Document:

REGN-Ex_10.6 - 06/30/2015 - 10Q

Exhibit 10.6

FIRST AMENDMENT TO MT. PLEASANT LEASE
THIS FIRST AMENDMENT TO MT. PLEASANT LEASE (this “First Amendment”) is entered into as of this 30th day of June, 2015 (the “Execution Date”), by and between BMR-LANDMARK AT EASTVIEW LLC, a Delaware limited liability company (“Landlord”), and REGENERON PHARMACEUTICALS, INC., a New York corporation (“Tenant”). 
RECITALS
A.WHEREAS, Landlord and Tenant are parties to that certain Mt. Pleasant Lease dated as of April 3, 2013 (as the same may have been further amended, amended and restated, supplemented or modified from time to time, the “Existing Mt. Pleasant Lease”), whereby Tenant leases certain premises (the “Premises”) from Landlord in the Mt. Pleasant Project (as defined in the Existing Mt. Pleasant Lease) known as Building 8 and Building 9 in Tarrytown, New York (collectively, the “Buildings” and each, a “Building”); 
B.WHEREAS, concurrently herewith, Landlord and Tenant have entered into that certain Sixteenth Amendment to Lease (the “Sixteenth Amendment”) dated as of the Execution Date, which amends that certain Lease dated as of December 21, 2006 (as the same may have been further amended, amended and restated, supplemented or modified from time to time, the “Initial Lease”); and
C.WHEREAS, Landlord and Tenant desire to modify and amend the Existing Mt. Pleasant Lease only in the respects and on the conditions hereinafter stated.
AGREEMENT
NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, agree as follows:
1.Definitions.  For purposes of this First Amendment, capitalized terms shall have the meanings ascribed to them in the Existing Mt. Pleasant Lease unless otherwise defined herein.  The Existing Mt. Pleasant Lease, as amended by this First Amendment, is referred to collectively herein as the “Mt. Pleasant Lease.”
2.Term Commencement.
2.1.    Notwithstanding anything to the contrary in the Existing Mt. Pleasant Lease, the Building 8 Term Commencement Date and the Term Commencement Date are hereby established to be October 13, 2014.  Tenant accepted possession of Building 8 on the Building 8 Term Commencement Date for construction of the Tenant Improvements.  As of the Building 8 Term 

BioMed Realty form dated 2/26/14

Commencement Date, the TI Ready Work required to be constructed by Landlord with respect to Building 8 was completed.
2.2.    Notwithstanding anything to the contrary in the Existing Mt. Pleasant Lease, the Building 9 Term Commencement Date is hereby established to be October 13, 2014.  Tenant accepted possession of Building 9 on the Building 9 Term Commencement Date for construction of the Tenant Improvements.  As of the Building 9 Term Commencement Date, the TI Ready Work required to be constructed by Landlord with respect to Building 9 was completed.
2.3.    As of the Execution Date, there has not been any Landlord Delay for purposes of Section 5.1(d) of the Existing Mt. Pleasant Lease.  In addition, for purposes of determining the Building 8 Term Commencement Date, the Building 9 Term Commencement Date, the Building 8 Rent Commencement Date, and the Building 9 Rent Commencement Date, it shall be deemed that there has been no Landlord Delay and no Tenant Delay prior to the Execution Date.
2.4.    Sections 5.1(b) and 5.1(c) are hereby deleted in their entirety, and in each case, replaced with “Intentionally omitted.”
3.Term Expiration Date.  Section 2.9 of the Existing Mt. Pleasant Lease is hereby deleted in its entirety and replaced with the following:
“2.9    “Term Expiration Date:” July 31, 2029 (subject to extension pursuant to Section 4.1(d) and Section 5.1(d)); provided, however, that Tenant shall have options to extend this Lease as provided in Article 41.  For the sake of clarity, if the Term Expiration Date is extended pursuant to Section 4.1(d) or Section 5.1(d), the Term Expiration Date shall be extended for the entire Premises.”
4.Additional Cafeteria.  Notwithstanding anything to the contrary in the Existing Mt. Pleasant Lease, Landlord’s obligation in Article 61 of the Existing Mt. Pleasant Lease to operate an additional cafeteria shall not commence until the date that is three (3) weeks after the 777-SL1 Surrender Effective Date (as defined in the Sixteenth Amendment).
5.Powerhouse.  Landlord is currently in the process of upgrading the electric infrastructure of the Entire Project (the “Powerhouse Upgrade”).  A portion of the Powerhouse Upgrade includes additional electric infrastructure such that, upon completion, the electrical infrastructure that supports electrical power provided to Building 8 and Building 9 will be capable of supporting the amount of electrical power described in in the “Electrical Power Supply” line of Tenant’s load letter dated as of April 1, 2014 (and attached hereto as Exhibit A, the “Load Letter”) in connection with the Mt. Pleasant Lease (the “Mt. Pleasant Infrastructure”).  When the Powerhouse Upgrade (or any portion thereof) is placed in-service, Tenant acknowledges that it is responsible for Tenant’s proportionate share (allocated in accordance with the final sentence of this Section) of the costs of the Powerhouse Upgrade (or such portion placed in-service) (in accordance with, and subject to, the Operating Expense provisions of the Mt. Pleasant Lease) allocated (as reasonably determined by Landlord) to the Entire Project and the Mt. Pleasant Project regardless of whether the Powerhouse Upgrade (or any portion thereof) has been placed in-service prior to the Building 8 Operating 

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Expense Commencement Date or the Building 9 Operating Expense Commencement Date.  In furtherance of the foregoing, in the event the in-service date of the Powerhouse Upgrade (or any portion thereof) is prior to the Building 8 Operating Expense Commencement Date or the Building 9 Operating Expense Commencement Date, then the Building 8 Operating Expense Commencement Date and/or the Building 9 Operating Expense Commencement Date, as applicable and only with respect to Operating Expenses in connection with the Powerhouse Upgrade, shall be deemed to be the in-service date of the Powerhouse Upgrade (or the applicable portion thereof).  Tenant acknowledges that for purposes of determining the costs described above, the Powerhouse Upgrade will benefit the Buildings and is not subject to any of the Operating Expense carve outs set forth in Section 8.1(d)(a) of the Existing Mt. Pleasant Lease.  Further, Tenant acknowledges that the costs of the Powerhouse Upgrade will be allocated across the Entire Project (including the Mt. Pleasant Project) in accordance with each building’s kVA capacity.
6.Delay from 767 Tenant Work.  For purposes of clarity, and notwithstanding anything to the contrary in the Existing Mt. Pleasant Lease, any delay in Landlord’s prosecution of the Landlord Work, including the Final Landlord Work, caused by the 767 Tenant Work (as defined in the Sixteenth Amendment) or any other work performed by or on behalf of Tenant in connection with the 767 Premises (as defined in the Sixteenth Amendment) shall constitute a Tenant Delay to the extent that such circumstance continues for a period of two (2) business days after Landlord delivers notice to Tenant of such Tenant Delay and to the extent such circumstance actually delays Substantial Completion of the Landlord Work or Substantial Completion of the Final Landlord Work, as applicable, beyond the date when such Substantial Completion would have otherwise occurred.  If Landlord and Tenant cannot agree on whether or to what extent Tenant Delay applies, then the written determination of the Neutral Architect shall govern, whose determination shall be final and binding upon the parties.
7.Excluded Services.  The second (2nd) paragraph of Exhibit P in the Mt. Pleasant Lease is deleted in its entirety and replaced with the following: “Tenant may not give an Excluded Services Notice for internal maintenance and repair services, except to the extent that such internal maintenance and repair services only affect areas within Building 8 and Building 9 and do not affect (a) any structural portions of the Buildings, including the exterior walls, roof or foundation of the Buildings or (b) the exterior of the Buildings.”
8.Broker. Tenant represents and warrants that it has not dealt with any broker or agent in the negotiation for or the obtaining of this First Amendment, other than Savills Studley, Inc. (“Tenant’s Broker”), and agrees to reimburse, indemnify, save, defend and hold harmless Landlord for, from and against any and all cost or liability for compensation claimed by any such broker or agent, including Tenant’s Broker, employed or engaged by it or claiming to have been employed or engaged by it.  Landlord represents and warrants that it has not dealt with any broker or agent in the negotiation for or the obtaining of this First Amendment, other than Matthew McDevitt and Transwestern (collectively, “Landlord’s Broker” and together with Tenant’s Broker, the “Brokers”), and agrees to reimburse, indemnify, save, defend and hold harmless Tenant for, from and against any and all cost or liability for compensation claimed by any such broker or agent employed or engaged by it or claiming to have been employed or engaged by it.

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9.No Default.  Tenant represents, warrants and covenants that, to the best of Tenant’s knowledge, Landlord and Tenant are not in default of any of their respective obligations under the Existing Mt. Pleasant Lease and no event has occurred that, with the passage of time or the giving of notice (or both) would constitute a default by either Landlord or Tenant under the Existing Mt. Pleasant Lease.
10.Notices.  Tenant confirms that, notwithstanding anything in the Lease to the contrary, notices delivered to Tenant pursuant to the Mt. Pleasant Lease should be sent to:
Regeneron Pharmaceuticals, Inc.
777 Old Saw Mill River Road
Tarrytown, New York 10591
Attn: General Counsel;

with a copy to:
Regeneron Pharmaceuticals, Inc.
777 Old Saw Mill River Road
Tarrytown, New York 10591
Attn: Vice President of Facilities.

11.Effect of Amendment.  Except as modified by this First Amendment, the Existing Mt. Pleasant Lease and all the covenants, agreements, terms, provisions and conditions thereof shall remain in full force and effect and are hereby ratified and affirmed.  In the event of any conflict between the terms contained in this First Amendment and the Existing Mt. Pleasant Lease, the terms herein contained shall supersede and control the obligations and liabilities of the parties.  From and after the date hereof, the term “Lease,” as used in the Existing Mt. Pleasant Lease, shall mean the Existing Mt. Pleasant Lease, as amended by this First Amendment.
12.Successors and Assigns.  Each of the covenants, conditions and agreements contained in this First Amendment shall inure to the benefit of and shall apply to and be binding upon the parties hereto and their respective permitted successors and assigns.  Nothing in this section shall in any way alter the provisions of the Mt. Pleasant Lease restricting assignment or subletting.
13.Miscellaneous.  This First Amendment becomes effective only upon execution and delivery hereof by Landlord and Tenant. The captions of the paragraphs and subparagraphs in this First Amendment are inserted and included solely for convenience and shall not be considered or given any effect in construing the provisions hereof.  All exhibits hereto are incorporated herein by reference.  Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for a lease, and shall not be effective as a lease, lease amendment or otherwise until execution by and delivery to both Landlord and Tenant.
14.Authority.  Tenant represents, warrants and covenants to Landlord that the individual signing this First Amendment on behalf of Tenant has the power, authority and legal capacity to sign this First Amendment on behalf of and to bind Tenant.  Landlord represents, warrants and covenants to 

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Tenant that the individual signing this First Amendment on behalf of Landlord has the power, authority and legal capacity to sign this First Amendment on behalf of and to bind Landlord.
15.Counterparts; Facsimile and PDF Signatures.  This First Amendment may be executed in one or more counterparts, each of which, when taken together, shall constitute one and the same document.  A facsimile or portable document format (PDF) signature on this First Amendment shall be equivalent to, and have the same force and effect as, an original signature.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of the date and year first above written.
LANDLORD:
BMR-LANDMARK AT EASTVIEW LLC,
a Delaware limited liability company

	
					
	By:
	/s/ Kevin M. Simonsen
	 
	 
	 

	Name:
	Kevin M. Simonsen
	 
	 
	 

	Title:
	Sr. VP, Real Estate Legal
	 
	 
	 

TENANT:
REGENERON PHARMACEUTICALS, INC.,
a New York corporation

	
					
	By:
	/s/ Robert E. Landry
	 
	 
	 

	Name:
	Robert E. Landry
	 
	 
	 

	Title:
	SVP - Finance & CFO
	 
	 
	 

EXHIBIT A
TENANT’S LOAD LETTER
[See attached] 

April 1, 2014

Ms. Tiffany Phipps
BioMed Realty Trust
777 Old Saw Mill River Road
Tarrytown, NY 10591

RE: Bldg.8&9 Loads and Pipe Sizes

Dear Tiffany,
Our MEP firm has reviewed Regeneron’s operational parameters and determined the following: 
Following is a summary of the MEP site utility loads for Buildings 8 & 9.
Note:  These loads are based upon the programming efforts to date and are subject to more refinement as the project moves through more detailed engineering calculations and project evolvement.

Building 8
	
			
	ElectricalPower SUQQ!y
	1500 KVA**
	Demand Load

	Chilled Water_{no heat recovery)
	675 Tons
	 

	Chilled Waterlwith heat recovery)
	642Tons
	 

	Wastewater
	7500 GPO
	 

	Water
	7500 GPO
	 

	Natural Gas
	7,200,000 Btuh
	 

Building 9
	
			
	ElectricalPower Su_Qply**
	4300 KVA**
	Demand Load with (3) air-cooled chillers

	Chilled Water_{no heat recovery)
	2250 Tons
	 

	Chilled Waterlwith heat recovery)
	1900 Tons
	 

	Wastewater
	28,000 GPO
	 

	Water
	40,000 GPD
	(includes worst case humidification)

	Natural Gas
	38,000,000 Btuh
	 

Utility sizes to both Building 8 and Building 9 should be adjusted to support the above loads.  Chilled water supply and return pipe sizes servicing building 9 should be increased to 16 inch. This pipe sizes is based upon a corresponding differential temperature between the chilled water supply & return of 12F.

The electrical demand load is based on running three of the four air cooled chillers and associated pumps on normal power. Based on this we anticipate the total Electrical Demand and Metered Demand is 5,250kW or
5,800kVA. For breakdown of electrical loads refer to the attached Table 1.

** Revised 3/25/14

Regards,

Joanne DeyoWarrantStockOxford

Exhibit  4.1
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
WARRANT TO PURCHASE STOCK
	
		
	Company:
	OCERA THERAPEUTICS, INC., a Delaware corporation

	Number of Shares:
	48,840

	Type/Series of Stock:
	Common Stock (“Common Stock”)

	Warrant Price:
	$4.095 per share

	Issue Date:
	July 30, 2015

	Expiration Date:
	July 30, 2025  See also Section 5.1(b).

	Credit Facility:
	This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain Loan and Security Agreement of even date herewith among Oxford Finance LLC, as Lender and Collateral Agent, the Lenders from time to time party thereto, including Silicon Valley Bank and the Company (as modified, amended and/or restated from time to time, the “Loan Agreement”).

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE LLC (“Oxford” and, together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares (the “Shares”) of Common Stock as stated above of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.  
SECTION 1.EXERCISE.
1.1    Method of Exercise.  Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.
1.2    Cashless Exercise.  On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised.  Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula: 
X = Y(A-B)/A
where:
		
	X =
	the number of Shares to be issued to the Holder;

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	Y =
	the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

		
	A =
	the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

		
	B =
	the Warrant Price.

1.3    Fair Market Value.  If the Company’s Common Stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”), the fair market value of a Share shall be the closing price or last sale price of a share of Common Stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company.  If the Company’s Common Stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.
1.4    Delivery of Certificate and New Warrant.  Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver, or cause to be delivered, to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.
1.5    Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.
1.6    Treatment of Warrant Upon Acquisition of Company.
(a)    Acquisition.  For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license (other than any Permitted License (as defined in the Loan Agreement)), or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.
(b)    Treatment of Warrant at Acquisition.  In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), either  (i) Holder shall exercise this Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) if Holder elects not to exercise the Warrant, this Warrant will expire immediately prior to the consummation of such Acquisition.
(c)    The Company shall provide Holder with written notice of its request relating to the Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Cash/Public Acquisition giving rise to such notice), which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of the proposed Cash/Public Acquisition.  In the event the Company does not provide such notice, then if, immediately prior to the Cash/Public Acquisition, the 

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fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof.
(d)    Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.
(e)    As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in any Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.
SECTION 2.    ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.
2.1    Stock Dividends, Splits, Etc.  If the Company declares or pays a dividend or distribution on the outstanding shares of the Common Stock payable in securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred.  If the Company subdivides the outstanding shares of the Common Stock by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased.  If the outstanding shares of the Common Stock are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.
2.2    Reclassification, Exchange, Combinations or Substitution.  Upon any event whereby all of the outstanding shares of the Common Stock are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events. 
2.3    Intentionally Omitted.
2.4    Intentionally Omitted.  
2.5    No Fractional Share.  No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder 

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in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.
2.6    Notice/Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, class and/or number of Shares, the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, class and/or number of Shares and facts upon which such adjustment is based.  The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, class and number of Shares in effect upon the date of such adjustment.
SECTION 3.    REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1    Representations and Warranties.  The Company represents and warrants to, and agrees with, the Holder as follows:
(a)    The initial Warrant Price referenced on the first page of this Warrant is not greater than the average of the closing price or last sale price of a share of Common Stock reported on the Trading Market for the 10 consecutive trading days ending immediately prior to the funding date of the Term A Loan (as defined in the Loan Agreement).
(b)    All Shares which may be issued upon the exercise of this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.  The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of securities as will be sufficient to permit the exercise in full of this Warrant. 
3.2    Notice of Certain Events.  If the Company proposes at any time to:
(a)    declare any dividend or distribution upon the outstanding shares of the Company’s stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; 
(b)    offer for subscription or sale pro rata to the holders of the outstanding shares any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights); 
(c)    effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Common Stock; or
(d)    effect an Acquisition or to liquidate, dissolve or wind up; 
then, in connection with each such event, the Company shall give Holder: 
(1)    at least seven (7) Business Days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Common Stock will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; and
(2)    in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event).  
Reference is made to Section 1.6(c) whereby this Warrant will be deemed to be exercised pursuant to Section 1.2 hereof if the Company does not give written notice to Holder of a Cash/Public Acquisition as required by the terms hereof.  

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Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements. 
SECTION 4.    REPRESENTATIONS, WARRANTIES OF THE HOLDER.
The Holder represents and warrants to the Company as follows:
4.1    Purchase for Own Account.  This Warrant and the securities to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act.  Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.
4.2    Disclosure of Information.  Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.
4.3    Investment Experience.  Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.
4.4    Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.
4.5    The Act.  Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein.  Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.  Holder is aware of the provisions of Rule 144 promulgated under the Act.
4.6    No Voting Rights.  Holder, as a Holder of this Warrant, will not have any voting rights or other rights as a stockholder of the Company (except as set forth herein) until the exercise of this Warrant.
SECTION 5.    MISCELLANEOUS.
5.1    Term; Automatic Cashless Exercise Upon Expiration.
(a)    Term.  Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Eastern time, on the Expiration Date and shall be void thereafter.   
(b)    Automatic Cashless Exercise upon Expiration.  In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically 

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be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder. 
5.2    Legends.  Each certificate evidencing Shares (and each certificate evidencing the securities issued upon conversion of any Shares, if any) shall be imprinted with a legend in substantially the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO OXFORD FINANCE LLC DATED JULY 30, 2015, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
5.3    Compliance with Securities Laws on Transfer.  This Warrant and the Shares issued upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company).  The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.  Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.
5.4    Transfer Procedure.  After receipt by Oxford of the executed Warrant, Oxford may transfer all or part of this Warrant to one or more of Oxford’s affiliates (each, an “Oxford Affiliate”), by execution of an Assignment substantially in the form of Appendix 2.  Subject to the provisions of Article 5.3 and upon providing the Company with written notice, Oxford, any such Oxford Affiliate and any subsequent Holder, may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant (or the securities issuable directly or indirectly, upon conversion of the Shares, if any) to any transferee, provided, however, in connection with any such transfer, the Oxford Affiliate(s) or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable).  
5.5    Notices.  All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5.  All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:
Oxford Finance LLC
133 N. Fairfax Street
Alexandria, VA 22314
Attn: Legal Department
Telephone: (703) 519-4900

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Facsimile: (703) 519-5225 
Email: LegalDepartment@oxfordfinance.com
Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:
Ocera Therapeutics, Inc.
525 University Avenue
Palo Alto, CA 94301
Attn: Michael Byrnes
Telephone: (650) 475-0158
Facsimile: (650) 521-5677
Email: mbyrnes@ocera.com
With a copy (which shall not constitute notice) to:
Goodwin Procter LLP
The New York Times Building
620 Eight Avenue
New York, NY 10018
Attn: Daniel Lang
Telephone: (212) 459-7095
Facsimile: (212) 355-3333
Email: dlang@goodwinprocter.com
5.6    Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.
5.7    Attorneys’ Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.
5.8    Counterparts; Facsimile/Electronic Signatures.  This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.  Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.
5.9    Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its principles regarding conflicts of law.
5.10    Headings.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.
5.11    Business Days.  “Business Day” is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

[Remainder of page left blank intentionally]
[Signature page follows]

7    

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.
	
			
	“COMPANY”
	 
	 

	 
	 
	 

	OCERA THERAPEUTICS, INC.
	 
	 

	 
	 
	 

	 
	 
	 

	By: /s/ Linda S. Grais, M.D.
	 
	 

	Name: Linda S. Grais, M.D.
	 
	 

	Title: President, Chief Executive Officer and Secretary
	 
	 

	 
	 
	 

	“HOLDER”
	 
	 

	 
	 
	 

	OXFORD FINANCE LLC
	 
	 

	By: /s/ Mark Davis
	 
	 

	Name: Mark Davis
	 
	 

	Title: Vice President- Finance, Secretary and Treasurer
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

[Signature Page to Warrant to Purchase Stock]

APPENDIX 1
NOTICE OF EXERCISE
1.The undersigned Holder hereby exercises its right to purchase ___________ shares of the Common Stock of OCERA THERAPEUTICS, INC. (the “Company”) in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows: 
[    ]    Check in the amount of $________ payable to order of the Company enclosed herewith
[    ]    Wire transfer of immediately available funds to the Company’s account 
[    ]    Cashless Exercise pursuant to Section 1.2 of the Warrant
[    ]    Other [Describe] __________________________________________
2.    Please issue a certificate or certificates representing the Shares in the name specified below:
                        
 
    Holder’s Name
                        
                        
 
    (Address)
3.    By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.
	
			
	 
	 
	HOLDER:

	 
	 
	 

	 
	 
	   

	 
	 
	 

	 
	 
	By:   

	 
	 
	 

	 
	 
	Name:   

	 
	 
	 

	 
	 
	Title:   

	 
	 
	 

	 
	 
	Date:   

Appendix 1

APPENDIX 2
ASSIGNMENT
For value received, Oxford Finance LLC hereby sells, assigns and transfers unto
		
	Name:
	[OXFORD TRANSFEREE]

Address:                    
		
	Tax ID:
	                ]

that certain Warrant to Purchase Stock issued by OCERA THERAPEUTICS, INC. (the “Company”), on July 30, 2015 (the “Warrant”) together with all rights, title and interest therein.
	
			
	 
	 
	OXFORD FINANCE LLC

	 
	 
	 

	 
	 
	 

	 
	 
	By:   

	 
	 
	 

	 
	 
	Name:   

	 
	 
	 

	 
	 
	Title:   

	 
	 
	 

	Date:   
	 
	 

By its execution below, and for the benefit of the Company, [OXFORD TRANSFEREE] makes each of the representations and warranties set forth in Article 4 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof.
	
			
	 
	 
	[OXFORD TRANSFEREE]

	 
	 
	 

	 
	 
	By:   

	 
	 
	 

	 
	 
	Name:   

	 
	 
	 

	 
	 
	Title:   ]

Appendix 2

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