Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE
HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT is made and dated as of December 31, 2019 and
is entered into by and among KALEIDO BIOSCIENCES, INC., a Delaware corporation,
and each of its Qualified Subsidiaries (including Cadena Bio, Inc., a Delaware
corporation) (hereinafter collectively referred to as the “Borrower”), the
several banks and other financial institutions or entities from time to time
parties to this Agreement (collectively, referred to as the “Lenders”) and
HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as
administrative agent and collateral agent for itself and the Lenders (in such
capacity, the “Agent”).

RECITALS

A. Borrower has requested the Lenders make available to Borrower a loan in an
aggregate principal amount of up to Thirty-Five Million Dollars ($35,000,000.00)
(the “Term Loan”); and

B. The Lenders are willing to make the Term Loan on the terms and conditions set
forth in this Agreement.

AGREEMENT

NOW, THEREFORE, Borrower, Agent and the Lenders agree as follows:

SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION

1.1 Unless otherwise defined herein, the following capitalized terms shall have
the following meanings:

“Account Control Agreement(s)” means any agreement entered into by and among the
Agent, Borrower and a third party bank or other institution (including a
Securities Intermediary) in which Borrower maintains a Deposit Account or an
account holding Investment Property and which perfects Agent’s first priority
security interest in the subject account or accounts.

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially
the form of Exhibit G, which account numbers shall be redacted for security
purposes if and when filed publicly by the Borrower.

“Advance(s)” means a Term Loan Advance.

“Advance Date” means the funding date of any Advance.

“Advance Request” means a request for an Advance submitted by Borrower to Agent
in substantially the form of Exhibit A, which account numbers shall be redacted
for security purposes if and when filed publicly by the Borrower.

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“Affiliate” means (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question, (b) any
Person directly or indirectly owning, controlling or holding with power to vote
ten percent (10%) or more of the outstanding voting securities of another
Person, (c) any Person ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held by another
Person with power to vote such securities, or (d) any Person related by blood or
marriage to any Person described in subsection (a), (b) or (c) of this
paragraph. As used in the definition of “Affiliate,” the term “control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

“Agreement” means this Loan and Security Agreement, as amended from time to
time.

“Amortization Date” means May 1, 2021; provided however, if the First Interest
Only Extension Conditions are satisfied, then August 1, 2021; provided further,
if the Second Interest Only Extension Conditions are satisfied, then February 1,
2022.

“Anti-Corruption Laws” means all laws, rules, and regulations of any
jurisdiction applicable to Borrower or any of its Affiliates from time to time
concerning or relating to bribery or corruption, including without limitation
the United States Foreign Corrupt Practices Act of 1977, as amended, the UK
Bribery Act 2010 and other similar legislation in any other jurisdictions.

“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to
terrorism or money laundering, including without limitation Executive Order
No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws
comprising or implementing the Bank Secrecy Act, and the laws administered by
OFAC.

“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order
No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.

“Borrower Products” means all products, software, service offerings, technical
data or technology currently being designed, manufactured or sold by Borrower or
which Borrower intends to sell, license, or distribute in the future including
any products or service offerings under development, collectively, together with
all products, software, service offerings, technical data or technology that
have been sold, licensed or distributed by Borrower since its incorporation.

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

“Borrower’s Market Capitalization” means, for any given date of determination,
an amount equal to (a) the average of the daily volume weighted average price of
common stock as reported for each of the three (3) trading days preceding such
date of determination (it being understood that a “trading day” shall mean a day
on which shares of common stock trade on the NASDAQ in an ordinary trading
session) multiplied by (b) the total number of issued and outstanding shares of
common stock that are issued and outstanding on the date of the determination
and listed on the NASDAQ (or, if the primary listing of such common stock is on
another exchange, on such other exchange). Such determination shall be
appropriately adjusted for any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable calculation
period.

 

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“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions in the State of California are closed for business.

“Cash” means all cash, cash equivalents and liquid funds.

“CFC” means a “controlled foreign corporation” as defined in Section 957 of the
Code.

“CFC Holdco” means a direct or indirect Subsidiary of the Borrower substantially
all of the assets of which are Equity Interests (or Equity Interests and debt
interests) in one or more CFCs.

“Change in Control” means any reorganization, recapitalization, consolidation or
merger (or similar transaction or series of related transactions) of Borrower,
sale or exchange of outstanding shares (or similar transaction or series of
related transactions) of Borrower in which the holders of Borrower’s outstanding
shares immediately before consummation of such transaction or series of related
transactions do not, immediately after consummation of such transaction or
series of related transactions, retain shares representing more than fifty
percent (50%) of the voting power of the surviving entity of such transaction or
series of related transactions (or the parent of such surviving entity if such
surviving entity is wholly owned by such parent), in each case without regard to
whether Borrower is the surviving entity; provided, however, that an initial
public offering shall not constitute a Change in Control.

“Closing Date” means the date of this Agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“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 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 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 designated to protect a 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 such Person 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.

“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States of America, any State thereof, or of
any other country.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit that is not evidenced by an instrument.

 

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“Designated Account” means the account number ending 759 (last three digits),
maintained by Borrower with JPMorgan Chase Bank, N.A., or any other account that
Borrower designates from time to time to Agent in writing with reasonable
notice.

“Domestic Subsidiary” means any Subsidiary organized under the laws of the
United States of America, any State thereof, the District of Columbia, or any
other jurisdiction within the United States of America.

“Due Diligence Fee” means $20,000, which fee has been paid to the Lenders prior
to the Closing Date, and shall be deemed fully earned on such date regardless of
the early termination of this Agreement.

“Eligible Foreign Subsidiary” means each Foreign Subsidiary other than an
Excluded Subsidiary.

“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.

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

“Excluded Subsidiary” means (x) each direct and indirect Subsidiary of the
Borrower (a) that is a CFC, (b) that is a direct or indirect Subsidiary of a
CFC, or (c) that is a CFC Holdco; in each case, provided that (i) the pledge of
all or substantially all of the Equity Interests of such Subsidiary as
Collateral, (ii) the guarantee by such Subsidiary of the Secured Obligations, or
(iii) the execution of a Joinder Agreement by such Subsidiary, would result in
material adverse tax consequences to the Borrower (as reasonably determined by
the Borrower and Agent) and (y) the MSC Subsidiary.

“First Interest Only Extension Conditions” shall mean satisfaction of each of
the following events: (a) no default or Event of Default shall have occurred;
and (b) on or before June 30, 2020, Borrower achieves Performance Milestone I,
subject to verification by Agent (including supporting documentation requested
by Agent).

“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.

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

“Indebtedness” means indebtedness of any kind, including (a) all indebtedness
for borrowed money or the deferred purchase price of property or services
(excluding trade credit entered into in the ordinary course of business due
within ninety (90) days), including 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, (d) non-contingent obligations to reimburse any bank or Person in
respect of amounts paid under a letter of credit, banker’s acceptance or similar
instrument, (e) equity securities of any Person subject to repurchase or
redemption other than at the sole option of such Person, other than any such
equity securities that are subject to repurchase or redemption solely after the
91st day after the Term Loan Maturity Date, (f) earn outs, purchase price
adjustments, deferred purchase amounts and similar payment obligations or any
nature arising out of purchase and sale contracts, and (g) all Contingent
Obligations.

 

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“Initial Facility Charge” means One Hundred Thirty-Seven Thousand Five Hundred
Dollars ($137,500), which is payable to the Lenders in accordance with
Section 4.1(f).

“Insolvency Proceeding” means any proceeding by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.

“Intellectual Property” means all of Borrower’s Copyrights; Trademarks; Patents;
Licenses; trade secrets and inventions; mask works; Borrower’s applications
therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill
associated with any of the foregoing, together with Borrower’s rights to sue for
past, present and future infringement of Intellectual Property and the goodwill
associated therewith.

“Investment” means any beneficial ownership (including stock, partnership,
limited liability company interests, or other securities) of or in any Person,
or any loan, advance or capital contribution to any Person or the acquisition of
any material asset or property of another Person.

“IRS” means the United States Internal Revenue Service.

“Joinder Agreements” means for each Subsidiary (other than an Excluded
Subsidiary), a completed and executed Joinder Agreement in substantially the
form attached hereto as Exhibit F.

“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.

“Loan” means the Advances made under this Agreement.

“Loan Documents” means this Agreement, the promissory notes (if any), the ACH
Authorization, the Account Control Agreements, the Joinder Agreements, all UCC
Financing Statements, the Pledge Agreement, and any other documents executed in
connection with the Secured Obligations or the transactions contemplated hereby,
as the same may from time to time be amended, modified, supplemented or
restated.

“Material Adverse Effect” means a material adverse effect upon: (i) the
business, operations, properties, assets or financial condition of Borrower and
its Subsidiaries taken as a whole; or (ii) the ability of Borrower to perform or
pay the Secured Obligations in accordance with the terms of the Loan Documents,
or the ability of Agent or the Lenders to enforce any of its rights or remedies
with respect to the Secured Obligations; or (iii) the Collateral or Agent’s
Liens on the Collateral or the priority of such Liens (other than as a result of
a failure by the Agent to make any necessary filings or maintain possession of
any possessory collateral).

“Maximum Term Loan Amount” means Thirty-Five Million and No/100 Dollars
($35,000,000.00).

 

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“MSC Investment Conditions” means that Borrower maintains Qualified Cash in an
amount equal to or greater than the lesser of (i) 110% of the aggregate
outstanding Secured Obligations (inclusive of any Prepayment Charge and End of
Term Charge that would be due and owing if the outstanding Loans were prepaid at
the time of measurement) plus the Qualified Cash A/P Amount or (ii) 100% of the
consolidated Cash of Borrower and its Subsidiaries, unless compliance with the
foregoing conditions are waived in writing from time to time by Agent with
respect to specified periods, in Agent’s sole discretion.

“MSC Subsidiary” means Kaleido Biosciences Securities Corporation, a
wholly-owned Subsidiary incorporated in the Commonwealth of Massachusetts or the
State of Delaware for the purpose of holding Investments as a Massachusetts
security corporation under 830 CMR 63.38B.1 of the Massachusetts tax code and
applicable regulations (as the same may be amended, modified or replaced from
time to time).

“Non-Core Intellectual Property” means microbiome metabolic therapy candidates
that do not target, directly, indirectly, entirely or partially, any of the
following indications: urea cycle disorders, hepatic encephalopathy, multi drug
resistant infection, chronic kidney disease, atherosclerotic cardiovascular
disease, cardio-metabolic syndrome, immuno-oncology or any indication related to
the existing KB195, KB174 or KB109 programs, and in each case any related
programs or related Intellectual Property in connection with such indications.

“Non-Consenting Lender” means any Lender that does not approve any consent,
waiver or amendment that (a) requires the approval of all or all affected
Lenders in accordance with the terms of Section 11.3 and (b) has been approved
by the Required Lenders.

“Non-Disclosure Agreement” means that certain Non-Disclosure Agreement by and
between Kaleido Biosciences, Inc. and Hercules Capital, Inc. dated as of
October 2, 2019.

“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement Borrower now holds or hereafter acquires any
interest.

“Patents” means all letters patent of, or rights corresponding thereto, in the
United States of America or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States of America or any other country.

“Performance Milestone I” means satisfaction of each of the following events:

(a) [***]

(b) [***]

(i) [***]

 

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(ii) [***]

(x) [***]

(y) [***]

(iii) [***]

“Performance Milestone II” means satisfaction of each of the following events:

(a) [***]

(b) [***]

(c) [***]

“Permitted In-Licenses” means (a) any License with respect to which Borrower is
the licensee, in which: (i) Borrower and its Subsidiaries are not reasonably
likely to be required to transfer cash or other consideration, prior to the Term
Loan Maturity Date, assets or property valued (book or market) at more than
$1,000,000 in the aggregate for all such Licenses and (ii) is not a Restricted
License.

“Permitted Indebtedness” means:

(i) Indebtedness of Borrower in favor of the Lenders or Agent arising under this
Agreement or any other Loan Document;

(ii) Indebtedness existing on the Closing Date which is disclosed in Schedule
1A;

(iii) Indebtedness of up to $250,000 outstanding at any time secured by a Lien
described in clause (vii) of the defined term “Permitted Liens,” provided such
Indebtedness does not exceed the cost of the Equipment financed with such
Indebtedness;

(iv) without duplication of any other item of Permitted Indebtedness,
Indebtedness to trade creditors incurred in the ordinary course of business (due
within 90 days), including such Indebtedness incurred in the ordinary course of
business with corporate credit cards in an amount to not exceed $500,000
outstanding at any time;

(v) Indebtedness that also constitutes a Permitted Investment;

(vi) Subordinated Indebtedness;

(vii) without duplication of any other item of Permitted Indebtedness,
reimbursement obligations in connection with letters of credit that are secured
by Cash and issued on behalf of the Borrower or a Subsidiary thereof in an
amount not to exceed $2,500,000 at any time outstanding,

(viii) other unsecured Indebtedness in an amount not to exceed $250,000 at any
time outstanding,

(ix) intercompany Indebtedness as long as either (A) each of the Subsidiary
obligor and the Subsidiary obligee under such Indebtedness is a Borrower or
Domestic Subsidiary that has executed a Joinder Agreement or (B) each of the
obligor and obligee are Foreign Subsidiaries;

 

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(x) Indebtedness consisting of interest rate, currency, or commodity swap
agreements, interest rate cap or collar agreements or arrangements entered into
in the ordinary course of business and designated to protect Borrower or its
Subsidiaries against fluctuations in interest rates, currency exchange rates, or
commodity prices as long as the aggregate outstanding nominal value outstanding
of such Indebtedness does not exceed $500,000;

(xi) Indebtedness consisting of financing of insurance premiums in the ordinary
course of business;

(xii) to the extent constituting Indebtedness obligations, Indebtedness in
respect of netting services or overdraft protection or otherwise in connection
with deposit or securities accounts in the ordinary course of business; and

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

“Permitted Investment” means:

(i) Investments existing on the Closing Date which are disclosed in Schedule 1B;

(ii) short-term, customary, non-speculative money market securities pursuant to
Borrower’s investment policy provided to Agent on the Closing Date;

(iii) (a) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof currently having a rating of at
least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors
Services, (b) commercial paper maturing no more than one year from the date of
creation thereof and currently having a rating of at least A-2 or P-2 from
either Standard & Poor’s Corporation or Moody’s Investors Service,
(c) certificates of deposit issued by any bank with assets of at least
$500,000,000 maturing no more than one year from the date of investment therein,
and (d) money market accounts;

(iv) repurchases of stock from former or existing employees, directors, or
consultants of Borrower under the terms of applicable repurchase agreements in
an aggregate amount not to exceed $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;

(v) Investments accepted in connection with Permitted Transfers;

(vi) 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 Borrower’s business;

(vii) 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 (vii) shall not
apply to Investments of Borrower in any Subsidiary;

 

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(viii) Investments consisting of loans not involving the net transfer on a
substantially contemporaneous basis of cash proceeds to employees, officers or
directors relating to the purchase of capital stock of Borrower pursuant to
employee stock purchase plans or other similar agreements approved by Borrower’s
Board of Directors;

(ix) Investments consisting of (a) travel advances, employee relocation loans
and other employee loans in the ordinary course of business and (b) loans to
employees, officers or directors relating to the purchase of equity securities
of Borrower or its Subsidiaries pursuant to employee stock purchase plans or
agreements;

(x) Investments in newly-formed Domestic Subsidiaries, provided that each such
Domestic Subsidiary has entered into or enters into a Joinder Agreement promptly
after its formation by Borrower and execute such other documents as shall be
reasonably requested by Agent;

(xi) Investments in Foreign Subsidiaries approved in advance in writing by
Agent;

(xii) joint ventures, research collaborations or strategic alliances in the
ordinary course of Borrower’s business including any licensing of Non-Core
Intellectual Property permitted hereunder, nonexclusive licensing of technology,
the development of technology or the providing of technical support, provided
that any cash Investments by Borrower do not exceed $1,000,000 in the aggregate
in any fiscal year and $2,000,000 in the aggregate during the term of this
Agreement;

(xiii) subject to Section 7.12, Investments in Deposit Accounts;

(xiv) Investments in the MSC Subsidiary, so long as an Event of Default does not
exist at the time of such Investment and would not exist after giving effect to
such Investment and provided that Borrower is, at all times, in compliance with
the MSC Investment Conditions; and

(xv) additional Investments that do not exceed $250,000 in the aggregate.

“Permitted Liens” means:

(i) Liens in favor of Agent or the Lenders;

(ii) Liens existing on the Closing Date which are disclosed in Schedule 1C;

(iii) Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by appropriate
proceedings diligently conducted; provided, that Borrower maintains adequate
reserves therefor on Borrower’s Books in accordance with GAAP;

(iv) Liens securing claims or demands of materialmen, artisans, mechanics,
carriers, warehousemen, landlords and other like Persons arising in the ordinary
course of Borrower’s business and imposed without action of such parties;
provided, that the payment thereof is not yet required;

 

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(v) Liens arising from judgments, decrees or attachments in circumstances which
do not constitute an Event of Default hereunder;

(vi) the following deposits, to the extent made in the ordinary course of
business: deposits under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;

(vii) Liens on Equipment or software or other intellectual property constituting
purchase money Liens and Liens in connection with capital leases securing
Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;

(viii) Liens incurred in connection with Subordinated Indebtedness;

(ix) leasehold interests in leases or subleases and licenses granted in the
ordinary course of business and not interfering in any material respect with the
business of the licensor;

(x) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of custom duties that are promptly paid on or before the date
they become due;

(xi) Liens on insurance proceeds securing the payment of financed insurance
premiums that are promptly paid on or before the date they become due (provided
that such Liens extend only to such insurance proceeds and not to any other
property or assets);

(xii) statutory and common law rights of set-off and other similar rights as to
deposits of cash and securities in favor of banks, other depository institutions
and brokerage firms;

(xiii) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business so
long as they do not materially impair the value or marketability of the related
property;

(xiv) (A) Liens on Cash securing obligations permitted under clause (vii) of the
definition of Permitted Indebtedness and (B) security deposits in connection
with real property leases, the combination of (A) and (B) in an aggregate amount
not to exceed $250,000 at any time; and

(xv) licenses permitted hereunder;

(xvi) Liens in favor of other financial institutions arising in connection with
Deposit Accounts and/or securities accounts held at such institutions in the
ordinary course of business;

(xvii) Liens consisting of pledges of cash, cash equivalents or government
securities to secure swap or foreign exchange contracts or letters of credit, in
a combined aggregate amount outstanding not to exceed $500,000;

(xviii) the filing of UCC financing statements solely as a precautionary measure
in connection with operating leases or consignment of goods;

 

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(xix) Liens not otherwise permitted hereunder securing Indebtedness with
specific assets in an aggregate outstanding amount not to exceed $250,000; and

(xx) Liens incurred in connection with the extension, renewal or refinancing of
the Indebtedness secured by Liens of the type described in clauses (i) through
(xix) 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 (as may have been
reduced by any payment thereon) does not increase.

“Permitted Out-Licenses” mean the following licenses entered into in the
ordinary course of business:

(i) non-exclusive licenses and non-exclusive arrangements for the use of
Intellectual Property;

(ii) licenses that could not result in a legal transfer of title of the licensed
property that may be exclusive in respects other than territory; and

(iii) licenses that could not result in a legal transfer of title of the
licensed property that may be exclusive as to territory:

(x) but only as to discreet geographical areas outside of the United States of
America, or

(y) solely for Non-Core Intellectual Property.

“Permitted Transfers” means:

(i) sales of Inventory in the ordinary course of business,

(ii) Permitted Out-Licenses,

(iii) dispositions of worn-out, obsolete or surplus Equipment at fair market
value in the ordinary course of business,

(iv) (iv) the sale or issuance of any stock of Borrower not prohibited under
this Agreement,

(v) Borrower’s use or transfer of cash in a manner that is not prohibited by the
terms of this Agreement or the other Loan Documents; and

(vi) other transfers of assets having a fair market value of not more than
$250,000 in the aggregate in any fiscal year.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.

“Pledge Agreement” means the Pledge Agreement dated as of the Closing Date
between Borrower and Agent, as the same may from time to time be amended,
restated, modified or otherwise supplemented.

 

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“Qualified Cash” means the amount of Borrower’s Cash held in accounts in the
United States subject to an Account Control Agreement in favor of Agent.

“Qualified Cash A/P Amount” means the amount of Borrower’s and its Subsidiaries’
accounts payable that have not been paid within ninety (90) days from the
invoice date of the relevant account payable.

“Qualified Subsidiary” means any direct or indirect Subsidiary other than an
Excluded Subsidiary.

“Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.

“Required Lenders” means at any time, the holders of more than 50% of the sum of
the aggregate unpaid principal amount of the Term Loans then outstanding.

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

“Sanctioned Country” means, at any time, a country or territory which is the
subject or target of any Sanctions.

“Sanctioned Person” means, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State, or by the United Nations Security Council, the European Union or any EU
member state, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person controlled by any such Person.

“Sanctions” means economic or financial sanctions or trade embargoes imposed,
administered or enforced from time to time by (a) the U.S. government, including
those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.

“Second Interest Only Extension Conditions” shall mean satisfaction of each of
the following events: (a) no default or Event of Default shall have occurred,
(b) Borrower shall have achieved the First Interest Only Extension Conditions
and (c) on or before November 15, 2020, Borrower achieves Performance Milestone
II, subject to verification by Agent (including supporting documentation
requested by Agent).

“Secured Obligations” means Borrower’s obligations under this Agreement and any
Loan Document, including any obligation to pay any amount now owing or later
arising.

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured
Obligations in amounts and on terms and conditions satisfactory to Agent in its
sole discretion and subject to a subordination agreement in form and substance
satisfactory to Agent in its sole discretion.

 

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“Subsequent Financing” means the closing of any Borrower financing which becomes
effective after the Closing Date.

“Subsidiary” means an entity, whether a corporation, partnership, limited
liability company, joint venture or otherwise, in which Borrower owns or
controls 50% or more of the outstanding voting securities, including each entity
listed on Schedule 1 hereto.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any governmental authority, including any interest, additions to tax
or penalties applicable thereto.

“Term Commitment” means as to any Lender, the obligation of such Lender, if any,
to make a Term Loan Advance to the Borrower in a principal amount not to exceed
the amount set forth under the heading “Term Commitment” opposite such Lender’s
name on Schedule 1.1.

“Term Loan Advance” means each Tranche 1 Advance, Tranche 2 Advance, Tranche 3
Advance, and any other Term Loan funds advanced under this Agreement.

“Term Loan Interest Rate” means, for any day a per annum rate of interest equal
to the greater of either (i) 8.95% plus the prime rate as reported in The Wall
Street Journal minus 4.75%, and (ii) 8.95%.

“Term Loan Maturity Date” means January 1, 2024; provided that if such day is
not a Business Day, the Term Loan Maturity Date shall be the immediately
preceding Business Day.

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by Borrower
or in which Borrower now holds or hereafter acquires any interest.

“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof.

“Tranche 2 Availability Conditions” shall mean satisfaction of each of the
following events: (a) no default or Event of Default shall have occurred and
(b) on or before November 15, 2020, Borrower achieves both Performance Milestone
I and Performance Milestone II, in each case subject to verification by Agent
(including supporting documentation requested by Agent).

“Tranche 3 Facility Charge” means half of one percent (0.50%) of the Tranche 3
Advance, which is payable to Lender in accordance with Section 4.2(d).

“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.

 

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“U.S. Person” means any Person that is a “United States person” as defined in
Section 7701(a)(30) of the Code.

1.2 The following terms are defined in the Sections or subsections referenced
opposite such terms:

 

Defined Term    Section  

Agent

     Preamble  

Assignee

     11.14  

Borrower

     Preamble  

Claims

     11.11  

Collateral

     3.1  

Confidential Information

     11.13  

End of Term Charge

     2.6  

Event of Default

     9  

Financial Statements

     7.1  

Indemnified Person

     6.3  

Lenders

     Preamble  

Liabilities

     6.3  

Maximum Rate

     2.3  

Open Source License

     5.10  

Participant Register

     11.8  

Prepayment Charge

     2.5  

Publicity Materials

     11.19  

Register

     11.7  

Rights to Payment

     3.1  

Tranche 1 Advance

     2.2 (a) 

Tranche 2 Advance

     2.2 (a) 

Tranche 3 Advance

     2.2 (a) 

1.3 Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement. Unless otherwise specifically provided herein,
any accounting term used in this Agreement or the other Loan Documents shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC. For all purposes
under the Loan Documents, in connection with any division or plan of division
under Delaware law (or any comparable event under a different jurisdiction’s
laws): (a) if any asset, right, obligation or liability of any Person becomes
the asset, right, obligation or liability of a different Person, then it shall
be deemed to have been transferred from the original Person to the subsequent
Person and (b) if any new Person comes into existence, such new Person shall be
deemed to have been organized on the first date of its existence by the holders
of its Equity Interests at such time.

 

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SECTION 2. THE LOAN

2.1 [Reserved.]

2.2 Term Loan.

(a) Advances. Subject to the terms and conditions of this Agreement, the Lenders
will severally (and not jointly) make in an amount not to exceed its respective
Term Commitment, and Borrower agrees to draw, a Term Loan Advance of Twenty-Two
Million Five Hundred Thousand Dollars ($22,500,000) on the Closing Date (the
“Tranche 1 Advance”). Subject to the terms and conditions of this Agreement,
beginning on the date Borrower achieves the Tranche 2 Availability Conditions
and continuing through March 31, 2021, Borrower may request and the Lenders
shall severally (and not jointly) make an additional Term Loan Advance in a
principal amount of Five Million Dollars ($5,000,000) (the “Tranche 2 Advance”).
Subject to the terms and conditions of this Agreement, and conditioned on
approval by the Lenders’ investment committee in its sole and unfettered
discretion, on or before March 31, 2021, Borrower may request an additional Term
Loan Advance in a principal amount up to Seven Million Five Hundred Thousand
Dollars ($7,500,000) (the “Tranche 3 Advance”). The aggregate outstanding Term
Loan Advances may be up to the Maximum Term Loan Amount.

(b) Advance Request. To obtain a Term Loan Advance, Borrower shall complete,
sign and deliver an Advance Request (at least three (3) Business Days before the
Advance Date other than the Closing Date, which shall be at least one
(1) Business Day) to Agent. The Lenders shall fund the Term Loan Advance in the
manner requested by the Advance Request provided that each of the conditions
precedent set forth in Section 4 and applicable to such Term Loan Advance is
satisfied as of the requested Advance Date.

(c) Interest. Term Loan Interest Rate. The principal balance shall bear interest
thereon from such Advance Date at the Term Loan Interest Rate based on a year
consisting of 360 days, with interest computed daily based on the actual number
of days elapsed. The Term Loan Interest Rate will float and change on the day
the prime rate changes from time to time.

(d) Payment. Borrower will pay interest on each Term Loan Advance in arrears on
the first Business Day of each month, beginning the month after the Advance
Date. Borrower shall repay the aggregate Term Loan principal balance that is
outstanding on the day immediately preceding the Amortization Date, in equal
monthly installments of principal and interest (mortgage style) beginning on the
Amortization Date and continuing on the first Business Day of each month
thereafter until the Secured Obligations (other than inchoate indemnity
obligations) are repaid. The entire Term Loan principal balance and all accrued
but unpaid interest hereunder, shall be due and payable on the Term Loan
Maturity Date. Borrower shall make all payments under this Agreement without
setoff, recoupment or deduction and regardless of any counterclaim or defense.
If a payment hereunder becomes due and payable on a day that is not a Business
Day, the due date thereof shall be the immediately following Business Day. The
Lenders will initiate debit entries to the Borrower’s Designated Account or any
other account as authorized on the ACH Authorization (i) on each payment date of
all periodic obligations payable to the Lenders under each Term Loan Advance and
(ii) reasonable and documented out-of-pocket legal fees and costs incurred by
Agent or the Lenders in connection with Section 11.12 of this Agreement;
provided that, with respect to clause (i) above, in the event that the Lenders
or Agent informs Borrower that the Lenders will not initiate a debit entry to
Borrower’s account for a certain amount of the periodic obligations due on a
specific payment date, Borrower shall pay to the

 

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Lenders such amount of periodic obligations in full in immediately available
funds on such payment date; provided, further, that, with respect to clause
(i) above, if the Lenders or Agent informs Borrower that the Lenders will not
initiate a debit entry as described above later than the date that is three
(3) Business Days prior to such payment date, Borrower shall pay to the Lenders
such amount of periodic obligations in full in immediately available funds on
the date that is three (3) Business Days after the date on which the Lenders or
Agent notifies Borrower of such; provided, further, that, with respect to clause
(ii) above, in the event that the Lenders or Agent informs Borrower that the
Lenders will not initiate a debit entry to Borrower’s account for certain amount
of such out-of-pocket legal fees and costs incurred by Agent or the Lenders,
Borrower shall pay to the Lenders such amount in full in immediately available
funds within three (3) Business Days.

2.3 Maximum Interest. Notwithstanding any provision in this Agreement or any
other Loan Document, it is the parties’ intent not to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”). If a court of competent jurisdiction shall finally determine that
Borrower has actually paid to the Lenders an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrower shall be applied as follows: first, to the payment of the
Secured Obligations consisting of the outstanding principal; second, after all
principal is repaid, to the payment of the Lenders’ accrued interest, reasonable
and documented out-of-pocket costs, expenses, professional fees and any other
Secured Obligations; and third, after all Secured Obligations are repaid, the
excess (if any) shall be refunded to Borrower.

2.4 Default Interest. In the event any payment is not paid on the scheduled
payment date, an amount equal to five percent (5%) of the past due amount shall
be payable on demand. In addition, upon the occurrence and during the
continuation of an Event of Default hereunder, all outstanding Secured
Obligations, including principal, interest, compounded interest, and
professional fees, shall bear interest at a rate per annum equal to the rate set
forth in Section 2.2(c), plus five percent (5%) per annum. In the event any
interest is not paid when due hereunder, delinquent interest shall be added to
principal and shall bear interest on interest, compounded at the rate set forth
in Section 2.2(c) or Section 2.4, as applicable.

2.5 Prepayment. At its option upon at least five (5) Business Days prior written
notice to Agent, Borrower may prepay all, but not less than all, of the
outstanding Advances by paying the entire principal balance, all accrued and
unpaid interest thereon, together with a prepayment charge equal to the
following percentage of the Advance amount being prepaid: with respect to each
Advance, if such Advance amounts are prepaid in any of the first twelve
(12) months following the Closing Date, 2.00%; after twelve (12) months but on
or prior to twenty four (24) months, 1.50%; after twenty four (24) months but on
or prior to thirty six (36) months, 1.00%; and thereafter, 0.00% (each, a
“Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable
calculation of the Lenders’ lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early repayment
of the Advances. Borrower shall prepay the outstanding amount of all principal
and accrued interest through the prepayment date and the applicable Prepayment
Charge upon the occurrence of a Change in Control or any other prepayment
hereunder. Notwithstanding the foregoing, Agent and the Lenders agree to waive
the Prepayment Charge if Agent and the Lenders (in their sole and absolute
discretion) agree in writing to refinance the Advances prior to the Term Loan
Maturity Date. Any amounts paid under this Section shall be applied by Agent to
the then unpaid amount of any Secured Obligations (including principal and
interest) in such order and priority as Agent may choose in its sole discretion.
For the avoidance of doubt, if a payment hereunder becomes due and payable on a
day that is not a Business Day, the due date thereof shall be the immediately
following Business Day.

 

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2.6 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity
Date, (ii) the date that Borrower prepays the outstanding Secured Obligations
(other than any inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) in full, or
(iii) the date that the Secured Obligations become due and payable, Borrower
shall pay the Lenders a charge equal to 7.55% of the aggregate principal amount
of the Term Loan Advances (the “End of Term Charge”). Notwithstanding the
required payment date of such End of Term Charge, the applicable pro rata
portion of the End of Term Charge shall be deemed earned by the Lenders as of
each date a Term Loan Advance is made. For the avoidance of doubt, if a payment
hereunder becomes due and payable on a day that is not a Business Day, the due
date thereof shall be the immediately following Business Day.

2.7 Pro Rata Treatment. Each payment (including prepayment) on account of any
fee and any reduction of the Term Loan Advances shall be made pro rata according
to the Term Commitments of the relevant Lender.

2.8 Taxes; Increased Costs. The Borrower, the Agent and the Lenders each hereby
agree to the terms and conditions set forth on Addendum 1 attached hereto.

2.9 Treatment of Prepayment Charge and End of Term Charge. Borrower agrees that
any Prepayment Charge and any End of Term Charge payable shall be presumed to be
the liquidated damages sustained by each Lender as the result of the early
termination, and Borrower agrees that it is reasonable under the circumstances
currently existing and existing as of the Closing Date. The Prepayment Charge
and the End of Term Charge shall also be payable in the event the Secured
Obligations (and/or this Agreement) are satisfied or released by foreclosure
(whether by power of judicial proceeding), deed in lieu of foreclosure, or by
any other means. Borrower expressly waives (to the fullest extent it may
lawfully do so) the provisions of any present or future statute or law that
prohibits or may prohibit the collection of the foregoing Prepayment Charge and
End of Term Charge in connection with any such acceleration. Borrower agrees (to
the fullest extent that each may lawfully do so): (a) each of the Prepayment
Charge and the End of Term Charge is reasonable and is the product of an arm’s
length transaction between sophisticated business people, ably represented by
counsel; (b) each of the Prepayment Charge and the End of Term Charge shall be
payable notwithstanding the then prevailing market rates at the time payment is
made; (c) there has been a course of conduct between the Lenders and Borrower
giving specific consideration in this transaction for such agreement to pay the
Prepayment Charge and the End of Term Charge as a charge (and not interest) in
the event of prepayment or acceleration; (d) Borrower shall be estopped from
claiming differently than as agreed to in this Section 2.9. Borrower expressly
acknowledges that their agreement to pay each of the Prepayment Charge and the
End of Term Charge to the Lenders as herein described was on the Closing Date
and continues to be a material inducement to the Lenders to provide the Term
Loans.

 

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SECTION 3. SECURITY INTEREST

3.1 As security for the prompt and complete payment when due (whether on the
payment dates or otherwise) of all the Secured Obligations, subject to
Section 3.2, Borrower grants to Agent a security interest in all of Borrower’s
right, title, and interest in and to the following Borrower’s personal property
whether now owned or hereafter acquired (collectively, the “Collateral”): (a)
Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles (other than
Intellectual Property); (e) Inventory; (f) Investment Property; (g) Deposit
Accounts; (h) Cash; (i) Goods; and all other tangible and intangible personal
property of Borrower whether now or hereafter owned or existing, leased,
consigned by or to, or acquired by, Borrower and wherever located, and any of
Borrower’s property in the possession or under the control of Agent; and, to the
extent not otherwise included, all Proceeds of each of the foregoing and all
accessions to, substitutions and replacements for, and rents, profits and
products of each of the foregoing; provided, however, that the Collateral shall
include all Accounts and General Intangibles that consist of rights to payment
and proceeds from the sale, licensing or disposition of all or any part, 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 the date of this Agreement, include the
Intellectual Property to the extent necessary to permit perfection of Agent’s
security interest in the Rights to Payment.

3.2 Notwithstanding the broad grant of the security interest set forth in
Section 3.1, above, the Collateral shall not include (a) nonassignable licenses
or contracts, which by their terms require 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,
9407 and 9408 of the UCC), (b) any Intellectual Property, (c) assets as to which
a security interest in such assets is prohibited by applicable law, rule or
regulation (but only to the extent and during such times such prohibition
exists), (d) more than 65% of the presently existing and hereafter arising
issued and outstanding Equity Interests owned by Borrower of any Excluded
Subsidiary that is a CFC or CFC Holdco which Equity Interests entitle the holder
thereof to vote for directors or any other matter (provided, however, that in
the case of this clause (d), immediately upon any change in the U.S. tax laws
that would allow the pledge of a greater percentage of such Equity Interests
without material adverse tax consequences to the Borrower, the Collateral shall
automatically and without further action required by, and without notice to, any
Person include such greater percentage of Equity Interests of such Subsidiary
from that time forward) and (e) the assets of any (i) Excluded Subsidiary or
(ii) MSC Subsidiary, in each case, including the Equity Interests of any
Subsidiary thereof.

3.3 The security interest granted in Section 3.1 of this Agreement shall
continue until the Secured Obligations (other than contingent indemnification or
reimbursement obligations that are not yet due and payable) have been paid in
full and Lender has no further commitment or obligation hereunder or under the
other Loan Documents to make any further Advances, and shall thereupon
terminate, and Lender shall, at Borrower’s expense, take all actions reasonably
requested by Borrower to evidence such termination.

SECTION 4. CONDITIONS PRECEDENT TO LOAN

The obligations of the Lenders to make the Loan hereunder are subject to the
satisfaction by Borrower of the following conditions:

4.1 Initial Advance. On or prior to the Closing Date, Borrower shall have
delivered to Agent the following:

 

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(a) executed copies of the Loan Documents, Account Control Agreements, and all
other documents and instruments reasonably required by Agent to effectuate the
transactions contemplated hereby or to create and perfect the Liens of Agent
with respect to all Collateral, in all cases in form and substance reasonably
acceptable to Agent;

(b) a legal opinion of Borrower’s counsel, in form and substance reasonably
acceptable to Agent;

(c) certified copy of resolutions of Borrower’s board of directors evidencing
approval of the Loan and other transactions evidenced by the Loan Documents;

(d) certified copies of the Certificate of Incorporation and the Bylaws, as
amended through the Closing Date, of Borrower;

(e) a certificate of good standing for Borrower from its state of incorporation
and similar certificates from all other jurisdictions in which it does business
and where the failure to be qualified would have a Material Adverse Effect;

(f) payment of the Initial Facility Charge and reimbursement of Agent’s and
Lenders’ current expenses reimbursable pursuant to this Agreement and which have
been invoiced to Borrower prior to the date hereof, which amounts may be
deducted from the initial Advance;

(g) all certificates of insurance and copies of each insurance policy required
hereunder; and

(h) such other documents as Agent may reasonably request.

4.2 All Advances. On each Advance Date:

(a) Agent shall have received (i) an Advance Request for the relevant Advance as
required by Section 2.2(b), each duly executed by Borrower’s Chief Executive
Officer or Chief Financial Officer, and (ii) any other documents Agent may
reasonably request.

(b) The representations and warranties set forth in this Agreement shall be true
and correct in all material respects on and as of the Advance Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all
material respects as of such date.

(c) Borrower shall be in compliance with all the terms and provisions set forth
herein and in each other Loan Document on its part to be observed or performed,
and at the time of and immediately after such Advance no Event of Default shall
have occurred and be continuing.

(d) With respect to the Tranche 3 Advance, Borrower shall have paid the Tranche
3 Facility Charge;

(e) Each Advance Request shall be deemed to constitute a representation and
warranty by Borrower on the relevant Advance Date as to the matters specified in
paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in
the Advance Request.

 

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4.3 No Default. As of the Closing Date and each Advance Date, (i) no fact or
condition exists that would (or would, with the passage of time, the giving of
notice, or both) constitute an Event of Default and (ii) no event that has had
or could reasonably be expected to have a Material Adverse Effect has occurred
and is continuing.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower represents and warrants that:

5.1 Corporate Status. Borrower is a corporation duly organized, legally existing
and in good standing under the laws of the State of Delaware, and is duly
qualified as a foreign corporation in all jurisdictions in which the nature of
its business or location of its properties require such qualifications and where
the failure to be qualified could reasonably be expected to have a Material
Adverse Effect. Borrower’s present name, former names (if any), locations, place
of formation, tax identification number, organizational identification number
and other information are correctly set forth in Exhibit B, as may be updated by
Borrower in a written notice (including any Compliance Certificate) provided to
Agent after the Closing Date.

5.2 Collateral. Borrower owns the Collateral and the Intellectual Property, free
of all Liens, except for Permitted Liens. Borrower has the power and authority
to grant to Agent a Lien in the Collateral as security for the Secured
Obligations.

5.3 Consents. Borrower’s execution, delivery and performance of this Agreement
and all other Loan Documents (i) have been duly authorized by all necessary
corporate action of Borrower, (ii) will not result in the creation or imposition
of any Lien upon the Collateral, other than Permitted Liens and the Liens
created by this Agreement and the other Loan Documents, (iii) do not violate any
provisions of Borrower’s Certificate or Articles of Incorporation (as
applicable), bylaws, or any material law, regulation, order, injunction,
judgment, decree or writ to which Borrower is subject and (iv) except as
described on Schedule 5.3, do not violate in any material respect any material
contract or agreement or require the consent or approval of any other Person
which has not already been obtained. The individual or individuals executing the
Loan Documents are duly authorized to do so.

5.4 Material Adverse Effect. No event that has had or could reasonably be
expected to have a Material Adverse Effect has occurred and is continuing.
Borrower is not aware of any event likely to occur that is reasonably expected
to result in a Material Adverse Effect.

5.5 Actions Before Governmental Authorities. There are no actions, suits or
proceedings at law or in equity or by or before any governmental authority now
pending or, to the knowledge of Borrower, threatened in writing against or
affecting Borrower or its property, that is reasonably expected to result in a
Material Adverse Effect.

5.6 Laws. Neither Borrower nor any of its Subsidiaries is in violation of any
law, rule or regulation, or in default with respect to any judgment, writ,
injunction or decree of any governmental authority, where such violation or
default is reasonably expected to result in a Material Adverse Effect. Borrower
is not in default in any manner under any provision of any agreement or
instrument evidencing material Indebtedness, or any other material agreement to
which it is a party or by which it is bound and for which such default would
reasonably be expected to result in a Material Adverse Effect.

 

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Neither Borrower nor any of its Subsidiaries is an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act
of 1940, as amended. Neither Borrower nor any of its Subsidiaries is engaged as
one of its important activities in extending credit for margin stock (under
Regulations X, T and U of the Federal Reserve Board of Governors). Borrower and
each of its Subsidiaries has complied in all material respects with the Federal
Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a
“holding company” or an “affiliate” of a “holding company” or a “subsidiary
company” of a “holding company” as each term is defined and used in the Public
Utility Holding Company Act of 2005. Neither Borrower’s nor any of its
Subsidiaries’ properties or assets has been used by Borrower or such Subsidiary
or, to Borrower’s knowledge, by previous Persons, in disposing, producing,
storing, treating, or transporting any hazardous substance other than in
material compliance with applicable laws. Borrower and each of its Subsidiaries
has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all governmental
authorities that are necessary to continue their respective businesses as
currently conducted.

None of Borrower, any of its Subsidiaries, or any of Borrower’s or its
Subsidiaries’ Affiliates or any of their respective agents acting or benefiting
in any capacity in connection with the transactions contemplated by this
Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of
Borrower, any of its Subsidiaries, or to the knowledge of Borrower and any of
its Affiliates or agents, acting or benefiting in any capacity in connection
with the transactions contemplated by this Agreement, (x) conducts any business
or engages in making or receiving any contribution of funds, goods or services
to or for the benefit of any Blocked Person, or (y) deals in, or otherwise
engages in any transaction relating to, any property or interest in property
blocked pursuant to Executive Order No. 13224, any similar executive order or
other Anti-Terrorism Law. None of the funds to be provided under this Agreement
will be used, directly or indirectly, (a) for any activities in violation of any
applicable anti-money laundering, economic sanctions and anti-bribery laws and
regulations laws and regulations or (b) for any payment to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.

5.7 Information Correct and Current. No information, report, Advance Request,
financial statement, exhibit or schedule furnished, by or on behalf of Borrower
to Agent in connection with any Loan Document or included therein or delivered
pursuant thereto (other than the projections) contained, or, when taken as a
whole, contains or will contain any material misstatement of fact or, when taken
together with all other such information or documents, omitted, omits or will
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were, are or will be made, not
materially misleading at the time such statement was made or deemed made.
Additionally, any and all financial or business projections provided by Borrower
to Agent, whether prior to or after the Closing Date, shall be (i) provided in
good faith and based on the most current data and information available to
Borrower, and (ii) the most current of such projections provided to Borrower’s
Board of Directors (it being understood that such projections are subject to
significant uncertainties and contingencies, many of which are beyond the
control of Borrower, that no assurance is given that any particular projections
will be realized and that actual results may differ materially).

 

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5.8 Tax Matters. Except as described on Schedule 5.8, (a) Borrower and its
Subsidiaries have filed all federal and state income Tax returns and other
material Tax returns that they are required to file, (b) Borrower and its
Subsidiaries have duly paid all federal and state income Taxes and other
material Taxes or installments thereof (including any interest or penalties) as
and when due, except those being contested in good faith with adequate reserves
taken in connection thereto in accordance with GAAP, (c) Borrower has paid or
fully reserved for any tax assessment received by Borrower for the three
(3) years preceding the Closing Date, if any, and (d) to Borrower’s knowledge,
no proposed or pending Tax assessments, deficiencies, audits or other
proceedings with respect to Borrower or any Subsidiary have had, or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

5.9 Intellectual Property Claims. Borrower is the sole owner of, or otherwise
has the right to use, the Intellectual Property material to Borrower’s business.
Except as described on Schedule 5.9, (i) each of the material Copyrights,
Trademarks and Patents is valid and enforceable, (ii) no material part of the
Intellectual Property has been judged invalid or unenforceable, in whole or in
part, and (iii) to the best of Borrower’s knowledge, no claim has been made in
writing alleging to Borrower that any material part of the Intellectual Property
violates the rights of any third party. Exhibit C is a true, correct and
complete list of each of Borrower’s Patents, registered Trademarks, registered
Copyrights, and material agreements under which Borrower licenses Intellectual
Property from third parties (other than shrink-wrap software licenses or other
licenses which, if terminated, would not reasonably be expected to result in a
Material Adverse Effect), together with application or registration numbers, as
applicable, owned by Borrower or any Subsidiary, in each case as of the Closing
Date. Borrower is not in material breach of, nor has Borrower failed to perform
any material obligations under, any of the foregoing contracts, licenses or
agreements and, to Borrower’s knowledge, no third party to any such contract,
license or agreement is in material breach thereof or has failed to perform any
material obligations thereunder, except as would not reasonably be expected to
result in a Material Adverse Effect.

5.10 Intellectual Property. To the best of Borrower’s knowledge, except as
described on Schedule 5.10, Borrower has all material rights with respect to
Intellectual Property necessary or material in the operation or conduct of
Borrower’s business as currently conducted and proposed to be conducted by
Borrower. Without limiting the generality of the foregoing, and in the case of
Licenses, except for restrictions that are unenforceable under Division 9 of the
UCC, Borrower has the right, to the extent required to operate Borrower’s
business, to freely transfer, license or assign Intellectual Property necessary
or material in the operation or conduct of Borrower’s business as currently
conducted and proposed to be conducted by Borrower, without condition,
restriction or payment of any kind (other than license payments in the ordinary
course of business) to any third party, and Borrower owns or has the right to
use, pursuant to valid licenses, all software development tools, library
functions, compilers and all other third-party software and other items that are
material to Borrower’s business and used in the design, development, promotion,
sale, license, manufacture, import, export, use or distribution of Borrower
Products except customary covenants in inbound license agreements and equipment
leases where Borrower is the licensee or lessee. Borrower is not a party to, nor
is it bound by, any Restricted License.

No material software or other materials used by Borrower or any of its
Subsidiaries (or used in any Borrower Products or any Subsidiaries’ products)
are subject to an open-source or similar license (including but not limited to
the General Public License, Lesser General Public License, Mozilla Public
License, or Affero License) (collectively, “Open Source Licenses”) in a manner
that would cause such software or other materials to have to be (i) distributed
to third parties at no charge or a minimal charge (royalty-free basis); (ii)
licensed to third parties to modify, make derivative works based on, decompile,
disassemble, or reverse engineer; or (iii) used in a manner that does could
require disclosure or distribution in source code form.

 

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5.11 Borrower Products. Except as described on Schedule 5.11, no material
Intellectual Property owned by Borrower or Borrower Product has been or is
subject to any actual or, to the knowledge of Borrower, threatened in writing
litigation, proceeding (including any proceeding in the United States Patent and
Trademark Office or any corresponding foreign office or agency) or outstanding
decree, order, judgment, settlement agreement or stipulation that restricts in
any manner Borrower’s use, transfer or licensing thereof or that would
reasonably be expected to adversely affect the validity, use or enforceability
thereof. There is no decree, order, judgment, agreement, stipulation, arbitral
award or other provision entered into in connection with any litigation or
proceeding before a governmental authority that obligates Borrower to grant
licenses or ownership interest in any future Intellectual Property material to
the operation or conduct of the business of Borrower or Borrower Products.
Borrower has not received any written notice or claim, or, to the knowledge of
Borrower, oral notice or claim, challenging or questioning Borrower’s ownership
in any material Intellectual Property (or written notice of any claim
challenging or questioning the ownership in any material licensed Intellectual
Property of the owner thereof) or suggesting that any third party has any claim
of legal or beneficial ownership with respect thereto nor, to Borrower’s
knowledge, is there a reasonable basis for any such claim. To the Borrower’s
knowledge, neither Borrower’s use of its material Intellectual Property nor the
production and sale of Borrower Products infringes the material Intellectual
Property or other rights of others.

5.12 Financial Accounts. Exhibit D, as may be updated by the Borrower in a
written notice provided to Agent after the Closing Date, is a true, correct and
complete list of (a) all banks and other financial institutions at which
Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions
at which Borrower or any Subsidiary maintains an account holding Investment
Property, and such exhibit correctly identifies the name, address and telephone
number of each bank or other institution, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.

5.13 Employee Loans. Borrower has no outstanding loans to any employee, officer
or director of the Borrower nor has Borrower guaranteed the payment of any loan
made to an employee, officer or director of the Borrower by a third party.

5.14 Capitalization and Subsidiaries. Borrower’s capitalization as of the
Closing Date is set forth on Schedule 5.14 annexed hereto. Borrower does not own
any stock, partnership interest or other securities of any Person, except for
Permitted Investments. Attached as Schedule 5.14, as may be updated by Borrower
in a written notice provided after the Closing Date, is a true, correct and
complete list of each Subsidiary.

5.15 Certain Subsidiary Voting Rights. No decision or action in any governing
document of any Excluded Subsidiary that is a CFC or CFC Holdco requires a vote
of greater than 50.1% of the Equity Interests or voting rights of such
Subsidiary, other than with Agent’s written consent.

 

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SECTION 6. INSURANCE; INDEMNIFICATION

6.1 Coverage. Borrower shall cause to be carried and maintained commercial
general liability insurance, on an occurrence form, against risks customarily
insured against by businesses of Borrower’s size in Borrower’s line of business
in similar locations. Such risks shall include the risks of bodily injury,
including death, property damage, personal injury, advertising injury, and
contractual liability per the terms of the indemnification agreement found in
Section 6.3. Borrower must maintain a minimum of $2,000,000 of commercial
general liability insurance for each occurrence. Borrower has and agrees to
maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each
occurrence and $5,000,000 in the aggregate. So long as there are any Secured
Obligations (other than inchoate indemnification or reimbursement obligations or
other obligations which, by their terms, survive termination of this Agreement)
outstanding, Borrower shall also cause to be carried and maintained insurance
upon the Collateral, insuring against all risks of physical loss or damage
howsoever caused, in an amount not less than the full replacement cost of the
Collateral, provided that such insurance may be subject to standard exceptions
and deductibles. If Borrower fails to obtain the insurance called for by this
Section 6.1 or fails to pay any premium thereon or fails to pay any other amount
which Borrower is obligated to pay under this Agreement or any other Loan
Document or which may be required to preserve the Collateral, Agent may obtain
such insurance or make such payment, and all amounts so paid by Agent are
immediately due and payable, bearing interest at the then highest rate
applicable to the Secured Obligations, and secured by the Collateral. Agent will
make reasonable efforts to provide Borrower with notice of Agent obtaining such
insurance at the time it is obtained or within a reasonable time thereafter. No
payments by Agent are deemed an agreement to make similar payments in the future
or Agent’s waiver of any Event of Default.

6.2 Certificates. Borrower shall deliver to Agent certificates of insurance that
evidence Borrower’s compliance with its insurance obligations in Section 6.1 and
the obligations contained in this Section 6.2. Borrower’s insurance certificate
shall state Agent (shown as “Hercules Capital, Inc., as Agent”) is an additional
insured for commercial general liability, a lenders loss payable for all risk
property damage insurance, subject to the insurer’s approval, and a lenders loss
payable for property insurance and additional insured for liability insurance
for any future insurance that Borrower may acquire from such insurer.
Notwithstanding the foregoing, (i) so long as no Event of Default has occurred
and is continuing, Borrower shall have the option of applying the proceeds of
any casualty policy up to $250,000 in the aggregate for all losses under all
casualty policies in any one (1) year, toward the replacement or repair of
destroyed or damaged property; provided that any such replaced or repaired
property (A) shall be of equal or like value as the replaced or repaired
Collateral and (B) shall be deemed Collateral in which Agent has been granted a
first priority security interest (subject only to Permitted Liens that are
permitted pursuant to the terms of this Agreement to have superior priority to
Agent’s Lien), and (ii) after the occurrence and during the continuance of an
Event of Default, all proceeds payable under such casualty policy shall, at the
option of Agent, be payable to Agent on account of the Secured Obligations.
Borrower shall deliver additional insured endorsements for liability and
lender’s loss payable endorsements for all risk property damage insurance
pursuant to Section 7.16(b). All certificates of insurance will provide for a
minimum of thirty (30) days advance written notice to Agent of cancellation
(other than cancellation for non-payment of premiums, for which ten (10) days’
advance written notice shall be sufficient). Any failure of Agent to scrutinize
such insurance certificates for compliance is not a waiver of any of Agent’s
rights, all of which are reserved. Upon request by Agent, Borrower shall provide
Agent with copies of each insurance policy, and upon entering or amending any
insurance policy required hereunder, Borrower shall provide Agent with copies of
such policies and shall promptly deliver to Agent updated insurance certificates
with respect to such policies.

 

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6.3 Indemnity. Borrower agrees to indemnify and hold Agent, the Lenders and
their officers, directors, employees, agents, in-house attorneys,
representatives and shareholders (each, an “Indemnified Person”) harmless from
and against any and all claims, reasonable and documented out-of-pocket costs,
expenses, damages and liabilities (including such claims, costs, expenses,
damages and liabilities based on liability in tort, including strict liability
in tort), including reasonable and documented out-of-pocket attorneys’ fees and
disbursements and other costs of investigation or defense (including those
incurred upon any appeal) (collectively, “Liabilities”), that may be instituted
or asserted against or incurred by such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and
the other Loan Documents or the administration of such credit, or in connection
with or arising out of the transactions contemplated hereunder and thereunder,
or any actions or failures to act in connection therewith, or arising out of the
disposition or utilization of the Collateral, excluding in all cases Liabilities
to the extent resulting solely from any Indemnified Person’s gross negligence or
willful misconduct. This Section 6.3 shall not apply with respect to Taxes other
than any Taxes that represent losses, claims, damages, etc. arising from any
non-Tax claim. In no event shall any Indemnified Person be liable on any theory
of liability for any special, indirect, consequential or punitive damages
(including any loss of profits, business or anticipated savings). This
Section 6.3 shall survive the repayment of indebtedness under, and otherwise
shall survive the expiration or other termination of, the Loan Agreement.

SECTION 7. COVENANTS OF BORROWER

Borrower agrees as follows:

7.1 Financial Reports. Borrower shall furnish to Agent the financial statements
and reports listed hereinafter (the “Financial Statements”):

(a) as soon as practicable (and in any event within 30 days) after the end of
each month, unaudited interim and year-to-date financial statements as of the
end of such month (prepared on a consolidated and consolidating basis, if
applicable), including balance sheet and related statements of income and cash
flows accompanied by a report detailing any material contingencies (including
the commencement of any material litigation by or against Borrower) or any other
occurrence that could reasonably be expected to have a Material Adverse Effect,
all certified by Borrower’s Chief Executive Officer or Chief Financial Officer
to the effect that they have been prepared in accordance with GAAP, except
(i) for the absence of footnotes, (ii) that they are subject to normal year end
adjustments, and (iii) they do not contain certain non-cash items that are
customarily included in quarterly and annual financial statements;

(b) as soon as practicable (and in any event within 45 days) after the end of
each calendar quarter, unaudited interim and year-to-date financial statements
as of the end of such calendar quarter (prepared on a consolidated and
consolidating basis, if applicable), including balance sheet and related
statements of income and cash flows accompanied by a report detailing any
material contingencies (including the commencement of any material litigation by
or against Borrower) or any other occurrence that would reasonably be expected
to have a Material Adverse Effect, certified by Borrower’s Chief Executive
Officer or Chief Financial Officer to the effect that they have been prepared in
accordance with GAAP, except (i) for the absence of footnotes, and (ii) that
they are subject to normal year end adjustments.

(c) as soon as practicable (and in any event within ninety (90) days) after the
end of each fiscal year, unqualified (other than as to going concern or a
qualification resulting solely from the scheduled maturity of the Advances
occurring within one year from the date such opinion is delivered) audited
financial statements as of the end of such year (prepared on a

 

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consolidated and consolidating basis, if applicable), including balance sheet
and related statements of income and cash flows, and setting forth in
comparative form the corresponding figures for the preceding fiscal year,
certified by a firm of independent certified public accountants selected by
Borrower and reasonably acceptable to Agent, accompanied by any management
report from such accountants;

(d) as soon as practicable (and in any event within 30 days) after the end of
each month, a Compliance Certificate in the form of Exhibit E;

(e) as soon as practicable (and in any event within 30 days) after the end of
each month, a report showing agings of accounts receivable and accounts payable;

(f) promptly after the sending or filing thereof, as the case may be, (i) copies
of any proxy statements, financial statements or reports that Borrower has made
generally available to holders of its preferred stock and (ii) copies of any
regular, periodic and special reports or registration statements that Borrower
files with the Securities and Exchange Commission or any governmental authority
that may be substituted therefor, or any national securities exchange;

(g) within ten (10) Business Days after a Board meeting, an executive summary of
the materials that Borrower provides to its directors in connection with
meetings of the Board of Directors, provided that in all cases Borrower may
exclude highly confidential information, information that would present a
conflict of interest and information subject to attorney-client privilege;

(h) financial and business projections promptly following their approval by
Borrower’s Board of Directors, and in any event, within 60 days after the end of
Borrower’s fiscal year, as well as budgets, operating plans and other financial
information reasonably requested by Agent; and

(i) immediate notice if Borrower or any Subsidiary has knowledge that Borrower,
or any Subsidiary or Affiliate of Borrower, is listed on the OFAC Lists or
(a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or
(d) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering.

Borrower shall not make any change in its (a) accounting policies or reporting
practices, except as required by GAAP or (b) fiscal years or fiscal quarters.
The fiscal year of Borrower shall end on December 31.

The executed Compliance Certificate and all Financial Statements required to be
delivered pursuant to clauses (a), (b), (c) and (d) shall be sent via e-mail to
Agent at financialstatements@htgc.com with a copy to legal@htgc.com and
jbourque@htgc.com; provided, that if e-mail is not available or sending such
Financial Statements via e-mail is not possible, they shall be faxed to Agent
at: (650) 473-9194, attention Account Manager: Kaleido Biosciences, Inc.

Notwithstanding the foregoing, documents required to be delivered under Sections
7.1(a), (b), (c) or (f) (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date on which
Borrower posts such documents, or provides a link thereto, on Borrower’s website
on the Internet at Borrower’s website address; provided that Borrower shall
directly provide Agent all Financial Statements required to be delivered
pursuant to Section 7.1(b) and (c) hereunder.

 

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7.2 Management Rights. Borrower shall permit any representative that Agent or
the Lenders authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of Borrower at reasonable times and upon reasonable notice during normal
business hours; provided, however, that so long as no Event of Default has
occurred and is continuing, such examinations shall be limited to no more often
than once per fiscal year. In addition, in connection with any such examination,
any such representative shall have the right to meet with management and
officers of Borrower to discuss such books of account and records. In addition,
Agent or the Lenders shall be entitled at reasonable times and intervals and
upon reasonable prior written notice to consult with and advise the management
and officers of Borrower concerning significant business issues affecting
Borrower. Such consultations shall not unreasonably interfere with Borrower’s
business operations. The parties intend that the rights granted Agent and the
Lenders shall constitute “management rights” within the meaning of 29 C.F.R.
Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or
participation by Agent or the Lenders with respect to any business issues shall
not be deemed to give Agent or the Lenders, nor be deemed an exercise by Agent
or the Lenders of, control over Borrower’s management or policies.

7.3 Further Assurances. Borrower shall from time to time execute, deliver and
file, alone or with Agent, any financing statements, security agreements,
collateral assignments, notices, control agreements, promissory notes or other
documents to perfect, give the highest priority to Agent’s Lien on the
Collateral (subject to Permitted Liens) as Agent may reasonably request from
time to time or as otherwise specifically required under the Loan Documents.
Borrower shall from time to time procure any instruments or documents as may be
reasonably requested by Agent, and take all further action that may be
necessary, or that Agent may reasonably request, to perfect and protect the
Liens granted hereby and thereby in accordance with the Loan Documents. In
addition, and for such purposes only, Borrower hereby authorizes Agent to
execute and deliver on behalf of Borrower and to file such financing statements
(including an indication that the financing statement covers “all assets or all
personal property” of Borrower in accordance with Section 9-504 of the UCC),
collateral assignments, notices, control agreements, security agreements and
other documents without the signature of Borrower either in Agent’s name or in
the name of Agent as agent and attorney-in-fact for Borrower. Borrower shall
protect and defend Borrower’s title to the Collateral and Agent’s Lien thereon
against all Persons claiming any interest adverse to Borrower or Agent other
than Permitted Liens.

7.4 Indebtedness. Borrower shall not 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 Subordinated Indebtedness
or take any actions which impose on Borrower an obligation to prepay any
Subordinated Indebtedness, except for (a) the conversion of Indebtedness into
equity securities and the payment of cash in lieu of fractional shares in
connection with such conversion, (b) purchase money Indebtedness pursuant to its
then applicable payment schedule, (c) prepayment by any Subsidiary of
(i) inter-company Indebtedness owed by such Subsidiary to any Borrower, or
(ii) if such Subsidiary is not a Borrower, intercompany Indebtedness owed by
such Subsidiary to another Subsidiary that is not a Borrower, (d) as otherwise
permitted hereunder or approved in writing by Agent, or (e) the Indebtedness
under the Loan Documents pursuant to Section 2.5.

7.5 Collateral. Borrower shall at all times keep the Collateral, the
Intellectual Property and all other property and assets used in Borrower’s
business or in which Borrower now or hereafter holds any interest free and clear
from any Liens whatsoever (except for Permitted Liens), and shall give Agent
prompt written notice of any known legal process affecting the Collateral, the

 

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Intellectual Property, such other property and assets, in each case, with a
value in excess of $250,000, or any Liens thereon, provided however, that the
Collateral and such other property and assets may be subject to Permitted Liens
except that there shall be no Liens whatsoever on Intellectual Property.
Borrower shall not agree with any Person other than Agent or the Lenders not to
encumber its property (other than holders of Permitted Liens). Borrower shall
not enter into or suffer to exist or become effective any agreement that
prohibits or limits the ability of any Borrower to create, incur, assume or
suffer to exist any Lien upon any of its property (including Intellectual
Property), whether now owned or hereafter acquired, to secure its obligations
under the Loan Documents to which it is a party other than (a) this Agreement
and the other Loan Documents, (b) any agreements governing any purchase money
Liens or capital lease obligations otherwise permitted hereby (in which case,
any prohibition or limitation shall only be effective against the assets
financed thereby) and (c) customary restrictions on the assignment of leases,
licenses and other agreements. Borrower shall cause its Subsidiaries to protect
and defend such Subsidiary’s title to its assets from and against all Persons
claiming any interest adverse to such Subsidiary, and Borrower shall cause its
Subsidiaries at all times to keep such Subsidiary’s property and assets free and
clear from any known legal process or Liens whatsoever (except for Permitted
Liens, provided however, that there shall be no Liens whatsoever on Intellectual
Property), and shall give Agent prompt written notice of any legal process
affecting such Subsidiary’s assets with a value in excess of $250,000.

7.6 Investments. Borrower shall not directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so to
do, other than Permitted Investments.

7.7 Distributions. Borrower shall not, and shall not allow any Subsidiary to,
(a) repurchase or redeem any class of stock or other Equity Interest other than
pursuant to employee, director or consultant repurchase plans, stock option
plans or agreements, restricted stock agreements, or other similar agreements,
provided, however, in each case the repurchase or redemption price does not
exceed the original consideration paid for such stock or Equity Interest, or
(b) declare or pay any cash dividend or make any other cash distribution on any
class of stock or other Equity Interest, except that a Subsidiary may pay
dividends or make other distributions to Borrower or any Subsidiary of Borrower,
or (c) lend money to any employees, officers or directors or guarantee the
payment of any such loans granted by a third party in excess of $250,000 in the
aggregate outstanding other than Permitted Investments or (d) waive, release or
forgive any Indebtedness owed by any employees, officers or directors in excess
of $250,000 in the aggregate per fiscal year.

7.8 Transfers. Except for Permitted Transfers, Borrower shall not, and shall not
allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease,
license, lend or in any other manner convey any equitable, beneficial or legal
interest in any material portion of its assets.

7.9 Mergers or Acquisitions. Other than Permitted In-Licenses, Borrower shall
not 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 of (a) a Subsidiary which is not a Borrower into another
Subsidiary or into Borrower or (b) a Borrower into another Borrower), or
acquire, or permit any of its Subsidiaries to acquire, in each case including
for the avoidance of doubt through a merger, purchase, in-licensing arrangement
or any similar transaction, all or substantially all of the capital stock or any
property of another Person.

 

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7.10 Taxes. Borrower shall, and shall cause each of its Subsidiaries to, pay
when due all material Taxes of any nature whatsoever now or hereafter imposed or
assessed against Borrower or the Collateral or upon Borrower’s ownership,
possession, use, operation or disposition thereof or upon Borrower’s rents,
receipts or earnings arising therefrom, unless the same are being contested in
good faith and by appropriate proceedings diligently conducted and for which
adequate reserves are being maintained in accordance with GAAP. Borrower shall,
and shall cause each of its Subsidiaries to, file on or before the due date
therefor (taking into account proper extensions) all federal and state income
Tax returns and other material Tax returns required to be filed.

7.11 Corporate Changes. Neither Borrower nor any Subsidiary shall change its
corporate name, legal form or jurisdiction of formation without ten (10) days’
prior written notice to Agent. Neither Borrower nor any Subsidiary shall suffer
a Change in Control unless, as part of the transaction(s) resulting in such a
Change in Control, the Secured Obligations (other than inchoate indemnity
obligations) are repaid in full in cash. Neither Borrower nor any Subsidiary
shall relocate its chief executive office or its principal place of business
unless: (i) it has provided prior written notice to Agent; and (ii) such
relocation shall be within the continental United States of America. Neither
Borrower nor any Domestic Subsidiary or Eligible Foreign Subsidiary shall
relocate any tangible item of Collateral with an aggregate value in excess of
$250,000 (other than (x) sales of Inventory in the ordinary course of business,
(y) relocations of mobile Equipment in the possession of its employees or
agents, and (z) relocations of Collateral from a location described on Exhibit B
to another location described on Exhibit B) unless (i) it has provided prompt
written notice to Agent, (ii) such relocation is within the continental United
States of America and, (iii) if such relocation is to a third party bailee, it
has delivered a bailee agreement in form and substance reasonably acceptable to
Agent.

7.12 Deposit Accounts. Neither Borrower nor any Qualified Subsidiary shall
maintain any Deposit Accounts, or accounts holding Investment Property, except,
in each case, with respect to which Agent has an Account Control Agreement;
provided that no Account Control Agreement is required for any of the existing
restricted accounts listed in Schedule 7.12. Notwithstanding the foregoing, on
and prior to December 31, 2019, Borrower may maintain up to $1,000,000 in its
account with Pacific Western Bank, account number ending in 643.

7.13 Borrower shall notify Agent of each Subsidiary formed subsequent to the
Closing Date and, within 20 days of formation, shall cause any such Subsidiary
(except for an Excluded Subsidiary) to execute and deliver to Agent a Joinder
Agreement, provided that, with respect to any Subsidiary that is an Excluded
Subsidiary at such time, immediately upon any change in applicable tax laws that
would result in such Subsidiary ceasing to be an Excluded Subsidiary, Borrower
shall cause such Subsidiary to execute and deliver to Agent a Joinder Agreement.

7.14 MSC Investment Conditions. At any time that the MSC Subsidiary has any
assets or liabilities, Borrower shall satisfy the MSC Investment Conditions at
all times.

7.15 Notification of Event of Default. Borrower shall notify Agent promptly and
in any case within three (3) Business Days of Borrower obtaining knowledge of
the occurrence of any Event of Default.

7.16 Post-Close Obligations. Notwithstanding any provision herein or in any
other Loan Document to the contrary, to the extent not actually delivered on or
prior to the Closing Date, Borrower shall deliver to Agent (or its designated
agent):

 

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(a) On or before December 31, 2019, evidence satisfactory to Agent that Borrower
has less than $15,000 in deposit in its account held at Pacific Western Bank,
account number ending in 643, for outstanding checks. Borrower shall not deposit
any additional funds or issue additional checks related to such account.
Borrower shall close such account when all currently outstanding checks are
paid.

(b) Within thirty (30) days after the Closing Date, Borrower shall deliver to
Agent appropriate endorsements evidencing lender loss payable, additional
insured, and notice of cancellation endorsements in favor of Agent with respect
to all insurance policies required by Section 6.2 hereof.

7.17 Use of Proceeds. Borrower agrees that the proceeds of the Loans shall be
used solely to refinance existing indebtedness, to pay related fees and expenses
in connection with this Agreement and for working capital and general corporate
purposes. The proceeds of the Loans Credit will not be used in violation of
Anti-Corruption Laws or applicable Sanctions.

7.18 Certain Subsidiary Voting Rights. Borrower shall not, and shall not permit
any Subsidiary, to amend or modify any governing document of any Excluded
Subsidiary of that is a CFC or CFC Holdco the effect of which is to require a
vote of greater than 50.1% of the Equity Interests or voting rights of such
Subsidiary for any decision or action of such Subsidiary, other than with
Agent’s written consent.

7.19 Compliance with Laws.

Borrower shall maintain, and shall cause its Subsidiaries to maintain,
compliance in all material respects with all applicable laws, rules or
regulations (including any law, rule or regulation with respect to the making or
brokering of loans or financial accommodations), and shall, or cause its
Subsidiaries to, obtain and maintain all required governmental authorizations,
approvals, licenses, franchises, permits or registrations reasonably necessary
in connection with the conduct of Borrower’s business.

Neither Borrower nor any of its Subsidiaries shall, nor shall Borrower or any of
its Subsidiaries permit any Affiliate to, directly or indirectly, knowingly
enter into any documents, instruments, agreements or contracts with any Person
listed on the OFAC Lists. Neither Borrower nor any of its Subsidiaries shall,
nor shall Borrower or any of its Subsidiaries, permit any Affiliate to, directly
or indirectly, (i) conduct any business or engage in any transaction or dealing
with any Blocked Person, including, without limitation, the making or receiving
of any contribution of funds, goods or services to or for the benefit of any
Blocked Person, (ii) deal in, or otherwise engage in any transaction relating
to, any property or interests in property blocked pursuant to Executive Order
No. 13224 or any similar executive order or other Anti-Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.

Borrower has implemented and maintains in effect policies and procedures
designed to ensure compliance by the Borrower, its Subsidiaries and their
respective directors, officers, employees and agents with Anti-Corruption Laws
and applicable Sanctions, and Borrower, its Subsidiaries and their respective
officers and employees and to the knowledge of Borrower its directors and
agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in
all material respects.

 

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None of Borrower, any of its Subsidiaries or any of their respective directors,
officers or employees, or to the knowledge of Borrower, any agent for Borrower
or its Subsidiaries that will act in any capacity in connection with or benefit
from the credit facility established hereby, is a Sanctioned Person. No Loan,
use of proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.

7.20 Financial Covenant (Minimum Cash).

(a) In the event Borrower fails to achieve Performance Milestone I on or before
June 30, 2020, beginning on July 1, 2020, Borrower shall, at all times, maintain
Qualified Cash in an amount greater than or equal to the greater of (i) Fifteen
Million Dollars ($15,000,000) plus the Qualified Cash A/P Amount and (ii) the
amount of Qualified Cash required to be maintained pursuant to Section 7.20(b)
or (c), as applicable.

(b) In the event (x) Borrower fails to achieve Performance Milestone II on or
before November 15, 2020, (y) [***] or (z) [***], effective immediately on the
earliest such date, Borrower shall, at all times maintain Qualified Cash in an
amount greater than or equal to the greater of (i) the then-outstanding Secured
Obligations plus the Qualified Cash A/P Amount and (ii) the amount of Qualified
Cash required to be maintained pursuant to Section 7.20(a) or (c), as
applicable.

(c) In the event Borrower achieves both Performance Milestone I and Performance
Milestone II on or before June 30, 2020 and November 15, 2020, respectively, and
has drawn both the Tranche 1 Advance and the Tranche 2 Advance, beginning on
July 1, 2021, Borrower shall at all times maintain Qualified Cash in an amount
greater than or equal to the sum of Seven Million Five Hundred Thousand Dollars
($7,500,000) plus the Qualified Cash A/P Amount.

Notwithstanding the foregoing, Borrower shall not be subject to requirements set
forth in this Section 7.20 during any time (i) [***] and (ii) [***].

Borrower shall provide Agent evidence of compliance with this Section 7.20 in
each Compliance Certificate and upon request in form and substance reasonably
acceptable to Agent, along with supporting documentation reasonably requested by
Agent.

7.21 Transactions with Affiliates. Borrower shall not and shall not permit any
Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction of any kind with any Affiliate of Borrower or such Subsidiary on
terms that are less favorable to Borrower or such Subsidiary, as the case may
be, than those that might be obtained in an arm’s length transaction from a
Person who is not an Affiliate of Borrower or such Subsidiary.

 

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SECTION 8. RIGHT TO INVEST

8.1 The Lenders or their assignee or nominee shall have the right, in its
discretion, to participate in any Subsequent Financing in an amount of up to
$2,000,000 on the same terms, conditions and pricing afforded to other investors
participating in such Subsequent Financing.

SECTION 9. EVENTS OF DEFAULT

The occurrence of any one or more of the following events shall be an Event of
Default:

9.1 Payments. Borrower fails to pay (i) any scheduled payment of principal or
interest due under this Agreement or any of the other Loan Documents on the due
date or (ii) any other payment due on the Secured Obligations hereunder within
three (3) Business Days; provided, however, that an Event of Default shall not
occur on account of a failure to pay due solely to an administrative or
operational error of Agent or the Lenders or Borrower’s bank if Borrower had the
funds to make the payment when due and makes the payment within three
(3) Business Days following Borrower’s knowledge of such failure to pay; or

9.2 Covenants. Borrower breaches or defaults in the performance of any covenant
or Secured Obligation under this Agreement, or any of the other Loan Documents
or any other agreement among Borrower, Agent and the Lenders, and (a) with
respect to a default under any covenant under this Agreement (other than under
Sections 6, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19,
7.20 and 7.21), any other Loan Document, or any other agreement among Borrower,
Agent and the Lenders, such default continues for more than ten (10) days after
the earlier of the date on which (i) Agent or the Lenders has given notice of
such default to Borrower and (ii) Borrower has actual knowledge of such default
or (b) with respect to a default under any of Sections 6, 7.4, 7.5, 7.6, 7.7,
7.8, 7.9, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19, 7.20 and 7.21, the occurrence of
such default; or

9.3 Material Adverse Effect. A circumstance has occurred that could reasonably
be expected to have a Material Adverse Effect, provided that solely for purposes
of this Section 9.3, the occurrence of any of the following, in and of itself,
shall not constitute a Material Adverse Effect: (a) adverse results or delays in
any nonclinical or clinical trial or (b) the denial, delay or limitation of
approval of, or taking of any other regulatory action by, the FDA; provided
that, in determining whether a Material Adverse Effect has occurred, Agent’s
primary, though not sole, consideration will be whether Borrower has or will
have sufficient cash resources to repay the Secured Obligations as and when due
and the clear intention of Borrower’s investors to continue to fund Borrower in
the amounts and timeframe necessary, in Agent’s good faith judgment, to enable
Borrower to satisfy the Secured Obligations as they become due and payable is
the most significant criterion Agent shall consider in making any such
determination.

9.4 Representations. Any representation or warranty made by Borrower in any Loan
Document shall have been false or misleading in any material respect when made
or when deemed made; or

9.5 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be unable to pay its debts as they become due in the
ordinary course of business, or be unable to pay or perform under the Loan
Documents, or shall become insolvent; or (iii) shall file a voluntary petition
in bankruptcy; or (iv) shall file any petition, answer, or document seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation pertinent to such circumstances except as permitted under
Section 7.10 of this Agreement; or (v) shall seek or consent to or acquiesce in
the appointment of any trustee, receiver, or liquidator of

 

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Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets
or property of Borrower; or (vi) shall cease operations of its business as its
business has normally been conducted, or terminate substantially all of its
employees; or (vii) Borrower or its directors or majority shareholders shall
take any action initiating any of the foregoing actions described in clauses (i)
through (vi); or (B) either (i) forty-five (45) days shall have expired after
the commencement of an involuntary action against Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation,
without such action being dismissed or all orders or proceedings thereunder
affecting the operations or the business of Borrower being stayed; or (ii) a
stay of any such order or proceedings shall thereafter be set aside and the
action setting it aside shall not be timely appealed; or (iii) Borrower shall
file any answer admitting or not contesting the material allegations of a
petition filed against Borrower in any such proceedings; or (iv) the court in
which such proceedings are pending shall enter a decree or order granting the
relief sought in any such proceedings; or (v) forty-five (45) days shall have
expired after the appointment, without the consent or acquiescence of Borrower,
of any trustee, receiver or liquidator of Borrower or of all or any substantial
part of the properties of Borrower without such appointment being vacated; or

9.6 Attachments; Judgments. Any portion of Borrower’s assets in an amount
greater than $250,000 is attached or seized, or a levy is filed against any such
assets that is not removed, rescinded or dismissed within thirty (30) days, or a
judgment or judgments is/are entered for the payment of money (not covered by
independent third party insurance as to which liability has not been rejected by
such insurance carrier), individually or in the aggregate, of at least $250,000,
or Borrower is enjoined or in any way prevented by court order from conducting
any part of its business; or

9.7 Other Obligations. The occurrence of any default (beyond any applicable
grace or cure periods) under any agreement or obligation of Borrower giving rise
to the ability by the counterparty to accelerate any Indebtedness in excess of
$250,000.

9.8 Stop Trade. At any time, an SEC stop trade order or NASDAQ market trading
suspension of the Common Stock shall be in effect for five (5) consecutive days
or five (5) days during a period of ten (10) consecutive days, excluding in all
cases a suspension of all trading on a public market, provided that Borrower
shall not have been able to cure such trading suspension within thirty (30) days
of the notice thereof or list the Common Stock on another public market within
sixty (60) days of such notice.

SECTION 10. REMEDIES

10.1 General. Upon and during the continuance of any one or more Events of
Default, (i) Agent may, and at the direction of the Required Lenders shall,
accelerate and demand payment of all or any part of the outstanding Secured
Obligations together with the applicable Prepayment Charge and declare them to
be immediately due and payable (provided, that upon the occurrence and during
the continuance of an Event of Default of the type described in Section 9.5, all
of the outstanding Secured Obligations (including, without limitation, the
Prepayment Charge and the End of Term Charge) shall automatically be accelerated
and made due and payable, in each case without any further notice or act).
Borrower hereby irrevocably appoints Agent as its lawful attorney-in-fact
exercisable following the occurrence and during the continuance of an Event of
Default, (a) sign Borrower’s name on any invoice or bill of lading for any
account or drafts against account debtors; (b) demand, collect, sue, and give
releases to any account debtor for monies due, settle and adjust disputes and
claims about the accounts directly with account debtors, and

 

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compromise, prosecute, or defend any action, claim, case, or proceeding about
any Collateral (including filing a claim or voting a claim in any bankruptcy
case in Agent’s or Borrower’s name, as Agent may elect); (c) make, settle, and
adjust all claims under Borrower’s insurance policies; (d) pay, contest or
settle any Lien, charge, encumbrance, security interest, or other claim in or to
the Collateral, or any judgment based thereon, or otherwise take any action to
terminate or discharge the same; (e) transfer the Collateral into the name of
Agent or a third party as the UCC permits; (f) receive, open and dispose of mail
addressed to Borrower; (g) endorse Borrower’s name on any checks, payment
instruments, or other forms of payment or security; and (h) notify all account
debtors to pay Agent directly. Borrower hereby appoints Agent as its lawful
attorney-in-fact to sign Borrower’s name on any documents necessary to perfect
or continue the perfection of Agent’s security interest in the Collateral
regardless of whether an Event of Default has occurred until all outstanding
Secured Obligations have been satisfied in full and the Loan Documents have been
terminated. Agent’s foregoing appointment as Borrower’s attorney in fact, and
all of Agent’s rights and powers, coupled with an interest, are irrevocable
until all Secured Obligations have been fully repaid and performed and the Loan
Documents have been terminated. Agent may, and at the direction of the Required
Lenders shall, exercise all rights and remedies with respect to the Collateral
under the Loan Documents or otherwise available to it under the UCC and other
applicable law, including the right to release, hold, sell, lease, liquidate,
collect, realize upon, or otherwise dispose of all or any part of the Collateral
and the right to occupy, utilize, process and commingle the Collateral. All
Agent’s rights and remedies shall be cumulative and not exclusive.

10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of
any Event of Default, Agent may, and at the direction of the Required Lenders
shall, at any time or from time to time, apply, collect, liquidate, sell in one
or more sales, lease or otherwise dispose of, any or all of the Collateral, in
its then condition or following any commercially reasonable preparation or
processing, in such order as Agent may elect. Any such sale may be made either
at public or private sale at its place of business or elsewhere. Borrower agrees
that any such public or private sale may occur upon ten (10) calendar days’
prior written notice to Borrower. Agent may require Borrower to assemble the
Collateral and make it available to Agent at a place designated by Agent that is
reasonably convenient to Agent and Borrower. The proceeds of any sale,
disposition or other realization upon all or any part of the Collateral shall be
applied by Agent in the following order of priorities:

First, to Agent and the Lenders in an amount sufficient to pay in full Agent’s
and the Lenders’ reasonable and documented out-of-pocket costs and
professionals’ and advisors’ fees and expenses as described in Section 11.12;

Second, to the Lenders in an amount equal to the then unpaid amount of the
Secured Obligations (including principal, interest, and the default rate
interest pursuant to Section 2.4), in such order and priority as Agent may
choose in its sole discretion; and

Finally, after the full and final payment in Cash of all of the Secured
Obligations (other than inchoate obligations), to any creditor holding a junior
Lien on the Collateral, or to Borrower or its representatives or as a court of
competent jurisdiction may direct.

Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.

10.3 No Waiver. Agent shall be under no obligation to marshal any of the
Collateral for the benefit of Borrower or any other Person, and Borrower
expressly waives all rights, if any, to require Agent to marshal any Collateral.

 

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10.4 Cumulative Remedies. The rights, powers and remedies of Agent hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of or election
of remedies with respect to any other rights, powers and remedies of Agent.

SECTION 11. MISCELLANEOUS

11.1 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
such law, such provision shall be ineffective only to the extent and duration of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

11.2 Notice. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by electronic mail or hand delivery or delivery by an overnight express service
or overnight mail delivery service; or (ii) the third calendar day after deposit
in the United States of America mails, with proper first class postage prepaid,
in each case addressed to the party to be notified as follows:

 

  (a)

If to Agent:

HERCULES CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Janice Bourque

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

email: legal@htgc.com and jbourque@htgc.com

Telephone: 650-289-3060

 

  (b)

If to the Lenders:

HERCULES CAPITAL, INC.

Legal Department

Attention: Chief Legal Officer and Janice Bourque

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

email: legal@htgc.com and jbourque@htgc.com

Telephone: 650-289-3060

 

  (c)

If to Borrower:

KALEIDO BIOSCIENCES, INC.

Attention: Jerald Korn, General Counsel

65 Hayden Avenue

 

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Lexington, MA 02421

email: jerald.korn@kaleido.com

Telephone: 617-890-5735

with a copy (which shall not constitute notice) to:

GOODWIN PROCTER LLP

100 Northern Avenue

Boston, MA 02210

Attention: Mark D. Smith

Telephone: 617-570-1750

email: marksmith@goodwinprocter.com

or to such other address as each party may designate for itself by like notice.

11.3 Entire Agreement; Amendments.

(a) This Agreement and the other Loan Documents constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the
subject matter hereof or thereof (including Agent’s revised proposal letter
dated November 22, 2019 and the Non-Disclosure Agreement).

(b) Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.3(b). The Required Lenders and Borrower party to
the relevant Loan Document may, or, with the written consent of the Required
Lenders, the Agent and the Borrower party to the relevant Loan Document may,
from time to time, (i) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Borrower hereunder or thereunder or
(ii) waive, on such terms and conditions as the Required Lenders or the Agent,
as the case may be, may specify in such instrument, any of the requirements of
this Agreement or the other Loan Documents or any default or Event of Default
and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (A) forgive the principal amount or
extend the final scheduled date of maturity of any Loan, extend the scheduled
date of any amortization payment in respect of any Term Loan, reduce the stated
rate of any interest or fee payable hereunder or extend the scheduled date of
any payment thereof, in each case without the written consent of each Lender
directly affected thereby; (B) eliminate or reduce the voting rights of any
Lender under this Section 11.3(b) without the written consent of such Lender;
(C) reduce any percentage specified in the definition of Required Lenders,
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release a Borrower from its obligations
under the Loan Documents, in each case without the written consent of all
Lenders; or (D) amend, modify or waive any provision of Section 11.18 or
Addendum 3 without the written consent of the Agent. Any such waiver and any
such amendment, supplement or modification shall apply equally to each Lender
and shall be binding upon Borrower, the Lender, the Agent and all future holders
of the Loans.

 

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11.4 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

11.5 No Waiver. The powers conferred upon Agent and the Lenders by this
Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon
Agent or the Lenders to exercise any such powers. No omission or delay by Agent
or the Lenders at any time to enforce any right or remedy reserved to it, or to
require performance of any of the terms, covenants or provisions hereof by
Borrower at any time designated, shall be a waiver of any such right or remedy
to which Agent or the Lenders is entitled, nor shall it in any way affect the
right of Agent or the Lenders to enforce such provisions thereafter.

11.6 Survival. All agreements, representations and warranties contained in this
Agreement and the other Loan Documents or in any document delivered pursuant
hereto or thereto shall be for the benefit of Agent and the Lenders and shall
survive the execution and delivery of this Agreement for so long as any Secured
Obligations (other than contingent obligations for which no claim has been
asserted) remain outstanding. Sections 6.3, 11.14, 11.15 and 11.17 shall survive
the termination of this Agreement.

11.7 Successors and Assigns. The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on Borrower and its
permitted assigns (if any). Borrower shall not assign its obligations under this
Agreement or any of the other Loan Documents without Agent’s express prior
written consent, and any such attempted assignment shall be void and of no
effect. Agent and the Lenders may assign, transfer, or endorse its rights
hereunder and under the other Loan Documents without prior notice to Borrower,
and all of such rights shall inure to the benefit of Agent’s and the Lenders’
successors and assigns; provided that as long as no Event of Default has
occurred and is continuing, neither Agent nor any Lender may assign, transfer or
endorse its rights hereunder or under the Loan Documents to any party that is a
direct competitor of Borrower (as reasonably determined by Borrower), a vulture
hedge fund or any other party designated by Borrower in writing on or prior to
the Closing Date, it being acknowledged that in all cases, any transfer to an
Affiliate of any Lender or Agent shall be allowed. Agent will make reasonable
efforts to provide Borrower with notice of any assignment, transfer or
endorsement at the time it is made or within a reasonable time thereafter other
than any transfers to an Affiliate of any Lender or Agent. Notwithstanding the
foregoing, (x) in connection with any assignment by a Lender as a result of a
forced divestiture at the request of any regulatory agency, the restrictions set
forth herein shall not apply and Agent and the Lenders may assign, transfer or
indorse its rights hereunder and under the other Loan Documents to any Person or
party and (y) in connection with a Lender’s own financing or securitization
transactions, the restrictions set forth herein shall not apply and Agent and
the Lenders may assign, transfer or indorse its rights hereunder and under the
other Loan Documents to any Person or party providing such financing or formed
to undertake such securitization transaction and any transferee of such Person
or party upon the occurrence of a default, event of default or similar
occurrence with respect to such financing or securitization transaction;
provided that no such sale, transfer, pledge or assignment under this clause
(y) shall release such Lender from any of its obligations hereunder or
substitute any such Person or party for such Lender as a party hereto until
Agent shall have received and accepted an effective assignment agreement from
such Person or party in form satisfactory to Agent executed, delivered and fully
completed by the applicable parties thereto, and shall have received such other
information regarding such assignee as Agent reasonably shall require. The
Agent, acting solely for this purpose as an agent of the Borrower, shall
maintain at one of its

 

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offices in the United States a register for the recordation of the names and
addresses of the Lender(s), and the Term Commitments of, and principal amounts
(and stated interest) of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be
conclusive absent manifest error, and the Borrower, the Agent and the Lender(s)
shall treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

11.8 Participations. Each Lender that sells a participation shall, acting solely
for this purpose as a non-fiduciary agent of the Borrower, maintain a register
on which it enters the name and address of each participant and the principal
amounts (and stated interest) of each participant’s interest in the Loans or
other obligations under the Loan Documents (the “Participant Register”);
provided that no Lender shall have any obligation to disclose all or any portion
of the Participant Register (including the identity of any participant or any
information relating to a participant’s interest in any commitments, loans, its
other obligations under any Loan Document) to any Person except to the extent
that such disclosure is necessary to establish that such commitment, loan,
letter of credit or other obligation is in registered form under
Section 5f.103-1(c) of the United States Treasury Regulations. The entries in
the Participant Register shall be conclusive absent manifest error, and such
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary. For the avoidance of doubt, the
Agent (in its capacity as Agent) shall have no responsibility for maintaining a
Participant Register. Borrower agrees that each participant shall be entitled to
the benefits of the provisions in Addendum 1 attached hereto (subject to the
requirements and limitations therein, including the requirements under Section 7
of Addendum 1 attached hereto (it being understood that the documentation
required under Section 7 of Addendum 1 attached hereto shall be delivered to the
participating Lender)) to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 11.7; provided that such
participant shall not be entitled to receive any greater payment under Addendum
1 attached hereto, with respect to any participation, than its participating
Lender would have been entitled to receive, except to the extent such
entitlement to receive a greater payment results from a change in law that
occurs after the participant acquired the applicable participation.

11.9 Governing Law. This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and the Lenders in the State of California,
and shall have been accepted by Agent and the Lenders in the State of
California. Payment to Agent and the Lenders by Borrower of the Secured
Obligations is due in the State of California. This Agreement and the other Loan
Documents shall be governed by, and construed and enforced in accordance with,
the laws of the State of California, excluding conflict of laws principles that
would cause the application of laws of any other jurisdiction.

11.10 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent
that the reference requirement of Section 11.11 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents may be
brought in any state or federal court located in the State of California. By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa
Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and
(d) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or the other Loan Documents. Service of process
on

 

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any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.

11.11 Mutual Waiver of Jury Trial / Judicial Reference.

(a) Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF BORROWER, AGENT AND THE LENDERS
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST AGENT, THE LENDERS OR
THEIR RESPECTIVE ASSIGNEE OR BY AGENT, THE LENDERS OR THEIR RESPECTIVE ASSIGNEE
AGAINST BORROWER. This waiver extends to all such Claims without limitation and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement, or any
other Loan Document (other than to the extent arising from Agent or any Lender’s
gross negligence or willful misconduct).

(b) If the waiver of jury trial set forth in Section 11.11(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of the Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.

(c) In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.10, any prejudgment order, writ
or other relief and have such prejudgment order, writ or other relief enforced
to the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.

11.12 Professional Fees. Borrower promises to pay Agent’s and the Lenders’ fees
and reasonable and documented out-of-pocket expenses necessary to finalize the
loan documentation, including but not limited to reasonable and documented
out-of-pocket attorneys’ fees, UCC searches, filing costs, and other
miscellaneous expenses. In addition, Borrower promises to pay any and all
reasonable and documented out-of-pocket attorneys’ and other professionals’ fees
and expenses incurred by Agent and the Lenders after the Closing Date in
connection with or related to: (a) the Loan; (b) the administration, collection,
or enforcement of the Loan; (c) the amendment or modification of the Loan
Documents; (d) any waiver, consent, release, or termination under the Loan
Documents; (e) the protection, preservation, audit, field exam, sale, lease,
liquidation, or disposition of Collateral or the exercise of remedies with
respect to the Collateral; (f) any legal, litigation, administrative,
arbitration, or out of court proceeding in connection with or related to
Borrower or the Collateral, and any appeal or review thereof; and (g) any
bankruptcy, restructuring, reorganization, assignment for the benefit of
creditors, workout, foreclosure, or other action related to Borrower, the
Collateral, the Loan Documents, including representing Agent or the Lenders in
any adversary proceeding or contested matter commenced or continued by or on
behalf of Borrower’s estate, and any appeal or review thereof.

 

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11.13 Confidentiality. Agent and the Lenders acknowledge that certain items of
Collateral and information provided to Agent and the Lenders by Borrower are
confidential and proprietary information of Borrower, if and to the extent such
information either (x) is marked as confidential by Borrower at the time of
disclosure, or (y) should reasonably be understood to be confidential (the
“Confidential Information”). Accordingly, Agent and the Lenders agree that any
Confidential Information it may obtain in the course of acquiring,
administering, or perfecting Agent’s security interest in the Collateral shall
not be disclosed to any other Person or entity in any manner whatsoever, in
whole or in part, without the prior written consent of Borrower, except that
Agent and the Lenders may disclose any such information: (a) to its Affiliates
and its partners, investors, lenders, directors, officers, employees, agents,
advisors, counsel, accountants, counsel, representative and other professional
advisors if Agent or the Lenders in their reasonable good-faith discretion
determines that any such party should have access to such information in
connection with such party’s responsibilities in connection with the Loan or
this Agreement and, provided that such recipient of such Confidential
Information either (i) agrees to be bound by the confidentiality provisions of
this paragraph or (ii) is otherwise subject to confidentiality restrictions that
reasonably protect against the disclosure of Confidential Information which are
no less restrictive than the terms of this Section 11.13; (b) if such
information is generally available to the public or to the extent such
information becomes publicly available other than as a result of a breach of
this Section or becomes available to Agent or any Lender, or any of their
respective Affiliates on a non-confidential basis from a source other than the
Borrower; (c) if required in any report, statement or testimony to be submitted
to any governmental authority having or claiming to have jurisdiction over Agent
or the Lenders and any rating agency; (d) if required or appropriate in response
to any summons or subpoena or in connection with any litigation, to the extent
permitted or deemed advisable by Agent’s or the Lenders’ counsel; (e) to comply
with any legal requirement or law applicable to Agent or the Lenders or demanded
by any governmental authority; (f) to the extent reasonably necessary in
connection with the exercise of, or preparing to exercise, or the enforcement
of, or preparing to enforce, any right or remedy under any Loan Document
(including Agent’s sale, lease, or other disposition of Collateral during the
continuance of an Event of Default), or any action or proceeding relating to any
Loan Document; (g) to any participant or assignee of Agent or the Lenders or any
prospective participant or assignee, provided, that such participant or assignee
or prospective participant or assignee agrees in writing to be bound by
confidentiality restrictions similar to those under this Section 11.13; (h)
otherwise to the extent consisting of general portfolio information that does
not identify Borrower; or (i) otherwise with the prior written consent of
Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of Borrower or any of its Affiliates or any
guarantor under this Agreement or the other Loan Documents. Agent’s and the
Lenders’ obligations under this Section 11.13 shall supersede all of their
respective obligations under the Non-Disclosure Agreement.

11.14 Assignment of Rights. Borrower acknowledges and understands that Agent or
the Lenders may, subject to Section 11.7, sell and assign all or part of its
interest hereunder and under the Loan Documents to any Person or entity (an
“Assignee”). After such assignment the term “Agent” or “Lender” as used in the
Loan Documents shall mean and include such Assignee, and such Assignee shall be
vested with all rights, powers and remedies of Agent and the Lenders hereunder
with respect to the interest so assigned; but with respect to any such interest
not so transferred, Agent and the Lenders shall retain all rights, powers and
remedies hereby given. No such assignment by Agent or the Lenders shall relieve
Borrower of any of its obligations hereunder. the Lenders agrees that in the
event of any transfer by it of the promissory note(s) (if any), it will endorse
thereon a notation as to the portion of the principal of the promissory note(s),
which shall have been paid at the time of such transfer and as to the date to
which interest shall have been last paid thereon.

 

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11.15 Revival of Secured Obligations. This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against Borrower for liquidation or reorganization, if
Borrower becomes insolvent or makes an assignment for the benefit of creditors,
if a receiver or trustee is appointed for all or any significant part of
Borrower’s assets, or if any payment or transfer of Collateral is recovered from
Agent or the Lenders. The Loan Documents and the Secured Obligations and
Collateral security shall continue to be effective, or shall be revived or
reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations or any transfer of Collateral to Agent, or any part thereof
is rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Agent, the Lenders or by any
obligee of the Secured Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment, performance,
or transfer of Collateral had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned,
or recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
until the Secured Obligations (other than contingent obligations for which no
claim has been asserted) are fully satisfied.

11.16 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument. Delivery of an executed counterpart
signature page of this Agreement by telecopier or other electronic means shall
be effective as delivery of a manually executed counterpart of this Agreement.

11.17 No Third Party Beneficiaries. No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, the Lenders and Borrower unless specifically provided otherwise herein,
and, except as otherwise so provided, all provisions of the Loan Documents will
be personal and solely among Agent, the Lenders and the Borrower.

11.18 Agency. Agent and each Lender hereby agree to the terms and conditions set
forth on Addendum 3 attached hereto. Borrower acknowledges and agrees to the
terms and conditions set forth on Addendum 3 attached hereto.

11.19 Publicity. None of the parties hereto nor any of its respective member
businesses and Affiliates shall, without the other parties’ prior written
consent, publicize or use (a) the other party’s name (including a brief
description of the relationship among the parties hereto), logo or hyperlink to
such other parties’ web site, separately or together, in written and oral
presentations, advertising, promotional and marketing materials, client lists,
public relations materials or on its web site (together, the “Publicity
Materials”); (b) the names of officers of such other parties in the Publicity
Materials; and (c) such other parties’ name, trademarks, service marks in any
news or press release concerning such party; provided however, notwithstanding
anything to the contrary herein, no such consent shall be required (i) to the
extent necessary to comply with the requests of any regulators, legal
requirements or laws applicable to such party, pursuant to any listing agreement
with any national securities exchange (so long as such party provides prior
notice to the other party hereto to the extent reasonably practicable) and
(ii) to comply with Section 11.13.

 

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11.20 Multiple Borrowers. Each Borrower hereby agrees to the terms and
conditions set forth on Addendum 4 attached hereto.

(SIGNATURES TO FOLLOW)

 

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IN WITNESS WHEREOF, Borrower, Agent and the Lenders have duly executed and
delivered this Loan and Security Agreement as of the day and year first above
written.

 

BORROWER: KALEIDO BIOSCIENCES, INC. Signature:   /s/ Alison Lawton Print Name:  
Alison Lawton Title:   President & Chief Executive Officer CADENA BIO, INC.
Signature:   /s/ Alison Lawton Print Name:   Alison Lawton Title:   President

(SIGNATURES CONTINUE ON THE FOLLOWING PAGE)

 

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Accepted in Palo Alto, California:

 

AGENT:   HERCULES CAPITAL, INC. Signature:   /s/ Jennifer Choe Print Name:  
Jennifer Choe Title:   Assistant General Counsel LENDERS:   HERCULES CAPITAL,
INC. Signature:   /s/ Jennifer Choe Print Name:   Jennifer Choe Title:  
Assistant General Counsel

 

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Table of Addenda, Exhibits and Schedules

 

Addendum 1:    Taxes; Increased Costs Addendum 2:    [Reserved] Addendum 3:   
Agent and Lender Terms Addendum 4:    Multiple Borrower Terms Exhibit A:   
Advance Request    Attachment to Advance Request Exhibit B:    Name, Locations,
and Other Information for Borrower Exhibit C:    Borrower’s Patents, Trademarks,
Copyrights and Licenses Exhibit D:    Borrower’s Deposit Accounts and Investment
Accounts Exhibit E:    Compliance Certificate Exhibit F:    Joinder Agreement
Exhibit G:    ACH Debit Authorization Agreement Exhibit H-1:    Form of U.S. Tax
Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S.
Federal Income Tax Purposes) Exhibit H-2:    Form of U.S. Tax Compliance
Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal
Income Tax Purposes) Exhibit H-3:    Form of U.S. Tax Compliance Certificate
(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes) Exhibit H-4:    Form of U.S. Tax Compliance Certificate (For Foreign
Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) Schedule 1.1
   Commitments Schedule 1    Subsidiaries Schedule 1A    Existing Permitted
Indebtedness Schedule 1B    Existing Permitted Investments Schedule 1C   
Existing Permitted Liens Schedule 5.3    Consents, Etc. Schedule 5.8    Tax
Matters Schedule 5.9    Intellectual Property Claims Schedule 5.10   
Intellectual Property Schedule 5.11    Borrower Products Schedule 5.14   
Capitalization Schedule 7.12    Deposit Accounts

 

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ADDENDUM 1 to LOAN AND SECURITY AGREEMENT

TAXES; INCREASED COSTS

 

1.

Defined Terms. For purposes of this Addendum 1:

 

  a.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

  b.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (i) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (A) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(B) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal
withholding Taxes imposed on amounts payable to or for the account of such
Lender with respect to an applicable interest in a Loan or Term Commitment
pursuant to a law in effect on the date on which (A) such Lender acquires such
interest in the Loan or Term Commitment (other than pursuant to an assignment
request by the Borrower under Section 10 of this Addendum 1) or (B) such Lender
changes its lending office, except in each case to the extent that, pursuant to
Section 2 or Section 4 of this Addendum 1, amounts with respect to such Taxes
were payable either to such Lender’s assignor immediately before such Lender
became a party hereto or to such Lender immediately before it changed its
lending office, (iii) Taxes attributable to such Recipient’s failure to comply
with Section 7 of this Addendum 1 and (iv) any withholding Taxes imposed under
FATCA.

 

  c.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any agreements entered into
pursuant to Section 1471(b)(1) of the Code, and any fiscal or regulatory
legislation, rules or practices adopted pursuant to any intergovernmental
agreement, treaty or convention among governmental authorities and implementing
such Sections of the Code.

 

  d.

“Foreign Lender” means a Lender that is not a U.S. Person.

 

  e.

“Indemnified Taxes” means (i) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the
Borrower under any Loan Document and (ii) to the extent not otherwise described
in clause (i), Other Taxes.

 

  f.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

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  g.

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment (other than an assignment
made pursuant to Section 10(b) of this Addendum 1).

 

  h.

“Recipient” means the Agent or any Lender, as applicable.

 

  i.

“Withholding Agent” means the Borrower and the Agent.

 

2.

Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower under any Loan Document shall be made without deduction or
withholding for any Taxes, except as required by applicable law. If any
applicable law (as determined in the good faith discretion of an applicable
Withholding Agent) requires the deduction or withholding of any Tax from any
such payment by a Withholding Agent, then the applicable Withholding Agent shall
be entitled to make such deduction or withholding and shall timely pay the full
amount deducted or withheld to the relevant governmental authority in accordance
with applicable law and, if such Tax is an Indemnified Tax, then the sum payable
by the Borrower shall be increased as necessary so that after such deduction or
withholding has been made (including such deductions and withholdings applicable
to additional sums payable under this Section 2 or Section 4 of this Addendum 1)
the applicable Recipient receives an amount equal to the sum it would have
received had no such deduction or withholding been made.

 

3.

Payment of Other Taxes by Borrower. The Borrower shall timely pay to the
relevant governmental authority in accordance with applicable law, or at the
option of the Agent timely reimburse it for the payment of, any Other Taxes.

 

4.

Indemnification by Borrower. The Borrower shall indemnify each Recipient, within
10 days after demand therefor, for the full amount of any Indemnified Taxes
(including Indemnified Taxes imposed or asserted on or attributable to amounts
payable under Section 2 of this Addendum 1 or this Section 4) payable or paid by
such Recipient or required to be withheld or deducted from a payment to such
Recipient and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant governmental authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender (with a copy
to the Agent), or by the Agent on its own behalf or on behalf of a Lender, shall
be conclusive absent manifest error. In addition, the Borrower agrees to pay,
and to save the Agent and any Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other similar taxes (excluding taxes imposed on or measured by the net income of
the Agent or such Lender) that may be payable or determined to be payable with
respect to any of the Collateral or this Agreement.

 

5.

Indemnification by the Lenders. Each Lender shall severally indemnify the Agent,
within 10 days after demand therefor, for (a) any Indemnified Taxes attributable
to such Lender (but only to the extent that the Borrower has not already
indemnified the Agent for such Indemnified Taxes and without limiting the
obligation of the Borrower to do so), (b) any Taxes attributable to such
Lender’s failure to comply with the provisions of Section 11.8 of the Agreement
relating to the maintenance of a Participant Register and (c) any Excluded Taxes
attributable to such Lender, in each case, that are payable or paid by the Agent
in connection with any Loan Document, and any reasonable expenses arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally imposed or asserted by the relevant governmental authority. A
certificate as to the amount of such payment or liability delivered to any
Lender by the Agent shall be conclusive absent manifest error. Each Lender
hereby authorizes the Agent to set off and apply any and all amounts at any time
owing to such Lender under any Loan Document or otherwise payable by the Agent
to the Lender from any other source against any amount due to the Agent under
this Section 5.

 

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6.

Evidence of Payments. As soon as practicable after any payment of Taxes by the
Borrower to a governmental authority pursuant to the provisions of this Addendum
1, the Borrower shall deliver to the Agent the original or a certified copy of a
receipt issued by such governmental authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Agent.

 

7.

Status of Lenders.

 

  a.

Any Lender that is entitled to an exemption from or reduction of withholding Tax
with respect to payments made under any Loan Document shall deliver to the
Borrower and the Agent, at the time or times reasonably requested by the
Borrower or the Agent, such properly completed and executed documentation
reasonably requested by the Borrower or the Agent as will permit such payments
to be made without withholding or at a reduced rate of withholding. In addition,
any Lender, if reasonably requested by the Borrower or the Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower or the Agent as will enable the Borrower or the Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements. Notwithstanding anything to the contrary in the
preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Sections 7(b)(i),
7(b)(ii) and 7(b)(iv) of this Addendum 1) shall not be required if in the
Lender’s reasonable judgment such completion, execution or submission would
subject such Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of such Lender.

 

  b.

Without limiting the generality of the foregoing,

 

  i.

any Lender that is a U.S. Person shall deliver to the Borrower and the Agent on
or prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter upon the reasonable request of the Borrower or
the Agent), executed copies of IRS Form W-9 certifying that such Lender is
exempt from U.S. federal backup withholding tax;

 

  ii.

any Foreign Lender shall, to the extent it is legally entitled to do so, deliver
to the Borrower and the Agent (in such number of copies as shall be requested by
the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Agent), whichever of the following is
applicable:

 

  A.

in the case of a Foreign Lender claiming the benefits of an income tax treaty to
which the United States is a party (x) with respect to payments of interest
under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E
establishing an exemption from, or reduction of, U.S. federal withholding Tax
pursuant to the “interest” article of such tax treaty and (y) with respect to
any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS
Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of
such tax treaty;

 

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  B.

executed copies of IRS Form W-8ECI;

 

  C.

in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit H-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a
“10 percent shareholder” of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related
to the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form
W-8BEN-E; or

 

  D.

to the extent a Foreign Lender is not the beneficial owner, executed copies of
IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form
W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit
H-2 or Exhibit H-3, IRS Form W-9, and/or other certification documents from each
beneficial owner, as applicable; provided that if the Foreign Lender is a
partnership and one or more direct or indirect partners of such Foreign Lender
are claiming the portfolio interest exemption, such Foreign Lender may provide a
U.S. Tax Compliance Certificate substantially in the form of Exhibit H-4 on
behalf of each such direct and indirect partner;

 

  iii.

any Foreign Lender shall, to the extent it is legally entitled to do so, deliver
to the Borrower and the Agent (in such number of copies as shall be requested by
the recipient) on or prior to the date on which such Foreign Lender becomes a
Lender under this Agreement (and from time to time thereafter upon the
reasonable request of the Borrower or the Agent), executed copies of any other
form prescribed by applicable law as a basis for claiming exemption from or a
reduction in U.S. federal withholding Tax, duly completed, together with such
supplementary documentation as may be prescribed by applicable law to permit the
Borrower or the Agent to determine the withholding or deduction required to be
made; and

 

  iv.

if a payment made to a Lender under any Loan Document would be subject to U.S.
federal withholding Tax imposed by FATCA if such Lender were to fail to comply
with the applicable reporting requirements of FATCA (including those contained
in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall
deliver to the Borrower and the Agent at the time or times prescribed by law and
at such time or times reasonably requested by the Borrower or the Agent such
documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower or the Agent as may be necessary for the
Borrower and the Agent to comply with their obligations under FATCA and to
determine that such Lender has complied with such Lender’s obligations under
FATCA or to determine the amount, if any, to deduct and withhold from such
payment. Solely for purposes of this clause (iv), “FATCA” shall include any
amendments made to FATCA after the date of this Agreement.

 

49

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

  c.

Each Lender agrees that if any form or certification it previously delivered
expires or becomes obsolete or inaccurate in any respect, it shall update such
form or certification or promptly notify the Borrower and the Agent in writing
of its legal inability to do so.

 

8.

Treatment of Certain Refunds. If any party determines, in its sole discretion
exercised in good faith, that it has received a refund of any Taxes as to which
it has been indemnified pursuant to the provisions of this Addendum 1 (including
by the payment of additional amounts pursuant to the provisions of this Addendum
1), it shall pay to the indemnifying party an amount equal to such refund (but
only to the extent of indemnity payments made under the provisions of this
Addendum 1 with respect to the Taxes giving rise to such refund), net of all
reasonable and documented out-of-pocket expenses (including Taxes) of such
indemnified party and without interest (other than any interest paid by the
relevant governmental authority with respect to such refund). Such indemnifying
party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this Section 8 (plus any
penalties, interest or other charges imposed by the relevant governmental
authority) in the event that such indemnified party is required to repay such
refund to such governmental authority. Notwithstanding anything to the contrary
in this Section 8, in no event will the indemnified party be required to pay any
amount to an indemnifying party pursuant to this Section 8 the payment of which
would place the indemnified party in a less favorable net after-Tax position
than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid. This Section 8 shall not be construed
to require any indemnified party to make available its Tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

9.

Increased Costs. If any change in applicable law shall subject any Recipient to
any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses
(ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income
Taxes) on its loans, loan principal, commitments, or other obligations, or its
deposits, reserves, other liabilities or capital attributable thereto, and the
result shall be to increase the cost to such Recipient of making, converting to,
continuing or maintaining any Term Loan or of maintaining its obligation to make
any such Loan, or to reduce the amount of any sum received or receivable by such
Recipient (whether of principal, interest or any other amount), then, upon the
request of such Recipient, the Borrower will pay to such Recipient such
additional amount or amounts as will compensate such Recipient for such
additional costs incurred or reduction suffered.

 

10.

Mitigation Obligations; Replacement of Lenders.

 

  a.

Designation of a Different Lending Office. If any Lender requests compensation
under Section 9 of this Addendum 1, or requires the Borrower to pay any
Indemnified Taxes or additional amounts to any Lender or any Governmental
Authority for the account of any Lender pursuant to this Addendum 1, then such
Lender shall (at the request of the Borrower) use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable by Borrower pursuant to
this Addendum 1, as the case may be, in the future, and (ii) would not subject
such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment.

 

50

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  b.

Replacement of Lenders. If any Lender requests compensation under Section 9 of
this Addendum 1, or if the Borrower is required to pay any Indemnified Taxes or
additional amounts to any Lender or any Governmental Authority for the account
of any Lender pursuant to this Addendum 1 and, in each case, such Lender has
declined or is unable to designate a different lending office in accordance with
paragraph (a) of this Section, or if a Lender is a Non-Consenting Lender, then
the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to Section 11.7 of the Loan Agreement),
all of its interests, rights (other than its existing rights to payments
pursuant to this Addendum 1) and obligations under this Loan Agreement and the
related Loan Documents to an Assignee that shall assume such obligations;
provided that:

 

  i.

such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts);

 

  ii.

in the case of any such assignment resulting from a claim for compensation under
Section 9 of this Addendum 1 or payments required to be made pursuant to this
Addendum, such assignment will result in a reduction in such compensation or
payments thereafter;

 

  iii.

such assignment does not conflict with applicable law; and

 

  iv.

in the case of any assignment resulting from a Lender becoming a Non-Consenting
Lender, the applicable assignee shall have consented to the applicable
amendment, waiver or consent.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

11.

Survival. Each party’s obligations under the provisions of this Addendum 1 shall
survive the resignation or replacement of the Agent or any assignment of rights
by, or the replacement of, a Lender, the termination of the Term Commitments and
the repayment, satisfaction or discharge of all obligations under any Loan
Document.

 

51

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ADDENDUM 2 to LOAN AND SECURITY AGREEMENT

[Reserved]

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

 

ADDENDUM 3 to LOAN AND SECURITY AGREEMENT

Agent and Lender Terms

(a) Each Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its
behalf as the Agent hereunder and under the other Loan Documents and authorizes
the Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Agent by the terms hereof or thereof, together with such
actions and powers as are reasonably incidental thereto.

(b) Each Lender agrees to indemnify the Agent in its capacity as such (to the
extent not reimbursed by Borrower and without limiting the obligation of
Borrower to do so), according to its respective Term Commitment percentages
(based upon the total outstanding Term Loan Commitments) in effect on the date
on which indemnification is sought under this Addendum 3, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever that
may at any time be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.

(c) Agent in Its Individual Capacity. The Person serving as the Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Agent and the term
“Lender” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each such Person serving as Agent hereunder in its
individual capacity.

(d) Exculpatory Provisions. The Agent shall have no duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, the Agent shall not:

 

  (i)

be subject to any fiduciary or other implied duties, regardless of whether any
default or any Event of Default has occurred and is continuing;

 

  (ii)

have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that the Agent is required to exercise as directed
in writing by the Lenders, provided that the Agent shall not be required to take
any action that, in its opinion or the opinion of its counsel, may expose the
Agent to liability or that is contrary to any Loan Document or applicable law;
and

 

  (iii)

except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and the Agent shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Affiliates that is
communicated to or obtained by any Person serving as the Agent or any of its
Affiliates in any capacity.

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

(e) The Agent shall not be liable for any action taken or not taken by it
(i) with the consent or at the request of the Lenders or as the Agent shall
believe in good faith shall be necessary, under the circumstances or (ii) in the
absence of its own gross negligence or willful misconduct.

(f) The Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of
any certificate, report or other document delivered hereunder or thereunder or
in connection herewith or therewith, (iii) the performance or observance of any
of the covenants, agreements or other terms or conditions set forth herein or
therein or the occurrence of any default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the Agent.
Reliance by Agent. Agent may rely, and shall be fully protected in acting, or
refraining to act, upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties. In the absence of its gross negligence or willful misconduct, Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to Agent
and conforming to the requirements of the Loan Agreement or any of the other
Loan Documents. Agent may consult with counsel, and any opinion or legal advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, not taken or suffered by Agent hereunder or under
any Loan Documents in accordance therewith. Agent shall have the right at any
time to seek instructions concerning the administration of the Collateral from
any court of competent jurisdiction. Agent shall not be under any obligation to
exercise any of the rights or powers granted to Agent by this Agreement, the
Loan Agreement and the other Loan Documents at the request or direction of the
Lenders unless Agent shall have been provided by the Lenders with adequate
security and indemnity against the costs, expenses and liabilities that may be
incurred by it in compliance with such request or direction.

 

2

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ADDENDUM 4 to LOAN AND SECURITY AGREEMENT

Multiple Borrower Terms

(a) Borrower’s Agent. Each of the Borrowers hereby irrevocably appoints Kaleido
Biosciences, Inc. as its agent, attorney-in-fact and legal representative for
all purposes, including requesting disbursement of the Term Loan and receiving
account statements and other notices and communications to Borrowers (or any of
them) from the Agent or any Lender. The Agent may rely, and shall be fully
protected in relying, on any request for the Term Loan, disbursement
instruction, report, information or any other notice or communication made or
given by Kaleido Biosciences, Inc., whether in its own name or on behalf of one
or more of the other Borrowers, and the Agent shall not have any obligation to
make any inquiry or request any confirmation from or on behalf of any other
Borrower as to the binding effect on it of any such request, instruction,
report, information, other notice or communication, nor shall the joint and
several character of the Borrowers’ obligations hereunder be affected thereby.

(b) Waivers. Each Borrower hereby waives: (i) any right to require the Agent to
institute suit against, or to exhaust its rights and remedies against, any other
Borrower or any other person, or to proceed against any property of any kind
which secures all or any part of the Secured Obligations, or to exercise any
right of offset or other right with respect to any reserves, credits or deposit
accounts held by or maintained with the Agent or any Indebtedness of the Agent
or any Lender to any other Borrower, or to exercise any other right or power, or
pursue any other remedy the Agent or any Lender may have; (ii) any defense
arising by reason of any disability or other defense of any other Borrower or
any guarantor or any endorser, co-maker or other person, or by reason of the
cessation from any cause whatsoever of any liability of any other Borrower or
any guarantor or any endorser, co-maker or other person, with respect to all or
any part of the Secured Obligations, or by reason of any act or omission of the
Agent or others which directly or indirectly results in the discharge or release
of any other Borrower or any guarantor or any other person or any Secured
Obligations or any security therefor, whether by operation of law or otherwise;
(iii) any defense arising by reason of any failure of the Agent to obtain,
perfect, maintain or keep in force any Lien on, any property of any Borrower or
any other person; (iv) any defense based upon or arising out of any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any other Borrower or any
guarantor or any endorser, co-maker or other person, including without
limitation any discharge of, or bar against collecting, any of the Secured
Obligations (including without limitation any interest thereon), in or as a
result of any such proceeding. Until all of the Secured Obligations have been
paid, performed, and discharged in full, nothing shall discharge or satisfy the
liability of any Borrower hereunder except the full performance and payment of
all of the Secured Obligations. If any claim is ever made upon the Agent for
repayment or recovery of any amount or amounts received by the Agent in payment
of or on account of any of the Secured Obligations, because of any claim that
any such payment constituted a preferential transfer or fraudulent conveyance,
or for any other reason whatsoever, and the Agent repays all or part of said
amount by reason of any judgment, decree or order of any court or administrative
body having jurisdiction over the Agent or any of its property, or by reason of
any settlement or compromise of any such claim effected by the Agent with any
such claimant (including without limitation the any other Borrower), then and in
any such event, each Borrower agrees that any such judgment, decree, order,
settlement and compromise shall be binding upon such Borrower, notwithstanding
any revocation or release of this Agreement or the cancellation of any note or
other instrument evidencing any of the Secured Obligations, or any release of
any of the Secured Obligations, and each Borrower shall be and remain liable to
the Agent and the Lenders under

 

3

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

this Agreement for the amount so repaid or recovered, to the same extent as if
such amount had never originally been received by the Agent or any Lender, and
the provisions of this sentence shall survive, and continue in effect,
notwithstanding any revocation or release of this Agreement. Each Borrower
hereby expressly and unconditionally waives all rights of subrogation,
reimbursement and indemnity of every kind against any other Borrower, and all
rights of recourse to any assets or property of any other Borrower, and all
rights to any collateral or security held for the payment and performance of any
Secured Obligations, including (but not limited to) any of the foregoing rights
which Borrower may have under any present or future document or agreement with
any other Borrower or other person, and including (but not limited to) any of
the foregoing rights which any Borrower may have under any equitable doctrine of
subrogation, implied contract, or unjust enrichment, or any other equitable or
legal doctrine.

(c) Consents. Each Borrower hereby consents and agrees that, without notice to
or by Borrower and without affecting or impairing in any way the obligations or
liability of Borrower hereunder, the Agent may, from time to time before or
after revocation of this Agreement, do any one or more of the following in its
sole and absolute discretion: (i) accept partial payments of, compromise or
settle, renew, extend the time for the payment, discharge, or performance of,
refuse to enforce, and release all or any parties to, any or all of the Secured
Obligations; (ii) grant any other indulgence to any Borrower or any other Person
in respect of any or all of the Secured Obligations or any other matter;
(iii) accept, release, waive, surrender, enforce, exchange, modify, impair, or
extend the time for the performance, discharge, or payment of, any and all
property of any kind securing any or all of the Secured Obligations or any
guaranty of any or all of the Secured Obligations, or on which the Agent at any
time may have a Lien, or refuse to enforce its rights or make any compromise or
settlement or agreement therefor in respect of any or all of such property;
(iv) substitute or add, or take any action or omit to take any action which
results in the release of, any one or more other Borrowers or any endorsers or
guarantors of all or any part of the Secured Obligations, including, without
limitation one or more parties to this Agreement, regardless of any destruction
or impairment of any right of contribution or other right of Borrower; (v) apply
any sums received from any other Borrower, any guarantor, endorser, or
co-signer, or from the disposition of any Collateral or security, to any
Indebtedness whatsoever owing from such person or secured by such Collateral or
security, in such manner and order as the Agent determines in its sole
discretion, and regardless of whether such Indebtedness is part of the Secured
Obligations, is secured, or is due and payable. Each Borrower consents and
agrees that the Agent shall be under no obligation to marshal any assets in
favor of Borrower, or against or in payment of any or all of the Secured
Obligations. Each Borrower further consents and agrees that the Agent shall have
no duties or responsibilities whatsoever with respect to any property securing
any or all of the Secured Obligations. Without limiting the generality of the
foregoing, the Agent shall have no obligation to monitor, verify, audit,
examine, or obtain or maintain any insurance with respect to, any property
securing any or all of the Secured Obligations.

(d) Independent Liability. Each Borrower hereby agrees that one or more
successive or concurrent actions may be brought hereon against such Borrower, in
the same action in which any other Borrower may be sued or in separate actions,
as often as deemed advisable by Agent. Each Borrower is fully aware of the
financial condition of each other Borrower and is executing and delivering this
Agreement based solely upon its own independent investigation of all matters
pertinent hereto, and such Borrower is not relying in any manner upon any
representation or statement of the Agent or any Lender with respect thereto.
Each Borrower represents and warrants that it is in a position to obtain, and
each Borrower hereby assumes full responsibility for obtaining, any additional
information concerning any other Borrower’s financial condition and any other
matter pertinent hereto as such Borrower may desire, and such Borrower is not
relying upon or expecting the Agent to furnish to it any information now or
hereafter in the Agent’s possession concerning the same or any other matter.

 

4

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(e) Subordination. All Indebtedness of a Borrower now or hereafter arising held
by another Borrower is subordinated to the Secured Obligations and the Borrower
holding the Indebtedness shall take all actions reasonably requested by Agent to
effect, to enforce and to give notice of such subordination.

 

5

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

EXHIBIT A

ADVANCE REQUEST

 

To:

  

Agent:

  

Date:

  

__________, 20[__]

  

Hercules Capital, Inc. (the “Agent”)

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

email: legal@htgc.com

Attn:

     

Kaleido Biosciences, Inc., a Delaware corporation, on behalf of itself and each
of its Subsidiaries party to the Agreement (collectively, “Borrower”) hereby
requests from Hercules Capital, Inc. (“Lenders”) an Advance in the amount of
_____________________ Dollars ($________________) (the “Advance Amount”) on
______________, _____ (the “Advance Date”) pursuant to the Loan and Security
Agreement among Borrower, Agent and the Lenders (the “Agreement”). Capitalized
words and other terms used but not otherwise defined herein are used with the
same meanings as defined in the Agreement.

Please:

 

(a)

  

Issue a check payable to Borrower

  

________

  

or

     

(b)

  

Wire Funds to Borrower’s account

  

________ [LAST 3 DIGITS]

  

Bank:

  

_____________________________

     

Address:

  

_____________________________

        

_____________________________

      ABA Number:   

_____________________________

      Account Number:   

_____________________________

      Account Name:   

_____________________________

      Contact Person:   

_____________________________

      Phone Number          To Verify Wire Info:   

_____________________________

     

Email address:

  

_____________________________

  

Borrower represents that the conditions precedent to the Advance set forth in
the Agreement are satisfied and shall be satisfied upon the making of such
Advance, including but not limited to: (i) that no event that has had or could
reasonably be expected to have a Material Adverse Effect has occurred and is
continuing; (ii) that the representations and warranties set forth in the
Agreement are and shall be true and correct in all material respects on and as
of the Advance Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an
earlier date; (iii) that Borrower is in compliance with all the terms and
provisions set forth in each Loan Document on its part to be observed or
performed, which shall have been true and correct in all material respects as of
such date; and (iv) that as of the Advance Date, no fact or condition exists
that would (or would, with the passage of time, the giving of notice, or both)
constitute an Event of Default under the Loan Documents.

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

Borrower understands and acknowledges that Agent has the right to review the
financial information supporting this representation and, based upon such review
in its sole discretion, the Lenders may decline to fund the requested Advance.

Borrower hereby represents that Borrower’s corporate status and locations have
not changed since the date of the Agreement or, if the Attachment to this
Advance Request is completed, are as set forth in the Attachment to this Advance
Request.

Borrower agrees to notify Agent promptly before the funding of the Loan if any
of the matters which have been represented above shall not be true and correct
on the Borrowing Date and if Agent has received no such notice before the
Advance Date then the statements set forth above shall be deemed to have been
made and shall be deemed to be true and correct as of the Advance Date.

Executed as of [                ], 20[    ].

 

BORROWER: KALEIDO BIOSCIENCES, INC. SIGNATURE:________________________
TITLE:_____________________________ PRINT NAME:______________________

 

2

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ATTACHMENT TO ADVANCE REQUEST

Dated: _______________________

Borrower hereby represents and warrants to Agent that Borrower’s current name
and organizational status is as follows:

 

Name:    Kaleido Biosciences, Inc. Type of organization:    Corporation State of
organization:    Delaware Organization file number:    47-3048279

Borrower hereby represents and warrants to Agent that the street addresses,
cities, states and postal codes of its current locations are as follows:

[ 🌑 ]

Borrower hereby represents and warrants to Agent that the Advance Amount does
not exceed the Maximum Term Loan Amount as follows:

a. Advance Amount: $________________

b. [Maximum Term Loan Amount: $________________]

[c. Is clause a. less than or equal to clause b.? Yes/Compliant _______
No/Non-Compliant _______]

 

 

3

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EXHIBIT B

NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER

1. Borrower represents and warrants to Agent that Borrower’s current name and
organizational status as of the Closing Date is as follows:

 

Name:    Kaleido Biosciences, Inc. Type of organization:    Corporation State of
organization:    Delaware Organization file number:    5681784 Name:    Cadena
Bio, Inc. Type of organization:    Corporation State of organization:   
Delaware Organization file number:    6000485

2. Borrower represents and warrants to Agent that for five (5) years prior to
the Closing Date, Borrower did not do business under any other name or
organization or form except the following:

Name: VL32, Inc.

Used during dates of: January, 2015 – November, 2015

Type of Organization: Same as above.

State of organization: Same as above.

Organization file Number: Same as above.

Borrower’s fiscal year ends on December 31

Borrower’s federal employer tax identification number is: 47-3048279

3. Borrower represents and warrants to Agent that its chief executive office is
located at 65 Hayden Avenue Lexington, MA 02421.

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EXHIBIT C

BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES

 

  1)

Kaleido IP Assets

 

  a)

Patents and Patent Applications:

U.S. 9,492,473, Glycan Therapeutics and Related Methods Thereof

U.S. 9,757,403, Glycan Therapeutics and Related Methods Thereof

U.S. 9,901,595, Glycan Therapeutics and Related Methods Thereof

U.S. 10,314,853, Glycan Therapeutics and Related Methods Thereof

EP 3071235 Glycan Therapeutic Compositions and Related Methods Thereof

HK 1228788 Glycan Therapeutic Compositions and Related Methods Thereof

ZA 2017/04735 Glycan Therapeutic Compositions and Related Methods Thereof

Kaleido Portfolio Listing:

 

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

15/017396    US    Granted    05-Feb-2016    GLYCAN THERAPEUTICS AND RELATED
METHODS THEREOF 15/286382    US    Granted    05-Oct-2016    GLYCAN THERAPEUTICS
AND RELATED METHODS THEREOF 15/385331    US    Granted    20-Dec-2016    GLYCAN
THERAPEUTICS AND RELATED METHODS THEREOF 15/624372    US    Granted   
15-Jun-2017    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

16/396067    US    Pending    26-Apr-2019    GLYCAN THERAPEUTICS AND RELATED
METHODS THEREOF 16/395929    US    Pending    26-Apr-2019    GLYCAN THERAPEUTICS
AND RELATED METHODS THEREOF 2016212030    AU    Published    13-Jan-2016   
GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF 1120170156148    BR    Published
   13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF 2973617    CA
   Published    13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF
201701901    CL    Published    13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED
METHODS THEREOF 201680017749.4    CN    Published    13-Jan-2016    GLYCAN
THERAPEUTICS AND RELATED METHODS THEREOF 201791702    EA    Published   
13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF 16704085.6    EP
   Granted    13-Jan-2016    GLYCAN THERAPEUTIC COMPOSITIONS AND RELATED METHODS
THEREOF 17206409.9    EP    Published    13-Jan-2016    GLYCAN THERAPEUTIC
COMPOSITIONS AND RELATED METHODS THEREOF

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

17102650.8    HK    Granted    13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED
METHODS THEREOF PID201704900    ID    Published    13-Jan-2016    GLYCAN
THERAPEUTICS AND RELATED METHODS THEREOF P00201909582    ID    Pending   
25-Oct-2019    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF 253195    IL   
Published    13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF
201717026559    IN    Published    13-Jan-2016    GLYCAN THERAPEUTICS AND
RELATED METHODS THEREOF 2017-557273    JP    Published    13-Jan-2016    GLYCAN
THERAPEUTICS AND RELATED METHODS THEREOF 10-2017-7023785    KR    Pending   
13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF MX/a/2017/009589
   MX    Published    13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS
THEREOF PI2017001075    MY    Pending    13-Jan-2016    GLYCAN THERAPEUTICS AND
RELATED METHODS THEREOF 733270    NZ    Pending    13-Jan-2016    GLYCAN
THERAPEUTICS AND RELATED METHODS THEREOF 1-2017-501342    PH    Published   
13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

2017110006033    SG    Published    13-Jan-2016    GLYCAN THERAPEUTICS AND
RELATED METHODS THEREOF PCT/US2016/013305    WO    Inactive    13-Jan-2016   
GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF 2017/04735    ZA    Granted   
13-Jan-2016    GLYCAN THERAPEUTICS AND RELATED METHODS THEREOF 16/140091    US
   Published    24-Sep-2018    GLYCAN THERAPEUTIC COMPOSITIONS AND RELATED
METHODS THEREOF 2016253010    AU    Published    23-Apr-2016    GLYCAN
THERAPEUTIC COMPOSITIONS AND RELATED METHODS THEREOF 2983236    CA    Published
   23-Apr-2016    GLYCAN THERAPEUTIC COMPOSITIONS AND RELATED METHODS THEREOF
201680035931.2    CN    Published    23-Apr-2016    GLYCAN THERAPEUTIC
COMPOSITIONS AND RELATED METHODS THEREOF 16722465.8    EP    Published   
23-Apr-2016    GLYCAN THERAPEUTICS AND METHODS OF TREATMENT 18110824.1    HK   
Pending    22-Aug-2018    GLYCAN THERAPEUTICS AND METHODS OF TREATMENT
2017-555593    JP    Published    23-Apr-2016    GLYCAN THERAPEUTIC COMPOSITIONS
AND RELATED METHODS THEREOF

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

735895    NZ    Pending    23-Apr-2016    GLYCAN THERAPEUTIC COMPOSITIONS AND
RELATED METHODS THEREOF PCT/US2016/029082    WO    Inactive    23-Apr-2016   
GLYCAN THERAPEUTICS AND METHODS OF TREATMENT 16/270051    US    Pending   
07-Feb-2019    MICROBIOME REGULATORS AND RELATED USES THEREOF 2016253011    AU
   Published    23-Apr-2016    MICROBIOME REGULATORS AND RELATED USES THEREOF
2983016    CA    Published    23-Apr-2016    MICROBIOME REGULATORS AND RELATED
USES THEREOF 201680036013.1    CN    Published    23-Apr-2016    MICROBIOME
REGULATORS AND RELATED USES THEREOF 16724150.4    EP    Published    23-Apr-2016
   MICROBIOME REGULATORS AND RELATED USES THEREOF MX/a/2017/013562    MX   
Published    23-Apr-2016    MICROBIOME REGULATORS AND RELATED USES THEREOF
735897    NZ    Pending    23-Apr-2016    MICROBIOME REGULATORS AND RELATED USES
THEREOF PCT/US2016/029083    WO    Inactive    23-Apr-2016    MICROBIOME
REGULATORS AND RELATED USES THEREOF 2017/06675    ZA    Pending    23-Apr-2016
   MICROBIOME REGULATORS AND RELATED USES THEREOF

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

2016311452    AU    Published    25-Aug-2016    GLYCAN COMPOSITIONS AND USES
THEREOF 2994430    CA    Published    25-Aug-2016    GLYCAN COMPOSITIONS AND
USES THEREOF 201680059550.8    CN    Published    25-Aug-2016    GLYCAN
COMPOSITIONS AND USES THEREOF 16778131.9    EP    Published    25-Aug-2016   
GLYCAN COMPOSITIONS AND USES THEREOF 2018-510084    JP    Published   
25-Aug-2016    GLYCAN COMPOSITIONS AND USES THEREOF MX/a/2018/002301    MX   
Published    25-Aug-2016    GLYCAN COMPOSITIONS AND USES THEREOF 739502    NZ   
Pending    25-Aug-2016    GLYCAN COMPOSITIONS AND USES THEREOF 15/754850    US
   Published    25-Aug-2016    GLYCAN COMPOSITIONS AND USES THEREOF
PCT/US2016/048794    WO    Inactive    25-Aug-2016    GLYCAN COMPOSITIONS AND
USES THEREOF 201780056075.3    CN    Published    13-Jul-2017    GLYCAN
COMPOSITIONS AND METHODS OF USE 17746236.3    EP    Published    13-Jul-2017   
GLYCAN COMPOSITIONS AND METHODS OF USE

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

2019-501469    JP    Published    13-Jul-2017    GLYCAN COMPOSITIONS AND METHODS
OF USE 16/316755    US    Pending    10-Jan-2019    GLYCAN COMPOSITIONS AND
METHODS OF USE PCT/US2017/042022    WO    Inactive    13-Jul-2017    GLYCAN
COMPOSITIONS AND METHODS OF USE 2017370682    AU    Published    06-Dec-2017   
GLYCAN POLYMERS AND RELATED METHODS THEREOF 3046207    CA    Published   
06-Dec-2017    GLYCAN POLYMERS AND RELATED METHODS THEREOF 201780075847.8    CN
   Published    06-Dec-2017    GLYCAN POLYMERS AND RELATED METHODS THEREOF
17832599.9    EP    Published    06-Dec-2017    GLYCAN POLYMERS AND RELATED
METHODS THEREOF 2019-530061    JP    Pending    06-Dec-2017    GLYCAN POLYMERS
AND RELATED METHODS THEREOF 754185    NZ    Pending    06-Dec-2017    GLYCAN
POLYMERS AND RELATED METHODS THEREOF 16/466945    US    Published    05-Jun-2019
   GLYCAN POLYMERS AND RELATED METHODS THEREOF PCT/US2017/064974    WO   
Inactive    06-Dec-2017    GLYCAN POLYMERS AND RELATED METHODS THEREOF

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

PCT/US2018/059100    WO    Published    03-Nov-2018    GLYCAN PREPARATIONS FOR
THE TREATMENT OF INFECTION PCT/US2018/059102    WO    Published    03-Nov-2018
   GLYCAN PREPARATIONS AND METHODS OF USE FOR HYPERAMMONEMIA PCT/US2018/059101
   WO    Published    03-Nov-2018    METHODS OF PRODUCING GLYCAN POLYMERS
62/861252    US    Pending    13-Jun-2019    GLYCAN PREPARATIONS AND MICROBES
62/790671    US    Pending    10-Jan-2019    GLYCAN PREPARATIONS AND METHODS OF
USE FOR TREATING NON-ALCOHOLIC FATTY LIVER DISEASE 62/790631    US    Pending   
10-Jan-2019    GLYCAN PREPARATIONS AND METHODS OF USE IN RENAL DISEASES
62/880369    US    Pending    30-Jul-2019    GLYCAN PREPARATIONS AND METHODS OF
USE IN RENAL DISEASES PCT/US2018/042174    WO    Published    13-Jul-2018   
GLYCAN COMPOSITIONS AND METHODS OF USE 62/861268    US    Pending    13-Jun-2019
   COMPOSITIONS AND METHODS 62/861256    US    Pending    13-Jun-2019   
COMPOSITIONS AND METHODS

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

Application No.    

  

Country

  

Status

  

Filing

Date

  

Application Title

62/861270    US    Pending    13-Jun-2019    COMPOSITIONS AND METHODS
PCT/US2019/047595    WO    Pending    21-Aug-2019    OLIGOSACCHARIDE
COMPOSITIONS AND METHODS OF USE THEREOF FOR REDUCING AMMONIA LEVELS
PCT/US2019/060626    WO    Pending    8-Nov-2019    OLIGOSACCHARIDE COMPOSITIONS
AND METHODS OF USE THEREOF 62/791006    US    Pending    10-Jan-2019   
FORMULATIONS FOR MODULATING MICROBIOME ACTIVITY 62/845305    US    Pending   
8-May-2019    OLIGOSACCHARIDE COMPOSITIONS AND METHODS OF USE 62/910179    US   
Pending    3-Oct-2019    OLIGOSACCHARIDE COMPOSITIONS AND METHODS OF USE

 

  b)

Trademarks and/or service marks:

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

The following marks have been applied for but not yet granted, unless otherwise
noted.

 

Mark

  

Country

  

Status

   Serial No.   

Filing Date

  

Reg. No.

  

Reg. Date

  

Class

KALEIDO    Canada    Allowed    1776706    11-Apr-16          N/A KALEIDO   
China (People’s Republic)    Registered    1314387    8-Apr-16    1314387   
8-Apr-16    05 Int. KALEIDO    European Union    Registered    017224072   
20-Sep-17    017224072    17-Jan-18    01 Int. KALEIDO    European Union   
Registered    017941073    10-Aug-18    017941073    25-Dec-18    05 Int.
KALEIDO    Japan    Registered    1314387    8-Apr-16    1314387    8-Apr-16   
05 Int. KALEIDO    Mexico    Registered    1314387    8-Apr-16    1314387   
8-Apr-16    05 Int. KALEIDO    United States of America    Allowed    86/783357
   9-Oct-15          05 Int. KALEIDO    Int’l Registration—Madrid Protocol   
Registered    A0057956    8-Apr-16    1314387    8-Apr-16    05 Int.; 42 Int.
LOGO [g860822page71a.jpg]    United States of America    Pending*    88/369612
   3-Apr-19          05 Int. LOGO [g860822page71b.jpg]    United States of
America    Allowed    88/369644    3-Apr-19          05 Int. LOGO
[g860822page71c.jpg]    Int’l Registration    Registered       2-Oct-19   
1497529    2-Oct-19    05 Int. MICROBIOME ENHANCER    United States of America
   Pending    87/195340    6-Oct-16          05 Int. MMT    European Union   
Published    1482563    19-Jun-19          05 Int. MMT    Japan    Pending   
1482563    19-Jun-19          05 Int. MMT    United States of America   
Published    88/235670    19-Dec-18          05 Int. MMT    Int’l
Registration—Madrid Protocol    Registered    A0086981    19-Jun-19    1482563
   19-Jun-19    05 Int.

 

*

international filing for class 5 on October 2, 2019. Appl. # not yet available

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

  c)

Copyright registrations or applications: None

 

  d)

Domain names:

kaleido.com

kaleidobio.com

caleidobio.com

kaleidobiosciences.com

kaleidotherapeutics.com

kaleidotx.com

kaleidotx.net

vl32.com

cadena-bio.com

cadena-bio.net

cadena-bio.org

cadenabio.com

cadenabio.net

cadenahealth.com

 

  2)

Cadena IP Assets (as of December 31, 2018):

 

  a)

Patents and Patent Applications:

U.S. 8,466,242, Polymeric Acid Catalysts and Uses Thereof

U.S. 8,476,388, Polymeric Acid Catalysts and Uses Thereof

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

U.S. 9,079,171, Polymeric Acid Catalysts and Uses Thereof

U.S. 9,205,418, Polymeric Acid Catalysts and Uses Thereof

U.S. 10,131,721, Polymeric Acid Catalysts and Uses Thereof

U.S. 9,238,845, Methods of Producing Sugars from Biomass Feedstocks

EP 2681547, Polymeric Acid Catalysts and Uses Thereof

AR 085503B1, Polymeric Acid Catalysts and Uses Thereof

AU 2012223494, Polymeric Acid Catalysts and Uses Thereof

CA 2,864,086, Polymeric Acid Catalysts and Uses Thereof

CN ZL201280018901.2, Polymeric Acid Catalysts and Uses Thereof

CO 30876, Polymeric Acid Catalysts and Uses Thereof

ID 465560, Polymeric Acid Catalysts and Uses Thereof

MX 344405, Polymeric Acid Catalysts and Uses Thereof

NZ 616047, Polymeric Acid Catalysts and Uses Thereof

SG 192958, Polymeric Acid Catalysts and Uses Thereof

ZA 2013/06233 Polymeric Acid Catalysts and Uses Thereof

CN ZL201380055050.3, Polymeric and Solid-Supported Catalysts, and Methods of
Digesting Cellulosic Materials Using such Catalysts

Cadena Bio Portfolio Listing:

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

    

Title/Inventors

  

Pub. No.

Serial No.

  

C & E Ref.

  

Cadena Ref.

  

Status

  

Patent No. /

Issue date

1   

POLYMERIC ACID CATALYSTS AND USES THEREOF

 

John M. Geremia

 

Brian M. Baynes

 

Ashish Dhawan

 

Corresponding to International Application PCT/US2012/026820 filed 2/27/2012

 

Priority information:

 

61/447,311 filed 2/28/2011

 

61/522,351 filed 8/11/2011

  

U.S.S.N. 13/406,490*

 

Filed 2/27/2012

   51169-002003    CAD-001 US3    Granted   

9,079,171

 

7/14/2015

  

 

U.S.S.N. 13/406,517

 

Filed 2/27/2012

  

 

51169-002004

  

 

CAD-001 US4

  

 

Granted

  

 

8,466,242

 

6/18/2013

  

 

U.S.S.N. 13/657,724

 

Filed 10/22/2012

  

 

51169-002005

  

 

CAD-001 US5

  

 

Granted

  

 

8,476,388

 

7/2/2013

  

 

U.S.S.N. 13/865,048

 

Filed 4/17/2013

  

 

51169-002006

  

 

CAD-001 US6

  

 

Granted

  

 

9,205,418

 

12/8/2015

  

 

U.S.S.N. 14/730,143*

 

Filed 6/3/2015

  

 

51169-002007

  

 

CAD-001 US7

  

 

Granted

  

 

10,131,721

 

11/20/2018

  

 

U.S.S.N. 16/175,213

 

Filed 10/30/2018

  

 

51169-002008

  

 

CAD-001US8

  

 

Published

     

 

AR P20120100642

 

Filed 2/28/2012

  

 

51169-002AR3

  

 

CAD-001 AR

  

 

Granted

  

 

AR085503B1

 

08/30/2018

  

 

AU 2012223494

  

 

51169-002AU3

  

 

CAD-001 AU

  

 

Granted

  

 

2012223494

 

07/20/2017

  

 

BR1120130220473

  

 

51169-002BR3

  

 

CAD-001 BR

  

 

Pending

     

 

CA 2,864,086

  

 

51169-002CA3

  

 

CAD-001 CA

  

 

Granted

  

 

2,864,086

 

07/10/2018

  

 

CL 2463-2013

  

 

51169-002CL3

  

 

CAD-001 CL

  

 

Abandoned

     

 

CN 201280018901.2

  

 

51169-002CN3

  

 

CAD-001 CN

  

 

Granted

  

 

ZL201280018901.2

 

02/27/2018

  

 

CO 13230542

  

 

51169-002CO3

  

 

CAD-001 CO

  

 

Granted

  

 

30876

 

08/18/2015

  

 

EP 12709207.0

  

 

51169-002EP3

  

 

CAD-001 EP1

  

 

Granted

  

 

2681247

 

04/04/2018

  

 

EP 18163838.8

  

 

51169-002EP4

  

 

CAD-001 EP2

  

 

Published

  

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

    

Title/Inventors

  

Pub. No.

Serial No.

  

C & E Ref.

  

Cadena Ref.

  

Status

  

Patent No. /

Issue date

      ID W00201304395    51169-002ID3    CAD-001 ID    Granted   

IDP0000465560

 

06/20/2017

      IN 7946/DELNP/2013    51169-002IN3    CAD-001 IN    Pending          JM
18/1/5278    51169-002JM3    CAD-001 JM    Pending          KR 10-2013-7018658
   51169-002KR3    CAD-001 KR    Abandoned          MX/a/2013/009920   
51169-002MX3    CAD-001 MX    Granted   

344405

 

12/14/2016

      MX/a/2015/016430    51169-002MX4    CAD-001 MX    Pending          MY PI
2013003157    51169-002MY3    CAD-001 MY    Abandoned          NZ 616047   
51169-002NZ3    CAD-001 NZ    Granted   

616047

 

3/30/2016

      PH 1-2013-501775    51169-002PH3    CAD-001 PH    Pending          RU
2013143822    51169-002RU3    CAD-001 RU    Abandoned          SG 201306465-4   
51169-002SG3    CAD-001 SG    Granted   

192958

 

3/9/2016

      TH 1301004754    51169-002TH3    CAD-001 TH    Pending          ZA
2013/06233    51169-002ZA3    CAD-001 ZA    Granted   

2013/06233

 

12/20/2017

2   

METHODS OF PRODUCING SUGARS FROM BIOMASS FEEDSTOCKS

 

Brian M. Baynes

 

John M. Geremia

 

Joseph Andoh

 

Ashish Dhawan

 

Priority information:

 

61/693,210 filed 8/24/2012

  

U.S.S.N. 13/831,495

 

Filed 3/14/2013

   51169-003001    CAD-006 US2    Granted   

9,238,845

 

1/19/2016

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

    

Title/Inventors

  

Pub. No.

Serial No.

  

C & E Ref.

  

Cadena Ref.

  

Status

  

Patent No. /

Issue date

3   

POLYMERIC AND SOLID-SUPPORTED CATALYSTS, AND METHODS OF DIGESTING CELLULOSIC
MATERIALS USING SUCH CATALYSTS

 

John M. Geremia

 

Brian M. Baynes

 

Jaouad Fichtali

 

Joseph Andoh

  

U.S.S.N. 14/423,697*

 

Filed 2/24/2015

   51169-004004    CAD-004 US    Abandoned       CA 2,922,254    51169-004CA4   
CAD-004 CA    Abandoned       CN 201380055050.3    51169-004CN4    CAD-004 CN   
Granted   

ZL201380055050.3

 

4/12/2017

   EP 13831228.5    51169-004EP4    CAD-004 EP    Abandoned       KR
10-2015-7007481    51169-004KR4    CAD-004 KR    Abandoned      

Corresponding to International Application No. PCT/US2013/056389 filed 8/23/2013

 

Priority information:

 

61/693,200 filed 8/24/2012

 

61/693,210 filed 8/24/2012

 

61/693,213 filed 8/24/2012

 

13/831,495 filed 3/14/2013

               4   

OLIGOSACCHARIDE COMPOSITIONS AND METHODS FOR PRODUCING THEREOF

 

John M. Geremia

 

Anastasia V. Murphy

 

Scott Han

 

Benjamin A. Seigal

 

Alicia Landry

 

Kyle Sherry

 

Stephan Panos

 

Devin Churchman

  

U.S.S.N. 14/795,720*

Filed 7/9/2015

   51169-007003    CAD-012 US    Published       2015287703    51169-007AU3   
CAD-012AU    Abandoned       2019222849    51169-007AU4    CAD-012AU1   
Published       BR112017000345-7    51169-007BR3    CAD-012 BR    Pending      
CA 2,954,662    51169-007CA3    CAD-012 CA    Pending       201580048065.6   
51169-007CN3    CAD-012 CN    Published       15819734.3    51169-007EP3   
CAD-012 EP    Published       17111776.8    51169-007HK3    CAD-012 HK   
Pending       P00 2017 00913    51169-007ID3    CAD-012 ID    Pending      
249982    51169-007IL3    CAD-012 IL    Pending   

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

    

Title/Inventors

  

Pub. No.

Serial No.

  

C & E Ref.

  

Cadena Ref.

  

Status

  

Patent No. /

Issue date

   Andrew O’Connor    201717004105    51169-007IN3    CAD-012 IN    Pending   
                        2017-522455    51169-007JP3    CAD-012 JP    Published
      Corresponding to International Application No. PCT/US2015/039795 filed
7/9/2015    MX/a/2017/000319    51169-007MX3    CAD-012 MX    Pending         
PI 2017000019    51169-007MY3    CAD-012 MY    Pending      

Priority information:

 

62/022,579 filed 7/9/2014

 

62/108,035 filed 1/26/2015

               5   

OLIGOSACCHARIDE COMPOSITIONS FOR USE AS FOOD INGREDIENTS AND METHODS OF
PRODUCING THEREOF

 

John M. Geremia

 

Raffi Mardirosian

 

Michael J. Gidding

 

Corresponding to International Application PCT/US2016/013265 filed January 13,
2016

 

Priority information:

 

62/108,036 filed 1/26/2015

  

U.S.S.N. 15/546,438

 

Filed 7/26/2017

   51169-008002    CAD-013US    Abandoned      

U.S.S.N. 16/440,261

 

Filed 6/13/2019

 

   51169-008003    CAD-013US2    Published       AU 2016212025    51169-008AU2
   CAD-013AU    Published      

 

BR 1120170159465

  

 

51169-008BR2

  

 

CAD-013BR

  

 

Published

     

 

CA 2,975,091

  

 

51169-008CA2

  

 

CAD-013CA

  

 

Published

     

 

CN 201680016821.1

  

 

51169-008CN2

  

 

CAD-013CN

  

 

Published

     

 

EP 16743841.5

  

 

51169-008EP2

  

 

CAD-013EP

  

 

Published

     

 

HK 18106258.4

  

 

51169-008HK2

  

 

CAD-013HK

  

 

Pending

     

 

ID PID201705111

  

 

51169-008ID2

  

 

CAD-013ID

  

 

Pending

     

 

IN 201717028052

  

 

51169-008IN2

  

 

CAD-013IN

  

 

Published

     

 

JP 2017-557270

  

 

51169-008JP2

  

 

CAD-013JP

  

 

Published

     

 

MX/a/2017/009722

  

 

51169-008MX2

  

 

CAD-013MX

  

 

Published

     

 

MY PI 2017001086

  

 

51169-008MY2

  

 

CAD-013MY

  

 

Pending

     

 

PH 1-2017-501341

  

 

51169-008PH2

  

 

CAD-013PH

  

 

Published

     

 

RU 2017130166

  

 

51169-008RU2

  

 

CAD-013RU

  

 

Pending

     

 

ZA 2017/05200

  

 

51169-008ZA2

  

 

CAD-013ZA

  

 

Pending

  

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

    

Title/Inventors

  

Pub. No.

Serial No.

  

C & E Ref.

  

Cadena Ref.

  

Status

  

Patent No. /

Issue date

6    OLIGOSACCHARIDE COMPOSITIONS FOR USE IN NUTRITIONAL COMPOSITIONS, AND
METHODS OF PRODUCING THEREOF   

U.S.S.N 15/546,508

 

Filed 07/26/2017

   51169-010002    CAD-015US    Published         

 

AU 2016212026

   51169-010AU2    CAD-015AU    Published       John M. Geremia   

 

CA 2,975,093

   51169-010CA2    CAD-015CA    Published         

 

CN 201680016981.6

   51169-010CN2    CAD-015CN    Published       Corresponding to International
Application PCT/US2016/013271   

 

EP 16743842.3

   51169-010EP2    CAD-015EP    Published       Filed January 13, 2016   

 

HK 18106257.5

   51169-010HK2    CAD-015HK    Pending         

 

JP 2017-557271

   51169-010JP2    CAD-015JP    Published      

Priority information:

 

62/108,038 filed 1/26/2015

  

 

MX/a/2017/009720

   51169-010MX2    CAD-015MX    Published    7#    OLIGOSACCHARIDE COMPOSITIONS
FOR USE AS ANIMAL FEED AND METHODS OF PRODUCING THEREOF   

 

U.S.S.N. 14/995,129*

 

Filed 1/13/2016

   51169-017001    CAD-014 US    Pending         

 

BR 1120170159449

   51169-017BR1    CAD-014BR    Published       John M. Geremia   

 

CA 2,975,095

   51169-017CA1    CAD-014CA    Published       Raffi Mardirosian   

 

CN 201680016822.6

   51169-017CN1    CAD-014CN    Published      

Michael J. Gidding

 

Anastasia V. Murphy

  

 

EP 16743843.1

   51169-017EP1    CAD-014EP    Granted   

EP 3250048

 

08/14/2019

     

 

EP 19191223.7

   51169-017EP2    CAD-014EP1    Pending       Corresponding to
PCT/US2016/013280   

 

HK 18106256.6

   51169-017HK1    CAD-014HK    Pending         

 

IN 201717026993

   51169-017IN1    CAD-014IN    Published         

 

JP 2017-557272

   51169-017JP1    CAD-014JP    Published         

 

MX/a/2017/009730

   51169-017MX1    CAD-014MX    Published   

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

    

Title/Inventors

  

Pub. No.

Serial No.

  

C & E Ref.

  

Cadena Ref.

  

Status

  

Patent No. /

Issue date

  

Filed 1/13/2016

 

Priority information:

 

62/108,037 filed 1/26/2015

 

62/216,945 filed 9/10/2015

 

62/216,952 filed 9/10/2015

 

62/255,341 filed 11/13/2015

 

62/255,343 filed 11/13/2015

 

               8#   

ANIMAL THERAPEUTIC AND FEED COMPOSITIONS AND METHODS OF USE

 

  

PCT/US2016/061337

 

Filed 11/10/2016

   51169-020WO1    CAD-020 WO    National Stage      

John M. Geremia

  

U.S.S.N. 15/775,501

 

Filed 05/11/2018

 

   51169-020001    CAD-020 US    Abandoned      

Anastasia V. Murphy

 

Priority information:

 

62/255,348 filed 11/13/2015

 

62/255,352 filed 11/13/2015

  

U.S.S.N. 16/293,140

 

Filed 03/05/2019

   51169-020002    CAD-020 US1    Pending   

 

*

US Utility application, not a national phase.

 

#

Exclusively licensed to Midori, Inc.

b) Trademarks and/or service marks: None

c) Copyright registrations or applications: None

d) Domain names: None

 

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

EXHIBIT D

BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS

 

Bank Name

  

Account Number

  

Company/Subsidiary

  

Purpose of Account

   Avg. Balance Pacific Western Bank    0007068643    Kaleido Biosciences, Inc.
   Operating    $0.204M1    1001658366    Kaleido Biosciences, Inc.    LC –
collateral Bedford facility    $0.118M    1001787199    Kaleido Biosciences,
Inc.    LC – collateral Lexington facility    $2.070M Pacific Western Bank Asset
Mgmt.    19-SQ79184    Kaleido Biosciences, Inc.    Former Money Market   
$0.000M    19-SQ79184A    Kaleido Securities Corp.    Former Money Market   
$0.001M Morgan Stanley Asset Mgmt.    233-089616-428    Kaleido Biosciences,
Inc.    Money Market    $5.238M    233-089711-428    Kaleido Securities Corp.   
Money Market    $20.001M JPMorgan Chase Bank, N.A.    000000518371759    Kaleido
Biosciences, Inc.    Operating    $48.007M

 

1 

NTD: This balance is as of November 30th. Kaleido will not be making future
deposits to this PacWest account. The plan is to transfer the balance (net of
any remaining outstanding checks, currently ~$0.010M) to the JPM operating
account by the end of December, 2019.

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

EXHIBIT E

COMPLIANCE CERTIFICATE

Hercules Capital, Inc. (as “Agent”)

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Reference is made to that certain Loan and Security Agreement dated as of
December 31, 2019 and the Loan Documents (as defined therein) entered into in
connection with such Loan and Security Agreement all as may be amended from time
to time (hereinafter referred to collectively as the “Loan Agreement”) by and
among Hercules Capital, Inc. (the “Agent”), the several banks and other
financial institutions or entities from time to time party thereto
(collectively, the “Lender”) and Kaleido Biosciences, Inc. (the “Company”) and
each of its Qualified Subsidiaries, as Borrower. All capitalized terms not
defined herein shall have the same meaning as defined in the Loan Agreement.

The undersigned is an Officer of the Company, knowledgeable of all Company
financial matters, and is authorized to provide certification of information
regarding the Company; hereby certifies, in such capacity and not in his
individual capacity, that in accordance with the terms and conditions of the
Loan Agreement, the Company is in compliance for the period ending ___________
of all covenants, conditions and terms and hereby reaffirms that all
representations and warranties contained therein are true and correct in all
material respects (to the extent not already qualified by materiality) on and as
of the date of this Compliance Certificate with the same effect as though made
on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, after giving effect in all cases to any
standard(s) of materiality contained in the Loan Agreement as to such
representations and warranties. Attached are the required documents supporting
the above certification. The undersigned further certifies that the attached
financial statements are prepared in accordance with GAAP (except for the
absence of footnotes with respect to unaudited financial statement and subject
to normal year-end adjustments) and are consistent from one period to the next
except as explained below.

 

REPORTING REQUIREMENT    REQUIRED    CHECK IF ATTACHED Interim Financial
Statements    Monthly within 30 days    Interim Financial Statements   
Quarterly within 45 days    Audited Financial Statements    FYE within 90 days
  

ACCOUNTS OF BORROWER AND ITS SUBSIDIARIES AND AFFILIATES

The undersigned hereby also confirms the below disclosed accounts represent all
depository accounts and securities accounts presently open in the name of each
Borrower or Borrower’s Subsidiary, as applicable.

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

Each new account that has been opened since delivery of the previous Compliance
Certificate is designated below with a “*”.

 

            Depository
AC #    Financial
Institution    Account Type
(Depository /
Securities)    Last
Month Ending
Account Balance    Purpose of
Account

BORROWER Name/Address:

        1                       2                       3                      
4                       5                       6                       7     
           

BORROWER’S SUBSIDIARY Name/Address

        1                       2                       3                      
4                       5                       6                       7     
           

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

To the extent applicable, the undersigned hereby confirms that the Borrowers are
in compliance with Section 7.20 of the Loan Agreement (as applicable, as
applicable, attached as [Schedule A-1][Schedule A-2][Schedule A-3] hereto are
the required calculations supporting this certification(s)), as of the date
first set forth above.

 

Very Truly Yours, KALEIDO BIOSCIENCES, INC. By:  

                

Name:  

 

Its:  

 

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

Schedule A-1 to Compliance Certificate

If

A. Performance Milestone I has not been achieved on or before June 30, 2020;
then

 

(1)    Sum of Cash held by Borrower in accounts in the United States subject to
an Account Control Agreement in favor of Agent:    $____________________ (2)   
Sum of the Borrower’s accounts payable under GAAP not paid after the 90th day
following the invoice date for such account payable:    $____________________
(3)    Sum of line (2) plus $15,000,000    $____________________ (4)    Is the
amount line (1) greater than or equal to the amount in line (3)?   

YES – In compliance

 

NO – Not in compliance

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

Schedule A-2 to Compliance Certificate

If

A. Performance Milestone II has not been achieved on or before November 15,
2020; then

 

(1)    Sum of Cash held by Borrower in accounts in the United States subject to
an Account Control Agreement in favor of Agent:    $____________________ (2)   
Sum of the Borrower’s accounts payable under GAAP not paid after the 90th day
following the invoice date for such account payable:    $____________________
(3)    Outstanding Secured Obligations as of the date hereof   
$____________________ (4)    Sum of line (2) plus line (3)   
$____________________ (5)    Is the amount line (1) greater than or equal to the
amount in line (4)?   

YES – In compliance

 

NO – Not in compliance

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

Schedule A-3 to Compliance Certificate

If

A. Performance Milestone I has been achieved on or before June 30, 2020; and

B. Performance Milestone II has been achieved on or before November 15, 2020;
and

C. Both the Tranche 1 Advance and the Tranche 2 Advance have been drawn, then

 

(1)    Sum of Cash held by Borrower in accounts in the United States subject to
an Account Control Agreement in favor of Agent:    $____________________ (2)   
Sum of the Borrower’s accounts payable under GAAP not paid after the 90th day
following the invoice date for such account payable:    $____________________
(3)    Sum of line (2) plus $7,500,000    $____________________ (4)    Is the
amount line (1) greater than or equal to the amount in line (3)?   

YES – In compliance

 

NO – Not in compliance

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

EXHIBIT F

FORM OF JOINDER AGREEMENT

This Joinder Agreement (the “Joinder Agreement”) is made and dated as of
[                ], 20[     ], and is entered into by and
between__________________., a ___________ corporation (“Subsidiary”), and
HERCULES CAPITAL, INC., a Maryland corporation (as “Agent”).

RECITALS

A. Subsidiary’s Affiliate, [                ] (“Company”) [has entered/desires
to enter] into that certain Loan and Security Agreement dated as of December 31,
2019, with the several banks and other financial institutions or entities from
time to time party thereto as lender (collectively, the “Lenders”) and the
Agent, as such agreement may be amended, restated, supplemented or otherwise
modified (the “Loan Agreement”), together with the other agreements executed and
delivered in connection therewith;

B. Subsidiary acknowledges and agrees that it will benefit both directly and
indirectly from Company’s execution of the Loan Agreement and the other
agreements executed and delivered in connection therewith;

AGREEMENT

NOW THEREFORE, Subsidiary and Agent agree as follows:

 

  1.

The recitals set forth above are incorporated into and made part of this Joinder
Agreement. Capitalized terms not defined herein shall have the meaning provided
in the Loan Agreement.

 

  2.

By signing this Joinder Agreement, Subsidiary shall be bound by the terms and
conditions of the Loan Agreement the same as if it were the Borrower (as defined
in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided
however, that (a) with respect to (i) Section 5.1 of the Loan Agreement,
Subsidiary represents that it is an entity duly organized, legally existing and
in good standing under the laws of [                ], (b) neither Agent nor the
Lenders shall have any duties, responsibilities or obligations to Subsidiary
arising under or related to the Loan Agreement or the other Loan Documents,
(c) that if Subsidiary is covered by Company’s insurance, Subsidiary shall not
be required to maintain separate insurance or comply with the provisions of
Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Company
satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary
shall not have to provide Agent separate Financial Statements. To the extent
that Agent or the Lenders has any duties, responsibilities or obligations
arising under or related to the Loan Agreement or the other Loan Documents,
those duties, responsibilities or obligations shall flow only to Company and not
to Subsidiary or any other Person or entity. By way of example (and not an
exclusive list): (i) Agent’s providing notice to Company in accordance with the
Loan Agreement or as otherwise agreed among Company, Agent and the Lenders shall
be deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to
Company shall be deemed an Advance to Subsidiary; and (iii) Subsidiary shall
have no right to request an Advance or make any other demand on the Lenders.

 

  3.

Subsidiary agrees not to certificate its equity securities without Agent’s prior
written consent, which consent may be conditioned on the delivery of such equity
securities to Agent in order to perfect Agent’s security interest in such equity
securities.

 

  4.

Subsidiary acknowledges that it benefits, both directly and indirectly, from the
Loan Agreement, and hereby waives, for itself and on behalf on any and all
successors in interest (including without limitation any assignee for the
benefit of creditors, receiver, bankruptcy trustee or itself as
debtor-in-possession under any bankruptcy proceeding) to the fullest extent
provided by law, any and all

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

  claims, rights or defenses to the enforcement of this Joinder Agreement on the
basis that (a) it failed to receive adequate consideration for the execution and
delivery of this Joinder Agreement or (b) its obligations under this Joinder
Agreement are avoidable as a fraudulent conveyance.

 

  5.

As security for the prompt, complete and indefeasible payment when due (whether
on the payment dates or otherwise) of all the Secured Obligations, Subsidiary
grants to Agent a security interest in all of Subsidiary’s right, title, and
interest in and to the Collateral.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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

[SIGNATURE PAGE TO JOINDER AGREEMENT]

 

SUBSIDIARY: _________________________________.

 

                                   By:   Name:   Title:   Address:  
Telephone:___________   email: ____________

AGENT:

HERCULES CAPITAL, INC.

 

                                           
By:____________________________________  
Name:__________________________________  
Title:___________________________________   Address:   400 Hamilton Ave., Suite
310   Palo Alto, CA 94301   email: legal@htgc.com   Telephone: 650-289-3060

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

EXHIBIT G

ACH DEBIT AUTHORIZATION AGREEMENT

Hercules Capital, Inc.

400 Hamilton Avenue, Suite 310

Palo Alto, CA 94301

Re: Loan and Security Agreement dated as of December 31, 2019 (the “Agreement”)
by and among Kaleido Biosciences, Inc. and each of its Qualified Subsidiaries
(collectively, “Borrower”) and Hercules Capital, Inc., as agent (“Agent”) and
the Lenders party thereto (collectively, the “Lenders”)

In connection with the above referenced Agreement, the Borrower hereby
authorizes the Agent to initiate debit entries for (i) the periodic payments due
under the Agreement and (ii) reasonable and documented out-of-pocket legal fees
and costs incurred by Agent or the Lenders pursuant to Section 11.12 of the
Agreement to the Borrower’s account indicated below; provided, however, that
Agent shall provide Borrower with an invoice of such fees and costs. The
Borrower authorizes the depository institution named below to debit to such
account.

[IF FILED PUBLICLY, ACCOUNT INFO REDACTED FOR SECURITY PURPOSES]

 

DEPOSITORY NAME    BRANCH CITY    STATE AND ZIP CODE TRANSIT/ABA NUMBER   
ACCOUNT NUMBER

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

This authority will remain in full force and effect so long as any amounts are
due under the Agreement.

KALEIDO BIOSCIENCES, INC.

 

By: _________________________________________ Name:
_________________________________________ Date:
________________________________________

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

EXHIBIT H-1

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Loan and Security Agreement dated as of
December 31, 2019 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among Kaleido Biosciences, Inc., a Delaware
corporation, and each of its Qualified Subsidiaries (as defined in the Loan
Agreement) (hereinafter collectively referred to as the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
the Loan Agreement (collectively, referred to as the “Lenders”), and Hercules
Capital, Inc., a Maryland corporation, in its capacity as administrative agent
and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the
Loan(s) (as well as any promissory note(s) evidencing such Loan(s)) in respect
of which it is providing this certificate, (ii) it is not a “bank” within the
meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a “ten percent
shareholder” of the Borrower within the meaning of Section 871(h)(3)(B) of the
Code and (iv) it is not a “controlled foreign corporation” related to the
Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Agent and the Borrower with a certificate of
its non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided in
this certificate changes, or if a lapse in time or change in circumstances
renders the information in this certificate obsolete, expired or inaccurate in
any material respect, the undersigned shall promptly so inform the Borrower and
the Agent in writing and deliver promptly to the Agent and the Borrower an
updated certificate or other appropriate documentation (including any new
documentation reasonably requested by the Agent or the Borrower) or promptly
notify the Agent and the Borrower in writing of its legal ineligibility to do
so, and (2) the undersigned shall have at all times furnished the Borrower and
the Agent with a properly completed and currently effective certificate in
either the calendar year in which each payment is to be made to the undersigned,
or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

 

Date: _____________ ___, 20___     [NAME OF LENDER]     By:  

         

    Name:  

 

    Title:  

 

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

EXHIBIT H-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Loan and Security Agreement dated as of
December 31, 2019 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among Kaleido Biosciences, Inc., a Delaware
corporation, and each of its Qualified Subsidiaries (as defined in the Loan
Agreement) (hereinafter collectively referred to as the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
the Loan Agreement (collectively, referred to as the “Lenders”), and Hercules
Capital, Inc., a Maryland corporation, in its capacity as administrative agent
and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the
participation in respect of which it is providing this certificate, (ii) it is
not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (iii) it is
not a “ten percent shareholder” of the Borrower within the meaning of
Section 871(h)(3)(B) of the Code and (iv) it is not a “controlled foreign
corporation” related to the Borrower as described in Section 881(c)(3)(C) of the
Code.

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN or IRS Form W-8BEN-E. By executing
this certificate, the undersigned agrees that (1) if the information provided in
this certificate changes, or if a lapse in time or change in circumstances
renders the information in this certificate obsolete, expired or inaccurate in
any material respect, the undersigned shall promptly so inform such Lender in
writing and deliver promptly to such Lender an updated certificate or other
appropriate documentation (including any new documentation reasonably requested
by such Lender) or promptly notify such Lender in writing of its legal
ineligibility to do so, and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

 

Date: _____________ ___, 20___     [NAME OF PARTICIPANT]     By:  

             

    Name:  

 

    Title:  

 

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

EXHIBIT H-3

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

Reference is hereby made to the Loan and Security Agreement dated as of
December 31, 2019 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among Kaleido Biosciences, Inc., a Delaware
corporation, and each of its Qualified Subsidiaries (as defined in the Loan
Agreement) (hereinafter collectively referred to as the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
the Loan Agreement (collectively, referred to as the “Lenders”), and Hercules
Capital, Inc., a Maryland corporation, in its capacity as administrative agent
and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the participation in
respect of which it is providing this certificate, (ii) its direct or indirect
partners/members are the sole beneficial owners of such participation,
(iii) with respect to such participation, neither the undersigned nor any of its
direct or indirect partners/members is a “bank” extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its direct
or indirect partners/members is a “ten percent shareholder” of the Borrower
within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its
direct or indirect partners/members is a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS
Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided in this certificate
changes, or if a lapse in time or change in circumstances renders the
information in this certificate obsolete, expired or inaccurate in any material
respect, the undersigned shall promptly so inform such Lender in writing and
deliver promptly to such Lender an updated certificate or other appropriate
documentation (including any new documentation reasonably requested by the
Borrower or the Agent) or promptly notify such Lender in writing of its legal
ineligibility to do so, and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

 

Date: _____________ ___, 20___       [NAME OF PARTICIPANT]       By:   

         

      Name:   

 

      Title:   

 

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

EXHIBIT H-4

FORM OF U.S. TAX COMPLIANCE CERTIFICATE

(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

Reference is hereby made to the Loan and Security Agreement dated as of
December 31, 2019 (as amended, supplemented or otherwise modified from time to
time, the “Loan Agreement”) by and among Kaleido Biosciences, Inc., a Delaware
corporation, and each of its Qualified Subsidiaries (as defined in the Loan
Agreement) (hereinafter collectively referred to as the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
the Loan Agreement (collectively, referred to as the “Lenders”), and Hercules
Capital, Inc., a Maryland corporation, in its capacity as administrative agent
and collateral agent for itself and the Lenders (in such capacity, the “Agent”).

Pursuant to the provisions of Addendum 1 of the Loan Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the Loan(s) (as well as
any promissory note(s) evidencing such Loan(s)) in respect of which it is
providing this certificate, (ii) its direct or indirect partners/members are the
sole beneficial owners of such Loan(s) (as well as any promissory note(s)
evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant
to this Loan Agreement or any other Loan Document, neither the undersigned nor
any of its direct or indirect partners/members is a “bank” extending credit
pursuant to a loan agreement entered into in the ordinary course of its trade or
business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of
its direct or indirect partners/members is a “ten percent shareholder” of the
Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of
its direct or indirect partners/members is a “controlled foreign corporation”
related to the Borrower as described in Section 881(c)(3)(C) of the Code.

The undersigned has furnished the Agent and the Borrower with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or IRS Form
W-8BEN-E or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN or IRS
Form W-8BEN-E from each of such partner’s/member’s beneficial owners that is
claiming the portfolio interest exemption. By executing this certificate, the
undersigned agrees that (1) if the information provided in this certificate
changes, or if a lapse in time or change in circumstances renders the
information in this certificate obsolete, expired or inaccurate in any material
respect, the undersigned shall promptly so inform the Borrower and the Agent in
writing and deliver promptly to the Borrower and the Agent an updated
certificate or other appropriate documentation (including any new documentation
reasonably requested by the Borrower or the Agent) or promptly notify the
Borrower and the Agent in writing of its legal ineligibility to do so, and
(2) the undersigned shall have at all times furnished the Borrower and the Agent
with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

Unless otherwise defined herein, terms defined in the Loan Agreement and used
herein shall have the meanings given to them in the Loan Agreement.

 

Date: _____________ ___, 20___       [NAME OF LENDER]       By:   

             

      Name:   

 

      Title:   

 

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

SCHEDULE 1.1

COMMITMENTS

 

LENDER    TRANCHE      TERM COMMITMENT  

Hercules Capital, Inc.

     Tranche 1      $ 22,500,000  

Hercules Capital, Inc.

     Tranche 2      $ 5,000,000  

Hercules Capital, Inc.

     Tranche 3      $ 7,500,000 * 

TOTAL COMMITMENTS

      $ 35,000,000.00 * 

 

*

Funding of Tranche 3 is subject to approval by Lender’s investment committee in
its sole discretion.

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

SCHEDULE 1

SUBSIDIARIES

 

1.

Cadena Bio, Inc.

 

2.

Kaleido Biosciences Securities Corporation

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

SCHEDULE 1A

EXISTING PERMITTED INDEBTEDNESS

 

Agreement

  

Date

  

Description of Indebtedness

Letter of Credit    September 24, 2019, as may be replaced to reflect correction
of proper beneficiary (subject to the limitations set forth in clause (viii) of
the definition of Permitted Indebtedness)    Letter of Credit with Square 1 Bank
issued in connection with the security deposit requirement under the lease for
space at 18 Crosby Drive, Bedford MA in the amount of $117,156.33 Letter of
Credit    December 16, 2019    Letter of Credit with JPMorgan Chase Bank, N.A.
issued in connection with the security deposit requirement under the lease for
space at 65 Hayden Street, Lexington MA in the amount of $2,057,658.75 Line of
Credit    Kaleido’s American Express account went effective on October 1, 2018.
   Line of Credit with American Express issued in connection with the Company’s
corporate credit card program in the amount of $1,000,000.00; provided that the
amount of any thereunder Indebtedness, together with any other credit card
Indebtedness, shall not exceed the cap set forth in clause (iv) of the
definition of Permitted Indebtedness

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

SCHEDULE 1B

EXISTING PERMITTED INVESTMENTS

Investments held by Kaleido Biosciences, Inc. of 1,000 shares of common stock of
Cadena Bio, Inc., par value $0.001.

Investments held by Kaleido Biosciences, Inc. of 1,000 shares of common stock of
Kaleido Biosciences Securities Corporation, par value $0.001.

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

SCHEDULE 1C EXISTING PERMITTED LIENS

 

Name of Holder of

Lien/Encumbrance

  

Description of Property Encumbered

  

Company/Subsidiary

De Lage Landen Financial Services, Inc.    Lien of De Lage Landen Financial
Services, Inc. on a leased asset of Kaleido Biosciences, Inc.    Kaleido
Biosciences, Inc.

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

SCHEDULE 5.3

CONSENTS, ETC.

None.

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

SCHEDULE 5.8

TAX MATTERS

None.

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

SCHEDULE 5.9

INTELLECTUAL PROPERTY CLAIMS

None.

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

SCHEDULE 5.10

INTELLECTUAL PROPERTY

None.

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

SCHEDULE 5.11

BORROWER PRODUCTS

None.

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

SCHEDULE 5.14

CAPITALIZATION

[***]

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

SCHEDULE 7.12

DEPOSIT ACCOUNTS

 

Bank Name

  

Account Number

  

Company/

Subsidiary

  

Purpose of Account

Pacific Western Bank   

1001658366

 

1001787199

  

Kaleido Biosciences, Inc.

 

Kaleido Biosciences, Inc.

  

LC – collateral Bedford facility

 

LC – collateral Lexington facility

Pacific Western Bank Asset Mgmt.   

19-SQ79184

 

19-SQ79184A

  

Kaleido Biosciences, Inc.

 

Kaleido Securities Corp.

  

Former Money Market

 

Former Money Market

Morgan Stanley Asset Mgmt.   

233-089616-428

 

233-089711-428

  

Kaleido Biosciences, Inc.

 

Kaleido Securities Corp.

  

Money Market

 

Money Market