Exhibit 10.1


 


LOAN AND
SECURITY AGREEMENT


 


THIS LOAN AND SECURITY
AGREEMENT (this “Agreement”) dated as of February 26, 2021 (the “Effective Date”) among
(a) SILICON VALLEY BANK, a California corporation with a loan production office located at 275 Grove Street, Suite 2-200,
Newton, Massachusetts 02466 (“Bank”) and (b) (i) LIQUIDIA CORPORATION, a Delaware corporation (“Parent
Borrower”), (ii) LIQUIDIA TECHNOLOGIES, INC., a Delaware corporation (“Technologies”), and
(iii) LIQUIDIA PAH, LLC, a Delaware limited liability company (“Liquidia PAH” and, together with Parent
Borrower and Technologies, jointly and severally, individually and collectively, “Borrower”), provides the terms
on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows:


 


1.                  
ACCOUNTING AND OTHER TERMS


 


Accounting terms not
defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Notwithstanding
the foregoing, all financial covenant and other financial calculations shall be computed with respect to Borrower only, and not
on a consolidated basis. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13.
All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent
such terms are defined therein.


 


2.                  
LOAN AND TERMS OF PAYMENT


 


2.1               
Promise to Pay. Borrower hereby unconditionally promises to pay Bank the outstanding principal amount
of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement.


 


2.1.1          
Term Loan Advances.


 


(a)                
Availability. Subject to the terms and conditions of this Agreement, Borrower shall request on the Effective Date
and Bank shall, on or about the Effective Date, make one (1) term loan advance available to Borrower in an original principal amount
of Ten Million Five Hundred Thousand Dollars ($10,500,000.00) (the “Term A Loan Advance”). Subject to the terms
and conditions of this Agreement, Borrower shall request on the date on which the Second Tranche Availability Event occurs and
Bank shall, on or about the date on which the Second Tranche Availability Event occurs, make one (1) term loan advance available
to Borrower in an original principal amount of Five Million Dollars ($5,000,000.00) (the “Term B Loan Advance”).
Subject to the terms and conditions of this Agreement, Borrower shall request on the date on which the Third Tranche Availability
Event occurs and Bank shall, on or about the date on which the Third Tranche Availability Event occurs, make one (1) term loan
advance available to Borrower in an original principal amount of Five Million Dollars ($5,000,000.00) (the “Term C Loan
Advance”). If the Second Tranche Availability Event has not occurred and the Term B Loan Advance has not been made by
the date on which the Third Tranche Availability Event occurs then, without limitation of Borrower’s obligation to request
the Term C Loan Advance pursuant to the previous sentence, Borrower may request the Term B Loan Advance and Bank shall make the
Term B Loan Advance available to Borrower in the original principal amount of Five Million Dollars ($5,000,000.00). The Term A
Loan Advance, the Term B Loan Advance, and the Term C Loan Advance are each referred to herein as a “Term Loan Advance”
and, collectively, as the “Term Loan Advances”. After repayment, no Term Loan Advance (or any portion thereof)
may be reborrowed.


 


(b)               
Interest Period. With respect to each Term Loan Advance, commencing on the Payment Date of the month following the
month in which the Funding Date of such Term Loan Advance occurs, and continuing on the Payment Date of each month thereafter,
Borrower shall make monthly payments of interest, in arrears, on the principal amount of such Term Loan Advance, at the rate set
forth in Section 2.2(a).


 






     


     


    

 


(c)                
 Repayment. Commencing on April 1, 2023 and continuing on the Payment Date of each month thereafter, Borrower shall
repay the Term Loan Advances in (i) eighteen (18) equal monthly installments of principal, plus (ii) monthly payments of accrued
interest at the rate set forth in Section 2.2(a). All outstanding principal and accrued and unpaid interest under the Term Loan
Advances, and all other outstanding Obligations with respect to the Term Loan Advances, are due and payable in full on the Term
Loan Advance Maturity Date.


 


(d)               
Permitted Prepayment. Borrower shall have the option to prepay all, but not less than all, of the Term Loan Advances,
provided Borrower (i) delivers written notice to Bank of its election to prepay the Term Loan Advances at least ten (10) days prior
to such prepayment, and (ii) pays, on the date of such prepayment (A) the outstanding principal plus accrued and unpaid interest
with respect to the Term Loan Advances, (B) the Final Payment, (C) the Prepayment Fee, and (D) all other sums, if any, that shall
have become due and payable with respect to the Term Loan Advances, including interest at the Default Rate with respect to any
past due amounts.


 


(e)                
Mandatory Prepayment Upon an Acceleration. If the Term Loan Advances are accelerated by Bank following the occurrence
and during the continuance of an Event of Default, Borrower shall immediately pay to Bank an amount equal to the sum of (i) all
outstanding principal plus accrued and unpaid interest with respect to the Term Loan Advances, (ii) the Final Payment, (iii) the
Prepayment Fee, and (iv) all other sums, if any, that shall have become due and payable with respect to the Term Loan Advances,
including interest at the Default Rate with respect to any past due amounts.


 


2.2               
Payment of Interest on the Credit Extensions. 


 


(a)                
Interest Rate on Term Loan Advances. Subject to Section 2.2(b), the outstanding principal amount of each Term Loan
Advance shall accrue interest at a floating per annum rate equal to the greater of (i) three-quarters of one percent (0.75%) above
the Prime Rate and (ii) four percent (4.0%), which interest shall be payable monthly in accordance with Section 2.2(d) below.


 


(b)               Default Rate. Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall
bear interest at a rate per annum which is four percent (4.0%) above the rate that is otherwise applicable thereto (the “Default
Rate”). Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without
limitation, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable
to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.2(b) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights
or remedies of Bank.


 


(c)                Adjustment
to Interest Rate. Changes to the interest rate of any Credit Extension based on changes to the Prime Rate shall be effective
on the effective date of any change to the Prime Rate and to the extent of any such change.


 


(d)               
Payment; Interest Computation. Interest is payable monthly on the Payment Date of each month and shall be computed
on the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after
2:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the
date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that
if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such
Credit Extension.


 


2.3               
Fees. Borrower shall pay to Bank:


 


(a)                
Final Payment. The Final Payment, when due hereunder;


 


(b)               
Prepayment Fee. The Prepayment Fee, when due hereunder; and


 


(c)                
Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses for documentation and negotiation
of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank).


 






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Unless otherwise provided
in this Agreement or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees
earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of
Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this
Section 2.3 pursuant to the terms of Section 2.4(c). Bank shall provide Borrower written notice of deductions made from the Designated
Deposit Account pursuant to the terms of the clauses of this Section 2.3.


 


2.4               
Payments; Application of Payments; Debit of Accounts. 


 


(a)                
All payments to be made by Borrower under any Loan Document shall be made in immediately available funds in Dollars, without
setoff or counterclaim, before 2:00 p.m. Eastern time on the date when due. Payments of principal and/or interest received after
2:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a
day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable,
shall continue to accrue until paid.


 


(b)               
Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may
be applied. Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments
required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application
is not specified elsewhere in this Agreement.


 


(c)                
Bank may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest
payments or any other amounts Borrower owes Bank when due. Bank shall promptly notify Borrower when it debits Borrower’s
accounts for any payments other than payments on account of principal or interest, provided that any failure to provide such notice
by Bank shall not be deemed a breach of this Agreement and shall not result in any liability to Bank. These debits shall not constitute
a set-off.


 


2.5               
Withholding. Payments received by Bank from Borrower under this Agreement will be made free and clear
of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments,
fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto)
other than taxes imposed on the net income or profits of Bank as a result of Bank being organized under the laws of, or having
its principal office or its applicable lending office located in, the jurisdiction imposing such tax (or any political subdivision
thereof). Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement
requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Bank, Borrower hereby
covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased
to the extent necessary to ensure that, after the making of such required withholding or deduction, Bank receives a net sum equal
to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld
or deducted to the relevant Governmental Authority. Borrower will, upon request, furnish Bank with proof reasonably satisfactory
to Bank indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding
payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings
and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained
in this Section 2.5 shall survive the termination of this Agreement.


 






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3.                  
CONDITIONS OF LOANS


 


3.1               
Conditions Precedent to Initial Credit Extension. Bank’s obligation to make the initial Credit Extension
is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents,
and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation:


 


(a)            duly
executed signatures to the Loan Documents;


 


(b)            duly
executed signature to the Warrant, together with a capitalization table of Parent Borrower;


 


(c)             the
Operating Documents and (i) a long form good standing certificate of each Borrower certified by the Secretary of State of Delaware
and (ii) a good standing certificate of each of Parent Borrower and Technologies certified by the Secretary of State of North
Carolina, each as of a date no earlier than thirty (30) days prior to the Effective Date;


 


(d)            a
secretary’s corporate borrowing certificate of each of Parent Borrower and Technologies with respect to such Borrower’s
Operating Documents, incumbency, specimen signatures and resolutions authorizing the execution and delivery of this Agreement
and the other Loan Documents;


 


(e)            a limited liability
company borrowing certificate of Liquidia PAH with respect to Liquidia PAH’s Operating Documents, incumbency, specimen signatures
and resolutions authorizing the execution and delivery of this Agreement and the other Loan Documents to which it is a party;


 


(f)             duly executed signatures
to the completed Borrowing Resolutions for each Borrower;


 


(g)            certified copies,
dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including any
UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have
been or, in connection with the initial Credit Extension, will be terminated or released;


 


(h)            the Perfection Certificate
of each Borrower, together with the duly executed signature thereto;


 


(i)              a legal opinion (authority
and enforceability) of Borrower’s counsel dated as of the Effective Date, together with the duly executed signature thereto;


 


(j)             evidence satisfactory
to Bank that the insurance policies and endorsements required by Section 6.5 hereof are in full force and effect, together with
appropriate evidence showing lender loss payable and/or additional insured clauses or endorsements in favor of Bank;


 


(k)            duly executed original
signature to a payoff letter from Pacific Western Bank;


 


(l)              evidence that (i)
the Liens securing Indebtedness owed by Borrower to Pacific Western Bank will be terminated and (ii) the documents and/or filings
evidencing the perfection of such Liens, including without limitation any financing statements and/or control agreements, have
or will, concurrently with the initial Credit Extension, be terminated; and


 


(m)           payment of the fees
and Bank Expenses then due as specified in Section 2.3 hereof.


 






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3.2               
Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension,
including the initial Credit Extension, is subject to the following conditions precedent:


 


(a)                
timely receipt of an executed Payment/Advance Form;


 


(b)                the
representations and warranties in this Agreement shall be true, accurate, and complete in all material respects on the date
of the proposed Credit Extension and/or the Payment/Advance Form and on the Funding Date of each Credit Extension; provided,
however, that such materiality qualifier shall not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no
Event of Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is
Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain
true, accurate, and complete in all material respects; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof;
and provided, further that those representations and warranties expressly referring to a specific date shall be true,
accurate and complete in all material respects as of such date; and


 


(c)                
Bank determines to its reasonable satisfaction that there has not been any material impairment in the general affairs, management,
results of operation, financial condition of Borrower or the prospect of repayment of the Obligations.


 


3.3               
Covenant to Deliver. Borrower agrees to deliver to Bank each item required to be delivered to Bank under
this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to
the receipt by Bank of any such item shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item,
and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion.


 


3.4               
Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the
making of a Term Loan Advance set forth in this Agreement, to obtain a Term Loan Advance, Borrower shall notify Bank (which notice
shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Eastern time two (2) Business Days before the proposed
Funding Date of the Term Loan Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank
by electronic mail or facsimile a completed Payment/Advance Form executed by an Authorized Signer. Bank may rely on any telephone
notice given by a person whom Bank believes is an Authorized Signer. Bank shall credit any Term Loan Advances to the Designated
Deposit Account. Bank may make Term Loan Advances under this Agreement based on instructions from an Authorized Signer or without
instructions if the Term Loan Advances are necessary to meet Obligations which have become due.


 


4.                  
CREATION OF SECURITY INTEREST


 


4.1               
Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full
of all of the Obligations, a continuing security interest in, and pledges to Bank, the Collateral, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof.


 


Borrower acknowledges
that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless of the terms
of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations
hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first priority perfected security
interest in the Collateral granted herein (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement
to have superior priority to Bank’s Lien in this Agreement).


 


If this Agreement is
terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations)
are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at
such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower,
release its Liens in the Collateral and all rights therein shall revert to Borrower. In the event (x) all Obligations (other than
inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall
terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business
judgment for Bank Services, if any. In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide
to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one
hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one
hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus, in each case, all
interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment),
to secure all of the Obligations relating to such Letters of Credit.


 






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4.2               
 Priority of Security Interest. Borrower represents, warrants, and covenants that the security interest
granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject
only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien
under this Agreement). If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed
by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.


 


4.3               
Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements,
without notice to Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder,
including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the
rights of Bank under the Code. Such financing statements may indicate the Collateral as “all assets of the Debtor”
or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion.


 


5.                  
REPRESENTATIONS AND WARRANTIES


 


Borrower represents
and warrants as follows:


 


5.1               
Due Organization, Authorization; Power and Authority. Borrower is duly existing and in good standing as
a Registered Organization in its jurisdiction of formation and is qualified and licensed to do business and is in good standing
in any jurisdiction in which the conduct of its business or its ownership of property requires that it be qualified except where
the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s business. In connection
with this Agreement, each Borrower has delivered to Bank a completed certificate signed by such Borrower, entitled “Perfection
Certificate” (collectively, the “Perfection Certificate”). Borrower represents and warrants to Bank that
(a) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; (b) Borrower
is an organization of the type and is organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection
Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has
none; (d) the Perfection Certificate accurately sets forth Borrower’s place of business, or, if more than one, its chief
executive office as well as Borrower’s mailing address (if different than its chief executive office); (e) Borrower
(and each of its predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, organizational structure
or type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate
pertaining to Borrower and each of its Subsidiaries is accurate and complete in all material respects (it being understood and
agreed that Borrower may from time to time update certain information in the Perfection Certificate after the Effective Date to
the extent permitted by one or more specific provisions in this Agreement). If Borrower is not now a Registered Organization but
later becomes one, Borrower shall promptly notify Bank of such occurrence and provide Bank with Borrower’s organizational
identification number.


 


The execution, delivery
and performance by Borrower of the Loan Documents to which it is a party have been duly authorized, and do not (i) conflict with
any of Borrower’s organizational documents, (ii) contravene, conflict with, constitute a default under or violate any
material Requirement of Law, (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority by which Borrower or any of its Subsidiaries or any of their property or assets
may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval
from, any Governmental Authority (except such Governmental Approvals which have already been obtained and are in full force and
effect), or (v) conflict with, contravene, constitute a default or breach under, or result in or permit the termination or
acceleration of, any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which it
is a party or by which it is bound in which the default could reasonably be expected to have a material adverse effect on Borrower’s
business.


 


5.2                Collateral.
Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant
a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with
any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in
the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are
necessary to give Bank a perfected security interest therein, to the extent required pursuant to the terms of Section 6.6(c).
The Accounts are bona fide, existing obligations of the Account Debtors.


 






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The Collateral is not
in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate. None
of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as
permitted pursuant to Section 7.2. All Inventory is in all material respects of good and marketable quality, free from material
defects.


 


Borrower is the sole
owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers
in the ordinary course of business, (b) over-the-counter software that is commercially available to the public, and (c) material
Intellectual Property licensed to Borrower and noted on the Perfection Certificate. Each Patent which it owns or purports to own
and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower
owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or
in part. To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates
the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect
on Borrower’s business.


 


Except as noted on
the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted License.


 


5.3               
Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer,
threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate,
Five Hundred Thousand Dollars ($500,000.00).


 


5.4               
Financial Statements; Financial Condition. All consolidated financial statements for Borrower and any
of its Subsidiaries delivered to Bank by submission to the Financial Statement Repository or otherwise submitted to Bank fairly
present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of
operations as of the dates thereof and for the periods covered thereby. There has not been any material deterioration in Borrower’s
consolidated financial condition since the date of the most recent financial statements submitted to the Financial Statement Repository
or otherwise submitted to Bank.


 


5.5               
Solvency. The fair salable value of Borrower’s consolidated assets (including goodwill minus disposition
costs) exceeds the fair value of Borrower’s liabilities; Borrower is not left with unreasonably small capital after the transactions
in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature.


 


5.6               
Regulatory Compliance. Borrower is not an “investment company” or a company “controlled”
by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of
its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).
Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements
of Law the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s
or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s
knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than
legally. Borrower and each of its Subsidiaries 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 to continue their respective businesses
as currently conducted, except where the failure to obtain or make such consents, declarations, notices or filings could not reasonably
be expected to have a material adverse effect on the business of Borrower.


 


5.7               
Subsidiaries; Investments. Borrower does not own any stock, partnership, or other ownership interest or
other equity securities except for Permitted Investments.


 






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5.8                Tax
Returns and Payments; Pension Contributions. Borrower has timely filed all required tax returns and reports (or obtained
valid extensions therefor), and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits
and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and
contributions do not, individually or in the aggregate, exceed One Hundred Twenty-Five Thousand Dollars ($125,000.00).


 


To the extent Borrower
defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development
in, the proceedings, and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contested
taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.” Borrower is unaware of
any claims or adjustments proposed for any of Borrower's prior tax years which could reasonably be expected to result in additional
taxes becoming due and payable by Borrower in excess of One Hundred Twenty-Five Thousand Dollars ($125,000.00) individually or
in the aggregate. Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected
to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or
any other governmental agency.


 


5.9               
Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital and
to fund its general business requirements and not for personal, family, household or agricultural purposes.


 


5.10            
Full Disclosure. No written representation, warranty or other statement of Borrower in any report, certificate,
or written statement submitted to the Financial Statement Repository or otherwise submitted to Bank, as of the date such representation,
warranty, or other statement was made, taken together with all such written reports, written certificates and written statements
submitted to the Financial Statement Repository or otherwise submitted to Bank, contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained in the reports, certificates, or written statements
not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon
reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections
and forecasts may differ from the projected or forecasted results).


 


5.11            
Definition of “Knowledge.” For purposes of the Loan Documents, whenever a representation
or warranty is made to Borrower’s knowledge or awareness, to the “best of” Borrower’s knowledge, or with
a similar qualification, knowledge or awareness means the actual knowledge, after reasonable investigation, of any Responsible
Officer.


 


6.                  
AFFIRMATIVE COVENANTS


 


Borrower shall do all
of the following:


 


6.1               
Government Compliance. 


 


(a)                
Maintain its and all its Subsidiaries’ legal existence and good standing in their respective jurisdictions of formation
and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material
adverse effect on Borrower’s business or operations. Borrower shall comply, and have each Subsidiary comply, in all material
respects, with all laws, ordinances and regulations to which it is subject.


 


(b)               
Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents
to which it is a party and the grant of a security interest to Bank in all of the Collateral. Borrower shall promptly provide copies
of any such obtained Governmental Approvals to Bank.


 






    -8-


     


    

 


6.2               
Financial Statements, Reports. Provide Bank with the following by submitting to the Financial Statement
Repository:


 


(a)                
 Monthly Financial Statements. As soon as available, but no later than thirty (30) days after the last day of each
month, a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations for
such month in a form acceptable to Bank (the “Monthly Financial Statements”);


 


(b)              
Quarterly Compliance Statement. Within thirty (30) days after the last day of each calendar quarter of Borrower,
and together with the Monthly Financial Statements for the last month in such calendar quarter, a completed Compliance Statement,
confirming that, as of the end of such calendar quarter, Borrower was in full compliance with all of the terms and conditions of
this Agreement, and setting forth calculations showing compliance with the financial covenants set forth in this Agreement and
such other information as Bank may reasonably request;


 


(c)              
Annual Operating Budget and Financial Projections. As soon as available, and in any event no later than sixty (60)
days following the end of each fiscal year of Borrower, and within ten (10) days of any with any updates or amendments thereto,
(i) annual operating budgets (including income statements, balance sheets and cash flow statements, by month), and (ii) annual
financial projections (on a quarterly basis), in each case as approved by Borrower’s board of directors, together with any
related business forecasts used in the preparation of such annual financial projections, in each case in a form reasonably acceptable
to Bank (it being understood and agreed that the form of such budgets and projections delivered to Bank prior to the Effective
Date is a form acceptable to Bank);


 


(d)               
Other Statements. Within five (5) days of delivery, copies of all statements, reports and notices made available
to Borrower’s security holders or to any holders of Subordinated Debt;


 


(e)                
10-K/10-Q. As soon as available, and in any event no later than (i) forty-five (45) days after the end of the first
three (3) fiscal quarters in each fiscal year of Borrower, Borrower’s 10-Q report and (ii) ninety (90) days after the last
day of each fiscal year of Borrower, Borrower’s 10-K report, together with an unqualified opinion on such 10-K from an independent
certified public accounting firm reasonably acceptable to Bank;


 


(f)                 
SEC Filings. Within five (5) days of filing, copies of all periodic and other reports, proxy statements and other
materials filed by Borrower and/or any Guarantor with the SEC, any Governmental Authority succeeding to any or all of the functions
of the SEC or with any national securities exchange, or distributed to its shareholders, as the case may be. Documents required
to be delivered pursuant to the terms hereof (to the extent any such documents are included in materials otherwise filed with the
SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower
posts such documents, or provides a link thereto, on Borrower’s website on the internet at Borrower’s website address;
provided, however, Borrower shall promptly notify Bank in writing (which may be by electronic mail) of the posting of any such
documents;


 


(g)               
Legal Action Notice. A prompt report of any legal actions pending or threatened in writing against Borrower or any
of its Subsidiaries that could result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate,
Five Hundred Thousand Dollars ($500,000.00) or more;


 


(h)               
Beneficial Ownership Information. Prompt written notice of any changes to the beneficial ownership information set
out in Section 14 of the Perfection Certificate. Borrower understands and acknowledges that Bank relies on such true, accurate
and up-to-date beneficial ownership information to meet Bank’s regulatory obligations to obtain, verify and record information
about the beneficial owners of its legal entity customers; and


 






    -9-


     


    

 


(i)                 
Other Financial Information. Other financial information reasonably requested by Bank.


 


Any submission by
Borrower of a Compliance Statement or any other financial statement submitted to the Financial Statement Repository pursuant
to this Section 6.2 or otherwise submitted to Bank shall be deemed to be a representation by Borrower that (a) as of the date
of such Compliance Statement or other financial statement, the information and calculations set forth therein are true,
accurate and correct in all material respects, (b) as of the end of the compliance period set forth in such submission,
Borrower is in complete compliance with all required covenants except as noted in such Compliance Statement or other
financial statement, as applicable; (c) as of the date of such submission, no Events of Default have occurred or are
continuing; (d) all representations and warranties other than any representations or warranties that are made as of a
specific date in Section 5 remain true and correct in all material respects as of the date of such submission except as noted
in such Compliance Statement or other financial statement, as applicable; (e) as of the date of such submission, Borrower and
each of its Subsidiaries have timely filed all required tax returns and reports (or obtained valid extensions therefor), and
Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by
Borrower except as otherwise permitted pursuant to the terms of Section 5.8; and (f) as of the date of such submission, no
Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or
benefits of which Borrower has not previously provided written notification to Bank.


 


6.3               
Inventory; Returns. Keep all Inventory in good and marketable condition, free from material defects. Returns
and allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the
Effective Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One Hundred
Thousand Dollars ($100,000.00).


 


6.4               Taxes; Pensions. Timely file, and require each of its Subsidiaries to timely file, all required tax returns
and reports (or obtain valid extensions therefor) and timely pay, and require each of its Subsidiaries to timely pay, all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for
deferred payment of any taxes contested or permitted pursuant to the terms of Section 5.8 hereof, and shall deliver to Bank, on
demand, appropriate certificates attesting to such payments, and pay all amounts necessary to fund all present pension, profit
sharing and deferred compensation plans in accordance with their terms.


 


6.5               
Insurance. 


 


(a)                
Keep its business and the Collateral insured for risks and in amounts standard for companies in Borrower’s industry
and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance
companies that are not Affiliates of Borrower, and in amounts that are reasonably satisfactory to Bank. All property policies shall
have a lender’s loss payable endorsement showing Bank as the sole lender loss payee. All commercial general liability policies
shall show, or have endorsements showing, Bank as an additional insured. Bank shall be named as lender loss payee and/or additional
insured with respect to any such insurance providing coverage in respect of any Collateral.


 


(b)               
Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations.
Notwithstanding the foregoing, (i) so long as no Event of Default has occurred and is continuing, Borrower shall have the option
of applying the proceeds of any casualty policy up to Five Hundred Thousand Dollars ($500,000.00) in the aggregate for all losses
under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any
such replaced or repaired property (A) shall be of equal or like value as the replaced or repaired Collateral and (B) shall be
deemed Collateral in which Bank has been granted a first priority security interest, and (ii) after the occurrence and during the
continuance of an Event of Default, all proceeds payable under such casualty policy shall, at the option of Bank, be payable to
Bank on account of the Obligations.


 


(c)                
At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments.
Each provider of any such insurance required under this Section 6.5 shall agree, by endorsement upon the policy or policies issued
by it or by independent instruments furnished to Bank, that it will give Bank thirty (30) days prior written notice before
any such policy or policies shall be materially altered or canceled. If Borrower fails to obtain insurance as required under this
Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or
part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Bank
deems prudent.


 






    -10-


     


    

 


6.6               
Accounts.


 


(a)                
 At all times on and after July 1, 2021, maintain all of Borrower’s, all of its Subsidiaries’, and any Guarantor’s
operating and other depository accounts and excess cash with Bank and Bank’s Affiliates.


 


(b)               
In addition to the foregoing, at all times on and after July 1, 2021, Borrower, all of its Subsidiaries, and any Guarantor
shall conduct all letters of credit and business credit card banking exclusively with Bank.


 


(c)                
In addition to and without limiting the restrictions in (a), Borrower shall provide Bank five (5) days prior written notice
before establishing any Collateral Account at or with any bank or financial institution other than Bank or Bank’s Affiliates.
For any Collateral Account that Bank in its sole discretion permits Borrower at any time to open or maintain on or after July 1,
2021, Borrower shall cause the applicable bank or financial institution (other than Bank) at or with which any Collateral Account
is maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account
to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not
be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts
exclusively used for payroll, payroll taxes, and other employee wage and benefit payments to or for the benefit of Borrower’s
employees and identified to Bank by Borrower as such.


 


6.7               
Protection of Intellectual Property Rights. 


 


(a)                
(i) Use commercially reasonable efforts to protect, defend and maintain the validity and enforceability of the Intellectual
Property material to Borrower’s business; (ii) promptly advise Bank in writing of material infringements or any other event
that could reasonably be expected to materially and adversely affect the value of the Intellectual Property material to Borrower’s
business; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated
to the public without Bank’s written consent.


 


(b)               
 Provide written notice to Bank within ten (10) days of entering or becoming bound by any Restricted License (other than
over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank reasonably requests
to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to
be deemed “Collateral” and for Bank to have a security interest in it that might otherwise be restricted or prohibited
by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Bank to
have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with Bank’s
rights and remedies under this Agreement and the other Loan Documents.


 


6.8               
Financial Covenant – Cumulative Cash Burn. Have at all times, to be tested as of the last
day of each calendar quarter, as measured cumulatively from January 1, 2021, Cash Burn for the period ending on the last day of
such calendar quarter in an amount equal to at least the amount set forth in the table below corresponding to such period; provided,
however, that, the amounts set forth below shall be increased by an amount equal to seventy-five percent (75.0%) of the aggregate
net cash proceeds received by Borrower from the sale of Borrower’s equity securities on or after the Effective Date but on
or prior to the last day of such calendar quarter.


 


	Period Ending	 	Cumulative Cash Burn	 
	March 31, 2021	 	$	(10,500,000.00	)
	June 30, 2021	 	$	(17,000,000.00	)
	September 30, 2021	 	$	(23,000,000.00	)
	December 31, 2021	 	$	(28,500,000.00	)
	March 31, 2022	 	$	(33,500,000.00	)
	June 30, 2022, and for the period ending on the last day of each calendar quarter thereafter	 	$	(38,000,000.00	)



 






    -11-


     


    

 


Notwithstanding the
foregoing, the financial covenant set forth in this Section 6.8 shall not be tested for any calendar quarter (such quarter, a “Tested
Quarter”) (a) with respect to which Borrower maintained the Minimum Cash Balance at all times during the period commencing
on the first day of such Tested Quarter through and including the date that is thirty (30) days after the last day of such Tested
Quarter; provided, however that the financial covenant set forth in this Section 6.8 shall be tested for such Tested Quarter if
Borrower does not maintain the Minimum Cash Balance during the period commencing on the date that is thirty-one (31) days after
the last day of such Tested Quarter through and including the last day of the calendar quarter immediately following such Tested
Quarter, or (b) ending on or after the Funding Date of the Term C Loan Advance.


 


6.9               
Litigation Cooperation. From the date hereof and continuing through the termination of this Agreement,
make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower's books and records,
to the extent that Bank may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted
by or against Bank with respect to any Collateral or relating to Borrower.


 


6.10            
Further Assurances. Execute any further instruments and take further action as Bank reasonably requests
to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within
five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any
Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or in each case
where non-compliance could reasonably be expected to have a material adverse effect on any of the Governmental Approvals or otherwise
on the operations of Borrower or any of its Subsidiaries.


 


6.11            
Post-Closing Requirements. Deliver to Bank, in form and substance satisfactory to Bank, within thirty
(30) days of the Effective Date, a certificate of good standing/foreign qualification for Liquidia PAH certified by the Secretary
of State (or equivalent agency) for North Carolina, dated as of a date no earlier than thirty (30) days prior to the Effective
Date.


 


7.                  
NEGATIVE COVENANTS


 


Borrower shall not
do any of the following without Bank’s prior written consent:


 


7.1               
Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (including, without limitation,
pursuant to a Division) (collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any
part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or
obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in
the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the
sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use
or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents;
and (f) consisting of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course
of business.


 


7.2               
Changes in Business, Management, Control, or Business Locations.  (a) Engage in or permit any of its Subsidiaries
to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably
related thereto; (b) liquidate or dissolve; (c) fail to provide notice to Bank of any Key Person departing from or ceasing to be
employed by Borrower within ten (10) Business Days after his or her departure from Borrower; or (d) permit or suffer any Change
in Control.


 






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Borrower shall
not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including
warehouses (unless such new offices or business locations contain less than One Hundred Thousand Dollars ($100,000.00) in
Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in
excess of One Hundred Thousand Dollars ($100,000.00) to a bailee at a location other than to a bailee and at a location
already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational
structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction
of organization. If Borrower intends to add any new offices or business locations, including warehouses, containing in excess
of One Hundred Thousand Dollars ($100,000.00) of Borrower's assets or property, then Borrower will cause the landlord of any
such new offices or business locations, including warehouses, to execute and deliver a landlord consent in form and substance
reasonably satisfactory to Bank. If Borrower intends to deliver any portion of the Collateral valued, individually or in the
aggregate, in excess of One Hundred Thousand Dollars ($100,000.00) to a bailee, and Bank and such bailee are not already
parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the
Collateral, then Borrower will cause such bailee to execute and deliver a bailee agreement in form and substance reasonably
satisfactory to Bank.


 


7.3            
Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate,
with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock
or property of another Person (including, without limitation, by the formation of any Subsidiary or pursuant to a Division) except
for Permitted Acquisitions. A Borrower may merge or consolidate into another Borrower and a Subsidiary (which is not a Borrower)
may merge or consolidate into another Subsidiary or into Borrower.


 


7.4              Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do
so, other than Permitted Indebtedness.


 


7.5              
Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any
right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens,
permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has
the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon,
or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, in each case except as is otherwise permitted
in Section 7.1 hereof and the definition of “Permitted Liens” herein.


 


7.6               
Maintenance of Collateral Accounts.  Maintain any Collateral Account except pursuant to the terms of Section
6.6(c) hereof.


 


7.7              
Distributions; Investments. (a) Pay any dividends or make any distribution or payment or redeem, retire
or purchase any capital stock; provided that (i) any Subsidiary (that is not a Borrower) may pay dividends or make distributions
to Borrower or another Subsidiary, (ii) Borrower may convert any of its convertible securities into other securities pursuant to
the terms of such convertible securities or otherwise in exchange thereof, (iii) Borrower may make payments of cash in lieu of
the issuance of fractional shares in aggregate amount for all such payments not to exceed One Hundred Thousand Dollars ($100,000.00)
per fiscal year and (iv) Borrower may repurchase the stock of former directors, officers employees or consultants pursuant to stock
repurchase agreements so long as an Event of Default does not exist at the time of any such repurchase and would not exist after
giving effect to any such repurchase, provided that the aggregate amount of all such repurchases does not exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) per fiscal year; or (b) directly or indirectly make any Investment (including, without limitation,
by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.


 


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 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) transactions of the type described in and permitted by Sections 7.1, 7.3 and 7.7 hereof, and (c) unsecured
debt financings with Borrower’s existing investors, so long as all such Indebtedness is Subordinated Debt.


 






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7.9                Subordinated Debt.  (a) Make or permit any payment on any Subordinated Debt, except under the terms of
the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) except to the extent
permitted by the applicable subordination, intercreditor, or other similar agreement with respect to the Subordinated Debt amend
any provision in any document relating to the Subordinated Debt which would increase the amount thereof, provide for earlier or
greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank.


 


7.10            
Compliance. Become an “investment company” or a company controlled by an “investment
company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending
credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System),
or use the proceeds of any Credit Extension for that purpose; (a) fail to meet the minimum funding requirements of ERISA, (b) permit
a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, or (c) fail to comply with the Federal Fair Labor
Standards Act or violate any other law or regulation, if the violation or failure of any of the conditions described in clauses
(a) through (c) could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its
Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination
of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation
plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.


 


8.                  
EVENTS OF DEFAULT


 


Any one of the following
shall constitute an event of default (an “Event of Default”) under this Agreement:


 


8.1               
Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension
when due, or (b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which
three (3) Business Day cure period shall not apply to payments due on the Term Loan Advance Maturity Date). During the cure period,
the failure to make or pay any payment specified under clause (b) hereunder is not an Event of Default (but no Credit Extension
will be made during the cure period);


 


8.2               
Covenant Default. 


 


(a)                
Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, or 6.11 or violates
any covenant in Section 7; or


 


(b)               
Borrower fails or neglects to perform, keep, or observe any other term, provision, condition, covenant or agreement contained
in this Agreement or any Loan Documents, and as to any default (other than those specified in this Section 8) under such other
term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after
the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or
cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within
a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt
to cure such default, and within such reasonable time period the failure to cure the default shall not be deemed an Event of Default
(but no Credit Extensions shall be made during such cure period). Cure periods provided under this section shall not apply, among
other things, to financial covenants or any other covenants set forth in clause (a) above;


 


8.3               
Material Adverse Change. A Material Adverse Change occurs;


 






    -14-


     


    

 


8.4               
Attachment; Levy; Restraint on Business.


 


(a)                
 (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under
the control of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets
by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence
thereof, discharged or stayed (whether through the posting


of a bond or otherwise); provided, however,
no Credit Extensions shall be made during any ten (10) day cure period; or


 


(b)               
 (i) any material portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee
or receiver, or (ii) any court order enjoins, restrains, or prevents Borrower from conducting all or any material part of
its business;


 


8.5               
Insolvency. (a) Borrower or any of its Subsidiaries is unable to pay its debts (including trade debts)
as they become due or otherwise becomes insolvent; (b) Borrower or any of its Subsidiaries begins an Insolvency Proceeding;
or (c) an Insolvency Proceeding is begun against Borrower or any of its Subsidiaries and is not dismissed or stayed within
thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause (a) exist and/or until
any Insolvency Proceeding is dismissed);


 


8.6               
Other Agreements. There is, under any agreement to which Borrower or any Guarantor is a party with a third
party or parties, (a) any default resulting in a right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount individually or in the aggregate in excess of Two Hundred Fifty Thousand Dollars
($250,000.00); or (b) any breach or default by Borrower or Guarantor, the result of which could have a material adverse effect
on Borrower’s or any Guarantor’s business;


 


8.7               
Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment
of money in an amount, individually or in the aggregate, of at least Two Hundred Fifty Thousand Dollars ($250,000.00) (not covered
by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against
Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof,
discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged
prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge,
stay, or bonding of such fine, penalty, judgment, order or decree);


 


8.8               
Misrepresentations. Borrower or any Person acting for Borrower makes any representation, warranty, or
other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter
this Agreement or any Loan Document, and such representation, warranty, or other statement is incorrect in any material respect
when made;


 


8.9               
Subordinated Debt. Any document, instrument, or agreement evidencing any Subordinated Debt shall for any
reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest
in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the
Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement or any applicable
subordination or intercreditor agreement;


 


8.10            
Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force
and effect; (b) any Guarantor does not perform any obligation or covenant under any guaranty of the Obligations; (c) any circumstance
described in Sections 8.3, 8.4, 8.5, 8.6, 8.7, or 8.8 of this Agreement occurs with respect to any Guarantor; (d) the death,
liquidation, winding up, or termination of existence of any Guarantor; or (e) (i) a material impairment in the perfection
or priority of Bank’s Lien in the collateral provided by Guarantor or in the value of such collateral or (ii) a material
adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of
repayment of the Obligations occurs with respect to any Guarantor;


 


8.11             Governmental
Approvals. Any Governmental Approval shall have been (a) revoked, rescinded, suspended, modified in an adverse manner or
not renewed in the ordinary course for a full term or (b) subject to any decision by a Governmental Authority that designates
a hearing with respect to any applications for renewal of any of such Governmental Approval or that could result in the
Governmental Authority taking any of the actions described in clause (a) above, and such decision or such revocation,
rescission, suspension, modification or non-renewal (i) causes, or could reasonably be expected to cause, a Material Adverse
Change, or (ii) adversely affects the legal qualifications of Borrower or any of its Subsidiaries to hold such Governmental
Approval in any applicable jurisdiction and such revocation, rescission, suspension, modification or non-renewal could
reasonably be expected to affect the status of or legal qualifications of Borrower or any of its Subsidiaries to hold any
Governmental Approval in any other jurisdiction; or


 






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8.12            
LIQ861 Action. One or more judgments, rulings, orders or decrees is rendered against Borrower by any court
or Governmental Authority which Bank determines in its good faith business judgment is reasonably likely to either (a) prohibit
Borrower from obtaining final approval from the FDA with respect to Borrower’s new drug application for its LIQ861 product
or (b) impair or delay Borrower’s ability to commercialize its LIQ861 product according to the most recent business plan
delivered to Bank on or prior to the Effective Date.


 


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,
without notice or demand, do any or all of the following:


 


(a)                
declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations
are immediately due and payable without any action by Bank);


 


(b)               
stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement
between Borrower and Bank;


 


(c)                
demand that Borrower (i) deposit cash with Bank in an amount equal to at least (A) one hundred five percent (105.0%) of
the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (B) one
hundred ten percent (110.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in a Foreign
Currency remaining undrawn, (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as
estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as
collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit
and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term
of any Letters of Credit;


 


(d)            terminate any FX Contracts;


 


(e)            verify
the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes
and claims directly with Account Debtors for amounts on terms and in any order that Bank considers advisable, and notify any Person
owing Borrower money of Bank’s security interest in such funds;


 


(f)             make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest
in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter
premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest,
or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants
Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies;


 


(g)            apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) amount held by Bank owing to or for
the credit or the account of Borrower;


 


(h)            ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby
granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights,
mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property
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, Borrower’s rights under all licenses and all franchise agreements
inure to Bank’s benefit;


 






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(i)                
place a “hold” on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement
order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral;


 


(j)                 demand
and receive possession of Borrower’s Books; and


 


(k)               
exercise all rights and remedies available to Bank under the Loan Documents or at law or equity, including all remedies
provided under the Code (including disposal of the Collateral pursuant to the terms thereof).


 


9.2               
Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable
upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower’s name on any checks or other
forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against
Account Debtors; (c) settle and adjust disputes and claims about the Accounts directly with Account Debtors, for amounts and on
terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest
or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon,
or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third
party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents
necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an Event
of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit
Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of Bank’s rights and
powers, coupled with an interest, are irrevocable until all Obligations (other than inchoate indemnity obligations) have been fully
repaid and performed and Bank’s obligation to provide Credit Extensions terminates.


 


9.3               
Protective Payments. If Borrower fails to obtain the insurance called for by Section 6.5 or fails to pay
any premium thereon or fails to pay any other amount which Borrower is obligated to pay under this Agreement or any other Loan
Document or which may be required to preserve the Collateral, Bank may obtain such insurance or make such payment, and all amounts
so paid by Bank are Bank Expenses and immediately due and payable, bearing interest at the then highest rate applicable to the
Obligations, and secured by the Collateral. Bank will make reasonable efforts to provide Borrower with notice of Bank obtaining
such insurance at the time it is obtained or within a reasonable time thereafter. No payments by Bank are deemed an agreement to
make similar payments in the future or Bank’s waiver of any Event of Default.


 


9.4               
Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing,
Bank shall have the right to apply in any order any funds in its possession, whether from Borrower account balances, payments,
proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations.
Bank shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto;
Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or other
credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either
reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the Obligations until the
actual receipt by Bank of cash therefor.


 


9.5               
Bank’s Liability for Collateral. So long as Bank complies with reasonable banking practices regarding
the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral;
or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction
of the Collateral.


 


9.6                No
Waiver; Remedies Cumulative. Bank’s failure, at any time or times, to require strict performance by Borrower of any
provision of this Agreement or any other Loan Document shall not waive, affect, or diminish any right of Bank thereafter to
demand strict performance and compliance herewith or therewith. No waiver hereunder shall be effective unless signed by the
party granting the waiver and then is only effective for the specific instance and purpose for which it is given.
Bank’s rights and remedies under this Agreement and the other Loan Documents are cumulative. Bank has all rights and
remedies provided under the Code, by law, or in equity. Bank’s exercise of one right or remedy is not an election and
shall not preclude Bank from exercising any other remedy under this Agreement or other remedy available at law or in equity,
and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay in exercising any remedy is
not a waiver, election, or acquiescence.


 






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9.7              
Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments,
chattel paper, and guarantees held by Bank on which Borrower is liable.


 


9.8               
Borrower Liability. Any Borrower may, acting singly, request Credit Extensions hereunder. Each Borrower
hereby appoints each other as agent for the other for all purposes hereunder, including with respect to requesting Credit Extensions
hereunder. Each Borrower hereunder shall be jointly and severally obligated to repay all Credit Extensions made hereunder, regardless
of which Borrower actually receives said Credit Extension, as if each Borrower hereunder directly received all Credit Extensions.
Each Borrower waives (a) any suretyship defenses available to it under the Code or any other applicable law, and (b) any right
to require Bank to: (i) proceed against any Borrower or any other person; (ii) proceed against or exhaust any security; or (iii)
pursue any other remedy. Bank may exercise or not exercise any right or remedy it has against any Borrower or any security it holds
(including the right to foreclose by judicial or non-judicial sale) without affecting any Borrower’s liability. Notwithstanding
any other provision of this Agreement or other related document, each Borrower irrevocably waives all rights that it may have at
law or in equity (including, without limitation, any law subrogating Borrower to the rights of Bank under this Agreement) to seek
contribution, indemnification or any other form of reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment made by Borrower with respect to the Obligations in
connection with this Agreement or otherwise and all rights that it might have to benefit from, or to participate in, any security
for the Obligations as a result of any payment made by Borrower with respect to the Obligations in connection with this Agreement
or otherwise. Any agreement providing for indemnification, reimbursement or any other arrangement prohibited under this Section
9.8 shall be null and void. If any payment is made to a Borrower in contravention of this Section 9.8, such Borrower shall hold
such payment in trust for Bank and such payment shall be promptly delivered to Bank for application to the Obligations, whether
matured or unmatured.


 


10.               
NOTICES


 


All notices, consents,
requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing
and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business
Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid;
(b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed
to the party to be notified and sent to the address, facsimile number, or email address indicated below. Bank or Borrower may change
its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with
the terms of this Section 10.


 






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	 	If to Borrower:	LIQUIDIA CORPORATION



                                                                         LIQUIDIA TECHNOLOGIES, INC.



                                                                         LIQUIDIA PAH,
LLC
 P.O. Box 110085

Research Triangle Park, NC 27709

Attn: Michael Kaseta, CFO







 








	 	with a copy to:	DLA Piper LLP (US)

51 John F. Kennedy Parkway, Suite 120

Short Hills, New Jersey 07078-2704

Attn:  Andrew P. Gilbert




 


	 	If to Bank:	Silicon Valley Bank

3475 Piedmont Road, Suite 560
	 	Atlanta, Georgia 30305

Attn:  Mr. Scott McCarty




 


	 	with a copy to:	Morrison & Foerster LLP

200 Clarendon Street, Floor 20

Boston, Massachusetts 02116

Attn:  David A. Ephraim, Esquire




 


11.               
CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER


 


Except as otherwise
expressly provided in any of the Loan Documents, Massachusetts law governs the Loan Documents without regard to principles of conflicts
of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Boston, Massachusetts; provided,
however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action
in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other
court order in favor of Bank. Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced
in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper
venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by
such court. Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit
and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to
Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and
that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3)
days after deposit in the U.S. mails, proper postage prepaid.


 


BORROWER AND BANK
EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS
OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT
FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.


 






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This Section 11 shall
survive the termination of this Agreement.


 


12.              
GENERAL PROVISIONS


 


12.1           
Termination Prior to Term Loan Advance Maturity Date; Survival. All covenants, representations and warranties
made in this Agreement shall continue in full force until this Agreement has terminated pursuant to its terms and all Obligations
(other than inchoate indemnity obligations) have been satisfied. So long as Borrower has satisfied the Obligations (other than
inchoate indemnity obligations, and any other obligations which, by their terms, are to survive the termination of this Agreement,
and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement),
this Agreement may be terminated prior to the Term Loan Advance Maturity Date by Borrower, effective three (3) Business Days after
written notice of termination is given to Bank. Those obligations that are expressly specified in this Agreement as surviving this
Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination. Without limiting the
foregoing, except as otherwise provided in Section 4.1, the grant of a security interest by Borrower in Section 4.1 shall survive
until the termination of this Agreement and all Bank Services Agreements.


 


12.2           
Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns
of each party. Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written
consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to
Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s
obligations, rights, and benefits under this Agreement and the other Loan Documents (other than the Warrant, as to which assignment,
transfer and other such actions are governed by the terms thereof). Notwithstanding the foregoing, so long as no Event of Default
shall have occurred and is continuing, Bank shall not assign its interest in the Loan Documents to any Person who in the reasonable
estimation of Bank is (a) a direct competitor of Borrower, or (b) a vulture fund or distressed debt fund.


 


12.3           
Indemnification. Borrower agrees to indemnify, defend and hold Bank and its directors, officers, employees,
agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”)
harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed
or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses
(including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential
to, or arising from transactions between Bank and Borrower contemplated by the Loan Documents (including reasonable attorneys’
fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful
misconduct.


 


This Section 12.3 shall
survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have
run.


 


12.4           
Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.


 


12.5           
Severability of Provisions. Each provision of this Agreement is severable from every other provision in
determining the enforceability of any provision.


 


12.6            Correction
of Loan Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement
of the parties, so long as Bank provides Borrower with written notice of such correction and allows Borrower at least ten (10)
days to object to such correction. In the event of such objection, such correction shall not be made except by an amendment signed
by both Bank and Borrower.


 


12.7            Amendments
in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or
termination of any obligation under any Loan Document, shall be enforceable or admissible unless, and only to the extent,
expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the
generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or
course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan
Document. Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to
any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or
commitment to grant any further waiver. The Loan Documents represent the entire agreement about this subject matter and
supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and
negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.


 






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12.8            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, is an original, and all taken together, constitute one Agreement.


 


12.9            Confidentiality.
In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and
Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective permitted transferees or
purchasers of any interest in the Credit Extensions (provided, however, Bank shall use its best efforts to obtain any prospective
permitted transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation,
subpoena, or other order; (d) to Bank’s regulators or as otherwise required in connection with Bank’s examination
or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service
providers of Bank so long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive
than those contained herein. Confidential information does not include information that is either: (i) in the public domain
or in Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure
by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank does
not know that the third party is prohibited from disclosing the information.


 


Bank Entities may use
anonymous forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly
prohibited in writing by Borrower.  The provisions of the immediately preceding sentence shall survive the termination of
this Agreement.


 


12.10           Right
of Set Off. Borrower hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations
to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter
in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary)
or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand
or notice, Bank may set off the same or any part thereof and apply the same to any liability or Obligation of Borrower even though
unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK
TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.


 


12.11          
Electronic Execution of Documents. The words “execution,” “signed,” “signature”
and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use
of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including,
without limitation, any state law based on the Uniform Electronic Transactions Act.


 


12.12          
Captions. The headings used in this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.


 


12.13          
Construction of Agreement. The parties mutually acknowledge that they and their attorneys have participated
in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard
to which of the parties caused the uncertainty to exist.


 


12.14          
Relationship. The relationship of the parties to this Agreement is determined solely by the provisions
of this Agreement. The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship
with duties or incidents different from those of parties to an arm’s-length contract.


 






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12.15        
 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any
benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their
respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express
party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against
any party to this Agreement.


 


13.               
DEFINITIONS


 


13.1            
Definitions. As used in the Loan Documents, the word “shall” is mandatory, the word “may”
is permissive, the word “or” is not exclusive, the words “includes” and “including” are not
limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative. As used in
this Agreement, the following capitalized terms have the following meanings:


 


“Account”
is any “account” as defined in the Code with such additions to such term as may hereafter be made, and includes,
without limitation, all accounts receivable and other sums owing to Borrower.


 


“Account Debtor”
is any “account debtor” as defined in the Code with such additions to such term as may hereafter be made.


 


“Affiliate”
is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls
or is controlled by or is under common control with the Person, and each of that Person’s senior executive officers, directors,
partners and, for any Person that is a limited liability company, that Person’s managers and members.


 


“Agreement”
is defined in the preamble hereof.


 


“Authorized
Signer” is any individual listed in Borrower’s Borrowing Resolution who is authorized to execute the Loan Documents,
including making (and executing if applicable) any Credit Extension request, on behalf of Borrower.


 


“Bank”
is defined in the preamble hereof.


 


“Bank Entities”
is defined in Section 12.9 of this Agreement.


 


“Bank Expenses”
are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for preparing, amending,
negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection
with appeals or Insolvency Proceedings) or otherwise incurred with respect to Borrower or any Guarantor.


 


“Bank Services” 
are any products, credit services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of
its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services
(including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services),
interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s
various agreements related thereto (each, a “Bank Services Agreement”).


 


“Bank Services
Agreement” is defined in the definition of Bank Services.


 


“Borrower”
is defined in the preamble hereof.


 


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


 






    -22-


     


    

 


“Borrowing
Resolutions” are, with respect to any Person, those resolutions adopted by such Person’s board of directors (or
the limited liability company equivalent thereof) (and, if required under the terms of such Person’s Operating Documents,
stockholders) and delivered by such Person to Bank approving the Loan Documents to which such Person is a party and the transactions
contemplated thereby, together with a certificate executed by its secretary on behalf of such Person certifying (a) such Person
has the authority to execute, deliver, and perform its obligations under each of the Loan Documents to which it is a party, (b) that
set forth as a part of or attached as an exhibit to such certificate is a true, correct, and complete copy of the resolutions then
in full force and effect authorizing and ratifying the execution, delivery, and performance by such Person of the Loan Documents
to which it is a party, (c) the name(s) of the Person(s) authorized to execute the Loan Documents, including making (and executing
if applicable) any Credit Extension request, on behalf of such Person, together with a sample of the true signature(s) of such
Person(s), and (d) that Bank may conclusively rely on such certificate unless and until such Person shall have delivered to
Bank a further certificate canceling or amending such prior certificate.


 


“Business
Day” is any day that is not a Saturday, Sunday or a day on which Bank is closed, and if any determination of a “Business
Day” shall relate to an FX Contract, the term “Business Day” shall mean a day on which dealings are carried on
in the country of settlement of the Foreign Currency.


 


“Cash Burn”
is, for any measurement period, Borrower’s (a) Net Income, plus (b) to the extent deducted in the calculation of Net Income,
(i) depreciation expenses, plus (ii) amortization expenses, plus (iii) non-cash stock compensation expenses, plus (iv) other non-cash
items approved by Bank in writing on a case-by-case basis in its sole discretion, minus (c) capital expenditures.


 


“Cash Equivalents”
means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State
thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more
than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue.


 


“Change in
Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become,
the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of
forty-nine percent (49.0%) or more of the ordinary voting power for the election of directors of Borrower (determined on a fully
diluted basis) other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private
equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business
Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction; or (b)
at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%)
of each class of outstanding capital stock of each Subsidiary of Borrower free and clear of all Liens (except Liens created by
this Agreement).


 


“Claims”
is defined in Section 12.3 of this Agreement.


 


“Code”
is the Uniform Commercial Code, as the same may, from time to time, be enacted and in effect in the Commonwealth of Massachusetts;
provided, that, to the extent that the Code is used to define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of such term contained in Article or Division 9 shall
govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection,
or priority of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in
effect in a jurisdiction other than the Commonwealth of Massachusetts, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of definitions relating to such provisions.


 


“Collateral”
is any and all properties, rights and assets of Borrower described on Exhibit A.


 


“Collateral
Account” is any Deposit Account, Securities Account, or Commodity Account.


 






    -23-


     


    

 


“Commodity
Account” is any “commodity account” as defined in the Code with such additions to such term as may hereafter
be made.


 


“Compliance
Statement” is that certain statement in the form attached hereto as Exhibit B.


 


“Contingent
Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness,
lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed,
endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate,
currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect
a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined
amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated
liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any
guarantee or other support arrangement.


 


“Control Agreement”
is any control agreement entered into among the depository institution at which Borrower maintains a Deposit Account or the securities
intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank
pursuant to which Bank obtains control (within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity
Account.


 


“Copyrights”
are any and all copyright rights, copyright applications, copyright registrations and like protections in each work of authorship
and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret.


 


“Credit Extension”
is any Term Loan Advance, FX Contract, or any other extension of credit by Bank for Borrower’s benefit.


 


“Default Rate”
is defined in Section 2.2(b) of this Agreement.


 


“Deposit Account”
is any “deposit account” as defined in the Code with such additions to such term as may hereafter be made.


 


“Designated
Deposit Account” is account number ending 202 (last three digits), maintained by Borrower with Bank (provided, however,
if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained
with Bank as chosen by Bank).


 


“Division”
means, in reference to any Person which is an entity, the division of such Person into two (2) or more separate Persons, with the
dividing Person either continuing or terminating its existence as part of such division, including, without limitation, as contemplated
under Section 18-217 of the Delaware Limited Liability Company Act for limited liability companies formed under Delaware law, or
any analogous action taken pursuant to any other applicable law with respect to any corporation, limited liability company, partnership
or other entity.


 


“Dollars,”
 “dollars” or use of the sign “$” means only lawful money of the United States and not any
other currency, regardless of whether that currency uses the “$” sign to denote its currency or may be readily converted
into lawful money of the United States.


 


“Dollar Equivalent”
is, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated
in a Foreign Currency, the equivalent amount therefor in Dollars as determined by Bank at such time on the basis of the then-prevailing
rate of exchange in San Francisco, California, for sales of the Foreign Currency for transfer to the country issuing such Foreign
Currency.


 


“Effective
Date” is defined in the preamble hereof.


 






    -24-


     


    

 


“Equipment”
is all “equipment” as defined in the Code with such additions to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing.


 


“ERISA”
is the Employee Retirement Income Security Act of 1974, and its regulations.


 


“Event of
Default” is defined in Section 8 of this Agreement.


 


“Exchange
Act” is the Securities Exchange Act of 1934, as amended.


 


“FDA”
means the Food and Drug Administration.


 


“Final Payment”
is a payment (in addition to and not a substitution for the regular monthly payments of principal plus accrued interest) due on
the earliest to occur of (a) the Term Loan Advance Maturity Date, (b) the repayment of the Term Loan Advances in full, (c) as required
pursuant to Section 2.1.1(d) or 2.1.1(e), or (d) the termination of this Agreement, in an amount equal to five percent (5.0%) of
the aggregate original principal amount of all Term Loan Advances made by Bank.


 


“Financial
Statement Repository” is mase@svb.com or such other means of collecting information approved and designated by Bank after
providing notice thereof to Borrower from time to time.


 


“Foreign Currency”
means lawful money of a country other than the United States.


 


“Funding Date”
is any date on which a Credit Extension is made to or for the account of Borrower which shall be a Business Day.


 


“FX Contract”
is any foreign exchange contract by and between Borrower and Bank under which Borrower commits to purchase from or sell to Bank
a specific amount of Foreign Currency on a specified date.


 


“GAAP”
is generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination.


 


“General Intangibles”
is all “general intangibles” as defined in the Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation, all Intellectual Property, claims, income and other tax refunds, security
and other deposits, payment intangibles, contract rights, options to purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation
key man, property damage, and business interruption insurance), payments of insurance and rights to payment of any kind.


 


“Governmental
Approval” is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration,
filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.


 


“Governmental
Authority” is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory organization.


 


“Guarantor”
is any present or future guarantor of the Obligations.


 






    -25-


     


    

 


“Indebtedness”
is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations
for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital
lease obligations, and (d) Contingent Obligations.


 


“Indemnified
Person” is defined in Section 12.3 of this Agreement.


 


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


 


“Intellectual
Property” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:


 


(a)                
its Copyrights, Trademarks and Patents;


 


(b)               
any and all trade secrets and trade secret rights, including, without limitation, any rights to unpatented inventions, know-how
and operating manuals;


 


(c)                
any and all source code;


 


(d)               
any and all design rights which may be available to such Person;


 


(e)               
any and all claims for damages by way of past, present and future infringement of any of the foregoing, with the right,
but not the obligation, to sue for and collect such damages for said use or infringement of the Intellectual Property rights identified
above; and


 


(f)                
all amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents.


 


“Inventory”
is all “inventory” as defined in the Code in effect on the date hereof with such additions to such term as may hereafter
be made, and includes without limitation all merchandise, raw materials, parts, supplies, packing and shipping materials, work
in process and finished products, including without limitation such inventory as is temporarily out of Borrower’s custody
or possession or in transit and including any returned goods and any documents of title representing any of the above.


 


“Investment”
is any beneficial ownership interest in any Person (including stock, partnership interest or other securities), and any loan, advance
or capital contribution to any Person.


 


“Key Person”
is each of Borrower’s Chief Executive Officer and Chief Financial Officer.


 


“Letter of
Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon an application,
guarantee, indemnity, or similar agreement.


 


“Lien”
is a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily
incurred or arising by operation of law or otherwise against any property.


 


“Liquidia
PAH” is defined in the preamble hereof.


 


“Loan Documents”
are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement,
the Warrant, the Perfection Certificate, any Bank Services Agreement, any Control Agreement, any subordination agreement, any note,
or notes or guaranties executed by Borrower or any Guarantor, and any other present or future agreement by Borrower and/or any
Guarantor with or for the benefit of Bank, all as amended, restated, or otherwise modified.


 






    -26-


     


    

 


“Material
Adverse Change” is (a) a material impairment in the perfection or priority of Bank’s Lien in the Collateral or
in the value of such Collateral; (b) a material adverse change in the business, operations, or financial condition of Borrower;
or (c) a material impairment of the prospect of repayment of any portion of the Obligations.


 


“Minimum Cash
Balance” means unrestricted and unencumbered cash of Borrower maintained in accounts of Borrower at (a) Bank, (b) Bank’s
Affiliates, so long as such accounts are subject to a Control Agreement in favor of Bank, and (c) prior to July 1, 2021, Pacific
Western Bank, in an aggregate amount equal to at least (i) during the period commencing on the Effective Date through and including
the date immediately prior to the Funding Date of the Term B Loan Advance, Thirty Million Dollars ($30,000,000.00) and (ii) during
the period commencing on the Funding Date of the Term B Loan Advance through and including the date immediately prior to the Funding
Date of the Term C Loan Advance, Thirty-Five Million Dollars ($35,000,000.00).


 


“Monthly Financial
Statements” is defined in Section 6.2(a) of this Agreement.


 


“Net Income”
means, for any period as at any date of determination, the net profit (or loss), after provision for taxes, of Borrower for such
period taken as a single accounting period.


 


“Obligations”
are Borrower’s obligations to pay when due any debts, principal, interest, fees, the Final Payment, the Prepayment Fee, Bank
Expenses, and other amounts Borrower owes Bank now or later, whether under this Agreement or the other Loan Documents (other than
the Warrant), including, without limitation, all obligations relating to Bank Services, and including interest accruing after Insolvency
Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under
the Loan Documents (other than the Warrant).


 


“Operating
Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary of State (or equivalent
agency) of such Person’s jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Effective
Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability
company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership
agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.


 


“Parent Borrower”
is defined in the preamble hereof.


 


“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.


 


“Payment Date”
is the first (1st) calendar of each month.


 


“Payment/Advance
Form” is that certain form attached hereto as Exhibit C.


 


“Perfection
Certificate” is defined in Section 5.1 of this Agreement.


 


“Permitted
Acquisition” means a transaction whereby Borrower acquires, or permits any of its Subsidiaries to acquire, all or substantially
all of the capital stock or property of another Person, which satisfies each of the following conditions:


 


(a)                such
transaction shall only involve assets located in the United States and entities organized in a jurisdiction in the United States,
and the party or parties being acquired is in the same or a substantially similar line of business as Borrower;


 


(b)               
no Event of Default has occurred and is continuing or would exist after giving effect to the transaction and Bank has received
satisfactory evidence that Borrower is in compliance with all terms and conditions of this Agreement (and that it will be in compliance
after giving effect to the transaction);


 


(c)               
the acquisition is approved by the board of directors (or equivalent control group) of all parties to the transaction;


 






    -27-


     


    

 


(d)              the total aggregate consideration to be paid by Borrower and its Subsidiaries (including the value of Borrower’s
or its Subsidiaries’ stock issued by Borrower or its Subsidiaries and any other property used in satisfaction of the purchase
price) in connection therewith in all of the contemplated transactions during the term of this Agreement does not exceed One Million
Dollars ($1,000,000.00);


 


(e)               Borrower
provides Bank (i) written notice of the transaction at least thirty (30) days before the closing of the transaction, and (ii)
copies of the acquisition agreement and other material documents relative to the contemplated transaction and such other financial
information, financial analysis, documentation or other information relating to such transaction as Bank shall request at least
thirty (30) days before the closing of the transaction;


 


(f)                Borrower
is a surviving legal entity after completion of the contemplated transaction;


 


(g)               the
contemplated transaction is consensual and non-hostile;


 


(h)               no
Indebtedness will be incurred, assumed, or would exist with respect to Borrower or its Subsidiaries as a result of the contemplated
transaction, other than Permitted Indebtedness, and no Liens will be incurred, assumed, or would exist with respect to the assets
of Borrower or its Subsidiaries as a result of the contemplated transaction, other than Permitted Liens, and any Person whose
capital stock is acquired shall not have any Indebtedness following the contemplated transaction;


 


(i)                
the acquisition and the company being acquired is accretive in all respects;


 


(j)                
any Person whose capital stock is acquired or any Subsidiary that acquires assets in such contemplated transaction shall,
within thirty (30) days of the consummation of the transaction, become a co-borrower or guarantor (as determined by Bank in its
sole discretion) hereunder and shall grant a first priority Lien in all of its assets to Bank, all on documentation acceptable
to Bank in its sole discretion; and


 


(k)               
Borrower shall have delivered to Bank, at least five (5) Business Days prior to the date on which any such acquisition is
to be consummated (or such later date as is agreed by Bank in its sole discretion), a certificate of a Responsible Officer of Borrower,
in form and substance reasonably satisfactory to Bank, certifying that all of the requirements set forth in this definition have
been satisfied or will be satisfied on or prior to the consummation of such purchase or other acquisition.


 


“Permitted
Indebtedness” is:


 


(a)               
Borrower’s Indebtedness to Bank under this Agreement and the other Loan Documents;


 


(b)               
Indebtedness existing on the Effective Date which is shown on the Perfection Certificate;


 


(c)               
Subordinated Debt;


 


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


 


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


 


(f)                
Indebtedness secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder;


 


(g)               Indebtedness
consisting of performance bonds, bid bonds, surety bonds, appeal bonds and similar obligations, in each case provided in the ordinary
course of business not to exceed Two Hundred Thousand Dollars ($200,000.00) outstanding in the aggregate at any time;


 






    -28-


     


    

 


(h)               prior
to July 1, 2021, Indebtedness incurred in the ordinary course of business in respect of credit cards and letters of credit, provided
that the aggregate outstanding amount of such Indebtedness at any time does not exceed Five Hundred Thousand Dollars ($500,000.00),
provided further that such Indebtedness is only secured by the Liens permitted pursuant to clause (j) of the definition of Permitted
Liens;


 


(i)                Indebtedness
consisting of overdraft protections incurred in the ordinary course of business with respect to deposit accounts (but only to
the extent that Borrower is permitted to maintain such accounts pursuant to Section 6.6 of this Agreement);


 


(j)               
Indebtedness incurred in connection with insurance premium financing arrangements solely with respect to director’s
and officer’s insurance premiums in an aggregate amount at any time outstanding not to exceed the lesser of (i) the premiums
owed under such policies or (ii) Seven Hundred Fifty Thousand Dollars ($750,000.00), so long as such Indebtedness is secured solely
by the proceeds of the policy being financed;


 


(k)               other
unsecured Indebtedness (specifically excluding Indebtedness in connection with credit cards or letters of credit) not exceeding
One Hundred Thousand Dollars ($100,000.00) in the aggregate outstanding at any time; and


 


(l)                extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (k) above, provided
that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon
Borrower or its Subsidiary, as the case may be.


 


“Permitted
Investments” are:


 


(a)               Investments
(including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate (but
specifically excluding any future Investments in any Subsidiaries unless otherwise permitted hereunder);


 


(b)               Investments
consisting of Cash Equivalents;


 


(c)               Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course
of Borrower;


 


(d)               Investments
consisting of deposit accounts (but only to the extent that Borrower is permitted to maintain such accounts pursuant to Section
6.6 of this Agreement) in which Bank has a first priority perfected security interest;


 


(e)               Investments
accepted in connection with Transfers permitted by Section 7.1;


 


(f)                Investments
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 plans or agreements approved by the Board;


 


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


 


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


 


(i)                 Permitted
Acquisitions.


 






    -29-


     


    

 


“Permitted
Liens” are:


 


(a)                Liens
existing on the Effective Date which are shown on the Perfection Certificate or arising under this Agreement or the other Loan
Documents;


 


(b)               Liens
for taxes, fees, assessments or other government charges or levies, either (i) not due and payable or (ii) being contested in
good faith and for which Borrower maintains adequate reserves on Borrower’s Books, provided that no notice of any
such Lien has been filed or recorded under the Internal Revenue Code of 1986, as amended, and the Treasury Regulations adopted
thereunder;


 


(c)                purchase
money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no
more than Three Million Five Hundred Thousand Dollars ($3,500,000.00) in the aggregate amount outstanding, or (ii) existing on
Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment;


 


(d)               Liens
of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business
so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000.00) and which are not delinquent or remain payable without penalty or which are being contested in good faith
and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject
thereto;


 


(e)                Liens
to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations
incurred in the ordinary course of business (other than Liens imposed by ERISA);


 


(f)                
Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c),
but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness may not increase;


 


(g)               
leases or subleases of real property granted in the ordinary course of Borrower’s business (or, if referring to another
Person, in the ordinary course of such Person’s business), and leases, subleases, non-exclusive licenses or sublicenses of
personal property (other than Intellectual Property) granted in the ordinary course of Borrower’s business (or, if referring
to another Person, in the ordinary course of such Person’s business), if the leases, subleases, licenses and sublicenses
do not prohibit granting Bank a security interest therein;


 


(h)               
non-exclusive licenses of Intellectual Property granted to third parties in the ordinary course of business;


 


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


 


(j)                 prior
to July 1, 2021, Liens on cash collateral maintained in the account of Borrower ending 090 maintained with Pacific Western Bank
securing the credit card obligations permitted pursuant to subsection (h) of Permitted Indebtedness, so long as the aggregate
amount of cash maintained in such account and the Indebtedness that such cash collateral secures does not exceed Five Hundred
Thousand Dollars ($500,000.00) at any time.


 


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


 


“Prepayment
Fee” shall be an additional fee payable to Bank, for a prepayment of the Term Loan Advances, in an amount equal to:


 


(a)               for
a prepayment made on or prior to March 31, 2023, five percent (5.0%) of the outstanding principal balance of the Term Loan Advances
immediately prior to such prepayment; and


 






    -30-


     


    

 


(b)               for
a prepayment made after March 31, 2023, Zero Dollars ($0.00).


 


Notwithstanding the
foregoing, Bank agrees to waive the Prepayment Fee and no Prepayment Fee is due for a prepayment of the Term Loan Advances in connection
with the refinancing and re-documentation of the Term Loan Advances by Bank (the determination of whether to provide such refinancing
and re-documentation being in Bank’s sole and absolute discretion).


 


“Prime Rate”
is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor
publication thereto as the “prime rate” then in effect; provided that, in the event such rate of interest is less than
zero, such rate shall be deemed to be zero for purposes of this Agreement; and provided further that if such rate of interest,
as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined
by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at
its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest
charged by Bank in connection with extensions of credit to debtors); provided that, in the event such rate of interest is less
than zero, such rate shall be deemed to be zero for purposes of this Agreement.


 


“Registered
Organization” is any “registered organization” as defined in the Code with such additions to such term as
may hereafter be made.


 


“Requirement
of Law” is as to any Person, the organizational or governing documents of such Person, and any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or any of its property is subject.


 


“Responsible
Officer” is any of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.


 


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


 


“SEC”
shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority.


 


“Second Tranche
Availability Event” occurs if and when (if ever) Bank confirms in writing that Bank has received evidence, satisfactory
to Bank in Bank’s reasonable discretion, on or prior to June 30, 2022, that Borrower has received tentative approval from
the FDA with respect to the new drug application for Borrower’s LIQ861 product.


 


“Securities
Account” is any “securities account” as defined in the Code with such additions to such term as may hereafter
be made.


 


“Subordinated
Debt” is indebtedness incurred by Borrower subordinated to all of Borrower’s now or hereafter indebtedness to Bank
(pursuant to a subordination, intercreditor, or other similar agreement in form and substance satisfactory to Bank entered into
between Bank and the other creditor), on terms acceptable to Bank.


 


“Subsidiary”
is, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of
the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or
more intermediaries, or both, by such Person. Unless the context otherwise requires, each reference to a Subsidiary herein shall
be a reference to a Subsidiary of Borrower or Guarantor.


 






    -31-


     


    

 


“Technologies”
is defined in the preamble hereof.


 


“Term A Loan
Advance” is defined in Section 2.1.1(a) of this Agreement.


 


“Term B Loan
Advance” is defined in Section 2.1.1(a) of this Agreement.


 


“Term C Loan
Advance” is defined in Section 2.1.1(a) of this Agreement.


 


“Term Loan
Advance” or “Term Loan Advances” is defined in Section 2.1.1(a) of this Agreement.


 


“Term Loan
Advance Maturity Date” is September 1, 2024.


 


“Tested Quarter”
is defined in Section 6.8.


 


“Third Tranche
Availability Event” occurs if and when (if ever) Bank confirms in writing that Bank has received evidence, satisfactory
to Bank in Bank’s reasonable discretion, on or prior to December 31, 2022, that Borrower has received final and unconditional
approval from the FDA with respect to the new drug application for Borrower’s LIQ861 product.


 


“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.


 


“Transfer”
is defined in Section 7.1 of this Agreement.


 


“Warrant”
is that certain Warrant to Purchase Stock dated as of the Effective Date between Parent Borrower and Bank, as amended, modified,
supplemented and/or restated from time to time.


 


[Signature page
follows.]


 






    -32-


     


    

 


IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed as a sealed instrument under the laws of the Commonwealth of Massachusetts
as of the Effective Date.


 


	BORROWER:	 
	 	 
	LIQUIDIA CORPORATION	 
	 	 
	By	/s/ Michael Kaseta	 
	Name:	Michael Kaseta	 
	Title:	Chief Financial Officer	 
	 	 
	LIQUIDIA TECHNOLOGIES, INC.	 
	 	 
	By	/s/ Michael Kaseta	 
	Name:	Michael Kaseta	 
	Title:	Chief Financial Officer	 
	 	 
	LIQUIDIA PAH, LLC	 
	 	 
	By	/s/ Michael Kaseta	 
	Name:	Michael Kaseta	 
	Title:	Chief Financial Officer	 
	 	 
	BANK:	 
	 	 
	SILICON VALLEY BANK	 
	 	 
	By	/s/ Scott McCarty
	Name:	Scott McCarty
	Title:	Director



 


Signature Page to Loan and Security Agreement


 






     


     


    

 


EXHIBIT A – COLLATERAL DESCRIPTION


 


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


 


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


 


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


 


Notwithstanding the foregoing,
the Collateral does not include (a) any Intellectual Property; provided, however, the Collateral shall include all Accounts and
all proceeds of Intellectual Property; (b) any interest of Borrower as a lessee or sublessee under a real property lease or an
Equipment lease if Borrower is prohibited by the terms of such lease from granting a security interest in such lease or under which
such an assignment or Lien would cause a default to occur under such lease (but only to the extent that such prohibition is enforceable
under all applicable laws including, without limitation, the Code); provided, however, that upon termination of such prohibition,
such interest shall immediately become Collateral without any action by Borrower or Bank; or (c) rights held under a license that
are not assignable by their terms without the consent of the licensor thereof (but only to the extent such restriction on assignment
is enforceable under applicable law); provided, however, that upon termination of such prohibition, such interest shall immediately
become Collateral without any action by Borrower or Bank. If a judicial authority (including a U.S. Bankruptcy Court) would hold
that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and
such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective
Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in such
Accounts and such other property of Borrower that are proceeds of the Intellectual Property.


 


Pursuant to the terms
of a certain negative pledge arrangement with Bank, Borrower has agreed not to encumber any of its Intellectual Property without
Bank’s prior written consent.


 












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EXHIBIT B


 


COMPLIANCE STATEMENT


 


 


	TO:	  SILICON VALLEY BANK	Date:  	 
	FROM:	  LIQUIDIA CORPORATION, LIQUIDIA TECHNOLOGIES, INC.	 
	 	  and LIQUIDIA PAH, LLC	 




 


Under the terms and
conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), Borrower is in complete
compliance for the period ending _______________ with all required covenants except as noted below. Attached are the required documents
evidencing such compliance, setting forth calculations prepared in accordance with GAAP consistently applied from one period to
the next except as explained in an accompanying letter or footnotes. Capitalized terms used but not otherwise defined herein shall
have the meanings given them in the Agreement.


 


	Please indicate compliance status by circling Yes/No under “Complies” column.
	 
	Reporting Covenants	Required	Complies
	 	 	 
	Monthly Financial Statements	Monthly within 30 days	Yes   No
	Quarterly Compliance Statement	Quarterly within 30 days	Yes  No
	
        10-K and unqualified opinion from auditor

         
	FYE within 90 days	Yes   No   
	10-Q	Quarterly within 45 days	Yes   No
	8-K and other SEC filings	Within 5 days after filing with SEC	Yes   No
	Board Approved Projections	
        Within 60 days following FYE,

        and as amended/updated
	Yes   No


 


	Financial Covenant	Required	Actual	Complies
	 	 	 	 
	Maintain as indicated:	 	 	 
	Cumulative Cash Burn (tested quarterly)	$_______*	$______	Yes   No


 


* As set forth in Section 6.8 of
the Agreement. Not tested for any Tested Quarter (a) with respect to which Borrower maintained the Minimum Cash Balance at all
times during the period commencing on the first day of such Tested Quarter through and including the date that is 30 days after
the last day of such Tested Quarter; provided, however that the cumulative Cash Burn financial covenant shall be tested for such
Tested Quarter if Borrower does not maintain the Minimum Cash Balance during the period commencing on the date that is 31 days
after the last day of such Tested Quarter through and including the last day of the calendar quarter immediately following such
Tested Quarter, or (b) ending on or after the Funding Date of the Term C Loan Advance.


 


Other Matters


 


	Have there been any amendments of or other changes to the Operating Documents of Borrower or any of its Subsidiaries?  If yes, provide copies of any such amendments or changes with this Compliance Statement.	Yes	No


 


The following financial
covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Compliance
Statement.


 


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


 









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Schedule 1 to Compliance Statement


 


Financial Covenant of Borrower


 


In the event of a conflict between this
Schedule and the Agreement, the terms of the Agreement shall govern.


 


	Dated:	____________________



 


I.       Cumulative
Cash Burn (Section 6.8) (tested quarterly on a cumulative basis from January 1, 2021)


 


Required: __________ (see chart below)


 


	Period Ending	 	Cumulative Cash Burn*	 
	March 31, 2021	 	$	(10,500,000.00	)
	June 30, 2021	 	$	(17,000,000.00	)
	September 30, 2021	 	$	(23,000,000.00	)
	December 31, 2021	 	$	(28,500,000.00	)
	March 31, 2022	 	$	(33,500,000.00	)
	June 30, 2022, and for the period ending on the last day of each calendar quarter thereafter	 	$	(38,000,000.00	)



 


Actual:


 


	A.	Net Income	$___________
	B.	To the extent included in the determination of Net Income	
         

         

	 	1.	Depreciation	
        $__________

         

	 	2.	Amortization	
        $__________

         

	 	
        3.
	Non-cash stock compensation expenses

         
	$__________
	 	
        4.
	Non-cash
items approved by Bank in writing on a case-by-case basis in its sole discretion
	$__________
	 	 	 
	 	5.	The sum of lines 1 through 4	
        $__________

         

	C.	Capital expenditures	$__________
	 	 	 
	D.	Cash Burn (line A plus line B.5 minus line C)	$__________


 


Is line D equal to or greater than the
amount set forth above?


 


 


__________  No,
not in compliance_________ Yes, in compliance __________N/A **


 






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* The amounts set forth in the above table
shall be increased by an amount equal to seventy-five percent (75.0%) of the net cash proceeds received by Borrower from the sale
of Borrower’s equity securities on or after the Effective Date but on or prior to the last day of such Tested Quarter.


 


** Not tested for any Tested Quarter (a) with
respect to which Borrower maintained the Minimum Cash Balance at all times during the period commencing on the first day of such
Tested Quarter through and including the date that is 30 days after the last day of such Tested Quarter; provided, however that
the cumulative Cash Burn financial covenant shall be tested for such Tested Quarter if Borrower does not maintain the Minimum Cash
Balance during the period commencing on the date that is 31 days after the last day of such Tested Quarter through and including
the last day of the calendar quarter immediately following such Tested Quarter, or (b) ending on or after the Funding Date of the
Term C Loan Advance.


 






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EXHIBIT C – LOAN PAYMENT/ADVANCE
REQUEST FORM


 


Deadline
for same day processing is Noon Eastern Time


 


	Fax To:	Date: _____________________




 




LIQUIDIA CORPORATION, LIQUIDIA TECHNOLOGIES,
INC. and LIQUIDIA PAH, LLC


 


Loan
Payment:


From Account #________________________________     To
Account #__________________________________________________


(Deposit Account #)                                                                       (Loan
Account #)


Principal $____________________________________and/or
Interest $________________________________________________


	Authorized Signature:	 	 	Phone Number:	







	Print Name/Title: 	 	 




 





 




Loan
Advance:


Complete Outgoing Wire Request section
below if all or a portion of the funds from this loan advance are for an outgoing wire.


From Account #________________________________To
Account #__________________________________________________


(Loan Account #)                                                                                 (Deposit
Account #)


 


Amount of Term Loan Advance $___________________________


 


All Borrower’s representations and
warranties in the Loan and Security Agreement are true, correct and complete in all material respects on the date of the request
for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties
that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and
warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:


 


	Authorized Signature:	 	 	Phone Number:	 	 




 


	Print Name/Title: 	 	 




 





 




Outgoing
Wire Request:


Complete only if all or a portion of
funds from the loan advance above is to be wired.


Deadline for same day processing is noon,
Eastern Time


 


	Beneficiary Name: _____________________________	 	Amount of Wire: $	 	 
	Beneficiary Bank: ______________________________	 	Account Number:	 	 




	City and State:	 	 




	Beneficiary Bank Transit (ABA) #:	 	 	Beneficiary Bank Code (Swift, Sort, Chip, etc.):	 
	 	 	 	     (For International
    Wire Only)	 










	Intermediary Bank:	 	Transit (ABA) #:	 	 




	For Further Credit to:	 	 




	Special Instruction:	 	 




 


By signing below, I (we) acknowledge
and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set
forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed by me
(us).


 


Authorized Signature: ___________________________           2nd
Signature (if required): _______________________________________


Print Name/Title: ______________________________             Print
Name/Title: ______________________________________________


	Telephone #:	 		Telephone #	 







 






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