower for the purposes permitted in the
Loan Agreement.

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

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

AGREEMENT

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

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

2. Amendments to Loan Agreement.

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

“Maintain all of Borrower’s and all of its Subsidiaries’ operating and other
deposit accounts and securities accounts with Silicon Valley Bank or its
Affiliates; provided, further, that Borrower shall have, at all times, on
deposit in Collateral Accounts, operating, and investment accounts maintained
with Silicon Valley Bank or its Affiliates that are subject to Control
Agreements in favor of each Lender, cash and/or Cash Equivalents in an amount
not less than one hundred five percent (105%) of the then-outstanding
Obligations of Borrower to Lenders. Notwithstanding the foregoing, Bermuda
Subsidiary may maintain accounts with banks and/or financial institutions other
than Silicon Valley Bank or its Affiliates (the “Permitted Accounts”).”

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2.2 Section 6.6(b) (Operating Accounts). The last sentence set forth in
Section 6.6(b) is amended in its entirety and replaced with the following:

“The provisions of the previous sentence shall not apply to (i) the Permitted
Accounts, or (ii) deposit accounts exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower’s
or such Subsidiary’s employees and identified to Agent by Borrower as such.”

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

“(c) Borrower and its Subsidiaries shall not maintain any Collateral Accounts
except (i) Collateral Accounts located in the United States in accordance with
Sections 6.6(a) and (b), and (ii) the Permitted Accounts.”

2.4 Section 13.1 (Definitions). The Loan Agreement is amended by (i) replacing
“.” with “; and” at the end of clause (k) and (ii) inserting the following new
subsection (l) to appear in the definition of “Permitted Investments” set forth
in Section 13.1 thereof:

“(l) Investments by Borrower in Bermuda Subsidiary.”

2.5 Section 13.1 (Definitions). The Loan Agreement is amended by inserting the
following new definitions to appear alphabetically in Section 13.1 thereof:

“Bermuda Subsidiary” means Tetraphase Pharmaceuticals (Bermuda) Ltd., a company
organized under the laws of Bermuda and a Subsidiary of Borrower.

“Permitted Accounts” is defined in Section 6.6(a) hereof.

2.6 Exhibit A (Collateral Description). The Exhibit A to the Loan Agreement is
amended in its entirety and replaced with the Exhibit A in the form of Schedule
1 attached hereto.

2.7 Exhibit C (Compliance Certificate). The Compliance Certificate is amended in
its entirety and replaced with the Compliance Certificate in the form of
Schedule 2 attached hereto.

3. Consent to Formation of Subsidiary and Exclusive License. Borrower has
notified Agent and Lenders that Borrower intends to (a) create the Bermuda
Subsidiary (the “Subsidiary Formation”), and (b) enter into a cost sharing
agreement with the Bermuda Subsidiary and a rights sharing agreement with the
Bermuda Subsidiary under which Borrower would license intellectual property of
the Borrower to the Bermuda Subsidiary, in each case substantially in the form
set forth on Schedule 3 attached hereto (the “Exclusive License”). Borrower has
requested that Agent and Lenders consent to the Subsidiary Formation and the
Exclusive License. Agent and Lenders hereby consent to the Subsidiary Formation
and the Exclusive License, and agree that the Subsidiary Formation and the
Exclusive License shall not, in and of themselves, constitute an “Event of
Default” under Section 6.10 (relative to creation and acquisition of
subsidiaries, Section 7.1 (relative to dispositions), Section 7.3 (relative to
mergers or acquisitions), Section 7.7 (relative to distributions and
investments), or Section 7.8 (relative to transactions with affiliates) of the
Loan Agreement. The Bermuda Subsidiary shall continue to be subject to all of
the terms and conditions of the Loan Agreement (other than Section 6.10 of the
Loan Agreement), including, without limitation, restrictions on investments set
forth in the definition of “Permitted Investments” pursuant to Section 13.1 of
the Loan Agreement.

4. Pledge Agreement. Borrower acknowledges, confirms, and agrees that, at the
election of Lenders, Borrower shall provide to Agent and Lenders (a) appropriate
certificates and powers and financing statements, pledging sixty-five percent
(65%) of the direct or beneficial ownership interest in Bermuda Subsidiary, in
form and substance satisfactory to Agent and Lenders, and (b) all other
documentation in form and substance satisfactory to Agent and Lenders which in
their opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above. It is understood and agreed that the
Bermuda Subsidiary is not and is not required to become a Borrower or a
guarantor of the Obligations under the Loan Documents.

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5. Limitation of Amendments.

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

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

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

6.1 Immediately after giving effect to this Amendment (a) the representations
and warranties contained in the Loan Documents are true, accurate and complete
in all material respects as of the date hereof (except (i) to the extent such
representations and warranties relate to an earlier date, in which case they are
true and correct as of such date, and (ii) with respect to Borrower’s
representations and warranties relating to the Perfection Certificate contained
in Section 5.1 of the Loan Agreement), and (b) no Event of Default has occurred
and is continuing;

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

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

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

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

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

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

7. Integration. This Amendment and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or
agreements. All prior agreements, understandings, representations, warranties,
and negotiations between the parties about the subject matter of this Amendment
and the Loan Documents merge into this Amendment and the Loan Documents.

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

9. Effectiveness. This Amendment shall be deemed effective upon (a) the due
execution and delivery to Agent of this Amendment by each party hereto, and
(b) Borrower’s payment of Lenders’ Expenses.

[Signature page follows.]

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

 

BORROWER: TETRAPHASE PHARMACEUTICALS, INC. By

/s/ David Lubner

Name:

David Lubner

Title:

SVP, CFO

TETRAPHASE SECURITIES CORPORATION By

/s/ David Lubner

Name:

David Lubner

Title:

SVP, CFO, Treasurer and Secretary

AGENT AND LENDERS: SILICON VALLEY BANK, as Agent and a Lender By

/s/ Kate Walsh

Name:

Kate Walsh

Title:

Vice President

OXFORD FINANCE LLC, as a Lender By

/s/ Mark Davis

Name:

Mark Davis

Title:

Vice President of Finance

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Schedule 1

EXHIBIT A

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

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

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

Notwithstanding the foregoing, the Collateral does not include (a) more than
sixty-five percent (65%) of the presently existing and hereafter arising issued
and outstanding shares of capital stock owned by Borrower of Bermuda Subsidiary
which shares entitle the holder thereof to vote for directors or any other
matter, or (b) any Intellectual Property except to the extent that it is
necessary under applicable law to have a security interest in Intellectual
Property in order to have a perfected lien and security interest in and to the
“IP Proceeds” defined below; provided, however, the Collateral shall include all
Accounts, license and royalty fees and other revenues, proceeds, or income
arising out of or relating to any of the Intellectual Property and any claims
for damage by way of any past, present, or future infringement of any of the
Intellectual Property (collectively, the “IP Proceeds”).

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Schedule 2

EXHIBIT C -COMPLIANCE CERTIFICATE

 

TO: Silicon Valley Bank, as Agent FROM:

TETRAPHASE PHARMACEUTICALS,

INC./ TETRAPHASE SECURITIES

CORPORATION

The undersigned authorized officer of TETRAPHASE PHARMACEUTICALS, INC. and
TETRAPHASE SECURITIES CORPORATION (collectively, “Borrower”) hereby certifies in
such capacity that in accordance with the terms and conditions of the Loan and
Security Agreement among Borrower, Agent, and the Lenders (the “Agreement”),

(i) Borrower is in complete compliance for the period ending
                     with all required covenants except as noted below;

(ii) There are no Events of Default, except as noted below;

(iii) Except as noted below, all representations and warranties of Borrower
stated in the Loan Documents are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof; and
provided, further that those representations and warranties expressly referring
to a specific date shall be true, accurate and complete in all material respects
as of such date.

(iv) Borrower, and each of its Subsidiaries, has timely filed all required tax
returns and reports, and Borrower has timely paid all foreign, federal, state,
and local taxes, assessments, deposits and contributions owed by Borrower except
as otherwise permitted pursuant to the terms of Section 5.8 of the Agreement;

(v) No Liens have been levied or claims made against Borrower or any of its
Subsidiaries relating to unpaid employee payroll or benefits of which Borrower
has not previously provided written notification to Agent

Attached are the required documents, if any, supporting our certification(s).
The Officer on behalf of Borrower further certifies that the attached financial
statements are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next
except as explained in an accompanying letter or footnotes and except, in the
case of unaudited financial statements, for the absence of footnotes and subject
to year-end audit adjustments as to the interim financial statements.
Capitalized terms used but not otherwise defined herein shall have the meanings
given them in the Agreement.

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Please indicate compliance status since the last Compliance Certificate by
circling Yes, No, or N/A under “Complies” column.

 

   

Reporting Covenant

  

Requirement

       

Complies

1)   Financial statements    Monthly within 30 days       Yes    No    N/A 2)  
Annual (CPA Audited) statements    Within 150 days after Fiscal Year End    Yes
   No    N/A 3)   Annual Financial Projections/Budget (prepared on a monthly
basis)    Annually (w/n 45 days of FYE). and when revised       Yes    No    N/A
4)   A/R & A/P agings    If applicable       Yes    No    N/A 5)   8-K, 10-K and
10-Q Filings    If applicable       Yes    No    N/A 6)   Intellectual Property
   Material Changes to composition of IP       Yes    No    N/A 7)  
Intellectual Property    New Registrations       Yes    No    N/A 8)   Total
amount of Borrower’s cash and cash equivalents at the last day of the
measurement period       $                      9)      Month    QTD    YTD   
           $                      10)        Deposit and Securities Accounts   
(Please list all accounts; attach separate sheet if additional space needed)

 

   

Bank

  

Account Number

  

New Account?

  

Acct Control

Agmt in place?

1)         Yes    No    Yes    No   Silicon Valley Bank                2)     
   Yes    No    Yes    No   Silicon Valley Bank                3)         Yes   
No    Yes    No   Silicon Valley Bank                4)         Yes    No    Yes
   No   Bank of Montreal                5)         Yes    No    Yes    No 6)  
      Yes    No    Yes    No

 

   

Minimum Cash at SVB

  

Requirement

  

Actual

       

Compliance

       Minimum Cash at SVB    Not less than 105% of the outstanding Obligations
   $                   Yes    No  

 

Other Matters

  Have there been any changes in management since the last Compliance
Certificate?    Yes    No      Have there been any
transfers/sales/disposals/retirement of Collateral or IP prohibited by the
Agreement?    Yes    No      Have there been any new or pending claims or causes
of action against Borrower that involve more than $100,000?    Yes    No   

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Exceptions Please explain any exceptions with respect to the certification
above: (If no exceptions exist, state “No exceptions.” Attach separate sheet if
additional space needed.)

 

    

    

    

 

 

LENDERS USE ONLY TETRAPHASE PHARMACEUTICALS, INC./ TETRAPHASE SECURITIES
CORPORATION DATE By:

 

Received by:

 

Verified by:

 

Name:

 

Title:

 

Date:

 

Date:

 

Compliance Status Yes No

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Schedule 3

[Attached]