EX-10.10



 Exhibit 10.10 

AMENDED AND RESTATED 
 LOAN AND
SECURITY AGREEMENT 
 THIS LOAN AND SECURITY AGREEMENT is made and dated as of December 16, 2013 and is entered into by and between
ACELRX PHARMACEUTICALS, INC., a Delaware corporation, and each of its subsidiaries, (hereinafter collectively referred to as the “Borrower”), HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership, and HERCULES TECHNOLOGY GROWTH
CAPITAL, INC., a Maryland corporation (collectively, “Lender”) and amends and restates in its entirety that certain Loan and Security Agreement between Borrower, as the borrower and Hercules Technology II, L.P., a Delaware limited
partnership, and Hercules Technology Growth Capital, Inc., collectively as the lender, dated June 29, 2011 (the “Original Agreement”). 

RECITALS 
 A. Borrower has
requested Lender to make available to Borrower a loan in an aggregate principal amount of up to Forty Million Dollars ($40,000,000) (the “Term Loan”); 

B. Part of the proceeds of the Term Loan will be used to refinance loans funded under the Original Agreement and for general corporate
purposes; and 
 C. Lender is willing to make the Term Loan on the terms and conditions set forth in this Agreement. 

AGREEMENT 
 NOW,
THEREFORE, Borrower and Lender agree as follows: 
 SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION 

1.1 Unless otherwise defined herein, the following capitalized terms shall have the following meanings: 

“Account Control Agreement(s)” means any agreement entered into by and among the Lender, Borrower and a third party Bank or other
institution (including a Securities Intermediary) in which Borrower maintains a Deposit Account or an account holding Investment Property and which grants Lender a perfected first priority security interest in the subject account or accounts. 

“ACH Authorization” means the ACH Debit Authorization Agreement in substantially the form of Exhibit I. 

“Advance(s)” means a Term Loan Advance. 

“Advance Date” means the funding date of any Advance. 







 “Advance Request” means a request for an Advance submitted by Borrower to Lender in
substantially the form of Exhibit A. 
 “Agreement” means this Loan and Security Agreement, as amended from time to time.

 “Assignee” has the meaning given to it in Section 11.13. 

“Borrower Products” means all products, software, service offerings, technical data or technology currently being designed,
manufactured or sold by Borrower or which Borrower intends to sell, license, or distribute in the future including any products or service offerings under development, collectively, together with all products, software, service offerings, technical
data or technology that have been sold, licensed or distributed by Borrower since its incorporation. 
 “Cap” shall have the
meaning assigned to such term in Section 2.2(e)(iii). 
 “Cash” means all cash and liquid funds. 

“Change in Control” means any reorganization, recapitalization, consolidation or merger (or similar transaction or series of related
transactions) of Borrower or any Subsidiary, sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Borrower or any Subsidiary in which the holders of Borrower or Subsidiary’s outstanding shares
immediately before consummation of such transaction or series of related transactions do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the
voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Borrower or
Subsidiary is the surviving entity. 
 “Claims” has the meaning given to it in Section 11.10. 

“Closing Date” means the date of this Agreement. 

“Collateral” means the property described in Section 3. 

“Collateral Agent” means Hercules Technology II, L.P.. 

“Commitment Fee” means $25,000, which fee was paid to Lender upon countersignature of Lender’s proposal letter dated
November 19, 2013, and shall be deemed fully earned on such date regardless of the early termination of this Agreement. 
 “Common
Stock” means the Common Stock, $0.001 par value per share, of the Company. 
 “Confidential Information” has the meaning
given to it in Section 11.12. 

  
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 “Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed, co-made or
discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued
for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to
protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course
of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support
arrangement. 
 “Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration,
now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest. 
 “Copyrights”
means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States, any State thereof, or of any other country. 

“Delivery Date” has the meaning given to it in Section 2.2(e)(i). 

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account,
savings account, or certificate of deposit. 
 “ERISA” is the Employee Retirement Income Security Act of 1974, and its
regulations. 
 “Event of Default” has the meaning given to it in Section 9. 

“Facility Charge” means one percent (1.00%) of the Maximum Term Loan Amount. 

“FDA” means the U.S. Food and Drug Administration or any successor entity performing similar functions. 

“Financial Statements” has the meaning given to it in Section 7.1. 

“Fixed Conversion Price” has the meaning given to it in Section 2.2(e)(i). 

“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time. 

  
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 “Indebtedness” means indebtedness of any kind, including (a) all indebtedness for
borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within sixty (60) days), including reimbursement and other obligations with respect to surety
bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations. 

“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 all of Borrower’s Copyrights; Trademarks; Patents; Licenses; trade secrets and inventions; mask
works; Borrower’s applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing, together with Borrower’s rights to sue for past, present and future infringement of
Intellectual Property and the goodwill associated therewith. 
 “Investment” means any beneficial ownership (including stock,
partnership or limited liability company interests) of or in any Person, or any loan, advance or capital contribution to any Person. 

“Joinder Agreements” means for each Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto
as Exhibit G. 
 “Lender” has the meaning given to it in the preamble to this Agreement. 

“Lender Expenses” are all audit fees and expenses, costs, and expenses (including reasonable attorneys’ fees and expenses) for
preparing, 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. 

“License” means any Copyright License, Patent License, Trademark License or other license of rights or interests. 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien
or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest. 

“Loan” means the Advances made under this Agreement. 

“Loan Documents” means this Agreement, the Notes, the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all
UCC Financing Statements, the Warrant, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated. 

  
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 “Material Adverse Effect” means a material adverse effect upon: (i) the business,
operations, properties, assets, or condition (financial or otherwise) of Borrower; or (ii) the ability of Borrower to perform the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Lender to enforce any of
its rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Lender’s Liens on the Collateral or the priority of such Liens. 

“Maximum Term Loan Amount” means Forty Million and No/100 Dollars ($40,000,000). 

“Maximum Rate” shall have the meaning assigned to such term in Section 2.3. 

“Note” means Secured Convertible Term Promissory Notes in substantially the form of Exhibit B-1 and Exhibit B-2. 

“Optional Prepayment” has the meaning given to it in Section 2.2(e)(i). 

“Optional Prepayment Date” has the meaning given to it in Section 2.2(e)(i). 

“Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a
Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest. 
 “Patents” means all
letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any
other country. 
 “Performance Milestone” means the date upon which the FDA approves Zalviso. 

“Permitted Indebtedness” means: (i) Indebtedness of Borrower in favor of Lender arising under this Agreement or any other Loan
Document; (ii) Indebtedness existing on the Closing Date which is disclosed in Schedule 1A; (iii) Indebtedness of up to $200,000 outstanding at any time secured by a lien described in clause (vii) of the defined term “Permitted
Liens,” provided such Indebtedness does not exceed the lesser of the cost or fair market value of the Equipment financed with such Indebtedness; (iv) Indebtedness to trade creditors incurred in the ordinary course of business, including
Indebtedness incurred in the ordinary course of business with corporate credit cards; (v) Indebtedness that also constitutes a Permitted Investment; (vi) Subordinated Indebtedness; (vii) reimbursement obligations in connection with
letters of credit that are secured by cash or cash equivalents and issued on behalf of the Borrower or a Subsidiary thereof in an amount not to exceed $200,000 at any time outstanding, (viii) other Indebtedness in an amount not to exceed
$500,000 at any time outstanding, and (ix) extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose materially more burdensome terms upon
Borrower or its Subsidiary, as the case may be. 

  
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 “Permitted Investment” means: (i) Investments existing on the Closing Date which
are disclosed in Schedule 1B; (ii) (a) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof,
(b) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service,
(c) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from the date of investment therein, and (d) money market accounts; (iii) Investments consisting of the endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; (iv) repurchases of stock from former employees, directors, or consultants of Borrower under the terms of applicable repurchase
agreements at the original issuance price of such securities in an aggregate amount not to exceed $250,000 in any fiscal year, provided that no Event of Default has occurred, is continuing or would exist after giving effect to the repurchases;
(v) Investments accepted in connection with Permitted Transfers; (vi) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business; (vii) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and
suppliers who are not affiliates, in the ordinary course of business, provided that this subparagraph (vii) shall not apply to Investments of Borrower in any Subsidiary; (viii) Investments consisting of loans not involving the net transfer
on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Borrower pursuant to employee stock purchase plans or other similar agreements approved by Borrower’s
Board of Directors; (ix) Investments consisting of travel advances, employee relocation loans and other employee loans and advances in the ordinary course of business and not in excess of $500,000 in the aggregate; (x) Investments in
newly-formed Subsidiaries organized in the United States, provided that such Subsidiaries enter into a Joinder Agreement promptly after their formation by Borrower and execute such other documents as shall be reasonably requested by Lender;
(xi) Investments in subsidiaries organized outside of the United States approved in advance in writing by Lender; (xii) joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the nonexclusive
licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower do not exceed $100,000 in the aggregate in any fiscal year; (xiii) Investments constituting mergers or
acquisitions permitted by Section 7.10; and (xiv) additional Investments that do not exceed $500,000 in the aggregate. 

“Permitted Liens” means any and all of the following: (i) Liens in favor of Lender; (ii) Liens existing on the Closing
Date which are disclosed in Schedule 1C; (iii) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; provided, that Borrower maintains
adequate reserves therefor in accordance with GAAP to the extent required thereby; (iv) Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary
course of Borrower’s business and imposed without action of such parties; provided, that the payment thereof is not overdue; (v) Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of
Default hereunder; (vi) the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to


  
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secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other similar
bonds; (vii) Liens on Equipment or software or other intellectual property constituting purchase money liens and liens in connection with capital leases securing Indebtedness permitted in clause (iii) of “Permitted Indebtedness”;
(viii) Liens incurred in connection with Subordinated Indebtedness; (ix) leasehold interests in leases or subleases and licenses granted in the ordinary course of business and not interfering in any material respect with the business of
the licensor; (x) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due; (xi) Liens on insurance proceeds securing the
payment of financed insurance premiums that are promptly paid on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property or assets); (xii) statutory and common law rights
of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms; (xiii) easements, zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property; (xiv) Liens on cash or cash equivalents securing obligations permitted under clause
(vii) of the definition of Permitted Indebtedness; and (xv) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (i) through (xi) above;
provided, that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced (as may have been reduced by any payment
thereon) does not increase. 
 “Permitted Transfers” means (i) sales of Inventory in the normal course of business,
(ii) non-exclusive licenses and similar arrangements for the use of Intellectual Property in the ordinary course of business and licenses that could not result in a legal transfer of title of the licensed property but that may be exclusive in
respects other than territory and that may be exclusive as to territory only as to discrete geographical areas outside of the United States in the ordinary course of business, or (iii) dispositions of worn-out, obsolete or surplus Equipment at
fair market value in the ordinary course of business, (iv) dispositions expressly permitted under Section 7.7, 7.8 or 7.10 hereof, (v) dispositions arising from the abandonment of fixtures and other similar tenant improvements in
connection with office relocations, and (vi) other Transfers of assets having a fair market value of not more than $250,000 in the aggregate in any fiscal year. 

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, other entity or government. 
 “Preferred Stock” means at any given time any
equity security issued by Borrower that has any rights, preferences or privileges senior to Borrower’s Common Stock. 

  
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 “Prepayment Charge” shall have the meaning assigned to such term in Section 2.5.

 “Principal Installment Due Date” has the meaning given to it in Section 2.2(e)(i). 

“Principal Installment Payment” has the meaning given to it in Section 2.2(e)(i). 

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

“Repayment Election Notice” has the meaning given to it in Section 2.2(e)(i). 

“Rule 144” means Rule 144 under the Securities Act. 

“SBA” shall have the meaning assigned to such term in Section 7.15. 

“SBIC” shall have the meaning assigned to such term in Section 7.15. 

“SBIC Act” shall have the meaning assigned to such term in Section 7.15. 

“SEC” has the meaning given to it in Section 2.2(e)(iv). 

“Secured Obligations” means Borrower’s obligations under this Agreement and any Loan Document, including any obligation to pay
any amount now owing or later arising. Notwithstanding the foregoing, the Secured Obligations shall not include any of Borrower’s obligations, liabilities or duties under the Warrant. 

“Securities Act” means the Securities Act of 1933, as amended. 

“Stock Payment Conditions” shall have the meaning assigned to such term in Section 2.2(e)(ii). 

“Stock Payment Option” has the meaning given to it in Section 2.2(e)(i). 

“Subordinated Indebtedness” means Indebtedness subordinated to the Secured Obligations in amounts and on terms and conditions
satisfactory to Lender in its sole discretion. 
 “Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which Borrower owns or controls 50% or more of the outstanding voting securities, including each entity listed on Schedule 1 hereto. 

“Term Commitment” means as to any Lender, the obligation of such Lender, if any, to make a Term Loan Advance to the Borrower in a
principal amount not to exceed the amount set forth under the heading “Term Commitment” opposite such Lender’s name on Schedule 1.1. 

  
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 “Term Loan Advance” means any Term Loan funds advanced under this Agreement. 

“Term Loan Interest Rate” means for any day a per annum rate of interest equal to the greater of either (i) 9.1% plus the prime
rate as reported in The Wall Street Journal minus 5.25%, and (ii) 9.10%. 
 “Term Loan Maturity Date” means October 1,
2017, or, if the Performance Milestone has occurred on or before April 1, 2015, January 1, 2018. 
 “Trademark
License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest. 

“Trademarks” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including
registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof. 

“UCC” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, 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, Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time
to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. 

“Warrant” means the warrant entered into in connection with the Loan. 

“1934 Act” has the meaning given to it in Section 2.2(e)(iii). 

Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,”
“Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in
this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined
herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC. 

SECTION 2. THE LOAN 

2.1 Reserved. 

2.2 Term Loan. 

  
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 (a) Advances. Subject to the terms and conditions of this Agreement, Lender will
make, and Borrower agrees to draw, a Term Loan Advance of $15,000,000 on the Closing Date. Beginning at any time on or after the Closing Date through June 30, 2014, Borrower may request a second Term Loan Advance of up to $10,000,000. Subject
to Borrower’s achievement of the Performance Milestone, from December 15, 2014 through March 15, 2015, Borrower may request a third Term Loan Advance of up to $15,000,000. Each Term Loan Advance shall be subject to the conditions
precedent set forth in Sections 4.2 and 4.3. The aggregate outstanding Term Loan Advances may be up to the Maximum Term Loan Amount. 

(b) Advance Request. To obtain a Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request (at least five
business days before the Advance Date). Lender shall fund the Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent to such Term Loan Advance is satisfied as of the requested Advance Date.

 (c) Interest. The principal balance of each Term Loan Advance shall bear interest thereon from such Advance Date at the
Term Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. The Term Loan Interest Rate will float and change on the day the Prime Rate changes from time to time. 

(d) Payment. Borrower will pay interest on each Term Loan Advance on the first day of each month, beginning the month after the
Advance Date. Borrower shall repay the aggregate Term Loan principal balance in thirty (30) equal monthly installments of principal and interest beginning April 1, 2015, or, if the Performance Milestone has occurred on or before
April 1, 2015, Borrower shall repay the aggregate Term Loan principal balance in twenty-four (24) equal monthly installments of principal and interest beginning January 1, 2016, and continuing on the first business day of each month
thereafter. The entire Term Loan principal balance and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date. Borrower shall make all payments under this Agreement without setoff, recoupment or deduction
and regardless of any counterclaim or defense. Except to the extent Borrower pays any regularly scheduled installments of principal and/or optional prepayments of principal in Common stock in accordance with, and subject to the limitations set forth
in, Section 2.2(e), Lender will initiate debit entries to the Borrower’s account as authorized on the ACH Authorization on each payment date of all periodic obligations payable to Lender under each Note or Term Loan Advance. 

(e) Payment in Cash or Common Stock of Monthly Amount or Prepayment Principal Amount. 

(i) Payment in Cash or Common Stock. Subject to satisfaction of the Stock Payment Conditions and compliance with the other
terms and conditions of this Section 2.2(e), Borrower may elect to pay, in whole or in part, any regularly scheduled installment of principal (a “Principal Installment Payment”) or any


  
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optional prepayment of principal (an “Optional Prepayment”) by converting the Notes into shares of Common Stock in lieu of payment in cash (such option, the “Stock Payment
Option”). In order to validly exercise a Stock Payment Option, Borrower (A) must deliver written notice thereof, in the form attached hereto as Exhibit J, to Lender (a”Repayment Election Notice”) five (5) days
prior to (i) the applicable due date of the Principal Installment Payment (the “Principal Installment Due Date”) or (ii) the Optional Prepayment (such date, the “Optional Prepayment Date”) and (B) shall either
(i) (provided that Borrower’s transfer agent is participating in the Fast Automated Securities Transfer Program of the Depository Trust Company) credit to Lender by no later than the first trading day following the applicable Principal
Installment Due Date or Optional Prepayment Date (such date, the “Delivery Date”) such aggregate number of shares of Common Stock to be issued to Lender with respect to such Repayment Election Notice, as determined in accordance with this
Section 2.2(e) (which shares shall be free of any restrictions on transfer), or (ii) deliver to Collateral Agent, on behalf of Lender, stock certificates, without restrictive legend, evidencing the number of shares of Common Stock with
respect to such Repayment Election Notice, as determined in accordance with this Section 2.2(e), by no later than the first trading day following the applicable Delivery Date. All payments in respect of a Principal Installment Payment and
Optional Prepayment shall be made in cash, unless (i) Borrower timely delivers a Repayment Election Notice in accordance with the immediately preceding sentence, (ii) Borrower timely delivers the requisite stock certificates or credits the
shares of Common Stock to Lender, free of restrictive legends, in accordance with this Section 2.2(e) and (iii) the Stock Payment Conditions are satisfied in respect of such payment. A Repayment Election Notice, once delivered by Borrower,
shall be irrevocable unless otherwise agreed, in writing, by Collateral Agent, on behalf of Lender. If Borrower elects to convert the Notes to repay a Principal Installment Payment or make an Optional Prepayment, in whole or in part, in shares of
Common Stock, the number of such shares of Common Stock to be issued in respect of such Principal Installment Payment or Optional Prepayment shall be equal to the number determined by dividing (x) the product of (A) the principal amount to
be paid in shares of Common Stock and (B) 103%, by (y) the Fixed Conversion Price. For purposes hereof, the “Fixed Conversion Price” shall be $9.30; provided, however, that upon the occurrence of any stock split, stock dividend,
combination of shares or reverse stock split pertaining to the Common Stock, the Fixed Conversion Price shall be proportionately increased or decreased as necessary to reflect the proportionate change in the shares of Common Stock issued and
outstanding as a result of such stock split, stock dividend, combination of shares or reverse stock split. Any shares of Common Stock issued pursuant to a Repayment Election Notice shall be deemed to be issued upon conversion of the Notes. 

  
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 (ii) Stock Payment Conditions. Notwithstanding the foregoing, Borrower’s
right to deliver, and Lender’s obligation to accept, shares of Common Stock in lieu of payment in cash of a Principal Installment Payment or Optional Prepayment, as applicable, is conditioned on the satisfaction of each of the following
conditions (the “Stock Payment Conditions”) as of such Delivery Date: (A) the closing price of the shares of Common Stock as reported by Bloomberg, L.P. on the NASDAQ market for each of the seven (7) consecutive trading days
immediately preceding the Delivery Date shall be greater than or equal to 115% of the Fixed Conversion Price; (B) the Common Stock issued in connection with any such payment does not exceed 15% of the total trading volume of the Common Stock
for the twenty-two (22) consecutive trading days immediately prior to and including such Delivery Date; (C) only one Repayment Election Notice may be given in any calendar month; (D) the aggregate principal amount to be paid in shares
of Common Stock pursuant to Section 2.2 of this Agreement shall not exceed Five Million Dollars ($5,000,000); (E) the Common Stock is (and was on each of the twenty-two (22) consecutive trading days immediately preceding such Delivery
Date) quoted or listed on the NASDAQ market; (F) a registration statement is effective and available for the resale of all of the shares of Common Stock to be delivered on such Delivery Date, or such shares of Common Stock are eligible for
resale to the public pursuant to Rule 144 without any limitation; (G) after giving effect to the issuance of such shares of Common Stock to Lender, Lender would not (A) beneficially own, together with its affiliates, Common Stock in excess
of the limitations specified in subsection (e)(iii) below and (B) have been issued shares of Common Stock pursuant to all Repayment Election Notices in an aggregate amount in excess of the Cap; (H) as of such Delivery Date, there is no
outstanding Event of Default and there is no breach or default that, if left uncured, would result in an Event of Default; and (I) Borrower shall have sufficient authorized but unissued shares of Common Stock to provide for the issuance of the
shares of Common Stock pursuant to the Repayment Election Notice. If any of the Stock Payment Conditions are not satisfied as of a Delivery Date, Borrower shall not be permitted to pay, and the Lender shall not be obligated to accept, the Principal
Installment Payment or Optional Prepayment, as applicable, in shares of Common Stock, and Borrower shall instead pay such principal amount in cash; provided, however, that the Stock Payment Conditions set forth in clauses (A), (B), (C), (E),
(F) and (H) above may be waived by a writing executed by both Borrower and Lender. In the event the Company is relying upon an effective registration statement to satisfy clause (F) of the Stock Payment Conditions, each of the Company
and Lender shall provide customary indemnification to one another with respect to such registration statement in a form acceptable to the Company and Lender. By no later than the first trading day following the Delivery Date, Borrower shall either
(i) (provided that Borrower’s transfer agent is participating in the Fast Automated Securities Transfer Program of the Depository Trust Company) credit to Lender the shares of Common Stock to be delivered by Borrower with respect to the
portion of the Principal Installment Payment or Optional Prepayment being paid in shares of Common Stock or (ii) deliver to Collateral Agent, on behalf of each Lender, certificates, free of restrictive legends, evidencing the shares of Common
Stock to be delivered by Borrower with respect to the portion of the Principal Installment Payment or Optional Prepayment being paid in shares of Common Stock, which shares of Common Stock, in the case of clauses (i) and (ii), shall be
allocated among each Lender in the manner specified to Borrower by the Collateral Agent. 

  
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 (iii) Beneficial Ownership Limitation. Notwithstanding any provision herein to
the contrary, Lender, together with its affiliates, shall not be permitted to beneficially own a number of shares of Common Stock (other than shares that may be deemed beneficially owned except for being subject to a limitation analogous to the
limitation contained in this Section 2.2(e)(iii)) in excess of 9.99% of the number of shares of Common Stock then issued and outstanding, it being the intent of Borrower and Lender that Lender, together with its affiliates, not be deemed at any
time to have the power to vote or dispose of greater than 9.99% of the number of shares of Common Stock issued and outstanding at any time; provided, however, that Lender shall have the right, upon 61 days’ prior written notice to
Borrower, to waive the 9.99% limitation of this subsection (e)(iii). Notwithstanding anything contained herein to the contrary, Borrower shall not be permitted to issue to Lender, and Lender shall not be required to accept, shares of Common Stock
pursuant to a Repayment Election Notice if and to the extent such issuance, when taking together with all other issuances pursuant to prior Repayment Election Notices, would result in (A) the issuance of more than 19.99% of the Common Stock
outstanding as of the date of this Agreement or (B) Lender, together with its affiliates, beneficially owning in excess of 19.99% of the outstanding Common Stock (each of clauses (A) and (B) are referred to herein as the
“Cap”). As used herein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). For any reason at any time, upon written or oral request
of Lender, Borrower shall within one business day confirm orally and in writing to Lender the number of shares of Common Stock then issued and outstanding as of any given date. 

(iv) With a view to making available to Lender the benefits of Rule 144 (or its successor rule) and any other rule or
regulation of the Securities and Exchange Commission (the “SEC”) that may at any time permit Lender to sell shares of Common Stock issued pursuant to Section 2.2(e) of this Agreement to the public without registration, Borrower
covenants and agrees to: (i) make and keep public information available, as those terms are understood and defined in Rule 144, until six (6) months after such date as all of the shares of Common Stock issued pursuant to
Section 2.2(e) of this Agreement may be sold without restriction by Lender pursuant to Rule 144 or any other rule of similar effect; (ii) file with the SEC in a timely manner all reports and other documents required of Borrower under the
1934 Act; and (iii) furnish to Lender upon request, as long as Lender owns any shares of Common Stock issued pursuant to Section 2.2(e) of this Agreement, such information as may be reasonably requested in order to avail Lender of any rule
or regulation of the SEC that permits the selling of any such shares of Common Stock without registration. 

  
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 (v) Borrower covenants and agrees to reserve from its duly authorized capital
stock not less than the number of shares of Common Stock that may be issuable upon payment of any Principal Installment Payment or Optional Prepayment pursuant to Section 2.2(e) of this Agreement. Borrower further represents, warrants and
covenants that, upon issuance of any shares of Common Stock pursuant to Section 2.2(e) of this Agreement, such shares of Common Stock shall be validly issued, fully paid and non-assessable and free from all preemptive or similar rights, taxes,
liens and charges with respect to the issue thereof. 
 (vi) For so long as Lender holds any shares of Common Stock issued
pursuant to Section 2.2(e) of this Agreement, Borrower shall maintain the Common Stock’s authorization for listing on NASDAQ and Borrower shall not take any action which would reasonably be executed to result in the delisting or suspension
of the Common Stock on NASDAQ. 
 2.3 Maximum Interest. Notwithstanding any provision in this Agreement, the Notes, or any
other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under
the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “Maximum Rate”). If a court of competent jurisdiction shall finally determine that Borrower has actually
paid to Lender an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrower shall be deemed
retroactively applied as of the date of receipt of such payment as follows: first, to the payment of the Secured Obligations, consisting of the outstanding principal; second, after all principal is repaid, to the payment of Lender’s accrued
interest, costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrower. 

2.4 Default Interest. In the event any payment is not paid on the scheduled payment date, an amount equal to five percent
(5%) of the past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, all Secured Obligations, including principal, interest, compounded interest, and
Lender’s fees and expenses in accordance with Section 11.11 hereof, shall bear interest at a rate per annum equal to the rate set forth in Section 2.2(c) plus five percent (5%) per annum. In the event any interest is not paid
when due hereunder, delinquent interest shall be added to principal and shall bear interest on interest, compounded at the rate set forth in Section 2.2(c) or this Section 2.4, as applicable. 

2.5 Prepayment. At its option upon at least 7 business days prior notice to Lender, Borrower may prepay all, but not less than
all, of the outstanding Advances by paying the entire principal balance and all accrued and unpaid interest, together with a prepayment charge equal to the following percentage of the Advance amount being prepaid: if such Advance amounts are prepaid
in any of the first twelve (12) months following the Closing Date, 3.0%; after twelve (12) months but prior to twenty four (24) months, 2.0%; 

  
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and thereafter, 1.0% (each, a “Prepayment Charge”). Borrower agrees that the Prepayment Charge is a reasonable calculation of Lender’s lost profits in view of the difficulties and
impracticality of determining actual damages resulting from an early repayment of the Advances. Borrower shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and the Prepayment Charge upon the
occurrence of a Change in Control. Notwithstanding the above, no Prepayment Charge shall be due in connection with term loan advances funded under the Original Agreement. 

2.6 End of Term Charge. 

(a) On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrower prepays the outstanding
Secured Obligations, or (iii) the date that the Secured Obligations become due and payable, Borrower shall pay Lender a charge of $1,700,000. Notwithstanding the required payment date of such charge, it shall be deemed earned by Lender as of
the Closing Date. 
 (b) On December 1, 2014, Borrower shall pay Lender a charge of $200,000 as scheduled in connection
with the term loan advances funded in connection with the Original Agreement. Notwithstanding the required payment date of such charge, it shall be deemed earned by Lender as of the Closing Date. 

2.7 Lender Investment Representations. The Note is being issued to Lender in reliance upon the following representations and
covenants of Lender (which, for the avoidance of doubt, are being made severally, but not jointly, by each Lender): 
 (a)
Investment Purpose. The Note has been, and the Common Stock issuable upon conversion of the Note by Borrower in accordance with Section 2.2(e) of this Agreement will be, acquired by Lender for investment and not with a view to the sale
or distribution of any part thereof, and Lender has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration under the Securities Act or an exemption from the registration requirements of
the Securities Act. Lender is not a registered broker-dealer under Section 15 of the 1934 Act or an entity engaged in a business that would require it to be so registered as a broker-dealer. 

(b) Private Issue. The Lender understands (i) that the Common Stock issuable upon conversion of the Note by
Borrower in accordance with Section 2.2(e) of this Agreement is not registered under the Securities Act or qualified under applicable state securities laws on the ground that the issuance contemplated upon conversion of the Note will be exempt
from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 2.7. 

(c) Financial Risk. The Lender has such knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Note, and has the ability to bear the economic risks of its investment. 

  
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 (d) Risk of No Registration. Without in any way limiting the
Company’s obligations under this Agreement, the Lender understands that if the Common Stock is not registered with the SEC pursuant to Section 12 of the 1934 Act or the Company is not required to file reports pursuant to Section 13(a)
or Section 15(d) of the 1934 Act, or if a registration statement is not effective under the Securities Act covering the resale of the shares of Common Stock issued to Lender upon conversion of the Note when it desires to sell such shares of
Common Stock it may be required to hold such securities for an indefinite period. The Lender also understands that any sale of Common Stock issuable by Borrower to Lender upon conversion of the Note in accordance with Section 2.2(e) of this
Agreement which might be made by it in reliance upon Rule 144 under the Securities Act may be made only in accordance with the terms and conditions of Rule 144. 

(e) Accredited Investor. The Lender is an “accredited investor” within the meaning of Rule 501 of Regulation D
promulgated under the Securities Act. 
 (f) No Short Sales. The Lender has not engaged, and will not engage, in
“short sales” of the Common Stock of the Company. The term “short sale” shall mean any sale of a security which the seller does not own or any sale which is consummated by the delivery of a security borrowed by, or for the
account of, the seller. 
 (g) Legends. The Lender understands and agrees that each Note issued pursuant to this
Agreement may bear the following legend. 
 THIS SECURED CONVERTIBLE TERM PROMISSORY NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) THIS NOTE HAS BEEN REGISTERED FOR SALE
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) THIS NOTE MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE BORROWER HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 
 Lender acknowledges and agrees that the issuance of a certificate or certificates without restrictive
legend for, or deposit with the Depositary Trust Company via book-entry of, any shares of Common Stock that may be issued upon conversion of the Notes is predicated upon the Company’s reliance that the holder of such shares would sell,
transfer, assign, pledge, hypothecate or otherwise dispose of such shares pursuant to either the registration requirements of the Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if such shares are
sold pursuant to a registration statement, they will be sold in compliance with the plan of distribution set forth therein. Lender acknowledges that the foregoing representations, warranties and covenants will be relied upon by the Company, the
Company’s transfer agent, and by the Company’s counsel in delivering an opinion to such transfer agent, in connection with not including restrictive legends on the certificates representing the shares, in order to facilitate the sale of
the shares pursuant Rule 144 or an effective registration statement. 

  
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The foregoing representations and covenants of Lender do not imply any period of time that Lender will hold any shares of Common Stock issuable to Lender in accordance with Section 2.2(e) of
this Agreement, and any shares of Common Stock issuable to Lender in accordance with Section 2.2(e) of this Agreement shall (i) not contain any restrictions on transfer and (ii) either be subject to an effective resale registration
statement or be eligible for resale to the public pursuant to Rule 144 without any limitation. 
 2.8 Pro Rata
Treatment. Each payment (including prepayment) on account of any fee and any reduction of the Term Loans shall be made pro rata according to the Term Commitments of the relevant Lender. 

SECTION 3. SECURITY INTEREST 

3.1 As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all
the Secured Obligations, Borrower grants to Lender a security interest in all of Borrower’s personal property now owned or hereafter acquired, including the following (collectively, the “Collateral”): (a) Receivables;
(b) Equipment; (c) Fixtures; (d) General Intangibles (other than Intellectual Property); (e) Inventory; (f) Investment Property (but excluding thirty-five percent (35%) of the capital stock of any foreign Subsidiary
that constitutes a Permitted Investment); (g) Deposit Accounts; (h) Cash; (i) Goods; and other tangible and intangible personal property of Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired
by, Borrower and wherever located; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing; provided,
however, that the Collateral shall include all Accounts and General Intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the Intellectual Property (the “Rights to
Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then
the Collateral shall automatically, and effective as of the date of this Agreement, include the Intellectual Property to the extent necessary to permit perfection of Lender’s security interest in the Rights to Payment. Upon payment in full in
cash of the Secured Obligations (other than inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) and at such time as this Agreement has been terminated, the Collateral
Agent shall, at Borrower’s sole cost and expense, release its Liens in the Collateral and all rights therein shall revert to Borrower. 

  
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 SECTION 4. CONDITIONS PRECEDENT TO LOAN 

The obligations of Lender to make the Loan hereunder are subject to the satisfaction by Borrower of the following conditions: 

4.1 Initial Advance. On or prior to the Closing Date, Borrower shall have delivered to Lender the following: 

(a) executed originals of the Loan Documents, Account Control Agreements, and all other documents and instruments reasonably
required by Lender to effectuate the transactions contemplated hereby or to create and perfect the Liens of Lender with respect to all Collateral, in all cases in form and substance reasonably acceptable to Lender; 

(b) certified copy of resolutions of Borrower’s board of directors evidencing approval of (i) the Loan and other
transactions evidenced by the Loan Documents; and (ii) the Warrant and transactions evidenced thereby; 
 (c) certified
copies of the Certificate of Incorporation and the Bylaws, as amended through the Closing Date, of Borrower; 
 (d) a
certificate of good standing for Borrower from its state of incorporation and similar certificates from all other jurisdictions in which it does business and where the failure to be qualified would have a Material Adverse Effect; 

(e) payment of the Facility Charge and reimbursement of Lender’s current expenses reimbursable pursuant to this Agreement,
which amounts may be deducted from the initial Advance; and 
 (f) such other documents as Lender may reasonably request.

 4.2 All Advances. On each Advance Date: 

(a) Lender shall have received (i) an Advance Request for the relevant Advance as required by Section 2.2(b), each
duly executed by Borrower’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Lender may reasonably request. 

(b) The representations and warranties set forth in this Agreement and in Section 5 and in the Warrant shall be true and
correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date. 

(c) Borrower shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its
part to be observed or performed, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing. 

(d) Each Advance Request shall be deemed to constitute a representation and warranty by Borrower on the relevant Advance Date
as to the matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request. 

  
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 4.3 No Default. As of the Closing Date and each Advance Date, (i) no fact or condition
exists that would (or would, with the passage of time, the giving of notice, or both) constitute an Event of Default and (ii) no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is
continuing. 
 SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWER 

Borrower represents and warrants that: 
 5.1
Corporate Status. Borrower is a corporation duly organized, legally existing and in good standing under the laws of the State of Delaware, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or
location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect. Borrower’s present name, former names (if any), locations, place of formation, tax
identification number, organizational identification number and other information are correctly set forth in Exhibit C, as may be updated by Borrower in a written notice (including any Compliance Certificate) provided to Lender after the Closing
Date. 
 5.2 Collateral. Borrower owns the Collateral and the Intellectual Property, free of all Liens, except for Permitted Liens. Borrower
has the power and authority to grant to Lender a Lien in the Collateral as security for the Secured Obligations. 
 5.3 Consents.
Borrower’s execution, delivery and performance of the Notes, this Agreement and all other Loan Documents, and Borrower’s execution of the Warrant, (i) have been duly authorized by all necessary corporate action of Borrower,
(ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of Borrower’s
Certificate or Articles of Incorporation (as applicable), bylaws, or any, law, regulation, order, injunction, judgment, decree or writ to which Borrower is subject and (iv) except as described on Schedule 5.3, do not violate any contract or
agreement or require the consent or approval of any other Person. The individual or individuals executing the Loan Documents and the Warrant are duly authorized to do so. 

5.4 Material Adverse Effect. Since September 30, 2013, no event that has had or could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing. Borrower is not aware of any event likely to occur that is reasonably expected to result in a Material Adverse Effect. 

5.5 Actions Before Governmental Authorities. Except as described on Schedule 5.5, there are no actions, suits or proceedings at law or in
equity or by or before any governmental authority now pending or, to the knowledge of Borrower, threatened against or affecting Borrower or its property. 

  
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 5.6 Laws. Borrower is not in violation of any law, rule or regulation, or in default with respect
to any judgment, writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected to result in a Material Adverse Effect. Borrower is not in default in any manner under any provision of any agreement
or instrument evidencing indebtedness, or any other material agreement to which it is a party or by which it is bound. 
 5.7 Information
Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of Borrower to Lender in connection with any Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not
misleading at the time such statement was made or deemed made. Additionally, any and all financial or business projections provided by Borrower to Lender shall be (i) provided in good faith and based on the most current data and information
available to Borrower, and (ii) the most current of such projections approved by Borrower’s Board of Directors. 
 5.8 Tax
Matters. Except as described on Schedule 5.8, (a) Borrower has filed all federal, and all material state and local tax returns that it is required to file, (b) Borrower has duly paid or fully reserved for all taxes or installments thereof
(including any interest or penalties) as and when due, which have or may become due pursuant to such returns, and (c) Borrower has paid or fully reserved for any tax assessment received by Borrower for the three (3) years preceding the
Closing Date, if any (including any taxes being contested in good faith and by appropriate proceedings). 
 5.9 Intellectual Property
Claims. Borrower is the sole owner of, or otherwise has the right to use, the Intellectual Property. Except as described on Schedule 5.9,(i) each of the material Copyrights, Trademarks and Patents is valid and enforceable, (ii) no material part
of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and (iii) no claim has been made to Borrower that any material part of the Intellectual Property violates the rights of any third party. Exhibit D
is a true, correct and complete list of each of Borrower’s Patents, registered Trademarks, registered Copyrights, and material agreements under which Borrower licenses Intellectual Property from third parties (other than shrink-wrap software
licenses), together with application or registration numbers, as applicable, owned by Borrower or any Subsidiary, in each case as of the Closing Date. Borrower is not in material breach of, nor has Borrower failed to perform any material obligations
under, any of the foregoing contracts, licenses or agreements and, to Borrower’s knowledge, no third party to any such contract, license or agreement is in material breach thereof or has failed to perform any material obligations thereunder.

 5.10 Intellectual Property. Except as described on Schedule 5.10, Borrower has, or in the case of any proposed business, will have, all
material rights with respect to Intellectual Property necessary in the operation or conduct of Borrower’s business as currently conducted and proposed to be conducted by Borrower. Without limiting the generality of the foregoing, and in the
case of Licenses, except for restrictions that are 

  
 20 








 
unenforceable under Division 9 of the UCC, Borrower has the right, to the extent required to operate Borrower’s business, to freely transfer, license or assign Intellectual Property without
condition, restriction or payment of any kind (other than license payments in the ordinary course of business) to any third party, and Borrower owns or has the right to use, pursuant to valid licenses, all software development tools, library
functions, compilers and all other third-party software and other items that are used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products. 

5.11 Borrower Products. Except as described on Schedule 5.11, no Intellectual Property owned by Borrower and no Borrower Product has been or
is subject to any actual or, to the knowledge of Borrower, threatened litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order,
judgment, settlement agreement or stipulation that restricts in any manner Borrower’s use, transfer or licensing thereof or that may affect the validity, use or enforceability thereof. There is no decree, order, judgment, agreement,
stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates Borrower to grant licenses or ownership interest in any future Intellectual Property related to the operation or conduct of
the business of Borrower or Borrower Products. Borrower has not received any written notice or claim, or, to the knowledge of Borrower, oral notice or claim, challenging or questioning Borrower’s ownership in any Intellectual Property (or
written notice of any claim challenging or questioning the ownership in any licensed Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to
Borrower’s knowledge, is there a reasonable basis for any such claim. Neither Borrower’s use of its Intellectual Property nor the production and sale of Borrower Products infringes the Intellectual Property or other rights of others. 

5.12 Financial Accounts. Exhibit E, as may be updated by the Borrower in a written notice provided to Lender after the Closing Date, is a
true, correct and complete list of (a) all banks and other financial institutions at which Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions at which Borrower or any Subsidiary maintains an account holding
Investment Property, and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number
therefor. 
 5.13 Employee Loans. Borrower has no outstanding loans to any employee, officer or director of the Borrower nor has Borrower
guaranteed the payment of any loan made to an employee, officer or director of the Borrower by a third party. 
 5.14 Capitalization and
Subsidiaries. Borrower’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto. Borrower does not own any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached as
Schedule 5.14, as may be updated by Borrower in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary. 

  
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 SECTION 6. INSURANCE; INDEMNIFICATION 

6.1 Coverage. Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks
customarily insured against in Borrower’s line of business. Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the
indemnification agreement found in Section 6.3. Borrower must maintain a minimum of $2,000,000 of commercial general liability insurance for each occurrence. Borrower has and agrees to maintain a minimum of $10,000,000 of directors and
officers’ insurance for each occurrence and $10,000,000 in the aggregate. So long as there are any Secured Obligations (other than inchoate indemnity obligations) outstanding, Borrower shall also cause to be carried and maintained insurance
upon the Collateral, insuring against all risks of physical loss or damage, in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard exceptions and deductibles. Borrower shall
also carry and maintain a fidelity insurance policy in an amount not less than $25,000. 
 6.2 Certificates. Borrower shall deliver to
Lender certificates of insurance that evidence Borrower’s compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2. Borrower’s insurance certificate shall state Lender is an
additional insured for commercial general liability, loss payee for all risk property damage insurance, subject to the insurer’s approval, and a loss payee for property insurance. Attached to the certificates of insurance will be additional
insured endorsements for liability and lender’s loss payable endorsements, or copies of policy forms evidencing such coverages. Any failure of Lender to scrutinize such insurance certificates for compliance is not a waiver of any of
Lender’s rights, all of which are reserved. 
 6.3 Indemnity. Borrower agrees to indemnify and hold Lender and its officers, directors,
employees, agents, in-house attorneys, representatives and shareholders harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in
tort, including strict liability in tort), including reasonable attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal), that may be instituted or asserted against or incurred by
Lender or any such Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions
contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization of the Collateral, excluding in all cases claims resulting solely from the Collateral Agent’s or
the Lender’s gross negligence or willful misconduct. Borrower agrees to pay, and to save Lender harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other similar taxes
(excluding taxes imposed on or measured by the net income of Lender) that may be payable or determined to be payable with respect to any of the Collateral or this Agreement. 

  
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 SECTION 7. COVENANTS OF BORROWER 

Borrower agrees as follows: 
 7.1 Financial
Reports. Borrower shall furnish to Lender the financial statements and reports listed hereinafter (the “Financial Statements”): 

(a) as soon as practicable (and in any event within 30 days) after the end of each month, unaudited interim and year-to-date
financial statements as of the end of such month (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows accompanied by a report detailing any material
contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse Effect, all certified by Borrower’s Chief Executive Officer or
Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, (ii) that they are subject to normal year end adjustments, (iii) they do not contain certain non-cash
items that are customarily included in quarterly and annual financial statements, and (iv) for the first two months of each quarter only the balance sheet and income statement will be required; 

(b) as soon as practicable (and in any event within 45 days) after the end of each of the first three fiscal quarters of any
fiscal year of Borrower, unaudited interim and year-to-date financial statements as of the end of such fiscal quarter (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and
cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against Borrower) or any other occurrence that would reasonably be expected to have a Material Adverse Effect,
certified by Borrower’s Chief Executive Officer or Chief Financial Officer to the effect that they have been prepared in accordance with GAAP, except (i) for the absence of footnotes, and (ii) that they are subject to normal year end
adjustments; as well as the most recent capitalization table for Borrower, including the weighted average exercise price of employee stock options; 

(c) as soon as practicable (and in any event within 90 days) after the end of each fiscal year, unqualified audited financial
statements as of the end of such year (prepared on a consolidated and consolidating basis, if applicable), including balance sheet and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for
the preceding fiscal year, certified by a firm of independent certified public accountants selected by Borrower and reasonably acceptable to Lender, accompanied by any management report from such accountants; 

(d) as soon as practicable (and in any event within 30 days) after the end of each month, a Compliance Certificate in the form
of Exhibit F; 
 (e) promptly after the sending or filing thereof, as the case may be, copies of any proxy statements,
financial statements or reports that Borrower has made available to holders of its Preferred Stock and copies of any regular, periodic and special reports or registration statements that Borrower files with the SEC or any governmental authority that
may be substituted therefor, or any national securities exchange; 

  
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 (f) [reserved]; and 

(g) financial and business projections promptly following their approval by Borrower’s Board of Directors, as well as
other financial information reasonably requested by Lender. 
 Borrower shall not make any change in its (a) accounting policies or reporting
practices, except in accordance with GAAP or with the consent of Lender, or (b) fiscal years or fiscal quarters. The fiscal year of Borrower shall end on December 31. 

The executed Compliance Certificate may be sent via facsimile to Lender at (650) 473-9194 or via e-mail to cnorman@herculestech.com. All Financial
Statements required to be delivered pursuant to clauses (a), (b) and (c) shall be sent via e-mail to financialstatements@herculestech.com with a copy to cnorman@herculestech.com provided, that if e-mail is not available or sending
such Financial Statements via e-mail is not possible, they shall be sent via facsimile to Lender at: (866) 468-8916, attention Chief Credit Officer. Notwithstanding anything herein to the contrary, documents required to be delivered pursuant to
this Section 7.1 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
www.acelrx.com, and notifies Lender via email or facsimile as provided in the immediately preceding sentence. 
 7.2 Management
Rights. Borrower shall permit any representative that Lender authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account of Borrower at reasonable times and upon
reasonable notice during normal business hours. Such inspections or examinations shall be conducted no more often than once every six months unless an Event of Default has occurred and is continuing. In addition, any such representative shall have
the right to meet with management and officers of Borrower to discuss such books of account and records. In addition, Lender shall be entitled at reasonable times and intervals to consult with and advise the management and officers of Borrower
concerning significant business issues affecting Borrower. Such consultations shall not unreasonably interfere with Borrower’s business operations. The parties intend that the rights granted Lender shall constitute “management rights”
within the meaning of 29 C.F.R Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Lender with respect to any business issues shall not be deemed to give Lender, nor be deemed an exercise by Lender of, control
over Borrower’s management or policies. 

  
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 7.3 Further Assurances. Borrower shall from time to time execute, deliver and file, alone or with
Lender, any financing statements, security agreements, collateral assignments, notices, control agreements, or other documents to perfect or give the highest priority to Lender’s Lien on the Collateral. Borrower shall from time to time procure
any instruments or documents as may be requested by Lender, and take all further action that may be necessary or desirable, or that Lender may reasonably request, to perfect and protect the Liens granted hereby and thereby. In addition, and for such
purposes only, Borrower hereby authorizes Lender to execute and deliver on behalf of Borrower and to file such financing statements, collateral assignments, notices, control agreements, security agreements and other documents without the signature
of Borrower either in Lender’s name or in the name of Lender as agent and attorney-in-fact for Borrower. Borrower shall protect and defend Borrower’s title to the Collateral and Lender’s Lien thereon against all Persons claiming any
interest adverse to Borrower or Lender other than Permitted Liens. 
 7.4 Post-Closing Items. Borrower shall use its commercially reasonable
efforts to deliver or cause to be delivered the documents listed on Schedule 7.4 on or before the corresponding dates set forth on Schedule 7.4. Within three (3) business days of the Closing Date, Borrower shall deliver to Lender a legal
opinion of Borrower’s counsel and certified incumbency signatures. 
 7.5 Indebtedness. Borrower shall not create, incur, assume,
guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on Borrower an obligation to prepay any
Indebtedness, except for the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion. 

7.6 Collateral. Borrower shall at all times keep the Collateral, the Intellectual Property and all other property and assets used in
Borrower’s business or in which Borrower now or hereafter holds any interest free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Lender prompt written notice of any legal process affecting the
Collateral, the Intellectual Property, such other property and assets, or any Liens thereon. Borrower shall cause its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest
adverse to such Subsidiary, and Borrower shall cause its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any legal process or Liens whatsoever (except for Permitted Liens), and shall give Lender
prompt written notice of any legal process affecting such Subsidiary’s assets. Except with respect to (i) specific property encumbered to secure payment of particular Indebtedness incurred to finance the acquisition of such property, and
(ii) restrictions by reason of customary provisions restricting assignment, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are
limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be), Borrower shall not agree with any Person other than Lender not to encumber its property.

 7.7 Investments. Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of
its Subsidiaries so to do, other than Permitted Investments. 

  
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 7.8 Distributions. Borrower shall not, and shall not allow any Subsidiary to, (a) repurchase
or redeem any class of stock or other equity interest other than pursuant to employee, director or consultant stock purchase or repurchase plans or other similar agreements, provided, however, in each case the repurchase or redemption price does not
exceed the original consideration paid for such stock or equity interest, or (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other equity interest, except that a Subsidiary may pay dividends or make
distributions to Borrower, or (c) lend money to any employees, officers or directors except as expressly permitted by clause (ix) of the definition of Permitted Investments. 

7.9 Transfers. Except for Permitted Transfers, neither Borrower nor its Subsidiaries shall voluntarily or involuntarily transfer, sell, lease,
license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of their assets. 
 7.10
Mergers or Acquisitions. Borrower shall not merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of a Subsidiary into another Subsidiary
or into Borrower), or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. 

7.11 Taxes. Borrower and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any
related interest or penalties) now or hereafter imposed or assessed against Borrower, Lender (to the extent assessed in connection with the making of the Loan hereunder but excluding taxes on Lender’s net income) or the Collateral or upon
Borrower’s ownership, possession, use, operation or disposition thereof or upon Borrower’s rents, receipts or earnings arising therefrom. Borrower shall file on or before the due date therefor all personal property tax returns in respect
of the Collateral. Notwithstanding the foregoing, Borrower may contest, in good faith and by appropriate proceedings, taxes for which Borrower maintains adequate reserves therefor in accordance with GAAP. 

7.12 Corporate Changes. Neither Borrower nor any Subsidiary shall change its corporate name, legal form or jurisdiction of formation without
twenty (20) days’ prior written notice to Lender. Neither Borrower nor any Subsidiary shall suffer a Change in Control. Neither Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business
unless: (i) it has provided prior written notice to Lender; and (ii) such relocation shall be within the continental United States. Neither Borrower nor any Subsidiary shall relocate any item of Collateral (other than (w) sales of
Inventory in the ordinary course of business, (x) relocations of mobile Equipment, (y) relocations of other Equipment having an aggregate value of up to $150,000 in any fiscal year, and (z) relocations of Collateral from a location
described on Exhibit C to another location described on Exhibit C) unless (i) it has provided prompt written notice to Lender, (ii) such relocation is within the continental United States or to such other jurisdiction as designated in
writing by Borrower from time to time, and (iii), if such relocation is to a third party bailee, it has delivered a bailee agreement in form and substance reasonably acceptable to Lender. 

  
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 7.13 Deposit Accounts. Neither Borrower nor any Subsidiary shall maintain any Deposit Accounts,
or accounts holding Investment Property, except with respect to which Lender has an Account Control Agreement. 
 7.14 Borrower shall notify
Lender of each Subsidiary formed subsequent to the Closing Date and, within 30 days of formation, shall cause any such Subsidiary organized under the laws of any State within the United States to execute and deliver to Lender a Joinder Agreement.

 7.15 Notification of Event of Default. Borrower shall notify Lender promptly upon becoming aware of the occurrence of any Event of
Default, such notice to be sent via facsimile to Lender. 
 7.16 Hercules Technology II, L.P. has received a license from the U.S. Small
Business Administration (“SBA”) to extend loans as a small business investment company (“SBIC”) pursuant to the Small Business Investment Act of 1958, as amended, and the associated regulations (collectively, the “SBIC
Act”). Portions of the loan to Borrower will be made under the SBA license and the SBIC Act. Addendum 1 to this Agreement outlines various responsibilities of Lender and Borrower associated with an SBA loan, and such Addendum 1 is hereby
incorporated in this Agreement. 
 SECTION 8. [RESERVED] 

SECTION 9. EVENTS OF DEFAULT 
 The
occurrence of any one or more of the following events shall be an Event of Default: 
 9.1 Payments. Borrower fails to pay any amount due
under this Agreement, the Notes or any of the other Loan Documents on the due date; or 
 9.2 Covenants. Borrower breaches or defaults in
the performance of any covenant or Secured Obligation under this Agreement, the Notes, or any of the other Loan Documents, and (a) with respect to a default under any covenant under this Agreement (other than under Sections 6, 7.5, 7.6, 7.7,
7.8, 7.9, 7.10 or 7.16) such default continues for more than ten (10) days after the earlier of the date on which (i) Lender has given notice of such default to Borrower and (ii) Borrower has actual knowledge of such default or
(b) with respect to a default under any of Sections 6, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 or 7.16, the occurrence of such default; or 
 9.3
Material Adverse Effect. A circumstance has occurred that would reasonably be expected to have a Material Adverse Effect; or 

  
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 9.4 Other Loan Documents. The occurrence of any default under any Loan Document or any other
agreement between Borrower and Lender and such default continues for more than ten (10) days after the earlier of the date on which (a) Lender has given notice of such default to Borrower, or (b) Borrower has actual knowledge of such
default; or 
 9.5 Representations. Any representation or warranty made by Borrower in any Loan Document or in the Warrant shall have been
false or misleading in any material respect; or 
 9.6 Insolvency. Borrower (A) (i) shall make an assignment for the benefit of
creditors; or (ii) shall be unable to pay its debts as they become due, or be unable to pay or perform under the Loan Documents, or shall become insolvent; or (iii) shall file a voluntary petition in bankruptcy; or (iv) shall file any
petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or
(v) shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of Borrower or of all or any substantial part (i.e., 33-1/3% or more) of the assets or property of Borrower; or (vi) shall cease
operations of its business as its business has normally been conducted, or terminate substantially all of its employees; or (vii) Borrower or its directors or majority shareholders shall take any action initiating any of the foregoing actions
described in clauses (i) through (vi); or (B) either (i) forty-five (45) days shall have expired after the commencement of an involuntary action against Borrower seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the business of Borrower being stayed; or
(ii) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be timely appealed; or (iii) Borrower shall file any answer admitting or not contesting the material allegations of a
petition filed against Borrower in any such proceedings; or (iv) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or (v) forty-five (45) days shall have
expired after the appointment, without the consent or acquiescence of Borrower, of any trustee, receiver or liquidator of Borrower or of all or any substantial part of the properties of Borrower without such appointment being vacated; or 

9.7 Attachments; Judgments. Any portion of Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a
judgment or judgments is/are entered for the payment of money, individually or in the aggregate, of at least $500,000, and such judgment remains unstayed for a period of ten (10) days, or Borrower is enjoined or in any way prevented by court
order from conducting any part of its business; or 
 9.8 Other Obligations. The occurrence of any default under any agreement or obligation
of Borrower involving any Indebtedness which results in a right by a third party or parties, whether or not exercised, to accelerate the maturity of such Indebtedness in excess of $250,000, or the occurrence of any default under any agreement or
obligation of Borrower that could reasonably be expected to have a Material Adverse Effect; or 

  
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 9.9 Stop Trade. At any time after Lender has received shares of Common Stock pursuant to the
terms set forth in Section 2.3(e), an SEC stop trade order or NASDAQ market trading suspension of the Common Stock shall be in effect for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days,
excluding in all cases a suspension of all trading on a public market, provided that Borrower shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list the Common Stock on another public
market within sixty (60) days of such notice. 
 SECTION 10. REMEDIES 

10.1 General. Upon and during the continuance of any one or more Events of Default, (i) Lender may, at its option, accelerate and demand
payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.6, the
Notes and all of the Secured Obligations shall automatically be accelerated and made due and payable, in each case without any further notice or act), and (ii) Lender may notify any of Borrower’s account debtors to make payment directly to
Lender, compromise the amount of any such account on Borrower’s behalf and endorse Lender’s name without recourse on any such payment for deposit directly to Lender’s account. Lender may exercise all rights and remedies with respect
to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the
Collateral and the right to occupy, utilize, process and commingle the Collateral. All Lender’s rights and remedies shall be cumulative and not exclusive. 

10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Lender may, at any time or from time to
time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Lender may elect. Any
such sale may be made either at public or private sale at its place of business or elsewhere. Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Borrower. Lender may require
Borrower to assemble the Collateral and make it available to Lender at a place designated by Lender that is reasonably convenient to Lender and Borrower. The proceeds of any sale, disposition or other realization upon all or any part of the
Collateral shall be applied by Lender in the following order of priorities: 
 First, to Lender in an amount sufficient to pay in full
Lender’s costs and professionals’ and advisors’ fees and expenses as described in Section 11.11; 
 Second, to Lender in
an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, and the Default Rate interest), in such order and priority as Lender may choose in its sole discretion; and Finally, after the full, final, and
indefeasible payment in Cash of all of the Secured Obligations, to any creditor holding a junior Lien on the Collateral, or to Borrower or its representatives or as a court of competent jurisdiction may direct. 

  
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 Lender shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the
Collateral if it complies with the obligations of a secured party under the UCC. 
 10.3 No Waiver. Lender shall be under no obligation to
marshal any of the Collateral for the benefit of Borrower or any other Person, and Borrower expressly waives all rights, if any, to require Lender to marshal any Collateral. 

10.4 Cumulative Remedies. The rights, powers and remedies of Lender hereunder shall be in addition to all rights, powers and remedies given by
statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of
Lender. 
 SECTION 11. MISCELLANEOUS 

11.1 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement. 
 11.2 Notice. Except as otherwise provided herein, any notice, demand,
request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof
shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by facsimile or hand delivery or delivery by an overnight express service or overnight mail
delivery service; or (ii) the third calendar day after deposit in the United States mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows: 

 

	 	(a)	If to either Lender: 

 HERCULES TECHNOLOGY II, L.P. 

Legal Department 
 Attention:
Chief Legal Officer and Chad Norman 
 400 Hamilton Avenue, Suite 310 

Palo Alto, CA 94301 
 Facsimile:
650-473-9194 
 Telephone: 650-289-3060 

  
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	 	(b)	If to Borrower: 

 ACELRX PHARMACEUTICALS, INC. 

Attention: Chief Financial Officer 

351 Galveston Drive 

Redwood City, CA 94063 

Facsimile: 650-216-6500 

Telephone: 650-216-3511 
 or to
such other address as each party may designate for itself by like notice. 
 11.3 Entire Agreement; Amendments. This Agreement, the Notes,
and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, letters,
negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Lender’s proposal letter dated November 19, 2013). None of the terms of this Agreement, the Notes or
any of the other Loan Documents may be amended except by an instrument executed by each of the parties hereto. 
 11.4 No Strict
Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the
parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. 

11.5 No Waiver. The powers conferred upon Lender by this Agreement are solely to protect its rights hereunder and under the other Loan
Documents and its interest in the Collateral and shall not impose any duty upon Lender to exercise any such powers. No omission or delay by Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of the
terms, covenants or provisions hereof by Borrower at any time designated, shall be a waiver of any such right or remedy to which Lender is entitled, nor shall it in any way affect the right of Lender to enforce such provisions thereafter. 

11.6 Survival. All agreements, representations and warranties contained in this Agreement, the Notes and the other Loan Documents or in any
document delivered pursuant hereto or thereto shall be for the benefit of Lender and shall survive the execution and delivery of this Agreement and the expiration or other termination of this Agreement. 

11.7 Successors and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on
Borrower and its permitted assigns (if any). Borrower shall not assign its obligations under this Agreement, the Notes or any of the other Loan Documents without Lender’s express prior written consent, and any such attempted assignment without
such consent shall be void and of no effect. Subject to Section 11.13, Lender may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrower, and all of such rights shall inure to the
benefit of Lender’s successors and assigns. 

  
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 11.8 Governing Law. This Agreement, the Notes and the other Loan Documents have been negotiated
and delivered to Lender in the State of California, and shall have been accepted by Lender in the State of California. Payment to Lender by Borrower of the Secured Obligations is due in the State of California. This Agreement, the Notes and the
other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction. 

11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.10 is not
applicable) arising in or under or related to this Agreement, the Notes or any of the other Loan Documents may be brought in any state or federal court located in the State of California. By execution and delivery of this Agreement, each party
hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California;
(c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement, the Notes or the other Loan
Documents. Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2, and shall be deemed effective and
received as set forth in Section 11.2. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction. 

11.10 Mutual Waiver of Jury Trial / Judicial Reference. 

(a) Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWER AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWER AGAINST LENDER OR ITS ASSIGNEE OR BY
LENDER OR ITS ASSIGNEE AGAINST BORROWER. This waiver extends to all such Claims, including Claims that involve Persons other than Borrower and Lender; Claims that arise out of or are in any way connected to the relationship between Borrower and
Lender; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document. 

(b) If the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all
Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of
the Santa Clara County, California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding. 

  
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 (c) In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.9, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise
subject to resolution by judicial reference. 
 11.11 Professional Fees. Borrower promises to pay Lender’s fees and expenses necessary
to finalize the loan documentation, including but not limited to reasonable attorneys fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, Borrower promises to pay any and all reasonable attorneys’ and other
professionals’ fees and expenses (including fees and expenses of in-house counsel) incurred by Lender after the Closing Date in connection with or related to: (a) the Loan; (b) the administration, collection, or enforcement of the
Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, sale, lease, liquidation, or disposition of Collateral or the
exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to Borrower or the Collateral, and any appeal or review thereof; and
(g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to Borrower, the Collateral, the Loan Documents, including representing Lender in any adversary proceeding
or contested matter commenced or continued by or on behalf of Borrower’s estate, and any appeal or review thereof. 
 11.12
Confidentiality. Lender acknowledges that certain items of Collateral and information provided to Lender by Borrower are confidential and proprietary information of Borrower, if and to the extent such information either (x) is marked as
confidential by Borrower at the time of disclosure, or (y) should reasonably be understood to be confidential (the “Confidential Information”). Accordingly, Lender agrees that any Confidential Information it may obtain in the course
of acquiring, administering, or perfecting Lender’s security interest in the Collateral shall not be disclosed to any other person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrower, except
that Lender may disclose any such information: (a) to its own directors, officers, employees, accountants, counsel and other professional advisors and to its affiliates if Lender in its sole discretion determines that any such party should have
access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the
confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available to the
public through no fault of Collateral Agent or Lender; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming to have jurisdiction over Lender; (d) if required or
appropriate in response to any summons 

  
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or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Lender’s counsel; (e) to comply with any legal requirement or law applicable to Lender;
(f) to the extent reasonably necessary in connection with the exercise of any right or remedy under any Loan Document, including Lender’s sale, lease, or other disposition of Collateral after default; (g) to any participant or
assignee of Lender or any prospective participant or assignee; provided, that such participant or assignee or prospective participant or assignee agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise with the prior
consent of Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of Borrower or any of its affiliates or any guarantor under this Agreement or the other Loan Documents. 

11.13 Assignment of Rights. Borrower acknowledges and understands that Lender may sell and assign all or part of its interest hereunder and
under the Note(s) and Loan Documents to any person or entity (an “Assignee”), provided, however, that (i) Lender shall not sell or assign any of its rights pursuant to Section 8 of this Agreement without the express written
consent of Borrower, which consent may be withheld by Borrower in its sole discretion, and any such attempted assignment without such consent shall be void and of no effect and (ii) any transfer by Lender of the Note shall be subject to
compliance with applicable federal and state securities laws. After such assignment the term “Lender” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and
remedies of Lender hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Lender shall retain all rights, powers and remedies hereby given. No such assignment by Lender shall relieve Borrower of
any of its obligations hereunder. Lender agrees that in the event of any transfer by it of the Note(s), it will endorse thereon a notation as to the portion of the principal of the Note(s), which shall have been paid at the time of such transfer and
as to the date to which interest shall have been last paid thereon. 
 11.14 Revival of Secured Obligations. This Agreement and the Loan
Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against Borrower for liquidation or reorganization, if Borrower becomes insolvent or makes an assignment for the benefit of creditors, if a
receiver or trustee is appointed for all or any significant part of Borrower’s assets, or if any payment or transfer of Collateral is recovered from Lender. The Loan Documents and the Secured Obligations and Collateral security shall continue
to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Lender, or any part thereof is rescinded, avoided or avoidable, reduced in
amount, or must otherwise be restored or returned by, or is recovered from, Lender or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment, performance, or transfer of Collateral had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall
be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment to Lender in Cash. 

  
 34 








 11.15 Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

 11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any
third-party beneficiary rights or any other rights of any kind in any person other than Lender and Borrower unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal
and solely between the Lender and the Borrower. 
 11.17 Publicity. Lender may use Borrower’s name and logo, and include a brief
description of the relationship between Borrower and Lender, in Lender’s marketing materials. 
 SECTION 12. COLLATERAL AGENT

 12.1 Appointment of Agent. Hercules Technology II, L.P. is hereby appointed as Collateral Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Hercules Technology II, L.P. to act as Collateral Agent in accordance with the terms hereof and the other Loan Documents. Collateral Agent hereby agrees to act in its capacity as such upon the express
conditions contained herein and the other Loan Documents, as applicable. The provisions of this Section 12 are solely for the benefit of Collateral Agent and each Lender and Borrower shall have any rights as a third party beneficiary of any of
the provisions thereof. 
 12.2 Powers and Duties. Each Lender irrevocably authorizes Collateral Agent to take such action on such
Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to Collateral Agent by the terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. Collateral Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. Collateral Agent may accept payments of principal, interest, fees and
expenses due under the Loan Documents from and deposits from Borrower on the account or benefit for any Lender. 
 (SIGNATURES TO FOLLOW)


  
 35 








 IN WITNESS WHEREOF, Borrower and Lender have duly executed and delivered this Loan and Security
Agreement as of the day and year first above written. 
  

			
	 BORROWER:
  

ACELRX PHARMACEUTICALS, INC.

		
	Signature:	 	/s/ James Welch
		
	Print Name:	 	James Welch
		
	Title:	 	CFO
		 	
		 	


 Accepted in Palo Alto, California: 

			
	
	LENDER:
	
	HERCULES TECHNOLOGY II, L.P.
		
	By: 	 	Hercules Technology SBIC Management, LLC, its General Partner
		
	By:	 	Hercules Technology Growth Capital, Inc., its Manager
		
	Signature:	 	/s/ Ben Bang
		
	Print Name:	 	Ben Bang
		
	Title:	 	Senior Counsel
	
	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
		
	Signature:	 	/s/ Ben Bang
		
	Print Name:	 	 Ben Bang

		
	Title:	 	Senior Counsel


 [Signature Page to Loan and Security Agreement] 







 Table of Addenda, Exhibits and Schedules 

 

			
	Addendum 1:	  	SBA Provisions
		
	Exhibit A:	  	 Advance Request
 Attachment to Advance
Request

		
	Exhibit B-1:	  	Term Note for Hercules Technology II, L.P.
		
	Exhibit B-2:	  	Term Note for Hercules Technology Growth Capital, Inc.
		
	Exhibit C:	  	Name, Locations, and Other Information for Borrower
		
	Exhibit D:	  	Borrower’s Patents, Trademarks, Copyrights and Licenses
		
	Exhibit E:	  	Borrower’s Deposit Accounts and Investment Accounts
		
	Exhibit F:	  	Compliance Certificate
		
	Exhibit G:	  	Joinder Agreement
		
	Exhibit H:	  	Reserved
		
	Exhibit I:	  	ACH Debit Authorization Agreement
	Schedule 1	  	Subsidiaries
	Schedule 1.1	  	Commitments
	Schedule 1A	  	Existing Permitted Indebtedness
	Schedule 1B	  	Existing Permitted Investments
	Schedule 1C	  	Existing Permitted Liens
	Schedule 5.3	  	Consents, Etc.
	Schedule 5.5	  	Actions Before Governmental Authorities
	Schedule 5.8	  	Tax Matters
	Schedule 5.9	  	Intellectual Property Claims
	Schedule 5.10	  	Intellectual Property
	Schedule 5.11	  	Borrower Products
	Schedule 5.14	  	Capitalization
		
	Exhibit J:	  	Repayment Election Notice


  
 1 








 ADDENDUM 1 to LOAN AND SECURITY AGREEMENT 

(a) Borrower’s Business. For purposes of this Addendum 1, Borrower shall be deemed to include its “affiliates” as
defined in Title 13 Code of Federal Regulations Section 121.103. Borrower represents and warrants to Hercules Technology II, L.P. (“Hercules II”) as of the Closing Date, and covenants to Hercules II 

(b) for a period of one year after the Closing Date with respect to subsections 2, 3, 4, 5, 6 and 7 below, as follows: 

 

	 	1.	Size Status. As of the Closing Date, Borrower’s NAIC is 325412, and Borrower has fewer than 750 employees; 

  

	 	2.	No Relender. Borrower’s primary business activity does not involve, directly or indirectly, providing funds to others, purchasing debt obligations, factoring, or long-term leasing of equipment with no
provision for maintenance or repair; 

  

	 	3.	No Passive Business. Borrower is engaged in a regular and continuous business operation (excluding the mere receipt of payments such as dividends, rents, lease payments, or royalties). Borrower’s employees are
carrying on the majority of day to day operations. Borrower will not pass through substantially all of the proceeds of the Loan to another entity; 

  

	 	4.	No Real Estate Business. Borrower is not classified under Major Group 65 (Real Estate) or Industry No. 1531 (Operative Builders) of the SIC Manual. The proceeds of the Loan will not be used to acquire or
refinance real property unless Borrower (x) is acquiring an existing property and will use at least 51 percent of the usable square footage for its business purposes; (y) is building or renovating a building and will use at least 67
percent of the usable square footage for its business purposes; or (z) occupies the subject property and uses at least 67 percent of the usable square footage for its business purposes. 


 

	 	5.	No Project Finance. Borrower’s assets are not intended to be reduced or consumed, generally without replacement, as the life of its business progresses, and the nature of Borrower’s business does not require
that a stream of cash payments be made to the business’s financing sources, on a basis associated with the continuing sale of assets (e.g., real estate development projects and oil and gas wells). The primary purpose of the Loan is not to
fund production of a single item or defined limited number of items, generally over a defined production period, where such production will constitute the majority of the activities of Borrower (e.g., motion pictures and electric generating plants).










	 	6.	No Farm Land Purchases. Borrower will not use the proceeds of the Loan to acquire farm land which is or is intended to be used for agricultural or forestry purposes, such as the production of food, fiber, or wood, or is
so taxed or zoned. 

  

	 	7.	No Foreign Investment. The proceeds of the Loan will not be used substantially for a foreign operation. At the time of the Loan, Borrower will not have more than 49 percent of its employees or tangible assets
located outside the United States. The representation in this subsection (7) is made only as of the date hereof and shall not continue for one year as contemplated in the first sentence of this Section 1. 


(c) Small Business Administration Documentation. Hercules II acknowledges that Borrower completed, executed and delivered
to Hercules II SBA Forms 480, 652 and 1031 (Parts A and B) together with a business plan showing Borrower’s financial projections (including balance sheets and income and cash flows statements) for the period described therein and a
written statement (whether included in the purchase agreement or pursuant to a separate statement) from Hercules II regarding its intended use of proceeds from the sale of securities to Hercules II (the “Use of Proceeds
Statement”). Borrower represents and warrants to Hercules II that the information regarding Borrower and its affiliates set forth in the SBA Form 480, Form 652 and Form 1031 and the Use of Proceeds Statement delivered as of
the Closing Date is accurate and complete. 
 (d) Inspection. The following covenants contained in this Section
(c) are intended to supplement and not to restrict the related provisions of the Loan Documents. Subject to the preceding sentence, Borrower will permit, for so long as Hercules II holds any debt or equity securities of Borrower,
Hercules II or its representative, at Hercules II’s expense, and examiners of the SBA to visit and inspect the properties and assets of Borrower, to examine its books of account and records, and to discuss Borrower’s affairs, finances and
accounts with Borrower’s officers, senior management and accountants, all at such reasonable times as may be requested by Hercules II or the SBA. 

(e) Annual Assessment. Promptly after the end of each calendar year (but in any event prior to February 28 of each
year) and at such other times as may be reasonably requested by Hercules II, Borrower will deliver to Hercules II a written assessment of the economic impact of Hercules II’s investment in Borrower, specifying the full-time equivalent jobs
created or retained in connection with the investment, the impact of the investment on the businesses of Borrower in terms of expanded revenue and taxes, other economic benefits resulting from the investment (such as technology development or
commercialization, minority business development, or expansion of exports) and such other information as may be required regarding Borrower in connection with the filing of  

  
 2 








 
Hercules II’s SBA Form 468. Hercules II will assist Borrower with preparing such assessment. In addition to any other rights granted hereunder, Borrower will grant Hercules II and
the SBA access to Borrower’s books and records for the purpose of verifying the use of such proceeds. Borrower also will furnish or cause to be furnished to Hercules II such other information regarding the business, affairs and condition
of Borrower as Hercules II may from time to time reasonably request. 
 (f) Use of Proceeds. Borrower will deliver to
Hercules II from time to time promptly following Hercules II’s request, a written report, certified as correct by Borrower’s Chief Financial Officer, verifying the purposes and amounts for which proceeds from the Loan have been
disbursed. Borrower will supply to Hercules II such additional information and documents as Hercules II reasonably requests with respect to its use of proceeds and will permit Hercules II and the SBA to have access to any and all Borrower
records and information and personnel as Hercules II deems necessary to verify how such proceeds have been or are being used. 

(g) Activities and Proceeds. Neither Borrower nor any of its affiliates (if any) will engage in any activities or use directly
or indirectly the proceeds from the Loan for any purpose for which a small business investment company is prohibited from providing funds by the SBIC Act, including 13 C.F.R. §107.720. Without obtaining the prior written approval of
Hercules II, Borrower will not change within 1 year of the date hereof, Borrower’s current business activity to a business activity which a licensee under the SBIC Act is prohibited from providing funds by the SBIC Act. 

(h) Redemption Provisions. Notwithstanding any provision to the contrary contained in the Certificate of Incorporation of
Borrower, as amended from time to time (the “Charter”), if, pursuant to the redemption provisions contained in the Charter, Hercules II is entitled to a redemption of its Warrant, such redemption (in the case of Hercules II) will be at a
price equal to the redemption price set forth in the Charter (the “Existing Redemption Price”). If, however, Hercules II delivers written notice to Borrower that the then current regulations promulgated under the SBIC Act prohibit payment
of the Existing Redemption Price in the case of an SBIC (or, if applied, the Existing Redemption Price would cause the Series C Preferred Stock to lose its classification as an “equity security” and Hercules II has determined that such
classification is unadvisable), the amount Hercules II will be entitled to receive shall be the greater of (i) fair market value of the securities being redeemed taking into account the rights and preferences of such securities plus any costs
and expenses of Hercules II incurred in making or maintaining the Warrant, and (ii) the Existing Redemption Price where the amount of accrued but unpaid dividends payable to Hercules II is limited to Borrower’s earnings plus any costs and
expenses of Hercules II incurred in making or maintaining the Warrant; provided, however, the amount calculated in subsections (i) or (ii) above shall not exceed the Existing Redemption Price. 

(i) Cost of Money. Notwithstanding any provision to the contrary contained in the Loan Documents, all interest and fees charged pursuant
to the Loan Documents shall comply with the provisions of 13 C.F.R. § 107.855, including, without limitation, that such amounts shall not exceed the Cost of Money ceiling (as defined hereafter). The current Cost of Money ceiling for this Loan
is fourteen percent. 

  
 3 








 (j) Compliance and Resolution. Borrower agrees that a failure to comply with
Borrower’s obligations under this Addendum, or any other set of facts or circumstances where it has been asserted by any governmental regulatory agency (or Hercules II believes that there is a substantial risk of such assertion) that Hercules
II and its affiliates are not entitled to hold, or exercise any significant right with respect to, any securities issued to Hercules II by Borrower, will constitute a breach of the obligations of Borrower under the financing agreements between
Borrower and Hercules II. In the event of (i) a failure to comply with Borrower’s obligations under this Addendum; or (ii) an assertion by any governmental regulatory agency (or Hercules II believes that there is a substantial
risk of such assertion) of a failure to comply with Borrower’s obligations under this Addendum, then (i) Hercules II and Borrower will meet and resolve any such issue in good faith to the satisfaction of Borrower, Hercules II, and any
governmental regulatory agency, and (ii) upon request of Hercules II, Borrower will cooperate and assist with any assignment of the financing agreements from Hercules II to Hercules Technology Growth Capital, Inc.  

  
 4 








 EXHIBIT A 

ADVANCE REQUEST 
  

			
	 To:   Lender:
	  	Date:             , 20__

 Hercules Technology II, L.P. 

Hercules Technology Growth Capital, Inc. 

400 Hamilton Avenue, Suite 310 

Palo Alto, CA 94301 
 Facsimile:
650-473-9194 
 Attn: 
 AcelRx Pharmaceuticals,
Inc. (“Borrower”) hereby requests from Hercules Technology II, L.P. and Hercules Technology Growth Capital, Inc. (collectively, “Lender”) an Advance in the amount of Fifteen Million Dollars ($15,000,000.00) on December 16,
2013 (the “Advance Date”) pursuant to the Loan and Security Agreement between Borrower and Lender dated as of December 16, 2013 (the “Agreement”). In addition, Borrower directs Lender to (i) retain the Facility Charge
and reimbursement of Lender’s current expenses and (ii) payoff loans funded under the Original Agreement. Capitalized words and other terms used but not otherwise defined herein are used with the same meanings as defined in the Agreement.

 Please: 
  

	 	(a)	Issue a check payable to Borrower                          


                        
or 
  

	 	(b)	Wire Funds to Borrower’s account                          


 

					
	 Bank:
	  	 	  	
	 Address:
	  	 	  	
		  	 	  	
	 ABA Number:
	  	 	  	
	 Account Number:
	  	 	  	
	 Account Name:
	  	 	  	

 Borrower represents that the conditions precedent to the Advance set forth in the Agreement are satisfied and
shall be satisfied upon the making of such Advance, including but not limited to: (i) that no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing; (ii) that the
representations and warranties set forth in the Agreement and in the Warrants are and shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent
such representations and warranties expressly relate to an earlier date; (iii) that Borrower is in compliance with all the terms and provisions set forth in each Loan Document on its part to be observed or performed; and (iv) that as of
the Advance Date, no fact or condition exists that would (or would, with the passage of time, the giving of notice, or both) constitute an Event of Default under the Loan Documents. Borrower understands and acknowledges that Lender has the right to
review the financial information supporting this representation and, based upon such review in its sole discretion, Lender may decline to fund the requested Advance. 







 Borrower hereby represents that Borrower’s corporate status and locations have not changed
since the date of the Agreement or, if the Attachment to this Advance Request is completed, are as set forth in the Attachment to this Advance Request. 

Borrower agrees to notify Lender promptly before the funding of the Loan if any of the matters which have been represented above shall not be
true and correct on the Borrowing Date and if Lender has received no such notice before the Advance Date then the statements set forth above shall be deemed to have been made and shall be deemed to be true and correct as of the Advance Date. 

Executed as of
                    , 20__. 
  

			
	BORROWER: AcelRx Pharmaceuticals, Inc.
		
	SIGNATURE:	 	 
	TITLE:	 	 
	PRINT NAME:	 	 


 [Signature Page to Advance Request] 







 ATTACHMENT TO ADVANCE REQUEST 

Dated:
                             

Borrower hereby represents and warrants to Lender that Borrower’s current name and organizational status is as follows: 

 

					
		 	Name:	  	AcelRx Pharmaceuticals, Inc.
			
		 	Type of organization:	  	Corporation
			
		 	State of organization:	  	Delaware
			
		 	Organization file number:	  	3998627

 Borrower hereby represents and warrants to Lender that the street addresses, cities, states and postal codes of its current
locations are as follows: 







 EXHIBIT B-1 

THIS SECURED CONVERTIBLE TERM PROMISSORY NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS (I) THIS NOTE HAS BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) THIS
NOTE MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE BORROWER HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 

SECURED CONVERTIBLE TERM PROMISSORY NOTE 
  

			
	$13,333,333.33	  	Advance Date: December 16, 2013

 FOR VALUE RECEIVED, AcelRx Pharmaceuticals, Inc., a Delaware corporation, for itself and each of its
Subsidiaries (the “Borrower”) hereby promises to pay to the order of Hercules Technology II, L.P., a Delaware limited partnership or the holder of this Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or
such other place of payment as the holder of this Secured Term Promissory Note (this “Promissory Note”) may specify from time to time in writing, in lawful money of the United States of America, the principal amount of Thirteen Million
Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three and 33/100 Dollars ($13,333,333.33) or such other principal amount as Lender has advanced to Borrower, together with interest at a floating rate as set forth in that certain Loan and
Security Agreement dated December 16, 2013, by and between Borrower and Lender (as the same may from time to time be amended, modified or supplemented in accordance with its terms, the “Loan Agreement”). 

This Promissory Note is one of the Notes referred to in, and is executed and delivered in connection with, the Loan Agreement, and is entitled
to the benefit and security of the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement), to which reference is made for a statement of all of the terms and conditions thereof. All payments shall be made in accordance with
the Loan Agreement, including the right of Borrower to pay a portion of the amounts due and owing under this Promissory Note in shares of Common Stock in accordance with, and subject to the limitations set forth in, Section 2.2(e) of the Loan
Agreement (including the requirement that any shares of Common Stock issuable by Borrower upon conversion of this Note are subject to an effective resale registration statement or are eligible for resale to the public pursuant to Rule 144 without
any limitation). All terms defined in the Loan Agreement shall have the same definitions when used herein, unless otherwise defined herein. An Event of Default under the Loan Agreement shall constitute a default under this Promissory Note. 







 Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of
protest under the UCC or any applicable law. Borrower agrees to make all payments under this Promissory Note without setoff, recoupment or deduction and regardless of any counterclaim or defense. This Promissory Note has been negotiated and
delivered to Lender and is payable in the State of California. This Promissory Note shall be governed by and construed and enforced in accordance with, the laws of the State of California, excluding any conflicts of law rules or principles that
would cause the application of the laws of any other jurisdiction. 
  

							
	BORROWER:	 		 	ACELRX PHARMACEUTICALS, INC.
				
		 		 	By:	 	
		 		 	Title:	 	
		 		 		 	








 EXHIBIT B-2 

THIS SECURED CONVERTIBLE TERM PROMISSORY NOTE, AND ANY SECURITIES ISSUED UPON CONVERSION PURSUANT TO THIS SECURED CONVERTIBLE TERM PROMISSORY NOTE, HAVE NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE TRANSFERRED UNLESS
(I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144, OR (III) THE BORROWER HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. 
 SECURED CONVERTIBLE TERM
PROMISSORY NOTE 
  

			
	$26,666,666.67	  	Advance Date: December 16, 2013

 FOR VALUE RECEIVED, AcelRx Pharmaceuticals, Inc., a Delaware corporation, for itself and each of its
Subsidiaries (the “Borrower”) hereby promises to pay to the order of Hercules Technology Growth Capital, Inc., a Maryland corporation or the holder of this Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA
94301 or such other place of payment as the holder of this Secured Term Promissory Note (this “Promissory Note”) may specify from time to time in writing, in lawful money of the United States of America, the principal amount of Twenty-Six
Million Six Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars ($26,666,666.67) or such other principal amount as Lender has advanced to Borrower, together with interest at a floating rate as set forth in that certain Loan and
Security Agreement dated December 16, 2013, by and between Borrower and Lender (as the same may from time to time be amended, modified or supplemented in accordance with its terms, the “Loan Agreement”). 

This Promissory Note one of the Notes referred to in, and is executed and delivered in connection with, the Loan Agreement, and is entitled to
the benefit and security of the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement), to which reference is made for a statement of all of the terms and conditions thereof. All payments shall be made in accordance with the
Loan Agreement, including the right of Borrower to pay a portion of the amounts due and owing under this Promissory Note in shares of Common Stock in accordance with, and subject to the limitations set forth in, Section 2.2(e) of the Loan
Agreement (including the requirement that any shares of Common Stock issuable by Borrower upon conversion of this Note are subject to an effective resale registration statement or are eligible for resale to the public pursuant to Rule 144 without
any limitation). All terms defined in the Loan Agreement shall have the same definitions when used herein, unless otherwise defined herein. An Event of Default under the Loan Agreement shall constitute a default under this Promissory Note. 







 Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of
protest under the UCC or any applicable law. Borrower agrees to make all payments under this Promissory Note without setoff, recoupment or deduction and regardless of any counterclaim or defense. This Promissory Note has been negotiated and
delivered to Lender and is payable in the State of California. This Promissory Note shall be governed by and construed and enforced in accordance with, the laws of the State of California, excluding any conflicts of law rules or principles that
would cause the application of the laws of any other jurisdiction. 
  

							
	BORROWER:	 		 	ACELRX PHARMACEUTICALS, INC.
				
		 		 	By:	 	
		 		 	Title:	 	
		 		 		 	








 EXHIBIT C 

NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER 

1. Borrower represents and warrants to Lender that Borrower’s current name and organizational status as of the Closing Date is as
follows: 
  

			
	Name:	  	AcelRx Pharmaceuticals, Inc.
		
	Type of organization:	  	Corporation
		
	State of organization:	  	Delaware
		
	Organization file number:	  	3998627

 2. Borrower represents and warrants to Lender that for five (5) years prior to the Closing Date, Borrower
did not do business under any other name or organization or form except the following: 
 Name: 

Used during dates of: 

Type of Organization: Corporation 

State of organization: Delaware 

Organization file Number: 

Borrower’s fiscal year ends on December 31 

Borrower’s federal employer tax identification number is: 41-2193603 

3. Borrower represents and warrants to Lender that its chief executive office is located at 351 Galveston Drive, Redwood City, CA 94063. 







 EXHIBIT D 

BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES 

See attached chart of patents. 
 ACELRX, THE
ACELRX LOGO, ARX, NANOTAB, ACCELERATE.INNOVATE.ALLEVIATE., ZALVISO AND ASSOCIATED LOGO ARE TRADEMARKS OF ACELRX PHARMACEUTICALS, INC. 







 EXHIBIT E 

BORROWER’S DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS 

DEPOSIT ACCOUNTS 
  

							
	 Depository Institution

(name and address)
	  	 Account Type
	  	 Account Number
	  	 Account Holder

	Wells Fargo Bank	  	Demand	  	4121466536	  	AcelRx Pharmaceuticals, Inc.

 INVESTMENT ACCOUNTS 
  

							
	 Securities Intermediary

(name and address)
	  	 Account Type
	  	 Account Number
	  	 Account Holder

	Morgan Stanley & Co.	  	Securities	  	14-78EW8	  	AcelRx Pharmaceuticals, Inc.








 EXHIBIT F 

COMPLIANCE CERTIFICATE 
 Hercules
Technology II, L.P. 
 Hercules Technology Growth Capital, Inc. 

400 Hamilton Avenue, Suite 310 
 Palo Alto, CA 94301 

Reference is made to that certain Loan and Security Agreement dated December 16, 2013 and all ancillary documents entered into in
connection with such Loan and Security Agreement all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”) between Hercules Technology II, L.P. and Hercules Technology Growth Capital, Inc.,
each as a Lender, and AcelRx Pharmaceuticals, Inc. (the “Company”) as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement. 

The undersigned is an officer of the Company, knowledgeable of all Company financial matters, and is authorized to provide certification of
information regarding the Company; hereby certifies that in accordance with the terms and conditions of the Loan Agreement, the Company is in compliance for the period ending
                    , 20     of all covenants, conditions and terms and hereby reaffirms that all representations
and warranties contained therein are true and correct on and as of the date of this Compliance Certificate with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an
earlier date, after giving effect in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations and warranties. Attached are the required documents supporting the above certification. The undersigned
further certifies that these are prepared in accordance with GAAP (except for the absence of footnotes with respect to unaudited financial statement and subject to normal year end adjustments) and are consistent from one period to the next except as
explained below. 
  

					
	REPORTING REQUIREMENT	  	REQUIRED	  	CHECK IF ATTACHED
			
	Interim Financial Statements	  	Monthly within 30 days	  	 ̈
			
	Interim Financial Statements	  	Within 45 days after each of the first 3 fiscal quarters of each fiscal year	  	 ̈
			
	Audited Financial Statements	  	FYE within 90 days	  	 ̈








 
			
	 Very Truly Yours,
  

ACELRX PHARMACEUTICALS, INC.

		
	By:	 	 
		
	Name:	 	 
		
	Its:	 	 


 [Signature Page to Compliance Certificate] 







 EXHIBIT G 

FORM OF JOINDER AGREEMENT 

This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [        ],
20[    ], and is entered into by and between                    ., a
                     corporation (“Subsidiary”), and HERCULES TECHNOLOGY II, L.P., a Delaware limited partnership, and HERCULES
TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation (collectively, “Lender”). 
 RECITALS 

A. Subsidiary’s Affiliate, AcelRx Pharmaceuticals, Inc. (“Company”) has entered into that certain Loan and Security Agreement
dated December 16, 2013, with Lender, as such agreement may be amended (the “Loan Agreement”), together with the other agreements executed and delivered in connection therewith; 

B. Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from Company’s execution of the Loan Agreement
and the other agreements executed and delivered in connection therewith; 
 AGREEMENT 

NOW THEREFORE, Subsidiary and Lender agree as follows: 
  

	1.	The recitals set forth above are incorporated into and made part of this Joinder Agreement. Capitalized terms not defined herein shall have the meaning provided in the Loan Agreement. 


 

	2.	By signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were the Borrower (as defined in the Loan Agreement) under the Loan Agreement, mutatis
mutandis, provided however, that Lender shall have no duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other agreements executed and delivered in connection therewith. Rather, to the extent
that Lender has any duties, responsibilities or obligations arising under or related to the Loan Agreement or the other agreements executed and delivered in connection therewith, those duties, responsibilities or obligations shall flow only to
Company and not to Subsidiary or any other person or entity. By way of example (and not an exclusive list): (a) Lender’s providing notice to Company in accordance with the Loan Agreement or as otherwise agreed between Company and Lender
shall be deemed provided to Subsidiary; (b) a Lender’s providing an Advance to Company shall be deemed an Advance to Subsidiary; and (c) Subsidiary shall have no right to request an Advance or make any other demand on Lender.


 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 







 [SIGNATURE PAGE TO JOINDER AGREEMENT] 

SUBSIDIARY: 
  

					
	                                      
                          .	 		  	

  

													
		 	By:	  		  		  		  		  	
		 	Name:	  		  		  		  		  	
		 	Title:	  		  		  		  		  	
		 		  		  		  		  		  	
		 	Address:	  		  		  		  		  	
		 		  		  		  		  		  	
		 	Telephone: 	  	 	  		  		  		  	
		 	Facsimile:	  	 	  		  		  		  	

 HERCULES TECHNOLOGY II, L.P. 
  

	 	By:	Hercules Technology SBIC Management, LLC, its General Partner 

  

	 	By:	Hercules Technology Growth Capital, Inc., its Manager 

  

									
		 	By:	  	 	  		  	
		 	Name:	  	 	  		  	
		 	Title:	  	 	  		  	
		 	  
 Address:

400 Hamilton Ave., Suite 310
 Palo Alto, CA 94301

Facsimile: 650-473-9194
 Telephone: 650-289-3060
	  	

 HERCULES TECHNOLOGY GROWTH CAPITAL, INC. 
  

									
		 	By:	  	 	  		  	
		 	Name:	  	 	  		  	
		 	Title:	  	 	  		  	
		 	  
 Address:

400 Hamilton Ave., Suite 310
 Palo Alto, CA 94301

Facsimile: 650-473-9194
 Telephone: 650-289-3060
	  	

 [Signature Page to Joinder Agreement] 







 EXHIBIT H 

[RESERVED] 







 EXHIBIT I 

ACH DEBIT AUTHORIZATION AGREEMENT 

Hercules Technology II, L.P. 
 Hercules Technology Growth
Capital, Inc. 
 400 Hamilton Avenue, Suite 310 
 Palo Alto, CA
94301 
 Re: Loan and Security Agreement dated December 16, 2013 between AcelRx Pharmaceuticals, Inc. (“Borrower”) and
Hercules Technology II, L.P. and Hercules Technology Growth Capital, Inc. (collectively, “Company”) (the “Agreement”) 
 In connection
with the above referenced Agreement, the Borrower hereby authorizes the Company to initiate debit entries for the periodic payments due under the Agreement to the Borrower’s account indicated below. The Borrower authorizes the depository
institution named below to debit to such account. 
  

			
	DEPOSITORY NAME	  	BRANCH
		
	CITY	  	STATE AND ZIP CODE
		
	TRANSIT/ABA NUMBER	  	ACCOUNT NUMBER

 This authority will remain in full force and effect so long as any amounts are due under the Agreement. 

 

			
	ACELRX PHARMACEUTICALS, INC.
		
	By:	 	 
		
	Date:	 	 








 EXHIBIT J 

REPAYMENT ELECTION NOTICE 
 [INSERT DATE]

 Hercules Technology II, L.P. 
 Hercules Technology Growth
Capital, Inc. 
 400 Hamilton Avenue, Suite 310 
 Palo Alto, CA
94301 
 Reference is made to that certain Loan and Security Agreement dated December 16, 2013 and all ancillary documents entered into
in connection with such Loan and Security Agreement all as may be amended from time to time, (hereinafter referred to collectively as the “Loan Agreement”) between Hercules Technology II, L.P. and Hercules Technology Growth Capital, Inc.,
each as a Lender, and AcelRx Pharmaceuticals, Inc. (the “Company”) as Borrower. All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement. 

Borrower hereby irrevocably elects to make [the Principal Installment Payment in the amount of
$             due on [                    ] (the “Delivery Date”)
in shares of Common Stock in accordance with Section 2.2(e) of the Loan Agreement][an Optional Prepayment in the amount of
$                     on
[                    ] (the “Delivery Date”) in shares of Common Stock in accordance with Section 2.2(e) of the Loan
Agreement].1 The number of shares of Common Stock to be delivered to Lender, on or prior to the Delivery Date, is
[                    ], which amount was determined in accordance with Section 2.2(e) of the Loan Agreement. The stock certificates shall
be delivered free and clear of any restrictive legends. 
 The Borrower hereby represents, warrants and certifies to Lender that, as
of the date hereof, all of the Stock Payment Conditions have been satisfied. The Borrower acknowledges and agrees that its right to pay the [Principal Installment Payment][Optional Prepayment] in Common Stock in accordance with
this Repayment Election Notice is subject to the satisfaction of all of the Stock Payment Conditions on the Delivery Date and, to the extent any of the Stock Payment Conditions are not satisfied on the Delivery Date, Borrower shall pay the
[Principal Installment Payment][Optional Prepayment] in cash. 
  

	
	Sincerely,


  

	1 	Note: In accordance with Section 2.2(e) of the Loan Agreement, the Delivery Date must be at least 10 days following the date of delivery of this Repayment Election Notice. 








 
			
	ACELRX PHARMACEUTICALS, INC.
		
	By:	 	 
		
	Name:	 	 
		
	Its:	 	 









 SCHEDULE 1.1 

COMMITMENTS 
  

									
	 LENDER
	  	TERM COMMITMENT	 	  	TERM COMMITMENT
PERCENTAGE	 
	 Hercules Technology II, L.P.
	  	$	13,333,333.33	  	  	 	33.33	% 
	 Hercules Technology Growth Capital, Inc.
	  	$	26,666,666.67	  	  	 	66.67	% 
	 TOTAL COMMITMENTS
	  	$	40,000,000.00	  	  	 	100	% 








 SCHEDULE 7.4 

POST-CLOSING ITEMS 
 Borrower shall deliver or
cause to be delivered to Lender: 
 1. On or before February 16, 2014, a Landlord’s Waiver and Consent for 351 Galveston Drive, Redwood City, CA
94063 in form reasonably satisfactory to Lender. 
 2. On or before February 16, 2014, a Bailee Agreement approved by Patheon Inc. for Collateral
located at 2110 East Galbraith Road, Cincinnati, OH 45237 in form reasonably satisfactory to Lender.