Document:

Exhibit 10.11

 

Final Execution Copy

 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

SPONSORED RESEARCH AND OPTION AGREEMENT

 

This Sponsored Research Agreement (“Agreement”), effective as of January 1, 2015 (the “Effective Date”) is made by and between The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation (“Institution”), with offices located at The Penn Center for Innovation, 3160 Chestnut St., Suite 200, Philadelphia, PA 19104, and Dimension Therapeutics, Inc., a corporation organized under the laws of Delaware (“Sponsor”), having a place of business at 840 Memorial Drive, Cambridge, MA, 02139.

 

RECITALS

 

Institution and Sponsor are entering into this Agreement since Sponsor desires to fund the research of James M. Wilson, M.D., Ph.D. of Institution’s Perelman School of Medicine in liver gene therapy and hemophilia.  Sponsor desires to support such research conducted by Institution in accordance with the terms and conditions of this Agreement.  The research program contemplated by this Agreement is of mutual interest to Sponsor and Institution and furthers the educational, scholarship and research objectives of Institution as a nonprofit, tax-exempt, educational institution, and may benefit Sponsor and Institution through the creation or discovery of new inventions.

 

In consideration of the promises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                      DEFINITIONS

 

1.1                               “Affiliate” means a legal entity that is controlling, controlled by or under common control with Sponsor.  For purposes of this Section 1.1., the word “control” means (x) the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of a legal entity, (y) the right to receive fifty percent (50%) or more of the profits or earnings of a legal entity, or (z) the right to determine the policy decisions of a legal entity.

 

1.2                               “Institution Intellectual Property” means the Institution Patent Rights and the Research Results.

 

1.3                               “Institution Patent Rights” means all of Perm’s rights in potentially patentable and patentable inventions conceived., created, or conceived and reduced to practice in the conduct of the Sponsored Research during the term of this Agreement, together with patent rights represented by or issuing from the United States patents and patent applications (including provisional patent applications) on such patentable inventions, as well as any continuations, continuations-in-part (to the extent the inventions claimed or disclosed in any such patent or patent applications are directed to subject matter specifically described in the patent or patent

 

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applications under this Agreement), divisional, reexaminations, renewals, re-issues, substitutions, patent term adjustments and extensions (including supplemental protection certificates), and foreign counterparts of any of the foregoing, and all other patents and patent applications rights that claim priority from or have common prior it)’ with any of the foregoing patent rights and patent applications, including any patents issuing from any of the foregoing (to the extent the inventions claimed or disclosed in any such patent or patent applications are directed to subject matter specifically described in the patent or patent applications referred to above) and including any patents issuing from any of the foregoing.

 

1.4                               “Principal Investigator” means James M. Wilson, M.D., Ph.D., who has agreed to serve as faculty investigator for the Sponsored Research and shall be responsible for the conduct, supervision and administration of the Sponsored Research, or such other faculty member as mutually agreed by the parties in accordance with Section 2.1.

 

1.5                               “Research Results” means all any and all ideas, information, inventions, developments, animate and inanimate materials, including but not limited to live animals, discoveries, software, know-how, methods, techniques, formulae, data, software, processes, methodologies, techniques, biological materials, software and works of authorship, whether patentable or copyrightable, that are First conceived, discovered, developed or reduced to practice, or generated in the performance of the Sponsored Research by Principal Investigator or other Penn employees during the term of this Agreement, including any unpatentable inventions conceived, created or reduced to practice in the conduct of the Sponsored Research during the term of this Agreement.  Research Results expressly excludes Institution Patent Rights.

 

1.6                               “Sponsored Research” means the two (2) year research program conducted hereunder.  The research plan and budget for the first year of the Sponsored Research are set forth in Attachment A and B hereto, respectively, and may be amended from time to time upon mutual Written agreement of the parties.

 

2.                                      SPONSORED RESEARCH

 

2.1                               If the services of the Principal Investigator become unavailable to Institution for any reason.  Institution may propose another member of its faculty who is acceptable to Sponsor, in its sole discretion, to serve as the Principal Investigator of the Sponsored Research.  If a substitute Principal Investigator acceptable to Sponsor has not been agreed upon within [...***...] after the original Principal Investigator ceases his or her services under this Agreement, either party may terminate this Agreement upon written notice thereof to the other party, subject to the provisions of Article 10.

 

2.2                               Institution shall use good faith efforts to conduct such Sponsored Research in accordance with, the terms and conditions of this Agreement.  Sponsor acknowledges that Institution and the Principal Investigator shall have the freedom to conduct and supervise the Sponsored Research in a manner consistent with Institution’s educational and research missions.

 

2.3                               A research plan and budget for the second year of the Sponsored Research shall be agreed upon by the parties by [...***...], and such plan and budget shall thereafter be appended hereto as Attachments C and D, respectively.  To that end, by no later than [...***...],

 

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the parties shall (a) utilize good faith and diligent efforts to initiate discussions on the second year plan and budget, and (b) agree upon a time line for planning that will result in a final research plan and budget for calendar year 2016 of the Sponsored Research by the [...***...] deadline.

 

3.                                      TERM OF AGREEMENT

 

The initial term of this Agreement shall begin on the Effective Date and shall end on December 31, 2016 unless terminated sooner pursuant to Sections 2.1 or 10.1 hereof.  This Agreement may be extended or renewed only by mutual mitten agreement executed by duly authorized representatives of the parties.  The initial term plus any extension or renewal term shall be referred to herein as the “Term.”

 

4.                                      REIMBURSEMENT OF COSTS, PAYMENT

 

4.1                               Sponsor shall pay the amounts specified in Attachment B in accordance with the schedule set forth therein.  Institution shall apply all such amounts to its direct costs and mutually agreed upon overhead incurred in the conduct of the Sponsored Research.  Sponsor acknowledges that the amounts set forth in Attachment B are only a good faith estimate of the costs to complete the Sponsored Research and not a guarantee of the cost to conduct the Sponsored Research.  If at any time Institution determines that it will require additional funds for the Sponsored Research, it shall notify Sponsor and provide a good faith estimate and itemized budget of the additional amount.  Sponsor shall not be liable for any costs in excess of the amount set forth in Attachment B unless it has agreed1 in writing to provide additional funds.  In the event that Sponsor declines to provide such additional funding the parties shall promptly meet to determine how to achieve mutually agreed upon modified objectives.

 

Sponsor shall make payments in advance to Institution in accordance with the payment schedule set forth in Attachment B.  All payments shall clearly identify the Principal Investigator and Sponsored Research.  All payments are to be made by wire transfer, banking information is as follows:

 

Banking Information:

 

	
Bank Name:
    	
 
    	
[...***...]
    
	
Bank Address:
    	
 
    	
[...***...]
    
	
 
    	
 
    	
 
    
	
ACH Coordinator:
    	
 
    	
[...***...]
    
	
Account Title:
    	
 
    	
[...***...]
    
	
 
    	
 
    	
 
    
	
Account Type:
    	
 
    	
[...***...]
    
	
Account #:
    	
 
    	
[...***...]
    
	
ABA Routing #:
    	
 
    	
[...***...]
    
	
SWIFT CODE:
    	
 
    	
[...***...]
    
	
CHIPS:
    	
 
    	
[...***...]
    
	
Reference:
    	
 
    	
[...***...]
    

 

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4.2                               Title to any equipment, laboratory animals, or any other materials made or acquired with funds provided under this Agreement shall vest in Institution, and such equipment, animals, or materials shall remain the property of Institution following termination of this Agreement.

 

5.                                      RECORDS AND REPORTS

 

Principal Investigator shall maintain records of the results of the Sponsored Research in sufficient detail and in good scientific manner appropriate for patent purposes to properly reflect all work done and results achieved.  Within [...***...] after the close of each [...***...], Principal Investigator shall provide Sponsor with [...***...] financial reports for the Sponsored Research conducted during such [...***...].  Such [...***...] financial reports shall include an account of tasks actually performed and the costs and expenses actually incurred during such [...***...].

 

Principal Investigator shall provide task-based, scientific reports of the progress and results of the Research on a schedule on a schedule to be agreed upon by the parties and oral reports on reasonable request.  Within [...***...] after the conclusion of each year of the Sponsored Research, Principal Investigator shall provide Sponsor with a final written report setting forth the research conducted and results obtained in sufficient detail to allow reproduction of the Sponsored Research by Sponsor.

 

6.                                      SPONSOR’S RIGHTS IN RESEARCH RESULTS AND REPORTS

 

6.1                               Sponsor shall have the right to use, disclose and otherwise exploit the Research Results disclosed to Sponsor in records and reports for any reasonable purpose, provided however that Sponsor agrees not to make Research Results publicly available until either (i) Institution has published the Research Results in accordance with Article 9 below, (ii) a patent application filed by Institution that contains Research Results is published; or (iii) [...***...] after the termination of the Sponsored Research, in the event that Institution has not sought approval for publication or patent filing within such [...***...] period.  Notwithstanding the foregoing, nothing herein is intended to prevent Sponsor from relying upon or disclosing Research Results to regulatory agencies as required for obtaining regulatory approvals or to third, parties provided such disclosures are made under obligations of confidentiality no less stringent than those set forth herein.

 

6.2                               Institution hereby grants Sponsor a royalty-free, nontransferable, non-exclusive right to copy, reproduce and distribute any research reports furnished to Sponsor under this Agreement.  Sponsor may not charge fees for said research reports, use said research reports for advertising or promotional activities, or alter or modify said research reports without the prior written permission of Institution.

 

7.                                      INTELLECTUAL PROPERTY

 

7.1                               Principal Investigator shall provide Institution (through its Penn Center for Innovation) and Sponsor with a prompt written disclosure of any copyrightable software created in the conduct of the Sponsored Research during the term of this Agreement that Principal Investigator reasonably considers to be scientifically valuable.

 

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7.2                               Institution shall retain all right, title and interest in and to the Institution Intellectual Property and any patents, copyrights, software and tangible research materials and other intellectual property related thereto, subject to any rights, options and licenses set forth herein or granted in accordance with Articles 6 and 8 hereof.

 

7.3                               Principal Investigator shall provide Institution and Sponsor a complete written disclosure of any Institution Patent Rights reasonably considered material or patentable within [...***...] following creation or discovery of such Institution Patent Rights.  Sponsor shall advise Institution in writing, no later than [...***...] after receipt of such disclosure, whether it requests Institution to file and prosecute patent applications related to such Institution Patent Rights or whether Sponsor believes that the conduct of additional research would be necessary or useful to support the patents claiming the Institution Patent Rights.  If Sponsor requests that Institution undertake such filing and prosecution, and agrees to pay the expenses for such patent prosecution in accordance with Section 7.4, Institution shall do so promptly utilizing counsel reasonably acceptable to Sponsor and such patent applications shall be included in Sponsor’s Option under Article 8 hereof, If Sponsor believes that additional research would be necessary or useful to support the patents claiming the Institution Intellectual Property, Institution and Sponsor shall engage in good faith negotiations to determine how best to accomplish such research prior to any patent application filing.  If Sponsor does not request Institution to file and prosecute such patent applications, Institution may proceed with such preparation and prosecution at its own cost and expense; but such patent applications shall be excluded from Sponsor’s Option under Article 8 hereof.  Sponsor shall reimburse Institution for all expenses incurred for filing, prosecution and maintenance of Institution Patent Rights until and unless Sponsor declines to exercise its Option to license any such Institution Patent Rights.  Institution shall work closely with its patent counsel and Sponsor at the reasonable request of Sponsor to provide Sponsor with an estimate of anticipated patent costs and copies of official correspondence related to prosecution of Institution Patent Rights that fall under Sponsor’s Option.

 

7.4                               The preparation, prosecution and maintenance of any copyright, trademark and other intellectual property applications for the Institution Intellectual Property other than the Institution Patent Rights shall be subject to the funding, option and control provisions of Sections 7.1-7.4 and Article 8.

 

8.                                      OPTION

 

8.1                               In consideration of Sponsor’s funding of the Sponsored Research, Institution hereby grants to Sponsor an option to obtain a worldwide, non-exclusive or exclusive, royalty-bearing license, with the right to sublicense, to make, have made, use, sell, offer for sale, have sold, import and have imported products and services within the scope of the Institution Patent Rights (the “Option”).  Sponsor may exercise the Option by written notice to Institution within [...***...] after completion of the Sponsored Research, provided that Sponsor has reimbursed Institution for all intellectual property expenses incurred up to the date of the Option exercise.  Upon receipt of such notice by Institution, the parties shall negotiate in good faith to agree upon commercially reasonable terms for such exclusive license.

 

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8.2                               Sponsor may at any time elect not to include certain Institution Patent Rights within the scope of the Option by providing Institution with [...***...] prior written notice, in which event (a) such Institution Patent Rights will be excluded from the Option, and Sponsor will have no additional funding obligations under Article 7 with respect to such Institution Patent Rights; provided that Sponsor shall be obligated to reimburse Institution for all patent and maintenance cost obligations incurred by Institution prior to the aforementioned notice date, including all instances in which Sponsor has requested that a patent application be filed by Institution pursuant to Section 7.3 of this Agreement, and (b) Institution shall be free to license such Institution Patent Rights to any party upon such terms as Institution deems appropriate, without any further obligation to Sponsor.  Notwithstanding the foregoing, it is understood and agreed that Sponsor shall retain any and all rights Sponsor may have in Institution Patent Rights.

 

8.3                               Any license granted to Sponsor pursuant to Section 8.1 hereof shall be subject to Institution’s right to use and permit other non-profit organizations to use Institution Intellectual Property for educational and research purposes other than the treatment of humans and, if applicable, to the rights of the United States government reserved under Public Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C. 200-212, and any regulations issued thereunder,

 

9.                                      CONFIDENTIALITY, PUBLICATION, USE OF NAME

 

9.1                               In order to maximize the value of the Sponsored Research to Institution, Sponsor and society, Institution, Sponsor and Principal Investigator may disclose to each other confidential information considered pertinent to the Research Program.  Any confidential information will be in writing and clearly marked by the disclosing party as “Confidential” or, if disclosed orally, written notice will be provided within [...***...] of disclosure (“Confidential Information’’).  The receiving party shall protect Confidential Information received from the disclosing party with the same degree of care as it uses to protect its own confidential information.  The receiving party’s obligations of confidentiality will exist during the performance of this Agreement and for [...***...] following termination or expiration of this Agreement, unless disclosure is required by law or regulation, in which case the party required to make such disclosure shall provide prompt written notice and take all reasonable steps to limit the extent of the disclosure and obtain confidential treatment for any remaining required disclosure.

 

The confidentiality obligations contained herein shall not apply to Confidential Information that is:

 

(i)                                     Known by the receiving party without restriction prior to disclosure under this Agreement;

 

(ii)                                  Disclosed to the receiving party by a third party without an obligation of confidentiality;

 

(iii)                               Available to the public not through a breach of this Agreement by the receiving part)’;

 

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(iv)                              Independently developed by the receiving part}’ without knowledge or use of Confidential Information disclosed by the disclosing party under this Agreement; or

 

(v)                                 Published or disclosed in accordance with the terms of this Agreement.

 

9.2                               In order to preserve the patentability of Institution Intellectual Property during the term and for a period of [...***...] thereafter, the Institution, Principal Investigator and Sponsor shall maintain Institution Intellectual Property and information provided pursuant to Section 7.1 (whether oral or written) as confidential and shall not disclose such information to any third party until the publication of such information by the Principal Investigator in accordance with Section 9.3 or until Institution provides Sponsor With written verification, reasonably satisfactory to Sponsor, that all desirable patentable inventions have been protected, Whichever occurs sooner.

 

9.3                               Institution shall be free to publish, present or otherwise disclose Research Results or other information and material resulting from the Sponsored Research for any purpose subject to this Section 9.3.  Institution shall furnish the Sponsor with a copy of any proposed publication, presentation or other public disclosure at least [...***...] in advance of the submission of said proposed publication, presentation or other public disclosure in order for Sponsor to review said proposed publication, presentation or other disclosure for patentable inventions and Sponsor Confidential Information.  Sponsor shall have the right to require that any Sponsor Confidential Information be removed or redacted from the proposed publication.  In the event that Sponsor believes that the proposed publication contains a patentable invention, and Sponsor agrees to pay patent expenses as stipulated in Section 7.3, Institution agrees to delay such proposed publication until a patent application has been prepared and filed, in the event that Sponsor believes that the proposed publication contains a potentially patentable invention but that additional research would be necessary or useful to support the validity of patent(s) claiming such invention, then any publication will be delayed for a period of no more than [...***...] while the parties engage in good faith negotiations to determine how best to conduct the research in order to secure intellectual property rights that further the goals of both parties.

 

9.4                               Institution shall not use Sponsor’s name without Sponsor’s prior written consent except that Institution may acknowledge Sponsor’s funding of this Sponsored Research and any scientific contributions in scientific publications and in listings of sponsored research projects.  Sponsor shall not use Institution’s name, mark or symbol, or the name of any trustee, officer, faculty member, student or employee thereof, without Institution’s prior written consent, except that Sponsor may acknowledge the existence and general nature of this Agreement.

 

10.                               TERMINATION

 

10.1                        In addition to the termination right set forth in Section 2.1 hereof,

 

(a)                                 either party may terminate this Agreement effective upon written notice to the other party, if the other party breaches any of the terms or conditions of this Agreement and fails to cure such breach within [...***...] after

 

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receiving written notice thereof. In the event of an incurable breach, the non-breaching party may terminate this Agreement effective immediately upon written notice to the breaching party; and

 

(b)                                 provided that Sponsor has met all payment and performance obligations to date under this Agreement, Sponsor may terminate this Agreement effective after [...***...]  prior written notice to Institution.

 

(c)                                  either party may terminate this Agreement effective as of December 31, 2015 if the parties fail to negotiate a mutually acceptable work plan and budget for calendar year 2016 of the Sponsored Research.

 

10.2                        In the event of termination of this Agreement prior to its stated term, whether for breach or for any other reason whatsoever, within [...***...] after the effective termination date, Institution shall submit a final report of all costs incurred and all funds received under this Agreement through the effective termination date (or allowable commitments as described in this Section 10.2).  The report shall be accompanied by a check in the amount of any excess of funds advanced over costs and allowable commitments incurred.  In case of a deficit of funds.  Sponsor shall pay Institution the amount needed to cover costs through the effective termination date as well as all allowable commitments (i.e., all costs or non-cancellable commitments incurred prior to the receipt, or issuance, by Institution of the notice of termination, and the cost of each employee, student and faculty member supported hereunder through the end of such commitments; and subject to Institution’s written notification to Sponsor and Sponsor’s acknowledgement of all costs and non-cancellable commitments as they arise) inclined by Institution under this Agreement; provided, however, that Sponsor’s payment for Institution’s allowable commitments that extend beyond the effective termination date of this Agreement shall in no event exceed [...***...] of the total amount of payments as provided in Attachment B.

 

10.3                        Termination of this Agreement shall not affect the rights and obligations of the parties accrued prior to termination hereof.  The provisions of this Section 10.4, Article 4, entitled Reimbursement of Costs, Payment; Article 6, entitled Sponsor’s Rights in Research Results and Reports; Article 7, entitled Intellectual Property; Article 8, entitled License; Article 9, entitled Confidentiality, Publication, Use of Name; Article 11, entitled Disclaimer of Warranties, Indemnification; and Article 12, entitled Additional Provisions, shall survive such termination.

 

11.                               DISCLAIMER OF WARRANTIES, INDEMNIFICATION

 

11.1                        INSTITUTION MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, WARRANTIES WITH RESPECT TO THE CONDUCT, COMPLETION, SUCCESS OR PARTICULAR RESULTS OF THE SPONSORED RESEARCH, OR THE CONDITION, OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE SPONSORED RESEARCH OR ANY INSTITUTION INTELLECTUAL PROPERTY OR RESEARCH RESULTS OR THAT USE OF THE INSTITUTION INTELLECTUAL PROPERTY OR RESEARCH RESULTS WILL NOT INFRINGE ANY PATENT,

 

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COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY.  INSTITUTION SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, PUNITIVE OR OTHER DAMAGES SUFFERED BY SPONSOR OR ANY OTHER PERSON RESULTING FROM THE SPONSORED RESEARCH OR THE USE OF ANY INSTITUTION INTELLECTUAL PROPERTY, ANY RESEARCH RESULTS OR ANY PRODUCTS RESULTING THEREFROM.

 

11.2                        Sponsor shall defend, indemnify and hold harmless Institution, the Principal Investigator and any of Institution’s faculty, students, employees, trustees, officers, Affiliates and agents (hereinafter referred to collectively as the “Indemnified Persons”) from and against any and all liability, claims, lawsuits, losses, damages, costs or expenses (including attorneys’ fees), which the Indemnified Persons may hereafter incur, or be required to pay to the extent resulting from (a) Sponsor’s use of the results of Sponsored Research or any Institution Intellectual Property or Research Results or (b) any breach of this Agreement by Sponsor or (c) any act or omission of Sponsor, its employees, Affiliates, contractors, licensees, sublicensees or transferees or agents; provided, however, that Sponsor shall not have any responsibility hereunder for liability, claims, lawsuits, losses, damages, costs or expenses (including attorneys’ fees) to the extent based on the gross negligence or intentional misconduct of the Indemnified Persons as determined by a court of law of competent jurisdiction in a final opinion from which no appeal has or may be taken.  Institution shall notify Sponsor upon learning of the institution or threatened institution of any such liability, claims, lawsuits, losses, damages, costs and expenses, and Institution shall cooperate with Sponsor in every proper way in the defense or settlement thereof at Sponsor’s request and expense.  Sponsor shall be entitled to control any litigation or potential litigation involving any such defense or settlement.  Sponsor shall not dispose or settle any claim admitting liability on the part of the Institution without Institution’s prior written consent.

 

12.                               ADDITIONAL PROVISIONS

 

12.1                        The rights and obligations of Institution and Sponsor hereunder shall inure to the benefit of and shall be binding upon, their respective successors and assigns.  Neither party may assign this Agreement, directly or by merger or other operation of law, without the express written consent of the other party, which consent shall not be unreasonably withheld; provided, however, that Sponsor may assign this Agreement to any Affiliate of Sponsor or to any entity with which Sponsor may merge or consolidate, or to which it may transfer all or substantially all of its assets to which this Agreement relates (“Permitted Assignment”).  For any Permitted Assignment, Sponsor shall provide Institution with notice of such assignment containing at minimum the complete contact information and undertaking of the assignee within [...***...] after closing of such Permitted Assignment.  Any prohibited assignment of this Agreement or the rights hereunder shall be null and void.  No assignment shall relieve Sponsor of responsibility for the performance of any accrued obligations, which it has prior to such assignment.

 

12.2                        A waiver by either party of a breach or violation of any provision of this Agreement will not constitute or be construed as a waiver of any subsequent breach or violation of that provision or as a waiver of any breach or violation of any other provision of this Agreement,

 

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12.3                        Nothing herein shall be deemed to establish a relationship of principal and agent between Institution and Sponsor, nor any of their agents or employees, nor shall this Agreement be construed as creating any form of legal association or arrangement which would impose liability upon one party for the act or failure to act of the other party.  Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties hereto or their permitted assigns, any benefits, rights or remedies.

 

12.4                        Notices, statements, reports and other communications under this Agreement shall be in writing and shall be deemed to have been received one business day following the date dispatched if sent by public overnight courier (e.g., Federal Express) and addressed as follows:

 

If to the Institution:

 

Penn Center for Innovation

University of Pennsylvania

3160 Chestnut St., Suite 200

Philadelphia, PA 19104-6205

Attn.:  Executive Director

 

If to Principal Investigator:

 

James M. Wilson, M.D., Ph.D.

Gene Therapy Program

Translational Research Laboratory

125 South 31st Street,

Suite 2000

Philadelphia, PA 19104-3403

 

If to Sponsor:

 

Dimension Therapeutics

840 Memorial Drive

Cambridge, MA, 02139

Attn:  Chief Executive Officer

 

12.5                        This Agreement shall be construed and governed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to conflict of law provisions.  The parties hereby submit to the exclusive jurisdiction of the state or federal courts, as applicable, located within the Eastern District of Pennsylvania with respect to any and all disputes concerning the subject of this Agreement.

 

12.6                        Institution and Sponsor shall not discriminate against any employee or applicant for employment because of race, color, sex, sexual or affectional preference, age, religion, national or ethnic origin, handicap, or because he or she is a disabled veteran or veteran of the Vietnam Era,

 

12.7                        Neither party shall be liable for any failure to perform as required by this Agreement to the extent such failure to perform is due to circumstances reasonably beyond such

 

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party’s control, including, without limitation, labor disturbances or labor disputes of any kind, accidents, failure of any governmental approval required for full performance, civil disorders or commotions, terrorism, acts of aggression, acts of God, energy or other conservation measures imposed by law or regulation, explosions, failure of utilities, mechanical breakdowns, material shortages, disease, or other such occurrences.

 

12.8        Sponsor and Institution shall comply with all laws, regulations and other legal requirements applicable to such party in connection with this Agreement, including but not limited to any legal requirements applicable to the conduct of the Sponsored Research or the use of the results of the Sponsored Research or any Institution Intellectual Property or Research Results and laws controlling the export of technical data, computer software, laboratory prototypes, and all other export controlled commodities.

 

12.9        This Agreement embodies the entire understanding between die parties relating to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral.  This Agreement may not be varied except by a written document signed by duly authorized representatives of both parties.

 

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IN WITNESS WHEREOF, the duly authorized representatives of the parties hereby execute this Agreement as of the date first written above.

 

	
 
    	
THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   John S. Swarley
    
	
 
    	
Name:
    	
John   S. Swarley, Ph.D.
    
	
 
    	
Title:
    	
Associate   Vice Provost for Research and Executive Director, Penn Center for Innovation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DIMENSION THERAPEUTICS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Annalisa Jenkins
    
	
 
    	
Name:
    	
Annalisa   Jenkins
    
	
 
    	
Title:
    	
CEO
    

 

 

I have read and accept the responsibilities of the Principal Investigator:

 

 

	
By:
    	
/s/   James M. Wilson
    	
 
    
	
 
    	
Name:  James   M. Wilson
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
December 22,   2014
    	
 
    

 

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ATTACHMENT A

 

SUMMARY OF SPONSORED RESEARCH

 

Work Scope:  Liver Gene Therapy and Hemophilia

 

Details of Program - See Appendix entitled Appendix to Attachment A

 

Principal investigator:

 

Name:  James M. Wilson, M.D., Ph.D.

 

Phone Number:  215-898-0226

 

Representative of Sponsor:

 

Name:  Annalisa Jenkins

 

Phone Number:  (617) 245-2148

 

Period of Performance:  January 1,2015-December 31,2015

 

Report Schedule:  [...***...] financial reports during the term, task based scientific reports and final reports as set forth in Sections 5 and 10.2.

 

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Attachment A - 1

 

ATTACHMENT B

 

Budget and Payment Schedule for Work Described in Appendix to Attachment A Note

 

Budget:  The total budget for the period of performance extending from January 1,2015 through December 31, 2015 under this Agreement is [...***...] and shall be paid by Sponsor to Institution in accordance with the payment schedule set forth below.

 

For clarity, the budget as set forth in this Attachment B provides funding only for calendar year 2015 of the Sponsored Research.  Both the work plan and associated budget for the Sponsored Research during the 2016 calendar year shall be negotiated and agreed upon between the parties no later than [...***...].  Should no agreement on budget and work plan for calendar year 2016 be agreed upon between the parties, Institution shall be under no obligation to continue the Sponsored Research beyond December 31, 2015.

 

Payment Schedule

 

	
Payment Due Date
    	
 
    	
Amount of Payment to Institution
    
	
[...***...]
    	
 
    	
[...***...]
    

 

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Attachment B - 1

 

Itemized Calendar Year 2015 Budget

 

Hemophilia A Project

 

	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
Total
    	
 
    	
[...***...]
    

 

Hemophilia B Project

 

	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
Total
    	
 
    	
[...***...]
    

 

OTC Project

 

	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
[...***...]
    	
 
    	
[...***...]
    
	
Total
    	
 
    	
[...***...]
    
	
 
    	
 
    	
 
    
	
Grand Total for calendar year 2015
    	
 
    	
[...***...]
    

 

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Attachment B - 2

 

APPENDIX TO ATTACHMENT A

 

Sponsored Research for the period of performance from Jan. 1, 2015 - Dec 31, 2015

 

Calendar year 2015 work plans for hemophilia A, hemophilia B and OTC projects mutually agreeable to the parties are attended hereto.

 

*** Confidential Treatment Requested ***

 

Appendix - 1

 

Hemophilia A Work Plan — 2015

 

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*** Confidential Treatment Requested ***

 

Appendix - 2

 

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*** Confidential Treatment Requested ***

 

Appendix - 3

 

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*** Confidential Treatment Requested ***

 

Appendix - 4

 

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Appendix - 5

 

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Appendix - 6

 

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Appendix - 7

 

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Appendix - 8

 

Hemophilia B Work Plan — 2015

 

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Appendix - 1

 

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Appendix - 2

 

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Appendix - 3

 

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Appendix - 4

 

OTC Work Plan-2015

 

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Appendix - 8

 

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Appendix - 9Exhibit 10.14

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated as of August 21, 2014 (the “Effective Date”) between SILICON VALLEY BANK, a California corporation with a loan production office located at 275 Grove Street, Suite 2-200, Newton, Massachusetts 02466 (“Bank”), and DIMENSION THERAPEUTICS, INC., a Delaware 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.  Notwithstanding the foregoing, all financial covenant calculations shall be computed with respect to the Borrower only, and not on a consolidated basis.  Capitalized terms not otherwise defined in this Agreement shall have the meanings set forth in Section 13.  All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code to the extent such terms are defined therein.

 

2.                                      LOAN AND TERMS OF PAYMENT

 

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

 

2.1.1       Equipment Advances.

 

(a)           Availability.  Subject to the terms and conditions of this Agreement, during the Draw Period, Bank shall make advances (each, an “Equipment Advance” and, collectively, “Equipment Advances”) not exceeding the Equipment Line.  Equipment Advances may only be used to finance Eligible Equipment purchased within ninety (90) days (determined based upon the applicable invoice date of such Eligible Equipment) before the date of each Equipment Advance.  No Equipment Advance may exceed one hundred percent (100.0%) of the total invoice for Eligible Equipment (excluding taxes, shipping, warranty charges, freight discounts and installation expenses relating to such Eligible Equipment except to the extent such are allowed to be financed pursuant hereto as Other Equipment).  Unless otherwise agreed to by Bank, not more than twenty-five percent (25.0%) of the proceeds of the Equipment Line shall be used to finance Other Equipment.  Each Equipment Advance must be in an amount equal to the lesser of One Hundred Thousand Dollars ($100,000.00) or the amount that has not yet been drawn under the Equipment Line.  Borrower may only request three (3) Equipment Advances hereunder.  Notwithstanding the foregoing, the initial Equipment Advance (the “Initial Equipment Advance”) hereunder may be used to reimburse Borrower for Eligible Equipment purchased within one hundred eighty (180) days (determined based upon the applicable invoice date of such Eligible Equipment) before the Effective Date, provided such Initial Equipment Advance is made within ten (10) Business Days of the Effective Date.  After repayment, no Equipment Advance may be reborrowed.

 

 

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

 

(c)           Repayment.  Commencing on the applicable Amortization Date, and continuing on the Payment Date of each month thereafter, Borrower shall repay each Equipment Advance in (i) thirty-six (36) equal monthly installments of principal, plus (ii) monthly payments of accrued interest at the rate set forth in Section 2.2(a).  All outstanding principal and accrued interest under each Equipment Advance, and all other outstanding Obligations with respect to each Equipment Advance, is due and payable in full on the applicable Equipment Maturity Date.

 

(d)           Mandatory Prepayment Upon an Acceleration.  If repayment on an Equipment Advance is accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to Bank an amount equal to the sum of: (i) all outstanding principal plus accrued and unpaid interest, (ii) the Prepayment Premium, plus (iii) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

 

(e)           Permitted Prepayment of Equipment Advances.  Borrower shall have the option to prepay all, but not less than all, of the Equipment Advances advanced by Bank under this Agreement, provided Borrower (i) provides written notice to Bank of its election to prepay the Equipment Advances at least ten (10) days prior to such prepayment, and (ii) pays, on the date of such prepayment (A) all outstanding principal plus accrued and unpaid interest, (B) the Prepayment Premium, plus (C) all other sums, if any, that shall have become due and payable, including interest at the Default Rate with respect to any past due amounts.

 

2.2          Payment of Interest on the Credit Extensions.

 

(a)           Interest Rate.  Subject to Section 2.2(b), the principal amount outstanding for each Equipment Advance shall accrue interest at a fixed per annum rate equal to two and one quarter of one percent (2.25%) above the Prime Rate, which interest shall be determined by Bank on the Funding Date of the applicable Equipment Advance and shall be payable monthly in accordance with Section 2.2(c) below.

 

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

 

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

 

2.3          Fees.  Borrower shall pay to Bank:

 

(a)           Commitment Fee.  A fully earned, non-refundable commitment fee of Five Thousand Dollars (5,000.00), on the Effective Date;

 

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

 

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

 

(d)           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 2.3 pursuant to the terms of Section 2.4(c).  Bank shall provide Borrower written notice of deductions made from the Designated Deposit Account pursuant to the terms of the clauses of this Section 2.3.

 

2.4          Payments; Application of Payments; Debit of Accounts.

 

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

 

(b)           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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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 Agreement(s);

 

(c)           the Operating Documents and long-form good standing certificates of Borrower certified by the Secretary of State (or equivalent agency) of Borrower’s jurisdiction of organization or formation and each jurisdiction in which Borrower is qualified to conduct business, 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)           certified copies, dated as of a recent date, of financing statement searches, as Bank may request, accompanied by written evidence (including any UCC termination statements) that the Liens indicated in any such financing statements either constitute Permitted Liens or have been or, in connection with the initial Credit Extension, will be terminated or released;

 

(f)            the Perfection Certificate of Borrower, together with the duly executed original signature thereto;

 

(g)           a landlord’s consent in favor of Bank for each of Borrower’s leased locations by the respective landlord thereof, together with the duly executed original signatures thereto;

 

(h)           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

 

(i)            payment of the fees and Bank Expenses then due as specified in Section 2.3 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;

 

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(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)           There has not been any material impairment in the general affairs, management, results of operation, financial condition or the prospect of repayment of the Obligations, or any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank.

 

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

 

3.4          Procedures for Borrowing.  Subject to the prior satisfaction of all other applicable conditions to the making of a Credit Extension set forth in this Agreement, to obtain a Credit Extension, Borrower shall notify Bank (which notice shall be irrevocable) by electronic mail, facsimile, or telephone by 12:00 p.m. Eastern time two (2) Business Days before the proposed Funding Date of the Credit Extension.  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 the Credit Extensions to the Designated Deposit Account.  Bank may make Credit Extensions under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the Credit Extensions are necessary to meet Obligations which have become due.

 

4.                                      CREATION OF SECURITY INTEREST

 

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

 

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

 

If this Agreement is terminated, Bank’s Lien in the Collateral shall continue until the Obligations (other than inchoate indemnity obligations) are repaid in full in cash.  Upon payment in full in cash of the Obligations (other than inchoate indemnity obligations) and at such time as Bank’s obligation to make Credit Extensions has terminated, Bank shall, at the sole cost and expense of Borrower, release its Liens in the Collateral and all rights therein shall revert to Borrower.  In the event (x) all Obligations (other than inchoate indemnity obligations), except for Bank Services, are satisfied in full, and (y) this Agreement is terminated, Bank shall terminate the security interest granted herein upon Borrower providing cash collateral acceptable to Bank in its good faith business judgment for Bank Services, if any.  In the event such Bank Services consist of outstanding Letters of Credit, Borrower shall provide to Bank cash collateral in an amount equal to (x) if such Letters of Credit are denominated in Dollars, then at least one hundred five percent (105.0%); and (y) if such Letters of Credit are denominated in a Foreign Currency, then at least one hundred ten percent (110.0%), of the Dollar Equivalent of the face amount of all such Letters of Credit plus 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          Priority of Security Interest.  Borrower represents, warrants, and covenants that the security interest granted herein is and shall at all times continue to be a first priority perfected security interest in the Collateral (subject only to Permitted Liens that are permitted pursuant to the terms of this Agreement to have superior priority to Bank’s Lien under this Agreement).  If Borrower shall acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the general details thereof and grant to Bank in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Bank.

 

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

 

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5.                                      REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants as follows:

 

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

 

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

 

5.2          Collateral.  Borrower has good title to, rights in, and the power to transfer each item of the Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens except Permitted Liens.  Borrower has no Collateral Accounts at or with any bank or financial institution other than Bank or Bank’s Affiliates except for the Collateral Accounts described in the Perfection Certificate delivered to Bank in connection herewith and which Borrower has taken such actions as are necessary to give Bank a perfected security

 

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interest therein, pursuant to the term of Section 6.6(b).  The Accounts are bona fide, existing obligations of the Account Debtors.

 

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

 

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

 

Borrower is the sole owner of the Intellectual Property which it owns or purports to own except for (a) non-exclusive licenses granted to its customers in the ordinary course of business, (b) (i) pursuant to that certain Collaboration and License Agreement by and between Borrower and Bayer HealthCare LLC, dated as of June 18, 2014 and (ii) pursuant to that certain Licensee Agreement by and between Borrower and ReGenX Biosciences, LLC, dated as of October 30, 2013, (c) over-the-counter software that is commercially available to the public, and (d) material Intellectual Property licensed to Borrower and noted on the Perfection Certificate.  Each Patent which it owns or purports to own and which is material to Borrower’s business is valid and enforceable, and no part of the Intellectual Property which Borrower owns or purports to own and which is material to Borrower’s business has been judged invalid or unenforceable, in whole or in part.  To the best of Borrower’s knowledge, no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim would not reasonably be expected to have a material adverse effect on Borrower’s business.

 

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

 

5.3          Litigation.  There are no actions or proceedings pending or, to the knowledge of any Responsible Officer, threatened in writing by or against Borrower or any of its Subsidiaries involving more than, individually or in the aggregate, One Hundred Thousand Dollars ($100,000.00).

 

5.4          Financial Statements; Financial Condition.  All consolidated financial statements for Borrower and any of its Subsidiaries delivered to Bank fairly present (subject to normal fiscal year-end adjustments) 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.

 

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

 

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margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors).  Borrower (a) has complied in all material respects with all Requirements of Law, and (b) has not violated any Requirements of Law the violation of which could reasonably be expected to have a material adverse effect on its business.  None of Borrower’s or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally.  Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all Government Authorities that are necessary to continue their respective businesses as currently conducted.

 

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 has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except (a) to the extent such taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (b) if such taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed Five Thousand Dollars ($5,000.00).

 

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

 

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

 

5.10        Full Disclosure.  No written representation, warranty or other statement of Borrower in any 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

 

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actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

 

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

 

6.                                      AFFIRMATIVE COVENANTS

 

Borrower shall do all of the following:

 

6.1          Government Compliance.

 

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

 

(b)           Obtain all of the Governmental Approvals necessary for the performance by Borrower of its obligations under the Loan Documents to which it is a party and the grant of a security interest to Bank in all of 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 balance sheet and income statement covering Borrower’s consolidated 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 covenant set forth in this Agreement and such other information as Bank may reasonably request;

 

(c)           Board Projections.  Within sixty (60) days following the end of Borrower’s fiscal year, and contemporaneously with any updates or changes thereto, annual Board-approved projections (reflecting projections on a quarterly or monthly basis), in a form acceptable to Bank;

 

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(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 prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting 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;

 

(g)           Legal Action Notice.  A prompt report of any legal actions pending or threatened in writing against Borrower or any of its Subsidiaries that could reasonably be expected to result in damages or costs to Borrower or any of its Subsidiaries of, individually or in the aggregate, Fifty Thousand Dollars ($50,000.00) 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 ($100,000.00).

 

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

 

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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.

 

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

 

6.6          Operating Accounts.

 

(a)           Maintain a portion of its and its Subsidiaries’ operating, depository and securities accounts with Bank and Bank’s Affiliates; provided further that the aggregate cash balances maintained in such accounts in the name of Borrower shall at all times be in an amount equal to or greater than the Required Amount.

 

(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 with respect to such Collateral Account to perfect Bank’s Lien in such Collateral Account in accordance with the terms hereunder which Control Agreement may not be terminated without the prior written consent of Bank.  The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower’s employees and identified to Bank by Borrower as such.

 

6.7          Protection of Intellectual Property Rights.

 

(a)           (i) Protect, defend and maintain the validity and enforceability of its Intellectual Property; (ii) promptly advise Bank in writing of material infringements or any other event that could reasonably be expected to materially and adversely affect the value of its

 

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Intellectual Property; and (iii) not allow any Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to the public without Bank’s written consent.

 

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

 

6.8          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.

 

6.9          Access to Collateral; Books and Records.  Allow Bank, or its agents, at reasonable times, on three (3) Business Days’ notice (provided no notice is required if an Event of Default has occurred and is continuing), to inspect the Collateral and audit and copy Borrower’s Books.  The foregoing inspections and audits shall be at Borrower’s expense.

 

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

 

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 any of its Subsidiaries to Transfer, all or any part of its business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b) of worn-out or obsolete Equipment (that does not constitute Financed Equipment) that is, in the reasonable judgment of Borrower, no longer economically practicable to maintain or useful in the ordinary course of business of Borrower; (c) consisting of Permitted Liens and Permitted Investments; (d) consisting of the sale or issuance of any stock of Borrower permitted under Section 7.2 of this Agreement; (e) consisting of Borrower’s use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents; and (f) of non-exclusive licenses, partnerships and joint ventures for the use of the

 

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property of Borrower or its Subsidiaries in the ordinary course of business and non-perpetual exclusive licenses that may be exclusive in some respects, such as, by way of example with respect to field of use or geographic territory, but that do not result in a legal transfer of title of the licensed property.

 

7.2          Changes in Business, Management, Ownership, or Business Locations.  (a) Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b) liquidate or dissolve; 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) days after such Key Person’s 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 (49.0%) 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 venture capital or private equity investors so long as Borrower identifies to Bank the venture capital or private equity investors at least seven (7) Business Days prior to the closing of the transaction and provides to Bank a description of the material terms of the transaction).

 

Borrower shall not, without at least thirty (30) days prior written notice to Bank: (1) add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Ten Thousand Dollars ($10,000.00) in Borrower’s assets or property) or deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000.00) to a bailee at a location other than to a bailee and at a location already disclosed in the Perfection Certificate, (2) change its jurisdiction of organization, (3) change its organizational structure or type, (4) change its legal name, or (5) change any organizational number (if any) assigned by its jurisdiction of organization.  If Borrower intends to deliver any portion of the Collateral valued, individually or in the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000.00) to a bailee, and Bank and such bailee are not already parties to a bailee agreement governing both the Collateral and the location to which Borrower intends to deliver the Collateral, then Borrower will 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 or Acquisitions.  Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person (including, without limitation, by the formation of any Subsidiary).  A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

 

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

 

7.5          Encumbrance.  Create, incur, allow, or suffer any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, permit any Collateral not to be subject to the first priority security interest granted herein, or enter into any agreement,

 

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document, instrument or other arrangement (except with or in favor of Bank) with any Person which directly or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning, mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or any Subsidiary’s Intellectual Property, except as is otherwise permitted in Section 7.1 hereof and the definition of “Permitted Liens” herein.

 

7.6          Maintenance of Collateral Accounts.  Maintain any Collateral Account except pursuant to the terms of Section 6.6(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; and (iii) Borrower may repurchase the stock of former employees, directors or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase; provided that the aggregate amount of all such repurchases does not exceed Two Hundred Fifty Thousand Dollars ($250,000) per fiscal year; or (b) directly or indirectly make any Investment (including, without limitation, by the formation of any Subsidiary) other than Permitted Investments, or permit any of its Subsidiaries to do so.

 

7.8          Transactions with Affiliates.  Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for (a) transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person, (b) sales by Borrower of shares of its capital stock in venture capital financings, (c) amendments, modification or restatements to, or transactions contemplated by, the Borrower’s existing shareholder agreements as each may be amended or modified from time to time, (d) compensation arrangements, including equity grants, for services provided to the Borrower or any Subsidiary by any employee, consultant, director or otherwise, (e) repurchases of capital stock of the Borrower or any Subsidiary from employees, officers, directors, consultants or other persons performing services for the Borrower or any subsidiary pursuant to agreements under which the Borrower has the option to repurchase such shares upon the occurrence of certain events, such as the termination of employment or service, or pursuant to a right of first refusal, in each case ((a)-(e)), pursuant to the terms of this Agreement.

 

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.

 

7.10        Compliance.  Become an “investment company” or a company controlled by an “investment company”, under the Investment Company Act of 1940, as amended, or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the

 

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proceeds of any Credit Extension for that purpose; fail to (a) meet the minimum funding requirements of ERISA, (b) prevent a Reportable Event or Prohibited Transaction, as defined in ERISA, from occurring, or (c) comply with the Federal Fair Labor Standards Act, the failure of any of the conditions described in clauses (a) through (c) which could reasonably be expected to have a material adverse effect on Borrower’s business; or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in, permit partial or complete termination of, or permit the occurrence of any other event with respect to, any present pension, profit sharing and deferred compensation plan which could reasonably be expected to result in any liability of Borrower, including any liability to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

 

8.                                      EVENTS OF DEFAULT

 

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

 

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

 

8.2          Covenant Default.

 

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

 

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

 

8.3          Material Adverse Change.  A Material Adverse Change occurs;

 

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8.4          Attachment; Levy; Restraint on Business.

 

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

 

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

 

8.5          Insolvency.  (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower 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 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 One Hundred Thousand Dollars ($100,000.00); or (b) any breach or default by Borrower, the result of which could have a material adverse effect on Borrower’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 ($50,000.00) (not covered by independent third-party insurance as to which liability has been accepted by such insurance carrier) shall be rendered against Borrower by any Governmental Authority, and the same are not, within ten (10) days after the entry, assessment or issuance thereof, discharged, satisfied, or paid, or after execution thereof, stayed or bonded pending appeal, or such judgments are not discharged prior to the expiration of any such stay (provided that no Credit Extensions will be made prior to the satisfaction, payment, discharge, stay, or bonding of such fine, penalty, judgment, order or decree);

 

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

 

8.9          Subordinated Debt.  Any document, instrument, or agreement evidencing any Subordinated Debt shall for any reason be revoked or invalidated or otherwise cease to be in full force and effect, any Person shall be in breach thereof or contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the

 

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Obligations shall for any reason be subordinated or shall not have the priority contemplated by this Agreement; or

 

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

 

9.                                      BANK’S RIGHTS AND REMEDIES

 

9.1          Rights and Remedies.  Upon the occurrence and during the continuance of an Event of Default, Bank may, without notice or demand, do any or all of the following:

 

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

 

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

 

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

 

(d)           terminate any FX Contracts;

 

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

 

(f)            make any payments and do any acts it considers necessary or reasonable to protect the Collateral and/or its security interest in the Collateral.  Borrower shall

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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.

 

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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:
    	
Dimension   Therapeutics, Inc.
   840 Memorial Drive
   Cambridge, Massachusetts 02139
   Attn:
   Fax:
   Email:
    
	
 
    	
 
    
	
If   to Bank:
    	
Silicon Valley Bank
   275 Grove Street, Suite 2-200
   Newton, Massachusetts 02466
   Attn: Bill Howell
   Fax:
   Email: bhowell@svb.com
    
	
 
    	
 
    
	
with   a copy to
    	
Riemer &   Braunstein LLP
   Three Center Plaza
   Boston, Massachusetts 02108
   Attn: David A. Ephraim, Esquire
   Fax: (617) 692-3455
   Email: DEphraim@riemerlaw.com
    

 

11.                               CHOICE OF LAW.  VENUE.  AND JURY TRIAL WAIVER

 

Except as otherwise expressly provided in any of the Loan Documents, Massachusetts law governs the Loan Documents without regard to principles of conflicts of law.  Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Boston, Massachusetts; provided, however, that nothing in this Agreement shall be deemed to operate to preclude Bank from bringing suit or taking other legal action in any other jurisdiction to realize on the Collateral or any other security for the Obligations, or to enforce a judgment or other court order in favor of Bank.  Borrower expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed

 

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appropriate by such court.  Borrower hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made by registered or certified mail addressed to Borrower at the address set forth in, or subsequently provided by Borrower in accordance with, Section 10 of this Agreement and that service so made shall be deemed completed upon the earlier to occur of Borrower’s actual receipt thereof or three (3) days after deposit in the U.S. mails, proper postage prepaid.

 

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

 

This Section 11 shall survive the termination of this Agreement.

 

12.                               GENERAL PROVISIONS

 

12.1                        Termination Prior to Equipment 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 Section 4.1 of this Agreement), this Agreement may be terminated prior to the Equipment 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

 

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expenses (including Bank Expenses) in any way suffered, incurred, or paid by such Indemnified Person as a result of, following from, consequential to, or arising from transactions between Bank and Borrower contemplated by the Loan Documents (including reasonable attorneys’ fees and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross negligence or willful misconduct.

 

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

 

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

 

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

 

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

 

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

 

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

 

12.9                        Confidentiality.  In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank’s Subsidiaries or Affiliates (such Subsidiaries and Affiliates, together with Bank, collectively, “Bank Entities”); (b) to prospective 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

 

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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.

 

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

 

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

 

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

 

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

 

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

 

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

 

13.                               DEFINITIONS

 

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

 

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

 

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

 

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

 

“Agreement” is defined in the preamble hereof.

 

“Amortization Date” means the first Payment Date following the six (6) month anniversary of the Funding Date of such Equipment Advance.

 

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

 

“Bank” is defined in the preamble hereof.

 

“Bank Entities” is defined in Section 12.9.

 

“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.

 

“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

 

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Bank Affiliate, including, without limitation, any letters of credit, cash management services (including, without limitation, merchant services, direct deposit of payroll, business credit cards, and check cashing services), interest rate swap arrangements, and foreign exchange services as any such products or services may be identified in Bank’s various agreements related thereto (each, a “Bank Services Agreement”).

 

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

 

“Board” means Borrower’s board of directors.

 

“Borrower” is defined in the preamble hereof.

 

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

 

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

 

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

 

“Cash Burn” means, as of any date of determination, net cash used in operations, as defined in GAAP and calculated consistent with the methodology and standards employed by the Borrower in the preparation of Borrower’s Board approved plan dated as of February 18, 2014.  Any subsequent Board approved plans or amendments thereto shall not deviate from those methods and practices.

 

“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

 

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Group or Moody’s Investors Service, Inc.; and (c) Bank’s certificates of deposit issued maturing no more than one (1) year after issue.

 

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

 

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

 

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

 

“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 B.

 

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

 

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

 

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

 

“Credit Extension” is any Equipment Advance or any other extension of credit by Bank for Borrower’s benefit.

 

“Currency” is coined money and such other banknotes or other paper money as are authorized by law and circulate as a medium of exchange.

 

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

 

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

 

“Designated Deposit Account” is the multicurrency account denominated in Dollars, account number           , maintained by Borrower with Bank.

 

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

 

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

 

“Draw Period” means the period of time commencing upon the Effective Date and continuing through the earlier to occur of (a) January 31, 2015, or (b) an Event of Default.

 

“Effective Date” is defined in the preamble hereof.

 

“Eligible Equipment” is the following to the extent it complies with all of Borrower’s representations and warranties to Bank, is acceptable to Bank in all respects, is located at 840 Memorial Drive, Cambridge, Massachusetts 02139 or such other location of which Bank has approved in writing, and is subject to a first priority Lien in favor of Bank: (a) new and used general purpose equipment, computer equipment, office equipment, test and laboratory equipment, furnishings, subject to the limitations set forth herein, and (b) Other Equipment.

 

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

 

“Equipment Advance” is defined in Section 2.1.1(a).

 

“Equipment Line” is an Equipment Advance or Equipment Advances in an aggregate amount of up to One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00).

 

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“Equipment Maturity Date” is the date which is thirty-five (35) months after the first Payment Date with respect to such Equipment Advance.

 

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

 

“Event of Default” is defined in Section 8.

 

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

 

“Financed Equipment” is all present and future Eligible Equipment in which Borrower has any interest which is financed by an Equipment Advance.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“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,

 

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(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 Equipment Advance” is defined in Section 2.1.1(a).

 

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

 

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

 

(a)                                 its Copyrights, Trademarks and Patents;

 

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

 

(c)                                  any and all source code;

 

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

 

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

 

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

 

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

 

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

 

“Key Person” is each of Borrower’s (a) Chief Executive Officer, who is Thomas Beck as of the Effective Date, and (b) Chief Financial Officer, who is James Murphy 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.

 

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“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 Certificate, any Bank Services Agreement, any subordination agreement, any note, or notes or guaranties executed by Borrower, and any other present or future agreement by Borrower with or for the benefit of Bank in connection with this Agreement or Bank Services, all as amended, restated, or otherwise modified.

 

“Material Adverse Change” is (a) a material impairment in the perfection or priority of 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; and (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).

 

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

 

“Obligations” are Borrower’s obligations to pay when due any debts, principal, interest, fees, Bank Expenses, the Prepayment Premium, 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, any interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank, and to perform Borrower’s duties under the Loan Documents (other than the Warrant).

 

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

 

“Other Equipment” is leasehold improvements, transferable software licenses, and other soft costs approved by Bank, including taxes, shipping, warranty charges, freight discounts and installation expenses.

 

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

 

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

 

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

 

31

 

“Perfection Certificate” is defined in Section 5.1.

 

“Permitted Indebtedness” is:

 

(a)                                 Borrower’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; and

 

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

 

“Permitted Investments” are:

 

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

 

(b)                                 Investments consisting of Cash Equivalents;

 

(c)                                  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;

 

(d)                                 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;

 

(e)                                  Investments consisting of deposit accounts in which Bank has a first priority perfected security interest; and

 

(f)                                   other Investments not otherwise permitted by Section 7.7 not exceeding Fifty Thousand Dollars ($50,000.00) in the aggregate outstanding at any time.

 

32

 

“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 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 or capital leases (i) on Equipment (other than Financed Equipment) acquired or held by Borrower incurred for financing the acquisition of the Equipment securing no more than Fifty Thousand Dollars ($50,000.00) 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 in favor of other financial institutions arising in connection with Borrower’s deposit and/or securities accounts held at such institutions; provided that Bank has a first priority perfected security interest in the amounts held in such deposit and/or securities accounts;

 

(e)                                  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 One Hundred Thousand Dollars ($100,000.00) and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

 

(f)                                   Liens on cash collateral securing reimbursement obligations to Bank under letters of credit in an amount not to exceed One Hundred Fifty Thousand Dollars ($150,000.00).

 

(g)                                  Easements, reservations, rights-of-way, restrictions, minor defects or irregularities in title and other similar charges or encumbrances affecting real property not likely to result in a Material Adverse Change;

 

(h)                                 non-exclusive licenses, partnerships and joint ventures for the use of the property of Borrower or its Subsidiaries in the ordinary course of business and other non-perpetual licenses that may be exclusive in some respects, such as, by way of example with respect to field of use or geographic territory, but that do not result in a legal transfer of title of the licensed property; and

 

(i)                                     Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (h), 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.

 

33

 

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

 

“Prepayment Premium” is an additional fee payable to the Bank in amount equal to:

 

(a) for a prepayment of an Equipment Advance made on or prior to the first (1st) anniversary of the Funding Date of such Equipment Advance, three quarters of one percent (0.75%) of the principal amount of such Equipment Advance outstanding as of the date immediately and prior to such prepayment;

 

(b)                                 for a prepayment of an Equipment Advance made after the first (1st) anniversary of the Funding Date of such Equipment Advance, but on or prior to the second (2nd) anniversary of the Funding Date of such Equipment Advance, one half of one percent (0.50%) of the principal amount of such Equipment Advance outstanding as of the date immediately and prior to such prepayment; and

 

(c)                                  for a prepayment of an Equipment Advance made after the second (2nd) anniversary of the Funding Date of such Equipment Advance, zero percent (0.0%) of the principal amount of such Equipment Advance outstanding as of the date immediately and prior to such prepayment.

 

Notwithstanding the foregoing, Bank agrees to waive the Prepayment Premium if Bank agrees to refinance and redocument this Agreement (in its sole and absolute discretion) prior to the Equipment Maturity Date.

 

“Prime Rate” is the greater of (a) three and one quarter of one percent (3.25%), or (b) the rate of interest per annum from time to time published in the money rates section of The Wall Street Journal or any successor publication thereto as the “prime rate” then in effect; provided that if such rate of interest, as set forth from time to time in the money rates section of The Wall Street Journal, becomes unavailable for any reason as determined by Bank, the “Prime Rate” shall mean the rate of interest per annum announced by Bank as its prime rate in effect at its principal office in the State of California (such Bank announced Prime Rate not being intended to be the lowest rate of interest charged by Bank in connection with extensions of credit to debtors).

 

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

 

“Required Amount” means unrestricted and unencumbered cash maintained in accounts in the name of Borrower at Bank and Bank’s Affiliates in an amount equal to at least (i) the Twelve Month Cash Burn Amount, plus (ii) fifty percent (50%) of all of Borrower’s and its Subsidiaries’ unrestricted and unencumbered cash above the Twelve Month Cash Burn Amount.

 

“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.

 

34

 

“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.

 

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

 

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

 

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

 

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

 

“Transfer” is defined in Section 7.1.

 

“Twelve Month Cash Burn Amount” means, the projected Cash Burn for the following twelve (12) months as of any date of determination and based upon Borrower’s Board-approved plan consistent with the requirement in Section 6.2(c) of this Agreement.

 

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

 

[Signature page follows.]

 

35

 

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

 

	
 
    	
BORROWER:
    
	
 
    	
 
    	
 
    
	
 
    	
DIMENSION   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Thomas Beck
    
	
 
    	
 
    	
Name:   Thomas Beck
    
	
 
    	
 
    	
Title:   CEO and President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BANK:
    
	
 
    	
 
    	
 
    
	
 
    	
SILICON   VALLEY BANK
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Matthew Griffiths
    
	
 
    	
 
    	
Name:   Matthew Griffiths
    
	
 
    	
 
    	
Title:   Vice President
    

 

[Signature Page to Loan and Security Agreement]

 

 

EXHIBIT A

 

COLLATERAL DESCRIPTION

 

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

 

All goods, Accounts (including health-care receivables), Equipment, Inventory, contract rights or rights to payment of money, leases, license agreements, franchise agreements, General Intangibles (except as provided below), commercial tort claims, documents, instruments (including any promissory notes), chattel paper (whether tangible or electronic), cash, deposit accounts, certificates of deposit, fixtures, letters of credit rights (whether or not the letter of credit is evidenced by a writing), securities, and all other investment property, supporting obligations, and financial assets, whether now owned or hereafter acquired, wherever located; and all Borrower’s Books relating to the foregoing, and any and all claims, rights and interests in any of the above and all substitutions for, additions, attachments, accessories, accessions and improvements to and replacements, products, proceeds and insurance proceeds of any or all of the foregoing.

 

Notwithstanding the foregoing, the Collateral does not include 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 Borrower that are proceeds of the Intellectual Property.

 

Pursuant to Section 7.5 of this Agreement and subject to any exceptions set forth herein, Borrower has agreed not to encumber any of its Intellectual Property without Bank’s prior written consent.

 

A-1

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

	
TO:
    	
SILICON   VALLEY BANK
    	
Date:
    	
 
    
	
FROM:
    	
DIMENSION   THERAPEUTICS, INC.
    	
 
    	
 
    

 

The undersigned authorized officer of DIMENSION THERAPEUTICS, INC. (“Borrower”) certifies that under the terms and conditions of the Loan and Security 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 5.8 of the Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to 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 (CPA Audited)
    	
 
    	
FYE within 180 days
    	
 
    	
Yes
    	
No
    
	
10-Q, 10-K and 8-K
    	
 
    	
Within 5 days after filing with SEC
    	
 
    	
Yes
    	
No
    
	
Board-approved Projections
    	
 
    	
FYE within 60 days
    	
 
    	
Yes
    	
No
    

 

B-1

 

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

 

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

 

 

 

B-2

 

	
DIMENSION THERAPEUTICS, INC.
    	
 
    	
BANK USE ONLY
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
Received   by:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    	
AUTHORIZED   SIGNER
    
	
Title:
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Verified:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
AUTHORIZED   SIGNER
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Compliance   Status:
    	
Yes
    	
No
    
							

 

B-3

 

EXHIBIT C

 

LOAN PAYMENT/ADVANCE REQUEST FORM

 

DEADLINE FOR SAME DAY PROCESSING IS NOON EASTERN TIME

 

	
Fax   To:
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
LOAN PAYMENT:
    	
 
    	
DIMENSION THERAPEUTICS, 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 and   Security Agreement are true, correct and complete in all material respects on   the date of the request for an advance; provided, however,   that such materiality qualifier shall not be applicable to any   representations and warranties that already are qualified or modified by   materiality in the text thereof; and provided, further   that those representations and warranties expressly referring to a specific   date shall be true, accurate and complete in all material respects as of such   date:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Authorized Signature:
    	
 
    	
 
    	
Phone Number:
    	
 
    
	
Print Name/Title:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
OUTGOING WIRE REQUEST:
    	
 
    	
 
    
	
Complete only if all or a portion of funds from   the loan advance above is to be wired.
    
	
Deadline   for same day processing is noon, Eastern Time
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Beneficiary Name:
    	
 
    	
 
    	
Amount of Wire:  $
    	
 
    
	
Beneficiary Bank:
    	
 
    	
 
    	
Account Number:
    	
 
    
	
City and State:
    	
 
    	
 
    	
 
    	
 
    
	
Beneficiary Bank   Transit (ABA) #:
    	
 
    	
 
    	
Beneficiary Bank Code   (Swift, Sort, Chip, etc.):
    	
 
    
	
 
    	
 
    	
 
    	
(For International Wire Only)
    
	
Intermediary Bank:
    	
 
    	
 
    	
Transit (ABA) #:
    	
 
    
	
For Further Credit to:
    	
 
    	
 
    	
 
    	
 
    
	
Special Instruction:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By signing below, I (we)   acknowledge and agree that my (our) funds transfer request shall be processed   in accordance with and subject to the terms and conditions set forth in the   agreements(s) covering funds transfer service(s), which   agreements(s) were previously received and executed by me (us).
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Authorized Signature:
    	
 
    	
 
    	
2nd Signature (if required):
    	
 
    
	
Print Name/Title:
    	
 
    	
 
    	
Print Name/Title:
    	
 
    
	
Telephone #:
    	
 
    	
 
    	
Telephone #:
    	
 
    
																

 

C-1

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