Document:

EXHIBIT 10.6

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

PATENT LICENSE AGREEMENT

 

BETWEEN

 

GENOCEA BIOSCIENCES, INC.

 

AND

 

UNIVERSITY OF WASHINGTON

 

FOR

 

“THE USE OF HERPES SIMPLEX VIRUS TYPE 2 ANTIGENS AS IMMUNOPROPHYLAXIS OR IMMUNOTHERAPY TO PREVENT OR TREAT HSV INFECTIONS IN HUMANS”

 

UWTT REF# 2158-2670DL, 2473-3146DL and 2709-3649DL

 

UWTT AGREEMENT# 22557A

 

Dated January 27, 2010 and as amended on July 19, 2012 (Amendment No. 1)

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

TABLE OF CONTENTS

 

	
1
    	
Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
2
    	
Term
    	
5
    
	
 
    	
 
    	
 
    
	
3
    	
Grant of License
    	
5
    
	
 
    	
 
    	
 
    
	
4
    	
Applications and Patents
    	
8
    
	
 
    	
 
    	
 
    
	
5
    	
Commercialization
    	
9
    
	
 
    	
 
    	
 
    
	
6
    	
Payments, Reimbursements, Reports, and Records
    	
10
    
	
 
    	
 
    	
 
    
	
7
    	
Infringement
    	
12
    
	
 
    	
 
    	
 
    
	
8
    	
Patent Validity
    	
13
    
	
 
    	
 
    	
 
    
	
9
    	
Termination
    	
14
    
	
 
    	
 
    	
 
    
	
10
    	
Release, Indemnification, and Insurance
    	
17
    
	
 
    	
 
    	
 
    
	
11
    	
Representations and Warranties
    	
18
    
	
 
    	
 
    	
 
    
	
12
    	
Damages
    	
19
    
	
 
    	
 
    	
 
    
	
13
    	
Amendment and Waiver
    	
20
    
	
 
    	
 
    	
 
    
	
14
    	
Assignment
    	
20
    
	
 
    	
 
    	
 
    
	
15
    	
Confidentiality
    	
20
    
	
 
    	
 
    	
 
    
	
16
    	
Construction
    	
21
    
	
 
    	
 
    	
 
    
	
17
    	
Enforceability
    	
22
    
	
 
    	
 
    	
 
    
	
18
    	
Third-Party Beneficiaries
    	
22
    
	
 
    	
 
    	
 
    
	
19
    	
Language
    	
22
    
	
 
    	
 
    	
 
    
	
20
    	
Notices
    	
22
    
	
 
    	
 
    	
 
    
	
21
    	
Patent Marking
    	
22
    
	
 
    	
 
    	
 
    
	
22
    	
Publicity
    	
23
    
	
 
    	
 
    	
 
    
	
23
    	
Relationship of Parties
    	
23
    
	
 
    	
 
    	
 
    
	
24
    	
Security Interest
    	
23
    
	
 
    	
 
    	
 
    
	
25
    	
Survival
    	
23
    
	
 
    	
 
    	
 
    
	
26
    	
Collection Costs and Attorneys’ Fees
    	
24
    
	
 
    	
 
    	
 
    
	
27
    	
Applicable Law
    	
24
    
	
 
    	
 
    	
 
    
	
28
    	
Forum Selection
    	
24
    
	
 
    	
 
    	
 
    
	
29
    	
Dispute Resolution
    	
24
    
	
 
    	
 
    	
 
    
	
30
    	
Entire Agreement
    	
26
    

 

i

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

	
Exhibit A
    	
27
    
	
 
    	
 
    
	
Exhibit B
    	
32
    
	
 
    	
 
    
	
Exhibit C
    	
33
    

 

ii

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

PATENT LICENSE AGREEMENT

 

This patent license agreement (the “Agreement”) is dated and effective as of January 27, 2010 (the “Effective Date”) and is made by and between the University of Washington, a public institution of higher education and an agency of the state of Washington, acting through UW TechTransfer, Technology Licensing (“University”), and Genocea Biosciences, Inc., a Delaware corporation with its principal place of business at 161 First Street, Suite 2C, Cambridge, MA 02142 (“Company”), (individually each a “Party” or collectively, the “Parties”).

 

Background

 

Whereas, University has the rights to certain technology made in the course of University research relating to the use of Herpes Simplex Virus Type 2 (“HSV2”) antigens as immunoprophylaxis or immunotherapy to prevent or treat HSV infections in humans;

 

Whereas, the Fred Hutchinson Cancer Research Center (“FHCRC”) is a joint owner of certain Licensed Patents, but has granted University the sole right to commercialize their rights in such Licensed Patents under an inter-institutional agreement with University dated April 28, 2009 (“Inter-Institutional Agreement”);

 

Whereas, University has entered into an option agreement dated as of May 11, 2009 with a Third Party whereby such Third Party has an option to obtain a license granting: (i) co-exclusive rights to Subset A and (ii) tri-exclusive rights to Subset B of Licensed Patents (such Third Party, “Third Party A” and such option agreement, “Option Agreement A”);

 

Whereas, University has entered into in an option agreement dated as of May 28, 2008 with a Third Party whereby such Third Party has an option to obtain non-exclusive rights to Subset B of Licensed Patents (such Third Party, “Third Party B”, and such option agreement, “Option Agreement B”);

 

Whereas, Corixa Corporation, prior to its acquisition by GlaxoSmithKline Biologicals North America, was originally a joint owner of certain Licensed Patents as set forth in Exhibit A but has now transferred and assigned its share of the title, rights and interests in the Licensed Patents to University on the condition that University undertakes for the entire life of the patents assigned not to use or assert or allow any licensee to use or assert said patents against Corixa Corporation or any company member of the Glaxo Group of companies;

 

Whereas, Company and University entered into a confidentiality agreement with an effective date of August 10, 2007 (“CDA”) and an option agreement with an effective date of June 30, 2008 (“Option Agreement”);

 

Whereas, Company now desires a license to the Licensed Patents granting (i) co-exclusive rights to Subset A of Licensed Patents and (ii) tri-exclusive rights to Subset B of Licensed Patents in the Field of Use; and

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Whereas, University is willing to grant to Company such a license on the terms set forth below.

 

NOW, THEREFORE, the Parties agree that:

 

1                                         Definitions.

 

For purposes of interpreting this Agreement, the following terms have the following meanings ascribed to them:

 

1.1                               “Affiliate” means an entity that is controlled by Company.  For the purposes of this Section 1.1, “controlled by” means either: a) the right to exercise 50% or more of the voting rights of such entity, or b) the power to direct or cause the direction of the management or policies of such entity.

 

1.2                               “Background Patents” means those patents listed in Section A1.3 of attached Exhibit A that are owned or controlled by University that are necessary to practice the inventions claimed in the Licensed Patents pursuant to Sections 1.8(a) - (c) and for each such patent, extensions and term restorations (including supplemental protection certificates), registrations, confirmations, renewals, re-examinations, reissues, and inventors certificates thereof, and foreign counterparts of such patent.

 

1.3                               “Co-Exclusive” means, with respect to a license, that such license may only be granted to Company and one Third Party.

 

1.4                               “Confidential Information” means, subject to the terms of this Agreement, any proprietary information or materials (biological, chemical, or otherwise) of the Parties not generally known to the public, including any information comprised by those materials, and including without limitation the inventions covered by the Licensed Patents and the business plans or reports of the Company and/or its Affiliates.  Confidential information does not include any information that:

 

1.4.1                     is or becomes part of the public domain through no fault of receiving Party;

 

1.4.2                     is known to receiving Party prior to the disclosure by the disclosing Party, as evidenced by documentation;

 

1.4.3                     is publicly released as authorized under this Agreement by University, its employees or agents;

 

1.4.4                     is subsequently obtained by a Party from a Third Party who is authorized to have such information; or

 

2

 

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1.4.5                     is independently developed by a Party without reliance on any portion of the Confidential Information received from the disclosing Party and without any breach of this Agreement as evidenced by documentation.

 

1.5                               “Event of Force Majeure” means an unforeseeable act that prevents a Party from performing one or more of its duties under this Agreement and that is beyond of the reasonable control of the Party.  An Event of Force Majeure includes acts of war or of nature, insurrection and riot, and labor strikes.  An Event of Force Majeure does not mean a Party’s inability to obtain a Third Party’s consent to any act or omission.

 

1.6                               “Fair Market Value” means the average closing price that the stock in question is publicly trading at for 20 days prior to the announcement of its purchase by the Sublicensee(s), or, if the stock is not publicly traded, the value of such stock as determined in good faith by the board of directors of Company.

 

1.7                               “Field of Use” means therapy that is administered to prevent or treat HSV2 infection.

 

1.8                               “Licensed Patents” means: (a) the patent(s) and patent application(s) described in Section Al of attached Exhibit A and any corresponding patent(s) issued during the term of this Agreement by the United States Patent and Trademark Office or any like foreign body with respect to such patent application(s); (b) for each patent application described in Subsection (a), any continuations, continuation-in-part (to the extent such claims are supported by a patent or patent application) set forth in Section Al of Exhibit A to benefit from the priority date of such patent or patent application), continued prosecutions, divisionals, substitutions thereof, and foreign counterparts of each of the foregoing; (c) for each patent described in Subsection (a), extensions and term restorations (including supplemental protection certificates), registrations, confirmations, renewals, re-examinations, reissues, and inventors certificates thereof, and foreign counterparts of each of the foregoing; and (d) Background Patents.

 

1.9                               “Licensed Product” means any product that is covered by one or more Valid Claims in a Licensed Patent.

 

1.10                        “Net Sales” means the gross amount invoiced or otherwise received by Company, Affiliates and its Sublicensees for sales, leases, and other dispositions of Licensed Products less (i) all trade, quantity, and cash discounts actually allowed, (ii) all credits and allowances actually granted due to rejections, returns, billing errors, and retroactive price reductions, (iii) duties, and (iv) excise, sale and use taxes, and equivalent taxes to the extent not reimbursable; provided that in no event shall the transfer of Licensed Products by Company or Affiliate to an Affiliate or Sublicensee be included in the calculation of Net Sales unless such transfer is in exchange for cash consideration and Company receives no further compensation for the sale of such Licensed Products by such Affiliate or Sublicensee.  Subject to this Section 1.10, on sales of Licensed Products made in other than an arms-length transaction, the value of the Net Sales attributed to such transaction shall be based upon the fair market value (as reasonably determined by

 

3

 

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Company) of the consideration which would have been received in an arms-length transaction, based on sales of like quantity and quality products on or about the time of this transaction.

 

1.11                        “Royalty Term” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period of time commencing on the Effective Date and extending until the earlier of (a) the termination of this Agreement, pursuant to and to the extent set forth in Article 9 hereof, and (b) the date on which the manufacture, import, use or sale of such Licensed Product is no longer covered by a Valid Claim of a Licensed Patent in such country.

 

1.12                        “Sublicense” means the grant by Company to a Third Party of any license, option, first right to negotiate, or other right granted under the Licensed Patents, in whole or in part.  For the avoidance of doubt, any arm’s length Third Party distributor (“Distributor”) to which Company or any Sublicensees sells a Licensed Product for resale of Licensed Product by the Distributor, and where Distributor has no other rights other than to resell Licensed Product, and for which resale Company and Sublicensees receive no further consideration (including but not limited to royalties and/or commissions) beyond the price for the initial sale to the Distributor, shall not be a considered a Sublicense.

 

1.13                        “Sublicensee” means a Third Party holding a Sublicense under the Licensed Patents.

 

1.14                        “Sublicensing Consideration” means all consideration, including but not limited to upfront fees, milestone payments, maintenance fees, non-cash consideration, and premiums over Fair Market Value of stock, but excluding the sharing of profits and royalties based on sales or orders of Licensed Products, payable by each Sublicensee for the grant of a Sublicense.  For avoidance of doubt, consideration paid to Company by Sublicensees for the performance of bona fide product development work, research work, marketing or promotional work, clinical studies and regulatory approvals performed by Company, pursuant to and as supported by an express agreement including a performance plan and commensurate budget is not deemed to be Sublicensing Consideration.  For the avoidance of doubt, consideration paid to Company by Sublicensee under an agreement which both includes a Sublicense and sets forth the terms under which the activities described in the preceding sentence will be provided by the Company shall not be deemed Sublicensing Consideration only to the extent such consideration is explicitly paid by Sublicensee for the performance of such activities and not for the grant of the Sublicense.

 

1.15                        “Subset A of Licensed Patents” means the patents and patent applications listed in Section Al.1 of Exhibit A.

 

1.16                        “Subset B of Licensed Patents” means the patents and patent applications listed in Section A1.2 of Exhibit A.

 

1.17                        “Territory” means worldwide.

 

1.18                        “Third Party” means an individual or entity other than University, Company and Affiliates.

 

4

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.19                        “Tri-Exclusive” means, with respect to a license, that such license may only be granted to Company and two Third Parties.

 

1.20                        “Valid Claim” means (a) a claim in an issued and unexpired patent included in the Licensed Patents that: (i) has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, and not subject to appeal, (ii) has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise and (iii) has not been lost through an interference, reexamination or reissue proceeding or (b) a pending claim of a pending patent application included in the Licensed Patents which has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken.

 

2                                         Term.

 

The term of this Agreement will commence on the Effective Date and, unless terminated earlier as provided in Article 9, will expire on the date on which no Valid Claim in a Licensed Patent is pending or subsisting in any country in the Territory.

 

3                                         Grant of License.

 

3.1                               Company’s Rights.

 

3.1.1                     Subject to the terms and conditions of this Agreement, University hereby grants to Company, and Company hereby accepts, a Co-Exclusive license under the Subset A of the Licensed Patents and a Tri-Exclusive license under Subset B of the Licensed Patents to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  Company may extend the license granted in the preceding sentence to any Affiliate provided that the Affiliate consents in writing to be bound by this Agreement to the same extent as Company.  Company agrees to deliver such contract to University within 30 days following execution thereof.  No provision of this Agreement grants Company or its Affiliates, by implication, estoppel or otherwise, any rights other than the rights expressly granted in this Agreement to a Licensed Patent, or to any other University-owned technology, patent applications, or patents.

 

3.1.2                     Notwithstanding Subsection 3.1.3, in the event that Third Party B does not exercise the option set forth in Option Agreement B to obtain non-exclusive rights to Subset B of Licensed Patents, the license under Subset B of Licensed Patents granted to Company in Subsection 3.1.1 will become a Co-Exclusive license unless Company, within [* * *] of being notified in writing of such license conversion by University, elects to maintain its Tri-Exclusive license to such rights.  If Company does not elect to maintain a Tri-Exclusive license to Subset B of Licensed Patents, notwithstanding anything to the contrary in Section A4 of Exhibit A, Company and University will amend this Agreement and Company will become responsible for [* * *].

 

5

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3.1.3                     If any rights under the Licensed Patents become available (the “Available Rights”) including without limitation as a result of Third Party A or Third Party B not obtaining a license under Option Agreement A or Option Agreement B, respectively, UW TechTransfer will endeavor to notify Company and Company may also inquire as to whether any Available Rights exist.  Upon Company’s inquiry as to whether any Available Rights exist, UW TechTransfer shall respond with information regarding Available Rights within 20 days following such inquiry.  Following the Company’s receipt of notice of Available Rights, Company can request that University enter into negotiations with Company regarding the grant of the Available Rights and University shall use good faith commercially reasonable efforts to negotiate with Company for a license to the Available Rights.

 

3.1.4                     Company shall have the right, exercisable from time to time during the term of this Agreement, to Sublicense its rights under this Agreement but only on an exclusive basis.  For the avoidance of doubt, Company shall not have the right to Sublicense the same scope of rights more than once at a time, but shall have the right to simultaneously enter into multiple Sublicenses provided the scope of rights granted in each such Sublicense differ, either with regards to the types of rights granted, the field of use or the territory.  Company, without University’s prior written consent, may not grant Sublicensees the right to grant sublicenses or the right to enforce Licensed Patents; provided, however that Company may grant Sublicensees the right to grant resale rights to Distributors.  Company shall remain responsible for its obligations under this Agreement, and shall ensure that the Sublicense agreement: (i) contains terms and conditions requesting Sublicensee to comply with the applicable terms and conditions under this Agreement (including a release substantially similar to that provided by Company in Section 10.1, a warranty substantially similar to that provided by Company in Section 11.1; University disclaimers and exclusions of warranties under Subsections 11.3.1 and 11.3.2; and limitations of remedies and damages substantially similar to those provided by Company in Article 12); and (ii) specifically incorporates provisions of this Agreement regarding obligations pertaining to indemnification, use of names and insurance.  Company shall deliver to University a true, correct, and complete copy of any Sublicense agreement or other agreement under which Company purports or intends to grant Sublicense rights at least 30 days after the execution of the agreement.  Company shall not enter into such agreement if the terms of the agreement are materially inconsistent in any respect with the terms of this Agreement.  Any Sublicense made in violation of this Subsection will be void.

 

3.2                               The United States Government’s Rights.  The inventions covered in the Licensed Patents arose, in whole or in part, from federally supported research and the federal government of the United States of America has certain rights in and to the Licensed Patents as those rights are described in Chapter 18, Title 35 of the United States Code and accompanying regulations, including Part 401, Chapter 37 of the Code of Federal Regulation.  The Parties’ rights and obligations under this Agreement to any government-funded inventions, including the grant of

 

6

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

license set forth in Subsection 3.1.1, are subject to the applicable terms of the aforementioned United States laws.

 

3.3                               University’s Reservation of Rights.  University reserves all rights not expressly granted to Company under this Agreement.  In addition, University retains for itself and FHCRC an irrevocable, nonexclusive license to make, have made, and use products, processes, and other subject matter covered by the Licensed Patents in the Field of Use for academic research, instructional, or any other academic purpose.  Expressly included within this reservation of rights is the right (i) to use the Licensed Patents in sponsored research or collaborative research with any Third Party but only to the extent no such Third Party is granted any rights to the Licensed Patents or to commercialize Licensed Products, (ii) to grant material transfer agreements to materials whose composition of matter is covered by the Licensed Patents where the use of such materials is restricted to academic research, instructional, or any other academic purpose, and (iii) to publish any information included in the Licensed Patents or any other information that may result from University or FHCRC’s research.  If a patent application for any intellectual property arising from any rights retained under this Section 3.3 is filed by University, and UW TechTransfer is aware that such intellectual property has arisen as a result of retained rights (with no obligation for diligence except at Company’s reasonable request), University shall, as soon as administratively practicable (including without limitation, within 10 days of Company’s inquiry during the Term), notify Company and shall make commercially reasonable efforts to grant Company a license under such rights as available on commercially reasonable terms to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  For the avoidance of doubt, no right reserved pursuant to this Section 3.3 shall give University any right (i) to commercialize any Licensed Product or (ii) to grant any Third Party the right to commercialize any Licensed Product.

 

3.4                               Reservation of Rights for Humanitarian Purposes.  To the extent required under 35 U.S.C. §200 et seq., in exceptional circumstances, University retains the right to require Company to grant sublicenses to responsible applicants in the Field of Use under the Licensed Patents on terms that are reasonable under the circumstances; or, if Company fails to grant a license, to grant the license itself, if University determines (i) such action is necessary to meet health or safety needs that are not reasonably satisfied by Company; or (ii) the action is necessary to meet requirements for public use specified by federal regulations, and such requirements are not reasonably satisfied by Company.  Notwithstanding anything in this Section 3.4, University shall not require the granting of a sublicense, and shall not grant the license itself, unless such grant is required by U.S. federal law and the responsible applicant has first used commercially reasonable good faith efforts to negotiate the terms of such sublicense in good faith with Company.  No sublicense granted under this Section 3.4 shall be deemed a Sublicense under Section 3.1.4 and therefore, such grant shall not affect Company’s ability to grant a Sublicense of the same rights to a Third Party in the same Field of Use in the same Territory.

 

7

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4                                         Applications and Patents.

 

4.1                               Pre-Agreement Patent Filings and Licensed Product Sales.  Company represents that, to its knowledge, as of the Effective Date, it has not and does not manufacture, have manufactured, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of (a) any product or good that infringes (including under the doctrine of equivalents) a claim in any Licensed Patent, or (b) any product or good that is made using a process or machine that infringes (including under the doctrine of equivalents) a claim in a Licensed Patent.

 

4.2                               Patent Application Filings during the Term of this Agreement.

 

4.2.1                     University retains the sole and exclusive right to file or otherwise prosecute Licensed Patents and University shall not grant any right to file or otherwise prosecute Licensed Patents to any other Third Party or licensee of the Licensed Patents including, without limitation, Third Party A and Third Party B.  As set out in Section A4 of Exhibit A, Company shall pay, or reimburse University for paying, a pro rata share of all reasonable and necessary costs (including attorneys’ and application fees) incurred prior to, on, or after the Effective Date to apply for, prosecute, enforce, and maintain Licensed Patents including the costs of interferences, oppositions, re-examinations, and patent litigation.

 

4.2.2                     University, in consultation with Company, shall determine in which countries University will file, or cause to be filed, Licensed Patents.  Subject to Company’s compliance with Section A.4, (i) University shall request patent counsel to inform Company of the status of the prosecution of the Licensed Patents, including delivering to Company written communications from the patent office, (ii) University shall consult with the Company on the prosecution of the Licensed Patents, and (iii) Company’s suggestions and requests regarding patent prosecution, including the countries in which Licensed Patents are filed, will be reasonably considered and included unless University reasonably deems such action(s) to be materially adverse to University’s rights to the Licensed Patents.  In no event shall Company file a patent application for a Licensed Patent where all of the inventors are under University policy obligated to assign their rights in such patent application to University.  In the event that University inventors and Company inventors invent an invention jointly (as determined by U.S. patent laws), University and Company shall discuss in good faith whether and how to proceed with respect to any corresponding patent applications.

 

4.2.3                     No provision of this Agreement limits, conditions, or otherwise affects University’s right to prosecute Licensed Patents in any country.

 

4.3                               Maintenance of Licensed Patents.  Subject to Company’s compliance with Section A4 of attached Exhibit A, University shall take all commercially reasonable actions to cause each Licensed Patent to remain or be valid and subsisting.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4.4                               Ownership of the Licensed Patents.  No provision of this Agreement grants Company any rights, titles, or interests (except for the grant of license in Subsection 3.1.1 of this Agreement) in the Licensed Patents, notwithstanding Company’s payment of all or any portion of the patent prosecution, maintenance, and related costs.

 

4.5                               Relative Rights.  University shall offer and grant other licensees of the Licensed Patents substantially similar rights and obligations to those granted to Company with respect to such licensee’s involvement in patent prosecution and reimbursement of patent prosecution costs as set forth in this Section 4.  In the event that University grants to another licensee more favorable rights with respect to such licensee’s involvement in patent prosecution and/or reimbursement of patent prosecution costs as set forth in this Section 4, then Company shall be entitled to the same rights as such other licensee.

 

5                                         Commercialization.

 

5.1                               Commercialization and Performance Milestones.  Company shall use its commercially reasonable efforts, consistent with reasonable business practices and judgment, to commercialize the inventions covered by the Licensed Patents and to make and sell Licensed Products within a reasonable period of time.  Unless excused by the occurrence of an Event of Force Majeure during the term of this Agreement, Company shall perform, or shall cause to happen or be performed, the performance milestones described in Section A2 of attached Exhibit A.

 

5.2                               Covenants Regarding the Manufacture of Licensed Products.  Company hereby covenants and agrees that the manufacture, use, sale, or transfer of Licensed Products will comply with all applicable federal and state laws, including all federal export laws and regulations.  Company hereby further covenants and agrees that, to the extent required by 35 United States Code Section 204, it shall, and it shall cause each Sublicensee, to substantially manufacture in the United States of America all products embodying or produced through the use of an invention that is subject to the rights of the federal government of the United States of America.

 

5.3                               Commercialization Reports.  Throughout the term of this Agreement and no later than 45 days after each yearly anniversary of the Effective Date, Company shall deliver to University written reports containing a summary of Company’s and Sublicensees’ efforts and plans to commercialize the inventions covered by the Licensed Patents and to make, have made on its behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products.  Company shall not be obligated to prepare such commercialization reports in years Company delivers to University a written sales report under Section 6.4 provided that such obligation will resume if sales of Licensed Products ceases.  In relation to each of the performance milestones described in Section A2 of attached Exhibit A, each commercialization report will include reasonably sufficient information to demonstrate Company’s compliance with those performance milestones and will set out general timeframes and plans for those milestones which have not yet been met.

 

9

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.4                               Use of Names and Trademarks or the Names of Faculty, Staff, or Students.   Unless otherwise specified herein, Company or Sublicensee shall not have any right or license to use the name or trademarks of University or FHCRC or the names or identities of any member of the faculty, staff, or student body of University or FHCRC.  Company shall not use, and shall not permit a Sublicensee to use, any such trademarks, names, or identities without University’s or FHCRC’s and, as the case may be, such member’s prior written approval.

 

5.5                               Use of Company’s Name and Trademarks.  Unless otherwise specified herein, University shall not have any right or license to use the name or trademarks of Company.

 

6                                         Payments, Reimbursements, Reports, and Records.

 

6.1                               Payments.  Company shall deliver to University the payments specified in Sections A3 and A4 of attached Exhibit A.  Company shall make such payments by check, wire transfer, or any other mutually agreed-upon and generally accepted method of payment.  All checks to University will be made payable to “University of Washington” and will be mailed to the address specified in Article 20 (Notices) of this Agreement and will include the University agreement number 22557A.  Upon request, University shall deliver to Company written wire transfer instructions.

 

6.2                               Currency and Checks.  All computations and payments made under this Agreement will be in United States dollars.  The exchange rate for the currency into dollars as reported in the Wall Street Journal as the New York foreign exchange mid-range rate on the last business day of the month in which the transaction was entered into will be used for determining the dollar value of transactions conducted in non-United States dollar currencies.

 

6.3                               Late Payments.  University may charge Company a late fee for all amounts owed to University that are overdue by 30 days or more unless such amount is disputed pursuant to this Section 6.3.  The late fee will be computed as the United States prime rate plus two percent (2%), compounded monthly, as set forth by The Wall Street Journal (Western edition) on the date on which such payment is due, of the outstanding, unpaid balance.  The payment of a late fee will not foreclose or limit University from exercising any other rights it may have as a consequence of the lateness of any payment.  The Parties agree to negotiate in good faith to resolve any dispute regarding payments within a reasonable period of time, but not to exceed 90 days, and during such time of good faith negotiations, the disputed payment shall not be considered late under this Agreement.  In the event such dispute is resolved in University’s favor, Company agrees to pay University the disputed amounts within 30 days of the resolution.  If payment is not made to University within this 30-day period, the payment will be considered overdue by 30 days or more under this Section 6.3.  In the event the Parties fail to resolve a payment dispute, the parties shall have all available remedies under Section 29 of this Agreement and at law.

 

6.4                               Sales Reports.  Within 45 days after the last day of each calendar quarter commencing the calendar quarter after Company effects its first commercial sale of a Licensed Product and during the term of this Agreement, Company shall deliver to University a written

 

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sales report (a copy of the form of which is attached as Exhibit B) recounting the number and Net Sales (expressed in U. S. dollars) of all sales, leases, or other dispositions of Licensed Products, whether made by Company or a Sublicensee, during such calendar quarter.  Included in that report shall be the names of Distributors, and the number and type of Licensed Products sold to such Distributor.  Company shall deliver such written report to University even if Company is not required hereunder to pay to University a payment for sales, leases, or other dispositions of Licensed Products during the calendar quarter.

 

6.5                               Records Retention and Audit Rights.

 

6.5.1                     Records Retained.  Throughout the term of this Agreement and for five years thereafter, Company, at its expense, shall keep and maintain and shall cause each Sublicensee to keep and maintain complete and accurate records of all sales, leases, and other dispositions of Licensed Products during the term of this Agreement and all other records related to this Agreement.

 

6.5.2                     Auditing Rights.  No more than once per every twelve-month period during the Term, Company shall permit, at the reasonable request of University, one or more accountants selected exclusively by the University (“Accountants”) to have access to Company’s records and books of account pertaining to this Agreement.  Accountants’ access will be during ordinary working hours to audit Company’s records for any payment period ending prior to such request, the correctness of any report or payment made under this Agreement, or to obtain information as to the payments due for any period in the case of failure of Company to report or make payment pursuant to the terms of this Agreement or to verify Company’s compliance with its payment obligations hereunder.

 

6.5.3                     Scope of Disclosure.  Accountants shall not disclose to University any information relating to the business of Company except that which is necessary to inform University of: the accuracy or inaccuracy of Company’s reports and payments; compliance or noncompliance by Company with the terms and conditions of this Agreement; and the extent of any inaccuracy or noncompliance.

 

6.5.4                     Accountant Copies.  Should Accountants believe there is an inaccuracy in any of Company’s payments or noncompliance by Company with any terms and conditions, Accountants shall have the right to make and retain copies (including photocopies) of any pertinent portions of the records and books of account.

 

6.5.5                     Costs of Audit.  If Company’s royalties calculated for any calendar year quarterly period are under-reported by more than five percent (5%), the costs of any audit and review initiated by University will be borne by Company; otherwise, University shall bear the costs of any audit initiated by University.

 

6.5.6                     Audit of Sublicensees.  Company shall use commercially reasonable efforts to cause each Sublicensee that sells, leases, or otherwise disposes of Licensed

 

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Products to grant University the same or similar right and obligations with respect to inspection and audit of Sublicensee’s records as University is granted with respect to Company’s records under this Section 6.5.  To the extent that Company does not have the right to grant University the right to audit a Sublicensee’s books and records hereunder, Company shall obtain for itself such right and, at the request of University, Company shall exercise such audit right with respect to such Sublicensee using auditors reasonably acceptable to University and provide the results of such audit for inspection by University pursuant to this Section 6.5, such results to be sufficient for University to confirm the amounts owed to University in connection with such Sublicense.  The Accountants shall provide a copy of their audit report to University and to Company, provided that University agrees to enter into a confidentiality agreement with such Sublicensee with respect to such audit report, provided that if Sublicensee and University cannot come to terms on such confidentiality agreement within 30 days, it shall not prevent University from viewing such report on terms of confidentiality and non-use no less restrictive upon University than University’s obligations to Company for Company Confidential Information.

 

7                                         Infringement.

 

7.1                               Third-Party Infringement of a Licensed Patent.

 

7.1.1                     Notice of Third Party’s Infringement.  If a Party learns of substantial, credible evidence that a Third Party is infringing a Licensed Patent in the Field of Use in the Territory, that Party will promptly deliver written notice of the possible infringement to the other Party, describing in detail all relevant information to which that Party has access or control suggesting infringement of the Licensed Patent.

 

7.1.2                     University Right to Institute Action.  If University, in accordance with the terms and conditions of this Agreement, chooses to institute suit against an alleged infringer, University may bring such suit in its own name (or, if required by law, in its and Company’s name) and at its own expense, and Company shall, but at University’s expense for Company’s reasonable associated expenses, fully and promptly cooperate and assist University in connection with any such suit.  All license fees, royalties, damages, awards, or settlement proceeds arising from such a University-initiated action will be solely for the account of University.  University shall inform Company in advance of its decision to institute such suit, and the parties shall consult in good faith as to potential strategy or strategies to manage infringement prior to any during any such suit.

 

7.1.3                     No Obligation to Institute Action; Company’s Step-In Rights.  If University decides not to institute such suit, University shall, within the earlier of (i) sixty (60) days of the date University was reasonably aware or notified of the possible infringement and (ii) twenty (20) business days before the time limit to respond, if any, set forth in the applicable laws and regulations for the filing of such actions, notify Company, as well as its then-current other licensee(s) under the applicable Licensed Patent (collectively, the “Licensees”). In such event, the Licensees shall have the right

 

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(but not the obligation) to institute such suit, and at a Licensee’s request, University shall provide the Licensees with necessary documentation and assistance to facilitate the Licensees’ efforts therefore, including facilitating correspondence between the Licensees.

 

In any prosecution initiated by Company, Company must notify the other Licensees of the existence of such legal action and allow the other Licensees to join as plaintiff.  In addition, in the event other Licensee(s) instigates an infringement prosecution, Company hereby consents to being joined as a plaintiff in such suit solely for the purpose of procuring standing to bring the action and at the sole expense of the initiating Licensee(s).  Company acknowledges that it and the other Licensees, if applicable, will need to mutually agree upon matters related to the prosecution, including without limitation, litigation strategy and the allocation of expenses and recovery; provided, however that (1) priority for leading any action shall be given in the following order: (a) unless the Licensees have otherwise mutually agreed, to the Licensee paying all or a substantial portion of the expenses related to such prosecution if the other Licensee(s) are unwilling or unable to be reasonably responsible for such costs, (b) to the Licensee(s) having a marketed product with respect to which such Third Party infringement is or may be competitive; (c) to the Licensee(s) with a product in development with respect to which such Third Party infringement is or may be competitive and (2) if reasonably requested by a Licensee, University shall facilitate the Licensees’ discussions on such matters.

 

Company shall not initiate any suit against Corixa Corporation or any company member of the Glaxo Group of companies for infringement of those certain Licensed Patents annotated as being patents formerly co-owned by Corixa Corporation in Section A1 of Exhibit A.  Company shall not settle any suits or actions in any manner relating to the Licensed Patents that would materially adversely affect the rights of University under this Agreement without obtaining the prior written consent of University.  Notwithstanding anything in this Agreement, including this Section 7.1.3, if it is reasonably determined that University is an indispensible party to a legal action initiated pursuant to this Section 7.1.3, University agrees to be joined as plaintiff in such suit solely for the purpose of procuring standing to bring the action and at, to the extent such expenses are reasonable, the sole expense of the initiating Licensee(s).  University agrees that all Licensees will be bound by the identical terms of this Section 7.1.3 and have the same rights and obligations as Company hereunder.

 

8                                         Patent Validity.

 

8.1                               Notice and Investigation of Third Party Challenges.  If any Third Party challenges the validity or enforceability of any of the Licensed Patents, the Party learning of such challenge shall immediately notify the other Party.

 

8.2                               Tender to University of Third Party Actions.  In the event of Third Party legal action challenging the validity or enforceability of any of the Licensed Patents, University, at its sole discretion, shall have the right to assume and control the sole defense of the claim at University’s expense.  If University opts not to assume and control the sole defense of the claim, it shall notify the Licensees by the earlier of (i) within forty-five (45) days after University’s awareness of such legal action and (ii) twenty (20) business days before the time limit to

 

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respond, if any, set forth in the applicable laws and regulations for the filing of such actions and shall simultaneously disclose to all Licensees the identities of all other Licensees.  In such event, the Licensees shall have the right (but not the obligation) to defend such claim, and at a Licensee’s request, University shall provide the Licensees with necessary documentation and assistance to facilitate the Licensees’ efforts therefore, including facilitating correspondence between the Licensees.

 

If Company elects to defend such claim, Company must notify the other Licensees and allow the other Licensees to join such defense.  In addition, in the event other Licensee(s) elect to defend such claim, Company hereby consents to being joined in such suit as a party solely for the purpose of procuring standing to defend the claim and at the sole expense of the defending Licensee(s).  Company acknowledges that it and the other Licensees, if applicable, will need to mutually agree upon matters related to the defense, including without limitation, strategy and the allocation of expenses; provided, however that (1) priority for leading any defense shall be given in the following order: (a) unless the Licensees have otherwise mutually agreed, to the Licensee paying all or a substantial portion of the expenses related to such prosecution if the other Licensee(s) are unwilling or unable to be reasonably responsible for such costs, (b) to the Licensee(s) having a marketed product covered by a Valid Claim of a challenged Licensed Patent(s); (c) to the Licensee(s) with a product in development covered by a Valid Claim of a challenged Licensed Patent(s); and (d) to the Licensee(s) who have been granted rights under the Licensed Patents in a specific subpart of the Field of Use that either falls within the scope of asserted claim or would be adversely affected by a declaratory judgment in favor of the Third Party asserting the claim and (2) if reasonably requested by a Licensee, University shall facilitate the Licensees’ discussions on such matters.

 

Licensees shall not settle any suits or actions in any manner relating to the Licensed Patents that would materially adversely affect the rights of University or FHCRC under this Agreement without obtaining the prior written consent of University.  Notwithstanding anything in this Agreement, including this Section 8.2, if it is reasonably determined that University is an indispensible party to a legal action initiated pursuant to this Section 8.2, University agrees to be joined in such suit solely for the purpose of procuring standing to bring the action and at, to the extent such expenses are reasonable, the sole expense of the initiating Licensee(s).  University agrees that all Licensees will be bound by the identical terms of this Section 8.2 and have the same rights and obligations as Company hereunder.

 

8.3                               Enforceability of Licensed Patents.  Notwithstanding challenge by any Third Party, any Licensed Patent will be enforceable under this Agreement until such Licensed Patent is determined to be invalid.

 

9                                        Termination.

 

9.1                               By University.

 

9.1.1                     If Company breaches one or more of its material obligations under this Agreement, University may deliver to Company a written notice of default.  University

 

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may terminate this Agreement by delivering to Company a written notice of termination if the default has not cured in full within 60 days of the delivery to Company of the notice of default.

 

9.1.2                     University may terminate this Agreement by delivering to Company a written notice of termination at least 10 days prior to the date of termination if Company (i) becomes insolvent; (ii) voluntarily files or has filed against it a petition under applicable bankruptcy or insolvency laws that Company fails to have released within 30 days after filing; (iii) proposes any dissolution, composition, or financial reorganization with creditors or if a receiver, trustee, custodian, or similar agent is appointed; (iv) makes a general assignment for the benefit of creditors; or (v) if Company challenges the validity of the Licensed Patents.

 

9.2                               By Company.  Company may terminate this Agreement in its entirety, or on a Licensed Patent-by-Licensed Patent and country-by-country basis, at any time by delivering to University a written notice of termination at least 60 days prior to the effective date of termination.

 

9.3                               Effect of Termination.

 

9.3.1                     After termination of this Agreement by University under Section 9.1 or by Company under Section 9.2, Company shall not make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products.  If Company terminates its rights to some but not all of the Licensed Patents under Section 9.2, then Company shall not make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of any product that is covered by a Valid Claim in a terminated Licensed Patent in the terminated country(ies).

 

9.3.2                     Upon the effective date of termination of a Licensed Patent(s) due to Company’s termination of the Agreement or such Licensed Patent(s) pursuant to Section 9.2 or the University’s termination of the Agreement pursuant to Section 9.1, Company shall no longer be required to reimburse University any part of the costs related to such removed patents or patent applications.  For the avoidance of doubt, with respect to such terminated Licensed Patent(s), after the effective date of termination, any filing, prosecution and/or maintenance activities related to such terminated Licensed Patent(s) shall be conducted at University’s sole expense and will not be part of the Licensed Patents.  Notwithstanding anything in this Section 9.3.2, Company shall be able to make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of any product if such product is not covered by an issued, enforceable claim in the terminated Licensed Patent, provided this shall in no way limit University’s rights to sue Company for infringement should a claim later issue, including under 35 U.S.C. § 154(d) for periods of time during which claims were published but not issued.

 

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9.3.3                     Within 60 days after the end of the calendar quarter following the expiration or termination of this Agreement, Company shall submit a final report to University.  Any payments, including those incurred but not yet paid (such as the pro-rata minimum annual royalty, and those related to patent expense incurred as of the date of termination but not yet paid), due to University shall become immediately due and payable upon termination or expiration.

 

9.3.4                     At any time within 30 days following termination of this Agreement, a Sublicensee may notify University that it wishes to enter into a direct license with University in order to retain its rights to the Licensed Patents granted to it under its Sublicense (such 30-day period following termination, the “Initial Notice Period”).  Following receipt of such notice, University and Sublicensee shall enter into a license agreement the terms of which shall be substantially similar to the terms of this Agreement; and the scope of such direct license, the licensed territory or the duration of the license grant shall be comparable to the corresponding terms granted by the Company to such Sublicensee; provided that such Sublicensee will be granted at least the same scope of rights as it obtained from Company under its Sublicense.  For the sake of clarity, the financial terms, including without limitation, the running royalty rate and milestone payments, shall be identical to the corresponding financial terms set forth in this Agreement.  Notwithstanding the foregoing, each Sublicensee’s right to enter into such direct license shall be conditioned upon:

 

(a)                                 such Sublicensee informing University in writing, pursuant to Article 20 (Notices), that it wishes to enter into such direct license with University, within the Initial Notice Period;

 

(b)                                 such Sublicensee being in good standing with Company under its Sublicense, and such Sublicense not being the subject of a reasonable dispute between Sublicensee and Company, or between Company and University under this Agreement;

 

(c)                                  such Sublicense having been validly entered into by Company and Sublicensee pursuant to the terms of Section 3.1.2;

 

(d)                                 such Sublicensee using reasonable efforts to certify or otherwise demonstrate that the conditions set forth in subsections 9.3.4(a), 9.3.4(b), and 9.3.4(c) have been met within 30 days of expiration of the Initial Notice Period (or within such longer period of time as University agrees is reasonable under the circumstances, based on the nature and extent of any documentation reasonably requested by University; and

 

(e)                                  such negotiations for a direct license not exceeding 180 days from the end of the 30-day (or longer, if applicable) period described in subsection 9.3.4(d) (subject to extension of said 180-day period by mutual written agreement of University and Sublicensee).

 

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University may, at its sole discretion, waive any of these requirements.  If all of the conditions set forth in this subsection 9.3.4 are met, then Sublicensee will be granted such direct license by University.  If any condition set forth in this subsection 9.3.4 is not met, then after expiration of any time period granted to Sublicensee with respect to meeting such condition, Sublicensee shall not make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products and University shall be free to license or not license Licensed Patents to such Sublicensee according to its sole discretion.

 

University shall solely offer any other licensee of the Licensed Patents substantially similar or less favorable terms with respect to the following provisions: (i) length of cure period for any default by such licensee; (ii) notice period for termination by University due to such licensee’s insolvency or other related event (such events described in clauses (i) — (v) of Section 9.1.2); (iii) notice period for such licensee’s right to terminate any aspect of the license arrangement for convenience; (iv) ability to terminate any aspect of the license agreement for convenience (e.g. on a Licensed Patent-by-Licensed Patent basis) (v) rights under the license arrangement and/or to the Licensed Patents after termination; (vi) types of payments due by such licensee to the University after termination; and (vii) terms pursuant to which a sublicensee of such licensee may establish a license arrangement with the University after termination of the licensee’s license arrangement.  For the avoidance of doubt, University will not offer any other licensee of the Licensed Patents any rights concerning termination or effects of termination that vary from Company’s rights hereunder to the extent that such licensee’s rights materially adversely affect Company’s rights under this Agreement.  In the event that University grants to another licensee more favorable rights with respect to any of the provisions outlined above in (i)-(vii), then Company shall be entitled to the same rights as such other licensee.

 

10                                  Release, Indemnification, and Insurance.

 

10.1                        Company’s Release.  Subject to the proviso below in this Article 10, for itself and its employees, Company hereby releases University and FHCRC and their regents, employees, students and agents forever from any suits, actions, claims, liabilities, demands, damages, losses, or expenses (including reasonable attorneys’ and investigative expenses and collectively, “Losses”) relating to or arising out of (i) the manufacture, use, lease, sale, or other disposition of a Licensed Product to the extent such Losses arise from or result from Company’s exercise of the license granted in Section 3.1; or (ii) the assigning or sublicensing of Company’s rights under this Agreement; provided, however that notwithstanding anything to the contrary in this Article 10, the Company shall not release University and/or FHCRC and/or their regents, employees, students and agents forever from any suits, actions, claims, liabilities, demands, damages, losses, or expenses (including reasonable attorneys’ and investigative expenses) relating to or arising out of the negligence or willful misconduct by the University and/or FHCRC and/or their respective regents, employees, students and agents.

 

10.2                        Company’s Indemnification.  Throughout the term of this Agreement and thereafter, Company shall indemnify, defend, and hold University and FHCRC and their respective regents, employees, students and agents harmless from all Losses, relating to or arising out of the manufacture, use, lease, sale, or other disposition of a Licensed Product to the

 

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extent such Losses arise from or result from Company’s exercise of the license granted in Section 3.1, including, without limitation, personal injury, property damage, breach of contract and warranty and products-liability claims relating to a Licensed Product.  This indemnification by Company excludes Losses that arise out of or result from, directly or indirectly, the negligence or willful misconduct by the University and/or FHCRC and/or their respective regents, employees, students and agents.

 

10.3                        Company’s Insurance.

 

10.3.1              Throughout the term of this Agreement, or during such period as the Parties shall agree in writing, Company shall maintain, and shall cause each Sublicensee to maintain, in full force and effect comprehensive general liability (CGL) insurance, with single claim limits consistent with industry standards.  Such insurance policy will include coverage for claims that may be asserted by University against Company under Section 10.2.  Such insurance policy must name University as an additional insured and will require the insurer to deliver written notice to University at the address set forth in Article 20 (Notices) of this Agreement, at least 45 days prior to the termination of the policy.  Company shall deliver to University a copy of the certificate of insurance for such policy.

 

10.3.2              No later than 30 days prior to the initiation of human clinical trials with respect to Licensed Product(s), Company shall provide to University certificates evidencing the existence and amount of clinical trials liability insurance.  Company shall issue irrevocable instructions to its insurance agent and to the issuing insurance company to notify University of any discontinuance or lapse of such insurance not less than 45 days prior to the time that any such discontinuance is due to become effective.  Company shall provide University a copy of such instructions upon their transmittal to the insurance agent and issuing insurance company.  Company shall further provide University, at least annually, proof of continued coverage.

 

11                                  Representations and Warranties.

 

11.1                        Mutual Representations and Warranties.  Each Party represents and warrants to the other Party that it has full corporate power and authority to execute, deliver, and perform this Agreement, and that no other corporate proceedings by such Party are necessary to authorize the Party’s execution or delivery of this Agreement.

 

11.2                        University Representations and Warranties.  University represents and warrants to Company that, to the best of UW TechTransfer’s knowledge, as of the Effective Date:

 

11.2.1              the execution, delivery and performance of this Agreement by University does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound, including but not limited to Option Agreement A and Option Agreement B;

 

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11.2.2              University has not granted any right to file or otherwise prosecute Licensed Patents to any Third Party; and

 

11.2.3              University is entitled to grant the licenses specified herein.  University has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Licensed Patents in a manner that conflicts with any rights granted to Company hereunder.

 

11.3                        Disclaimers.

 

11.3.1              EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 11.1 AND 11.2 OF THIS AGREEMENT, UNIVERSITY AND FHCRC DISCLAIM AND EXCLUDE ALL WARRANTIES, EXPRESS AND IMPLIED, CONCERNING EACH LICENSED PATENT AND EACH LICENSED PRODUCT, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF NON-INFRINGEMENT AND THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

11.3.2              University and FHCRC expressly disclaim any warranties concerning and makes no representations:

 

(a)                                 that the Licensed Patent(s) will be approved or will issue;

 

(b)                                 concerning the validity or scope of any Licensed Patent; or

 

(c)                                  that the manufacture, use, sale, lease or other disposition of a Licensed Product will not infringe a Third Party’s patent or violate a Third Party’s intellectual property rights.

 

12                                  Damages.

 

12.1                        Remedy Limitation.  EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, IN NO EVENT SHALL (A) UNIVERSITY OR FHCRC BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGES ARISING IN CONNECTION WITH COMPANY’S EXERCISE OF THE LICENSE GRANTED IN SECTION 3.1 OR (B) EITHER COMPANY, UNIVERSITY OR FHCRC BE LIABLE FOR LOST PROFITS, LOST BUSINESS OPPORTUNITY, LOST DATA OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND.

 

12.2                        Damage Cap.  IN NO EVENT WILL UNIVERSITY’S TOTAL LIABILITY FOR THE BREACH OR NONPERFORMANCE OF THIS AGREEMENT EXCEED THE AMOUNT OF PAYMENTS PAID TO UNIVERSITY UNDER SECTION A3 OF EXHIBIT A.  THIS LIMITATION WILL APPLY TO CONTRACT, TORT, AND ANY OTHER CLAIM OF WHATEVER NATURE.

 

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13                                  Amendment and Waiver.

 

This Agreement may be amended from time to time only by a written instrument signed by the Parties.  No term or provision of this Agreement will be waived and no breach excused unless such waiver or consent will be in writing and signed by the Party claimed to have waived or consented.  No waiver of a breach will be deemed to be a waiver of a different or subsequent breach.

 

14                                  Assignment.

 

The rights and licenses granted by University in this Agreement are personal to Company and may not be assigned or otherwise transferred without the written consent of University, which will not be unreasonably withheld.  The preceding sentence notwithstanding, Company, without the prior approval of University, may assign all, but no less than all, its rights and delegate all, but no less than all, its duties under this Agreement to a Third Party if the assignment is made to such Third Party as a part of and in connection with (A) the sale by Company of all or substantially all of its assets to the Third Party, (B) the sale, transfer, or exchange by the shareholders, partners, or equity owners of Company of a majority interest in Company to the Third Party, or (C) the merger of Company into the Third Party.  Company shall deliver to University written notice of the proposed assignment (along with material information about the terms of the assignment and assignee) at least 30 days prior to the effective date of the event described in part (A), (B) or (C) of this paragraph.  Except as provided above, Company shall not assign its interest or delegate its duties under this Agreement, unless University consents to the assignment, or delegation.  Any assignment or delegation attempted to be made in violation of this article will be void.  Absent the consent of all the Parties to this Agreement, an assignment or delegation will not release the assigning or delegating Party from its obligations under this Agreement.

 

This Agreement will inure to the benefit of Company and University and their respective permitted assignees and trustees.

 

15                                  Confidentiality.

 

15.1                        Form of Transfer.  Confidential Information may be conveyed in tangible or intangible form.  Disclosing Party must clearly mark its Confidential Information “confidential.” If disclosing Party communicates Confidential Information in non-written form, it shall reduce such communications to writing, clearly mark it “confidential”, and provide a copy to receiving Party no later than 30 days after original communication at the address in Article 20 (Notices).

 

15.2                        No Unauthorized Disclosure of Confidential Information.  Beginning on the Effective Date and continuing throughout the term of this Agreement and thereafter for a period of three (3) years, receiving Party shall not disclose or otherwise make known or available to any Third Party any disclosing Party Confidential Information, without the express prior written consent of disclosing Party.  Notwithstanding the foregoing, receiving Party shall be permitted to disclose disclosing Party Confidential Information to (i) actual or potential investors, lenders,

 

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consultants, collaborators, Sublicensees, or development partners, which disclosure will be made under conditions of confidentiality and limited use; and (ii) its attorney or agent as reasonably required.  University shall be permitted to disclose Company Confidential Information to FHCRC; provided, however that such disclosure will be made under conditions of confidentiality and limited use and any such disclosed Company Confidential Information will be deemed and treated as Confidential Information of University under the Inter-Institutional Agreement.  In no event shall receiving Party incorporate or otherwise use disclosing Party’s Confidential Information in connection with any patent application filed by or on behalf of receiving Party.  Receiving Party shall restrict the use of disclosing Party’s Confidential Information exclusively to the terms of this Agreement.  Receiving Party shall use reasonable procedures to safeguard disclosing Party’s Confidential Information.  In the case where Company is the receiving Party, Company acknowledges and agrees that its confidentiality obligations also apply equally to its Sublicensees.

 

15.3                        Access to University Information.  University is an agency of the state of Washington and is subject to the Washington Public Records Act, RCW 42.56 et seq., (“Act”), and no obligation assumed by University under this Agreement shall be deemed to be inconsistent with University’s obligations as defined under the Act and as interpreted by University in its sole discretion.  If University receives a request for public records under the Act for documents containing Company Confidential Information, and if University concludes that the documents are not otherwise exempt from public disclosure, University will provide Company notice of the request before releasing such documents.  Such notice will be provided in a timely manner to afford Company sufficient time to review such documents and/or seek a protective order, at Company’s expense utilizing the procedures described in RCW 42.56.540.  University shall have no obligation to protect Company Confidential Information from disclosure in response to a request for public records.

 

15.4                        Disclosure as Required by Law.  Either Party shall have the right to disclose the other Party’s Confidential Information as required by law or valid court order, provided that such Party shall inform the Party who owns such Confidential Information prior to such disclosure and shall limit the scope and recipient of disclosure to the extent required by such law or court order.

 

16                                  Construction.

 

The headings preceding and labeling the sections of this Agreement are for the purpose of identification only and will not in any event be employed or used for the purpose of construction or interpretation of any portion of this Agreement.  As used herein and where necessary, the singular includes the plural and vice versa, and masculine, feminine, and neuter expressions are interchangeable.

 

21

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

17                                  Enforceability.

 

If a court of competent jurisdiction adjudges a provision of this Agreement unenforceable, invalid, or void, such determination will not impair the enforceability of any of the remaining provisions hereof and the provisions will remain in full force and effect.

 

18                                  Third-Party Beneficiaries.

 

FHCRC is not a party to this Agreement but is an intended Third Party beneficiary, where indicated, of Sections 3.3, 5.4, 8.2, 10.1, 10.2, 11.3, 12.1 and 15.2 of this Agreement.  No person or entity other than FHCRC and the Parties and, with respect to Company, its permitted assignees hereunder, shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

 

19                                  Language.

 

Unless otherwise expressly provided in this Agreement, all notices, reports, and other documents and instruments that a Party hereto elects or is required by the terms of this Agreement to deliver to the other Party hereto will be in English.

 

20                                  Notices.

 

All notices, requests, and other communications that a Party is required or elects to deliver will be in writing and will be delivered personally, or by facsimile or electronic mail (provided such delivery is confirmed), or by a recognized overnight courier service or by United States mail, first-class, certified or registered, postage prepaid, return receipt requested, to the other Party at its address set forth below or to another address as a Party may designate by notice given pursuant to this article:

 

If to University:                                                          UW TechTransfer
 ATTN:  Director, Technology Licensing
 4311 11th Avenue NE, Suite 50
 Seattle, WA 98105-4608
 Facsimile No.:  206-685-4767

 

If to Company:                   Genocea Biosciences, Inc.
 Attn:  Chief Executive Officer
 161 First Street, Suite 2C
 Cambridge, MA 02142
 Phone No.:  (617) 876-8191
 Facsimile No.:  (617) 876-8192

 

21                                  Patent Marking.

 

To the extent allowed under applicable law, Company shall mark, or shall require that its Sublicensees mark, all material forms of Licensed Product(s) or packaging pertaining thereto

 

22

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

made and sold by Company in the United States with patent marking conforming to 35 U.S.C. §287(a), as amended from time to time.  Such marking shall further identify the pendency of any U.S. patent application and/or any issued U.S. or foreign patent forming any part of the Licensed Patents.  Licensed Product(s) shipped to or sold in other countries will be marked in such a manner as to provide notice to potential infringers pursuant to the patent law and practice of the country of manufacture or sale.

 

22                                  Publicity.

 

Each Party shall have the right to report in its customary publications and presentations that University and Company have entered into a license agreement for the technology covered by the Licensed Patents.  However, neither Party shall have the right to use the logos of the other Party without the other Party’s prior written consent and neither Party shall imply any endorsement by such Party by the other Party, including in the aforementioned publications and presentations.

 

The Parties will cooperate with one another to review and respond to any press release or similar communication proposed by the other Party regarding the non-confidential subject matter of this Agreement.  The specific content and timing of such press releases or similar communication is subject to mutual agreement by the Parties, which will not be unreasonably withheld.  Further, University and Company shall issue a joint press release regarding this Agreement, subject to both Party’s review and approval of the specific content thereof, and such press release shall include specific mention of the contributions of University personnel and University in developing the technology in a prominent portion of the press release.  Company shall provide University with appropriate quotes for such press release.  University may post the press release in digital and print publications as well as on University’s own website.

 

23                                  Relationship of Parties.

 

In entering into, and performing their duties under, this Agreement, the Parties are acting as independent contractors and independent employers.  No provision of this Agreement shall create or be construed as creating a partnership, joint venture, or agency relationship between the Parties.  No Party shall have the authority to act for or bind the other Party in any respect.

 

24                                  Security Interest.

 

Company shall not grant, or permit any person to assert or perfect, a security interest in the Licensed Patents.

 

25                                 Survival.

 

Immediately upon the termination or expiration of this Agreement all of the Parties’ rights under this Agreement will terminate; provided, however, Company’s obligations that have accrued prior to the effective date of termination or expiration of this Agreement (e.g., the obligation to report and make payments on sales, leases, or dispositions of Licensed Products and

 

23

 

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to reimburse University for costs) and the obligations specified in Sections 6.1 and 6.4 will survive.  The obligations and rights set forth in Sections 6.5, 9.3 and Articles 11, 12, 15, 17, 20, 25, 26, 27, 28, 29 and 30 will survive the termination or expiration of this Agreement.

 

26                                  Collection Costs and Attorneys’ Fees.

 

If it is determined that a Party has materially breached one or more of the terms of this Agreement, the other Party may recover from the breaching Party all of its reasonable costs (including attorneys’ fees) incurred to enforce the terms of this Agreement.

 

27                                  Applicable Law.

 

The internal laws of the state of Washington will govern the validity, construction, and enforceability of this Agreement, without giving effect to the conflict of laws principles thereof.

 

28                                  Forum Selection.

 

A suit, claim, or other action to enforce the terms of this Agreement will be brought exclusively in the state and federal courts of King County, Washington.  Company hereby submits to the jurisdiction of that court and waives any objections it may have to that court asserting jurisdiction over Company or its assets and property.

 

29                                  Dispute Resolution

 

The Parties agree that any and all disputes and controversies arising from, connected with, or relating to this Agreement, including relating to the construction, meaning, performance or effect of this Agreement or any breach thereof (collectively “Disputes”) will be resolved in accordance with the terms of this Article 29 as follows:

 

29.1                        Informal Dispute Resolution.  Prior to initiating formal dispute resolution procedures, the Parties will first attempt to resolve any Dispute directly through good faith negotiations.  Either Party may deliver to the other a written notice requiring negotiation of the Dispute (“Notice to Negotiate”).  The Parties will seek to resolve Disputes through negotiations, but may, during this informal dispute resolution period, escalate the resolution of any Dispute internally as necessary or appropriate to Company’s Chief Executive Officer and University’s Vice Provost for UW TechTransfer, or their authorized representatives.  If the Dispute has not been resolved within 15 business days after the delivery of a Notice to Negotiate, either Party may by written notice (“Notice to Mediate”), request to mediate the Dispute in accordance with Section 29.2 (Mediation), subject to the other Party’s consent.  If the Parties do not agree to mediate the Dispute after a failure to resolve the Dispute pursuant to this Section 29.1, the matter shall be resolved, subject to either Party’s initiation, by binding arbitration under Section 29.3 for Disputes directly related to the determination of the applicable pro rata percentages under Section A3.8 and, for all other Disputes, by any remedies available to the Parties under this Agreement or under law.  To the fullest extent permitted by law, the Parties will conduct the negotiations in confidence.

 

24

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

29.2                        Mediation.  Subject to the Parties’ mutual agreement to mediate the Dispute pursuant to Section 29.1 (Informal Dispute Resolution), the Parties agree to retain the services of a mutually acceptable Third Party mediator to mediate the resolution of the Dispute.  Unless the Parties otherwise agree in writing, the mediator will be resident in the city in which the University is situated, and all meetings regarding the mediation will be held either by video or telephone conference or by in-person meetings held in such city.  No Party will unreasonably withhold acceptance of a mediator, and the selection of a mediator will be made within 15 business days following the delivery of the Notice to Mediate pursuant to Section 29.1 (Informal Dispute Resolution) above.  If a mediator is not appointed, or if, following the appointment of a mediator, the Dispute is not resolved within thirty (30) days, or such extended period that the Parties may agree to in writing, after the delivery of the Notice to Mediate, then (i) if the matter involves the determination of the applicable percentages under Section A3.8, the matter shall be resolved by binding arbitration under Section 29.3, and (ii) if the matter does not involve the determination of the applicable percentages under Section A3.8, neither Party will be required to pursue arbitration under Section 29.3 and either Party may pursue any options available to them under this Agreement and/or commence litigation pursuant to Section 29.4 (Litigation) below.  To the fullest extent permitted by law, the Parties agree to maintain the mediation proceedings in confidence; and share the costs of the mediator and the mediation facilities equally.  To the fullest extent permitted by law, the Parties agree to maintain the mediation proceedings in confidence; and share the costs of the mediator and the mediation facilities equally, although each Party will bear the costs of its presentation including without limitation its attorneys’ fees and fees associated with the production of any information for such presentation.  All communications during the mediation referred to in this Section 29.2 including any documents or information prepared and exchanged solely for the purposes of that mediation, will be considered to be “without prejudice” and will not be admissible in any subsequent litigation.

 

29.3                        Arbitration.  Any Dispute directly related to the determination of the applicable pro rata percentages under Section A3.8 not resolved pursuant to Section 29.1 (Informal Dispute Resolution) or Section 29.2 (Mediation), shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.  The place of arbitration shall be Seattle, Washington.  The number of arbitrators shall be limited to one.  All expenses and costs of the arbitrators and the arbitration in connection therewith will be shared equally, except that each party will bear the costs of its prosecution and defense, including without limitation attorneys’ fees and the production of witnesses and other evidence.

 

29.4                        Litigation.  Any Party may seek (i) interim measure of protection, including injunctive relief, prior to or during the negotiation or mediation of Disputes, and (ii) final resolution, from the courts sitting in the city in which University is situated regarding any Dispute, and each Party irrevocably and unconditionally attorns to the exclusive jurisdiction of such courts, and all courts competent to hear appeals therefrom, for that purpose.

 

25

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

30                                  Entire Agreement.

 

This Agreement (including all attachments, exhibits, and amendments) is the final and complete understanding between the Parties concerning licensing the Licensed Patents.  This Agreement supersedes any and all prior or contemporaneous negotiations, representations, and agreements, whether written or oral, including the Option Agreement, concerning the Licensed Patents.  However, the obligations of nonuse and nondisclosure for Confidential Information disclosed pursuant to the CDA shall survive until August 10, 2012.  Confidential Information disclosed pursuant to this Agreement shall be governed by the terms of this Agreement.  This Agreement may not be modified in any manner, except by written agreement signed by an authorized representative of both Parties.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized representatives.

 

	
University   of Washington
    	
 
    	
Genocea Biosciences, Inc.
    
	
 
    	
 
    	
 
    	
 
    
	
By: 
    	
/s/ Fiona Wills
    	
 
    	
By:
    	
/s/ M. Leavenworth Bakali
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name: 
    	
Fiona Wills
    	
 
    	
Name:
    	
M. Leavenworth Bakali
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title: 
    	
Director of   Technology Licensing
    	
 
    	
Title:
    	
President & CEO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date: 
    	
January 27,   2010
    	
 
    	
Date:
    	
26 January 2010
    

 

26

 

	
THIS EXHIBIT HAS BEEN REDACTED AND IS   THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL   IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND   EXCHANGE COMMISSION.
    
	
 
    
	
Exhibit A

 

Exclusive Patent License Schedule
    
	
 
    
	
A1.                             Licensed Patents:

 

A1.1 Subset A of Licensed Patents
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
UW Ref. No.
    	
 
    	
Serial Number
    	
 
    	
Filing Type
    	
 
    	
Filing Date
    	
 
    	
Notes
    
	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
 
    
	
[* * *]
    	
 
    	
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[* * *]
    	
 
    	
 
    
	
[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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[* * *]
    	
 
    	
 
    
	
[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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[* * *]
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
A1.2 Subset B of Licensed Patents
    
	
 
    
	
UW Ref. No.
    	
 
    	
Serial Number
    	
 
    	
Filing Type
    	
 
    	
Filing Date
    	
 
    	
Notes
    
	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
 
    
	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
 
    
	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    

 

 

	
THIS   EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT   REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN   FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
    
	
 
    
	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
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[* * *]
    
	
[* * *]
    	
 
    	
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[* * *]
    
	
[* * *]
    	
 
    	
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[* * *]
    
	
[* * *]
    	
 
    	
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[* * *]
    	
 
    	
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A1.3. Background Patents
    
	
 
    
	
UW Ref. No.
    	
 
    	
Serial Number
    	
 
    	
Filing Type
    	
 
    	
Filing Date
    	
 
    	
Notes
    
	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
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[* * *]
    	
 
    	
 
    
	
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
[* * *]
    	
 
    	
 
    

 

A2.                             Performance Milestones (Section 5.1): Company shall meet the following performance milestones.

 

A2.1                      [* * *];

 

A2.2                      [* * *];

 

A2.3                      [* * *].

 

A2.4                      [* * *].

 

A3.                             Payments (Section 6.1):

 

A3.1                      Up-front Payment.  Company shall pay to University within 30 days of the Effective Date [* * *] as an up-front payment.  This up-front payment shall be non-refundable and not creditable against future royalty obligations.

 

A3.2                      Annual Maintenance Fee.  Within 30 days after each anniversary of the Effective Date during the term of this Agreement Company shall pay to University an annual payment according to the schedule below.  This annual payment shall be non-refundable and not creditable against Company’s other royalty obligations.

 

A3.2.1.  In 2011, Company shall pay University [* * *];

 

A3.2.2.  In 2012, Company shall pay University [* * *]; and

 

A3.2.3.  In 2013 and each year following [until Company pays minimum annual royalties pursuant to Section A3.4], Company shall pay University [* * *].

 

A3.3                      Running Royalty Payments.  During the Royalty Term, Company shall pay to University within 45 days after the last day of each calendar quarter during the term of this Agreement an amount equal to [* * *] of the Net Sales during such quarter as a running royalty payment.

 

A3.4                      Minimum Annual Royalties.  Beginning the first full calendar year following first commercial sale of a Licensed Product and for the term of this Agreement, Company shall pay minimum annual royalties in the amount of [* * *] to be creditable against running royalty payments for the preceding twelve months on a non-cumulative basis.  Minimum annual royalty payments for each year will be due in full and payable on the anniversary of the Effective Date of the relevant calendar year.  If this Agreement is terminated prior to the payment of a minimum annual royalty in any given year, the amount due for that minimum annual royalty payment will be prorated on the basis of the number of full quarters that have elapsed prior to termination since the last payment of a minimum annual royalty.

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

A3.5                      Financial Milestones.  Company shall pay to University the following non- cumulative and non-refundable milestone achievement payments within 30 days of achieving the corresponding milestone, whether achieved by Company or a Sublicensee.

 

A3.5.1.  [* * *];

 

A3.5.2.  [* * *];

 

A3.5.3.  [* * *]; and

 

A3.5.4.  [* * *].

 

A3.6                      Equity.  The Parties shall enter into a Stock Purchase Agreement and/or other agreements as they deem necessary and desirable pursuant to which Company shall issue to University [* * *] shares of its common stock within 30 days of the Effective Date.  Each share shall have voting rights and shall be non-assessable.

 

A3.7                      Third Party Royalties.  If Company is required to pay royalties to a Third Party based on Company’s manufacture, use, or sale of Licensed Product subject to one or more patents of such Third Party then the royalties Company pays to University may be reduced by [* * *] of such royalties actually paid to the Third Party provided that use of any Third Party patent is required for such manufacture, use, or sale of Licensed Product, and provided that the royalty to the University shall not fall below [* * *].

 

A3.8                      Sublicensing Consideration.  In addition to the running royalty payments due on Net Sales by any Sublicensee pursuant to Subsection A3.3 of this Exhibit A, Company shall pay to University a percentage of all Sublicensing Consideration received for a Sublicense according to the schedule below.  [* * *] For the avoidance of doubt, any failure by Company to pay University an amount under this Section A3.8 which is actively being disputed pursuant to Article 29 shall not be deemed a breach or default by Company of its obligations under this Agreement.

 

A3.8.1.  [* * *]:

 

A3.8.1.1. [* * *];

 

A3.8.1.2. [* * *];

 

A3.8.1.3.  [* * *];

 

A3.8.1.4.  [* * *].

 

A4.                             Patent Cost Reimbursement: Subject to the terms of this Agreement, Company shall pay, or reimburse University for paying, a [* * *] share [* * *] of all reasonable and necessary out-of-pocket costs (including attorneys’ and application fees) incurred prior to, on, or after the Effective Date to apply for, prosecute, enforce, and maintain Licensed Patents, including the 

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

reasonable out-of-pocket costs of interferences, oppositions, and re-examinations.  One half of the initial invoice for amounts subject to reimbursement that were incurred prior to the Effective Date hereunder (a summary of such amounts is attached hereto as Exhibit C) shall be due within 30 days of the Effective Date and one half shall be due on or before the first anniversary of the Effective Date; all other reimbursements shall be paid in cash within 30 days of Company’s receipt of University’s invoice setting forth such reimbursable expenses in reasonable detail (with supporting documentation, as appropriate).

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit B

 

Royalty Report Form

 

Date

 

Company Name & Address

 

	
License Number
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Reporting Period:
    	
 
    	
 
    	
Report Due Date:
    	
 
    

 

This report must be submitted regardless of whether royalties are owed.  Please do not leave any column blank.  State all information requested below.

 

	
Product Description
    	
 
    	
Royalty Rate
    	
 
    	
Quantity/
   Net Sales
    	
 
    	
Royalty Due
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Report Completed by:
    	
 
    	
 
    	
Total Royalties Due:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Telephone Number:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
If you have questions please contact:
    	
 
    	
 
    
								

 

Please make check payable to: University of Washington

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit C

 

Patent Costs Incurred as of the Effective Date

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Patent Expense Estimate for Agreement 22557A

 

Total Expenses: [* * *] Company Portion: [* * *]

 

	
Background Patents 
    	
[* * *] of   Background Patents patent expenses: [* * *]
    

 

	
IP Reference:
    	
 
    	
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Subset A 
    	
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Patent Expense Estimate for Genocea Agreement

 

	
Subset B 
    	
[* * *] of   Subset B patent expenses: [* * *]
    

 

	
IP Reference:
    	
 
    	
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Amendment No. 1 to Patent License Agreement

between

the University of Washington

and

Genocea Biosciences, Inc.

 

This Amendment No. 1 is made and entered into as of July 19, 2012, by and between the University of Washington, a public institution of higher education and an agency of the State of Washington, acting through UW Center for Commercialization, Technology Licensing (“University”), and Genocea Biosciences, Inc., a Delaware corporation with its principal place of business at 161 First Street, suite 2C, Cambridge, MA 02142 (“Company”).  University and Company are referred to individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, University and Company are Parties to a certain Patent License Agreement (the “Agreement”) with an Effective Date of January 23, 2010 with University reference 22557A;

 

WHEREAS, Company has informed University, through a Revised Termination Letter dated May 31, 2012, that it wishes to terminate its license to selected Licensed Patents under the Agreement;

 

WHEREAS, University and Company, through this Amendment No. 1, wish to update Licensed Patents and confirm the Co-Exclusive or exclusive nature of Company’s license thereto;

 

NOW, THEREFORE the Parties hereto agree as follows:

 

1.              The original Termination Letter dated April 26, 2012 is null and void, and this Amendment No. 1 controls with respect to identifying Licensed Patents.

 

2.              Unless otherwise defined herein, capitalized terms used in this Amendment No. 1 have the meanings set forth in the Agreement.

 

3.              Pursuant to Section 3.1.2 of the Agreement, University and Company hereby confirm (i) conversion of Company’s Tri-Exclusive license to Subset B of Licensed Patents to a Co-Exclusive license; and (ii) Company’s assumption of [* * *] of all reasonable and necessary out-of-pocket patent costs incurred for such converted Co-Exclusive Licensed Patents as of June 1, 2011, the date on which University notified Company of the possibility of conversion.  Table A1.1 (a) below, “Updated Subset A of Licensed Patents”, lists all Licensed Patents subject to a Co-Exclusive license as of the Effective Date of this Amendment No. 1, including Licensed Patents remaining in Subset A, Licensed Patents formerly in Subset B, and Licensed Patents filed subsequent to the Effective Date of the Agreement.

 

4.              University and Company hereby confirm grant of a Co-Exclusive license to Background Patents, as set forth in Table 1.3 below, to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  [Specific grant of a Tri-Exclusive license to Background Patents was inadvertently omitted from the Agreement.]

 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.              Further, subject to the terms and conditions of the Agreement, University hereby grants to Company, and Company hereby accepts, an exclusive license to Subset C of Licensed Patents, as set forth in new Table A1.1 (b) below, to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  Company assumes all reasonable and necessary out-of-pocket costs (including attorneys’ and application fees) incurred prior to, on, or after the Effective Date of this Amendment No. 1 to apply for, prosecute, enforce, and maintain Subset C of Licensed Patents, including the reasonable out-of-pocket costs of interferences, oppositions, and re-examinations.

 

6.              Table A1.1 “Subset A of Licensed Patents”, Table A1.2 “Subset B of Licensed Patents”, and Table 1.3 “Background Patents” are hereby deleted in their entirety and replaced as follows:

 

	
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A1.1 (b)    New Subset C of Licensed Patents; exclusively licensed to Genocea

 

	
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A1.2                      Updated (as of May 31, 2012) Subset B of Licensed Patents

[No Licensed Patents in Subset B.]

 

A1.3                      Updated (as of May 31, 2012) Background Patents; Co-Exclusively licensed to Genocea

 

	
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized representatives.

 

	
University   of Washington
    	
 
    	
Genocea   Biosciences, Inc.
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Angela Loihl
    	
 
    	
By: 
    	
/s/   William D. Clark
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name: 
    	
Angela   Loihl
    	
 
    	
Name: 
    	
William   D. Clark
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title: 
    	
Associate   Director
    	
 
    	
Title: 
    	
President &   CEO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date: 
    	
7/11/2012
    	
 
    	
Date: 
    	
July 19,   2012Exhibit 10.7

 

LOAN AND SECURITY AGREEMENT

No. V13111

 

This Loan and Security Agreement (this “Loan Agreement”), made as of September 30, 2013 by and between Ares Capital Corporation (“Lender”), with offices at 245 Park Avenue, 44th Floor, New York, NY 10167, and Genocea Biosciences, Inc. (“Borrower”), a Delaware corporation with its principal place of business at 100 Acorn Park Drive, 5th Floor, Cambridge, MA 02140.

 

In consideration of the promises set forth herein, Lender and Borrower agree upon the following terms and conditions:

 

1.                                      General Definitions

 

The following capitalized words, terms and /or phrases shall have the meanings set forth thereafter and such meanings shall be applicable to the singular and plural form thereof giving effect to the numerical difference:

 

A.                                    “Account” means any “account,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and, in any event, shall include all accounts receivable, book debts, rights to payment, and other forms of obligations now owned or hereafter received or acquired by or belonging or owing to Borrower (including under any trade name, style or division thereof), whether or not arising out of goods or software sold or licensed or services rendered by Borrower or from any other transaction (including any such obligation that may be characterized as an account or contract right under the UCC), and all of Borrower’s rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of Borrower’s rights to any goods represented by any of the foregoing (including unpaid seller’s rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), and all monies due or to become due to Borrower under all purchase orders and contracts for the sale of goods or the performance of services or both by Borrower or in connection with any other transaction (whether or not yet earned by performance on the part of Borrower), now in existence or hereafter occurring, including the right to receive the proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing.

 

B.                                    “Account Debtor” means any Person obligated on an Account.

 

C.                                    “Additional Documentation” has the meaning set forth in Section 5.2.

 

D.                                    “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

 

E.                                     “Borrower’s Liabilities” means all obligations and liabilities of Borrower to Lender (including without limitation all debts, claims, and indebtedness) whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to time hereafter owing, due or payable, however evidenced, created, incurred, acquired or owing and however arising, whether under this Loan Agreement and/or any promissory note or other instrument issued pursuant hereto or the “Other Agreements” (hereinafter defined), or by oral agreement or operation of law or otherwise, but specifically excluding any obligations and liabilities under the Warrant.

 

F.                                      “Business Day” means any day of the year that is not a Saturday, Sunday or a day on which banks are not required or authorized to close in New York City or Chicago, Illinois.

 

G.                                    “Cash” means all cash, money (as defined in the UCC), currency, and liquid funds, wherever held, in which Borrower now or hereafter acquires any right, title, or interest.

 

H.                                   “Change of Control” means, at any time prior to the closing of a public offering of the equity securities of Borrower, (i) the current shareholders of Borrower cease to beneficially own and control, directly or indirectly on a fully diluted basis, a majority of the economic and voting interests in Borrower’s capital stock or other ownership interests or (ii) any Person or group other than the current shareholders of Borrower shall have the right to elect a majority of the seats on Borrower’s board of directors; in each case, other than as a result of

 

1

 

Borrower’s issuance of capital stock for cash (or conversion of debt) to venture capital firms, private equity, institutional and strategic investors if Borrower provides Lender with the names of such investors at least ten (10) days prior to such issuance.  For the avoidance of doubt, a Change of Control may only occur before, and not at any time on or after, the closing of a public offering of the equity securities of Borrower.

 

I.                                        “Charges” means all national, federal, state, county, city, municipal and/or other governmental taxes, levies, assessments, charges, liens, claims or encumbrances upon and/or relating to the Collateral, Borrower’s Liabilities, Borrower’s business, Borrower’s ownership and/or use of any of its assets, and/or Borrower’s income and/or gross receipts.

 

J.                                        “Chattel Paper” means any “chattel paper,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

K.                                   “Cleanup” means all actions required to: (1) clean up, remove, treat or remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent the release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (3) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (4) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Materials in the indoor or outdoor environment.

 

L.                                     “Collateral” has the meaning set forth in Section 5.1.

 

M.                                 “Controlled Account” has the meaning set forth in Section 5.4(a).

 

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

 

O.                                    “Copyrights” means all of the following property, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest: (i) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States or of any other country; (ii) all registrations, applications and recordings in the United States Copyright Office or in any similar office or agency of the United States or of any other country; (iii) all continuations, renewals or extensions thereof; and (iv) all registrations to be issued under any pending applications.

 

P.                                      “Default” means any condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

 

Q.                                    “Deposit Accounts” means any “deposit accounts,” as defined in the UCC, and in any event includes any checking account, savings account, or certificate of deposit now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

R.                                    “Documents” means any “documents,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

S.                                      “DOL Regulations” has the meaning set forth in Section 6.1(o).

 

T.                                     “Environmental Claim” means any claim, action, cause of action, investigation or notice (written or oral) by any Person alleging potential liability (including, without limitation, an obligation to conduct a Cleanup or potential liability for investigatory costs, Cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence or release of any Hazardous Materials at any location, whether or not owned, leased or operated by Borrower or any of its Subsidiaries, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

 

U.                                    “Environmental Laws” means all federal, state, local and foreign laws and regulations relating to pollution or protection of human health (but excluding occupational safety and health, to the extent regulated by the Occupational Safety and Hazard Act of 1970) or the environment, including, without limitation, laws relating to releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, disposal, transport or handling of Hazardous Materials, laws and regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials and laws relating to the management or use of natural resources.

 

2

 

V.                                    “ERISA” has the meaning set forth in Section 6.1(o).

 

W.                                 “Equipment” means any “equipment”, as defined in the UCC, and in any event shall include but not be limited to computers and peripherals, laboratory equipment, manufacturing equipment,  networking equipment, switching and backbone equipment, servers and routers and other hardware, including disk drives and laser printers, office furniture, fixtures, office equipment, test and other equipment, and software, and all accessions, additions, attachments, accessories and improvements thereof and all replacements and/or substitutions therefore.

 

X.                                    “Event of Default” has the meaning set forth in Section 8.1.

 

Y.                                    “Excess Interest” has the meaning set forth in Section 9.9.

 

Z.                                     “Financials” means those financial statements described in Section 7.3.

 

AA.                           “Fixtures” means any “fixtures,” as defined in the UCC, together with all right, title and interest of Borrower in and to all extensions, improvements, betterments, accessions, renewals, substitutes, and replacements of, and all additions and appurtenances to any of the foregoing property, and all conversions of the security constituted thereby, immediately upon any acquisition or release thereof or any such conversion, as the case may be, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

BB.                           “Funding Request” has the meaning set forth in Section 2.1.

 

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

 

DD.                           “General Intangibles” means any “general intangibles,” as defined in the UCC, and, in any event, shall include all right, title and interest which Borrower may now or hereafter have in or under any rights to payment; payment intangibles; software; proprietary or confidential information; business records and materials; customer lists; interests in partnerships, joint ventures, business associations, corporations, and limited liability companies; permits; claims in or under insurance policies (including unearned premiums and retrospective premium adjustments); and rights to receive tax refunds and other payments and rights of indemnification now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

EE.                             “Goods” means any “goods,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

FF.                               “Hazardous Materials” means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law.

 

GG.                           “Indemnified Liabilities” has the meaning set forth in Section 7.5.

 

HH.                         “Indemnified Taxes” has the meaning set forth in Section 2.6.

 

II.                                   “Initial Tranche” has the meaning set forth in Section 2.1.

 

JJ.                                   “Instruments” means any “instrument,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

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

 

LL.                             “Inventory” means any “inventory,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest, and, in any event, shall include all Goods and other personal property that are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process or materials used or consumed or to be used or consumed in Borrower’s business, or the processing, packaging, promotion, delivery or shipping of the same, and all finished goods, whether or not the same is in transit or in the constructive, actual or exclusive possession of Borrower or is held by others for Borrower’s account, including all property covered by purchase orders and contracts with suppliers and all Goods billed and held by suppliers and all such property that may be in the possession or custody of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or other Persons.

 

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MM.                     “Investment Property” means all “investment property,” as defined in the UCC, and in any event includes any certificated security, uncertificated security, money market funds, bonds, mutual funds, and U.S. Treasury bills or notes, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

NN.                           “Joint Venture” means a corporation, partnership, limited liability company or other entity in which any Person other than the Borrower or any of its Subsidiaries holds, directly or indirectly, an equity interest together with Borrower.

 

OO.                           “Letter of Credit Rights” means any “letter of credit rights,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest, including any right to payment or performance under any letter of credit.

 

PP.                               “License” means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and any renewals or extensions thereof.

 

QQ.                           “Loan” has the meaning set forth in Section 2.2.

 

RR.                           “Material Adverse Effect” means a material adverse effect upon (i) the business, operations, properties, assets, results of operations or condition (financial or otherwise) of Borrower after the date hereof, (ii) the prospect of repayment of any portion of Borrower’s Liabilities, when due, (iii) the validity, perfection or priority of Lender’s security interest in the Collateral, (iv) the enforceability of any material provision of this Loan Agreement or any Other Agreement or (v) the ability of Lender to enforce its rights and remedies with respect to Borrower’s Liabilities under this Loan Agreement or any Other Agreement.

 

SS.                               “Material Investor” means any venture capital, private equity, institutional or strategic investor now or hereafter holding or having the ability to control 10% or more of the voting securities of Borrower and their respective affiliates.

 

TT.                             “Material Investor Event” means that any Material Investor shall (i) sell, transfer or otherwise assign the majority of its interest in Borrower to an unaffiliated passive investor, and such Material Investor is not replaced at such time by an existing or new, active Material Investor having comparable experience and assets under management, (ii) fail to participate in a material manner in future financing rounds of Borrower and Borrower is not able to replace this investor with another investor with comparable experience and assets under management, or (iii) have its representative resign from the Board of Directors of Borrower and such Material Investor does not replace the representative director within sixty (60) days, except that a failure of Johnson & Johnson Development Corporation, Lux Ventures II, L.P., Lux Ventures Sidecar, L.P., Lux Ventures II Sidecar II, LLC or Lux Venture II Sidecar III LLC to replace a representative director upon his or her resignation from the Board of Directors shall not constitute a Material Investor Event.

 

UU.                           “Non-U.S. Lender” has the meaning set forth in Section 2.6.

 

VV.                           “Other Agreements” means all agreements, instruments and documents , including, without limitation, the Warrants, any notes, guaranties, letters of credit, mortgages, deeds of trust, pledges, powers of attorney, consents, assignments, contracts, notices, security agreements, leases, warrants, account pledge and control agreements, fee arrangements and financing statements, and all other written matter heretofore, in each case, now and/or from time to time hereafter executed by and/or on behalf and/or for the benefit of Borrower and delivered to Lender in connection with a Loan, as the same may from time to time be amended, modified, supplemented or restated.

 

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

 

XX.                           “Patents” means all of the following property, now owned or hereafter acquired by Borrower: (a) all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country; (b) all reissues, continuations, continuations-in-part or extensions thereof; (c) all petty patents, divisionals, and patents of addition; and (d) all patents to be issued under any such applications.

 

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YY.                           “Permitted Debt” means (i) Borrower’s indebtedness to Lender under this Loan Agreement or any of the Other Agreements; (ii) indebtedness to trade creditors incurred in the ordinary course of business on ordinary trade terms and accrued expenses incurred in the ordinary course of business; (iii) other indebtedness for equipment financing in an aggregate outstanding principal amount not to exceed $150,000 at any time; (iv) unsecured, subordinated indebtedness of Borrower to new or existing investors or strategic partners, subject to a subordination agreement satisfactory to Lender in its sole reasonable discretion; (v) obligations incurred as a result of endorsing negotiable instruments in the ordinary course of business, (vi) reimbursement obligations of Borrower arising in connection with letters of credit relating to lease obligations, not to exceed $475,000 in the aggregate, or (vii) any extension, renewal, refinancing, modification, amendment or restatement of the indebtedness described in clauses (iii) and (vi) above, provided that the principal amount of, and interest rate on, such indebtedness may not be increased.

 

ZZ.                             “Permitted Joint Venture” means a Joint Venture in which (1) Borrower controls (as the term “control” is determined in the second sentence of the definition of “Affiliate” hereunder) such Joint Venture, and (2) the aggregate liability of the Borrower and/or its Subsidiaries with respect to, and in connection with, any such Joint Venture, at any time outstanding does not exceed $1,000,000, and not to exceed $3,000,000 in the aggregate for all Permitted Joint Ventures.

 

AAA.                  “Permitted Liens” means all (i) Charges for amounts not yet delinquent or being contested in good faith by appropriate proceedings and for which adequate reserves have been made in accordance with GAAP; (ii) statutory liens of landlords, carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet delinquent or that are being contested in good faith by appropriate proceedings being diligently conducted and for which Borrower maintains adequate reserves in accordance with GAAP; (iii) liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default; (iv) the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (v) banker’s liens, rights of setoff and similar liens arising by operation of law on deposits made in the ordinary course of business, provided such liens do not arise in respect of borrowed money; (vi) non-exclusive licenses and sublicenses granted by Borrower or any of its Subsidiaries in the ordinary course of business or exclusive licenses and sublicenses thereof where such exclusivity is with respect to geographic location, fields of use, customized products for specific customers and/or time-based, as approved by Borrower’s Board of Directors; (vii) Liens securing Borrower’s reimbursement obligations under Borrower’s letters of credit described in clause (vi) of definition of Permitted Debt; and (viii) liens arising in connection with indebtedness described in clause (iii) or (vii) of the definition of Permitted Debt on any Equipment (and any accessions, attachments, replacements or improvements thereon) which was acquired or financed by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment, provided that the lien is confined solely to the Equipment so acquired or financed, and improvements thereon and the proceeds thereof.

 

A.                                    “Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise, including without limitation, any instrumentality, division, agency, body or department thereof).

 

B.                                    “Proceeds” means “proceeds,” as defined in the UCC.

 

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

 

D.                                    “Register” has the meaning set forth in Section 9.6.

 

E.                                     “Required Permit” means a permit issued or reasonably required under laws applicable to the business of Borrower or any of its Subsidiaries, affiliates or joint ventures reasonably necessary and material to the business of Borrower.

 

F.                                      “Second Tranche” has the meaning set forth in Section 2.1.

 

G.                                    “Securities Account” means any “securities account”, as defined in the UCC, and in any event includes any account to which a financial asset is or may be credited in accordance with an agreement under which

 

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the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.

 

H.                                   “Securitization” has the meaning set forth in Section 9.6.

 

I.                                        “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than fifty percent (50%) of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

J.                                        “Supporting Obligations” means any “supporting obligations,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

K.                                   “Term Loan” has the meaning set forth in Section 2.1.

 

L.                                     “Terminal Payment” shall mean an amount which is two percent (2%) of the original principal amount of the relevant Loan (or in the case of partial prepayment, the amount of principal so prepaid, in which case the Terminal Payment due at maturity will be reduced by the amount of the Terminal Payment previously paid).

 

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

 

N.                                    “Trademarks” means all of the following property, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest: (a) all trademarks, tradenames, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, and designs of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, (b) all reissues, extensions or renewals thereof, and (c) all rights in World Wide Web addresses, uniform resource locators and domain names and applications and registrations therefor.

 

O.                                    “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York, provided that if by reason of mandatory provisions of law, the perfection, the effect of perfection or non-perfection or the priority of the security interest granted hereunder in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in any other jurisdiction(s), then  “UCC” shall mean the Uniform Commercial Code as in effect on or after the date hereof in such other jurisdiction(s) for the purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection, or priority or availability of such remedy.

 

P.                                      “Warrant” has the meaning set forth in Section 2.5(b).

 

2.                                      The Loans

 

2.1                               Term Loan. On the terms and subject to the conditions contained in this Loan Agreement, including those listed in Section 2.5, Lender shall loan to Borrower, a term loan (the “Term Loan”), in the amount of up to Ten Million Dollars ($10,000,000), the proceeds of which are to be used to repay the LightHouse Capital Partners debt facility in full and for working capital and general operating purposes.  The Term Loan shall be funded in two tranches, as follows: (i) on the date hereof, the initial advance (the “Initial Tranche”) in an amount of Three Million Five Hundred Thousand Dollars ($3,500,000), and (ii) not later than December 31, 2013, an additional advance (the “Second Tranche”) in an amount of up to Six Million Five Hundred Thousand Dollars ($6,500,000), which, in the case of the Second Tranche, will be made pursuant to a funding request submitted to Lender in the form attached hereto as Exhibit B (the “Funding Request”) not later than 9:00 a.m. (prevailing Chicago time) not less than five (5) Business Days prior to the date of such proposed borrowing. In no event shall the aggregate amount of the advances made hereunder exceed Ten Million Dollars ($10,000,000).  This is not a revolving line of credit and Borrower may not repay and re-borrow the amounts advanced or to be advanced under this Section 2.1.  Each tranche shall be repaid in forty-two (42) monthly installments as follows: (i) commencing on the first Business Day of the first month after funding such tranche, nine (9) monthly payments of interest only (paid in arrears), then

 

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(ii) commencing on first Business Day of the tenth month after the date of funding such tranche, thirty-three (33) equal monthly payments of principal, together with interest thereon (paid in arrears), then (iii) on the first Business Day of the forty-second month after the date of funding such tranche, the Terminal Payment. All such payments to be made on the first Business Day of each month commencing on the first Business Day of the month following the date of such borrowing.

 

2.2                               Evidence and Nature of Loans.  Each advance in respect of the Term Loan to be made by Lender to Borrower pursuant to this Loan Agreement (each, a “Loan”) will be evidenced by one or more promissory notes (in form and substance reasonably satisfactory to Lender) to be executed and delivered by Borrower to Lender before or concurrently with Lender’s disbursement of such Loan to or for the account of Borrower.

 

2.3                               Use of Proceeds. Borrower warrants and represents to Lender that Borrower shall use the proceeds of each Loan and any advances made pursuant to the Other Agreements solely for legal and proper corporate purposes (duly authorized by its Board of Directors) and consistent with all applicable laws and statutes.

 

2.4                               Direction to Remit.  Borrower hereby authorizes and directs Lender to disburse, for and on behalf of Borrower and for Borrower’s account, the proceeds of the Loan to such Person or Persons as an officer or director of Borrower shall direct, whether in writing or orally.

 

2.5                               Conditions Precedent.  (a) The following conditions precedent must be met before each Loan is made hereunder: (i) No event, condition or change that has had, or could reasonably be expected to have, a Material Adverse Effect shall exist, (ii) The representations and warranties contained in this Loan Agreement and in the Other Agreements shall be true and correct in all material respects on and as of the date of such Loan (provided, that representations and warranties which speak to another date, shall be true and correct as of such date; provided, further, that, any representation and warranty that is qualified by materiality in the text thereof shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates), (iii) As of  the date of such Loan, no Default or Event of Default shall exist or would result from the making of such Loan, and (iv) Such additional documents and information as Lender may reasonably request from Borrower from time to time.

 

(b)  In addition, the following conditions precedent must be met before the initial Loan is made hereunder:  (i) Payment of all fees required under this Loan Agreement or the Other Agreements, (ii) Receipt by Lender of satisfactory release documents from all conflicting secured creditors (other than holders of Permitted Liens), (iii) Receipt by Lender of appropriate filings and other means of perfecting its security interest in the Collateral, including, but not limited to, specific assignments of Collateral consisting of instruments or evidenced by titles, (iv) Lender shall have received copies of  the certificates and evidences of insurance contemplated under Section 5.6 and the Financials described in Section 7.3, (v) Receipt by Lender of such proof of free and clear ownership of the Collateral, as may be reasonably requested by Lender, (vi) Reserved, (vii) Delivery by Borrower of a reasonably satisfactory landlord waiver duly executed and delivered by Borrower’s Cambridge, Massachusetts landlord, (viii) Receipt by Lender of a Warrant to purchase 689,655 shares of Borrower’s Series C Preferred Stock at a purchase price of $0.58 per share in form and substance satisfactory to Lender (the “Warrant”), and (ix) Delivery by Borrower of a legal opinion of counsel to Borrower relating to this Loan Agreement and the Other Agreements in form and substance reasonably satisfactory to Lender.

 

(c) The following conditions precedent must be met before the second Tranche is made hereunder: (i) Borrower shall have filed a registration statement of on S-1 for an initial public offering of its stock and is actively pursuing such stock offering thereunder, or (ii) is or making progress (as determined by Lender in its sole discretion) toward the execution of, and funding under, a term sheet from a growth equity fund, inside investors or a pharmaceutical partner, in either case Borrower shall be seeking to raise a net amount not less than $20 million through such equity offering(s) and which transaction(s) would be expected to close and fund on or before April 30, 2014.

 

2.6                               Payments and Taxes.  All payments made by Borrower under this Loan Agreement or any Other Agreement shall be made free and clear of and without deduction for 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 any taxes imposed on or measured by Lender’s overall net income and franchise taxes imposed on it (in lieu of net income taxes), by a jurisdiction (or any political subdivision thereof) as a result of Lender being organized or resident, conducting business (other than a business deemed to arise from Lender having executed, delivered or performed its obligations or received a payment under, or enforced, or otherwise with respect to, this Loan Agreement or any Other Agreement) or having its principal office in such jurisdiction (“Indemnified Taxes”).  If any Indemnified Taxes shall be required by law to be withheld or deducted from or in respect of any sum payable under this Loan Agreement or any Other Agreement to Lender (w) an additional amount shall be payable as may be necessary so that, after making all required withholdings or deductions (including withholdings or deductions applicable to additional sums payable under this

 

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Section) Lender receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (x) Borrower shall make such withholdings or deductions, (y) Borrower shall pay the full amount withheld or deducted to the relevant taxing authority or other authority in accordance with applicable law and (z) Borrower shall deliver to Lender evidence of such payment.  If Borrower fails to pay any Indemnified Taxes when due to the appropriate taxing authority or fails to remit to Lender the required evidence of payment, Borrower shall further indemnify Lender for any incremental taxes, interest, costs or penalties that may become payable by Lender as a result of any such failure.  In addition, the Borrower shall pay any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement to the relevant governmental authority in accordance with applicable law.  Borrower’s obligation hereunder shall survive the termination of this Loan Agreement. Each Lender that is not organized under the laws of the United States of America or any state thereof (a “Non-U.S. Lender”) shall: (i) deliver to Borrower two copies of either (A) in the case of Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, United States Internal Revenue Service Form W-8BEN (together with a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower and is not a controlled foreign corporation related to Borrower (within the meaning of Section 864(d)(4) of the Code)), or (B) Internal Revenue Service Form W-8BEN or Form W-8ECI, in each case properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. federal withholding tax on payments by Borrower under this Agreement; and (ii) deliver to Borrower two further copies of any such form or certification (or any applicable successor form) promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.  Each Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to Borrower, at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate; provided, that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s reasonable judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.  Borrower shall make all payments hereunder in recognition of such exemption or reduction in rate based on the documentation set forth above.

 

3.                                      Interest, Fees and Repayment

 

3.1                               Interest.  Each advance in respect of the Loan shall bear interest payable monthly in arrears on the first Business Day of each month, calculated on the basis of a 360 day year and actual days elapsed at a rate equal to 8% per annum.  In no event shall interest accrue or be payable in connection with any Loan in an amount in excess of that permitted under applicable law.  If the note(s) so provide, the interest thereunder may be precomputed for the period ending when payments thereunder are due and on the assumption that all payments will be made on their respective due dates.  Payments due under any note and not made by their scheduled due date for a period in excess of two (2) Business Days thereafter shall be overdue and shall be subject to a service charge in an amount equal to five percent (5%) of the delinquent amount, but not more than the maximum rate permitted by law, whichever is less; provided, that Borrower shall not be obligated to pay such late charge if payments were overdue as a result of any technical or electronic errors in transferring funds from Borrower’s account.  During the continuance of an Event of Default all outstanding Borrower’s Liabilities in respect of the Loans shall bear interest (payable on demand) at a rate that is five percent (5%) per annum in excess of the Loan interest rate applicable to each Loan and other Borrower’s Liabilities from time to time.

 

3.2                               Fees.  Borrower agrees to pay to Lender a fee of $35,000 to cover due diligence and other costs and expenses, including legal expenses, incurred in connection with the Loan, of which Lender acknowledges receipt of $35,000.  All fees payable hereunder shall be fully earned and nonrefundable when due and payable hereunder.

 

3.3                               Repayment.  Borrower’s Liabilities are absolute and unconditional and are not subject to counterclaim, set-off or rights of rescission.  All costs, fees and expenses payable pursuant to this Loan Agreement or any of the Other Agreements shall be payable by Borrower to Lender or to such other Person or Persons designated by Lender, on demand.  All amounts payable to Lender hereunder shall be received by 2:00 p.m. (prevailing New York time) at Lender’s principal place of business specified at the beginning of this Loan Agreement or at such other place or

 

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places as Lender may designate in writing to Borrower. All payments to Persons other than Lender shall be payable at such place or places as Lender designates in writing to Borrower.

 

3.4                               Application of Payments.  Provided that an Event of Default does not exist, the application of payments received by Lender pursuant to this Loan Agreement shall be applied first to all late charges, fees and expenses then due and payable; second to interest then due and payable; third to the principal of the Loan then due and payable, fourth to the remaining principal of the Loan then outstanding together with unpaid interest accrued thereon and finally, to any other Borrower’s Liabilities then outstanding.  During the continuance of an Event of Default, Lender shall have the continuing and exclusive right to apply all such payments received by Lender to any portion of Borrower’s Liabilities, including to any of Borrower’s Liabilities arising under any of the Other Agreements.  Solely for the purpose of computing interest earned by Lender, payments received by Lender shall be applied as aforesaid on the Business Day following receipt by Lender.  Checks or other items of payment received after 2:00 p.m. (prevailing New York time) shall be deemed received the following Business Day.

 

4.                                      Term and Prepayment

 

4.1                               Term.  This Loan Agreement shall be in effect until the indefeasible payment in full to Lender of all Borrower’s Liabilities (other than inchoate indemnity or reimbursement obligations).  Except as provided below, Borrower has no right to prepay Borrower’s Liabilities.

 

4.2                               Voluntary Prepayment.  Borrower may, upon at least five (5) days prior written notice to Lender (stating the proposed date of prepayment, which date shall then be the due date for such Loan (or the portion of such Loan proposed to be repaid)), prepay the outstanding principal amount of the Loan then outstanding in whole, or in part, by paying to Lender, in immediately available funds, an amount equal to the sum of (i) the outstanding principal amount of the Loan (or the amount of the Loan proposed to be repaid), (ii) all accrued and unpaid interest, fees and expenses on the Loan (or the amount of the Loan proposed to be repaid) through the date of prepayment, and (iii) (A) if such prepayment is made on or prior to the last day of the twelfth month of the relevant Loan, a prepayment premium equal to two percent (2%) of the principal amount being prepaid; and (B) if such prepayment is made after the last day of the twelfth month after the date of the relevant Loan but prior to the maturity date of such Loan, a prepayment premium equal to one percent (1%) of the principal amount being prepaid, and (iv) the Terminal Payment relating to the principal amount of the Loan to be prepaid; provided that any partial prepayment shall be in a principal amount of at least $1,000,000.

 

5.                                      Collateral and Security

 

5.1                               Grant of Security Interest.  To further secure to Lender the prompt full and faithful payment and performance of Borrower’s Liabilities and the prompt, full and complete performance by Borrower of each of its covenants and duties under this Loan Agreement and the Other Agreements (other than the Warrant), Borrower grants to Lender, a valid, first priority continuing security interest in and lien upon all of the following (except as to assets or property with Permitted Liens, upon which a lien which may be other than a first priority lien is granted), whether now owned or hereafter acquired and wherever located:

 

(i)                                     All Receivables;

 

(ii)                                  All Equipment;

 

(iii)                               All Fixtures;

 

(iv)                              All General Intangibles (other than Intellectual Property);

 

(v)                                 All Inventory;

 

(vi)                              All Investment Property;

 

(vii)                           All Deposit Accounts and Securities Accounts;

 

(viii)                        All Cash;

 

(ix)                              All Documents;

 

(x)                                 All Proceeds from the sale, transfer or other disposition of Intellectual Property;

 

(xi)                              All other Goods and tangible and intangible personal property of Borrower other than Intellectual Property, whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and

 

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(xii)                           to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing and all attachments, accessories, accessions, replacements, substitutions, additions or improvements to any of the foregoing, wherever located and all products and proceeds of the foregoing including without limitation proceeds of insurance policies insuring the foregoing and all books and records with respect thereto;

 

(all of the foregoing personal property is hereinafter sometimes individually and sometimes collectively referred to as “Collateral”). Notwithstanding anything herein contained or construed to the contrary, Borrower is not granting to Lender, and Lender is not receiving from Borrower, any grant of a security interest in (i) any of the outstanding capital stock or other equity interests of any directly owned Subsidiary of Borrower organized under the laws of any jurisdiction other than the United States, any State thereof or the District of Columbia in excess of sixty-five percent (65%) of the voting power of all classes of such capital stock or other equity interests of such Subsidiary entitled to vote, (ii) any particular asset if the pledge thereof or the security interest therein is prohibited or restricted by applicable law, rule or regulation (including any requirement to obtain the consent of any governmental authority, regulatory authority or third party), (iii) any specifically identified asset in which Lender agrees in writing, and in its sole discretion not to take a security interest or (iv) any of Borrower’s now owned or hereafter acquired Intellectual Property (other than a security interest in the Proceeds from the sale, transfer or other disposition of Intellectual Property); provided, however, that Borrower may continue to enter into the following arrangements, which shall not be considered a sale, transfer or disposition of Intellectual Property: (x) non-exclusive licenses, sub-licenses and similar arrangements with respect to its Intellectual Property in the ordinary course of Borrower’s business and (y) exclusive licenses and sublicenses thereof where such exclusivity is with respect to geographic location, fields of use, customized products for specific customers and/or time-based, as approved by Borrower’s Board of Directors, as long as (i) Borrower does not encumber for the benefit of a party other than Lender any Proceeds of such license or other fees payable to Borrower under any such license or arrangement, and (ii) no such license or arrangement shall prohibit or restrict Borrower (or any successor or assign) from disposing of any Intellectual Property that is the subject of any such license or arrangement.  Borrower shall make appropriate entries upon its financial statements and its books and records disclosing Lender’s security interest in the Collateral.

 

5.2                               Further Assurances.  Borrower shall execute and/or deliver to Lender, at any time and from time to time hereafter at the request of Lender, all agreements, instruments, UCC financing statements (or other required perfection instruments), documents and other written matter (hereinafter individually and/or collectively, referred to as “Additional Documentation”) that Lender reasonably may request, in a form and substance reasonably acceptable to Lender, to perfect and maintain Lender’s security interest in the Collateral and to consummate the transactions contemplated in or by this Loan Agreement and the Other Agreements. In the event that Borrower fails to deliver such Additional Documentation or notify Lender in writing that it objects to such Additional Documentation  as being unreasonable within five (5) Business Days after notice from Lender, Borrower, irrevocably, (a) hereby makes, constitutes and appoints Lender (and all Persons designated by Lender for that purpose) as Borrower’s true and lawful attorney (and agent-in-fact) to sign the name of Borrower on the Additional Documentation and to deliver the Additional Documentation to such Persons as Lender, in its reasonable discretion, may elect, (b) authorizes the filing of any such Additional Documentation by Lender or its agents, whether paper or electronic, (c) hereby ratifies and confirms the filing of Additional Documentation by Lender or its agent, paper or electronic, occurring prior to the date hereof, and (d) declares that Borrower has the present intention to authenticate and process any such Additional Documentation, whether paper or electronic, and whether or not filed by Lender or its agents after the date hereof.

 

5.3                               Inspection of Collateral.  Lender (by any of its officers, employees and/or agents) shall have the right, at any time or times during Borrower’s usual business hours, to inspect the Collateral and all related records (and the premises upon which it is located) and to verify the amount and condition of or any other and all financial records and matters whether or not relating to the Collateral at its own cost and expense; provided, however, that during the continuance of an Event of Default, all costs, fees and expenses incurred by Lender, or for which Lender has become obligated, in connection with such inspection and/or verification shall be payable by Borrower to Lender. Borrower shall use commercially reasonable efforts to cause its employees and agents to cooperate with Lender in all inspections.

 

5.4                               Controlled Accounts; Proceeds of Collateral.  (a) Subject to subsection (b) below, Borrower shall deliver, or cause to be delivered to Lender, an account control agreement in form and substance reasonably satisfactory to Lender and duly authorized, executed and delivered by Borrower and each bank or financial institution where Borrower maintains a deposit or securities account, other than any such account supporting Borrower’s

 

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reimbursement obligations under a letter of credit as provided in clause (vi) of the definition of Permitted Debt (each a “Controlled Account”); provided, however, that Lender will not exercise its right to control amounts in a Controlled Account unless an Event of Default has occurred and is continuing.

 

(b) With respect to any deposit or securities account (other than any such account supporting Borrower’s reimbursement obligations under a letter of credit as provided in clause (vi) of the definition of Permitted Debt) in existence at the closing of the Initial Tranche, Borrower shall deliver an account control agreement in form and substance reasonably satisfactory to Lender and duly authorized, executed and delivered by Borrower and each bank or financial institution no later than October 4, 2013.

 

(c)  All proceeds arising from the disposition of any Collateral by Borrower shall be deposited in a Controlled Account within two (2) Business Days after receipt by Borrower.  Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Loan Agreement.

 

5.5                               Third Party Claims. Lender, in its sole discretion, without waiving or releasing any obligation, liability or duty of Borrower under this Loan Agreement or the Other Agreements or any Event of Default, may (but shall be under no obligation to) at any time or times hereafter, pay, acquire and/or accept an assignment of any security interest, lien, encumbrance or claim asserted (other than Permitted Liens) by any Person against the Collateral. All sums paid by Lender in respect thereof and all costs, fees and expenses, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto incurred by Lender on account thereof, shall be payable by Borrower to Lender upon demand.

 

5.6                               Insurance. Borrower shall maintain at its own expense the following minimum insurance coverages, which shall be provided by insurance carriers with an AM Best rating of A, Class X or as otherwise acceptable to Lender and with such deductibles and exclusions as approved by Lender:  (1)  All risk property damage insurance covering the Collateral which shall include, but not be limited to, fire and extended coverage and where applicable mechanical breakdown and electrical malfunction, and which shall be written in amount not less than the current replacement cost; and, (2) Commercial general liability insurance which may include excess liability insurance written on occurrence basis with a limit of not less than $2,000,000, and (3) workers’ compensation insurance in accordance with statutory limits and employers’ liability coverage which may include excess liability in an amount not less than $500,000.

 

Any insurance carried and maintained in accordance with this Loan Agreement shall be endorsed to provide that:  (i) Lender shall be loss payee with respect to the property insurance described in subsection (1) of the prior paragraph (and such insurance shall provide that the interest of Lender shall not be invalidated by any act or neglect of Lender, Borrower or other Person), and Lender shall be an additional insured with respect to the liability insurance described in subsection (2) of the prior paragraph; and (ii) The insurers thereunder waive all rights of subrogation against Lender, any right of setoff and counterclaim and any other right to deduction due to outstanding premiums, whether by attachment or otherwise; and (iii) Such insurance shall be primary without right of contribution of any other insurance carried by or on behalf of Lender; and (iv) Inasmuch as such policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements (other than the limits of liability) shall operate in the same manner as if there were a separate policy covering each insured; and (v) If such insurance is canceled for any reason whatsoever, including nonpayment of premium, or any substantial change is made in the coverage that affects the interests of Lender, such cancellation or change shall not be effective as to Lender until thirty (30) days after receipt by Lender of written notice sent by registered mail from such insurer of such cancellation or change; providing, however, that such thirty (30) day period shall be reduced to ten (10) days in the case where cancellation results from the nonpayment of premiums.  Effective upon the occurrence and during the continuance of an Event of Default, Borrower appoints Lender as Borrower’s true and lawful attorney (and agent-in fact) for the purpose of making, settling and adjusting claims under such policies, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies and for making all determinations and decisions with respect to such policies.

 

On or before the initial funding by Lender hereunder, and at each policy anniversary date, Borrower shall arrange to furnish Lender with appropriate Certificates of Insurance.  Such Certificates of Insurance shall be executed by each insurer or by an authorized representative of each insurer, and shall identify insurers, the type of insurance, the insurance limits and the policy term and shall specifically list the special endorsements (i) through (v) above.

 

In case of the failure to procure or maintain such insurance, Lender shall have the right, but not the obligation, to obtain such insurance and any premium paid by Lender shall be immediately due and payable by Borrower to Lender.  The maintenance of any policy or policies of insurance pursuant to this Section shall not limit any obligation or liability of Borrower pursuant to any other Sections or provisions of this Loan Agreement.

 

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5.7                               Charges on Collateral. Borrower shall not permit any Charges (other than Permitted Liens) to arise, or to remain, and Borrower shall pay promptly when due, and discharge, such Charges.  If Borrower, at any time or times hereafter, fails to pay such Charges (other than Permitted Liens) when due or to obtain such discharges, Borrower shall so advise Lender thereof in writing. Lender may, without waiving or releasing any obligation or liability of Borrower hereunder or any Event of Default, in its sole discretion, at any time or times thereafter, make such payment, or any part thereof, or obtain such discharge and take any other action with respect to such Charges (other than Permitted Liens) which Lender deems advisable. All sums so paid by Lender and any expenses, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable by Borrower to Lender upon demand.

 

5.8                               UCC Filing Authorization.  Borrower hereby authorizes Lender and its counsel and other representatives to file, at any time on or after the date hereof, UCC financing statements and continuation statements, and amendments to financing statements, in any jurisdictions and with any filing offices as Lender may determine, in its sole discretion, are necessary or advisable to perfect the security interests granted to Lender hereunder and under the Other Agreements. Such financing statements may describe the Collateral in the same manner as described herein or therein or may contain an indication or description of Collateral that describes such property in any other manner as Lender may determine is necessary or advisable to ensure the perfection of the security interest in the Collateral.

 

5.9                               Accounts.  So long as no Event of Default has occurred and is continuing, subject to Section 7.4, Borrower may settle, adjust or compromise any claim, offset, counterclaim or dispute with any Account Debtor.  At any time that an Event of Default has occurred and is continuing, Lender may, at its option, notify Borrower in writing that Lender intends to have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtors or grant any credits, discounts or allowances and on and after such notice from Lender to Borrower, Lender shall have such exclusive right until such Event of Default is cured or waived.

 

6.                                         Warranties and Representations

 

6.1                               Borrower Representations.  Borrower warrants and represents to Lender, as of the date hereof and as of the date of any Loan made hereunder, and agrees and covenants to Lender that:

 

(a)         Borrower is and at all times hereafter shall be (i) a Person having that legal name and organizational structure as set forth above, duly organized and existing and in good standing under the laws of the state of its organization as set forth above and (ii) qualified or licensed to do business in all other states in which the laws require Borrower to be so qualified and/or licensed, except in such states where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect;

 

(b)         Borrower is duly authorized and empowered to enter into, execute, deliver and perform this Loan Agreement and the Other Agreements and the execution, delivery and/or performance by Borrower of this Loan Agreement and the Other Agreements, and the use by Borrower of the proceeds of the Loans hereunder, shall not, by the lapse of time, the giving of notice or otherwise, conflict with or constitute a violation of any applicable law (including, without limitation, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof) or a breach of any provision contained in Borrower’s organizational documents or contained in any material agreement, instrument or document to which Borrower is a party or give rise to or result in any default thereunder;

 

(c)          This Loan Agreement is (and when executed or delivered, each Other Agreement will be) the legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles (whether enforcement is sought in equity or at law);

 

(d)         Except as disclosed to Lender in writing prior to the date hereof, there are no actions or proceedings which are pending, or to its knowledge threatened, against Borrower which could reasonably be expected to have a Material Adverse Effect.  Borrower is not in breach of or a party to any contract or agreement or subject to any charge, restriction, judgment, decree or order which has or could reasonably be expected to have a Material Adverse Effect, nor is Borrower in default with respect to any indenture, security agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound;

 

(e)          Borrower has and is in good standing with respect to all licenses, patents, copyrights, trademarks, trade names, governmental permits, certificates, consents and franchises necessary to continue to conduct its business as previously conducted by it and to own or lease and operate its properties as now owned or leased by it except, in each case, where failure to be in good standing or to obtain such licenses, permits, certificates, consents or franchises could not reasonably be expected to have a Material Adverse Effect;

 

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(f)           The financial statements delivered by Borrower to Lender prior to the date hereof and the Financials delivered by Borrower to Lender pursuant to Section 7.3 fairly and accurately present the assets, liabilities and financial conditions and results of operations of Borrower as of the dates and for the periods stated therein and have been prepared in accordance with GAAP (subject to, in the case of interim financial statements, the absence of footnotes and normal year-end adjustments in connection with the audited financial statements for the periods covered by such interim financial statements), and no event, condition or change that has had, or could reasonably be expected to have, a Material Adverse Effect has occurred since the date of this Loan Agreement;

 

(g)          As to the Accounts and other Collateral, (i) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral and the Accounts described and/or listed on any certificate or schedule relating to the Accounts delivered to Lender, free and clear of all liens, claims, security interests and encumbrances except those of Lender and Permitted Liens; (ii) Borrower, promptly on demand by Lender, shall deliver to Lender all evidence of ownership of, including without limitation, vendor invoices and proofs of payment thereof, certificates of title to and applications for title to, any Collateral; (iii) Borrower shall keep and maintain the Collateral in good operating condition and repair, ordinary wear and tear excepted, and shall make all necessary replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved; and (iv) Borrower shall not permit any such items to become a fixture to real estate or accession to any other Person’s personal property.

 

(h)         As to Lender’s security interest, (i) Lender’s security interest in the Collateral is now and at all times hereafter shall be perfected and have a first priority (subject to Permitted Liens); (ii) the offices and/or locations where Borrower keeps the Collateral and Borrower’s books and records concerning the Collateral are at the locations identified to Lender in writing and Borrower shall not remove such books and records and/or the Collateral therefrom to any other location unless Borrower gives Lender written notice thereof at least thirty (30) days prior thereto and the same is within the contiguous forty-eight (48) states of the United States of America; and (iii) the addresses identified to Lender in writing as Borrower’s chief executive office and principal place(s) of business are Borrower’s sole offices and place(s) of business, and Borrower, by written notice delivered to Lender at least thirty (30) days prior thereto, shall advise Lender of any change thereto.

 

(i)             Borrower is not an “investment company” or a company “controlled” by an “investment company”, as such terms are defined in the Investment Company Act of 1940.

 

(j)            All income and other tax returns and reports required to be filed by Borrower have been timely filed, and all taxes shown on such tax returns to be due and payable and all other assessments, fees and governmental charges upon Borrower and its properties, assets, income, businesses and franchises have been paid when due and payable, except to the extent that such taxes, assessments, charges or claims (i) 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 and (ii) such proceeding shall stay the attachment, sale, disposition, foreclosure or forfeiture of any asset of Borrower in connection with any such contested tax, assessment, charge or claim.  All necessary and appropriate estimated payments (including any interest and penalties) in respect of assessed tax liability under Borrower’s state and federal tax returns have been made on a timely basis.

 

(k)         As of the date hereof and of each Loan (i) the sum of Borrower’s debt (including contingent liabilities) does not exceed the present fair saleable value of Borrower’s present assets; (ii) Borrower’s capital is not unreasonably small in relation to its business as it exists and as is contemplated at such time; and (iii) Borrower has not incurred and does not intend to incur, or believe that it will incur, debts beyond its ability to pay such debts as they become due.

 

(l)             No information furnished to Lender by or on behalf of Borrower for use in connection with the transactions contemplated hereby, taken as a whole for the relevant period, contains, any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not materially misleading in light of the circumstances in which the same were made.  Any projections contained in such materials are based upon good faith estimates and assumptions believed by Borrower to be reasonable at the time made.  There are no facts known to Borrower that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

(m)     Borrower has provided to Lender on or prior to the date hereof a schedule that correctly identifies the ownership interest (including all options, warrants and other rights to acquire capital stock) of Borrower and each of its Subsidiaries as of the date hereof.

 

(n)         (i) Borrower (A) has been and is in compliance in all material respects with all applicable Environmental Laws;

 

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(B) has not received any communication, whether from a governmental authority or otherwise, alleging that Borrower is not in such compliance, which noncompliance could reasonably be expected to have a Material Adverse Effect, and there are no past or present actions, activities, circumstances conditions, events or incidents that may prevent or interfere with such compliance in the future; (ii) there is no Environmental Claim pending or, to the best knowledge of Borrower, threatened against Borrower or against any Person whose liability for any Environmental Claim Borrower has or may have retained or assumed either contractually or by operation of law and which could reasonably be expected to have a Material Adverse Effect; and (iii) there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, threatened release or presence of any Hazardous Material, which could reasonably be expected to form the basis of any Environmental Claim against Borrower or, to the best knowledge of Borrower, against any Person whose liability for any Environmental Claim Borrower has or may have retained or assumed either contractually or by operation of law and which could reasonably be expected to have a Material Adverse Effect.

 

(o)         (i) Borrower is an “operating company” within the meaning of the regulations of the United States Department of Labor included within 29 CFR Section 2510.3-101 (the “DOL Regulations”) or is in compliance with such other exception as may be available under such regulations to prevent the assets of Borrower from being treated as the assets of any employee benefit plan for purposes of the DOL Regulations and (ii) neither Borrower nor any Subsidiary of Borrower maintains or is obligated to make contributions to any employee benefit plan that is subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute (“ERISA”).

 

7.                                      Affirmative and Negative Covenants

 

7.1                               Affirmative Covenants.  Borrower shall, and shall cause each of its Subsidiaries to: (a) preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business, (b) pay all income and other taxes and assessments imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, except for those that are being contested in good faith and for which adequate reserves are maintained in accordance with GAAP and such proceeding shall stay the attachment, sale, disposition, foreclosure or forfeiture of any asset of Borrower in connection with any such contested tax, assessment, charge or claim, (c) comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, (d) keep adequate books of record and account, in which complete entries shall be made of all financial transactions and the assets and of its business, (e) on or prior to September 30, 2013 (and promptly after the establishment of any new facilities or co-host locations), deliver to Lender duly executed landlord or collateral access agreements, in form and substance satisfactory to Lender, for all premises (including offices and co-host locations) at which any Collateral is located (other than Borrower’s offices in Cambridge, Massachusetts for which a landlord agreement was delivered to Lender on or prior to the date hereof), (f) promptly take all necessary Cleanup action on, under or affecting any property owned, leased or operated by Borrower in accordance with all applicable laws and the applicable policies, orders and directives of all federal, state and local governmental authorities, and conduct and complete such Cleanup action in material compliance with all applicable Environmental Laws, and (g) if Borrower had not closed an equity financing in an amount of at least $40 million pursuant to its filing of a registration statement on Form S-1 on or prior to March 31, 2014, then, on or before April 30, 2014 (or such later date as may be consented to by Lender (such consent not to be (i) subject to or conditioned upon the payment of any fee or (ii) unreasonably withheld, conditioned or delayed)), Borrower shall have entered into, closed and funded under an executed term sheet for an equity financing from an alternative financing source (inclusive of growth equity funds, inside investors or pharmaceutical partners) for an amount not less than $20 million.

 

7.2                               Negative Covenants  Borrower shall not, and shall not permit any of its Subsidiaries to: (a) grant a security interest in, assign, sell or transfer any of the Collateral or any of its Intellectual Property to any Person or permit, grant, or suffer or permit a lien, claim or encumbrance upon any of the Collateral or Intellectual Property, except for (i) Permitted Liens, (ii) the sale of Inventory and obsolete or unneeded Equipment in the ordinary course of business, or upon Lender’s prior written consent or (iii) non-exclusive licenses or sublicenses of Borrower’s Intellectual Property in the ordinary course of business or exclusive licenses and sublicenses thereof where such exclusivity is with respect to geographic location, fields of use, customized products for specific customers and/or time-based, as approved by Borrower’s Board of Directors, and any such license is otherwise in compliance with Section 5.1 hereof; (b) permit or suffer any Charges to attach to or affect any of the Collateral (other than Permitted Liens); (c) permit or suffer any receiver, trustee or assignee for the benefit of creditors to be appointed to take possession of any of the Collateral; (d) merge or consolidate with or acquire any Person without the prior written consent of Lender; (e) make an equity investment in, or a loan, advance or capital contribution to, any Person, other than travel advances to employees in the ordinary course of business and investments in newly-formed Subsidiaries

 

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with the consent of Lender; (f) incur or permit or suffer to exist any indebtedness for borrowed money or for the deferred purchase price for property or services (other than Permitted Debt); (g) voluntarily prepay any indebtedness prior to its scheduled maturity other than pursuant to the terms hereof; (h) make or pay (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Borrower or (ii) any redemption, retirement or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Borrower or any outstanding warrants, options or other rights to acquire such shares; provided, however, that this restriction shall not apply to (x) the repurchase of shares of Borrower’s common stock from employees, directors and other Persons performing services for Borrower pursuant to agreements under which Borrower has the option to repurchase such shares upon the termination of such Person’s services for Borrower, provided that (A) at the time of any such repurchase, and after giving effect thereto, no Event of Default exists and (B) the aggregate cash paid in connection with such repurchases during any year during the term hereof does not exceed $100,000 or (y) any redemption or repurchase of shares of Borrower’s preferred stock or common stock issued upon conversion of such preferred stock from the Bill & Melinda Gates Foundation pursuant to the Letter Agreement between the Borrower and the Bill & Melinda Gates Foundation, dated as of September 28, 2012; (i) enter into any transaction with any Affiliate or any other transaction (including, without limitation, any sale of assets) not in the ordinary course of its business, except for Permitted Joint Ventures; (j) make a change in the nature of its business, such that Borrower ceases to generate a majority of its revenue from the business of development, design, license, co-development and sale of its T-cell vaccines and immunotherapies for a range of infectious diseases, cancers and autoimmune diseases; (k) without thirty (30) days’ prior written notice to Lender, make any change in its legal name or state of formation or organization; (l) adopt or otherwise become obligated to contribute to any employee benefit plan that is subject to Title IV of ERISA; or (m) take any action or fail to take an action if, as a result of such action or inaction, Borrower would fail to qualify as an “operating company” within the meaning of the DOL Regulations or otherwise comply with such other exception as may be available under such regulations to prevent the assets of Borrower from being treated as the assets of any employee benefit plan for purposes of the DOL Regulations.

 

7.3                               Covenants Regarding Financial Statements.  Borrower shall cause to be furnished to Lender, (i) the unqualified, audited fiscal year end financial statements of Borrower (which shall not contain any “going concern” exception (other than such exception if based upon (i) the history of accumulated losses and related impact upon the amount of cash shown on the financial statements of Borrower, (ii) the need to raise additional financing or (iii) the impending maturity (not in excess of 120 days) of the second tranche Loan in 2017) or any exception relating to scope of review) no later than June 30 of the subsequent fiscal year, provided that Borrower shall provide to Lender unaudited annual financial statements no later than 90 days after the fiscal year end, (ii) no later than 30 days after the end of each calendar month, the internally prepared monthly financial statements of Borrower, certified by Borrower’s chief financial officer, each containing consolidated and consolidating profit and loss statements for the month then ended and for Borrower’s fiscal year to date, consolidated and consolidating balance sheets as at the last day of such month and a consolidated statement of cash flows for the month then ended and for Borrower’s fiscal year to date, each of which will be presented in a trending monthly format with fiscal year to date subtotals,  (iii)summary monthly bank statements, no later than 30 days after the related month end, reflecting month-end cash balances, (iv) a monthly Compliance and Disclosure Certificate, substantially in the form of Exhibit A attached hereto, (v) promptly upon Borrower’s Board of Directors approval thereof, copies of Borrower’s annual operating plan and any revisions thereto; (vi) copies of materials provided to Borrower’s Board of Directors in connection with regular and special meetings thereof (excluding any materials subject to attorney-client privilege and attorney work-product); (vii) updated capitalization tables, together with any amendments or restatements of the certificate of incorporation or investor rights agreement of Borrower promptly following each round of equity or convertible debt issuance by Borrower, and (viii) such other financial and business information of Borrower as Lender may reasonably require (excluding any materials subject to attorney-client privilege and attorney work-product), including such other financial and operating performance data as is provided to its outside investors or commercial lenders and, if applicable, required to be provided to shareholders by the Securities and Exchange Commission. Each financial statement to be furnished to Lender must be prepared in accordance with GAAP, except for normal year-end adjustments and the absence of footnotes in unaudited interim financial statements. Borrower also agrees to promptly provide to Lender notice of, and such other data and information (financial and otherwise) at any time and from time to time relating to, any legal actions or proceedings pending, or to its knowledge, threatened against Borrower or the occurrence of any event or change that has, or could reasonably be expected to have, a Material Adverse Effect. Financial statements may be delivered via electronic mail to Lender.

 

7.4                               Further Covenants.  (a)  Borrower may not grant any credit, discount, allowance or extension, or enter into any agreement for any of the foregoing with Account Debtors, except for credits, discounts, allowances or extensions made or given in the ordinary course of Borrower’s business in accordance with Borrower’s historic credit and collection practices and policies without the prior consent of Lender.

 

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(b) Effective upon the occurrence and during the continuance of an Event of Default, Lender shall have the right to verify the validity, amount or any other matter relating to any Accounts, by mail, telephone, facsimile transmission or otherwise.

 

7.5                               Indemnification and Liability. Borrower shall indemnify and hold Lender and Lender’s directors, officers, employees and agents harmless from and against all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees), of every nature, character and description (the “Indemnified Liabilities”), which Lender may sustain or incur arising out of the Collateral, any Borrower’s Liabilities, any relationship or agreement between Lender and Borrower, or any other matter, cause or thing whatsoever occurred, done, omitted or suffered to be done by Lender relating to Borrower or Borrower’s Liabilities (except any such Indemnified Liabilities arising from the gross negligence or willful misconduct of Lender). If any third-party suit or proceeding is instituted by or against Lender with respect to any Collateral or relating to Borrower, Borrower shall, without expense to Lender, make available Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Lender may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding. Borrower’s obligation hereunder shall survive termination of this Loan Agreement.

 

8.                                      Default

 

8.1                               Events of Default.  The occurrence of any one of the following events shall constitute a default (“Event of Default”): (a) if Borrower fails to pay any principal of any Loans when due and payable or fails to pay any other Borrower’s Liabilities within two (2) Business Days after the same are due and payable; (b) if any representation, warranty, financial statement, statement, report or certificate made, deemed made or delivered by Borrower, or any of its officers, employees or agents, to Lender is not true and correct in any material respect when made, deemed made or delivered (except 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); (c) if Borrower fails or neglects to perform, keep or observe any term, provision, condition or covenant contained in this Loan Agreement or in the Other Agreements which is required to be performed, kept or observed by Borrower, other than the payment of Borrower’s Liabilities, and, in the case of any covenant contained in Section 7.1, the same is not cured within fifteen (15) days (provided that, notwithstanding the foregoing, the cure period for a breach of Section 7.1(g) shall be five (5) Business Days); (d) if any of the Collateral or any other of Borrower’s other material assets are attached, seized, subjected to a writ or distress warrant, or are levied upon, and such attachment, seizure, writ, warrant or levy is not removed within fifteen (15) days, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; (e) [Reserved]; (f) if a petition under the Bankruptcy Code or any similar law or regulation shall be filed by or against Borrower and, in the case of any involuntary proceeding, such proceeding shall continue undismissed or unstayed for thirty (30) days, or if Borrower shall make an assignment for the benefit of its creditors or if any case or proceeding is filed by Borrower for its dissolution or liquidation; (g) if Borrower is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business affairs and such injunction, restraint or other court-ordered impediment to conducting business continues for fifteen (15) days; (h) if an application is made by Borrower or any Person for the appointment of a receiver, trustee or custodian for the Collateral or any other of Borrower’s assets and, in the case of any application made by any Person other than Borrower, such application is not dismissed within fifteen (15) days; (i) if Borrower becomes aware of a notice of lien or Charges (other than with respect to Permitted Liens) being filed of record with respect to any of the Collateral by any Person and such notice of lien or Chargers is not removed within fifteen (15) days of Borrower ascertaining knowledge thereof; (j) if any Change of Control shall occur; (k) if any money judgment, writ or warrant of attachment or similar process for an aggregate of at least $50,000 (if not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Borrower or any of its Subsidiaries or any of their respective assets and such judgment, writ or warrant of attachment or similar process shall remain unsatisfied and unstayed for a period of fifteen (15) days; (l) this Loan Agreement or any Other Agreement shall for any reason fail or cease to be valid and binding on, or enforceable against, Borrower or any other party thereto or Borrower shall so assert; (m) this Loan Agreement or any Other Agreement shall for any reason cease to be in full force and effect or cease to create a valid and enforceable lien and security interest on any Collateral purported to be covered thereby or any such lien and security interest shall fail or cease to be a perfected and first priority lien and security interest (subject to Permitted Liens); (n) if Borrower is in default (i) in the payment of any of Borrower’s debt to Lender under any Other Agreement; or (ii) in the payment of any debt to any Person other than Lender in excess of $100,000 or, in the case of clause (i) or (ii), any other event shall occur or condition shall exist under any agreement or instrument relating to any such debt and such default, condition or event gives the holders of such debt (or any agent or trustee on their behalf) the then current right to accelerate such indebtedness; (o) Borrower changes the nature of its business such that it ceases to generate a

 

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majority of its revenue from the development, design, license, co-development and sale of its T-cell vaccines and immunotherapies for a range of infectious diseases, cancers and autoimmune diseases; (p) any of the Chief Executive Officer, Vice President of Development, Chief Medical Officer, Vice President of Business Development or Vice President of Finance is terminated, resigns or is no longer actively involved in the day to day management of Borrower and Borrower’s Board of Directors fails to designate an interim replacement promptly and fails to appoint a permanent replacement having comparable experience within: (i) ninety (90) days for non-C level employees and (ii) one hundred twenty (120) days  for C-level employees (which periods may be extended by Lender in its reasonable discretion in 30 to 60 day increments, not to exceed an aggregate of 180 days), provided that in no event may two of the positions listed above be vacant at the same time for a period greater than sixty (60) days; (q) prior to the closing of an initial public offering of Borrower’s equity securities, a Material Investor Event occurs, (r) Borrower becomes engaged in litigation or regulatory proceedings which, could reasonably be expected to result in a Material Adverse Effect; (s) any Required Permit shall have been revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course, provided any such occurrence would reasonably be expected to have a Material Adverse Effect or (t) a Material Adverse Effect upon the Intellectual Property of Borrower or its Subsidiaries (including a material breach, termination or revocation of licenses under which Borrower has licensed Intellectual Property from third parties) occurs. Borrower shall provide written notice of any events or circumstances which would give rise to an Event of Default under this Section 8.1 promptly (but in no event more than two (2) Business Days) after becoming aware of such events or circumstances.  Failure of Borrower to give such notice promptly shall constitute an Event of Default.

 

8.2                               Lender’s Rights and Remedies.  Upon an Event of Default under Section 8.1(f), without notice by Lender to, or demand by Lender of, Borrower, all Borrower’s Liabilities shall be automatically accelerated and shall be due and payable forthwith and any other commitments to provide any financing hereunder shall automatically terminate, and upon any other Event of Default, without notice by Lender, to or demand by Lender of, Borrower, Lender may accelerate all Borrower’s Liabilities and same shall be due and payable forthwith and/or Lender may terminate any other commitments to provide any financing hereunder. Lender may, in its sole discretion: (a) exercise any one or more of the rights and remedies accruing to a lender under the UCC or other applicable law of the relevant state or states or other applicable jurisdiction, and in equity, and under any other instrument or agreement now or in the future entered into between Lender and Borrower, including under this Loan Agreement and the Other Agreements; (b) enter, with or without process of law and without breach of the peace, any premises where the Collateral or the books and records of Borrower related thereto is or may be located, and without charge or liability to Lender therefor seize and remove the Collateral (and copies of Borrower’s books and records relating to the Collateral) from said premises and/or remain upon said premises and use the same (together with said books and records) for the purpose of collecting, preparing and disposing of the Collateral; (c) sell, lease, license or otherwise dispose of the Collateral or any part thereof by one or more contracts at one or more public or private sales for cash or credit, provided, however, that Borrower shall be credited with the net proceeds of such sale(s) only when such proceeds are actually received by Lender; and (d) require Borrower to assemble the Collateral and make it available to Lender at a place or places to be designated by Lender which is reasonably convenient to Lender and Borrower.

 

In addition, at any time an Event of Default exists, Lender may, in its reasonable discretion, enforce Borrower’s rights against any Account Debtor, secondary obligor or other obligor in respect of any of the Accounts.  Without limiting the generality of the foregoing, at any time or times that an Event of Default exists, Lender may, in its reasonable discretion, at such time or times (1) notify Account Debtors, secondary obligors or other obligors in respect thereof that the Accounts have been assigned to Lender and that Lender has a security interest therein and Lender may direct any or all Account Debtors, secondary obligors and other obligors to make payment of Accounts directly to Lender, (2) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, all Accounts or other obligations included in the Collateral and thereby discharge or release the Account Debtor or any secondary obligors or other obligors in respect thereof without affecting any Borrower’s Liabilities, (3) demand, collect or enforce payment of any Accounts or such other obligations, but without any duty to do so, and Lender shall not be liable for any failure to collect or enforce the payment thereof and (4) take whatever other action Lender may deem necessary or desirable for the protection of its interests.  At any time that an Event of Default exists, at Lender’s request, all invoices and statements sent to any Account Debtor shall state that the Accounts and such other obligations have been assigned to Lender and are payable directly and only to Lender and Borrower shall deliver to Lender such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Lender may reasonably require.

 

All of Lender’s rights and remedies under this Loan Agreement and the Other Agreements are cumulative and non-exclusive. Exercise or partial exercise by Lender of one or more of its rights or remedies shall not be deemed an

 

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election, nor bar Lender from subsequent exercise or partial exercise of any other rights or remedies. Lender agrees to give written notice of any sale to Borrower at least ten (10) days prior to any public sale or at least ten (10) days before the time after which any private sale may be held. Borrower agrees that Lender may purchase any such Collateral (including by way of credit bid), and may postpone or adjourn any such sale from time to time by an announcement at the time and place of sale or by announcement at the time and place of such postponed or adjourned sale, without being required to give a new notice of sale. Borrower agrees that Lender has no obligation to preserve rights against prior parties to the Collateral.

 

8.3                               Power of Attorney.  Borrower grants to Lender an irrevocable power of attorney coupled with an interest (in addition to such other powers of attorney granted to Lender elsewhere in this Loan Agreement), authorizing and permitting Lender at any time during the continuance of an Event of Default, at its option, but without obligation, with or without notice to Borrower, and at Borrower’s expense, to execute on behalf of Borrower any Additional Documentation, or such other instruments or documents as may be reasonably necessary in order to exercise a right of Borrower or Lender, including, but not limited to, the execution of any proof of claim in bankruptcy, any notice of lien, claim of mechanic’s or other lien, or assignment or satisfaction of mechanic’s or other lien, or to take control in any manner of any cash or non-cash proceeds of Collateral and take any action or pay any sum required of Borrower pursuant to this Loan Agreement and any Other Agreement.  In no event shall Lender’s rights under the foregoing power of attorney or any of Lender’s other rights under this Loan Agreement be deemed to indicate that Lender is in control of Borrower’s business, management or properties.

 

9.                                      General Provisions

 

9.1                               Notices. All notices, demands or other communications required or permitted to be given or delivered under or by reason of the provisions hereof shall be in writing and shall be deemed to have been given when (i) delivered personally to the recipient, (ii) sent via facsimile transmission, (iii) the next Business Day after having been sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) four (4) Business Days after having been mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid.  Such notices, demands and other communications shall be sent to the parties hereunder at their respective addresses and transmission numbers indicated on the signature page hereof, or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.

 

9.2                               Severability. If any court of competent jurisdiction holds any provision of this Loan Agreement to be void or unenforceable, such defect shall not affect the remainder of this Loan Agreement, which shall continue in full force and effect.

 

9.3                               Integration; Modification. This Loan Agreement, the Other Agreements and such other written agreements, documents and instruments as may be executed in connection herewith or pursuant hereto are the final, entire and complete agreement between Borrower and Lender and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Loan Agreement and the Other Agreements. There are no oral understandings, representations or agreements between the parties which are not set forth in this Loan Agreement or the Other Agreements or in other written instruments, documents or agreements signed by the parties in connection herewith. If any provision contained in this Loan Agreement is in conflict with, or inconsistent with, any provision in the Other Agreements, the provision contained in this Loan Agreement shall govern and control, it being the intent of the parties, however, that the terms of each of the Loan Agreement and the Other Agreements shall remain in full force and effect. This Loan Agreement and the Other Agreements may not be modified, altered or amended except by an agreement in writing signed by Borrower and Lender.

 

9.4                               Time of Essence. Time is of the essence in the performance by Borrower of each and every obligation under this Loan Agreement.

 

9.5                               Attorneys’ Fees and Other Costs. Borrower shall reimburse Lender for all reasonable and documented out-of-pocket costs and expenses, including, but not limited to, reasonable attorneys’ fees and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by Lender in connection with any amendment or waiver to this Loan Agreement or any Other Agreement; seeking to enforce any of its rights hereunder against Borrower or the Collateral, including in bankruptcy; enforcing Lender’s security interest in the Collateral, and  representing Lender in all such matters.  Borrower’s obligation hereunder shall survive termination of this Loan Agreement.

 

9.6                               Benefit of Agreement; Assignment.  The provisions of this Loan Agreement shall be binding upon and inure to the benefit of the respective successors, assigns and representatives of Borrower and Lender; provided, however, that Borrower may not assign or transfer any of its rights or obligations under this Loan Agreement

 

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without Lender’s prior written consent, and any prohibited assignment shall be void. Borrower hereby consents to Lender’s sale, assignment, pledge, transfer or other disposition, at any time and from time to time hereafter, of this Loan Agreement, or the Other Agreements, or of any portion thereof, including, without limitation, Lender’s rights, titles, interests, remedies, powers and/or duties.  Borrower hereby acknowledges that Lender and its Affiliates may securitize the Loan (a “Securitization”) through the pledge of the Loan as collateral security for loans to Lender or its Affiliates or through the sale of the Loan or the issuance of direct or indirect interests in the Loan to their controlled Affiliates, which loans to Lender or its Affiliates or direct or indirect interests will be rated by Moody’s, S&P or one or more other rating agencies.  Borrower shall, to the extent commercially reasonable, cooperate with Lender and its Affiliates to effect any and all Securitizations.  Notwithstanding the foregoing, no such Securitization shall release Lender from any of its obligations hereunder or substitute any pledgee, secured party or any other party to such Securitization for Lender as a party hereto. Borrower shall establish and maintain a record of ownership (the “Register”) in which it agrees to register by book entry Lender’s and each initial and subsequent assignee’s interest in each Loan, and in the right to receive any payments hereunder and any assignment of any such interest.  Notwithstanding anything to the contrary contained in this Loan Agreement, the Loans (including the notes in respect of such Loans) are registered obligations and the right, title, and interest of Lender and its assignees in and to such Loans shall be transferable upon notation of such transfer in the Register, pursuant to Borrower’s obligation above.  In no event is any note to be considered a bearer instrument or bearer obligation.  This Section shall be construed so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related regulations (or any successor provisions of the Code or such regulations).

 

9.7                               Joint and Several Liability. If Borrower consists of more than one Person, their liability shall be joint and several, and the compromise of any claim with, or the release of, any Borrower shall not constitute a compromise with, or a release of, any other Borrower.

 

9.8                               Headings; Interpretation.  Section headings are only used in this Loan Agreement for convenience. The term “including”, whenever used in this Loan Agreement, shall mean “including but not limited to”. This Loan Agreement has been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term or provision of this Loan Agreement shall be construed strictly against Lender or Borrower under any rule of construction or otherwise.

 

9.9                               Interest Laws. Notwithstanding any provision to the contrary contained in this Loan Agreement or any Other Agreement, Borrower shall not be required to pay, and Lender shall not be permitted to collect, any amount of interest in excess of the maximum amount of interest permitted by applicable law (“Excess Interest”).  If any Excess Interest is provided for or determined by a court of competent jurisdiction to have been provided for in this Loan Agreement or in any Other Agreement, then in such event:  (1) the provisions of this subsection shall govern and control; (2) Borrower shall not be obligated to pay any Excess Interest; (3) any Excess Interest that Lender may have received hereunder or under any Other Agreement shall be, at such Lender’s option, (a) applied as a credit against the outstanding principal balance of Borrower’s Liabilities or accrued and unpaid interest (not to exceed the maximum amount permitted by law), (b) refunded to the payor thereof, or (c) any combination of the foregoing; (4) the interest rate(s) provided for herein or in any Other Agreement shall be automatically reduced to the maximum lawful rate allowed from time to time under applicable law, and this Loan Agreement and the Other Agreements shall be deemed to have been and shall be, reformed and modified to reflect such reduction; and (5) Borrower shall not have any action against Lender for any damages arising out of the payment or collection of any Excess Interest.

 

9.10                        No Implied Waivers.  Lender’s failure at any time or times to exercise any rights or remedies or to require strict performance by Borrower of any provision of this Loan Agreement shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance therewith and all rights and remedies shall continue in full force and effect until all Borrower’s Liabilities have been fully and indefeasibly paid and performed. Any suspension or waiver by Lender of an Event of Default shall not suspend, waive or affect any other Event of Default, whether the same is prior or subsequent thereto and whether of the same or of a different type. No waiver by Lender of any Event of Default or of any of the undertakings, agreements, warranties, covenants and representations of Borrower contained in this Loan Agreement or the Other Agreements shall be effective unless specifically waived by an instrument in writing signed by an officer of Lender.

 

9.11                        Acceptance by Lender.  This Loan Agreement shall become effective upon acceptance by Lender, in writing, at its principal place of business as set forth above. If so accepted by Lender, this Loan Agreement and the Other Agreements shall be deemed to have been made at said place of business.

 

9.12                        Increased Costs.  If due to any change in law there shall be: (a) any increase in the cost to Lender or its parent of making or maintaining the Loans; (b) any increase in the amount of capital required or maintained, or

 

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expected to be maintained, by Lender or its parent and the amount of such capital is increased by or based upon the existence of the Loans outstanding hereunder; or (c) any decrease in the effective rate of return on the capital of Lender or its parent of making or maintaining the Loans, then within ten (10) days after written demand by Lender, Borrower shall pay to Lender such additional amount or amounts as will compensate Lender or its parent therefor, it being understood and agreed, however, that Lender shall not be entitled to such compensation as a result of Lender’s compliance with, or pursuant to any request or directive to comply with, any such applicable law as in effect on the date hereof.  Upon determining in good faith that any additional amounts will be payable pursuant to this Section, Lender will, as promptly as practicable upon ascertaining knowledge thereof, give written notice thereof to Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, which statement shall be conclusive for all purposes in the absence of manifest error.  The failure to give any such notice, with respect to a particular event, within the time frame specified herein, shall not release or diminish any of Borrower’s obligations to pay additional amounts pursuant to this Section for amounts accrued or incurred after the date of such notice with respect to such event.  If any change in law shall make it unlawful for Lender to continue to maintain the Loans, or for Borrower to comply with its obligations in respect of the Loans, Borrower shall forthwith, upon Lender’s demand, prepay the Loans in full, together with accrued interest thereon and payment of any compensation required pursuant to this Section. Lender shall submit to Borrower a written statement setting forth the basis for determining such amounts, which statement shall be conclusive for all purposes in the absence of manifest error.

 

9.13                        LAW AND VENUE.  THIS LOAN AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF NEW YORK. BORROWER CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. BORROWER WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY LENDER OR TO ASSERT THAT ANY ACTION INSTITUTED BY LENDER OR BORROWER IN SUCH COURT IS AN IMPROPER VENUE OR SUCH ACTION SHOULD BE TRANSFERRED TO A MORE CONVENIENT FORUM.

 

9.14                        WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS LOAN AGREEMENT AND THE OTHER AGREEMENTS WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

 

9.15                        USA Patriot Act.  Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Patriot Act.  Borrower agrees to provide all such information to Lender upon request by Lender at any time.

 

9.16                        CONFIDENTIALITY.  (a)  The provisions of this Loan Agreement and the Other Agreements shall be held in strictest confidence by Borrower and shall not be publicized or disclosed in any manner whatsoever; provided, however, that Borrower may disclose this Loan Agreement and the Other Agreements (i) in confidence to its officers, directors, employees, agents, advisors, attorneys, accountants, auditors, insurers, tax preparers, and financial advisors, (ii) insofar as such disclosure may be necessary to enforce its terms, (ii) if Lender consents in writing to any such proposed disclosure, (iii) as may be required by the rules, regulations, schedules and forms of the U.S. Securities and Exchange Commission in connection with any filings made with the U.S. Securities and Exchange Commission, (iv) pursuant to the order of any court or administrative agency in any pending legal or administrative proceeding, or otherwise as required by law, regulation, compulsory legal process or as requested by a governmental authority and (vi) in public disclosures by Borrower.

 

(b)  In handling any confidential information, Lender and all employees and agents of Lender shall exercise the same degree of care that Lender exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Loan Agreement except that disclosure of such information may be made (i) to the subsidiaries or Affiliates of Lender in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Loans, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order (provided, however, that, to the extent permitted, Lender shall use commercially reasonable efforts to provide Borrower with notice of its intent to disclose any confidential information in accordance with this clause (iii), so as to allow Borrower to obtain a protective order or similar court

 

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protection), (iv) as may be required in connection with the examination, audit or similar investigation of Lender, and (v) as Lender may determine in connection with the enforcement of any remedies hereunder.  Confidential information hereunder shall not include information that either:  (x) is generally available to the public, or was known to Lender when disclosed by Borrower, or becomes generally available to the public after disclosure to Lender through no fault of Lender; (y) is disclosed to Lender by a third party, provided Lender does not have actual knowledge that such third party is prohibited from disclosing such information; or (z) is developed by Lender without reference to the confidential information of Borrower.

 

[Signature Page Follows]

 

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In Witness Whereof, this Loan and Security Agreement has been duly executed as of the day and year first above written.

 

 

	
Borrower:
    	
 
    	
 
    	
 
    	
Accepted By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Borrower:
    	
 
    	
GENOCEA   BIOSCIENCES, INC.
    	
 
    	
Lender:
    	
 
    	
ARES   CAPITAL CORPORATION
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
/s/   William D. Clark
    	
 
    	
By:
    	
 
    	
/s/   Daniel F. Nguyen
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name: 
    	
 
    	
William   D. Clark
    	
 
    	
Name: 
    	
 
    	
Daniel   F. Nguyen 
    
	
Title:
    	
 
    	
President   and Chief Executive Officer
    	
 
    	
Title:
    	
 
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Address for Notices:
    	
 
    	
100   Acorn Park Drive, 5th Floor
   Cambridge, MA 02140
    	
 
    	
Address for Notices: 
    	
 
    	
One   North Wacker Drive, 48th Floor
   Chicago, IL 60606
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Attention:   Legal Department  
    
	
Telephone: 
    	
 
    	
617.876.8191
    	
 
    	
Telephone 
    	
 
    	
312.252.7500
    
	
Facsimile:
    	
 
    	
617.876.8192
    	
 
    	
Facsimile:
    	
 
    	
312.252.7501
    

 

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EXHIBIT A

 

Officer’s Compliance and Disclosure Certificate

(attachment to monthly financial reports)

 

Reference is hereby made to the Loan and Security Agreement (together with all instruments, documents and agreements entered into in connection therewith, the “Loan Documents”) by and between Ares Capital Corporation (“Lender”) and Genocea Biosciences, Inc. (“Borrower”). Capitalized terms used herein without definition have the meanings assigned to them in the Loan Documents.  The undersigned,                                   , the duly elected and acting                                      of Borrower hereby certifies to Lender in his/her capacity as an officer of Borrower and not in his/her individual capacity, that:

 

(i)                                     FINANCIAL STATEMENTS - General.  The attached financial statements fairly reflect the financial condition of Borrower in all material respects in accordance with GAAP, except for normal year-end adjustments and the absence of footnotes (in the case of unaudited interim financial statements) and as otherwise disclosed on the attached Schedule of Financial Statement Exceptions (if none, so state on said Schedule) and unless otherwise disclosed in writing to Lender, there has been no material adverse change in the assets, liabilities or financial condition of Borrower since                              , 201_;

 

(ii)                                  FINANCIAL STATEMENTS — Off-Balance Sheet.  All material financial obligations and contingent obligations of Borrower not otherwise listed and itemized on the attached financial statements, are disclosed on the attached Schedule of Financial Statement Exceptions, including but not limited to material off-balance sheet leasing obligations, and guarantees of financial obligations of Borrower, its affiliates, subsidiaries, officers and related parties (if none, so state on said Schedule);

 

(iii)                               FINANCIAL STATEMENTS — Related Party Transactions.  All material related party transactions, including but not limited to loans, receivables or payables due to/from Borrower’s officers or employees, affiliates, subsidiaries, or other related parties, are disclosed on the attached Schedule of Financial Statement Exceptions (if none, so state on said Schedule);

 

(iv)                              ACCOUNTS.  All Deposit Accounts and Securities Accounts maintained by Borrower are Controlled Accounts.  There are no Deposit Accounts or Securities Accounts maintained by Borrower for which there is not an account control agreement among Borrower, Lender and the relevant financial institution.

 

(v)                                 COMPLIANCE WITH APPLICABLE LAW.  Except as noted on the attached Schedule of Compliance Issues, there are no material events whereby, Borrower or, to the knowledge of Borrower,  Borrower’s directors, employees, affiliates, subsidiaries or other related parties are acting or conducting business contrary to applicable local, state, or national laws in the country or countries in which said parties are conducting business;

 

(vi)                              REQUIRED PERMITS, WITHDRAWALS, OR ADVERSE TEST RESULTS.  Except as noted on the attached Schedule of Compliance Issues, there are no material events, to the knowledge of Borrower, whereby (A) a governmental regulatory authority has instituted any proceeding to revoke or suspend any Required Permits, or order the withdrawal of any of Borrower’s products or to enjoin Borrower from manufacturing, selling, distributing any of Borrower’s products, (B) Borrower is required to recall, or will voluntarily withdraw, any of Borrower’s products from any market, or (C) any adverse test results have occurred in connection with any of Borrower’s products, which could reasonably be expected to have a Material Adverse Effect;

 

(vii)                           ABSENCE OF DEFAULT.  Except as noted on the attached Schedule of Compliance Issues, no Default or Event of Default exists on the date hereof.  To the knowledge of Borrower, there are no circumstances which could reasonably result in a breach, termination or revocation of licenses under which Borrower has licensed Intellectual Property from third parties.  There has been no amendment, modification or restatement of any licenses under which Borrower has licensed Intellectual Property from third parties, except as has been disclosed to Lender (with copies thereof); and

 

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(viii)                        LITIGATION/REGULATORY MATTERS.  There are no actions, suits or proceedings pending or, to the knowledge of Borrower and the undersigned, threatened against Borrower in any court or before any governmental commission, board or authority which could reasonably be expected to have a Material Adverse Effect (separately or in the aggregate) on the ability of Borrower to perform its obligations under the any of Loan Documents.  Borrower is involved in such litigation and other disputes as are listed on the attached Schedule of Compliance Issues (if none, so state on said Schedule).

 

The undersigned has executed this certificate as of                                               , 201  .

 

	
Signature:
    	
 
    	
 
    
	
 
    	
 
    
	
By   (printed name and title):
    	
 
    	
 
    
				

 

24

 

SCHEDULE OF FINANCIAL STATEMENT EXCEPTIONS

 

	
Category of Disclosure
    	
 
    	
Financial Date
    	
 
    	
Comments (if none, state “none”)
    
	
General   Exceptions:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Off-Balance   Sheet:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Related   Party Transactions:
    	
 
    	
 
    	
 
    	
 
    

 

SCHEDULE OF COMPLIANCE ISSUES

 

	
Parties Involved
    	
 
    	
Date of filing/incident
    	
 
    	
Nature of Dispute or Issue (if none, state “none)”
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Compliance   Issues:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Litigation   Issues:
    	
 
    	
 
    	
 
    	
 
    

 

	
 
    
	
Signatory Initials:
    	
 
    	
 
    
	
 
    

 

25

 

EXHIBIT B

 

FUNDING REQUEST NO.     

FOR

LOAN AND SECURITY AGREEMENT NO. V13111

BY AND BETWEEN

ARES CAPITAL CORPORATION, AS LENDER

AND

GENOCEA BIOSCIENCES, INC., AS BORROWER

 

Borrower hereby requests an advance under the terms of the above described Loan and Security Agreement (the “Loan Agreement”) in the original principal amount of                                    Dollars ($                                ).

 

Borrower hereby acknowledges and agrees that the representations and warranties as set forth in the Loan Agreement are as if fully set forth herein, and further agrees that all Conditions Precedent to the making of an advance by Lender set forth in the Loan Agreement either have been satisfied, waived or will be satisfied as a result of Lender making this advance.  Borrower represents and warrants that there has been no material adverse change in Borrower’s financial condition, internal organization and/or business prospects since the later of the date of the Loan Agreement or the date of the last advance made by Lender thereunder.

 

The advance requested hereby shall be secured by the Collateral, as defined in the Loan Agreement.

 

The undersigned certifies that the undersigned is a duly authorized signatory of Borrower, and that as such the undersigned is authorized to execute this request on behalf of Borrower.

 

 

	
 
    	
Genocea   Biosciences, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

26

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