Exhibit 10.1

EVOKE PHARMA, INC.

LOAN AND SECURITY AGREEMENT

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This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of May 28,
2014, by and between Square 1 Bank (“Bank”) and Evoke Pharma, Inc. (“Borrower”).

RECITALS

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

AGREEMENT

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

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

1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A
shall be construed in accordance with GAAP and all calculations shall be made in
accordance with GAAP (except for non-compliance with FAS 123R in monthly
reporting). The term “financial statements” shall include the accompanying notes
and schedules.

2. LOAN AND TERMS OF PAYMENT.

2.1 Credit Extensions.

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

(b) Term Loan.

(i) Subject to and upon the terms and conditions of this Agreement, Bank agrees
to make one (1) or more term loans to Borrower in an aggregate principal amount
not to exceed Four Million Five Hundred Thousand Dollars ($4,500,000) (each a
“Term Loan” and collectively the “Term Loans”). Borrower may request Term Loans
at any time from the date hereof through the Availability End Date, but Borrower
may not request more than four (4) Term Loans without Bank’s prior written
consent. The proceeds of the Term Loans shall be used for general corporate and
working capital purposes and for capital expenditures.

(ii) Interest shall accrue from the date of each Term Loan at the rate specified
in Section 2.3(a), and prior to the Availability End Date for the applicable
Term Loan shall be payable monthly in arrears beginning on the first day of the
month next following the date such Term Loan is funded, and continuing on the
same day of each month

 

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thereafter. Any Term Loans that are outstanding on the Availability End Date
shall be payable in 24 equal monthly installments of principal, plus all accrued
and unpaid interest, beginning on the date that is one month immediately
following the Availability End Date, and continuing on the same day of each
month thereafter through the Term Loan Maturity Date, at which time all
outstanding amounts due in connection with the Term Loans and any other amounts
due under this Agreement shall be immediately due and payable. Term Loans, once
repaid, may not be reborrowed. Borrower may prepay any Term Loans without
penalty or premium.

(iii) When Borrower desires to obtain a Term Loan, Borrower shall notify Bank
(which notice shall be irrevocable) by facsimile transmission to be received no
later than 3:30 p.m. Eastern time on the day on which the Term Loan is to be
made. Such notice shall be substantially in the form of Exhibit C. The notice
shall be signed by an Authorized Officer.

2.2 Intentionally Left Blank.

2.3 Interest Rates, Payments, and Calculations.

(a) Interest Rates.

(i) Term Loans. Except as set forth in Section 2.3(b), the Term Loans shall bear
interest, on the outstanding daily balance thereof, at either (A) a variable
annual rate equal to the greater of (1) 1.75% above the Prime Rate then in
effect, or (2) 5.00%, or (B) a fixed annual rate of 5.50%. Borrower shall
deliver written notice to Bank specifying which of the above two interest rate
structures Borrower elects to apply during the term of this Agreement before
submitting (or together with) the initial Loan Advance Request Form to Bank
pursuant to Section 2.1(b)(iii). Such election shall be irrevocable.

(b) Late Fee; Default Rate. If any payment is not made within 15 days after the
date such payment is due, Borrower shall pay Bank a late fee equal to the lesser
of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount
permitted to be charged under applicable law. All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate equal to 5 percentage points above the interest rate
applicable immediately prior to the occurrence of the Event of Default.

(c) Payments. Bank shall charge all interest, all Bank Expenses, and all
Periodic Payments against any of Borrower’s deposit accounts. Any interest not
paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder.

(d) Computation. In the event the Prime Rate is changed from time to time
hereafter, the applicable rate of interest hereunder shall be increased or
decreased, effective as of the day the Prime Rate is changed, by an amount equal
to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.

 

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2.4 Crediting Payments. Unless an Event of Default exists, Bank shall credit a
wire transfer of funds, check or other item of payment to such deposit account
or Obligation as Borrower specifies. After the occurrence and during the
continuance of an Event of Default, Bank shall have the right, in its sole
discretion, to immediately apply any wire transfer of funds, check, or other
item of payment Bank may receive to conditionally reduce Obligations, but such
applications of funds shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Bank after 5:30 p.m. Eastern time shall be deemed to have been received by
Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.

2.5 Fees. Borrower shall pay to Bank the following:

(a) Facility Fee. On or before the Closing Date, a fee equal to $20,000, which
shall be nonrefundable; and

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

2.6 Term. This Agreement shall become effective on the Closing Date and, subject
to Section 12.7, shall continue in full force and effect for so long as any
Obligations (other than inchoate indemnity obligations) remain outstanding or
Bank has any obligation to make Credit Extensions under this Agreement.
Notwithstanding the foregoing, Bank shall have the right to terminate its
obligation to make Credit Extensions under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default. Upon payment in full in Cash of the Obligations (other than inchoate
indemnity obligations) in their entirety, Borrower may terminate this Agreement
upon three (3) Business Days written notice to Bank. Following such payment in
full in Cash of the Obligations (other than inchoate indemnity obligations) in
their entirety, and at such time as Bank’s obligation to make Credit Extensions
has terminated, Bank shall release its Liens in the Collateral and Bank shall
promptly take such action reasonably requested by Borrower, at Borrower’s sole
cost and expense, in order to cause such Liens to be terminated of record
(including by filing UCC-3 or similar termination statements with respect to
such Liens), and all rights therein shall revert to Borrower.

3. CONDITIONS OF LOANS.

3.1 Conditions Precedent to Closing. The agreement of Bank to enter into this
Agreement on the Closing Date is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, each of the
following items and completed each of the following requirements:

(a) this Agreement;

 

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

(c) a financing statement (Form UCC-1);

(d) Borrower shall have opened at least one deposit account with Bank;

(e) payment of the fees and Bank Expenses then due specified in Section 2.5,
which may be debited from any of Borrower’s accounts with Bank;

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

(g) evidence satisfactory to Bank that Borrower has no outstanding Indebtedness
to Silicon Valley Bank;

(h) current financial statements, including audited statements for Borrower’s
most recently ended fiscal year, together with an unqualified opinion (or an
opinion qualified only for going concern so long as Borrower’s investors provide
additional equity as needed); company prepared consolidated and consolidating
balance sheets, income statements, and statements of cash flows for the most
recently ended month in accordance with Section 6.2; and such other updated
financial information as Bank may reasonably request; provided that (i) if
Borrower is not requesting a Term Loan on the Closing Date, Borrower may instead
deliver its most recent financial statements filed with the Securities and
Exchange Commission, and (ii) any such items that have been made publicly
available shall be deemed received by Bank prior to the Closing Date if Bank
confirms such public availability prior to the Closing Date;

(i) a current Compliance Certificate in accordance with Section 6.2;

(j) a Borrower Information Certificate; and

(k) such other documents or certificates, and completion of such other matters,
as Bank may reasonably request.

3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is
contingent upon Borrower’s compliance with Section 3.1 above, and is further
subject to the following conditions:

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

(b) Borrower shall have transferred substantially all of its Cash assets into
operating accounts held with Bank and otherwise be in compliance with
Section 6.6 hereof;

 

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(c) a warrant, duly executed by Borrower, in substantially the form attached
hereto as Exhibit E, with respect to such Credit Extension;

(d) prior to the initial Credit Extension, Borrower shall provide all monthly
financial statements, in accordance with Section 6.2(i), since Borrower’s most
recent financial reporting filing with the Securities and Exchange Commission;
and

(e) the representations and warranties contained in Section 5 shall be true and
correct in all material respects on and as of the date of such Loan
Advance/Paydown Request Form and on the effective date of each Credit Extension
as though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this
Section 3.2.

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing
security interest in the Collateral to secure prompt repayment of any and all
Obligations and to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except for Permitted Liens or as
disclosed in the Schedule, such security interest constitutes a valid, first
priority security interest in the presently existing Collateral, and will
constitute a valid, first priority security interest in later-acquired
Collateral. Borrower also hereby agrees not to sell, transfer, assign, mortgage,
pledge, lease, grant a security interest in, or encumber any of its Intellectual
Property, other than Permitted Liens. Notwithstanding any termination of this
Agreement or of any filings undertaken related to Bank’s rights under the Code,
Bank’s Lien on the Collateral shall remain in effect for so long as any
Obligations (other than inchoate indemnity obligations) are outstanding.

4.2 Perfection of Security Interest. Borrower authorizes Bank to file at any
time financing statements, continuation statements, and amendments thereto that
(i) either specifically describe the Collateral or describe the Collateral as
all assets of Borrower of the kind pledged hereunder, and (ii) contain any other
information required by the Code for the sufficiency of filing office acceptance
of any financing statement, continuation statement, or amendment, including
whether Borrower is an organization, the type of organization and any
organizational identification number issued to Borrower, if applicable. Borrower
shall have possession of the Collateral, except goods transferred in the
ordinary course of business, where expressly otherwise provided in this
Agreement, or where Bank chooses to perfect its security interest by possession
in addition to the filing of a financing statement. Where Collateral is in
possession of a third party bailee, Borrower shall take such steps as Bank
reasonably requests for Bank to (i) subject to Section 7.10 below, obtain an
acknowledgment, in form and substance reasonably satisfactory to Bank, of the
bailee that the bailee holds such Collateral for the benefit of Bank, and
(ii) subject to Section 6.6, obtain “control” of any Collateral consisting of
investment property, deposit accounts, letter-of-credit rights or electronic
chattel paper (as such items and the term “control” are defined in Revised
Article 9 of the Code) by causing the

 

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securities intermediary or depositary institution or issuing bank to execute a
control agreement in form and substance reasonably satisfactory to Bank.
Borrower will not create any chattel paper without placing a legend on the
chattel paper acceptable to Bank indicating that Bank has a security interest in
the chattel paper. Borrower from time to time may deposit with Bank specific
cash collateral to secure specific Obligations; Borrower authorizes Bank to hold
such specific balances in pledge and to decline to honor any drafts thereon or
any request by Borrower or any other Person to pay or otherwise transfer any
part of such balances for so long as the specific Obligations are outstanding.
Borrower shall take such other actions as Bank reasonably requests to perfect
its security interests granted under this Agreement.

5. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants as follows:

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

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

5.3 Collateral. Borrower has rights in or the power to transfer the Collateral,
and its title to the Collateral is free and clear of Liens, adverse claims, and
restrictions on transfer or pledge except for Permitted Liens. Other than
movable items of personal property such as laptop computers, all Collateral
having an aggregate book value not in excess of $100,000, is located solely in
the Collateral States. All Inventory is in all material respects of good and
merchantable quality, free from all material defects, except for Inventory for
which adequate reserves have been made. Except as set forth in the Schedule or
as permitted under Section 6.6, none of Borrower’s Cash is maintained or
invested with a Person other than Bank or Bank’s affiliates.

5.4 Intellectual Property. Borrower is the sole owner of the intellectual
property created or purchased by Borrower, except for licenses permitted
hereunder. To the best of Borrower’s knowledge, each of the Copyrights,
Trademarks and Patents created or purchased by Borrower is valid and
enforceable, and no part of the intellectual property created or purchased by
Borrower has been judged invalid or unenforceable, in whole or in part, and no
claim has been made to Borrower that any part of the intellectual property
created or purchased by Borrower violates the rights of any third party except,
in each case, to the extent that would not reasonably be expected to cause a
Material Adverse Effect.

 

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

5.6 Litigation. Except as set forth in the Schedule, there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court or
administrative agency in which a likely adverse decision would reasonably be
expected to have a Material Adverse Effect.

5.7 No Material Adverse Change in Financial Statements. All consolidated and
consolidating financial statements related to Borrower and any Subsidiary that
are delivered by Borrower to Bank fairly present in all material respects
Borrower’s consolidated and consolidating financial condition as of the date
thereof and Borrower’s consolidated and consolidating results of operations for
the period then ended. There has not been a material adverse change in the
consolidated or in the consolidating financial condition of Borrower since the
date of the most recent of such financial statements submitted to Bank, other
than those of which Bank has been given notice pursuant to Section 6.2.

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

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

5.10 Subsidiaries. Borrower does not own any stock, partnership interest or
other equity securities of any Person, except for Permitted Investments.

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

 

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5.12 Inbound Licenses. Except as disclosed on the Schedule or as otherwise
disclosed to Bank pursuant to Section 6.8, Borrower is not a party to, nor is
bound by, any material license or other agreement important for the conduct of
Borrower’s business that prohibits or otherwise restricts Borrower from granting
a security interest in Borrower’s interest in such license or agreement or any
other property important for the conduct of Borrower’s business, other than this
Agreement or the other Loan Documents.

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

6. AFFIRMATIVE COVENANTS.

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

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

6.2 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank:
(i) as soon as available, but in any event within 30 days after the end of each
calendar month, a company prepared consolidated and, if applicable,
consolidating balance sheet, income statement, and statement of cash flows
covering Borrower’s operations during such period, in a form reasonably
acceptable to Bank and certified by a Responsible Officer; provided that, so
long as no Credit Extensions are outstanding, and for so long as Borrower is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended, Borrower may instead deliver its most recent financial statements filed
with the Securities and Exchange

 

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Commission within 30 days after the end of the applicable period; (ii) as soon
as available, but in any event within 180 days after the end of Borrower’s
fiscal year, audited consolidated and consolidating financial statements of
Borrower prepared in accordance with GAAP, consistently applied, together with
an opinion which is either unqualified, qualified only for going concern so long
as Borrower’s investors provide additional equity as needed or otherwise
consented to in writing by Bank on such financial statements of an independent
certified public accounting firm reasonably acceptable to Bank; (iii) an annual
plan approved by Borrower’s Board of Directors as soon as available but not
later than March 31 of each fiscal year of Borrower during the term of this
Agreement; (iv) if applicable, copies of all statements, reports and notices
sent or made available generally by Borrower to its security holders or to any
holders of Subordinated Debt (excluding any materials provided to such security
holders, stockholders or holders of Subordinated Debt solely in their capacity
as members of Borrower’s Board of Directors) and all reports on Forms 10-K and
10-Q filed with the Securities and Exchange Commission; (v) promptly upon
receipt of notice thereof, a report of any legal actions pending or threatened
against Borrower or any Subsidiary that could reasonably be expected to result
in damages or costs to Borrower or any Subsidiary of $250,000 or more;
(vi) promptly upon receipt, each management letter prepared by Borrower’s
independent certified public accounting firm regarding Borrower’s management
control systems; and (vii) such budgets, sales projections, operating plans or
other financial information generally prepared by Borrower in the ordinary
course of business as Bank may reasonably request from time to time. Any items
that are required to be delivered under this paragraph that are made publicly
available shall be deemed delivered on the date made publicly available,
provided Borrower gives Bank written notice of such public availability within 5
days of such item being made publicly available.

(a) Within 30 days after the last day of each month, Borrower shall deliver to
Bank with the monthly financial statements a Compliance Certificate certified as
of the last day of the applicable month and signed by a Responsible Officer in
substantially the form of Exhibit D hereto, together with (i) at Bank’s
reasonable request, aged listings by invoice date of accounts receivable and
accounts payable and (ii) clinical trial updates.

(b) As soon as possible and in any event within 3 Business Days after becoming
aware of the occurrence and existence of an Event of Default hereunder, Borrower
shall deliver to Bank a written statement of a Responsible Officer setting forth
details of the Event of Default, and the action which Borrower has taken or
proposes to take with respect thereto.

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

Borrower may deliver to Bank on an electronic basis any certificates, reports or
information required pursuant to this Section 6.2, and Bank shall be entitled to
rely on the information contained in the electronic files, provided that Bank in
good faith believes that the files were delivered by a Responsible Officer.
Borrower shall include a submission date on any certificates and reports to be
delivered electronically.

 

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6.3 Inventory and Equipment; Returns. Borrower shall keep all Inventory and
Equipment in good and merchantable condition, free from all material defects
except for Inventory and Equipment (i) sold in the ordinary course of business,
and (ii) for which adequate reserves have been made, in all cases in the United
States and such other locations as to which Borrower gives prior written notice.
Returns and allowances, if any, as between Borrower and its account debtors
shall be on the same basis and in accordance with the usual customary practices
of Borrower, as they exist on the Closing Date. Borrower shall promptly notify
Bank of all returns and recoveries and of all disputes and claims involving
inventory having a book value of more than $100,000.

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

6.5 Insurance. Borrower, at its expense, shall (i) keep the Collateral insured
against loss or damage, and (ii) maintain liability and other insurance, in each
case as ordinarily insured against by other owners in businesses similar to
Borrower’s. All such policies of insurance shall be in such form, with such
companies, and in such amounts as reasonably satisfactory to Bank. All policies
of property insurance shall contain a lender’s loss payable endorsement, in a
form reasonably satisfactory to Bank, showing Bank as an additional loss payee,
and all liability insurance policies shall show Bank as an additional insured
and specify that the insurer must give at least 20 days’ notice to Bank before
canceling its policy for any reason. Within 30 days of the Closing Date,
Borrower shall cause to be furnished to Bank a copy of its policies or
certificate of insurance including any endorsements covering Bank or showing
Bank as an additional insured. Upon Bank’s request, Borrower shall deliver to
Bank certified copies of the policies of insurance and evidence of all premium
payments. Proceeds payable under any casualty policy will, at Borrower’s option,
be payable to Borrower to replace the property subject to the claim, provided
that any such replacement property shall be deemed Collateral in which Bank has
been granted a first priority security interest, provided that if an Event of
Default has occurred and is continuing, all proceeds payable under any such
policy shall, at Bank’s option, be payable to Bank to be applied on account of
the Obligations.

6.6 “Primary Depository”. Subject to the provisions of Section 3.2(b),
(a) within one week after the Closing Date, Borrower shall have transferred not
less than fifty percent (50%) of Borrower’s total cash into deposit accounts
with Bank, and (b) within 60 days after the Closing Date, Borrower shall
maintain all its depository and operating accounts with Bank and its primary
investment accounts with Bank or Bank’s affiliates. Prior to maintaining any
investment accounts with Bank’s affiliates, Borrower, Bank, and any such
affiliate shall have entered into a securities account control agreement with
respect to any such investment accounts, in form and substance satisfactory to
Bank.

 

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6.7 Financial Covenants. Borrower shall maintain the following financial ratios
and covenants:

(a) Patient Dosing Milestone. On or before June 30, 2014, Borrower shall achieve
the first patient dosing in connection with Borrower’s EVK-001 Phase III trial
(METO-IN-003).

(b) Phase III Enrollment Milestone. On or before June 1, 2015, Borrower shall
achieve at least 75% enrollment in Borrower’s EVK-001 Phase III trial
(METO-IN-003) for female participants.

(c) Phase III Results. On or before September 30, 2015, Borrower shall receive
positive (as reasonably determined based on similarly situated companies
completing Phase III trials) results from its EVK-001 Phase III trial
(METO-IN-003).

(d) Remaining Months Cash. At all times after Borrower achieves the milestone
set forth in Section 6.7(c) above, before Borrower’s Remaining Months Cash drops
below 3.00 to 1.00 at any time, Borrower shall have delivered to Bank either
(i) documents (such as a Securities and Exchange Commission filing) evidencing a
forthcoming financing, or (ii) a signed and accepted letter of intent with a
strategic partner (each of clause (i) and (ii), a “Financing Event”), in each
case providing for additional financing in an amount acceptable to Bank. Such
Financing Event shall occur within 60 days after Bank receives the documents
required by clause (i) or (ii), as applicable.

6.8 Consent of Inbound Licensors. Within 30 days after entering into or becoming
bound by any material inbound license or material agreement, Borrower shall
(i) provide written notice to Bank of the material terms of such license or
agreement with a description of its likely impact on Borrower’s business or
financial condition, and (ii) if Bank so requests, in good faith use
commercially reasonable efforts to obtain the consent of, or waiver by, any
person whose consent or waiver is necessary for Borrower’s interest in such
licenses or contract rights to be deemed Collateral and for Bank to have a
security interest in it that might otherwise be restricted by the terms of the
applicable license or agreement, whether now existing or entered into in the
future, provided, however, that the failure to obtain any such consent or waiver
shall not constitute a default under this Agreement.

6.9 Creation/Acquisition of Subsidiaries. In the event any Borrower or any
Subsidiary of any Borrower creates or acquires any Subsidiary after the Closing
Date, Borrower or such Subsidiary shall promptly notify Bank of such creation or
acquisition, and Borrower or such Subsidiary shall take all actions reasonably
requested by Bank to achieve any of the following with respect to such “New
Subsidiary” (defined as a Subsidiary formed after the date hereof during the
term of this Agreement): (i) to cause such New Subsidiary to become either a
co-Borrower hereunder, if such New Subsidiary is organized under the laws of the
United States, or a secured guarantor with respect to the Obligations; and
(ii) to grant and pledge to Bank a perfected security interest in 100% of the
stock, units or other evidence of ownership held by

 

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Borrower or its Subsidiaries of any such New Subsidiary which is organized under
the laws of the United States, and 65% of the stock, units or other evidence of
ownership held by Borrower or its Subsidiaries of any such New Subsidiary which
is not organized under the laws of the United States.

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

7. NEGATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until the outstanding Obligations are paid in full or for so long
as Bank may have any commitment to make any Credit Extensions, Borrower will not
do any of the following without Bank’s prior written consent, which shall not be
unreasonably withheld:

7.1 Dispositions. Convey, sell, lease, license, transfer or otherwise dispose of
(collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, or move cash balances on deposit
with Bank to accounts opened by Borrower at another financial institution not
permitted by Section 6.6, in each case, other than Permitted Transfers.

7.2 Change in Name, Location, Executive Office, or Executive Management; Change
in Business; Change in Fiscal Year; Change in Control. Change its name or the
state of Borrower’s formation or relocate its chief executive office without 30
days prior written notification to Bank; replace or suffer the departure of its
chief executive officer or chief financial officer without delivering written
notification to Bank within 10 days; fail to appoint an interim replacement or
fill a vacancy with a replacement satisfactory to Borrower’s Board of Directors
in the position of chief executive officer or chief financial officer for more
than 90 consecutive days; suffer a change on its board of directors without
notifying Bank in writing of such change within 10 days thereafter, or suffer
the resignation of one or more directors from its board of directors in
anticipation of Borrower’s insolvency, in each case without the prior written
consent of Bank which may be withheld in Bank’s sole discretion; take action to
liquidate, wind up, or otherwise cease to conduct business in the ordinary
course; engage in any business, or permit any of its Subsidiaries to engage in
any business, other than or reasonably related or incidental to the businesses
currently engaged in by Borrower; change its fiscal year end; have a Change in
Control.

7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other business
organization (other than mergers or consolidations of a Subsidiary into another
Subsidiary or into Borrower), or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another
Person except where (a) each of the following conditions is applicable: (i) the
consideration paid in connection with such transactions (including assumption of
liabilities) does not in the aggregate exceed $250,000 during any fiscal year,
(ii) no Event of Default has occurred, is continuing or would exist after giving
effect to such transactions, (iii) such transactions do not result in a Change
in Control, and (iv) Borrower is the surviving entity; or (b)

 

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the Obligations are repaid in full concurrently with the closing of any merger
or consolidation of Borrower in which Borrower is not the surviving entity;
provided, however, that Borrower shall not, without Bank’s prior written
consent, enter into any binding contractual arrangement (such as an engagement
letter) with any Person (such as a broker or investment bank) to attempt to
facilitate a merger or acquisition of Borrower unless (i) no Event of Default
exists when such agreement is entered into by Borrower, (ii) such agreement does
not give such Person the right to claim any fee, payment or damages from any
parties, other than from Borrower or Borrower’s investors, in connection with a
sale of Borrower’s stock or assets pursuant to or resulting from an assignment
for the benefit of creditors, an asset turnover to Borrower’s creditors
(including, without limitation, Bank), foreclosure, bankruptcy or similar
liquidation, and (iii) Borrower notifies Bank in advance of entering into such
an agreement (provided, the failure to give such notification shall not be
deemed a material breach of this Agreement).

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

7.5 Encumbrances. Create, incur, assume or allow any Lien with respect to its
property, or assign or otherwise convey any right to receive income, including
the sale of any Accounts, or permit any of its Subsidiaries so to do, except for
Permitted Liens, or covenant to any other Person (other than (i) the licensors
with respect to the property covered under such license or (ii) the lessors of
specific equipment or lenders financing specific equipment with respect to such
leased or financed equipment) that Borrower in the future will refrain from
creating, incurring, assuming or allowing any Lien with respect to any of
Borrower’s property.

7.6 Distributions. Pay any dividends or make any other distribution or payment
on account of or in redemption, retirement or purchase of any capital stock,
except that Borrower may (i) repurchase the stock of former employees,
directors, or consultants in an aggregate amount not to exceed $400,000 in any
fiscal year, pursuant to stock repurchase agreements as long as an Event of
Default does not exist prior to such repurchase or would not exist after giving
effect to such repurchase, and (ii) repurchase the stock of former employees,
directors, or consultants pursuant to stock repurchase agreements by the
cancellation of indebtedness owed by such former employees, directors, or
consultants to Borrower regardless of whether an Event of Default exists.

7.7 Investments. Directly or indirectly acquire or own, or make any Investment
in or to, any Person, or permit any of its Subsidiaries so to do, other than
Permitted Investments, or, subject to the requirements of Section 6.6, maintain
or invest any of its Investment Property with a Person other than Bank or Bank’s
Affiliates or permit any Subsidiary to do so unless such Person has entered into
a control agreement with Bank, in form and substance reasonably satisfactory to
Bank, or suffer or permit any Subsidiary to be a party to, or be bound by, an
agreement that restricts such Subsidiary from paying dividends or otherwise
distributing property to Borrower.

7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower except for
(a) transactions that

 

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are in the ordinary course of Borrower’s business, upon fair and reasonable
terms that are no less favorable to Borrower than would be obtained in an arm’s
length transaction with a non-affiliated Person, (b) the sale or issuance of
equity securities to Borrower’s existing investors, provided no Change in
Control occurs as a result, (c) Subordinated Debt, and (d) compensation
arrangements.

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

7.10 Inventory and Equipment. Store the Inventory or the Equipment of a book
value in excess of $100,000 with a bailee, warehouseman, collocation facility or
similar third party unless the third party has been notified of Bank’s security
interest and Bank (a) has received an acknowledgment from the third party that
it is holding or will hold the Inventory or Equipment for Bank’s benefit or
(b) is in possession of the warehouse receipt, where negotiable, covering such
Inventory or Equipment. Except for Inventory sold in the ordinary course of
business and for movable items of personal property having an aggregate book
value not in excess of $100,000, and except for such other locations as Bank may
approve in writing, Borrower shall keep the Inventory and Equipment only at the
location set forth in Section 10 and such other locations of which Borrower
gives Bank prior written notice and as to which Bank is able to take such
actions as may be necessary to perfect its security interest or to obtain a
bailee’s acknowledgment of Bank’s rights in the Collateral.

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

8. EVENTS OF DEFAULT.

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

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

8.2 Covenant Default.

(a) If Borrower fails to perform any obligation under Sections 6.2 (financial
reporting), 6.4 (taxes), 6.5 (insurance), 6.6 (primary accounts) or 6.7
(financial covenants), or violates any of the covenants contained in Article 7
of this Agreement; or

(b) If Borrower fails or neglects to perform or observe any other material term,
provision, condition, or covenant contained in this Agreement, in any of the
Loan Documents, or in any other present or future agreement between Borrower and
Bank and as to any default under such other term, provision, condition or
covenant that can be cured, has failed

 

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to cure such default within 15 days after Borrower receives notice thereof or
any officer of Borrower becomes aware thereof; provided, however, that if the
default cannot by its nature be cured within the 15 day period or cannot after
diligent attempts by Borrower be cured within such 15 day period, and such
default is likely to be cured within a reasonable time, then Borrower shall have
an additional reasonable period (which shall not in any case exceed 30 days) to
attempt to cure such default, and within such reasonable time period the failure
to have cured such default shall not be deemed an Event of Default but no Credit
Extensions will be made.

8.3 Material Adverse Change. If there occurs any circumstance or any
circumstances which would reasonably be expected to have a Material Adverse
Effect;

8.4 Attachment. If any material portion of Borrower’s assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within 10 days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any material portion of Borrower’s assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, and the same is not paid
within ten days after Borrower receives notice thereof, provided that none of
the foregoing shall constitute an Event of Default where such action or event is
stayed or an adequate bond has been posted pending a good faith contest by
Borrower (provided that no Credit Extensions will be made during such cure
period);

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

8.6 Other Agreements. If there is a default or other failure to perform in any
agreement to which Borrower is a party with a third party or parties
(a) resulting in a right by such third party or parties, whether or not
exercised, to accelerate the maturity of any Indebtedness in an amount in excess
of $400,000, (b) in connection with any lease of real property material to the
conduct of Borrower’s business, if such default or failure to perform results in
the right of another party to terminate such lease, or (c) that would reasonably
be expected to have a Material Adverse Effect;

8.7 Judgments. If a final, uninsured judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least $400,000 shall
be rendered against Borrower and shall remain unsatisfied and unstayed for a
period of 10 days (provided that no Credit Extensions will be made prior to the
satisfaction or stay of the judgment); or

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

 

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9. BANK’S RIGHTS AND REMEDIES.

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

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

(b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the
amount of any Letters of Credit remaining undrawn, as collateral security for
the repayment of any future drawings under such Letters of Credit, and (ii) pay
in advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of the Letters of Credit, and Borrower shall promptly deposit and
pay such amounts;

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

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

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

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

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

 

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

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

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

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

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

9.2 Power of Attorney. Effective only upon the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably appoints Bank
(and any of Bank’s designated officers, or employees) as Borrower’s true and
lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank’s security interest in the Accounts; (b) endorse
Borrower’s name on any checks or other forms of payment or security that may
come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims
under and decisions with respect to Borrower’s policies of insurance; (f) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Bank determines to be reasonable; and
(g) file, in its sole discretion, one or more financing or continuation
statements and amendments thereto, relative to any of the Collateral; provided
Bank may exercise such power of attorney to sign the name of Borrower on any of
the documents described in clause (g) above, regardless of whether an Event of
Default has occurred. The appointment of Bank as Borrower’s attorney in fact,
and each and every one of Bank’s rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been fully repaid and
performed and Bank’s obligation to provide advances hereunder is terminated.

 

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

9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required
proof of payment due to third persons or entities, as required under the terms
of this Agreement, then Bank may do any or all of the following after reasonable
notice to Borrower: (a) make payment of the same or any part thereof; and/or
(b) obtain and maintain insurance policies of the type discussed in Section 6.5
of this Agreement, and take any action with respect to such policies as Bank
deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.

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

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

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

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

10. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in

 

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writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by a recognized overnight delivery service, certified mail,
postage prepaid, return receipt requested, or by telefacsimile to Borrower or to
Bank, as the case may be, at its addresses set forth below:

 

If to Borrower:   Evoke Pharma, Inc.   505 Lomas Santa Fe Drive, Suite 270  
Solana Beach, CA 92075   Attn:   FAX: with copies to:   Latham & Watkins LLP  
12670 High Bluff Drive   San Diego, CA 92130   Attn: Cheston Larson   FAX: (619)
696-7419   Latham & Watkins LLP   505 Montgomery St., Ste. 2000   San Francisco,
CA 94111   Attn: Haim Zaltzman   FAX: (415) 395-8095 If to Bank:   Square 1 Bank
  406 Blackwell Street, Suite 240   Durham, North Carolina 27701   Attn: Loan
Operations Manager   FAX: (919) 314-3080 with a copy to:   Square 1 Bank   12481
High Bluff Drive, Suite 350   San Diego, CA 92130   Attn: Lisa Foussianes   FAX:
(858) 436-3501

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

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

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California, without regard to principles of
conflicts of law. Jurisdiction shall lie in the State of California. All
disputes, controversies, claims, actions and similar proceedings arising with
respect to Borrower’s account or any related agreement or transaction shall be
brought in the Superior Court of San Mateo County, California or the United
States District Court for the

 

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Northern District of California, except as provided below with respect to
arbitration of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT
TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF
THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL OF
THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF
THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK
OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the
jury waiver set forth in this Section 11 is not enforceable, then any dispute,
controversy, claim, action or similar proceeding arising out of or relating to
this Agreement, the Loan Documents or any of the transactions contemplated
therein shall be settled by final and binding arbitration held in San Mateo
County, California in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association by one arbitrator appointed in
accordance with those rules. The arbitrator shall apply California law to the
resolution of any dispute, without reference to rules of conflicts of law or
rules of statutory arbitration. Judgment upon any award resulting from
arbitration may be entered into and enforced by any state or federal court
having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this Section. The
costs and expenses of the arbitration, including without limitation, the
arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees,
incurred by the parties to the arbitration may be awarded to the prevailing
party, in the discretion of the arbitrator, or may be apportioned between the
parties in any manner deemed appropriate by the arbitrator. Unless and until the
arbitrator decides that one party is to pay for all (or a share) of such costs
and expenses, both parties shall share equally in the payment of the
arbitrator’s fees as and when billed by the arbitrator.

12. GENERAL PROVISIONS.

12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties and
shall bind all persons who become bound as a debtor to this Agreement; provided,
however, that neither this Agreement nor any rights hereunder may be assigned by
Borrower without Bank’s prior written consent, which consent may be granted or
withheld in Bank’s sole discretion. Bank shall have the right without the
consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits hereunder. Notwithstanding the foregoing, Bank shall not
assign its interest in the Term Loans and Loan Documents to any Person who in
Bank’s reasonable discretion is a direct competitor of Borrower, whether as an
operating company or direct or indirect parent with voting control over such
operating company.

12.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank
and its officers, employees, and agents against: (a) all obligations, demands,
claims, and

 

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liabilities claimed or asserted by any other party in connection with the
transactions contemplated by this Agreement; and (b) all losses or Bank Expenses
in any way suffered, incurred, or paid by Bank, its officers, employees and
agents as a result of or in any way arising out of, following, or consequential
to the transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys’ fees and
expenses), except for losses caused by Bank’s gross negligence or willful
misconduct.

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

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

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

12.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Executed copies of
the signature pages of this Agreement sent by facsimile or transmitted
electronically in Portable Document Format (“PDF”), or any similar format, shall
be treated as originals, fully binding and with full legal force and effect, and
the parties waive any rights they may have to object to such treatment.

12.7 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding or Bank has any obligation to make any Credit Extension to
Borrower. The obligations of Borrower to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in Section 12.2 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Bank have run.

12.8 Confidentiality. In handling any confidential information, Bank and
Borrower and all employees and agents of such party shall exercise the same
degree of care that such party exercises with respect to its own proprietary
information of the same types to maintain the confidentiality of any non-public
information thereby received or received pursuant to this Agreement except that
disclosure of such information may be made (i) in the case of Bank, to the
subsidiaries or Affiliates of Bank or Borrower in connection with their present
or prospective business relations with Borrower, (ii) in the case of Bank, to
prospective transferees or purchasers of any interest in the Credit Extensions,
provided that they have entered into a comparable confidentiality agreement in
favor of Borrower and have delivered a copy to Borrower, (iii) as required by
law, regulations, rule or order, subpoena, judicial order or similar order,
(iv) in the case of Bank, as may be required in connection with the examination,
audit or similar investigation of Bank, and (v) as Bank may determine in
connection with the

 

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enforcement of any remedies hereunder. Confidential information hereunder shall
not include information that either: (a) is in the public domain or in the
knowledge or possession of the receiving party when disclosed to such party, or
becomes part of the public domain after disclosure to such receiving party
through no fault of such receiving party; or (b) is disclosed to such receiving
party by a third party, provided the receiving party does not have actual
knowledge that such third party is prohibited from disclosing such information.

********

 

  22  

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

 

EVOKE PHARMA, INC. By:  

/s/ David A. Gonyer

Name:  

David A. Gonyer

Title:  

President and Chief Executive Officer

SQUARE 1 BANK By:  

/s/ David Kho

Name:  

David Kho

Title:  

Assistant Vice President

 

  23  

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EXHIBIT A

DEFINITIONS

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

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

“Authorized Officer” means someone designated as such in the corporate
resolution provided by Borrower to Bank in which this Agreement and the
transactions contemplated hereunder are authorized by Borrower’s board of
directors. If Borrower provides subsequent corporate resolutions to Bank after
the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the
most recently provided resolution shall be the only “Authorized Officers” for
purposes of this Agreement.

“Availability End Date” means November 28, 2015.

“Bank Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; reasonable
Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses
(whether generated in-house or by outside counsel) incurred in amending,
enforcing or defending the Loan Documents (including fees and expenses of
appeal), incurred before, during and after an Insolvency Proceeding, whether or
not suit is brought.

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

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

“Cash” means unrestricted cash and cash equivalents.

“Cash Burn” means an amount equal to the prior period’s ending Cash minus the
current period’s ending Cash that has been adjusted (up or down, as applicable)
for any changes to Cash as a result of borrowings and repayments of borrowings,
proceeds from the sale of equity and the exercise of stock options or warrants,
and paid-in-capital and minority interest. For the avoidance of doubt, the
‘current period’ is the most recently ended month for which reporting has been
provided pursuant to Section 6.2, and the ‘prior period’ is the month
immediately preceding such month.

“Change in Control” means a transaction (other than a bona fide equity financing
or series of financings on terms and from investors reasonably acceptable to
Bank) in which any “person” or “group” (within the meaning of Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of a sufficient number of shares of all classes of stock then
outstanding of Borrower ordinarily entitled to vote in the election of
directors, empowering such “person” or “group” to elect a majority of the Board
of Directors of Borrower, who did not have such power before such transaction.

 

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“Closing Date” means the date of this Agreement.

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

“Collateral” means the property described on Exhibit B attached hereto and all
Negotiable Collateral to the extent not described on Exhibit B, except to the
extent any such property (i) is non-assignable by its terms without the consent
of the licensor thereof or another party (but only to the extent such
prohibition on transfer is enforceable under applicable law, including, without
limitation, §9406 and §9408 of the Code), (ii) is property for which the
granting of a security interest therein is contrary to applicable law, provided
that upon the cessation of any such restriction or prohibition, such property
shall automatically become part of the Collateral, (iii) constitutes the capital
stock of a controlled foreign corporation (as defined in the IRC), in excess of
65% of the voting power of all classes of capital stock of such controlled
foreign corporations entitled to vote or any Subsidiary which sole purpose is to
hold the stock of such controlled foreign corporation, or (iv) is property
(including any attachments, accessions or replacements) that is subject to a
Lien that is permitted pursuant to clause (c) of the definition of Permitted
Liens, if the grant of a security interest with respect to such property
pursuant to this Agreement would be prohibited by the agreement creating such
Permitted Lien or would otherwise constitute a default thereunder, provided,
that such property will be deemed “Collateral” hereunder upon the termination
and release of such Permitted Lien.

“Collateral State” means the state or states where the Collateral is located,
which is California.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued 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.

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

“Credit Extension” means each Term Loan, or any other extension of credit, by
Bank to or for the benefit of Borrower hereunder.

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

 

  2  

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

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

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

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations, including but not limited to any sublimit contained herein.

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

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

“Investment” means any beneficial ownership of (including stock, partnership or
limited liability company interest or other securities) any Person, or any loan,
advance or capital contribution to any Person.

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

“Letter of Credit” means a commercial or standby letter of credit or similar
undertaking issued by Bank at Borrower’s request.

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

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

“Material Adverse Effect” means a material adverse effect on: (i) the
operations, business or financial condition of Borrower and its Subsidiaries
taken as a whole; (ii) the ability of Borrower to repay the Obligations or
otherwise perform its obligations under the Loan Documents; or (iii) Borrower’s
interest in, or the value, perfection or priority of Bank’s security interest in
the Collateral.

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

“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.
Notwithstanding the foregoing, “Obligations” shall not include any warrant or
equity-related investments.

 

  3  

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

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

“Permitted Indebtedness” means:

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

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

(c) Indebtedness not to exceed $450,000 (the “Equipment Financing Cap”) in the
aggregate at any time secured by a lien described in clause (c) of the defined
term “Permitted Liens,” provided such Indebtedness does not exceed at the time
it is incurred the lesser of the cost or fair market value of the property
financed with such Indebtedness; provided that Bank agrees to consider increases
in the Equipment Financing Cap based on future board-approved budgets of
Borrower projecting the need for additional equipment financing;

(d) Subordinated Debt;

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

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

(g) Indebtedness of Borrower with respect to corporate credit cards in an amount
not to exceed $50,000 at any time; and

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

“Permitted Investment” means:

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

(b) (i) 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, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having rating
of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s
Investors Service, (iii) Bank’s certificates of deposit maturing no more than
one year from the date of investment therein, (iv) Bank’s money market accounts,
(v) Investments in regular deposit or checking accounts held with Bank or as
otherwise permitted by, and subject to the terms and conditions of, Section 6.6
of this Agreement, and (vi) Investments consistent with any investment policy
adopted by Borrower’s board of directors;

(c) Investments accepted in connection with Permitted Transfers;

(d) Investments of Subsidiaries in or to other Subsidiaries or Borrower and
Investments by Borrower in Subsidiaries not to exceed $450,000 in the aggregate
in any fiscal year;

 

  4  

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(e) Investments not to exceed $400,000 outstanding in the aggregate at any time
consisting of (i) travel advances and employee relocation loans and other
employee loans and advances in the ordinary course of business, and (ii) loans
to employees, officers or directors relating to the purchase of equity
securities of Borrower or its Subsidiaries pursuant to employee stock purchase
plan agreements approved by Borrower’s Board of Directors;

(f) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of Borrower’s business;

(g) Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business, provided that this subparagraph (h) shall not
apply to Investments of Borrower in any Subsidiary;

(h) Investments (i) in joint ventures or strategic alliances in the ordinary
course of Borrower’s business consisting of the licensing of technology, the
development of technology or the providing of technical support permitted
hereunder, provided that any cash Investments by Borrower do not exceed $450,000
in the aggregate in any fiscal year, and (ii) by Borrower of property permitted
to be transferred under Section 7.1 in connection with joint ventures or
strategic alliances or collaborations of Borrower or a Subsidiary; and

(i) Investments permitted under Section 7.3.

“Permitted Liens” means the following:

(a) Any Liens existing on the Closing Date and disclosed in the Schedule
(excluding Liens to be satisfied with the proceeds of the Credit Extensions) or
arising under this Agreement, the other Loan Documents, or any other agreement
in favor of Bank;

(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves;

(c) Liens not to exceed $450,000 (the “Equipment Financing Cap”) in the
aggregate at any time (i) upon or in any Equipment (other than Equipment
financed by a Credit Extension) acquired or held by Borrower or any of its
Subsidiaries to secure the purchase price of such Equipment or indebtedness
incurred solely for the purpose of financing the acquisition or lease of such
Equipment, or (ii) existing on such Equipment at the time of its acquisition, in
each case provided that the Lien is confined solely to the property so acquired
and improvements thereon, and the proceeds of such Equipment; provided that Bank
agrees to consider increases in the Equipment Financing Cap based on future
board-approved budgets of Borrower projecting the need for additional equipment
financing;

(d) Statutory Liens securing claims or demands of materialmen, mechanics,
carriers, repairmen, or other like Liens imposed without the action of such
parties arising in the ordinary course of business;

(e) Liens to secure payment for workers’ compensation, employment insurance, old
age pensions, social security or other like obligations incurred in the ordinary
course of business;

(f) Non-exclusive licenses of Intellectual Property granted to third parties in
the ordinary course of business, and licenses of Intellectual Property that
could not result in a legal transfer of title of the licensed property that may
be exclusive in respects other than territory and that may be exclusive as to
territory only as to discrete geographical areas outside of the United States;

 

  5  

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

(h) Liens arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.4 (attachment) or 8.7
(judgments);

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

(j) Liens securing Subordinated Debt.

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

(a) Inventory in the ordinary course of business;

(b) licenses and similar arrangements for the use of the property of Borrower or
its Subsidiaries in the ordinary course of business;

(c) Licenses permitted by subsection (f) of the definition of “Permitted Liens”;

(d) worn-out, surplus or obsolete Equipment not financed with the proceeds of
Credit Extensions;

(e) grants of security interests and other Liens that constitute Permitted
Liens;

(f) Transfers that constitute Permitted Investments;

(g) Cash unless otherwise prohibited by the terms of this Agreement; and

(h) other assets of Borrower or its Subsidiaries that do not in the aggregate
exceed $450,000 during any fiscal year.

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

“Prime Rate” means the variable rate of interest, per annum, most recently
announced by Bank, as its “prime rate,” whether or not such announced rate is
the lowest rate available from Bank.

“Remaining Months Cash” means the ratio of (i) unrestricted Cash at Bank to
(ii) Cash Burn.

“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer, Vice President of Finance and
the Controller of Borrower, as well as any other officer or employee identified
as an Authorized Officer in the corporate resolution delivered by Borrower to
Bank in connection with this Agreement.

 

  6  

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

“SOS Reports” means the official reports from the Secretaries of State of each
Collateral State, the state where Borrower’s chief executive office is located,
the state of Borrower’s formation and other applicable federal, state or local
government offices identifying all current security interests filed in the
Collateral and Liens of record as of the date of such report.

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in
writing to the debt owing by Borrower to Bank on terms reasonably acceptable to
Bank (and identified as being such by Borrower and Bank), including a separate
writing signed by Bank with respect to each issuance of such debt.

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

“Term Loan Maturity Date” means November 28, 2017.

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

 

  7  

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DEBTOR:    EVOKE PHARMA, INC. SECURED PARTY:    SQUARE 1 BANK

EXHIBIT B

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

(a) all accounts (including health-care-insurance receivables), chattel paper
(including tangible and electronic chattel paper), deposit accounts, documents
(including negotiable documents), equipment (including all accessions and
additions thereto), financial assets, general intangibles (including patents,
trademarks, copyrights, goodwill, payment intangibles, domain names, and
software), goods (including fixtures), instruments (including promissory notes),
inventory (including all goods held for sale or lease or to be furnished under a
contract of service, and including returns and repossessions), investment
property (including securities and securities entitlements), letter of credit
rights, money, and all of Debtor’s books and records with respect to any of the
foregoing, and the computers and equipment containing said books and records;

(b) any and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment. All terms
above have the meanings given to them in the California Uniform Commercial Code,
as amended or supplemented from time to time, including revised Division 9 of
the Uniform Commercial Code-Secured Transactions.

Notwithstanding the foregoing, the Collateral shall not include any of the
intellectual property, in any medium, of any kind or nature whatsoever, now or
hereafter owned or acquired or received by Borrower, or in which Borrower now
holds or hereafter acquires or receives any right or interest (collectively, the
“Intellectual Property”); 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 foregoing (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 May 28, 2014, include
the Intellectual Property to the extent and only to the extent necessary to
permit perfection of Bank’s security interest in the Rights to Payment, and
further provided, however, that Bank’s enforcement rights with respect to any
security interest in the Intellectual Property shall be absolutely limited to
the Rights to Payment only, and Bank shall have no recourse whatsoever with
respect to the underlying Intellectual Property.

 

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EXHIBIT C

LOAN ADVANCE/PAYDOWN REQUEST FORM

[Please refer to New Borrower Kit]

EXHIBIT D

COMPLIANCE CERTIFICATE

[Please refer to New Borrower Kit]

 

  1  

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EXHIBIT E

FORM OF WARRANT

[See Exhibit 4.1]

 

  1  

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SCHEDULE OF EXCEPTIONS

Permitted Indebtedness    (Exhibit A) – None.

Permitted Investments    (Exhibit A) – None.

Permitted Liens    (Exhibit A)

Liens on Samsung copier leased by Borrower pursuant to that certain Lease
Agreement between Borrower and GE Capital, executed by Borrower on April 4,
2014.

Prior Names    (Section 5.5) – None.

Litigation    (Section 5.6) – None.

Inbound Licenses    (Section 5.12) – None.

 

   

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CORPORATE RESOLUTION

The undersigned duly elected and qualified [Assistant] Secretary of Evoke
Pharma, Inc. (the “Company”) does hereby certify that the following is a true
and correct copy of certain resolutions adopted by the Company’s Board of
Directors in accordance with applicable law and the Company’s bylaws, and that
such resolutions are now unmodified and in full force and effect:

BE IT RESOLVED, that:

 

1) Any one (1) of the following, duly elected officers of the Company (each, an
“Authorized Officer”) whose genuine original signature appears next to his or
her name is authorized to act for, on behalf of, and in the name of the Company
in connection with the resolutions below:

 

Title

  

Name

  

Authorized Signature

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

  

 

  

 

 

2) Any Authorized Officer may:

(a) Borrow money from time to time from Square 1 Bank (“Bank”), and may
negotiate and procure loans, letters of credit, foreign exchange contracts and
other financial accommodations from Bank, including without limitation, that
certain Loan and Security Agreement dated on or about May 28, 2014, and also to
execute and deliver to Bank one or more renewals, extensions, or modifications
thereof;

(b) Give security for any liabilities of the Company to Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Company;

(c) Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Company, whether or not registered
in the name of the Company;

(d) Discount with Bank, commercial or other business paper belonging to the
Company made or drawn by or upon third parties, without limit as to amount;

(e) Authorize and direct Bank to pay the proceeds of any such loans or discounts
as directed by the persons so authorized to sign; and

(f) Execute and deliver in form and content as may be required by Bank any and
all notes, evidences of indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
resolutions, any or all of which may relate to all or to substantially all of
the Company’s property and assets;

 

3) The Authorized Officers may designate additional or alternate individuals as
being authorized to request loan advances, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver such other
documents and agreements as he or she may in his or her discretion deem
reasonably necessary or proper in order to carry into effect the provisions of
these resolutions.

 

   

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4) Any and all acts authorized pursuant to these resolutions and performed prior
to the passage of these resolutions are hereby ratified and approved, and the
authority conferred herein may be exercised singly by any such officer, and
these resolutions shall continue in full force and effect until written notice
of modification or revocation is received and accepted by Bank (such notice to
have no effect on any action previously taken by Bank in reliance on these
resolutions). Bank may rely upon any form of notice, which it in good faith
believes to be genuine or what it purports to be.

 

5) The resolutions are in full force and effect as of the date of this
Certificate and are intended to replace, as of this date, any resolutions
previously given by the Company to Bank in connection with the matters described
herein; these resolutions and any borrowings or financial accommodations under
these resolutions have been properly noted in the corporate books and records,
and have not been rescinded, revoked or modified; neither the foregoing
resolutions nor any actions to be taken pursuant to them are or will be in
contravention of any provision of the certificate of incorporation or bylaws of
the Company or of any agreement, indenture or other instrument to which the
Company is a party or by which it is bound; and to the extent the certificate of
incorporation or bylaws of the Company or any agreement, indenture or other
instrument to which the Company is a party or by which it is bound require the
vote or consent of shareholders of the Company to authorize any act, matter or
thing described in the foregoing resolutions, such vote or consent has been
obtained.

In Witness Whereof, I have affixed my name as [Assistant] Secretary and have
caused the corporate seal (where available) of said Company to be affixed as of
May 28, 2014.

 

 

 

[Assistant] Secretary*

 

* If the certifying officer is designated as the only signer in these
resolutions then another corporate officer must also sign.

 

 

 

   

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USA PATRIOT ACT

NOTICE

OF

CUSTOMER IDENTIFICATION

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.

WHAT THIS MEANS FOR YOU: when you open an account, we will ask your name,
address, date of birth, and other information that will allow us to identify
you. We may also ask to see your driver’s license or other identifying
documents.

 

   

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  SQUARE 1 BANK AUTOMATIC DEBIT AUTHORIZATION   Member FDIC

 

  To:     Square 1 Bank

  Re:     Loan #                                                              

You are hereby authorized and instructed to charge account No.
                     in the name of Evoke Pharma, Inc.
for facility fees, principal, interest and other payments due on above
referenced loan as set forth below and credit the loan referenced above.

          x    Debit the Facility Fee as it becomes due according to the terms
of the Loan and Security Agreement and any renewals or amendments thereof.
          x    Debit each interest payment as it becomes due according to the
terms of the Loan and Security Agreement and any renewals or amendments thereof.
          x    Debit each principal payment as it becomes due according to the
terms of the Loan and Security Agreement and any renewals or amendments thereof.
          x    Debit each payment for Bank Expenses as it becomes due according
to the terms of the Loan and Security Agreement and any renewals or amendments
thereof.   This Authorization is to remain in full force and effect until
revoked in writing.

 

Borrower Signature    Date              

 

   

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We are excited to have you as a Square 1 Bank client and want to spread the word
about your success!

From press releases to mentions on social media sites, and all points in
between, Square 1’s marketing and communications team is constantly seeking new
opportunities to promote our clients and to connect them to prospects, existing
customers, and the larger entrepreneurial/venture capital community.

If you complete the authorization below and return it to us, you are authorizing
us to reference and/or include your company as part of our marketing and
advertising efforts without further review or advance approval by you. Please
select all areas that you approve.

 

¨ All items listed below

 

¨ List company as a Square 1 Bank customer on social media sites, including
Twitter, LinkedIn, Facebook, Square 1 Bank corporate blog, or any other social
media site

 

¨ Press release including your company as a Square 1 Bank client (to include
company name and description only; may appear alongside other clients)

 

¨ Press release including your company as a Square 1 Bank client (general press
release not focused on your company, but referring to your company as a client,
and including your company’s name, description, and editorial comments; may
appear alongside other clients)

 

¨ Provide quote for inclusion in a Square 1 Bank press release

 

¨ Use of company name and logo in Square 1 Bank marketing materials including
corporate marketing collateral, website, social media sites, and other
advertising campaigns

 

¨ Provide quotes for inclusion in Square 1 Bank marketing materials including
corporate marketing collateral, website, social media sites, and other
advertising campaigns

 

¨ Customer case study/application brief (success story to be posted on website,
included in press kits and/or pitched to publications as potential articles)

 

¨ Willing to participate in a video testimonial highlighting your banking
relationship and experiences with Square 1 Bank

 

¨ Other (please describe):                                                      

If you have questions, please contact your Square 1 banker, or our Marketing +
Communications department at marketing@square1bank.com.

Please acknowledge your authorization by signing below:

 

Company Name:   

Evoke Pharma, Inc.

   Authorized Signer:     

 

   Name:   

 

   Title:   

 

   Date: