Document:

Loan Agreement

 Exhibit 10.13 
 LOAN AGREEMENT 
 THIS LOAN AGREEMENT (this
“Agreement”) dated as of October 23, 2013 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation (“Bank”), and AQUINOX PHARMACEUTICALS INC., a Canadian
federal corporation (“Borrower”), provides the terms on which Bank shall lend to Borrower and Borrower shall repay Bank. The parties agree as follows: 
 1. ACCOUNTING AND OTHER TERMS 
 Accounting terms not defined in this
Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13. All other terms contained in
this Agreement, unless otherwise indicated, shall have the meaning provided by the PPSA to the extent such terms are defined therein. 
 2. LOAN AND TERMS OF PAYMENT 
 2.1 Promise to Pay. Borrower
hereby unconditionally promises to pay Bank the outstanding principal amount of all Credit Extensions and accrued and unpaid interest thereon as and when due in accordance with this Agreement. 

2.1.1 Growth Capital Advances. 
 (a) Availability. Subject to the terms and conditions of this Agreement, Bank agrees to make Growth Capital Advances to Borrower in two (2) tranches: “Tranche A” and
“Tranche B”. Bank shall make a Growth Capital Advance (i) under Tranche A, on the Effective Date, or as soon thereafter as is practical, in an amount equal to Two Million Five Hundred Thousand Dollars ($2,500,000) (the
“Tranche A Growth Capital Advance”), and (ii) under Tranche B, during the Tranche B Draw Period (provided that Borrower receives Positive Data Results on or prior to December 31, 2014), in an amount equal to One Million
Five Hundred Thousand Dollars ($1,500,000) (the “Tranche B Growth Capital Advance” and together with the Tranche A Growth Capital Advance, each a “Growth Capital Advance” and collectively, the “Growth
Capital Advances”). The aggregate outstanding amount of the Growth Capital Advances shall not exceed the Growth Capital Line. After repayment, no Growth Capital Advance may be reborrowed. 

(b) Repayment. 
 (i) Tranche A Growth Capital Advance. Borrower shall repay the Tranche A Growth Capital Advance in thirty (30) equal installments of principal, plus monthly payments of accrued interest (each
a “Tranche A Growth Capital Advance Payment”) beginning on October 1, 2014 and continuing on the first (1st) day of each month thereafter through the Tranche A Growth Capital Maturity Date, on which date Borrower shall pay
to Bank (i) the final Tranche A Growth Capital Advance Payment, which shall include all outstanding principal and accrued and unpaid interest under Tranche A and (ii) the Tranche A Final Payment. 

(ii) Tranche B Growth Capital Advance. Borrower shall repay the Tranche B Growth Capital Advance in thirty (30) equal
installments of principal, plus monthly payments of accrued interest (each a “Tranche B Growth Capital Advance Payment”) beginning on the first (1st) day of the first (1st) month following the Funding Date of the Tranche B
Growth Capital Advance (the “Initial Tranche B Growth Capital Advance Payment Date”) and continuing on the first (1st) day of each month thereafter through the Tranche B Growth Capital Maturity Date, on which date Borrower
shall pay to Bank (i) the final Tranche B Growth Capital Advance Payment, which shall include all outstanding principal and accrued and unpaid interest under Tranche B and (ii) the Tranche B Final Payment. 

 (c) Prepayment. 

(i) Mandatory Prepayment Upon an Acceleration. If the Growth Capital Advances are accelerated following the occurrence of an
Event of Default or otherwise, Borrower shall immediately pay to Bank an amount equal to the sum of (a) all outstanding principal with respect to the Growth Capital Advances, plus accrued and unpaid interest thereon, plus (b) the Tranche A
Prepayment Fee, plus (c) the Tranche B Prepayment Fee, plus (d) the Tranche A Final Payment, plus (e) the Tranche B Final Payment, plus (f) all other sums, including Bank Expenses, if any, that shall have become due and payable
hereunder in connection with the Growth Capital Advances, including interest at the Default Rate with respect to any past due amounts. 
 (ii) Voluntary Prepayment. Borrower shall have the option to prepay all, but not less than all, of the Growth Capital Advances advanced by Bank under this Agreement, provided Borrower
(i) delivers written notice to Bank of its election to prepay the Growth Capital Advances at least ten (10) Business Days prior to such prepayment, and (ii) pays, on the date of such prepayment (a) all outstanding principal with
respect to the Growth Capital Advances, plus accrued and unpaid interest thereon, plus (b) the Tranche A Prepayment Fee, plus (c) the Tranche B Prepayment Fee, plus (d) the Tranche A Final Payment, plus (e) the Tranche B Final
Payment, plus (f) all other sums, including Bank Expenses, if any, that shall have become due and payable hereunder in connection with the Growth Capital Advances. 
 2.2 Intentionally Omitted.  
 2.3 Payment of Interest on the
Credit Extensions. 
 (a) Interest Rate. Subject to Section 2.3(b), the principal amount outstanding for
each Growth Capital Advance shall accrue interest at a fixed per annum rate equal to the greater of two percentage points (2.00%) above the Prime Rate in effect on the applicable Funding Date or five and a quarter of one percentage points
(5.25%), which interest shall be payable monthly in accordance with Section 2.3(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 percentage points (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, Bank Expenses) but are not paid when due shall bear interest until paid at a rate equal to
the highest rate applicable to the Obligations. Payment or acceptance of the increased interest rate provided in this Section 2.3(b) is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Bank. 
 (c) Intentionally Omitted. 

(d) Payment; Interest Computation. Interest is payable monthly on the first calendar day of each month and shall be computed on
the basis of a 360-day year for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m. Pacific 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. 
 (e) Interest Act (Canada). For the purpose of the Interest Act (Canada),
the yearly rate of interest to which interest calculated on the basis of a year of 360, 365 or 366 days, as the case may be, is equivalent to the rate of interest determined as herein provided multiplied by the number of days in such year and
divided by 360, 365 or 366, as the case may be. Further, subject to subsection (f) below, in this Agreement all interest shall be calculated using the nominal rate method and not the effective rate method and the “deemed re-investment principle” shall not apply to such calculations. 
 (f) Notwithstanding any
provisions of this Agreement, in no event shall the aggregate “interest” (as defined in Section 347 of the Criminal Code (Canada)) payable by Borrower under the Loan Documents exceed the effective annual rate of interest on the
“credit advanced” (as defined in Section 347 of the 

  
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Criminal Code (Canada)) under this Agreement lawfully permitted by that Section and, if any payment, collection or demand pursuant to this Agreement in respect of “interest” (as
defined in Section 347 of the Criminal Code (Canada)) is determined to be contrary to the provisions of that Section, such payment, collection or demand shall be deemed to have been made by mutual mistake of Borrower and Bank and the
amount of such payment or collection shall be refunded to Borrower. For the purposes of this subsection (f) the effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over
the relevant term and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by Bank will be prima facie evidence of such rate. 
 2.4 Fees. Borrower shall pay to Bank:  
 (a) Facility Fee. A
fully earned, non-refundable facility fee of Twelve Thousand Dollars ($12,000) (the “Facility Fee”); 
 (b)
Final Payments. The Final Payments, if and when due hereunder; 
 (c) Prepayment Fees. The Prepayment Fees, if and
when due hereunder; and 
 (d) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and expenses
for documentation and negotiation of this Agreement) incurred through and after the Effective Date, when due (or, if no stated due date, upon demand by Bank). 
 (e) Good Faith Deposit. Bank hereby acknowledges receipt of a good faith deposit of Twenty Thousand Dollars ($20,000), of which any amounts not utilized to pay due diligence expenses and Bank
Expenses will be applied to the Facility Fee; and 
 (f) Fees Fully Earned. Unless otherwise provided in this Agreement
or in a separate writing by Bank, Borrower shall not be entitled to any credit, rebate, or repayment of any fees earned by Bank pursuant to this Agreement notwithstanding any termination of this Agreement or the suspension or termination of
Bank’s obligation to make loans and advances hereunder. Bank may deduct amounts owing by Borrower under the clauses of this Section 2.4 pursuant to the terms of Section 2.5(c). Bank shall provide Borrower written notice of deductions
made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.4. 
 2.5 Payments;
Application of Payments; Debit of Accounts. 
 (a) All payments to be made by Borrower under any Loan Document shall be made
in immediately available funds in Dollars, without setoff or counterclaim, before 12:00 p.m. Pacific time on the date when due. Payments of principal and/or interest received after 12:00 p.m. Pacific time are considered received at the opening of
business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment shall be due the next Business Day, and additional fees or interest, as applicable, shall continue to accrue until paid. 

(b) Bank has the exclusive right to determine the order and manner in which all payments with respect to the Obligations may be applied.
Borrower shall have no right to specify the order or the accounts to which Bank shall allocate or apply any payments required to be made by Borrower to Bank or otherwise received by Bank under this Agreement when any such allocation or application
is not specified elsewhere in this Agreement. 
 (c) Bank may debit any of Borrower’s deposit accounts, including the
Designated Deposit Account, for principal and interest payments or any other amounts Borrower owes Bank when due. These debits shall not constitute a set-off. 

  
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 2.6 Currency Indemnity. 

(a) Indemnity. If: (i) any amount payable under, or in connection with any matter relating to or arising out of, the Loan
Documents is received by Bank in a currency (the “Payment Currency”) other than that agreed to be payable hereunder or thereunder (the “Agreed Currency”), whether voluntarily or pursuant to an order, judgment or
decision of any court, tribunal, arbitration panel or administrative agency or as a result of any bankruptcy, receivership, liquidation or other insolvency type proceedings or otherwise; and (ii) the amount so produced by converting the Payment
Currency so received into the Agreed Currency is less than the relevant amount of the Agreed Currency; then: (iii) the amount so received shall constitute a discharge of the liability of Borrower under or in connection any of the Loan Documents
only to the extent of the amount received following the conversion described in paragraph (ii) above; and (iv) Borrower shall indemnify and save Bank harmless from and against such deficiency and any loss or damage arising as a result
thereof. 
 Any conversion pursuant to this Section 2.6(a) shall be made at such prevailing rate of exchange on the date
the Payment Currency is received by Bank and in such market as is determined by Bank as being the most appropriate for such conversion. Borrower shall in addition pay the costs of such conversion. 

(b) Independent Obligation. The indemnity set out in Section 2.6(a): (i) is an obligation of Borrower which is separate
and independent from all other obligations of Borrower under any of the Loan Documents; (ii) gives rise to a separate and independent cause of action; (iii) applies irrespective of any indulgence granted by or on behalf of Bank; and
(iv) continues in full force and effect notwithstanding, and does not merge with, any order, judgment or decision of any court, tribunal, arbitration panel or administrative agency or as a result of any bankruptcy, receivership, liquidation or
other insolvency type proceeding or otherwise as to any amount due under this Agreement and the Security or in connection herewith or therewith. 
 3. CONDITIONS OF LOANS 
 3.1 Conditions Precedent to Initial
Credit Extension. Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters,
as Bank may reasonably deem necessary or appropriate, including, without limitation: 
 (a) duly executed original signatures to
the Loan Documents; 
 (b) duly executed original signatures to the Control Agreements, if any; 

(c) Borrower’s Operating Documents and a certificate of Compliance of Borrower certified by Industry Canada and a good standing
certificate of Borrower certified by the Registrar of Companies for British Columbia, each as of a date no earlier than thirty (30) days prior to the Effective Date; 
 (d) duly executed original signatures to the completed Borrowing Resolutions for Borrower; 
 (e) copies, dated as of a recent date, of PPSA searches, as Bank shall request, accompanied by satisfactory written evidence that the Liens indicated in any such searches either constitute Permitted Liens
or have been or, in connection with the initial Credit Extension, will be terminated or released; 
 (f) the Perfection
Certificates of Borrower and Guarantor, together with the duly executed original signatures thereto; 
 (g) the duly executed
original signatures to the Guaranty, together with the duly executed original signatures to the completed Borrowing Resolutions for Guarantor; 
 (h) a copy of Guarantor’s Registration Rights Agreement, Investors’ Rights Agreement or similar agreement and any amendments thereto; 

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

  
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 (j) payment of the fees and Bank Expenses then due as specified in Section 2.4 hereof.

 3.2 Conditions Precedent to all Credit Extensions. Bank’s obligations to make each Credit Extension, including
the initial Credit Extension, is subject to the following conditions precedent: 
 (a) timely receipt of an executed
Payment/Advance Form; 
 (b) the representations and warranties in this Agreement shall be true, accurate, and complete in all
material respects on the date of the Payment/Advance Form and on the Funding Date of each Credit Extension; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, and no Event of
Default shall have occurred and be continuing or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and warranties in this Agreement remain true, accurate, and
complete in all material respects; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; and 
 (c) Bank determines to its satisfaction that there has not been a Material Adverse Change. 
 3.3 Intentionally Omitted.  
 3.4 Covenant to Deliver.
Borrower agrees to deliver to Bank each item required to be delivered to Bank under this Agreement as a condition precedent to any Credit Extension. Borrower expressly agrees that a Credit Extension made prior to the receipt by Bank of any such item
shall not constitute a waiver by Bank of Borrower’s obligation to deliver such item, and the making of any Credit Extension in the absence of a required item shall be in Bank’s sole discretion. 

3.5 Procedures for Borrowing. Subject to the prior satisfaction of all other applicable conditions to the making of a Growth
Capital Advance set forth in this Agreement, to obtain a Growth Capital Advance, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Pacific time on the Funding Date of the Growth
Capital Advance. Together with any such electronic or facsimile notification, Borrower shall deliver to Bank by electronic mail or facsimile a completed Payment/Advance Form executed by a Responsible Officer or his or her designee. Bank may rely on
any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Bank shall credit Growth Capital Advances to the Designated Deposit Account. Bank may make Growth Capital Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without instructions if the Growth Capital Advances are necessary to meet Obligations which have become due. 
 4. CREATION OF SECURITY INTEREST 
 4.1 Grant of Security
Interest. Repayment and performance of the Obligations of Borrower to Bank will be secured by the Security. 

Borrower acknowledges that it previously has entered, and/or may in the future enter, into Bank Services Agreements with Bank. Regardless
of the terms of any Bank Services Agreement, Borrower agrees that any amounts Borrower owes Bank thereunder shall be deemed to be Obligations hereunder and that it is the intent of Borrower and Bank to have all such Obligations secured by the first
priority perfected security interest in the Collateral granted herein (subject only to Permitted Liens that are not required to be subordinated to Bank’s Lien in this Agreement). 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity
obligations) are repaid in full in cash. Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit 

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

4.2 Authorization to File Financing Statements. Borrower hereby authorizes Bank to file financing statements, without notice to
Borrower, with all appropriate jurisdictions to perfect or protect Bank’s interest or rights hereunder. Any such financing statements may indicate the Collateral as “all assets of the Debtor, other than intellectual property, but including
all proceeds thereof” or words of similar effect, or as being of an equal or lesser scope, or with greater detail, all in Bank’s discretion. 
 4.3 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Bank, at the request of Bank, all financing statements and other documents that Bank may
reasonably request, in a form satisfactory to Bank, to perfect and continue the perfection of Bank’s security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents.

 4.4 Conflict with Security. Notwithstanding that any of the Security is expressed to be payable upon demand, Bank will
not make demand under the Security in respect of any Obligations which are not expressed to be payable on demand under the Loan Agreement or other Loan Documents other than the Security unless an Event of Default has occurred. Further, if there is
any conflict between the provisions of this Agreement and those of any of the Security then the provisions of this Agreement shall prevail. 
 5. REPRESENTATIONS AND WARRANTIES 
 Borrower represents and warrants
as follows: 
 5.1 Due Organization, Authorization; Power and Authority. Borrower, Guarantor and each of their respective
Subsidiaries are duly existing and in good standing in their respective jurisdictions of formation and are qualified and licensed to do business and are in good standing in any jurisdiction in which the conduct of their respective business or
ownership of property requires that they be qualified except where the failure to do so could not reasonably be expected to have a material adverse effect on Borrower’s, Guarantor’s or each of their respective Subsidiaries’ business.
In connection with this Agreement, Borrower has delivered to Bank completed certificates signed by Borrower and Guarantor, respectively, entitled “Perfection Certificate”. Borrower represents and warrants to Bank that (a) each of
Borrower’s and Guarantor’s exact legal name is that indicated on the Perfection Certificate and, with respect to the Borrower, on the signature page hereof; (b) each of Borrower and Guarantor is an organization of the type and is
organized in the jurisdiction set forth in the Perfection Certificate; (c) the Perfection Certificate accurately sets forth each of Borrower’s and Guarantor’s organizational identification number or accurately states that Borrower or
Guarantor has none; (d) the Perfection Certificate accurately sets forth each of Borrower’s and Guarantor’s place of business, or, if more than one, its chief executive office as well as each of Borrower’s and Guarantor’s
mailing address (if different than its chief executive office); (e) Borrower and Guarantor (and each of their respective predecessors) has not, in the past five (5) years, changed its jurisdiction of formation, corporate structure or
organizational type, or any organizational number assigned by its jurisdiction; and (f) all other information set forth on the Perfection Certificate pertaining to Borrower, Guarantor and each of their respective Subsidiaries is accurate and
complete in all material respects (it being understood and agreed that Borrower and Guarantor 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). 

  
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 The execution, delivery and performance by Borrower and Guarantor of the Loan Documents to
which it is a party have been duly authorized, and do not (i) conflict with any of Borrower’s or Guarantor’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, Guarantor or any of their respective Subsidiaries or any of their
property or assets may be bound or affected, (iv) require any action by, filing, registration, or qualification with, or Governmental Approval from, any Governmental Authority (except such Governmental Approvals which have already been obtained
and are in full force and effect (or are being obtained pursuant to Section 6.1(b))) 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 or Guarantor is bound. Neither of Borrower nor Guarantor is 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 or Guarantor’s business. 
 5.2 Collateral. Borrower has good title to, rights in, and the power to
transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens. Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or
Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security interest therein,
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. 
 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, and licenses of Intellectual Property that could not result in a legal transfer of title of the licensed
property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discrete geographical areas outside of the United States, (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. To the best of Borrower’s knowledge, each Patent which it owns or purports to own and which is material to Borrower’s
business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part. To the best of
Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s
business. 
 Except as noted on the Perfection Certificate, Borrower is not a party to, nor is it bound by, any Restricted
License. 
 5.3 Litigation. There are no actions or proceedings pending or, to the knowledge of any Responsible Officer,
threatened in writing by or against Borrower, Guarantor or any of their respective Subsidiaries involving more than, individually or in the aggregate, Fifty Thousand Dollars ($50,000). 

5.4 Financial Statements; Financial Condition. All consolidated financial statements for Borrower, Guarantor and any of their
respective Subsidiaries delivered to Bank 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 Bank. 

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

  
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 5.6 Regulatory Compliance. Borrower is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U
of the Federal Reserve Board of Governors). Neither Borrower nor Guarantor has violated any laws, ordinances or rules, the violation of which could reasonably be expected to have a material adverse effect on its business. None of Borrower’s,
Guarantor’s or any of their respective Subsidiaries’ properties or assets has been used by Borrower, Guarantor 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, Guarantor and each of their respective Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to,
all Governmental Authorities that are necessary to continue their respective businesses as currently conducted except where failure to obtain or make such consents, declarations, filings or notices would not reasonably be expected to have a material
adverse effect on their respective businesses. 
 5.7 Subsidiaries; Investments. Borrower does not own any stock,
partnership, or other ownership interest or other equity securities except for Permitted Investments. 
 5.8 Tax Returns and
Payments; Pension Contributions. Borrower, Guarantor and each Subsidiary have timely filed or have obtained extensions for filing all required tax returns and reports, and Borrower, Guarantor and each Subsidiary have timely paid all foreign,
federal, state, provincial and local taxes, assessments, deposits and contributions owed by Borrower, Guarantor and each Subsidiary 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). 
 To the extent Borrower, Guarantor or any
Subsidiary defers payment of any contested taxes, Borrower shall (i) notify Bank in writing of the commencement of, and any material development in, the proceedings, and (ii) post bonds or takes 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 or
Guarantor’s prior tax years which could result in additional taxes becoming due and payable by Borrower or Guarantor in excess of Fifty Thousand Dollars ($50,000). Each of Borrower and Guarantor has paid all amounts necessary to fund all their
respective present pension, profit sharing and deferred compensation plans in accordance with their terms, and neither Borrower nor Guarantor has withdrawn from participation in, or has permitted partial or complete termination of, or has 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 or Guarantor. 
 5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely as working capital, and to fund its general business requirements and not for personal, family, household or
agricultural purposes. 
 5.10 Full Disclosure. No written representation, warranty or other statement of Borrower or
Guarantor in any certificate or written statement given to Bank, as of the date such representation, warranty, or other statement was made, taken together with all such written certificates and written statements given to Bank, contains any untrue
statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good
faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results). 

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

  
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 6. AFFIRMATIVE COVENANTS 

Borrower shall do all of the following: 
 6.1 Government Compliance. 
 (a) Maintain its, Guarantor’s and
all their respective Subsidiaries’ organizational 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 or Guarantor’s business or operations. Borrower shall comply, and have Guarantor and each Subsidiary comply, in all material respects, with all laws, ordinances and regulations to which they are
subject, noncompliance with which could have a material adverse effect on Borrower’s or Guarantor’s business or operations. 
 (b) Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in
all of its property. Borrower shall promptly provide copies of any such obtained Governmental Approvals to Bank. 

6.2 Financial Statements, Reports, Certificates. Provide Bank 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 balance sheet and income statement covering Borrower’s, Guarantor’s and each of their respective Subsidiary’s operations for such month certified by a Responsible Officer and in a form
acceptable to Bank (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 set forth in this Agreement and such other information as Bank may reasonably request; 

(c) Annual Operating Budget and Financial Projections. Within forty five (45) days after the end of each fiscal year of
Borrower, (i) annual operating budgets (including income statements, balance sheets and cash flow statements, by month) for the upcoming fiscal year of Borrower, and (ii) annual financial projections for the following 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 one hundred eighty (180) days after the last day of Borrower’s fiscal year, audited consolidated financial
statements of Borrower and Guarantor prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent audit firm reasonably acceptable to Bank; 

(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. In the event that Borrower
becomes subject to the reporting requirements under the Exchange Act 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 Bank in writing (which may be by electronic mail) of the posting of any such documents; 

  
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 (g) Legal Action Notice. A prompt report of any legal actions pending or threatened
in writing against Borrower, Guarantor or any of their respective Subsidiaries that could result in damages or costs to Borrower, Guarantor or any of their respective Subsidiaries of, individually or in the aggregate, One Hundred Thousand Dollars
($100,000) or more; and 
 (h) Other Financial Information. Other financial information reasonably requested by Bank.

 6.3 Inventory; Returns. Keep all Inventory in good and marketable condition, free from material defects. Returns and
allowances between Borrower and its Account Debtors shall follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One
Hundred Thousand Dollars ($100,000). 
 6.4 Taxes; Pensions. Timely file, and require Guarantor and each Subsidiary to
timely file, all required material tax returns and reports and extensions thereof and timely pay, and require Guarantor and each Subsidiary to timely pay, all material foreign, federal, state, provincial and local taxes, assessments, deposits and
contributions owed by Borrower, Guarantor and each of their respective Subsidiaries, except for deferred payment of any taxes contested pursuant to the terms of Section 5.9 hereof, and shall deliver to Bank, on demand, appropriate certificates
attesting to such payments, and pay all amounts necessary to fund all present pension, profit sharing and deferred compensation plans in accordance with their terms. 
 6.5 Insurance. 
 (a) Keep its business and the Collateral insured
for risks and in amounts standard for companies in Borrower’s industry and location and as Bank may reasonably request. Insurance policies shall be in a form, with financially sound and reputable insurance companies that are not Affiliates of
Borrower, and in amounts that are satisfactory to Bank. All property policies shall have a lender’s loss payable endorsement showing Bank as lender loss payee. All liability policies shall show, or have endorsements showing, Bank as an
additional insured. Bank shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral. 
 (b) Ensure that proceeds payable under any property policy are, at Bank’s option, payable to Bank on account of the Obligations. Notwithstanding the foregoing, (a) so long as no Event of Default
has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to Fifty Thousand Dollars ($50,000) with respect to any loss, but not exceeding One Hundred Thousand Dollars ($100,000) in the
aggregate for all losses under all casualty policies in any one year, toward the replacement or repair of destroyed or damaged property; provided that any such replaced or repaired property (i) shall be of equal or like value as the replaced or
repaired Collateral and (ii) shall be deemed Collateral in which Bank has been granted a first priority security interest subject to Permitted Liens, and (b) after the occurrence and during the continuance of an Event of Default, all
proceeds payable under such casualty policy shall, at the option of Bank, be payable to Bank on account of the Obligations. 

(c) At Bank’s request, Borrower shall deliver certified copies of insurance policies and evidence of all premium payments. Each
provider of any such insurance required under this Section 6.5 shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Bank, that it will give Bank twenty (20) days prior written
notice before any such policy or policies shall be materially altered or canceled (or with respect to any premiums, ten (10) days). If Borrower fails to obtain insurance as required under this Section 6.5 or to pay any amount or furnish
any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in this Section 6.5, and take any action under the policies Bank deems prudent. 

6.6 Operating Accounts. 
 (a) Maintain all of its, Guarantor’s and all of their respective Subsidiaries’ primary U.S. operating and other US deposit accounts and securities accounts with Bank and Bank’s Affiliates
within 45 days of the Closing Date.  

  
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 (b) Provide Bank five (5) days prior written notice before establishing any Collateral
Account at or with any bank or financial institution other than Bank or Bank’s Affiliates. For each Collateral Account that Borrower at any time maintains, Borrower shall cause the applicable bank or financial institution (other than Bank) at
or with which any Collateral Account is maintained to execute and deliver a Control Agreement or other appropriate instrument under applicable Canadian law with respect to such Collateral Account to perfect Bank’s Lien in such Collateral
Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank. The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll
taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such. 
 6.7 Intentionally Omitted.  
 6.8 Protection of Intellectual
Property Rights. (a) Protect, defend and maintain the validity and enforceability of its Intellectual Property material to Borrower’s business; (b) promptly advise Bank in writing of material infringements or any other event that
could reasonably be expected to materially and adversely affect the value of its Intellectual Property; and (c) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public
without Bank’s written consent.  
 6.9 Litigation Cooperation. From the date hereof and continuing through
the termination of this Agreement, make available to Bank, without expense to Bank, Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Bank may deem them reasonably necessary to prosecute or
defend any third-party suit or proceeding instituted by or against Bank with respect to any Collateral or relating to Borrower. 

6.10 Access to Collateral; Books and Records. Allow Bank, or its agents, at reasonable times, on three (3) Business
Day’s 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 Bank shall determine is necessary. The foregoing inspections and audits shall be at Borrower’s
expense, and the charge therefor shall be Eight Hundred Fifty Dollars ($850) per person per day (or such higher amount as shall represent Bank’s then-current standard charge for the same), plus reasonable out-of-pocket expenses. In the event
Borrower and Bank schedule an audit more than ten (10) days in advance, and Borrower cancels or seeks to reschedule the audit with less than ten (10) days written notice to Bank, then (without limiting any of Bank’s rights or
remedies), Borrower shall pay Bank a fee of One Thousand Dollars ($1,000) plus any out-of-pocket expenses incurred by Bank to compensate Bank for the anticipated costs and expenses of the cancellation or rescheduling. 

6.11 Formation 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 Guarantor forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Effective Date, Borrower and Guarantor shall (a) cause such new Subsidiary to provide to
Bank a joinder to the Loan Agreement to cause such Subsidiary to become a co-borrower hereunder or a Guaranty, together with such appropriate financing statements and/or Control Agreements, all in form and substance satisfactory to Bank (including
being sufficient to grant Bank a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary), (b) provide to Bank 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 Bank, and (c) provide to Bank all other documentation in form and substance satisfactory to Bank, including one or more opinions of
counsel satisfactory to Bank, which in its 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 6.11 shall be a Loan Document. 
 6.12 Further Assurances. Execute any further instruments and take further
action as Bank reasonably requests to perfect or continue Bank’s Lien in the Collateral or to effect the purposes of this Agreement. Deliver to Bank, within five (5) days after the same are sent or received, copies of all correspondence,
reports, documents and other filings with any Governmental Authority that could reasonably be expected to have a material effect on the operations of Borrower, Guarantor or any of their respective Subsidiaries. 

  
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 7. NEGATIVE COVENANTS 

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

7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of (collectively, “Transfer”), or
permit Guarantor or any of their respective 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, surplus 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 or Guarantor;
(c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower or Guarantor permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s or
Guarantor’s use or transfer of money or Cash Equivalents in the ordinary course of its business for the payment of ordinary course business expenses in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents;
(f) of non-exclusive licenses for the use of the property of Borrower, Guarantor or any of their respective 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 Canada and the United States; and (g) transfers between Borrower and Guarantor. 

7.2 Changes in Business, Management, Ownership or Business Locations. (a) Engage in or permit Guarantor or any of their
respective Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower, Guarantor and each such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; or (c) (i) fail
to provide notice to Bank of any Key Person departing from or ceasing to be employed by Borrower within five (5) Business Days after his or her departure from Borrower; or (ii) enter into any transaction or series of related transactions
in which the stockholders of Borrower who were not stockholders immediately prior to the first such transaction own more than forty-nine percent (49%) of the voting stock of Borrower immediately after giving effect to such transaction or
related series of such transactions (other than by the sale of Borrower’s equity securities in a public offering or to Guarantor or to venture capital or private equity investors so long as, in the case of the sale of Borrower’s equity
securities venture capital or private equity investors Borrower identifies to Bank the venture capital or private equity investors prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction).

 Borrower shall not, without at least fifteen (15) days prior written notice to Bank: (1) add any new offices or
business locations, including warehouses (unless such new offices or business locations contain less than Fifty Thousand Dollars ($50,000) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the
aggregate, in excess of Fifty Thousand Dollars ($50,000) 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 deliver any portion of the Collateral valued, individually
or in the aggregate, in excess of Fifty Thousand Dollars ($50,000) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the
Collateral, then Borrower will first receive the written consent of Bank, and such bailee shall execute and deliver a bailee agreement in form and substance satisfactory to Bank. 

7.3 Mergers, Amalgamations or Acquisitions. Merge, amalgamate or consolidate, or permit any of its Subsidiaries to merge,
amalgamate 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). Borrower or a Subsidiary may merge, amalgamate or consolidate into another Subsidiary or into Guarantor or Borrower. 
 7.4 Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit Guarantor or any Subsidiary to do so, other than Permitted Indebtedness. 

7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income,
including the sale of any Accounts, or permit Guarantor or any Subsidiary to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Bank) 

  
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with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower, Guarantor or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in
or upon, or encumbering any of Borrower’s, Guarantor’s or any Subsidiary’s Intellectual Property, except customary anti-assignment provisions in contracts or other agreements or as is otherwise permitted in Section 7.1 hereof and
the definition of “Permitted Liens” herein. 
 7.6 Maintenance of Collateral Accounts. Maintain any Collateral
Account except pursuant to the terms of Section 6.6(b) hereof. 
 7.7 Distributions; Investments. (a) Pay any
dividends or make any distribution or payment or redeem, retire or purchase any capital stock provided that (i) 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. 
 7.8 Transactions 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, (ii) equity financings provided that such transactions are permitted pursuant to the terms of Section 7.2 hereof,
(iii) transactions permitted pursuant to the terms of the second sentence of Section 7.3 hereof, (iv) Permitted Investments, (v) debt financings from Borrower’s investors so long as all such Indebtedness is Subordinated
Debt, and (vi) transactions between Borrower and Guarantor. 
 7.9 Subordinated Debt. (a) Make or permit any
payment on any Subordinated Debt, except under the terms of the subordination, intercreditor, or other similar agreement to which such Subordinated Debt is subject, or (b) amend any provision in any document relating to the Subordinated Debt
which would increase the amount thereof, provide for earlier or greater principal, interest, or other payments thereon, or adversely affect the subordination thereof to Obligations owed to Bank. 

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

8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest on any Credit Extension when due, or
(b) pay any other Obligations within three (3) Business Days after such Obligations are due and payable (which three (3) Business Day cure period shall not apply to payments due on the Tranche A Growth Capital Maturity Date or Tranche
B 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); 

8.2 Covenant Default. 
 (a) Borrower fails or neglects to perform any obligation in Sections 6.2, 6.4, 6.5, 6.6, 6.10 or 6.11 or violates any covenant in Section 7; or 

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

  
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 8.3 Material Adverse Change. A Material Adverse Change occurs; 

8.4 Attachment; Levy; Restraint on Business. 
 (a) (i) The service of process seeking to attach, by trustee or similar process, any funds of Borrower, Guarantor or of any entity under the control of Borrower or Guarantor (including a Subsidiary) in
excess of Fifty Thousand Dollars ($50,000), or (ii) a notice of lien or levy is filed against any of Borrower’s or Guarantor’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 or Guarantor’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 or Guarantor from conducting all or any material part of its business; 
 8.5 Insolvency. (a) Borrower or Guarantor is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower or Guarantor begins an
Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower or Guarantor and is not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made while any of the conditions described in clause
(a) exist and/or until any Insolvency Proceeding is dismissed); 
 8.6 Other Agreements. There is, under any
agreement to which Borrower or 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 Fifty Thousand Dollars ($50,000); or (b) any breach or default by Borrower or Guarantor, the result of which could have a material adverse effect on Borrower’s or Guarantor’s business; 

 8.7 Judgments; Penalties. One or more fines, penalties or final judgments, orders or decrees for the payment of
money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against
Borrower or Guarantor by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or
such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

 8.8 Misrepresentations. Borrower, Guarantor or any Person acting for Borrower or Guarantor makes any
representation, warranty, or other statement now or later in this Agreement, any Loan Document or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document, and such representation, warranty, or other statement
is incorrect in any material respect when made; 
 8.9 Subordinated Debt. Any document, instrument, or agreement
evidencing the subordination of 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 of the subordination terms 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;  

8.10 Guaranty. (a) Any guaranty of any Obligations terminates or ceases for any reason to be in full force and effect;
(b) any guarantor of any obligations (a “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 liquidation, winding up, or termination of existence of any guarantor; or (e) (i) a material impairment in the perfection or priority of Bank’s Lien in the collateral provided by any 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 

  
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 8.11 Governmental Approvals. Any Governmental Approval shall have been
(a) revoked, rescinded, suspended, modified in a materially 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 as to (a) or (b) above, 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) materially adversely affects the legal qualifications of Borrower, Guarantor or any of their
respective 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 Guarantor to hold any Governmental Approval in any other jurisdiction. 
 9. BANK’S RIGHTS AND
REMEDIES 
 9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank
may, without notice or demand, do any or all of the following: 
 (a) declare all Obligations immediately due and payable
(but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank); 
 (b) stop advancing money or extending credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank; 

(c) demand that Borrower (i) deposit cash with Bank in an amount equal to one hundred five percent (105%) if the Dollar
Equivalent is denominated in U.S. dollars or one hundred ten percent (110%) if the Dollar Equivalent is denominated in Foreign Currency of the Dollar Equivalent of the aggregate face amount of all Letters of Credit remaining undrawn (plus all
interest, fees, and costs due or to become due in connection therewith (as estimated by Bank in its good faith business judgment)), to secure all of the Obligations relating to such Letters of Credit, as collateral security for the repayment of any
future drawings under such Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii) pay in advance all letter of credit fees scheduled to be paid or payable over the remaining term of any Letters of Credit;

 (d) terminate any FX Contracts; 
 (e) verify the amount of, demand payment of and performance under, and collect any Accounts and General Intangibles, settle or adjust disputes and claims directly with Account Debtors for amounts on terms
and in any order that Bank considers advisable, and notify any Person owing Borrower money of Bank’s security interest in such funds; 
 (f) make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests
and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies; 

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

  
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 (i) place a “hold” on any account maintained with Bank and/or deliver a notice of
exclusive control, any entitlement order, or other directions or instructions pursuant to any Control Agreement or similar agreements providing control of any Collateral; 
 (j) apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard
to the solvency of Borrower, any guarantor or any other Person liable for any of the obligations; 
 (k) demand and receive
possession of Borrower’s Books; and 
 (l) exercise all rights and remedies available to Bank under the Loan Documents or
at law or equity, including all remedies provided under the PPSA (including disposal of the Collateral pursuant to the terms thereof). 
 9.2 Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of Default, to:
(a) endorse Borrower’s name on any checks or other forms of payment or security; (b) sign Borrower’s name on any invoice or bill of lading for any Account or drafts against Account Debtors; (c) settle and adjust disputes and
claims about the Accounts directly with Account Debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Bank or a third party as
the PPSA permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower’s name on any documents necessary to perfect or continue the perfection of Bank’s security interest in the Collateral regardless of whether an
Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank’s foregoing appointment as Borrower’s attorney in fact, and all of
Bank’s rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates. 

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

9.4 Application of Payments and Proceeds Upon Default. If an Event of Default has occurred and is continuing, Bank shall have the
right to apply in any order any funds in its possession, whether from Borrower account balances, payments, proceeds realized as the result of any collection of Accounts or other disposition of the Collateral, or otherwise, to the Obligations. Bank
shall pay any surplus to Borrower by credit to the Designated Deposit Account or to other Persons legally entitled thereto; Borrower shall remain liable to Bank for any deficiency. If Bank, directly or indirectly, enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Bank shall have the option, exercisable at any time, of either reducing the Obligations by the principal amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Bank of cash therefor. 
 9.5 Bank’s Liability for Collateral. So long as
Bank complies with reasonable banking practices regarding the safekeeping of the Collateral in the possession or under the control of Bank, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or
damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

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

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

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

			
	If to Borrower:	  	AQUINOX PHARMACEUTICALS INC.
		  	5600 Parkwood Way, Suite 430
		  	Richmond, BC V6V 2M2
		  	Attn: Kamran Alam – VP Finance & CFO
		  	Fax: (778) 331- 4486
		  	Email: Kalam@aqxpharma.com
		
	If to Bank:	  	Silicon Valley Bank
		  	901 5th Avenue, Suite 3900
		  	Seattle, WA 98164
		  	Attn: Dave Sanders – Vice President
		  	Fax: (206) 624-0374
		  	Email: dsanders@svb.com

 11. CHOICE OF LAW AND VENUE 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the Province of British Columbia and the
federal laws of Canada applicable therein, without regard to principles of conflicts of law. Each of Borrower and Bank hereby submits to the non-exclusive jurisdiction of the courts of British Columbia. 

12. GENERAL PROVISIONS 
 12.1 Termination Prior to Growth Capital 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, and any other obligations which, by their terms, are to survive the termination of this
Agreement, and any Obligations under Bank Services Agreements that are cash collateralized in accordance with 

  
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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 Bank. Those obligations that are expressly specified in this Agreement as surviving this Agreement’s termination shall continue to survive notwithstanding this Agreement’s termination. 

12.2 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party.
Borrower may not assign this Agreement or any rights or obligations under it without Bank’s prior written consent (which may be granted or withheld in Bank’s discretion). Bank has the right, without the consent of or notice to Borrower, to
sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights, and benefits under this Agreement and the other Loan Documents (other than the Warrant, as to which assignment,
transfer and other such actions are governed by the terms thereof). 
 12.3 Indemnification. Borrower agrees to
indemnify, defend and hold Bank and its directors, officers, employees, agents, attorneys, or any other Person affiliated with or representing Bank (each, an “Indemnified Person”) harmless against: (i) all obligations, demands,
claims, and liabilities (collectively, “Claims”) claimed or asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (ii) all losses or expenses (including Bank Expenses) in any
way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower (including reasonable attorneys’ fees and expenses), except for Claims and/or
losses directly caused by such Indemnified Person’s gross negligence or willful misconduct. 
 12.4 Right of
Set-Off. Borrower hereby grants to Bank, a lien, security interest and right of setoff as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of
Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY
AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.  
 12.5 Time of Essence. Time is of the essence for the
performance of all Obligations in this Agreement. 
 12.6 Severability of Provisions. Each provision of this Agreement is
severable from every other provision in determining the enforceability of any provision. 
 12.7 Correction of Loan
Documents. Bank may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties. 
 12.8 Amendments in Writing; Waiver; Integration. No purported amendment or modification of any Loan Document, or waiver, discharge or termination of any obligation under any Loan Document, shall be
enforceable or admissible unless, and only to the extent, expressly set forth in a writing signed by the party against which enforcement or admission is sought. Without limiting the generality of the foregoing, no oral promise or statement, nor any
action, inaction, delay, failure to require performance or course of conduct shall operate as, or evidence, an amendment, supplement or waiver or have any other effect on any Loan Document. Any waiver granted shall be limited to the specific
circumstance expressly described in it, and shall not apply to any subsequent or other circumstance, whether similar or dissimilar, or give rise to, or evidence, any obligation or commitment to grant any further waiver. The Loan Documents represent
the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of the Loan Documents
merge into the Loan Documents. 

  
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 12.9 Counterparts. This Agreement may be executed in any number of counterparts and
by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. 
 12.10 Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may
be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective transferees or purchasers of any interest in the Credit
Extensions (provided, however, Bank shall use its best efforts to obtain any prospective transferee’s or purchaser’s agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order; (d) to
Bank’s regulators or as otherwise required in connection with Bank’s examination or audit; (e) as Bank considers appropriate in exercising remedies under the Loan Documents; and (f) to third-party service providers of Bank so
long as such service providers have executed a confidentiality agreement with Bank with terms no less restrictive than those contained herein. Confidential information does not include information that is either: (i) in the public domain or in
Bank’s possession when disclosed to Bank, or becomes part of the public domain (other than as a result of its disclosure by Bank in violation of this Agreement) after disclosure to Bank; or (ii) disclosed to Bank by a third party, if Bank
does not know that the third party is prohibited from disclosing the information. 
 Bank Entities may use anonymous
forms of confidential information for aggregate datasets, for analyses or reporting, and for any other uses not expressly prohibited in writing by Borrower. The provisions of the immediately preceding sentence shall survive termination of this
Agreement. 
 12.11 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Borrower and Bank
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.

 12.12 Electronic Execution of Documents. The words “execution,” “signed,”
“signature” and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a
manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions
Act. 
 12.13 Captions. The headings used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement. 
 12.14 Construction of Agreement. The parties mutually acknowledge that they
and their attorneys have participated in the preparation and negotiation of this Agreement. In cases of uncertainty this Agreement shall be construed without regard to which of the parties caused the uncertainty to exist. 

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

12.16 Third Parties. Nothing in this Agreement, whether express or implied, is intended to: (a) confer any benefits, rights
or remedies under or by reason of this Agreement on any persons other than the express parties to it and their respective permitted successors and assigns; (b) relieve or discharge the obligation or liability of any person not an express party
to this Agreement; or (c) give any person not an express party to this Agreement any right of subrogation or action against any party to this Agreement. 
 13. DEFINITIONS 
 13.1 Definitions. As used in the Loan
Documents, the word “shall” is mandatory, the word “may” is permissive, the word “or” is not exclusive, the words “includes” and “including” are not limiting, the singular includes the plural, and
numbers denoting amounts that are set off in brackets are negative. As used in this Agreement, the following capitalized terms have the following meanings: 
 “Account” has the meaning set forth in the Security Agreement. 

  
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 “Account Debtor” means any Person who owes funds to Borrower.

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

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

“Bank” is defined in the preamble hereof. 

“Bank Entities” is defined in Section 12.10. 

“Bank Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees
and expenses) for preparing, amending, negotiating, administering, defending and enforcing the Loan Documents (including, without limitation, those incurred in connection with appeals or Insolvency Proceedings) or otherwise incurred with respect to
Borrower, Guarantor or any other guarantor. 
 “Bank Services” are any products, credit
services, and/or financial accommodations previously, now, or hereafter provided to Borrower or any of its Subsidiaries by Bank or any Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without
limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various
agreements related thereto (each, a “Bank Services Agreement”). 
 “Borrower” is
defined in the preamble hereof. 
 “Borrower’s Books” are all Borrower’s books and
records including ledgers, federal, provincial 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 substantially in the form attached hereto as Exhibit C. 
 “Business Day” is any
day that is not a Saturday, Sunday or a day on which Bank is closed, and if any determination of a “Business Day” shall relate to an FX Contract, the term “Business Day” shall mean a day on which dealings are carried on in the
country of settlement of the Foreign Currency. 
 “Cash 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) Bank’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. 

“Claims” is defined in Section 12.3. 

“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 

  
 -20-

 
term contained in Article or Division 9 shall govern; provided further, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, or priority
of, or remedies with respect to, Bank’s Lien on any Collateral is governed by the Uniform Commercial Code in effect in a jurisdiction other than the 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” has the meaning set forth in the Security Agreement. 

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

“Commodity Account” is any “commodity account” as defined in the Code with such additions to such term as may
hereafter be made. 
 “Compliance Certificate” is that certain certificate in the form attached hereto
as Exhibit A. 
 “Contingent Obligation” is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation, in each case, directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and
(c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange
rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support
arrangement. 
 “Control Agreement” is any control agreement entered into among the depository
institution at which Borrower maintains a Deposit Account or the securities intermediary or commodity intermediary at which Borrower maintains a Securities Account or a Commodity Account, Borrower, and Bank pursuant to which Bank obtains control
(within the meaning of the Code) over such Deposit Account, Securities Account, or Commodity Account. 

“Copyrights” has the meaning set forth in the Security Agreement. 

“Credit Extension” is any Growth Capital Advance or any other extension of credit by Bank for Borrower’s
benefit. 
 “Default Rate” is defined in Section 2.3(b). 

“Deposit Account” is any “deposit account” as defined in the Code with such additions to such term as may
hereafter be made, and includes without limitation any operating account, current account or other deposit account of Borrower maintained with a Canada bank. 
 “Designated Deposit Account” is Borrower’s deposit account number
                    , maintained by Borrower with Bank; the multicurrency account denominated in Euros, account number
                    , maintained by Borrower. 
 “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. 

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

“Equipment” has the meaning set forth in the Security Agreement. 

“Event of Default” is defined in Section 8. 

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

“Final Payments” means individually and collectively, the Tranche A Final Payment and the Tranche B Final
Payment. 
 “Foreign Currency” means lawful money of a country other than the United States.

 “Funding Date” is any date on which a Credit Extension is made to or for the account of Borrower
which shall be a Business Day. 
 “FX Contract” is any foreign exchange contract by and between
Borrower and Bank under which Borrower commits to purchase from or sell to Bank a specific amount of Foreign Currency on a specified date. 
 “GAAP” means those accounting principles which are recognized as being generally accepted in the United States from time to time. 

“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. 

“Growth Capital Advance” or “Growth Capital Advances” is defined in Section 2.1.1(a).

 “Growth Capital Line” is a Growth Capital Advance or Growth Capital Advances in an aggregate
amount of up to Four Million Dollars ($4,000,000). 
 “Guarantor” is AQUINOX PHARMACEUTICALS
(USA) Inc., a Delaware corporation, and “guarantor” is defined in Section 8.10. 

“Guaranty” is any guarantee of all or any part of the Obligations, as the same may from time to time be amended,
restated, modified or otherwise supplemented. 
 “Indebtedness” is (a) indebtedness for
borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital
lease obligations, and (d) Contingent Obligations. 
 “Indemnified Person” is defined in
Section 12.3. 
 “Initial Tranche B Growth Capital Advance Payment Date” is defined in Section
2.1.1(b)(ii). 

  
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 “Insolvency Proceeding” is any proceeding by or against any Person
under the United States Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada) or the Companies’ Creditors Agreement Act (Canada), each as amended, or any other bankruptcy or insolvency law of any jurisdiction, including assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 

“Intellectual Property” has the meaning set forth in the Security Agreement. 

“Inventory” has the meaning set forth in the Security Agreement. 

“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 David Main as of the Effective Date, and (b) Chief Financial Officer, who is Kamran Alam as of the Effective Date. 

“Letter of Credit” is a standby or commercial letter of credit issued by Bank upon request of Borrower based upon
an application, guarantee, indemnity, or similar agreement. 
 “Lien” is a claim, mortgage, deed
of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property. 

“Loan Documents” are, collectively, this Agreement and any schedules, exhibits, certificates, notices, and any
other documents related to this Agreement, the Warrant, the Perfection Certificates, any Bank Services Agreement, the Security Agreement, the Secured Guaranty Documents, the Borrowing Resolutions, any subordination agreement, any note, or notes or
guaranties executed by Borrower, Guarantor or any other guarantor and any other present or future agreement by Borrower, Guarantor or any other guarantor with or for the benefit of Bank in connection with this Agreement, all as amended, restated, or
otherwise modified. 
 “Material Adverse Change” is (a) a material impairment in the
perfection or priority of Bank’s Lien in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower or Guarantor; 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, Bank Expenses, and other amounts Borrower owes Bank now or later, whether under this Agreement, the other Loan Documents (other than the Warrant), or otherwise, including, without
limitation, all obligations relating to letters of credit (including reimbursement obligations for drawn and undrawn letters of credit), cash management services, and foreign exchange contracts, if any, and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents (other than the Warrant). 

“Operating Documents” are, for any Person, such Person’s formation documents, as certified by the Secretary
of State (or equivalent agency) of such Person’s state of formation 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. 
 “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 B. 
 “Perfection Certificate” is defined in Section 5.1. 

  
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 “Permitted Indebtedness” is: 

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

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

(c) Subordinated Debt; 
 (d) unsecured Indebtedness to trade creditors incurred in the ordinary course of business; 
 (e) Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business; 
 (f) Indebtedness secured by Liens permitted under clauses (a) and (c) of the definition of “Permitted Liens” hereunder; 

(g) Indebtedness in the nature of Investments permitted by clause (g) of the definition of Permitted Investments; 

(h) Indebtedness owed to Bank consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements
or arrangements entered into in the ordinary course of business and designated to protect Borrower or its Subsidiaries against fluctuations in interest rates, currency exchange rates, or commodity prices and not for speculative purposes
(collectively, “Hedging Contracts”); 
 (i) Indebtedness incurred by Borrower or any Subsidiary in the ordinary
course of business under a commercial credit card program with Royal Bank of Canada to a maximum amount of $50,000; and 
 (j)
extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (i) 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 and shown on the
Perfection Certificate; 
 (b) (i) Investments consisting of Cash Equivalents and (ii) any other Investments permitted by
Borrower’s investment policy, as amended from time to time, provided that such investment policy (and any such amendment thereto) has been approved in writing by Bank; 
 (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower; 

(d) Investments consisting of deposit accounts or securities accounts in which Bank has a perfected security interest subject to the last
sentence of Section 6.6(b); 
 (e) Investments accepted in connection with Transfers permitted by Section 7.1;

 (f) 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; 
 (g) Investments (i) by Borrower in
Subsidiaries not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal year, (ii) by Subsidiaries in other Subsidiaries not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal year or in
Borrower and (iii) Investments by Borrower in Guarantor; 

  
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 (h) 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; 
 (i) 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; 

(j) 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 (j) shall not apply to Investments of Borrower in Guarantor or any Subsidiary; and 
 (k) Investments in joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the licensing of technology, the development of technology or the providing of
technical support not to exceed One Hundred Thousand Dollars ($100,000) in the aggregate in any fiscal year. 

“Permitted Liens” are: 
 (a) Liens existing on the Effective Date and 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 or Guarantor 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 or Guarantor
incurred for financing the acquisition of the Equipment securing no more than Fifty Thousand Dollars ($50,000) in the aggregate amount outstanding, or (ii) existing on Equipment (other than Financed 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 Fifty Thousand Dollars ($50,000) and
which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto; 

(e) Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like
obligations incurred in the ordinary course of business; 
 (f) Liens incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase;

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

  
 -25-

 (h) non-exclusive license of Intellectual Property granted to third parties in the ordinary
course of business, and licenses of Intellectual Property that could not result in a legal transfer of title of the licensed property that may be exclusive in respects other than territory and that may be exclusive as to territory only as to
discreet geographical areas outside of the United States; 
 (i) Liens arising from attachments or judgments, orders, or decrees
in circumstances not constituting an Event of Default under Sections 8.4 and 8.7; 
 (j) Liens in favor of other financial
institutions arising in connection with Borrower’s or Guarantor’s deposit and/or securities accounts held at such institutions, provided that Bank has a perfected security interest in the amounts held in such deposit and/or securities
accounts; 
 (k) Liens securing Subordinated Debt; 
 (l) easements, reservations, rights-of-way, restrictions, minor defects or irregularities in title and other similar Liens affecting real property not interfering in any material respect with the ordinary
course of the business of Borrower or Guarantor; 
 (m) deposits to secure the performance of bids, trade contracts (other than
for borrowed money), contracts for the purchase of property permitted hereunder, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred in the ordinary course of business;

 (n) deposits to secure the performance of leases incurred in the ordinary course of business and not representing an
obligation for borrowed money so long as each such deposit is made at the commencement of a lease or its renewal when there is no underlying default under such lease; and 
 (o) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (n), 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. 
 “Positive Data Results” means either one of the following Phase IIA top-line data trial results (based on Borrower’s targeted endpoints in the respective trials): (i) in
the COPD trial, with respect to which, data shall be measured using EXACT (a validated readout tool specific to COPD), the target endpoint reflects a mean daily improvement of 1.67 points on the EXACT symptom score; or (ii) in the BPS/IC trial,
with respect to which, data shall be based on an 11-point patient-reported questionnaire provided by Borrower, the target endpoint reflects a 1.5 point improvement in the change from the baseline pain score in treated patients in comparison to the
placebo group. 
 “Prepayment Fees” means individually and collectively, the Tranche A Prepayment
Fee and the Tranche B Prepayment Fee. 
 “PPSA” means the Personal Property
Security Act, British Columbia in force from time to time, including and all amendments thereto or replacements thereof, and regulations thereunder as may from time to time be amended or replaced. 

“Registered Organization” is any “registered organization” as defined in the Code with such additions
to such term as may hereafter be made. 
 “Requirement of Law” is as to any Person, the organizational
or governing documents of such Person, and any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject. 

  
 -26-

 “Responsible Officer” is any of the Chief Executive Officer,
President, Chief Financial Officer and Controller of Borrower.  
 “Restricted License” is any
material license or other agreement with respect to which Borrower is the licensee (a) that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other
property, or (b) for which a default under or termination of could interfere with the Bank’s right to sell any Collateral. 
 “SEC” shall mean the Securities and Exchange Commission, any successor thereto, and any analogous Governmental Authority. 

“Secured Guaranty Documents” means that certain Unconditional Guaranty and that certain security agreement, dated
as of the Effective Date, executed by Guarantor in favor of Bank, as the same may be renewed, amended, extended or restated from time to time. 
 “Securities Account” is any “securities account” as defined in the Code or in the PPSA with such additions to such term as may hereafter be made. 

“Security” means the Security Agreement and all other present and future security from time to time held by or on
behalf of Bank from Borrower or any other Person as security for the Obligations. 
 “Security
Agreement” means the security agreement given by Borrower in favor of Bank on or about the date hereof as the same may be renewed, amended, extended or restated from time to time. 

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

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

“Trademarks” has the meaning set out in the Security Agreement. 

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

“Tranche A Final Payment” is a fee equal to two percent (2.00%) of the Tranche A Growth Capital Advance.

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

“Tranche A Growth Capital Advance Payment” is defined in Section 2.1.1(b)(i). 

“Tranche A Growth Capital Maturity Date” is March 1, 2017. 

“Tranche A Prepayment Fee” means a fee equal to (i) three percent (3.00%) of the outstanding principal
balance of the Tranche A Growth Capital Advance on the date of prepayment if prepayment occurs on or prior to the first anniversary of the Effective Date, (ii) two percent (2.00%) of the outstanding principal balance of the Tranche A
Growth Capital Advance on the date of prepayment if prepayment occurs after the first anniversary of the Effective Date but on or prior to the second anniversary of the Effective Date and (iii) one percent (1.00%) of the outstanding
principal balance of the Tranche A Growth Capital Advance on the date of prepayment if prepayment occurs after the second anniversary of the Effective Date but prior to the Tranche A Growth Capital Maturity Date. 

  
 -27-

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

“Tranche B Draw Period” is the period of time from the date that Borrower receives Positive Data Results through
the earlier to occur of (a) December 31, 2014 or (b) the occurrence and continuance of an Event of Default. 
 “Tranche B Final Payment” is a fee equal to two percent (2.00%) of the Tranche B Growth Capital Advance. 

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

“Tranche B Growth Capital Advance Payment” is defined in Section 2.1.1(b)(ii). 

“Tranche B Growth Capital Maturity Date” is the date thirty (30) months after the Initial Tranche B Growth
Capital Advance Payment Date, but in no event later than June 1, 2017. 
 “Tranche B Prepayment
Fee” means a fee equal to (i) three percent (3.00%) of the outstanding principal balance of the Tranche B Growth Capital Advance on the date of prepayment if prepayment occurs on or prior to the first anniversary of the Effective
Date, (ii) two percent (2.00%) of the outstanding principal balance of the Tranche B Growth Capital Advance on the date of prepayment if prepayment occurs after the first anniversary of the Effective Date but on or prior to the second
anniversary of the Effective Date and (iii) one percent (1.00%) of the outstanding principal balance of the Tranche B Growth Capital Advance on the date of prepayment if prepayment occurs after the second anniversary of the Effective Date
but prior to the Tranche B Growth Capital Maturity Date. 
 “Transfer” is defined in
Section 7.1.  
 “Warrant” is that certain Warrant to purchase securities of Borrower and
Guarantor dated as of the Effective Date executed by Borrower and Guarantor in favor of Bank. 
 [Signature page
follows.] 

  
 -28-

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

			
	 BORROWER:
  

AQUINOX PHARMACEUTICALS INC.

		
	By	 	/s/ David Main
	Name:	 	David Main
	Title:	 	CEO
	
	 BANK:
  

SILICON VALLEY BANK

		
	By	 	/s/ David Sanders
	Name:	 	David Sanders
	Title:	 	VP

 [Signature Page to Loan Agreement] 

 EXHIBIT A 

COMPLIANCE CERTIFICATE 
  

					
	TO:	 	SILICON VALLEY BANK	  	Date: October 23, 2013
	FROM:	 	AQUINOX PHARMACEUTICALS INC.	  	

 The undersigned authorized officer of AQUINOX PHARMACEUTICALS INC. (“Borrower”) certifies that
under the terms and conditions of the Loan Agreement between Borrower and Bank (the “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 5.9 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 Bank. 
 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 (Audited) + CC	  	FYE within 180 days	  	Yes    No
	10-Q, 10-K and 8-K	  	Within 5 days after filing with SEC	  	Yes    No
	Board-approved financial projections	  	FYE within 45 days	  	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	  	

 

  
 1 

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

									
	AQUINOX PHARMACEUTICALS INC.	 		 	BANK USE ONLY
					
		 		 		 	Received by:	 	 
	By:	 	/s/ David Main	 		 		 	AUTHORIZED SIGNER
	Name:	 	David Main	 		 	Date:	 	 
	Title:	 	CEO	 		 		 	
		 		 		 	Verified:	 	 
		 		 		 		 	AUTHORIZED SIGNER
		 		 		 	Date:	 	 
				
		 		 		 	  

Compliance Status:                    Yes 
                   No

  
 2 

 EXHIBIT B – LOAN PAYMENT/ADVANCE REQUEST FORM 

DEADLINE FOR SAME DAY PROCESSING IS NOON PACIFIC TIME* 

 

									
	Fax To:	 		 		 	Date:	 	 

  

									
	LOAN PAYMENT:	 	 	 	 
	AQUINOX 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 #              
                                         
                                     
	                   
                             (Loan Account #)	 		 	                  
                              (Deposit Account #)
	 			 
	Amount of Advance $            
                                         
                            	 		 		 	 
	 
	All Borrower’s representations and warranties in the Loan
Agreement are true, correct and complete in all material respects on the date of the request for an advance; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified
or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date:
	 		 
	Authorized Signature:              
                                         
                          	 		 	Phone Number:               
                                         
                                 
	 			 
	Print Name/Title:              
                                         
                                	 		 		 	 
	 	 	 	 	 	 	 

  

									
	 OUTGOING WIRE REQUEST:
 Complete only if all or a portion of funds from the loan advance
above is to be wired.
 Deadline for same day processing is noon, Pacific 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
#:                                        
                                         
            
	 	 	 	 	 	 	 	 	 

  

	*	Unless otherwise provided for an Advance bearing interest at LIBOR. 

  
 3 

 EXHIBIT C 

BORROWING RESOLUTIONS 
  

 
 CORPORATE BORROWING CERTIFICATE 

 

			
	BORROWER/CORPORATION: AQUINOX PHARMACEUTICALS INC.	  	DATE: Oct 23, 2013
	BANK:         SILICON VALLEY BANK	  	

 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 federal laws of Canada and is extra-provincially
registered in British Columbia. 
 3. Attached hereto are true, correct and complete copies of Borrower’s Articles and Bylaws (including
amendments), as filed with Industry Canada. Such Articles and Bylaws have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date hereof. 

4. All resolutions set forth below 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 Silicon Valley
Bank (“Bank”) may rely on them until Bank receives written notice of revocation from Borrower. 
 APPROVAL OF LOAN TRANSACTION

 A. The Corporation wishes to borrow from Silicon Valley Bank (the “Lender”) loans (collectively, the “Growth
Capital Advances”) in the total principal amount of up to US$4,000,000 on the terms and subject to the conditions of a loan agreement between the Corporation and the Lender (the “Loan Agreement”), a draft of which has been
provided to the board of directors for its review; 
 B. It is a condition of the Loan Agreement that the Corporation grant security over
certain of its property and assets to the Lender on the terms and subject to the conditions of a security agreement between the Corporation and the Lender (the “Security Agreement”), a draft of which has been provided to the board
of directors for its review; 
 C. It is a condition of the Loan Agreement that the Corporation grant to the Lender a warrant (the “SBV
Warrant”) to purchase from the Corporation up to 218,181 special voting shares of the Corporation (the “Warrant Shares”) for an exercise price of US$0.000001 per share on the terms and subject to the conditions of a warrant
agreement, a draft of which has been provided to the board of directors for its review (the “Warrant Agreement” and, together with the Loan Agreement and the Security Agreement, the “Transaction Documents”); and

  
 1 

 D. The Corporation is not at the date hereof insolvent and, in particular, its assets exceed its liabilities
and it is paying and will have the ability to pay its debts as they become due in the usual course of its business; 
 ON MOTION
DULY MADE, SECONDED AND UNANIMOUSLY CARRIED, the following resolutions were passed: 
 1. The Corporation is hereby authorized to borrow the
Growth Capital Advances from the Lender and to enter into the Loan Agreement and perform all of its obligations thereunder. 
 2. The
Corporation is hereby authorized, as security for all present and future indebtedness, liabilities and obligations of the Corporation to the Lender and its successors and assigns under the Loan Agreement, to grant to the Lender a security interest
in all of its presently owned or held and after acquired or held personal property (other than personal property expressly excluded under the Security Agreement) and to enter into the Security Agreement and perform its obligations thereunder;

 3. The Corporation is hereby authorized to issue the SBV Warrant to the Lender and to enter into the Warrant Agreement and perform its
obligations thereunder; 
 4. The allotment of the Warrant Shares to the Lender pursuant to the terms of the Warrant Agreement is hereby
authorized and approved and, upon exercise of the SBV Warrant and receipt by the Corporation of full payment therefor and without further resolution of the directors of the Corporation, the Warrant Shares shall be issued as fully paid and
non-assessable shares of the Corporation; 
 5. The directors of the Corporation acting in good faith and in the best interests of the
Corporation hereby determine the consideration for the allotment and issue of the Warrant Shares to be US$0.000001 and fix such amount as the consideration for the allotment and issue of the Warrant Shares; 

6. Any one director or officer of the Corporation is hereby authorized and directed in the name and on behalf of the Corporation to execute and, if
necessary, affix the corporate seal of the Corporation to and deliver or cause to be delivered the certificates representing the Warrant Shares to the Lender; 
 7. Upon the issuance of Warrant Shares, (a) an amount equal to the issue price per Warrant Share be added to the stated capital account maintained by the Corporation for the special voting shares of
the Corporation and (b) the appropriate entries be made in the Corporation’s register of shareholders to reflect the issuance of the Warrant Shares; 
 8. Each of the Transaction Documents in substantially the same form and terms as the form thereof approved by the directors of the Corporation, with such amendments or variations thereto as the person
signing may deem appropriate to approve, is hereby approved and hereby authorized to be executed and delivered for and on behalf of and in the name of the Corporation by any one officer or director of the Corporation and the common seal of the
Corporation be and is hereby authorized (but not required) to be thereto affixed, and the approval of the person signing any such document or instrument or any such amendment or variation thereto be conclusively evidenced by his or her execution
thereof and the Transaction Documents so executed be and are the Transaction Documents authorized by these resolutions. 
 9. Any one officer or
director of the Corporation, alone, is hereby authorized and directed in the name of and on behalf of the Corporation to take all such action, do all such things, enter into, execute, affix the corporate seal of the Corporation and to deliver or
cause to be delivered all such or other documents, agreements and writings, as he or she may in his or her sole discretion deem necessary or 

  
 2 

 
advisable in connection with any of the matters referred to in the preceding resolutions, or any of them, or in respect thereof, or in connection with any actions to be taken by the Corporation
in the performance and fulfillment of its obligations as contemplated by the agreements and the transactions referred to in the preceding resolutions and execution by any one officer or director of the Corporation, alone, shall be conclusive proof
of his or her authority to act on behalf of the Corporation and his or her approval thereof. 
  

			
	By:	 	/s/ David Main
	Name:	 	David Main
	Title:	 	CEO

 This Certificate must also be signed by a second authorized officer or director of Borrower. 

I, the CFO of Borrower, hereby certify as to all paragraphs above, as of the date set forth above. 

 

			
	By:	 	/s/ Kamran Alam
	Name:	 	Kamran Alam
	Title:	 	CFO

  
 3Security Agreement - Silicon Valley Bank

 Exhibit 10.14 
 SECURITY AGREEMENT 
 This Security Agreement (this
“Agreement”) is entered into as of October 23, 2013, by and between SILICON VALLEY BANK (“Bank”) and AQUINOX PHARMACEUTICALS (USA) INC., a Delaware corporation (“Pledgor”). 

RECITALS 

AQUINOX PHARMACEUTICALS INC., a corporation existing under the federal laws of Canada and extra-provincially registered in British
Columbia (“Borrower”) wishes to borrow money from time to time from Bank pursuant to that certain Loan Agreement and that certain Security Agreement, dated as of October 23, 2013 executed by and between Borrower and Bank (as amended,
restated, or otherwise modified from time to time, the “Loan Agreement”; capitalized terms used but not otherwise defined herein shall have the meanings given them in the Loan Agreement). 

In consideration of the agreement of Bank to extend credit and make other financial accommodations to Borrower under the Loan Agreement,
Pledgor has executed that certain Unconditional Guaranty dated October 23, 2013 in favor of Bank (as amended, restated, or otherwise modified from time to time, the “Guaranty”). 

Pledgor’s obligations under the Guaranty (the “Guarantor Obligations”) shall be secured pursuant to and in accordance with
the terms of this Agreement. 
 AGREEMENT 
 The parties agree as follows: 
 1. DEFINITIONS. Unless otherwise defined herein, capitalized
terms used herein shall have the following meanings: 
 “Bank Expenses” means all costs or reasonable expenses
(including reasonable attorneys’ fees and expenses) incurred by Bank in preparing, negotiating, administering, defending, and enforcing this Agreement and the Guarantor Obligations (including, without limitation, those incurred during appeals
and/or Insolvency Proceedings). 
 “Code” means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of California. 
 “Collateral” means the property described in Exhibit A attached hereto.

 “Insolvency Proceeding” are proceedings by or against Borrower and/or Pledgor under the United States Bankruptcy
Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with either party’s creditors, or proceedings seeking reorganization, arrangement, or other relief.

 “Permitted Liens” shall have the meaning ascribed to such term in the Loan Agreement. 

  
 1 

 “Responsible Officer” is any of Pledgor’s Chief Executive Officer, the
President, the Chief Financial Officer and the Controller. 
 2. CREATION OF SECURITY INTEREST 

2.1 Grant of Security Interest. Pledgor grants Bank a continuing security interest in the Collateral to secure the prompt payment
and performance of the Guarantor Obligations. Except for Permitted Liens, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security
interest in Collateral acquired after the date hereof. Bank may liquidate the Collateral and apply such funds toward repayment of the Guarantor Obligations after the occurrence and continuance of an Event of Default (as defined under the Loan
Agreement). Such liquidation shall not be deemed a set-off. 
 2.2 Delivery of Additional Documentation Required. Pledgor
will from time to time execute and deliver to Bank, at the request of Bank, all financing statements and other documents that Bank may reasonably request, in form satisfactory to Bank, to perfect and continue the perfection of Bank’s security
interests in the Collateral. Pledgor authorizes Bank to file financing statements without notice to Pledgor, in all appropriate jurisdictions, as Bank deems appropriate, to perfect or protect Bank’s interest in the Collateral. 

3. REPRESENTATIONS AND WARRANTIES 
 Pledgor represents and warrants as follows: 
 3.1 Due Organization and
Qualification. Pledgor is duly existing and in good standing under the laws of its jurisdiction of formation and is qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified (except where the failure to so qualify would not have a material adverse effect on Guarantor’s condition or financial, or on Guarantor’s ability to pay or perform the obligations
hereunder). 
 3.2 Due Authorization; No Conflict. The execution, delivery, and performance of this Agreement are within
Pledgor’s powers, have been duly authorized, and neither conflict with nor constitute a breach of any provision contained in Pledgor’s formation documents or bylaws, nor will they constitute an event of default under any material agreement
to which Pledgor is a party or by which Pledgor is bound. 
 3.3 No Prior Encumbrances. Pledgor has good title to the
Collateral, free and clear of any liens, security interests, or other encumbrances other than the security interest in favor of Bank and other Permitted Liens. 
 3.4 Litigation. There is no action, suit or proceeding affecting Pledgor pending or threatened before any court, arbitrator, or governmental authority, domestic or foreign, which may have a
material adverse effect on the ability of Pledgor to perform its obligations under this Agreement and the Guaranty. 

  
 2 

 3.5 Solvency. The incurrence of Pledgor’s obligations under this Agreement will
not cause Pledgor to (a) become insolvent; (b) be left with unreasonably small capital for any business or transaction in which Pledgor is presently engaged or plans to be engaged; or (c) be unable to pay its debts as such debts
mature. 
 4. AFFIRMATIVE COVENANTS 
 Pledgor covenants and agrees that, until the Guarantor Obligations cease, Pledgor shall do all of the following: 
 4.1 Good Standing. Maintain its existence and its good standing in its jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to so qualify could have a
material adverse effect on Pledgor’s business. 
 4.2 Government Compliance. Comply with all statutes, laws,
ordinances and government rules and regulations to which it is subject, noncompliance with which could have a material adverse effect on Pledgor’s business. 
 4.3 Insurance. 
 (a) At Pledgor’s expense, keep the Collateral insured
against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily insured against by other owners in similar businesses conducted in the locations where Pledgor’s business is
conducted on the date hereof. Pledgor shall also maintain insurance relating to Pledgor’s ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Pledgor’s. 

(b) All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank.
All such policies of property insurance shall contain a lender’s loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least 20 days notice (or with respect to premiums, 10 days) to Bank before canceling its policy for any reason. 

4.4 Taxes. Make timely payment or extensions thereof of all material foreign, federal, state, and local taxes or assessments
(other than taxes and assessments which Pledgor in good faith contests its obligations by appropriate proceedings promptly and diligently instituted and conducted), and shall deliver to Bank, upon demand, appropriate certificates attesting to such
payments. 
 5. NEGATIVE COVENANTS 
 Pledgor covenants and agrees that, until the Guarantor Obligations cease, Pledgor shall not do any of the following: 
 5.1 Dispositions. Convey, sell, lease, transfer, pledge, assign control over or otherwise dispose of (collectively, “Transfer”) all or any part of the Collateral other than Transfers
(a) in the ordinary course of business; (b) of non-exclusive licenses and similar arrangements for the use of the Collateral 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 Canada and the United States; (c) of worn-out, surplus or obsolete equipment; (d) consisting of the sale or issuance of any stock of Pledgor; and (e) Transfers between Borrower and Pledgor; and
(h) other Transfers not in excess of $100,000 per fiscal year. 

  
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 5.2 Encumbrances. Create, incur, assume or suffer to exist any security interest,
lien or encumbrance with respect to any of its property, other than the security interest in favor of Bank and other Permitted Liens. 
 5.3 Change in Jurisdiction of Formation, Organizational Structure, Type. Without 10 days prior written notice to Bank, change its jurisdiction of formation or its organizational structure or type.

 6. EVENTS OF DEFAULT 
 Any one or more of the following events shall constitute an Event of Default under this Agreement: 
 6.1 Covenant Default. If Pledgor fails or neglects to perform, keep, or observe any material term, provision, condition, covenant, or agreement contained in this Agreement or the Guaranty, and,
except with respect to Sections 5.1, 5.2, and 5.3 of this Agreement, as to any default under a term, condition or covenant that can be cured, has not cured the default within 10 days after it occurs, or if the default cannot be cured within 10 days
or cannot be cured after Pledgor’s attempts in the 10 day period, and the default may be cured within a reasonable time, then Pledgor has an additional time, (of not more than 30 days) to attempt to cure the default. During the cure periods set
forth herein, the failure to cure the default is not an Event of Default. 
 6.2 Attachment. If any portion of the
Collateral is made the subject of a lien, security interest or other encumbrance (other than that in favor of Bank), or is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee,
receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days, or if Pledgor is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business affairs. During the cure period set forth herein, the failure to cure the default is not an Event of Default. 

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

6.4 Insolvency. (a) Pledgor becomes insolvent; (b) Pledgor begins an Insolvency Proceeding; or (c) an Insolvency
Proceeding is begun against Pledgor and not dismissed or stayed within 30 days. 

  
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 6.5 Material Adverse Change. If there (a) occurs a material adverse change in
the business, operations, or financial condition of the Pledgor, or (b) is a material impairment of the value or priority of Bank’s security interest in the Collateral. 
 7. BANK’S RIGHTS AND REMEDIES 
 7.1 Rights and Remedies. Upon
the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Pledgor: 

(a) Exercise all rights available to it under the Code and applicable law; 

(b) Set off and apply to the obligations any and all (i) balances and deposits of Pledgor held by Bank or in which Bank acts as
custodian, or (ii) indebtedness at any time owing to or for the credit or the account of Pledgor held by Bank; and 
 (c)
Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Pledgor’s premises) as Bank determines is commercially
reasonable in accordance with the Code. 
 7.2 Remedies Cumulative. Bank’s rights and remedies under the Loan
Agreement and any documents related thereto, the Guaranty, and this Agreement shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one
right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Pledgor’s part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. 

7.3 Demand; Protest. Pledgor waives demand, protest, notice of protest, 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 at any time held by Bank on which Pledgor may in any way be liable.

 7.4 Power of Attorney. When an Event of Default occurs and continues, Pledgor irrevocably appoints Bank as its lawful
attorney to: (a) endorse Pledgor’s name on any checks or other forms of payment or security; (b) sign Pledgor’s name on any invoice or bill of lading for any account or drafts against account debtors, (c) make, settle, and
adjust all claims under Pledgor’s insurance policies; (d) settle and adjust disputes and claims about the accounts directly with account debtors, for amounts and on terms Bank determines reasonable; and (e) transfer the Collateral
into the name of Bank or a third party. Bank may exercise the power of attorney to sign Pledgor’s name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has
occurred. Bank’s appointment as Pledgor’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable until the Guarantor Obligations cease. 

  
 5 

 7.5 Bank Expenses. If Pledgor fails to pay any amount due hereunder or furnish any
required proof of payment to third persons in connection with the Collateral, Bank may make all or part of the payment and take any action Bank deems prudent. Any amounts paid by Bank are Bank Expenses and immediately due and payable, bearing
interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of Default. After the sale of any of the Collateral, Bank may
deduct all reasonable legal and other expenses and attorneys’ fees for preserving, collecting, selling and delivering the Collateral and for enforcing its rights with respect to the Guarantor Obligations, and shall apply the remainder of the
proceeds to the Guarantor Obligations in such manner as Bank in its reasonable discretion shall determine, and shall pay the balance, if any, to Pledgor. 
 7.6 Bank’s Liability for Collateral. If Bank complies with reasonable banking practices, it is not liable or responsible for the safekeeping of the Collateral. 

8. NOTICES 
 Unless
otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by certified mail, postage prepaid, return receipt requested, or by prepaid facsimile to Pledgor or to Bank, as the case may be, at its addresses and facsimile numbers set forth below: 

 

			
	If to Pledgor:	  	Aquinox Pharmaceuticals (USA) Inc.
		  	5600 Parkwood Way, Suite 430
		  	Richmond, BC V6V 2M2
		  	Attn: Kamran Alam
		  	FAX: (778) 331-4486
		
	If to Bank:	  	Silicon Valley Bank
		  	901 5th Avenue, Suite 3900
		  	Seattle, WA 98164
		  	Attn: Dave Sanders
		  	FAX: (206) 624-0374

 Either party hereto may change the address or facsimile number at which it is to receive notices
hereunder by notice in writing in the foregoing manner given to the other. 
 9. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without
regard to principles of conflicts of law. Each of Pledgor and Bank hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County of Santa Clara, State of California. PLEDGOR AND BANK EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE GUARANTY AND ANY RELATED DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,

  
 6 

 
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL 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 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 order 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 the 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.  

10. GENERAL PROVISIONS 

10.1 Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party.
Pledgor may not assign this Agreement or any rights under it without Bank’s prior written consent which may be granted or withheld in Bank’s reasonable discretion. Bank has the right, without the consent of or notice to Pledgor, to sell,
transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits under this Agreement. 

  
 7 

 10.2 Indemnification. Pledgor will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the transactions contemplated by the Guaranty and/or this Agreement; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Pledgor under the Guaranty and/or Agreement (including reasonable attorneys’ fees and expenses), except for losses caused by Bank’s gross
negligence or willful misconduct. 
 10.3 Time of Essence. Time is of the essence for the performance of all obligations
set forth in this Agreement. 
 10.4 Severability of Provisions. Each provision of this Agreement is severable from every
other provision in determining the enforceability of any provision. 
 10.5 Amendments in Writing, Integration. All
amendments to this Agreement must be in writing and executed by the parties hereto. This Agreement and the Guaranty 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 this Agreement merge into this Agreement and the Guaranty. 
 10.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and
all taken together, are one Agreement. 
 10.7 Survival. All covenants, representations and warranties made in this
Agreement continue in full force while any obligations remain outstanding. The obligations of Pledgor in Section 10.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have run.

 10.8 Attorneys’ Fees, Costs and Expenses. In any action or proceeding between Pledgor and Bank arising out of the
Guaranty or this Agreement, the prevailing party will 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, whether or not a lawsuit is filed.

 10.9 Disclosure of Information; Borrower Collateral. Pledgor acknowledges that it has, independently of and without
reliance on Bank, made its own credit analysis of Borrower and the assets pledged by Borrower to Bank under the Loan Agreement, if any (the “Borrower Collateral”), performed its own legal review of this Agreement, the Guaranty, the Loan
Agreement and all related documents and filings, and is not relying on Bank with respect to any of the aforesaid items. Pledgor has established adequate means of obtaining from Borrower, on a continuing basis, financial and other information
pertaining to Borrower’s financial condition and the value of the Borrower Collateral and status of Bank’s lien on and in the Borrower Collateral. Pledgor agrees to keep adequately informed from such means of any facts, events or
circumstances which might in any way affect Pledgor’s risks hereunder or under the Guaranty, and Pledgor further agrees that Bank shall have no obligation to disclose to Pledgor information or material with respect to Borrower or the Borrower
Collateral acquired in the course of Bank’s relationship with Borrower. Bank makes no representation, express or implied, with respect to 

  
 8 

 
the Borrower Collateral or its interest in, or the priority or perfection of its lien on and in the Borrower Collateral. Pledgor acknowledges that its obligation hereunder will not be affected by
(a) Bank’s failure properly to create a lien on or in the Borrower Collateral, (b) Bank’s failure to create or maintain a priority with respect to the lien purported to be created in the Borrower Collateral, or (c) any act
or omission of Bank (whether negligent or otherwise) which adversely affects the value of the Borrower Collateral or Bank’s lien thereon or the priority of such lien. 
 [Signature page follows.] 

  
 9 

 This Security Agreement is executed as of the date first above written. 

 

							
	Pledgor	 		 	AQUINOX PHARMACEUTICALS (USA) INC.
				
		 		 	By:	 	/s/ David Main
		 		 	Title:	 	David Main, CEO
			
	Bank	 		 	SILICON VALLEY BANK
				
		 		 	By:	 	/s/ David Sanders
		 		 	Title:	 	VP

 [Signature Page to Security Agreement] 

 EXHIBIT A 
 The Collateral consists of all of Pledgor’s right, title and interest in and to the following: 
 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, 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 Pledgor’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 (1) any lease, license, contract, equipment, property rights or
agreement (including joint venture agreements) to which Pledgor is a party or any of its rights or interests thereunder if and for so long as the grant of a security interest therein shall constitute a breach or termination pursuant to the terms of,
or a default under, any such lease, license, contract, equipment, property rights or agreement (including joint venture agreements) (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408
or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the United States Bankruptcy Code) or principles of equity), provided however that, in the case of either (A) or
(B) above, such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and to the extent severable, shall attach immediately to any portion of such
lease, license, contract, property rights or agreement that does not result in any of the consequences specified in (A) or (B) above; (2) any equity interests of any Subsidiary not organized under the laws of the United States or a
political subdivision thereof in excess of sixty-five percent (65%) of the voting power of all classes of equity interests of such Subsidiary entitled to vote; or (3) 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 Bank’s
security interest in such Accounts and such other property of Pledgor that are proceeds of the Intellectual Property. 

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

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