Document:

phas-ex1013_470.htm

 

Exhibit 10.13

LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of March 25, 2019 (the “Effective Date”) among (a) SILICON VALLEY BANK, a California corporation (“SVB” or “Bank”), in its capacity as administrative agent and collateral agent (“Agent”), (b) SILICON VALLEY BANK, a California corporation, as a lender, (c) WESTRIVER INNOVATION LENDING FUND VIII, L.P., a Delaware limited partnership (“WestRiver”), as a lender (SVB and WestRiver and each of the other “Lenders” from time to time a party hereto are referred to herein collectively as the “Lenders” and each individually as a “Lender”), and (d) PHASEBIO PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”), provides the terms on which Agent and the Lenders shall lend to Borrower and Borrower shall repay Agent and the Lenders.  The parties agree as follows:

1ACCOUNTING AND OTHER TERMS

Accounting terms not defined in this Agreement shall be construed following GAAP.  Calculations and determinations must be made following GAAP.  Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 14 of this Agreement.  All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

2LOAN AND TERMS OF PAYMENT

2.1Promise to Pay.  Borrower hereby unconditionally promises to pay to Agent, for the ratable benefit of each Lender, the outstanding principal amount of all Credit Extensions advanced to Borrower by such Lender and accrued and unpaid interest thereon, together with any fees as and when due in accordance with this Agreement.

2.1.1Growth Capital Advances

(a)Availability.  Subject to the terms and conditions of this Agreement, the Lenders, severally and not jointly, agree to make growth capital advances to Borrower from time to time in three (3) tranches: “Tranche A”, “Tranche B” and “Tranche C”.  On the Effective Date, or as soon thereafter as all conditions precedent to the making thereof have been met, the Lenders shall make one (1) growth capital advance under Tranche A to Borrower, in an amount equal to Seven Million Five Hundred Thousand Dollars ($7,500,000) (the “Tranche A Growth Capital Advance”) according to each Lender’s Tranche A Loan Advance Commitment as set forth on Schedule 1.1 attached hereto, which shall be used to refinance all obligations owing from Borrower to Bank under the SVB Loan Agreement, and for working capital purposes.  During the Tranche B Draw Period, Borrower may request and the Lenders shall make one (1) growth capital advance under Tranche B to Borrower, in an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) (the “Tranche B Growth Capital Advance”) according to each Lender’s Tranche B Loan Advance Commitment as set forth on Schedule 1.1 attached hereto.  If Borrower achieves the Tranche C Milestone on or prior to December 31, 2019, Borrower shall, on or prior to the date that is ten (10) days after Borrower achieves the Tranche C Milestone, request and, provided no Event of Default has occurred and is continuing hereunder, the Lenders shall make one (1) growth capital advance under Tranche C to Borrower, in an amount equal to Five Million Dollars ($5,000,000) (the “Tranche C Growth Capital Advance”, and together with the Tranche A Growth Capital Advance and the Tranche B Growth Capital Advance, each a “Growth Capital Advance” and collectively, the “Growth Capital Advances”) according to each Lender’s Tranche C Loan Advance Commitment as set forth on Schedule 1.1 attached hereto.  The aggregate outstanding amount of the Growth Capital Advances shall not, at any time, exceed the Growth Capital Line.  After repayment, no Growth Capital Advance (or any portion thereof) may be reborrowed.

(b)Interest Period.  Commencing on the first (1st) Payment Date of the month following the month in which the Funding Date of the applicable Growth Capital Advance occurs, and continuing on the Payment Date of each month thereafter, Borrower shall make monthly payments of interest to Agent, for the account of the Lenders, in arrears, on the principal amount of each Growth Capital Advance, at the rate set forth in Section 2.2(a).

 

 

(c)Repayment.  Commencing on the Amortization Start Date, and continuing on each Payment Date thereafter, Borrower shall repay the aggregate outstanding Growth Capital Advances to Agent, for the account of the Lenders, in (i) consecutive equal monthly installments of principal based on the Repayment Schedule, plus (ii) monthly payments of accrued interest at the rate set forth in Section 2.2(a).  All outstanding principal and accrued and unpaid interest with respect to the Growth Capital Advances, and all other outstanding Obligations under the Growth Capital Advances, are due and payable in full on the Growth Capital Maturity Date.

(d)Permitted Prepayment.  Borrower shall have the option to prepay all, but not less than all, of any Growth Capital Advances advanced by the Lenders under this Agreement, provided Borrower (i) provides written notice to Agent of its election to prepay such Growth Capital Advance at least ten (10) days prior to such prepayment, and (ii) pays to Agent, for the account of the Lenders in accordance with their respective Pro Rata Share, on the date of such prepayment (A) all outstanding principal plus accrued and unpaid interest in connection with the Growth Capital Advance being prepaid, (B) the applicable portion of the Prepayment Premium due in connection with the Growth Capital Advance being prepaid, (C) the applicable portion of the Final Payment due in connection with the Growth Capital Advance being prepaid, and (D) all other sums, if any, that shall have become due and payable, in connection with the Growth Capital Advance being prepaid, including Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts.

(e)Mandatory Prepayment Upon an Acceleration.  If the Growth Capital Advances are accelerated by Agent pursuant to Section 9.1 hereof, following the occurrence of an Event of Default, Borrower shall immediately pay to Agent, for the account of the Lenders in accordance with its respective Pro Rata Share, an amount equal to the sum of (i) all outstanding principal plus accrued and unpaid interest with respect to the Growth Capital Advances, (ii) the Prepayment Premium, (iii) the Final Payment and (iv) all other sums, if any, that shall have become due and payable, including Lenders’ Expenses and interest at the Default Rate with respect to any past due amounts.

2.2Payment of Interest on the Credit Extensions.

(a)Interest Rate.  Subject to Section 2.2(b), the principal amount outstanding under each Growth Capital Advance shall accrue interest at a floating per annum rate equal to the greater of (i) six and one-half of one percent (6.50%) and (ii) one percent (1.00%) above the Prime Rate, which interest, in each case, shall be payable monthly in accordance with Section 2.2(d) below.

(b)Default Rate.  Immediately upon the occurrence and during the continuance of an Event of Default, Obligations shall bear interest at a rate per annum which is five percent (5.0%) above the rate that is otherwise applicable thereto (the “Default Rate”).  Fees and expenses which are required to be paid by Borrower pursuant to the Loan Documents (including, without limitation, Lenders’ Expenses) but are not paid when due shall bear interest until paid at a rate equal to the highest rate applicable to the Obligations.  Payment or acceptance of the increased interest rate provided in this Section 2.2(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Agent or any Lender.

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

(d)Payment; Interest Computation.  Interest is payable monthly on the Payment Date and shall be computed on the basis of a 360-day year for the actual number of days elapsed.  In computing interest, (i) all payments received after 12:00 p.m. Eastern time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of any Credit Extension shall be included and the date of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included in computing interest on such Credit Extension.

2.3Fees and Expenses.  Borrower shall pay to Agent:  

(a)Final Payment.  The Final Payment, when due hereunder, to be shared between the Lenders pursuant to their respective Growth Capital Loan Commitment Percentages;

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(b)Prepayment Premium.  The Prepayment Premium, when due hereunder, to be shared between the Lenders pursuant to their respective Growth Capital Loan Commitment Percentages; provided that the Lenders shall waive the Prepayment Premium if Borrower refinances the Growth Capital Advances with any Lender; 

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

Unless otherwise provided in this Agreement or in a separate writing by Agent, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Agent or any Lender pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of any Lender’s obligation to make loans and advances hereunder.  Agent may deduct amounts owing by Borrower under the clauses of this Section 2.2 pursuant to the terms of Section 2.4(e).  Agent shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.3.

2.4Payments; Pro Rata Treatment; Application of Payments; Debit of Accounts.  

(a)All payments (including prepayments) to be made by Borrower under any Loan Document shall be made to Agent for the account of Lenders, in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Eastern time on the date when due.   Agent shall distribute such payments to Lenders in like funds as set forth in Section 2.5.  Payments of principal and/or interest received after 12:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid.

(b)Each borrowing by Borrower from Lenders hereunder shall be made according to the respective Growth Capital Loan Commitment Percentages of the relevant Lenders.

(c)Except as otherwise provided herein, each payment (including each prepayment) by Borrower on account of principal or interest on the Growth Capital Advances shall be applied according to each Lender’s Pro Rata Share of the outstanding principal amount of the Growth Capital Advances.  The amount of each principal prepayment of the Growth Capital Advances shall be applied to reduce the then remaining installments of the Growth Capital Advances based upon each Pro Rata Share of Growth Capital Advances.

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

(e)Agent may debit any of Borrower’s deposit accounts, including the Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Agent or any Lender when due. These debits shall not constitute a set-off.

(f)Unless Agent shall have been notified in writing by Borrower prior to the date of any payment due to be made by Borrower hereunder that Borrower will not make such payment to Agent, Agent may assume that Borrower is making such payment, and Agent may, but shall not be required to, in reliance upon such assumption, make available to Lenders their respective Pro Rata Share of a corresponding payment amount.  If such payment is not made to Agent by Borrower within three (3) Business Days after such due date, Agent shall be entitled to recover, on demand, from each Lender to which any amount which was made available pursuant to the preceding sentence, such amount with interest thereon at the rate per annum equal to the daily average Federal Funds Effective Rate.  Nothing herein shall be deemed to limit the rights of Agent or any Lender against Borrower.

2.5Settlement Procedures.  If Agent receives any payment for the account of Lenders on or prior to 12:00 p.m. (Eastern time) on any Business Day, Agent shall pay to each applicable Lender such Lender’s Pro Rata 

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Share of such payment on such Business Day. If Agent receives any payment for the account of Lenders after 12:00 p.m. (Eastern time) on any Business Day, Agent shall pay to each applicable Lender such Lender’s Pro Rata Share of such payment on the next Business Day.  

2.6Withholding.  Payments received by Agent from Borrower under this Agreement will be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority (including any interest, additions to tax or penalties applicable thereto).  Specifically, however, if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Agent, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, Agent receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority.  Borrower will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower.  The agreements and obligations of Borrower contained in this Section 2.6 shall survive the termination of this Agreement.

3CONDITIONS OF LOANS

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

(a)duly executed original signatures to the Loan Documents;

(b)duly executed original signatures to a Warrant to Purchase Common Stock issued by Borrower in favor of Bank;

(c)duly executed original signatures to a Warrant to Purchase Common Stock issued by Borrower in favor of WestRiver;

(d)the Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State of the State of Delaware each other jurisdiction in which Borrower is qualified to conduct business, each dated as of a date no earlier than thirty (30) days prior to the Effective Date; 

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

(f)certified copies, dated as of a recent date, of Lien searches (including without limitation, UCC searches), as Agent may request, accompanied by written evidence (including any UCC termination statements and other Lien releases) that the Liens indicated in any such financing statements or other filings either constitute Permitted Liens or have been or, in connection with the initial Credit Extension hereunder, will be terminated or released;

(g)the Perfection Certificate of Borrower, together with the duly executed signatures thereto;

(h)a payoff letter from SVB with respect to all amounts owing from Borrower to Bank under the SVB Loan Agreement; 

(i)with respect to the Tranche B Growth Capital Advance only, an additional Warrant to Purchase Common Stock issued by Borrower in favor of each of (A) Bank and (B) WestRiver, in the form attached hereto as Annex I;

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(j)with respect to the Tranche C Growth Capital Advance only, an additional Warrant to Purchase Common Stock issued by Borrower in favor of each of (A) Bank and (B) WestRiver, in substantially the form attached hereto as Annex I; and  

(k)payment of the fees and Lenders’ Expenses then due as specified in Section 2.3 hereof.

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

(a)timely receipt by the Lenders of (i) an executed Disbursement Letter and (ii) an executed Payment/Advance Form;  

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

(c)Agent and each Lender determine to its satisfaction that there has not been a Material Adverse Change. 

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

3.4Procedures for Borrowing.  

(a)Growth Capital Advances.  Subject to the prior satisfaction of all other applicable conditions to the making of a Credit Extension set forth in this Agreement, to obtain a Credit Extension, Borrower shall notify Agent (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Eastern time at least five (5) Business Days before the proposed Funding Date of such Credit Extension.  Together with any such electronic or facsimile notification, Borrower shall deliver to Agent by electronic mail or facsimile a completed Disbursement Letter (and Payment/Advance Form) executed by an Authorized Signer.  Agent may rely on any telephone notice given by a person whom Agent believes is an Authorized Signer.  On the Funding Date, Agent shall credit the Credit Extensions to the Designated Deposit Account.  Agent may make Credit Extensions under this Agreement based on instructions from an Authorized Signer or without instructions if the Credit Extensions are necessary to meet Obligations which have become due

(b)Funding.  In determining compliance with any condition hereunder to the making of a Credit Extension that, by its terms, must be fulfilled to the satisfaction of a Lender, Agent may presume that such condition is satisfactory to such Lender unless Agent shall have received notice to the contrary from such Lender prior to the making of such Credit Extension.  Unless Agent shall have been notified in writing by any Lender prior to the date of any Credit Extension, that such Lender will not make the amount that would constitute its share of such borrowing available to Agent, Agent may assume that such Lender is making such amount available to Agent, and Agent may, in reliance upon such assumption, make available to Borrower a corresponding amount.  If such amount is not made available to Agent by the required time on the Funding Date therefor, such Lender shall pay to Agent, on 

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demand, such amount with interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate or (ii) a rate determined by Agent in accordance with banking industry rules on interbank compensation, for the period until such Lender makes such amount immediately available to Agent.  If such Lender’s share of such Credit Extension is not made available to Agent by such Lender within three (3) Business Days after such Funding Date, Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to the Growth Capital Advances, on demand, from Borrower.

4CREATION OF SECURITY INTEREST

4.1Grant of Security Interest.  Borrower hereby grants Agent, for the ratable benefit of the Lenders, to secure the payment and performance in full of all of the Obligations, a continuing security interest in, and pledges to Agent, for the ratable benefit of the Lenders, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof.  For clarity, any reference to “Agent’s Lien” or any granting of collateral to Agent in this Agreement or any Loan Document means the Lien granted to Agent for the ratable benefit of the Lenders.

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

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

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

4.3Authorization to File Financing Statements.  Borrower hereby authorizes Agent, on behalf of the Lenders, to file financing statements and other similar forms, without notice to Borrower, with all appropriate jurisdictions to perfect or protect Agent’s and Lenders’ interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Agent under the Code.  

5REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows: 

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

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

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

The Collateral is not in the possession of any third party bailee (such as a warehouse) except as otherwise provided in the Perfection Certificate.  None of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate or as permitted pursuant to Section 7.2.

All Inventory is in all material respects of good and marketable quality, free from material defects.

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

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

5.3Litigation.  There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries reasonably expected to result in liability involving more than, individually or in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000.00). 

5.4Financial Statements; Financial Condition.  All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent and the Lenders fairly present in all material respects Borrower’s consolidated financial condition and Borrower’s consolidated results of operations.  There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Agent and the Lenders.

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

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

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

5.8Tax Returns and Payments; Pension Contributions.  Borrower has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Fifty Thousand Dollars ($50,000.00).  

To the extent Borrower defers payment of any contested taxes, Borrower shall (i) notify Agent in writing of the commencement of, and any material development in, the proceedings and (ii) post bonds or take any other steps required to prevent the Governmental Authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is other than a “Permitted Lien.”  Borrower is unaware of any claims or adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes becoming due and payable by Borrower in excess of Fifty Thousand Dollars ($50,000.00).  Borrower has paid all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms, and Borrower has not withdrawn from participation in, and has not permitted partial or complete termination of, or permitted the occurrence of any other event with respect to, any such plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

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

5.10Full Disclosure.  No written representation, warranty or other statement of Borrower in any certificate or written statement given to Agent or any Lender in connection with the Loan Documents, or the 

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transactions contemplated thereby, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Agent or any Lender, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Agent and each Lender that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

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

6AFFIRMATIVE COVENANTS

Borrower shall do all of the following:

6.1Government Compliance.  

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

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

6.2Financial Statements, Reports, Certificates.  Provide Agent and each Lender with the following:

(a)Monthly Financial Statements.  As soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated and consolidating (if applicable) balance sheet, and income statement covering Borrower’s and each of its Subsidiary’s consolidated operations for such month certified by a Responsible Officer and in a form of presentation reasonably acceptable to Agent (the “Monthly Financial Statements”);

(b)Monthly Compliance Certificate.  Within thirty (30) days after the last day of each month and together with the Monthly Financial Statements, a duly completed Compliance Certificate signed by a Responsible Officer, certifying that as of the end of such month, Borrower was in full compliance with all of the terms and conditions of this Agreement, and setting forth calculations showing compliance with the financial covenants (if any) set forth in this Agreement and such other information as Agent or the Lenders may reasonably request; 

(c)Annual Operating Budget and Financial Projections.  As soon as available, at least annually, but no later than sixty (60) days after each fiscal year end of Borrower and within thirty (30) days of any board-approved updates or amendments thereto, (i) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for such fiscal year of Borrower, and (ii) annual financial projections for such fiscal year (on a quarterly basis) as approved by Borrower’s board of directors, together with any related business forecasts used in the preparation of such annual financial projections; 

(d)Annual Audited Financial Statements.  As soon as available, but no later than within one hundred fifty (150) days after the last day of Borrower’s fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Agent;

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

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

(g)Legal Action Notice.  A prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Two Hundred Fifty Thousand Dollars ($250,000.00) or more; and

(h)Other Financial Information.  Other financial information reasonably requested by Agent or any Lender.

6.3Taxes; Pensions.  (i) Timely file, and require each of its Subsidiaries to timely file, all required tax returns and reports and timely pay, and require each of its Subsidiaries to timely pay, all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower and each of its Subsidiaries, except for (x) deferred payment of any taxes contested pursuant to the terms of Section 5.8 hereof, and shall deliver to Agent, on demand, appropriate certificates attesting to such payments, and (ii) pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms.

6.4Inventory; Returns.  Keep all Inventory in good and marketable condition, free from material defects.  Returns and allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date.  Borrower must promptly notify Agent and the Lenders of all returns, recoveries, disputes and claims that involve more than Two Hundred Fifty Thousand Dollars ($250,000.00).

6.5Insurance.  

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

(b)Ensure that proceeds payable under any property policy are, at Agent’s option, payable to Agent for the ratable benefit of the Lenders on account of the Obligations. 

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

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6.6Operating Accounts.

(a)Maintain all of Borrower’s and all of its Subsidiaries’ operating, depository and securities/investment accounts with SVB and SVB’s Affiliates.  In addition, Borrower and any Guarantor shall use SVB’s credit cards for all corporate credit card services and shall conduct all other primary banking with SVB for Bank Services. 

(b)Provide Agent five (5) days prior written notice before establishing any Collateral Account at or with any bank or financial institution other than SVB or SVB’s Affiliates. Borrower shall indicate in the Compliance Certificate provided to Agent in accordance with Section 6.2(b) above any deposit or securities account it holds at or with any bank or financial institution other than SVB or SVB’s Affiliates and the aggregate value of deposits and/or securities in any such account.  In addition, for each account that the Lenders in their sole discretion permit Borrower at any time to open or maintain (other than accounts at SVB), Borrower shall cause the applicable bank or financial institution (other than SVB) at or with which any such Collateral Account is opened or maintained to execute and deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Agent’s Lien in such Collateral Account in accordance with the terms hereunder, which Control Agreement may not be terminated without the prior written consent of the Lenders.  The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Agent and the Lenders by Borrower as such.

6.7Protection of Intellectual Property Rights.

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

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

6.8Litigation Cooperation.  From the date hereof and continuing through the termination of this Agreement, make available to Agent, without expense to Agent or any Lender, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Agent and/or the Lenders may deem them reasonably necessary to prosecute or defend any third-party suit or proceeding instituted by or against Agent and/or any Lender with respect to any Collateral or relating to Borrower.

6.9Access to Collateral; Books and Records.  Allow Agent or its agents, at reasonable times, on one (1) Business Days’ notice (provided no notice is required if an Event of Default has occurred and is continuing), to inspect the Collateral and audit and copy Borrower’s Books.  Such inspections or audits shall be conducted no more often than once every twelve (12) months unless an Event of Default has occurred and is continuing in which case such inspections and audits shall occur as often as Agent shall determine is necessary.  The foregoing inspections and audits shall be at Borrower’s expense and the charge therefor shall be Two Thousand Dollars ($2,000.00) per person per day (or such higher amount as shall represent Agent’s then-current standard charge for the same), plus reasonable out-of-pocket expenses.  In the event Borrower and Agent schedule an audit more than eight (8) days in advance, and Borrower cancels or reschedules the audit with less than eight (8) days written notice to Agent, then (without limiting any of Agent’s or any Lender’s rights or remedies) Borrower shall pay Agent a fee of Two Thousand Dollars ($2,000.00) plus any out-of-pocket expenses incurred by Agent to compensate Agent for the anticipated costs and expenses of the cancellation or rescheduling.

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6.10Formation or Acquisition of Subsidiaries.  Notwithstanding and without limiting the negative covenants contained in Sections 7.3 and 7.7 hereof, at the time that Borrower or any Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date, Borrower and such Guarantor shall (a) cause such new Subsidiary to provide to Agent, for the benefit of the Lenders, a joinder to the Loan Agreement to cause such Subsidiary to become a co-borrower or Guarantor (as determined by the Lenders in their sole discretion) hereunder, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to the Lenders (including being sufficient to grant Agent, for the benefit of the Lenders a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to the Agent for the benefit of the Lenders appropriate certificates and powers and financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary, in form and substance satisfactory to the Lenders, and (c) provide to the Lenders all other documentation in form and substance satisfactory to the Lenders, including one or more opinions of counsel satisfactory to the Lenders, which in their opinion is appropriate with respect to the execution and delivery of the applicable documentation referred to above.  Any document, agreement, or instrument executed or issued pursuant to this Section 6.10 shall be a Loan Document.

6.11Further Assurances.  Execute any further instruments and take further action as Agent and the Lenders reasonably request to perfect or continue Agent’s Lien in the Collateral or to effect the purposes of this Agreement.  Deliver to Agent and the Lenders, within five (5) days after the same are sent or received, copies of all correspondence, reports, documents and other filings with any Governmental Authority regarding compliance with or maintenance of Governmental Approvals or Requirements of Law or that could reasonably be expected to have a material effect on any of the Governmental Approvals or otherwise on the operations of Borrower or any of its Subsidiaries.  

7NEGATIVE COVENANTS

Borrower shall not do any of the following without the prior written consent of the Lenders:

7.1Dispositions.  Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively a “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (f) of non-exclusive licenses for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and licenses that could not result in a legal transfer of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside of the United States.

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

Borrower shall not, without at least ten (10) days prior written notice to Agent: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Two Hundred Fifty Thousand Dollars ($250,000.00) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization.  If Borrower intends to add any new offices or business locations, including warehouses, containing in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) of Borrower’s assets or property, then Borrower will cause the landlord of any such new offices or business locations, including warehouses, to execute and deliver a landlord consent in form and substance satisfactory to Agent.   If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in 

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excess of Two Hundred Fifty Thousand Dollars ($250,000.00) to a bailee, and Agent and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will cause such bailee to execute and deliver a bailee agreement in form and substance reasonably satisfactory to Agent.

7.3Mergers or Acquisitions.  Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary).  A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

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

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

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

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

7.8Transactions with Affiliates.  Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person.

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

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

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respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

8EVENTS OF DEFAULT

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

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

8.2Covenant Default.  

(a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.3, 6.5, 6.6, 6.7(b), 6.9, or 6.10, or violates any covenant in Section 7; or

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

8.3Material Adverse Change.  A Material Adverse Change occurs;

8.4Attachment; Levy; Restraint on Business.  

(a)(i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower or of any entity under the control of Borrower (including a Subsidiary), or (ii) a notice of lien or levy is filed against any of Borrower’s assets by any Governmental Authority, and the same under subclauses (i) and (ii) hereof are not, within ten (10) days after the occurrence thereof, discharged or stayed (whether through the posting of a bond or otherwise); provided, however, no Credit Extensions shall be made during any ten (10) day cure period; or 

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

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

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

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

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

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

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

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

9RIGHTS AND REMEDIES

9.1Rights and Remedies.  Upon the occurrence and during the continuance of an Event of Default, Agent, in accordance with the Lender Intercreditor Agreement or, if such rights and remedies are not addressed in the Lender Intercreditor Agreement, as directed by a majority of the Lenders, may, without notice or demand, do any or all of the following:

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

(b)stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement among Borrower, Agent and/or any Lenders;

(c)demand that Borrower (i) deposit cash with SVB in an amount equal to at least (x) one hundred five percent (105.0%) of the Dollar Equivalent of the aggregate face amount of all Letters of Credit denominated in Dollars remaining undrawn, and (y) one hundred ten percent (110.0%) of the Dollar Equivalent of the 

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aggregate face amount of all Letters of Credit denominated in a Foreign Currency remaining undrawn (plus, in each case, all interest, fees, and costs due or to become due in connection therewith (as estimated by SVB in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

(d)terminate any FX Contracts;

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

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

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

(h)ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral.  Agent, for the benefit of the Lenders, is hereby granted a non-exclusive, royalty-free license or other right to use, without charge, Borrower’s labels, Patents, Copyrights, mask works, rights of use of any name, trade secrets, trade names, Trademarks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Agent’s exercise of its rights under this Section, Borrower’s rights under all licenses and all franchise agreements inure to Agent, for the ratable benefit of the Lenders;

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

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

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

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

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fact, and all of Agent’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and each Lender’s obligation to provide Credit Extensions terminates.

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

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

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

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

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

10Agent 

10.1Appointment and Authority.

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

(b)The provisions of this Section 10 are solely for the benefit of Agent and Lenders, and Borrower shall not have rights as a third party beneficiary of any of such provisions.  Notwithstanding any provision 

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to the contrary elsewhere in this Agreement, Agent shall not have any duties or responsibilities to any Lender or any other Person, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent.

10.2Delegation of Duties.  Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Agent.  Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Indemnified Persons.  The exculpatory provisions of this Section 10.2 shall apply to any such sub-agent and to the Indemnified Persons of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

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

(a)be subject to any fiduciary, trust, agency or other similar duties, regardless of whether any Event of Default has occurred and is continuing;

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

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

Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Lenders (or as Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 13.7) or (ii) in the absence of its own gross negligence or willful misconduct.

Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 3 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent.

 

10.4 Reliance by Agent.  Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.  In determining compliance with any condition hereunder to the making of a Credit Extension that, by its terms, must be fulfilled to the satisfaction of a Lender, Agent may presume that such condition is satisfactory to such Lender unless Agent shall have received notice to the contrary from such Lender prior to the making of such Credit Extension.  Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon Lenders and all future holders of the Credit Extensions.

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10.5 Notice of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Event of Default (except with respect to defaults in the payment of principal, interest or fees required to be paid to Agent for the account of Lenders), unless Agent has received notice from a Lender or Borrower referring to this Agreement, describing such Event of Default and stating that such notice is a “notice of default”.  In the event that Agent receives such a notice, Agent shall give notice thereof to Lenders.  Agent shall take such action with respect to such Event of Default as shall be reasonably directed by the Lenders.

10.6 Non-Reliance on Agent and Other Lenders.  Each Lender expressly acknowledges that neither Agent nor any of its officers, directors, employees, agents, attorneys in fact or affiliates has made any representations or warranties to it and that no act by Agent hereafter taken, including any review of the affairs of a Group Member or any Affiliate of a Group Member, shall be deemed to constitute any representation or warranty by Agent to any Lender.  Each Lender represents to Agent that it has, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of, and investigation into, the business, operations, property, financial and other condition and creditworthiness of the Group Members and their Affiliates and made its own decision to make its Credit Extensions hereunder and enter into this Agreement.  Each Lender also represents that it will, independently and without reliance upon Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Group Members and their Affiliates.  Except for notices, reports and other documents expressly required to be furnished to Lenders by Agent hereunder, Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of any Group Member or any Affiliate of a Group Member that may come into the possession of Agent or any of its officers, directors, employees, agents, attorneys in fact or Affiliates.

10.7Indemnification.  Each Lender agrees to indemnify Agent in its capacity as such (to the extent not reimbursed by Borrower and without limiting the obligation of Borrower to do so in accordance with the terms hereof, according to its Growth Capital Loan Commitment Percentage in effect on the date on which indemnification is sought under this Section 10.7 (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Obligations shall have been paid in full, in accordance with its Growth Capital Loan Commitment Percentage immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Credit Extensions) be imposed on, incurred by or asserted against Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted primarily from Agent’s gross negligence or willful misconduct.  The agreements in this Section shall survive the payment of the Credit Extensions and all other amounts payable hereunder.

10.8Agent in Its Individual Capacity.  The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with Borrower, any Guarantor or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Lenders.

10.9  Successor Agent.  Agent may at any time give notice of its resignation to Lenders and Borrower, which resignation shall not be effective until the time at which the majority of the Lenders have delivered to Agent their written consent to such resignation.  Upon receipt of any such notice of resignation, the Lenders shall have the right, in consultation with Borrower, to appoint a successor, which shall be a financial institution with an office in the State of California, or an Affiliate of any such bank with an office in the State of California.  If no such successor shall have been so appointed by the Lenders and shall have accepted such appointment within thirty (30) days after the 

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retiring Agent has received the written consent of the majority of the Lenders to such resignation, then the retiring Agent may on behalf of Lenders, appoint a successor Agent meeting the qualifications set forth above; provided that in no event shall any such successor Agent be a Defaulting Lender and provided further that if the retiring Agent shall notify Borrower and Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by Agent on behalf of the Lenders under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed and such collateral security is assigned to such successor Agent) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender directly, until such time as the Lenders appoint a successor Agent as provided for above in this Section 10.9.  Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 10.9).  The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Section 10 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Indemnified Persons in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.

10.10Defaulting Lender.  

(a)Defaulting Lender Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

(i)Waivers and Amendments.  Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as long as said Lender is a Defaulting Lender.

(ii)Defaulting Lender Waterfall.  Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 8 or otherwise, and including any amounts made available to the Agent by such Defaulting Lender pursuant to Section 13.11), shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second, as the Borrower may request (so long as no Event of Default exists), to the funding of any Growth Capital Advance in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; third, if so determined by the Agent and Borrower, to be held in a Deposit Account and released pro rata to satisfy such Defaulting Lender’s potential future funding obligations with respect to Growth Capital Advances under this Agreement; fourth, so long as no Event of Default has occurred and is continuing, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (A) such payment is a payment of the principal amount of any Growth Capital Advances in respect of which such Defaulting Lender has not fully funded its appropriate share and (B) such Growth Capital Advances were made at a time when the conditions set forth in Section 3.1 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Growth Capital Advances of such Defaulting Lender until such time as all Growth Capital Advances are held by the Lenders pro rata in accordance with the Growth Capital Commitments under this Agreement.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 10.10(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

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(iii)Certain Fees.  No Defaulting Lender shall be entitled to receive any fee pursuant to Section 2.3(b) or Section 2.3(c) for any period during which such Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to such Defaulting Lender).  

(b)Defaulting Lender Cure.  If Borrower and Agent agree in writing that a Lender is no longer a Defaulting Lender, Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Lender will, to the extent applicable, purchase at par that portion of outstanding Growth Capital Advances of the other Lenders or take such other actions as Agent may determine to be necessary to cause the Growth Capital Advances to be held on a pro rata basis by the Lenders in accordance with their respective Growth Capital Loan Commitment Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of Borrower while such Lender was a Defaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender having been a Defaulting Lender. 

(c)Termination of Defaulting Lender.  The Borrower may terminate the unused amount of the Growth Capital Commitment of any Lender that is a Defaulting Lender upon not less than ten (10) Business Days’ prior notice to Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 10.10(a)(ii) will apply to all amounts thereafter paid by Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (i) no Event of Default shall have occurred and be continuing, and (ii) such termination shall not be deemed to be a waiver or release of any claim Borrower, Agent or any Lender may have against such Defaulting Lender.

(d)If the Person serving as Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the non-Defaulting Lenders may, to the extent permitted by applicable law, by notice in writing to Borrower and such Person, remove such Person as Agent and, in consultation with Borrower, appoint a successor.  If no such successor shall have been so appointed by the non-Defaulting Lenders and shall have accepted such appointment within thirty (30) days (or such earlier day as shall be agreed by the non-Defaulting Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.

11NOTICES

All notices, consents, requests, approvals, demands, or other communication by any party to this Agreement or any other Loan Document must be in writing and shall be deemed to have been validly served, given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with proper postage prepaid; (b) upon transmission, when sent by electronic mail or facsimile transmission; (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by messenger, all of which shall be addressed to the party to be notified and sent to the address, facsimile number, or email address indicated below. Agent or Borrower may change its mailing or electronic mail address or facsimile number by giving the other party written notice thereof in accordance with the terms of this Section 11. 

	
 
	
If to Borrower:
	
Phasebio Pharmaceuticals, Inc. 

1 Great Valley Parkway, Suite 30
Malvern, PA 19355
Attn:  Jonathan Mow, CEO
Email:  jonathan.mow@phasebio.com   

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If to Agent or SVB:
	
Silicon Valley Bank 

3475 Piedmont Road, Suite 560
Atlanta, GA 30305
Attn: Myron Jensen 
Email: MJensen@svb.com   

	
 
	
with a copy to:
	
DLA Piper, LLP 

401 B Street, Suite 1700
San Diego, CA 92101
Attn:  Laurie Hutchins 
Fax:  858-638-5041
Email:  laurie.hutchins@dlapiper.com 

	
 
	
If to WestRiver:
	
WestRiver Innovation Lending Fund VIII, L.P.

c/o WestRiver Management, LLC

3720 Carillon Point

Kirkland, Washington 98033-7455

Attn: Harper Ellison 

Email: Harper@wrg.vc 

12Choice of Law, Venue AND Jury Trial Waiver

Except as otherwise expressly provided in any of the Loan Documents, California law governs the Loan Documents without regard to principles of conflicts of law.  Except to the extent otherwise set forth in the Loan Documents, Borrower, Agent and Lenders each submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County, California; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Agent or Lenders from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Agent or any Lender.  Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court.  Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 11 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

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

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial by jury is not enforceable, the parties hereto agree that any and all disputes or controversies of any nature between them arising at any time shall be decided by a reference to a private judge, mutually selected by the parties (or, if they cannot agree, by the Presiding Judge of the Santa Clara County, California Superior Court) appointed in accordance with California Code of Civil Procedure Section 638 (or pursuant to comparable provisions of federal law if the dispute falls within the exclusive jurisdiction of the federal courts), sitting without a jury, in Santa Clara County, California; and the parties hereby 

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submit to the jurisdiction of such court.  The reference proceedings shall be conducted pursuant to and in accordance with the provisions of California Code of Civil Procedure §§ 638 through 645.1, inclusive.  The private judge shall have the power, among others, to grant provisional relief, including without limitation, entering temporary restraining orders, issuing preliminary and permanent injunctions and appointing receivers.  All such proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed.  If during the course of any dispute, a party desires to seek provisional relief, but a judge has not been appointed at that point pursuant to the judicial reference procedures, then such party may apply to the Santa Clara County, California Superior Court for such relief.  The proceeding before the private judge shall be conducted in the same manner as it would be before a court under the rules of evidence applicable to judicial proceedings.  The parties shall be entitled to discovery which shall be conducted in the same manner as it would be before a court under the rules of discovery applicable to judicial proceedings.  The private judge shall oversee discovery and may enforce all discovery rules and orders applicable to judicial proceedings in the same manner as a trial court judge.  The parties agree that the selected or appointed private judge shall have the power to decide all issues in the action or proceeding, whether of fact or of law, and shall report a statement of decision thereon pursuant to California Code of Civil Procedure § 644(a).  Nothing in this paragraph shall limit the right of any party at any time to exercise self-help remedies, foreclose against collateral, or obtain provisional remedies.  The private judge shall also determine all issues relating to the applicability, interpretation, and enforceability of this paragraph.

 

This Section 12 shall survive the termination of this Agreement.

13GENERAL PROVISIONS

13.1Termination Prior to Maturity Date; Survival.  All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms and all Obligations have been satisfied.  So long as Borrower has satisfied the Obligations (other than inchoate indemnity obligations, any other obligations which, by their terms, are to survive the termination of this Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with Section 4.1 of this Agreement), this Agreement may be terminated prior to the Growth Capital Maturity Date by Borrower, effective three (3) Business Days after written notice of termination is given to Agent.  Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination.  No termination of this Agreement shall in any way affect or impair any right or remedy of Agent or any Lender, nor shall any such termination relieve Borrower of any Obligation to any Lender, until all of the Obligations (other than inchoate indemnification obligations) have been paid and performed in full. Those Obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination and payment in full of the Obligations then outstanding. 

13.2Successors and Assigns.  This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or obligations under it without Agent and Lenders’ prior written consent (which may be granted or withheld in Agent’s and Lenders’ sole discretion). Agent and each Lender has the right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, such Lender’s obligations, rights, and benefits under this Agreement and the other Loan Documents (other than the Warrant, as to which assignment, transfer and other such actions are governed by the terms thereof).   

13.3Indemnification.  Borrower agrees to indemnify, defend and hold Agent, each Lender and their respective directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Agent or any Lender (each, an “Indemnified Person”) harmless against: (i) all obligations, demands, claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Lenders’ Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Agent, Lenders and Borrower contemplated by the Loan Documents (including  reasonable attorneys’ fees and expenses),  except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.  This Section 13.3 shall survive until all statutes of limitation with respect to the Claims, losses, and expenses for which indemnity is given shall have run.

13.4Time of Essence.  Time is of the essence for the performance of all Obligations in this Agreement.

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13.5Severability of Provisions.  Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

13.6Correction of Loan Documents.  Agent may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties.

13.7Amendments in Writing; Waiver; Integration.  No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, or release, or subordinate Lenders’ security interest in, or consent to the transfer of, any Collateral shall be enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by Agent, with the consent of the Lenders in accordance with the Lender Intercreditor Agreement or, if such item is not addressed in the Lender Intercreditor Agreement, as consented to by a majority of the Lenders, and Borrower.  Without limiting the generality of the foregoing, no oral promise or statement, nor any action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document.  Any waiver granted shall be limited to the specific circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver.  The Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents merge into the Loan Documents.  In the event any provision of any other Loan Document is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall exclusively control.

13.8Counterparts.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement.

13.9Confidentiality.  Agent and each Lender agrees to maintain the confidentiality of Information (as defined below), except that Information may be disclosed (a) to Agent and/or any Lender’s subsidiaries or Affiliates, and their respective employees, directors, investors, potential investors, agents, attorneys, accountants and other professional advisors (collectively, “Representatives” and, together with Agent and the Lenders, collectively, “Lender Entities”); (b) to prospective transferees, assignees, credit providers or purchasers of any Lender’s interests under or in connection with this Agreement and their Representatives (provided, however, Lenders shall use their best efforts to obtain any such prospective transferee’s, assignee’s, credit provider’s, or purchaser’s or their Representatives’ agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to Agent’s or any Lender’s regulators or as otherwise required in connection with Agent’s or any Lender’s examination or audit; (e) as Agent or any Lender considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Agent and/or any Lender so long as such service providers have executed a confidentiality agreement with Agent or the Lenders, as applicable, with terms no less restrictive than those contained herein.  The term “Information” means all information received from Borrower regarding Borrower or its business, in each case other than information that is either: (i) in the public domain or in Agent’s or any Lender’s possession when disclosed to Agent or such Lender, or becomes part of the public domain (other than as a result of its disclosure by Agent or a Lender in violation of this Agreement) after disclosure to Agent and/or the Lenders; or (ii) disclosed to Agent and/or a Lender by a third party, if Agent or such Lender, as applicable, does not know that the third party is prohibited from disclosing the information.

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

13.10Attorneys’ Fees, Costs and Expenses.  In any action or proceeding between Borrower and any Lender arising out of or relating to the Loan Documents, the prevailing party shall be entitled to recover its reasonable attorneys’ fees and other costs and expenses incurred, in addition to any other relief to which it may be entitled.

13.11Right of Setoff.   Borrower hereby grants to Agent, for the ratable benefit of the Lenders, a Lien, security interest, and a right of setoff as security for all Obligations to Agent and the Lenders, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, 

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custody, safekeeping or control of Agent or any entity under the control of Agent (including a subsidiary of Agent) or in transit to any of them.  At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Agent or any Lender may setoff the same or any part thereof and apply the same to any Obligation of Borrower then due regardless of the adequacy of any other collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE AGENT OR ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

13.12Electronic Execution of Documents.  The words “execution,” “signed,” “signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.  

13.13Captions.  The headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

13.14Construction of Agreement.  The parties mutually acknowledge that they and their attorneys have participated in the preparation and negotiation of this Agreement.  In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist.

13.15Relationship.  The relationship of the parties to this Agreement is determined solely by the provisions of this Agreement.  The parties do not intend to create any agency, partnership, joint venture, trust, fiduciary or other relationship with duties or incidents different from those of parties to an arm’s-length contract.

13.16Third Parties.  Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement.

13.17Patriot Act.  Each Lender hereby notifies Borrower that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies Borrower and each of its Subsidiaries, which information includes the names and addresses of each Borrower and each of its Subsidiaries and other information that will allow Lender, as applicable, to identify Borrower and each of its Subsidiaries in accordance with the USA PATRIOT Act.

14DEFINITIONS

14.1Definitions.  As used in the Loan Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and numbers denoting amounts that are set off in brackets are negative.  As used in this Agreement, the following capitalized terms have the following meanings:

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

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

“Affiliate” is, with respect to any Person, each other Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that 

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Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members.

“Agent” is defined in the preamble hereof. 

“Agreement” is defined in the preamble hereof.

“Amortization Start Date” is the first day of the first month following the end of the Interest-Only Period. 

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

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

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

“Board” means Borrower’s board of directors.

“Borrower” is defined in the preamble hereof.

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

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

“Business Day” is any day that is not a Saturday, Sunday or a day on which Agent is closed.

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States or any agency or any State thereof having maturities of not more than one (1) year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s Investors Service, Inc.; (c) SVB’s certificates of deposit issued maturing no more than one (1) year after issue; and (d) money market funds at least ninety-five percent (95%) of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (c) of this definition.

“Change in Control” means (a) at any time, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), shall become, or obtain rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)‐5 under the Exchange Act), directly or indirectly, of forty percent (40.0%) or more of the ordinary voting power for the election of directors of 

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Borrower (determined on a fully diluted basis) other than by the sale of Borrower’s equity securities in a public offering or to venture capital or private equity investors so long as Borrower identifies to the Agent and the Lenders the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Agent and the Lenders a description of the material terms of the transaction; (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body; or (c) at any time, Borrower shall cease to own and control, of record and beneficially, directly or indirectly, one hundred percent (100.0%) of each class of outstanding capital stock of each Subsidiary of Borrower free and clear of all Liens (except Liens created by this Agreement).

“Claims” is defined in Section 13.3.

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

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

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

“Commitment” and “Commitments” means the Growth Capital Commitment(s).

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

“Compliance Certificate” is that certain certificate in the form attached hereto as Exhibit B.

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

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

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

“Credit Extension” is any Growth Capital Advance or any other extension of credit by any Lender for Borrower’s benefit.

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

“Defaulting Lender” is, subject to Section 10.10(b), any Lender that (a) has failed to (i) fund all or any portion of its Growth Capital Advances within two (2) Business Days of the date such Growth Capital Advances were required to be funded hereunder unless such Lender notifies Agent and Borrower in writing that such failure is the result of such Lender’s reasonable determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified Borrower or Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Growth Capital Advance hereunder and states that such position is based on such Lender’s reasonable determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by Agent or Borrower, to confirm in writing to Agent and Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of an Insolvency Proceeding, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 10.10(b)) upon delivery of written notice of such determination to Borrower and each Lender.

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

“Designated Deposit Account” is the multicurrency account denominated in Dollars, account number XXXXXXXX254, maintained by Borrower with SVB (provided, however, if no such account number is included, then the Designated Deposit Account shall be any deposit account of Borrower maintained with SVB as chosen by the Lenders).

“Disbursement Letter” is that certain form attached hereto as Exhibit E. 

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

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

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“Effective Date” is defined in the preamble hereof.

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

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

“Event of Default” is defined in Section 8.

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

“Federal Funds Effective Rate” means, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by SVB from three federal funds brokers of recognized standing selected by it.

“Final Payment” is a payment (in addition to and not in substitution for the regular monthly payments of principal plus accrued interest) equal to the original principal amount of each Growth Capital Advance extended by the Lenders to Borrower hereunder multiplied by six percent (6.0%), due on the earliest to occur of (a) the Growth Capital Maturity Date, (b) the payment in full of such Growth Capital Advance, (c) as required by Section 2.1.1(d) or 2.1.1(e) or (d) the termination of this Agreement.

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

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

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

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

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

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

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

“Group Member” means Borrower and its Subsidiaries.

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“Growth Capital Advance” and “Growth Capital Advances” are defined in Section 2.1.1(a).

“Growth Capital Commitment” means, for any Lender, the obligation of such Lender to make a Growth Capital Advance as and when available, up to the principal amount shown on Schedule 1.1.  “Growth Capital Commitments” means the aggregate amount of such commitments of all Lenders.

“Growth Capital Loan Commitment Percentage” means, as to any Lender at any time, the percentage (carried out to the fourth decimal place) of the Growth Capital Commitments represented by such Lender’s Growth Capital Commitment at such time.  The initial Growth Capital Commitment Percentage of each Lender is set forth opposite the name of such Lender on Schedule 1.1.

“Growth Capital Line” is a Growth Capital Advance or Growth Capital Advances in an aggregate principal amount of up to Fifteen Million Dollars ($15,000,000).

“Growth Capital Maturity Date” means March 1, 2023. 

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

“Indemnified Person” is defined in Section 13.3.

“Information” is defined in Section 13.9.

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

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

(a)its Copyrights, Trademarks and Patents; 

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

(c)any and all source code;

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

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

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

“Interest-Only Period” is the period of time from the Effective Date through December 31, 2019; provided, however, if Borrower achieves the Tranche C Milestone, the Interest-Only Period shall automatically, and with no further action required by the parties hereto, be extended to June 30, 2020.

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

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

“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is Jonathan Mow as of the Effective Date, (b) Chief Financial Officer, who is John Sharp as of the Effective Date, and (c) Chief Medical Officer, who is John Lee as of the Effective Date. 

“Lender” and “Lenders” is defined in the preamble.

“Lender Entities” is defined in Section 13.9. 

“Lender Intercreditor Agreement” is, collectively, any and all intercreditor agreement, master arrangement agreement or similar agreement by and between WestRiver and SVB, as each may be amended from time to time in accordance with the provisions thereof.

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

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

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

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Warrants, the Perfection Certificate, each Disbursement Letter, the Lender Intercreditor Agreement, any Bank Services Agreement, any Control Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower, and any other present or future agreement by Borrower with or for the benefit of Agent and the Lenders in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.

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

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

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

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

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

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

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

“Perfection Certificate” is defined in Section 5.1.

“Permitted Indebtedness” is:

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

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

(c)Subordinated Debt;

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

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

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

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

 “Permitted Investments” are:

(a)Investments (including, without limitation, Subsidiaries) existing on the Effective Date which are shown on the Perfection Certificate; 

(b)Investments consisting of Cash Equivalents;  

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

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

(e)Investments consisting of the creation of a Subsidiary for the purpose of consummating a merger transaction permitted by Section 7.3 of this Agreement, which is otherwise a Permitted Investment;

(f)Investments (i) by Borrower in Subsidiaries not to exceed Fifty Thousand Dollars ($50,000.00) in the aggregate in any fiscal year and (ii) by Subsidiaries in other Subsidiaries not to exceed Fifty Thousand Dollars ($50,000.00) in the aggregate in any fiscal year or in Borrower;

(g)Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors;

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

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

 “Permitted Liens” are:

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

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

(c)purchase money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate amount outstanding, or (ii) existing on Equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the Equipment; 

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

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

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

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

“Prepayment Premium” shall be an additional fee, payable to Agent, for the ratable benefit of the Lenders based on their Pro Rata Share, with respect to the Growth Capital Advances, in an amount equal to:

(a)for a prepayment of the Growth Capital Advances made on or prior to the first (1st) anniversary of the Effective Date, three percent (3.0%) of the then outstanding principal amount of the Growth Capital Advances immediately prior to the date of such prepayment; 

(b)for a prepayment of the Growth Capital Advances made after the first (1st) anniversary of the Effective Date, but on or prior to the second (2nd) anniversary of the Effective Date, two percent (2.0%) of the then outstanding principal amount of the Growth Capital Advances immediately prior to the date of such prepayment; and

(c)for a prepayment of the Growth Capital Advances made after the second (2nd) anniversary of the Effective Date, but prior to the Growth Capital Maturity Date, one percent (1.0%) of the then outstanding principal amount of the Growth Capital Advances immediately prior to the date of such prepayment.

“Prime Rate” is the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that, in the event 

-33-

 

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

“Pro Rata Share” is, as of any date of determination, with respect to each Lender, a percentage (expressed as a decimal, rounded to the ninth decimal place) determined by dividing the outstanding principal amount of Growth Capital Advances held by such Lender by the aggregate outstanding principal amount of all Growth Capital Advances.

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

“Removal Effective Date” is defined in Section 10.10(d).

“Repayment Schedule” means the period of time equal to thirty-nine (39) consecutive months; provided, however, upon the occurrence of the Tranche C Milestone, the Repayment Schedule shall mean the period of time equal to thirty-three (33) consecutive months.

“Representatives” is defined in Section 13.9.

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

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

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

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

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

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

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

-34-

 

“SVB” is defined in the preamble hereof.

“SVB Loan Agreement” means that certain Loan and Security Agreement dated as of October 18, 2017 between Borrower and Bank as amended, modified, supplemented and/or restated from time to time.

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

“Tranche A” is defined in Section 2.1.1(a) hereof.

“Tranche A Growth Capital Advance” is defined in Section 2.1.1(a).

“Tranche B” is defined in Section 2.1.1(a) hereof.

“Tranche B Draw Period” is the period of time from the Effective Date through May 31, 2019.

“Tranche B Growth Capital Advance” is defined in Section 2.1.1(a).

“Tranche C” is defined in Section 2.1.1(a) hereof.

“Tranche C Growth Capital Advance” is defined in Section 2.1.1(a).

“Tranche C Milestone” means (i) Borrower has requested and the Lenders have made the Tranche B Growth Capital Advance to Borrower, and (ii) Borrower delivers to the Lenders evidence, in form and substance satisfactory to the Lenders in their sole discretion, confirming that Borrower has received FDA clearance to initiate its Phase 3 clinical trial for PB2452.

“Transfer” is defined in Section 7.1. 

 “Warrant” means, collectively, (i) that certain Warrant to Purchase Stock dated as of October 18, 2017 issued by Borrower in favor of SVB, (ii) that certain Warrant to Purchase Stock dated as of the Effective Date issued by Borrower in favor of SVB, (iii) that certain Warrant to Purchase Stock dated as of the Effective Date issued by Borrower in favor of WestRiver and (iv) any other warrant to purchase stock issued by Borrower to SVB or WestRiver heretofore or hereafter, in each case as may be amended, modified, supplemented and/or restated from time to time. 

“WestRiver” is defined in the preamble hereof.

[Signature page follows.]

 

-35-

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Effective Date.

 

	
BORROWER:

	
 

	
PHASEBIO PHARMACEUTICALS, INC.

	
 
	
 
	
 

	
By
	
 
	
/s/ Jonathan P. Mow

	
Name:
	
 
	
Jonathan P. Mow

	
Title:
	
 
	
CEO

	
 
	
 
	
 

	
AGENT:

	
 
	
 
	
 

	
SILICON VALLEY BANK, as Agent

	
 
	
 
	
 

	
By
	
 
	
/s/ Myron O. Jensen

	
Name:
	
 
	
Myron O. Jensen

	
Title:
	
 
	
Vice President

	
 
	
 
	
 

	
LENDERS:

	
 
	
 
	
 

	
SILICON VALLEY BANK, as Lender

	
 
	
 
	
 

	
By
	
 
	
/s/ Myron O. Jensen

	
Name:
	
 
	
Myron O. Jensen

	
Title:
	
 
	
Vice President

	
 
	
 
	
 

	
WESTRIVER INNOVATION LENDING FUND VIII, L.P, as Lender

	
 
	
 
	
 

	
By
	
 
	
/s/ Trent Dawson

	
Name:
	
 
	
Trent Dawson

	
Title:
	
 
	
Chief Financial Officer

 

 

 

[Signature Page to Loan and Security Agreement]

 

SCHEDULE 1.1

 

LENDERS AND GROWTH CAPITAL COMMITMENTS

 

			
	
Lender
	
Tranche A Loan Advance  Commitment
	
Tranche A Loan Advance Commitment Percentage

	
Silicon Valley Bank
	
$3,750,000.00
	
50.0000%

	
WestRiver Innovation Lending Fund VIII, L.P.
	
$3,750,000.00
	
50.0000%

	
TOTAL
	
$7,500,000.00
	
100.0000%

 

			
	
Lender
	
Tranche B Loan Advance  Commitment
	
Tranche B Loan Advance Commitment Percentage

	
Silicon Valley Bank
	
$1,250,000.00
	
50.0000%

	
WestRiver Innovation Lending Fund VIII, L.P.
	
$1,250,000.00
	
50.0000%

	
TOTAL
	
$2,500,000.00
	
100.0000%

 

			
	
Lender
	
Tranche C Loan Advance  Commitment
	
Tranche C Loan Advance Commitment Percentage

	
Silicon Valley Bank
	
$2,500,000.00
	
50.0000%

	
WestRiver Innovation Lending Fund VIII, L.P.
	
$2,500,000.00
	
50.0000%

	
TOTAL
	
$5,000,000.00
	
100.0000%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

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

 

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

 

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

 

Notwithstanding the foregoing, the Collateral does not include any Intellectual Property; provided, however, the Collateral shall include all Accounts and all proceeds of Intellectual Property.  If a judicial authority (including a U.S. Bankruptcy Court) would hold that a security interest in the underlying Intellectual Property is necessary to have a security interest in such Accounts and such property that are proceeds of Intellectual Property, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Agent’s, for the ratable benefit of the Lenders, security interest in such Accounts and such other property of Borrower that are proceeds of the Intellectual Property.

 

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

 

 

 

 

 

 

 

EXHIBIT B

COMPLIANCE CERTIFICATE

			
	
TO:
	
SILICON VALLEY BANK, as Agent, SVB and WESTRIVER as Lenders

	
FROM:
	
PHASEBIO PHARMACEUTICALS, INC., a Delaware corporation 

	
DATE:
	
 
	
 

 

The undersigned authorized officer of PHASEBIO PHARMACEUTICALS, INC. (“Borrower”) certifies that under the terms and conditions of the Loan and Security Agreement among Borrower, SVB, and WestRiver (as amended, the “Loan Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.8 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Agent.  Attached are the required documents supporting the certification.  The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes.  The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered.  Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

 

	
Reporting Covenants
	
Required
	
Complies

	
 
	
 
	
 

	
Monthly financial statements with 
Compliance Certificate
	
Monthly within 30 days 

 
	
Yes   No

	
Annual financial statement (CPA Audited) 
	
FYE within 150 days

 
	
Yes   No

	
10‐Q, 10‐K and 8-K
	
Within 5 days after filing with SEC

 
	
Yes   No

	
Board Projections
	
At least annually and within 60 days of FYE, and as amended/updated by Board approval

 
	
Yes   No

 

Other Matters

 

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

 

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

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

 

 

 

	
PHASEBIO PHARMACEUTICALS, INC.
	
 
	
SVB USE ONLY

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
Received by:
	
 
	
 

	
By:
	
 
	
 
	
 
	
 
	
 
	
authorized signer

	
Name:
	
 
	
 
	
 
	
Date:
	
 
	
 

	
Title:
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
Verified:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
authorized signer

	
 
	
 
	
 
	
 
	
Date:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
Compliance Status:
	
 
	
Yes
	
No

 

 

 

 

 

EXHIBIT C

LOAN PAYMENT/ADVANCE REQUEST FORM

 

	
Fax To:
	
 
	
 
	
 
	
Date:
	
 
	
 

 

	
Loan Payment:
	
PHASEBIO PHARMACEUTICALS, INC.
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
From Account #
	
 
	
 
	
To Account #
	
 
	
 

	
 
	
(Deposit Account #)
	
 
	
 
	
(Loan Account #)
	
 

	
Principal $
	
 
	
 
	
and/or Interest $
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Authorized Signature:
	
 
	
 
	
Phone Number:
	
 
	
 

	
Print Name/Title:
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

 

	
Loan Advance:
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

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

	
 
	
 
	
 
	
 
	
 
	
 

	
From Account #
	
 
	
 
	
To Account #
	
(Deposit Account #)
	
 

	
 
	
(Loan Account #)
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Amount of Growth Capital Advance $
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete on the date of the request for an advance:
	
 

	
 
	
 

	
Authorized Signature:
	
 
	
 
	
Phone Number:
	
 
	
 

	
Print Name/Title:
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

 

	
Outgoing Wire Request:
	
 
	
 

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

	
Deadline for same day processing is noon, Eastern Time
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Beneficiary Name:
	
 
	
 
	
Amount of Wire: $
	
 
	
 

	
Beneficiary Bank:
	
 
	
 
	
Account Number:
	
 
	
 

	
City and State:
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Beneficiary Bank Transit (ABA) #:
	
 
	
 
	
Beneficiary Bank Code (Swift, Sort, Chip, etc.):
	
 
	
 

	
 
	
 
	
 
	
(For International Wire Only)
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 

	
Intermediary Bank:
	
 
	
 
	
Transit (ABA) #:
	
 
	
 

	
For Further Credit to:
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 

	
Special Instruction:
	
 
	
 

	
 
	
 
	
 

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

	
 
	
 

	
Authorized Signature:
	
 
	
 
	
2nd Signature (if required):
	
 
	
 

	
Print Name/Title:
	
 
	
 
	
Print Name/Title:
	
 
	
 

	
Telephone #:
	
 
	
 
	
Telephone #:
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 

 

 

 

 

EXHIBIT D

BORROWING RESOLUTIONS

 

 

CORPORATE BORROWING certificatE

 

 

				
	
Borrower:
	
PHASEBIO PHARMACEUTICALS, INC.
	
Date:
	
March 25, 2019

	
Lenders:
	
SILICON VALLEY BANK (“Bank”) and

	
 
	
WESTRIVER INNOVATION LENDING FUND VIII, L.P.

 

I hereby certify as follows, as of the date set forth above:

 

1.I am the Secretary, Assistant Secretary or other officer of Borrower.   My title is as set forth below.

 

2.Borrower’s exact legal name is set forth above.  Borrower is a corporation existing under the laws of the State of Delaware.  

 

3.Attached hereto are true, correct and complete copies of Borrower’s Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower is incorporated as set forth above.  Such Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date hereof.  

 

4.The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action).  Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and the Lenders may rely on them until the Lenders receive written notice of revocation from Borrower.

 

Resolved, that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:

 

	
Name
	
 
	
Title
	
 
	
Signature
	
 
	
Authorized to Add or Remove Signatories

	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

	
 
	
 
	
 
	
 
	
 
	
 
	
☐

 

Resolved Further, that any one of the persons designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower.

WEST\277485036.4
354271-000840 

 

 

Resolved Further, that such individuals may, on behalf of Borrower:

 

Borrow Money.  Borrow money from Lenders.

Execute Loan Documents.  Execute any loan documents the Lenders require. 

Grant Security.  Grant the Lenders a security interest in any of Borrower’s assets.

Negotiate Items.  Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

Apply for Letters of Credit.  Apply for letters of credit from Bank.

Enter Derivative Transactions.  Execute spot or forward foreign exchange contracts, interest rate swap agreements, or other derivative transactions with Bank. 

Issue Warrants.  Issue warrants for Borrower’s capital stock.

Further Acts.  Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Borrower’s right to a jury trial) they believe to be necessary to effect these resolutions.

 

Resolved Further, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 

 

5.The persons listed above are Borrower's officers or employees with their titles and signatures shown next to their names.

 

	
PHASEBIO PHARMACEUTICALS, INC.

	
 
	
 

	
 
	
 

	
By:
	
 

	
 
	
 

	
Name:
	
 

	
 
	
 

	
Title:
	
 

 

*** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

 

 

I, the                                    of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

 

	
 
	
 

	
By:
	
 

	
 
	
 

	
Name:
	
 

	
 
	
 

	
Title:
	
 

 

 

 

WEST\277485036.4
354271-000840 

 

 

Exhibit E

Form of Disbursement Letter

[see attached]

 

 

DISBURSEMENT LETTER 

[DATE]

The undersigned, being the duly elected and acting                                   of PHASEBIO PHARMACEUTICALS, INC., a Delaware corporation (“Borrower”) does hereby certify to (a) SILICON VALLEY BANK, a California corporation (“SVB”), in its capacity as administrative agent and collateral agent (“Agent”), (b) SILICON VALLEY BANK, a California corporation, as a lender, (c) WESTRIVER INNOVATION LENDING FUND VIII, L.P., a Delaware limited partnership (“WestRiver”), as a lender (SVB and WestRiver and each of the other “Lenders” from time to time a party hereto are referred to herein collectively as the “Lenders” and each individually as a “Lender”) in connection with that certain Loan and Security Agreement dated as of March 25, 2019, by and among Borrower, Agent and the Lenders from time to time party thereto (the “Loan Agreement”; with other capitalized terms used below having the meanings ascribed thereto in the Loan Agreement) that:

	
1.
	
The representations and warranties made by Borrower in Section 5 of the Loan Agreement and in the other Loan Documents are true and correct in all material respects as of the date hereof.

 

	
2.
	
No event or condition has occurred that would constitute an Event of Default under the Loan Agreement or any other Loan Document.

 

	
3.
	
Borrower is in compliance with the covenants and requirements contained in Sections 4, 6 and 7 of the Loan Agreement.

 

	
4.
	
All conditions referred to in Section 3 of the Loan Agreement to the making of a Credit Extension to be made on or about the date hereof have been satisfied or waived by Agent.

 

	
5.
	
No Material Adverse Change has occurred.

 

	
6.
	
The undersigned is an Authorized Signer.

 

 

[Balance of Page Intentionally Left Blank]

 

 

 

	
7.
	
The proceeds of the Growth Capital Advance shall be disbursed as follows:

 

	
Disbursement from SVB:
	
 
	
 

	
Loan Amount
	
$
	
 

	
Plus: 
	
 
	
 

	
--Deposit Received
	
$
	
 

	
 
	
 
	
 

	
Less:
	
 
	
 

	
--Agent’s Legal Fees
	
$
	
(                          )

	
 
	
 
	
 

	
Net Proceeds due from SVB:
	
$
	
 

	
 
	
 
	
 

	
Disbursement from WestRiver:
	
 
	
 

	
Loan Amount
	
$
	
 

	
Plus: 
	
 
	
 

	
--Deposit Received
	
$
	
 

	
 
	
 
	
 

	
Less:
	
 
	
 

	
‐‐Lender’s Legal Fees
	
$
	
(                          )

	
 
	
 
	
 

	
Net Proceeds due from WestRiver:
	
$
	
 

	
 
	
 
	
 

	
TOTAL GROWTH CAPITAL ADVANCE NET PROCEEDS FROM LENDERS 
	
$
	
 

	
 
	
 
	
 

	
 
	
 
	
 

 

	
8.
	
The aggregate net proceeds of the Growth Capital Advance shall be transferred to the Designated Deposit Account as follows:

 

			
	
Account Name:
	
Phasebio Pharmaceuticals, Inc. 

	
Bank Name:
	
Silicon Valley Bank

	
Bank Address:
	
3003 Tasman Drive
Santa Clara, California 95054

	
Account Number:
	
 
	
 

	
ABA Number:
	
 
	
 

 

 

 

[Balance of Page Intentionally Left Blank]

 

 

 

Dated as of the date first set forth above.

 

				
	
BORROWER:
	
 
	
 

	
 
	
 
	
 

	
PHASEBIO PHARMACEUTICALS, INC.
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 

	
 
	
 
	
 

 

				
	
AGENT AND LENDER:
	
 
	
 

	
 
	
 
	
 

	
SILICON VALLEY BANK
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 

	
 
	
 
	
 

 

				
	
LENDER:
	
 
	
 

	
 
	
 
	
 

	
SILICON VALLEY BANK
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 

	
 
	
 
	
 

 

				
	
LENDER:
	
 
	
 

	
 
	
 
	
 

	
WESTRIVER INNOVATION LENDING FUND VIII, L.P.
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
By
	
 
	
 
	
 

	
Name:
	
 
	
 
	
 

	
Title:
	
 
	
 
	
 

	
 
	
 
	
 

 

 

[Signature Page to Disbursement Letter]

 

ANNEX I

 

Form of Warrant

 

[see attached]

 

 

 

 

 

	

	
MARKETING CONSENT FORM

 

Marketing Consent Form

SVB Financial Group is proud of our business relationships and occasionally likes to promote these relationships. We would like to use your company’s information and logo for promotional and marketing purposes in SVB Financial Group member businesses (collectively “SVB”) materials. While we would appreciate your consent to all of the uses listed below, please review and select all of the uses that you consent to below.

 

	
Approved Use(s)
	
 

 

Indicate your selection(s) by checking the boxes below 

	
 
	
☐
	
Marketing: You consent to SVB’s use of Company’s name, logo and images provided to us in written and oral presentations, advertising, marketing and PR materials, professional lists and websites.
	
 

	
 
	
☐
	
Deal Terms: You consent to SVB’s inclusion of the size and type of any loan or credit facility alongside your company’s name in any oral presentations, advertising, marketing and PR materials, customer lists, and websites.
	
 

	
 
	
☐
	
Reference: You consent to SVB’s use of Company and representatives’ names as a reference for SVB.
	
 

	
 
	
☐
	
Testimonial: You consent to SVB’s use of Company and representatives’ names and quotations in written and oral presentations, marketing and PR materials, and websites. Our practice is to send you a draft of any quotation concerning Company prior to publishing.
	
 

	
 
	
☐
	
News release: You consent to SVB’s use of Company’s name, trademarks, service marks, quotations and images provided to us in the SVB’s news releases concerning Company. Our practice is to send you a draft of any news release concerning Company prior to publishing.
	
 

 

	
Logos
	
 

 

 

In order to maintain the integrity of your logos, please provide them in:

‣ Full color and black and white versions, with or without taglines

‣ At least 300 dpi in PNG, EPS, TIF, or JPG formats (please do not send PDF or website logos).

 

	
Names
	
 

 

Please make sure to print the Company name, and any individual names and titles as you would like them displayed in materials or lists.

 

	
Company name
	
PHASEBIO PHARMACEUTICALS, INC. 

	
Additional names
	
 

	
 

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Exhibit 10.14

 

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

MASTER SERVICES AGREEMENT

This Master Services Agreement (the "Agreement") is entered into as of November 14, 2018 (the "Effective Date") by and between PhaseBio Pharmaceuticals, Inc., a Delaware corporation having a place of business at 1 Great Valley Parkway, Suite 30, Malvern, Pennsylvania 19355 ("PhaseBio") and BioVectra Inc., a company registered under the laws of the province of Prince Edward Island, Canada having a place of business at 11 Aviation Avenue, Charlottetown, PE, Cl E0A1, Canada ("Contractor"). PhaseBio and Contractor may be referred to herein individually as a "Party" and collectively as the "Parties."

WHEREAS, contractor has expertise manufacturing and assembly of products similar to the product (as defined below); and

WHEREAS, the parties contemplate that PhaseBio will purchase from contractor, and contractor will manufacture and supply to PhaseBio the products as phase bio may order from time to time pursuant to the terms and conditions set forth in a separate supply agreement ("Supply Agreement") to be negotiated by the parties in good faith; and

WHEREAS, in preparation for such the manufacture and supply of the products pursuant to the supply agreement, the parties desire to conduct certain activities and have contractor perform certain services pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1.DEFINITIONS. As used in this Agreement:

1.1"Adverse Event" shall mean any adverse event associated with the use of any Product in humans, whether or not considered drug-related, including an adverse event occurring in the course of the use of a Product in professional practice, in studies, in investigations or in tests or an adverse event occurring from Product overdose (whether accidental or intentional), from Product abuse, or from Product withdrawal, as well as any toxicity, sensitivity, failure of expected pharmacological action, or laboratory abnormality that is, or is thought by the reporter to be, serious or associated with relevant clinical signs or symptoms.

1.2"Applicable Laws" means all relevant federal, state and local laws, statutes, rules, and regulations that are applicable to a Party's activities hereunder.

1.3"Confidentiality Agreement" means that certain Confidential Disclosure Agreement by and between the Parties dated as of May 14, 2018.

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1.4"Contractor Background Technology" shall mean all Information that Contractor uses in the manufacture of, or performance of manufacturing and development services with respect to, biological products on behalf of its clients, that is either: (a) owned or controlled by Contractor on the Effective Date (other than as a result of PhaseBio disclosing or providing the same to Contractor); or (b) developed or acquired, and owned or controlled, by Contractor during the Term independently of any activities conducted pursuant to this Agreement.

1.5"Contractor Improvement" shall mean any improvement to the Contractor Background Technology that: (a) is made solely by Contractor in the course of performing Services; (b) is not specific to the manufacture of Product; and (c) does not use or incorporate any Product, Materials, or Confidential Information of PhaseBio.

1.6"Contractor Technology" shall mean Contractor Background Technology and Contractor Improvements.

1.7"Deliverables" means the items to be provided or actually provided by Contractor to PhaseBio under this Agreement, including items specifically designated or characterized as deliverables in a Statement of Work.

1.8"Developments" means ideas, inventions, improvements, novel techniques, original works of authorship, discoveries, developments, know-how, trade secrets, patents, patent applications, copyrights, trademarks, studies, cost and pricing data, customer lists, technologies, methods, processes, formulas, research, methods, procedures, designs, models, testing systems, algorithms, computer software and programs (including source and object code and related documentation), data and results, reports, notes, memoranda, laboratory notebooks, drawings, technical information and materials; in each case, whether or not patentable or copyrightable; that, in each case, are made, generated, developed, conceived, or first reduced to practice by Contractor, whether solely or jointly with PhaseBio, either (i) in the course of performance of the Services hereunder or (ii) using any Confidential Information disclosed or made available by or on behalf of the PhaseBio to Contractor or to which Contractor obtains access in connection with the activities contemplated by this Agreement. Without limiting the generality of the foregoing, Developments include all Product Improvements.

1.9"FDA" means the United States Food and Drug Administration or any successor entity thereto.

1.10"Governmental Authority" means any national, international, federal, state, provincial or local government, or political subdivision thereof, or any multinational organization or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof, or any governmental arbitrator or arbitral body).

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1.11"Information" means any and all technical information and know-how, including without limitation, data, instructions, processes, formulae, trade secrets, expert opinions and other information (in written or other tangible form) including, without limitation, any biological, chemical, pharmacological, toxicological, clinical, assay, control and manufacturing data, biological materials, manufacturing or related technology, analytical methodology, chemical and quality control procedures, protocols, techniques, improvements and results of experimentation and testing.

1.12"Intellectual Property" means ideas, concepts, discoveries, inventions, developments, know-how, trade secrets, techniques, methodologies, modifications, innovations, improvements, writings, documentation, electronic code, data and rights (whether or not protectable under state, federal or foreign patent, trademark, copyright or similar laws) or the like, whether or not written or otherwise fixed in any form or medium, regardless of the media on which contained and whether or not patentable or copyrightable.

1.13"Materials" means those materials supplied by PhaseBio for use in connection with the Services.

1.14"PhaseBio Contact" means the PhaseBio contact person for a particular Statement of Work as identified in such Statement of Work.

1.15"Product Improvements" means any invention, discovery, development or modification with respect to any Product or relating to the development, manufacture, use or commercialization of any Product, whether or not patented or patentable, including any enhancement in the efficiency, operation, manufacture, ingredients, preparation, presentation, formulation, means of delivery or dosage of any Product, any discovery or development of any new or expanded methods of treatment, use or indications for any Product or any discovery or development that improves the stability, safety or efficacy of any Product; in each case that is conceived, discovered, developed or otherwise made by Contractor, whether solely or jointly with PhaseBio, under or in connection with this Agreement or the performance of the Services hereunder.

1.16"Product" means PhaseBio's drug candidate known as PB2452 ("PB2452").

1.17"Regulatory Approval" means all approvals, including pricing approvals, that are necessary for the commercial sale of a Licensed Product in a given country or regulatory jurisdiction.

1.18"Regulatory Authority" means any applicable Governmental Authority responsible for granting regulatory approvals for Product, including the FDA and the EMA, and any corresponding national or regional regulatory authorities.

1.19"Services" means the services related to any Product specifically set forth in a Statement of Work.

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1.20"Specifications" means any procedures, process parameters, analytical tests and other attributes and written specifications for the Services and Deliverables included in a Statement of Work.

1.21"Work Product" shall mean any and all data and results and products (interim and final) of the Services performed by Contractor, whether tangible or intangible, including all inventions, discoveries, developments, innovations, methods, techniques, protocols, processes, procedures, specifications, trade secrets, know-how, modifications, enhancements, improvements, substances, materials, writings and documentation (whether or not protectable under patent, trademark, copyright or other intellectual property laws), that are made, developed, perfected, designed, conceived or first reduced to practice by Contractor's employees, agents, consultants, subcontractors or other representatives, either solely or jointly with employees, agents, consultants or other representatives of PhaseBio, in the course and as a result of performing the Services; but excluding Contractor Technology.

2.SERVICES

2.1Statements of Work. From time to time, PhaseBio may submit to Contractor written work orders substantially in the form of Exhibit A that specify the Services to be performed and any Deliverables to be provided by Contractor under such work orders, as well as the terms and conditions (including Specifications (if applicable), delivery and performance schedules, and fees) under which Contractor shall perform such Services. Upon acceptance of a work order by Contractor (in writing or by performance as set forth below), such work order becomes a "Statement of Work." If Contractor begins to perform services under a work order, Contractor shall be deemed to have accepted such work order in the form submitted by PhaseBio. Contractor may not perform any services on behalf of PhaseBio other than pursuant to a Statement of Work established as set forth above. In the event of any conflict between this Agreement and a Statement of Work, this Agreement shall control unless the Statement of Work expressly refers to the Parties' intent to alter the terms of this Agreement with respect to that Statement of Work. For clarity, PhaseBio may retain third parties other than Contractor to provide services similar or identical to the Services provided under this Agreement.

2.2Performance of Services. Contractor shall perform the Services in accordance with the terms of this Agreement, the applicable Statement of Work, and all Applicable Laws. Contractor shall provide, at its own expense, a place of work (unless the Statement of Work requires Contractor to perform the Services on PhaseBio's premises), and all equipment, tools, and other materials necessary to complete the Statement of Work.

2.3Change Proposals. Upon the receipt of a proposal from PhaseBio to change the terms of a Statement of Work (a "Change Proposal"), Contractor shall promptly provide to PhaseBio (a) any information requested in such proposal, and (b) its written acceptance or rejection of the proposal. Contractor may reject any Change Proposal that materially shortens the delivery or performance schedule or materially alters the Services or Deliverables, and may not unreasonably reject any other Change Proposal. If Contractor begins to adhere to a Change Proposal or does not reject the Change Proposal in writing within five (5) days after its receipt thereof, Contractor shall be deemed to have accepted such Change Proposal. PhaseBio's submission or Contractor's reasonable rejection (in accordance with this Section 2.3) of a Change 

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Proposal does not constitute a breach of this Agreement. A Change Proposal may, but need not, include an increase in fees payable under the Statement of Work.

2.4Project Manager. Contractor shall appoint one of its employees as the "Project Manager" for each Statement of Work. The Project Manager shall be responsible for all aspects of the Services under such Statement of Work through completion of such Services. The Project Manager shall regularly report progress on such Statement of Work to the PhaseBio Contact for such Statement of Work, and coordinate with such PhaseBio Contact for the performance of the Services. Unless otherwise agreed, all communications between PhaseBio and Contractor regarding the conduct of the Services pursuant to a Statement of Work shall be addressed between such Project Manager and PhaseBio Contact. The Project Manager shall use best efforts to respond to any communication from PhaseBio within [***] after receipt of such communication.

2.5Timelines. Contractor shall use reasonable efforts to comply with any timelines, milestones, schedules, or target dates for completing the Services or any portion thereof as set forth in a Statement of Work. If at any time Contractor anticipates a delay in meeting such timelines for a Statement of Work, Contractor shall promptly notify PhaseBio in writing of such anticipated delay and the estimated duration of such delay.

2.6Records. Contractor shall maintain, in good scientific manner, complete and accurate books and records pertaining to Services provided hereunder, in sufficient detail to verify compliance with its obligations under this Agreement. Such books and records shall (a) be appropriate for patent and regulatory purposes, (b) be in compliance with Applicable Law, (c) properly reflect all work done and results achieved in the performance of the Services hereunder, and (d) be retained by Contractor for such period as may be required by Applicable Law. At any time upon PhaseBio's written request, PhaseBio shall have the right, during normal business hours and upon reasonable notice, to inspect and copy any or all such books and records pursuant to this Section 2.6; provided that PhaseBio shall maintain such records and information disclosed therein in accordance with Article 4.

2.7Additional Agreements. Contractor shall ensure that each of its employees who will have access to any Confidential Information or perform any Services has entered into a binding written agreement that protects PhaseBio' s rights and interests to at least the same degree as Sections 2.10, 2.11, 5, 6, 7 and 8 of this Agreement.

2.8Subcontracting. Contractor may not subcontract or otherwise delegate any of its obligations under this Agreement without PhaseBio' s prior written consent on a case-by-case basis for each specific subcontractor proposed by Contractor for a specific task. After receipt of PhaseBio's consent but before allowing a subcontractor to begin performing a task, Contractor shall enter into a written agreement with such subcontractor that obligates such subcontractor (and its personnel involved in the performance of such task) to be bound by the terms and conditions of this Agreement (including the Statement of Work(s) applicable to the task to be performed by such subcontractor), in the same manner as such terms and conditions apply to Contractor. Contractor shall direct and coordinate the services of each subcontractor, and shall ensure the subcontractor's compliance with the terms and conditions of this Agreement. Contractor shall directly retain any approved subcontractor and no contractual relationship shall be created between PhaseBio and subcontractors, other than PhaseBio's position as a third-party beneficiary of the services of 

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subcontractors and to the written agreements between Contractor and the subcontractors as set forth above. Contractor shall pay a subcontractor using the payment submitted by PhaseBio as part of the overall budget set forth in the Statement of Work. PhaseBio has no obligation to pay any subcontractor. PhaseBio's consent to a subcontractor shall not in any way relieve Contractor of any duty or responsibility under this Agreement. As between PhaseBio and Contractor, Contractor shall perform all Services hereunder, regardless of whether any portion of such Services is delegated pursuant to this Section 2.8.

2.9Employees. Subject to Section 2.8, Contractor shall conduct the Services solely through its employees and not through any consultants, temporary workers, agents or the like. PhaseBio may, with reasonable justification, refuse or limit Contractor's use of any employee or require Contractor to remove any employee already engaged in the performance of the Services. PhaseBio's exercise of such right shall in no way be construed as relieving Contractor from its obligations under this Agreement.

2.10Access to PhaseBio Premises. If the Services or any portion thereof are to be performed by Contractor on PhaseBio's premises, PhaseBio shall grant reasonable access to its premises to the employees of Contractor solely to the extent necessary for the performance of such Services and solely for the purpose of permitting such employees to perform such Services. To expedite security processing, Contractor shall give at least twenty-four (24)-hours’ prior notice to the applicable PhaseBio Contact prior to Contractor's initial entry onto PhaseBio's premises, informing such PhaseBio Contact the timing of such proposed entry and the names of Contractor's employees to be processed. At the time of initial entry, the employees specified in the preceding sentence shall report to the location directed by PhaseBio for security processing. PhaseBio shall issue appropriate identification badges and access cards that will give such employees entry to PhaseBio's premises for the performance of the Services. Any such badges and cards remain the property of PhaseBio. Contractor shall promptly report any missing badges to PhaseBio, and Contractor shall return the badges to PhaseBio upon completion of the Services to be performed on PhaseBio's premises. Contractor shall instruct such employees to wear the badges in plain sight at all times while working within the limits of PhaseBio's premises. Contractor shall ensure that such employees comply with all instructions given by PhaseBio employees or security personnel, and any other access or other restrictions that may be imposed by PhaseBio.

2.11Materials. To the extent specified in a particular Statement of Work, PhaseBio shall provide Contractor with sufficient amounts of the Materials for Contractor to perform the Services. PhaseBio retains all right, title, and interest in and to the Materials. Contractor shall use the Materials solely to perform the Services under such Statement of Work and shall comply with PhaseBio's instructions and Applicable Laws. Contractor may not sell, transfer, disclose, or otherwise provide access to the Materials to any person, other than Contractor employee's, or entity without the prior written consent of PhaseBio, and Contractor may not reverse engineer or otherwise attempt to determine the structure, composition, or individual components of the Materials. Promptly upon completion of the applicable Services or earlier upon PhaseBio's request, Contractor shall, according to PhaseBio's instructions, return the Materials to PhaseBio or destroy the Materials and certify such destruction in writing.

2.12Reports. Upon completion of all Services under a Statement of Work, or at such other times as set forth in the applicable Statement of Work, Contractor shall provide PhaseBio with a written report summarizing all Project Records and Services completed for such Statement 

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of Work, in both electronic and hard copy. All such reports shall be deemed Confidential Information of PhaseBio.

3.INDEPENDENT CONTRACTOR RELATIONSHIP. Contractor's relation to PhaseBio under this Agreement is that of an independent contractor. Nothing in this Agreement is intended or should be construed to create a partnership, joint venture, or employer-employee relationship between PhaseBio and any of Contractor's employees or agents. Contractor is not the agent of PhaseBio and is not authorized, and may not represent to any third party that it is authorized, to make any commitment or otherwise act on behalf of PhaseBio. Without limiting the generality of the foregoing:

3.1Benefits and Contributions. Neither Contractor nor any of its employees or agents is entitled to or eligible for any benefits that PhaseBio may make available to its employees, such as group insurance, profit-sharing, or retirement benefits. Because Contractor is an independent contractor, PhaseBio will not withhold or make payments for social security, make unemployment insurance or disability insurance contributions, or obtain workers' compensation insurance on behalf of Contractor or any of its employees or agents.

3.2Taxes. Contractor is solely responsible for filing all tax returns and submitting all payments as required by any federal, state, local, or foreign tax authority arising from the payment of fees to Contractor under this Agreement, and shall do so in a timely manner. If applicable, PhaseBio shall report the fees paid to Contractor under this Agreement by filing Form 1099-MISC with the Internal Revenue Service as required by law.

4.COMPENSATION

4.1Fees. Subject to the terms and conditions of this Agreement, PhaseBio shall pay Contractor the fees specified in each Statement of Work ("Fees") as Contractor's sole and complete compensation for all Services, Deliverables, and Intellectual Property rights provided by Contractor under such Statement of Work and this Agreement. Contractor shall provide PhaseBio with written, itemized invoices in accordance with the payment schedule set forth in the applicable Statement of Work, with each such invoice specifying the Services performed for which payment is being requested. In no event shall the total amount invoiced under a particular Statement of Work exceed the budget set forth in such Statement of Work, unless as amended by an executed Change Proposal. Contractor may not submit for payment any invoice for services that PhaseBio has not consented to pursuant to an executed Statement of Work or Change Proposal. In no event shall PhaseBio be liable for fees or expenses incurred by Contractor in connection with any services or other work performed by Contractor without PhaseBio's prior written consent.

4.2Expenses. Unless expressly provided otherwise in the applicable Statement of Work, PhaseBio shall reimburse Contractor for any reasonable expenses for travel undertaken at PhaseBio's request, and other out-of-pocket expenses previously approved by PhaseBio, that are incurred by Contractor or any of its employees in performing the Services (the "Expenses"), on the condition that: (a) Contractor provides PhaseBio with invoices for such Expenses and adequate supporting documentation for such invoices; and (b) Contractor complies with PhaseBio's travel policy for the submission and verification of such expenses. Contractor is responsible for obtaining the then-current version of such policy before submitting any invoice for reimbursement.

4.3Release and Delivery of Product. Where Services involve manufacturing of Product, Contractor is responsible for release of Product to PhaseBio. Contactor shall release Product against the Specifications and shall provide PhaseBio with a Certificate of Analysis, Certificate of Origin and a Certificate of Compliance.

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4.4Delivery of Product. Contractor shall deliver Product to PhaseBio FCA, Charlottetown, PE (INCOTERMS 2010). Contractor shall arrange for the shipment of Product including insurance, customs and clearance to a designated delivery location specified by PhaseBio, at PhaseBio's expense. Contractor shall provide documents for export and support the inspection and export process. Unless requested in writing, Contractor shall deliver Product upon release. PhaseBio will be responsible for any costs related to the storage, handling and insurance fees incurred with respect to storage of Product after release and transfer of ownership.

4.5Title and Risk of Loss. Title to and risk of loss of or damage to the Product sold hereunder shall pass to PhaseBio upon release of Product. PhaseBio shall assume the risk of loss of or damage to the Product after release, except to the extent that such loss or damage results from the negligence or willful misconduct of Contractor or its representatives, for which Contractor shall retain the risk of loss of or damage to Product.

4.6Payments. Unless otherwise expressly provided in the applicable Statement of Work payment to Contractor of undisputed Fees and Expenses shall be due [***] following PhaseBio's receipt of the invoice for such Fees and Expenses submitted by Contractor pursuant to Section 4.1 or 4.2 above. Payments shall be addressed to:

	
	
BioVectra Inc.

	
11 Aviation Avenue

	
Charlottetown, PE

	
C1E OA1, Canada

	
Attention: Accounting Department

4.7Acceptance of Services. PhaseBio may accept or reject the Service or Deliverable, or any portion thereof, in writing within [***] from receipt thereof. Such acceptance or rejection shall be consistent with the criteria set forth in the Statement of Work, if any. If PhaseBio does not reject in writing within [***], the Service or Deliverable shall be considered accepted by PhaseBio. PhaseBio shall clearly state in writing the reasons for any rejection. Where Contractor agrees with assessment of rejection, within [***] of any notice of rejection, Contractor shall present a corrective plan of action to PhaseBio. Upon approval by PhaseBio of the corrective plan, Contractor, at no additional expense to PhaseBio, shall then make the corrections and, where applicable, Contractor shall resubmit the corrected Service or Deliverable to PhaseBio.

 

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4.8Independent Laboratory Testing. If PhaseBio and Contractor are unable to agree as to whether any Product conforms to the Specifications or warranties, the Parties shall cooperate to have the Product in dispute analyzed by an independent testing laboratory of recognized repute or a mutually acceptable independent GMP consultant in the case of an alleged failure to comply with GMP selected by Contractor and approved by PhaseBio, which approval shall not be unreasonably withheld, conditioned or delayed. The results of such laboratory testing or GMP consultant shall be final and binding on the Parties on the issue of conformance of the Product to the Specifications. If the Product is determined to so conform, then PhaseBio shall bear the cost of the independent laboratory testing or GMP review and pay for the Product in accordance with this Agreement. If the Product is determined not to conform, then Contractor shall bear the cost of the independent laboratory testing or GMP review, and Contractor shall, at PhaseBio's sole discretion, within [***] of the date of such determination, either replace the rejected Product at no cost to Company or promptly refund to PhaseBio the price paid for such Product.

4.9Disputed Amounts. For disputed invoices or the disputed portion of an invoice, PhaseBio shall use reasonable efforts to provide to Contractor, in writing, within [***], a description of the disputed amounts. PhaseBio and Contractor shall negotiate in a timely, good faith manner to resolve billing queries.

5.AUDITS

5.1Audit. Contractor shall maintain accurate and complete records and accounts relating to Services provided hereunder, and, in accordance with generally-accepted accounting principles, complete and accurate records of expenses incurred sufficient to document the Fees and Expenses invoiced to PhaseBio for at least three (3) years following the date of the invoice. ("Records and Accounts"). Upon request by PhaseBio provided with reasonable prior notice, Contractor shall allow PhaseBio or PhaseBio's authorized representatives to visit Contractor's facilities during normal business hours to observe and verify Contractor's compliance with this Agreement, review the Records and Accounts, inspect those facilities of Contractor which are being utilized in the Services, and to make copies of relevant records. Records and Accounts shall be maintained for a period of three (3) years after the creation of the applicable Record or Account. To assure the quality of Contractor's performance of the Services hereunder, PhaseBio may perform such audits no more than two (2) times in any twelve (12) months; provided, however, PhaseBio may also visit Contractor's offices with reasonable frequency during normal business hours to discuss the progress of the Services. If said audits exceed two (2) times in any twelve (12) month period, PhaseBio shall reimburse Contractor for costs and expenses actually incurred by Contractor in connection with the additional audits, provided, however, that if PhaseBio discovers that Contractor has been overcharging PhaseBio as a result of such audit, Contractor shall refund the amount of any overcharging that is not disputed in good faith by Contractor. In addition, if the amount of any such undisputed overcharge exceeds 10% of the amounts actually due during the period being audited, Contractor shall reimburse PhaseBio for the costs of any said additional audit. All Records and Accounts shall be deemed Confidential Information under the Confidentiality Agreement.

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5.2Monitoring. Contractor shall cooperate with any requests by PhaseBio to monitor the Services to verify that the Services are being performed in accordance with this Agreement and in a timely and satisfactory manner. Contractor shall use its best efforts to facilitate any such monitoring, including providing access to Contractor's employees, agents, equipment, and facilities.

6.REGULATORY.

6.1Cooperation and Assistance. Contractor shall cooperate with any pre-approval or other type of regulatory inspection by any Regulatory Authority. Without limiting the generality of the foregoing, Contractor shall cooperate with PhaseBio and PhaseBio's representatives in the performance of mock pre-approval inspections in preparation for a pre-approval inspection by a Regulatory Authority in connection with any application for Regulatory Approval of Product. Contractor shall promptly address any findings that are discovered during any such mock pre-approval inspection in advance of any pre-approval inspection by a Regulatory Authority. During the Term, Contractor shall provide all reasonable support and cooperation to PhaseBio in connection with its submissions to Regulatory Authorities in applications for Regulatory Approval or for the purpose of obtaining or maintaining Regulatory Approvals or pre-approval regulatory submissions. Upon PhaseBio's written request, Contractor shall provide to PhaseBio all information, documentation and data, including CMC data, in Contractor's or its permitted subcontractors' possession relating to Product or its manufacture (or true and complete copies thereof) as PhaseBio may require for any purpose, including submissions to Regulatory Authorities in applications for Regulatory Approval or for the purpose of obtaining or maintaining Regulatory Approvals or pre-approval regulatory submissions; in each case, at PhaseBio's expense for actual out-of-pocket costs. In addition, upon PhaseBio's request, Contractor shall review manufacturing-related portions of PhaseBio's draft regulatory submissions for accuracy and conformance with current practice at Contractor, and shall respond to PhaseBio in writing within [***] of such request.

6.2Adverse Event Reporting. PhaseBio shall be responsible for all reporting to regulatory authorities of Adverse Events associated with the use of any Product supplied by Contractor hereunder. If Contractor becomes aware of any Adverse Events associated with the use of such Products, it shall report all information in its possession regarding such event to PhaseBio within [***] of becoming aware of such information, and shall cooperate with PhaseBio as necessary to report such event to regulatory authorities.

6.3Regulatory Compliance. Contractor shall comply with all regulatory requirements with respect to Products imposed by applicable laws, rules and regulations upon Contractor as the manufacturer of the Products. Contractor shall, on a timely basis, provide PhaseBio with information in Contractor's possession relevant to its role as the manufacturer of Products that is reasonably necessary for PhaseBio to obtain or maintain Regulatory Approvals or otherwise to comply with applicable regulatory requirements. Contractor shall not file any drug master file ("DMF") for a Product with any Regulatory Authority, except with the prior written consent of PhaseBio. Should any Statement of Work provide for Contractor to develop and file a DMF for a Product, such DMF shall be subject to review, comment and approval by PhaseBio prior to filing. In the event of filing of any DMF for a Product, Contractor shall provide PhaseBio with letters of access to such DMF.

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6.4Cooperation. Contractor will provide to PhaseBio such documentation, data and other information relating to Products as PhaseBio may require for submission to regulatory authorities. Contractor shall also provide, upon request by PhaseBio, information concerning its production processes and quality control procedures with respect to Products.

6.5Regulatory Inspections. Contractor shall inform PhaseBio within [***] of notification of any regulatory inquiry, communication, or inspection relating to any Product. If Contractor receives any correspondence from any regulatory or governmental agency relating to a Product (including any Form FDA-483 notice, and any FDA refusal to file, rejection or warning letter, even if they do not specifically mention PhaseBio), or any notice of inspection or an inspection visit by any Regulatory Authority that involves a Product or could impact Contractor's ability to produce a Product, Contractor shall notify PhaseBio, and shall deliver to PhaseBio a copy of any such correspondence or notice (if any), within [***] of notification by such Regulatory Authority. Contractor shall permit PhaseBio to, at PhaseBio's option, have PhaseBio's representatives present at any such inspection by a Regulatory Authority. If there are written observations (or any other written communication) by a Regulatory Authority that involve Product or could impact Contractor's ability to produce Product, or any proposed written response by Contractor to any such inspection, Contractor shall inform PhaseBio within [***] and provide PhaseBio with copies of all documentation within [***], and shall have a reasonable opportunity to review and comment on the proposed response.

6.6Incidents or Accidents. Contractor shall immediately notify PhaseBio in writing of any incident or accident experienced by Contractor that Contractor believes may affect the quality of the Product or Deliverables that Contractor is obligated to deliver hereunder or its ability to meet delivery date obligations hereunder. Contractor shall promptly investigate such incident or accident and shall provide a written report within [***] of the results of the investigation of such incidence or accident to PhaseBio.

7.INTELLECTUAL PROPERTY

7.1PhaseBio Intellectual Property. PhaseBio shall retain all right, title and interest in and to all Intellectual Property and know-how owned by PhaseBio prior to the Effective Date or made or acquired by PhaseBio during the Term.

7.2Contractor Intellectual Property. Subject to the licenses set forth in Section 7.4, Contractor shall retain all right, title and interest in and to all Contractor Background Technology.

 

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7.3Project Intellectual Property. PhaseBio owns all right, title and interest in and to the Developments, Deliverables, and all intellectual property rights and know-how therein, as well as all Intellectual Property or know-how made or developed solely or jointly by Contractor in the course of performing the Services or otherwise under this Agreement (collectively, the "Project IP"); provided, however, the Project IP excludes the Contractor Technology. Contractor shall notify PhaseBio in writing of any and all Project IP promptly after its conception, development or reduction to practice. Contractor hereby assigns and transfers to PhaseBio all of its right, title and interest in and to the Project IP and shall take, and to cause its employees, agents, and consultants to take, all further acts reasonably required to evidence such assignment and transfer to PhaseBio, at PhaseBio's reasonable expense. Contractor shall not apply for any patent, copyright, trademark or other statutory or common law protection of any Project IP. PhaseBio may use, assert, and apply for patent, copyright, trademark and other statutory or common law protection for any or all Project IP in any and all countries. Contractor waives and releases, to the extent permitted by law, all rights to the Project IP, and shall assist PhaseBio in every reasonable way, without additional compensation (but at PhaseBio's expense), in PhaseBio's application for, prosecution and obtaining patent, copyright or other protection for Project EP, and in PhaseBio's enforcement, defense and protection from time to time of PhaseBio's rights to Project IP. Contractor shall, whether during or following its engagement hereunder, at PhaseBio's request and expense, but without additional compensation, execute any and all assignments, transfers, applications and other papers covering any and all Project IP which may be considered necessary or helpful by PhaseBio in furtherance of the foregoing and/or to accomplish the assignment, transfer and/or license of any Project IP to PhaseBio or persons or entities designated by PhaseBio. Any assignment of copyright hereunder includes Contractor's rights of attribution, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "moral rights" (collectively, "Moral Rights"). To the extent such Moral Rights cannot be assigned under applicable law and to the extent permitted by the laws in the various countries where Moral Rights exist, Contractor hereby waives such Moral Rights. Contractor will confirm any such waivers from time to time as requested by PhaseBio.

7.4Contractor Technology. Work Product shall not include Contractor Technology, and, as between the parties, all Contractor Technology shall be owned solely by Contractor. In order to provide PhaseBio with freedom to operate with respect to Products, Contractor hereby grants to PhaseBio a limited worldwide, royalty-free, fully-paid, non-exclusive license, including the right to sublicense through multiple tiers of sublicense, under Contractor Technology pertaining to or embodied within the Deliverables or that is actually used by Contractor in the performance of the Services to make, have made, use, sell, have sold, offer for sale and import such Product.

7.5Technology Transfer. Contractor shall provide reasonable technical assistance and make its technical personnel reasonably available to PhaseBio, as necessary for PhaseBio to implement any processes developed by Contractor during its conduct of the Services or conduct development and commercialization of any Deliverable provided by Contractor. PhaseBio shall compensate Contractor for its reasonable out-of-pocket and personnel costs for providing such technical assistance.

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8.CONFIDENTIALITY

8.1Confidential Information. All information that is disclosed or provided by PhaseBio to Contractor pursuant to this Agreement or pursuant to the Confidentiality Agreement shall be "Confidential Information" of PhaseBio. Confidential Information may be disclosed by PhaseBio in oral, written or other tangible form or otherwise learned by Contractor under this Agreement, and may including but not limited to PhaseBio's research, development, preclinical and clinical programs, data and results; pharmaceutical or biologic candidates and products; inventions, works of authorship, trade secrets, processes, conceptions, formulas, patents, patent applications, and licenses; business, product, marketing, sales, scientific and technical strategies, programs and results, including costs and prices; suppliers, manufacturers, customers, market data, personnel, and consultants; and other confidential or proprietary matters related to the Services. Notwithstanding the foregoing, all reports provided under this Agreement, Developments, Deliverables, and Project IP are the Confidential Information of PhaseBio, regardless of which Party disclosed such information. Except to the extent expressly authorized by this Agreement or by PhaseBio in writing, during the Term and for ten (10) years thereafter, Contractor shall maintain in strict trust and confidence and shall not disclose to any third party or use for any purpose other than as provided for in this Agreement any Confidential Information. Contractor may use the Confidential Information only to the extent required to perform the Services and for no other purpose. Contractor shall not use the Confidential Information for any purpose or in any manner that would constitute a violation of Applicable Laws.

8.2Exceptions. The obligations of confidentiality and nonuse set forth in Section 8.1 shall not apply to any specific portion of information that Contractor can demonstrate by competent evidence: (a) is in the public domain or comes into the public domain through no fault of Contractor; (b) is furnished to Contractor by a third party rightfully in possession of such information not subject to a duty of confidentiality with respect thereto, as shown by Contractor's written records contemporaneous with such third party disclosure; (c) is already known by Contractor at the time of receiving such Confidential Information and as evidenced by Contractor's prior written records, provided further that this exception does not apply to Developments; or (d) is independently developed by Contractor outside of any activities contemplated by this Agreement without use or reference to or reliance upon the Confidential Information, as demonstrated by Contractor's independent written records contemporaneous with such development. Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party. Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.

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8.3Authorized Disclosure. Notwithstanding the foregoing in this Section 8, Contractor may disclose certain Confidential Information to the extent such disclosure is required by law or regulation, or pursuant to a valid order of a court or other governmental body having jurisdiction, provided that Contractor provides PhaseBio with reasonable prior written notice of such disclosure and reasonable assistance in obtaining a protective order or confidential treatment preventing or limiting the disclosure or requiring that the Confidential Information so disclosed be used only for the purposes for which the law or regulation required, or for which the order was issued; provided further, that the Confidential Information disclosed pursuant to a requirement of applicable law or an order of a court of competent jurisdiction or a facially valid administrative, Congressional or other subpoena shall be limited to that information which, in the opinion of the receiving Party's legal counsel, is legally required to be disclosed.

8.4Publication; Use of Names. Under no circumstances may either Party use the name of the other Party or any of its personnel in any publication or any form of advertising without such other Party's prior written consent. For the avoidance of doubt, Contractor may not publish any articles or make any presentations relating to the Services or referring to data, information or materials generated as part of the Services, in whole or in part, without the prior written consent of PhaseBio.

8.5Third Party Confidential Information. Contractor shall not disclose to PhaseBio any confidential or proprietary information that belongs to any third party unless Contractor first obtains the consent of such third party and enters into a separate confidentiality agreement with PhaseBio covering that disclosure. Contractor shall not represent to PhaseBio as being unrestricted any designs, plans, models, samples, or other writings or products that Contractor knows are covered by valid patent, copyright, or other form of intellectual property protection belonging to a third party.

8.6Return of Confidential Information. Upon termination or expiration of the Agreement, or upon written request of PhaseBio, Contractor shall promptly return or destroy all documents, notes and other tangible materials representing PhaseBio's Confidential Information and all copies thereof; provided, however, that Contractor may retain a single archival copy of the Confidential Information for the sole purpose of facilitating compliance with the surviving provisions of this Agreement.

8.7Injunctive Relief. The Parties expressly acknowledge and agree that any breach or threatened breach of this Section 8 by Contractor may cause immediate and irreparable harm to PhaseBio that may not be adequately compensated by damages. Each Party therefore agrees that in the event of such breach or threatened breach by Contractor, and in addition to any remedies available at law, PhaseBio may secure equitable and injunctive relief, without bond, in connection with such a breach or threatened breach.

9.REPRESENTATIONS AND WARRANTIES

9.1Due Authorization. Each Party represents and warrants that (a) it has the full power and authority to enter into this Agreement, (b) this Agreement has been duly authorized, and (c) this Agreement is binding upon it.

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9.2No Inconsistent Obligations or Constraints upon Contractor. Contractor represents and warrants that (a) it is qualified and permitted to enter into this Agreement; (b) the terms of the Agreement are not inconsistent with its other contractual arrangements; (c) it has the right to grant all licenses granted to PhaseBio in this Agreement; (d) PhaseBio may freely use, practice, reproduce, distribute, make and sell all advice, data, information, inventions, works of authorship or know-how that Contractor conveys or provides to PhaseBio hereunder, in the form of a Deliverable or otherwise, without restriction and without infringing or misappropriating any third party Intellectual Property or other rights; and (e) it shall perform the Services in accordance with the highest standards of care and diligence practiced by recognized firms in providing services of a similar nature.

9.3No Pending Litigation. Contractor represents and warrants that it is not currently involved in any litigation, and is unaware of any pending litigation proceedings, relating to Contractor's performance of services for any third party.

9.4No Debarred Person. Contractor represents and warrants that it will not employ, contract with, or retain any person directly or indirectly to perform the Services under this Agreement if such person is under investigation by the FDA for debarment or is presently debarred by the FDA pursuant to the Generic Drug Enforcement Act of 1992, as amended (21 U.S.C. § 301, et seq.). In addition, Contractor represents and warrants that it has not engaged in any conduct or activity that could lead to any such debarment actions. If during the Term, Contractor or any person employed or retained by it to perform the Services (i) comes under investigation by the FDA for a debarment action, (ii) is debarred, or (iii) engages in any conduct or activity that could lead to debarment, Contractor shall immediately notify PhaseBio of same.

9.5No Infringement. Contractor represents and warrants that it will not, in the course of conducting the Services, infringe or misappropriate, and that neither the Deliverables nor any element thereof will infringe or misappropriate, any intellectual property right of any third party.

9.6Deliverables. Contractor warrants that the Services performed and the Deliverables will fully conform to the Specifications, requirements, and other terms in the applicable Statement of Work and this Agreement. In the event of a breach of this warranty, Section 4.8 shall control with respect to any Products and the remainder of this Section 9.6 shall apply with respect to all other Services and Deliverables. If such other Service or Deliverable does not conform to the requirements and other terms in the applicable Statement of Work or this Agreement, then without limiting any other rights or remedies, PhaseBio may request that Contractor, and Contractor shall, promptly re-perform the nonconforming Services at no additional charge to PhaseBio; provided, that if Contractor disputes the existence of such breach, then the Parties shall refer such matter to a mutually agreed independent consultant. If the breach has not been cured within [***] after determination of existence of a breach (or such longer period of time as may be reasonably required to allow for cure of such breach), then Contractor shall refund all fees previously paid to Contractor under the applicable Statement of Work, which will automatically terminate upon the expiration of such timeframe.

9.7Warranty Disclaimer. EXCEPT AS EXPLICITLY SET FORTH IN THIS SECTION 8, EACH PARTY HEREBY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS 

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OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

10.QUALITY ASSURANCE. Contractor shall perform the Services (a) in a professional manner, consistent with applicable industry standards and practices and in conformance with that level of care and skill ordinarily exercised in similar circumstances by providers of the same or similar services; (b) in compliance with all PhaseBio policies, procedures and instructions provided to Contractor in writing and applicable to the Services which have been provided to and agreed by Contractor in writing, and (c) accordance with the terms of this Agreement, the applicable Statement of Work, and all Applicable Laws. Contractor shall perform services consistent with its Quality Assurance Standard Operating Procedures (SOPs). Contractor agrees that in performing Services hereunder: (i) Contractor shall comply with the U.S. Foreign Corrupt Practices Act, as amended, the UK Bribery Act 2010, as amended, and any other applicable anti-corruption laws and laws for the prevention of fraud, racketeering, money laundering or terrorism (collectively, "Anti-Corruption Laws"), and shall not take any action that will, or would reasonably be expected to, cause PhaseBio or its licensors to be in violation of any Anti-Corruption Laws; and (ii) Contractor shall promptly provide PhaseBio with written notice of the following events: (A) upon becoming aware of any breach or violation by Contractor of any representation, warranty or undertaking set forth in clause (i) of this Section 10 or (B) upon receiving a formal notification that it is the target of a formal investigation by a governmental authority for a material violation of any Anti-Corruption Law.

11.INSURANCE. Contractor, at its sole cost and expense, shall secure and maintain in full force and effect throughout the performance of the Services and for [***] thereafter, (i) Workers' Compensation insurance with coverage in accordance with statutory limits, and (ii) Commercial General Liability insurance, including blanket contractual liability with limits of not less than [***]. Certificates evidencing such insurance shall be made available for examination upon request by PhaseBio.

12.INDEMNIFICATION; LIMITATION OF LIABILITY

12.1By Contractor. Contractor shall indemnify, defend and hold harmless PhaseBio and its affiliates and their respective directors, officers, employees, and agents (the "PhaseBio Indemnitees") from and against any and all costs, expenses, liabilities, damages, losses and harm (including reasonable legal expenses and attorneys' fees) arising out of or resulting from any third party suits, claims, actions, or demands (collectively, "Claims") to the extent resulting from or caused by: (a) the infringement or misappropriation by any Deliverable of any third party Intellectual Property (except to the extent caused solely by the Materials); (b) the negligence, recklessness or willful misconduct of Contractor or its officers, directors, employees, or agents; or (c) Contractor's breach of its obligations, warranties, or representations under this Agreement, except in each case to the extent that a Claim arises out of or results from the negligence, recklessness or willful misconduct of any PhaseBio Indemnitee or PhaseBio's breach of its obligations, warranties, or representations under this Agreement.

12.2By PhaseBio. PhaseBio shall indemnify, defend and hold harmless Contractor and its directors, officers, employees, and agents (the "Contractor Indemnitees") from and against any and all Claims to the extent resulting from or caused by: (a) the negligence, recklessness or 

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willful misconduct of any PhaseBio Indemnitee; (b) PhaseBio's breach of its obligations, warranties or representations under this Agreement, or (c) the development, manufacture, use, handling, storage, sale or other disposition of Product by or on behalf of PhaseBio (including any claim by any third party that the development, manufacture, use, handling, storage, sale or other disposition of Product infringes or misappropriates the intellectual property rights of such third party, except to the extent such claim relates solely to Contractor Technology used in connection therewith), except in each case to the extent that a Claim arises out of or results from the negligence, recklessness or willful misconduct of any Contractor Indemnitee or Contractor's breach of its obligations, warranties, or representations under this Agreement.

12.3Indemnification Conditions and Procedures. Each Party's agreement to indemnify, defend and hold harmless the other Party is conditioned on the indemnified Party: (i) providing written notice to the indemnifying Party of any claim or demand for which is it seeking indemnification hereunder promptly after the indemnified Party has knowledge of such claim; (ii) permitting the indemnifying party to assume full responsibility to investigate, prepare for and defend against any such claim or demand, except that the indemnified Party may cooperate in the defense at its expense using its own counsel; (iii) assisting the indemnifying Party, at the indemnifying Party's reasonable expense, in the investigation of, preparing for and defense of any such claim or demand; and (iv) not compromising or settling such claim or demand without the indemnifying Party's written consent.

12.4Limitation of Liability. EXCEPT FOR DAMAGES AVAILABLE FOR BREACHES OF CONFIDENTIALITY OBLIGATIONS UNDER SECTION 7 AND THE INDEMNIFICATION RIGHTS AND OBLIGATIONS UNDER SECTION 10, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.

13.TERM AND TERMINATION

13.1Term. The term of this Agreement (the "Term") shall commence on the Effective Date and continue thereafter until terminated in accordance with this Section 13.

13.2Termination by PhaseBio. PhaseBio may terminate this Agreement or any Statement of Work at any time with or without cause for its convenience, effective upon [***] notice to Contractor.

13.3Termination by Contractor. Contractor may terminate this Agreement at any time with or without cause for its convenience, effective upon [***] notice to PhaseBio, provided that termination will not be effective until the last remaining Statement of Work is complete.

13.4Termination for Cause. A Party may terminate this Agreement or any Statement of Work for material breach of this Agreement by the other Party upon [***] written notice specifying the nature of the breach, if such breach has not been cured within such [***] period. If such notice of breach is for breach of a Statement of Work, such notice shall note the specific Statement of Work under which such breach is claimed.

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13.5Effects of Termination

13.5.1Survival. Sections 1, 2.11, 3, 5.1, 6, 7, 8, 10, 11 (solely to the extent the Claims can be attributed to action or omission during the Term), 13.3 and 14 shall survive any termination or expiration of this Agreement. Termination or expiration of this Agreement shall not affect either Party's liability for any breach of this Agreement it may have committed before such expiration or termination.

13.5.2Return of PhaseBio Property. Upon termination of this Agreement, Contractor shall return or destroy the Materials, and return to PhaseBio the Confidential Information, as set forth in Sections 2.11 and 8.6. In addition, Contractor shall deliver to PhaseBio, or destroy at PhaseBio's request, the Deliverables (in whatever stage of development or completion).

13.6Payment. Upon termination or expiration of this Agreement or termination of any Statement of Work, neither Contractor nor PhaseBio shall have any further obligations under this Agreement or such Statements of Work, except as set forth in Section 13.5 and except that, with respect to each terminated Statement of Work:

13.6.1Contractor shall terminate all Services in progress, including subcontracted Services, in an orderly manner as soon as practical and in accordance with a schedule agreed to by PhaseBio, unless PhaseBio specifies in the notice of termination that Services in progress should be completed;

13.6.2Contractor shall deliver to PhaseBio all Materials, Deliverables and Work Product not previously delivered to PhaseBio, Product, retained samples (except for samples Contractor is required to retain pursuant to applicable law), records, data, reports and other property, information, and know-how in recorded form that was provided by PhaseBio, or developed in the performance of the Services;

13.6.3Contractor shall use commercially reasonable efforts to return to the vendor for a refund all unused, returnable materials in Contractor's possession that are related to any such Statements of Work;

13.6.4within [***] after the termination of any Statements of Work, Contractor shall provide to PhaseBio a written itemized cost statement of all Services performed in connection with the terminated Statements of Work and a final invoice for such Statements of Work, pursuant to the terms and conditions set forth in such Statement of Work. If PhaseBio has paid to Contractor in advance more than the amount in a final invoice, then Contractor shall refund the excess payment to PhaseBio, or to credit the excess payment toward any other existing or future Statements of Work, at the election of PhaseBio.

14.GENERAL PROVISIONS

14.1Governing Law; Venue. This Agreement is governed by the laws of the State of Delaware without reference to any conflict of laws principles that would require the application of the laws of any other jurisdiction. The United Nations Convention on Contracts for the International Sale of Goods does not apply to this Agreement. Contractor irrevocably consents to 

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the personal jurisdiction of the state and federal courts located in Philadelphia, Pennsylvania for any suit or action arising from or related to this Agreement, and waives any right Contractor may have to object to the venue of such courts. Contractor further agrees that these courts will have exclusive jurisdiction over any such suit or action initiated by Contractor against PhaseBio.

14.2Severability. If any provision of this Agreement is, for any reason, held to be invalid or unenforceable, the other provisions of this Agreement will be unimpaired and the invalid or unenforceable provision will be deemed modified so that it is valid and enforceable to the maximum extent permitted by law.

14.3Limitation of Liability. EXCEPT FOR DAMAGES AVAILABLE FOR BREACHES OF CONFIDENTIALITY OBLIGATIONS UNDER SECTION 7 AND THE INDEMNIFICATION RIGHTS AND OBLIGATIONS UNDER SECTION 11, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR INDIRECT, SPECIAL, CONSEQUENTIAL, OR INCIDENTAL DAMAGES INCLUDING, BUT NOT LIMITED TO DAMAGES FOR LOSS OF PROFIT OR GOODWILL REGARDLESS OF WHETHER SUCH PARTY HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. Notwithstanding anything to the contrary stated in this Agreement or any attachments thereto, in no event shall Contractor be liable to PhaseBio for any and all causes, whether based in contract or in tort, including negligence, strict liability, or any other cause, that in the aggregate exceeds twice the amount of the total fees paid to Contractor by PhaseBio under the applicable work order giving rise to such liability.

14.4No Assignment. Neither Party shall assign this Agreement to any other person or entity without the prior written consent of the other, and any purported assignment without such consent shall be void, provided however, that PhaseBio may assign this Agreement without such consent (a) to an Affiliate, (b) in connection with the transfer or sale of all or substantially all of PhaseBio's business to which this Agreement relates to a third party, whether by merger, sale of stock, sale of assets or otherwise, or (c) to PhaseBio's licensor of PB2452 and such licensor's affiliated entities (collectively, "Licensor") in the event of termination of the license granted by Licensor to PhaseBio. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

14.5Notices. Each Party must deliver all notices, consents, and approvals required or permitted under this Agreement in writing to the other Party at the address specified below, by personal delivery, by certified or registered mail (postage prepaid and return receipt requested), by a nationally-recognized overnight carrier, or by electronic mail with confirmation of transmission. Notice will be effective upon receipt or refusal of delivery. Each Party may change its address for receipt of notice by giving notice of such change to the other Party.

		
	
If to PhaseBio:
	
PhaseBio Pharmaceuticals, Inc.

	
 
	
1 Great Valley Parkway

	
 
	
Suite 30

	
 
	
Malvern, Pennsylvania 19355 United States

	
 
	
Attention: CFO/Legal

	
 
	
E-mail: john.sharp@phasebio.com

19.

 

		
	
If to Contractor:
	
BioVectra Inc.

	
 
	
11 Aviation Avenue

	
 
	
Charlottetown, PE, CIE 0A1, Canada

	
 
	
Attention: Legal Department

	
 
	
E-mail: vdeighan@biovectra.com

 

14.6Remedies. The rights and remedies provided to each Party in this Agreement are cumulative and in addition to any other rights and remedies available to such Party at law or in equity.

14.7Construction. Section headings are included in this Agreement merely for convenience of reference; they are not to be considered part of this Agreement or used in the interpretation of this Agreement. No rule of strict construction will be applied in the interpretation or construction of this Agreement.

14.8Waiver. All waivers must be in writing and signed by the Party to be charged. Any waiver or failure to enforce any provision of this Agreement on one occasion will not be deemed a waiver of any other provision or of such provision on any other occasion.

14.9Time Is of the Essence. Time is of the essence in the performance of the Services and Contractor's other obligations under this Agreement.

14.10Entire Agreement; Amendments. This Agreement, including the Statements of Work hereunder, is the final, complete, and exclusive agreement of the Parties with respect to the subject matter hereof and supersedes and merges all prior or contemporaneous communications and understandings between the Parties. No modification of or amendment to this Agreement will be effective unless in writing and signed by the Party to be charged.

14.11Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which shall constitute together the same instrument.

Signature Page to Follow

 

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IN WITNESS WHEREOF, the Parties have executed this Master Services Agreement as of the Effective Date.

 

	
Phasebio Pharmaceuticals, Inc.
	
 
	
BioVectra Inc.

	
Signed:
	
/s/Susan Arnold
	
 
	
Signed:
	
/s/Heather Delage

	
Name:
	
Susan Arnold
	
 
	
Name:
	
Heather Delage

	
Title:
	
VP, Preclinical & CMC
	
 
	
Title:
	
VP Business Development

 

Signature Page to Master Services Agreement

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