Document:

exv10w3

Exhibit 10.3

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (“Agreement”) is made as of December 15, 2009 by and
between Javelin Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Fred
Mermelstein (“Indemnitee”).

RECITALS

     WHEREAS, highly competent persons have become more reluctant to serve publicly held
corporations as directors or in other capacities unless they are provided with adequate protection
through insurance or adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to and activities on behalf of the corporation;

     WHEREAS, the Board of Directors of the Company (the “Board”) has determined that, in
order to attract and retain qualified individuals, the Company will attempt to maintain on an
ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and
its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and other business
enterprises, the Company believes that, given current market conditions and trends, such insurance
may be available to it in the future only at higher premiums and with more exclusions. At the same
time, directors, officers, and other persons in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming litigation relating to, among other
things, matters that traditionally would have been brought only against the business enterprise
itself. The Amended and Restated Certificate of Incorporation of the Company (the
“Charter”) and the By-Laws of the Company (the “By-Laws”) require indemnification
of the officers and directors of the Company in certain instances. Indemnitee may also be entitled
to indemnification pursuant to the General Corporation Law of the State of Delaware
(“DGCL”). The Charter, the By-Laws and the DGCL expressly provide that the indemnification
provisions set forth therein are not exclusive, and thereby contemplate that contracts may be
entered into between the Company and members of the Board, officers and other persons with respect
to indemnification;

     WHEREAS, the uncertainties relating to such insurance and to indemnification have increased
the difficulty of attracting and retaining such persons;

     WHEREAS, the Board has determined that the increased difficulty in attracting and retaining
such persons is detrimental to the best interests of the Company’s stockholders and that the
Company should act to assure such persons that there will be increased certainty of such protection
in the future;

     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified;

     WHEREAS, this Agreement is a supplement to and in furtherance of the indemnification provided
in the Charter, the By-Laws and any resolutions adopted pursuant thereto, and shall not

 

 

be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder; and

     WHEREAS, Indemnitee is concerned that the protection available under the Charter, the By-Laws
and insurance may not be adequate in the present circumstances, and in consideration of serving as
a director desires to be assured of adequate protection, and the Company desires Indemnitee to
serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional
service for or on behalf of the Company on the condition that Indemnitee be so indemnified.

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and Indemnitee do hereby covenant and agree as follows:

     Section 1. Services to the Company. Indemnitee agrees to serve as a director of the
Company. Indemnitee may at any time and for any reason resign from such position (subject to any
other contractual obligation or any obligation imposed by operation of law), in which event the
Company shall have no obligation under this Agreement to continue Indemnitee in such position. This
Agreement shall not be deemed an employment contract between the Company (or any of its
subsidiaries or any Enterprise) and Indemnitee. The foregoing notwithstanding, this Agreement shall
continue in force after Indemnitee has ceased to serve as a director of the Company.

     Section 2. Definitions

     As used in this Agreement:

          (a) “Corporate Status” describes the status of a person who is or was a director,
officer, employee or agent of the Company or of any other corporation, partnership or joint
venture, trust, employee benefit plan or other enterprise which such person is or was serving at
the request of the Company.

          (b) “Disinterested Director” shall mean a director of the Company who either is not or
was not a party to the Proceeding, or affiliated with a party to the Proceeding, in respect of
which indemnification is being sought by the Indemnitee, or is not the Indemnitee.

          (c) “Enterprise” shall mean the Company and any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at
the request of the Company as a director, officer, employee, agent or fiduciary.

          (d) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, being or preparing to be a witness in, or otherwise
participating in, a Proceeding. Expenses also shall include Expenses incurred in connection with
any appeal resulting from any Proceeding, including without limitation the premium, security for,
and other costs relating to any cost bond, supersedes bond, or other appeal

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bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by
Indemnitee or the amount of judgments or fines against Indemnitee.

          (e) “Independent Counsel” means a law firm, or a partner (or, if applicable, member)
of such a law firm, that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning the Indemnitee under
this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any
other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term “Independent Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under
this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent
Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims,
liabilities and damages arising out of or relating to this Agreement or its engagement pursuant
hereto.

          (f) The term “Proceeding” shall include any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought in the right of
the Company or otherwise and whether of a civil, criminal, administrative or investigative nature,
in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that
Indemnitee is or was a director of the Company, by reason of any action taken by him or of any
action on his part while acting as director of the Company, or by reason of the fact that he is or
was serving at the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in each
case whether or not serving in such capacity at the time any liability or expense is incurred for
which indemnification, reimbursement, or advancement of expenses can be provided under this
Agreement; except one initiated by Indemnitee to enforce his rights under this Agreement.

     Section 3. Indemnity in Third-Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened
to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee
shall be indemnified against all Expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any
claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company and, in the case of a
criminal proceeding, had no reasonable cause to believe that his conduct was unlawful.

     Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company
shall indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or
is threatened to be made, a party to or a participant in any Proceeding by or in the right of the
Company to procure a judgment in its favor. Pursuant to this Section 4,

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Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if
Indemnitee acted in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company. No indemnification for Expenses shall be made under this
Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally
adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware
Court of Chancery (the “Delaware Court”) or any court in which the Proceeding was brought
shall determine upon application that, despite the adjudication of liability but in view of all the
circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such
expenses as the Delaware Court or such other court shall deem proper.

     Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.
Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee is a party
to or a participant in and is successful, on the merits or otherwise, in any Proceeding or in
defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith.
If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the
Company shall indemnify Indemnitee against (a) all Expenses actually and reasonably incurred by him
or on his behalf in connection with each successfully resolved claim, issue or matter and (b) any
claim, issue or matter related to any such successfully resolved claim, issue or matter. For
purposes of this Section and without limitation, the termination of any claim, issue or matter in
such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.

     Section 6. Indemnification For Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a
witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all
Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

     Section 7. Additional Indemnification.

          (a) Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee is a party to or threatened to be
made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure
a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by Indemnitee in connection with the Proceeding.

          (b) For purposes of Section 7(a), the meaning of the phrase “to the fullest extent permitted
by law” shall include, but not be limited to:

               (i) to the fullest extent permitted by the provision of the DGCL that authorizes or
contemplates additional indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL; and

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               (ii) to the fullest extent authorized or permitted by any amendments to or replacements of the
DGCL adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its officers and directors.

     Section 8. Exclusions. Notwithstanding any provision in this Agreement to the
contrary, the Company shall not be obligated under this Agreement to make any indemnity in
connection with any claim made against Indemnitee:

          (a) for which payment has actually been made to or on behalf of Indemnitee under any insurance
policy or other indemnity provision, except with respect to any excess beyond the amount paid under
any insurance policy or other indemnity provision;

          (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by
Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law; or

          (c) for which payment is prohibited by applicable law.

     Section 9. Advances of Expenses. The Company shall advance, to the extent not
prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding, and such
advancement shall be made within thirty (30) days after the receipt by the Company of a statement
or statements requesting such advances (which shall include invoices received by Indemnitee in
connection with such Expenses but, in the case of invoices in connection with legal services, any
references to legal work performed or to expenditures made that would cause Indemnitee to waive any
privilege accorded by applicable law shall not be included with the invoice) from time to time,
whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and
interest free. Advances shall be made without regard to Indemnitee’s ability to repay the expenses
and without regard to Indemnitee’s ultimate entitlement to indemnification under the other
provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred
pursuing an action to enforce this right of advancement, including Expenses incurred preparing and
forwarding statements to the Company to support the advances claimed. The Indemnitee shall qualify
for advances upon the execution and delivery to the Company of this Agreement which shall
constitute an undertaking providing that the Indemnitee undertakes to the fullest extent permitted
by law to repay the advance if and to the extent that it is ultimately determined that Indemnitee
is not entitled to be indemnified by the Company. This Section 9 shall not apply to any claim made
by Indemnitee for which indemnity is excluded pursuant to Section 8.

     Section 10. Procedure for Notification and Defense of Claim. To obtain
indemnification under this Agreement, Indemnitee shall submit to the Company a written request
therefor. The Company will be entitled to participate in the Proceeding at its own expense.

     Section 11. Procedure Upon Application for Indemnification.

          (a) Upon written request by Indemnitee for indemnification pursuant to Section 10(a), a
determination, if required by applicable law, with respect to Indemnitee’s

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entitlement thereto shall be made in the specific case by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee and, if it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the Independent Counsel making such
determination with respect to Indemnitee’s entitlement to indemnification, including providing to
such counsel upon reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee
and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees
and disbursements) incurred by Indemnitee in so cooperating with the Independent Counsel shall be
borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless
therefrom.

          (b) The Independent Counsel shall be selected by a majority vote of the Board’s Disinterested
Directors, whether or not such majority constitutes a quorum, or, if there are no Disinterested
Directors, and upon application of either the Indemnitee or the Company, by the Delaware Court or
any court in which the Proceeding was brought. If the selection is made by the Board’s
Disinterested Directors, the Indemnitee may, within ten (10) days after written notice of such
selection, deliver to the Company a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2
of this Agreement, and the objection shall set forth with particularity the factual basis of such
assertion. Absent a proper and timely objection, the person so selected shall act as Independent
Counsel. If such written objection is so made and substantiated, the Independent Counsel so
selected may not serve as Independent Counsel unless and until such objection is withdrawn or a
court has determined that such objection is without merit. If, within twenty (20) days after the
submission by Indemnitee of a written request for indemnification pursuant to Section 10(a) hereof,
no Independent Counsel shall have been selected and not objected to, either the Indemnitee or the
Company may petition a court of competent jurisdiction for resolution of any objection which shall
have been made by the Indemnitee to the selection of Independent Counsel and/or for the appointment
as Independent Counsel of a person selected by the court or by such other person as the court shall
designate, and the person with respect to whom all objections are so resolved or the person so
appointed shall act as Independent Counsel under Section 11(a) hereof. Upon the due commencement
of any judicial proceeding or arbitration pursuant to Section 13(a) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to
the applicable standards of professional conduct then prevailing).

     Section 12. Presumptions and Effect of Certain Proceedings.

          (a) In making a determination with respect to entitlement to indemnification hereunder, the
Independent Counsel making such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted a request for indemnification in
accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to
overcome that presumption in connection with the making by the Independent Counsel of any
determination contrary to that presumption. Neither the failure of the Company or of Independent
Counsel to have made a determination prior to the

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commencement of any action pursuant to this Agreement that indemnification is proper in the
circumstances because Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Company or by Independent Counsel that Indemnitee has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has
not met the applicable standard of conduct.

          (b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee
did not act in good faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.

          (c) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted
in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise,
including financial statements, or on information supplied to Indemnitee by the officers of the
Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or
the Board or counsel selected by any committee of the Board or on information or records given or
reports made to the Enterprise by an independent certified public accountant or by an appraiser,
investment banker or other expert selected with the reasonable care by the Company or the Board or
any committee of the Board. The provisions of this Section 12(c) shall not be deemed to be
exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to
have met the applicable standard of conduct set forth in this Agreement.

          (d) The knowledge and/or actions, or failure to act, of any director, officer, agent or
employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right
to indemnification under this Agreement.

          (e) The Company shall not be liable to indemnify the Indemnitee under this Agreement for any
amounts paid in settlement of any Proceeding effected without its written consent. The Company
shall not settle any Proceeding in any manner that would impose any penalty or limitation on or
disclosure or payment obligation with respect to or damage the reputation of the Indemnitee without
the Indemnitee’s written consent. Neither the Company nor the Indemnitee will unreasonably
withhold or delay its or his consent to any proposed settlement; provided, that the Indemnitee may
withhold consent to any proposed settlement that does not provide a complete and unconditional
release of the Indemnitee.

     Section 13. Remedies of Indemnitee.

          (a) Subject to Section 13(e), in the event that: (i) a determination is made pursuant to
Section 11 of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 9 of this Agreement,
(iii) no determination of entitlement to indemnification shall have been made pursuant to Section
11(a) of this Agreement within ninety (90) days after receipt by the Company of the request for
indemnification, (iv) payment of indemnification is not made

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pursuant to Section 5 or 6 or the last sentence of Section 11(a) of this Agreement within ten
(10) days after receipt by the Company of a written request therefor, or (v) payment of
indemnification pursuant to Section 3, 4 or 7 of this Agreement is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee
shall be entitled to an adjudication by a court of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration
to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American
Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an
award in arbitration within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 13(a); provided, however, that
the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce
his rights under Section 5 of this Agreement. The Company shall not oppose Indemnitee’s right to
seek any such adjudication or award in arbitration.

          (b) In the event that a determination shall have been made pursuant to Section 11(a) of this
Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 13 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that
adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section
13 the Company shall have the burden of proving Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.

          (c) If a determination shall have been made pursuant to Section 11(a) of this Agreement that
Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 13, absent: (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make
Indemnitee’s statement not materially misleading, in connection with the request for
indemnification; or (ii) a prohibition of such indemnification under applicable law.

          (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 13 that the procedures and presumptions of this Agreement are
not valid, binding and enforceable and shall stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement. The Company shall
indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within
ten (10) days after receipt by the Company of a written request therefore) advance, to the extent
not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection
with any action brought by Indemnitee for indemnification or advance of Expenses from the Company
under this Agreement or under any directors’ and officers’ liability insurance policies maintained
by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advancement of Expenses or insurance recovery, as the case may be.

          (e) Notwithstanding anything in this Agreement to the contrary, no determination as to
entitlement to indemnification under this Agreement shall be required to be made prior to the final
disposition of the Proceeding.

     Section 14. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

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          (a) The rights of indemnification and to receive advancement of Expenses as provided by this
Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Charter, the By-laws, any agreement, a vote of stockholders or a
resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of
any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in
respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such
amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or
judicial decision, permits greater indemnification or advancement of Expenses than would be
afforded currently under the Charter, By-laws and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such
change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other right or remedy.

          (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors, officers, employees, or agents of the Company or of any other
Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their
terms to the maximum extent of the coverage available for any such director, officer, employee or
agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant
to the terms hereof, the Company has director and officer liability insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee,
all amounts payable as a result of such proceeding in accordance with the terms of such policies.

          (c) In the event of any payment under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers
required and take all action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.

          (d) The Company shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any insurance policy,
contract, agreement or otherwise.

          (e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is
or was serving at the request of the Company as a director, officer, employee or agent of any other
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be
reduced by any amount Indemnitee has actually received as indemnification or advancement of
Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise.

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     Section 15. Duration of Agreement. This Agreement shall continue until and terminate
upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as
a director of the Company or (b) one (1) year after the final termination of any Proceeding then
pending in respect of which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 13 of this
Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.

     Section 16. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including, without limitation,
each portion of any Section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any
way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by
law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform
to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested thereby.

     Section 17. Enforcement.

          (a) The Company expressly confirms and agrees that it has entered into this Agreement and
assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director
of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in
serving as a director of the Company.

          (b) This Agreement constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings, oral, written and
implied, between the parties hereto with respect to the subject matter hereof; provided,
however, that this Agreement is a supplement to and in furtherance of the Charter, the
By-laws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or
abrogate any rights of Indemnitee thereunder.

     Section 18. Modification and Waiver. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provisions of this Agreement nor shall any waiver constitute a continuing waiver.

     Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in
writing upon being served with any summons, citation, subpoena, complaint, indictment, information
or other document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall
not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement
or otherwise.

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     Section 20. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by
hand and receipted for by the party to whom said notice or other communication shall have been
directed, (b) mailed by certified or registered mail with postage prepaid, on the third business
day after the date on which it is so mailed, (c) mailed by reputable overnight courier and
receipted for by the party to whom said notice or other communication shall have been directed or
(d) sent by facsimile transmission, with receipt of oral confirmation that such transmission has
been received:

          (a) If to Indemnitee, at such address as Indemnitee shall provide to the Company.

          (b) If to the Company to: Javelin Pharmaceuticals, Inc., 125 CambridgePark Drive, Cambridge,
Massachusetts 02140

or to any other address as may have been furnished to Indemnitee by the Company.

     Section 21. Contribution. To the fullest extent permissible under applicable law, if
the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason
whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount
incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to
be paid in settlement and/or for Expenses, in connection with any claim relating to an
indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect: (i) the relative benefits
received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving
cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors,
officers, employees and agents) and Indemnitee in connection with such event(s) and/or
transaction(s).

     Section 22. Applicable Law and Consent to Jurisdiction. This Agreement and the legal
relations among the parties shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware, without regard to its conflict of laws rules. Except with
respect to any arbitration commenced by Indemnitee pursuant to Section 13(a) of this Agreement, the
Company and Indemnitee hereby irrevocably and unconditionally: (i) agree that any action or
proceeding arising out of or in connection with this Agreement shall be brought only in the
Delaware Court, and not in any other state or federal court in the United States of America or any
court in any other country; (ii) consent to submit to the exclusive jurisdiction of the Delaware
Court for purposes of any action or proceeding arising out of or in connection with this Agreement;
(iii) appoint, to the extent such party is not otherwise subject to service of process in the State
of Delaware, The Corporation Trust Company, Wilmington, Delaware as its agent in the State of
Delaware as such party’s agent for acceptance of legal process in connection with any such action
or proceeding against such party with the same legal force and validity as if served upon such
party personally within the State of Delaware; (iv) waive any objection to the laying of venue of
any such action or proceeding in the Delaware Court; and (v) waive, and agree not to plead or to
make, any claim that any such action or proceeding brought in the Delaware Court has been brought
in an improper or inconvenient forum.

- 11 -

 

     Section 23. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one such counterpart signed by the party
against whom enforceability is sought needs to be produced to evidence the existence of this
Agreement.

     Section 24. Miscellaneous. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement or to
affect the construction thereof.

[remainder of page intentionally left blank; signature page follows]

- 12 -

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year
first above written.

	 	 	 	 	 
	 	JAVELIN PHARMACEUTICALS, INC.

 

	 
	 	By:  	     /s/ Martin J. Driscoll
 	 
	 	 	Name:  	Martin J. Driscoll 	 
	 	 	Title: 	Chief Executive Officer 	 
	 
	 	INDEMNITEE:

 	 
	 	By:  	Fred Mermelstein
 	 
	 	 	Name:  	Fred Mermelstein 	 
	 	 	 	 
	 

- 13 -exv10w4

Exhibit 10.4

LOAN AND SECURITY AGREEMENT

     This LOAN AND SECURITY AGREEMENT (this “Agreement”) is dated as of December 18, 2009, by and
among Myriad Pharmaceuticals, Inc., a Delaware corporation (“Parent”), Javelin Pharmaceuticals,
Inc., a Delaware corporation (the “Company”) and Innovative Drug Delivery Systems, Inc., a Delaware
corporation (the “Subsidiary”). The Company and the Subsidiary are sometimes referred to
individually as a “Borrower” and collectively as the “Borrowers.”

     A. Parent, the Company, MPI Merger Sub, Inc. and others are parties to that certain Agreement
and Plan of Merger, dated as of December 18, 2009, pursuant to which Parent shall acquire the
Company upon the terms and subject to the conditions set forth therein (the “Merger Agreement”).

     B. In connection with the Merger Agreement, Parent has agreed to make loans to the Borrowers
upon the terms and subject to the conditions set forth in this Agreement.

     The parties agree as follows:

     1. DEFINITIONS

          1.1 Definitions. Capitalized terms used herein that are not otherwise defined herein
shall have the meanings respectively ascribed to them in the Merger Agreement. Terms contained in
this Agreement, unless otherwise indicated, shall have the meanings provided in the UCC to the
extent such terms are defined therein. In addition, in this Agreement:

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

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

          “Company Products” means all products being manufactured, distributed or developed by or on
behalf of the Company or the Subsidiary.

          “Collateral” means the property described on Exhibit A.

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

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          “GAAP” is generally accepted accounting principles as applied in the United States.

          “General Intangibles” means all “general intangibles” as defined in the UCC in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all Intellectual Property, Regulatory Approvals, Regulatory Submissions, payment
intangibles, royalties, contract rights, licenses, goodwill, franchise agreements, purchase orders,
customer lists, route lists, telephone numbers, domain names, claims, income and other tax refunds,
security and other deposits, options to purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance
policies (including without limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any kind.

          “Governmental Authority” means any foreign or domestic national, state, provincial, municipal
or local government, governmental, regulatory or administrative authority, agency, instrumentality
or commission or any court, tribunal, or judicial or arbitral body.

          “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 (a) patents, patent applications and invention registrations
of any type, (b) trademarks, service marks, trade dress, logos, trade names, domain names,
corporate names and other source identifiers, and registrations and applications for registration
thereof and all goodwill associated with any of the foregoing, (c) copyrightable works, copyrights,
and registrations and applications for registration thereof, (d) confidential and proprietary
information, including trade secrets, know-how, inventions, discoveries, improvements and research
and development information and (e) formulae, technical information, specifications, data,
technology, plans, drawings, software and computer programs (including source code, executable
code, data files, databases and related documentation) and other intellectual property, including
in case of clauses (a) through (e) all copies and tangible embodiments thereof in whatever form or
medium.

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

          “Lien” means any mortgage, claim, pledge, security interest, assignment, deposit arrangement,
charge, encumbrance, lien, restriction, title defect or other adverse claim.

          “Maximum Loan Amount” means $6,000,000.

          “Note Documents” means collectively, this Agreement, the Note, the Intellectual Property
Security Agreement and any other present or future agreement between or among the

2

 

Borrowers, and/or for the benefit of Parent in connection with Loans made pursuant to this
Agreement, as the same may be amended, modified, extended or replaced from time to time.

          “Obligations” means all principal, interest, and other amounts that the Borrowers owe Parent
now or later under this Agreement and the other Note Documents, including interest accruing after
Insolvency Proceedings begin, and all out-of-pocket costs and expenses (including reasonable
attorneys’ fees and costs and other third party costs) incurred by Parent in connection with the
perfection, administration or enforcement of this Agreement or the other Note Documents or the
collection, recovery, sale or other realization relating in any way to the Collateral.

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

          “UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in
the State of Delaware.

     2. LOANS AND TERMS OF PAYMENT

          2.1 Bridge Loans. Subject to the terms and conditions hereinafter set forth, upon
written request of the Company given at least three (3) Business Days prior to the date on which
the Borrowers seek a loan from Parent, which date shall be specified in such written request,
Parent will make loans (each a “Loan” and collectively, the “Loans”) to the Borrowers from time to
time in an amount not to exceed $2,000,000 per month; provided, however, that the aggregate
original principal amount of all Loans to be made hereunder shall not exceed the Maximum Loan
Amount and no Loans shall be made after March 15, 2010.

          2.2 Note. The Loans shall be evidenced by that certain Secured Promissory Note dated
of even date herewith made by the Borrowers and payable to the order of Parent in the maximum,
principal amount of $6,000,000, in the form attached hereto as Exhibit B (the “Note”).
Each Borrower hereby irrevocably authorizes Parent to make or cause to be made, on a schedule
attached to the Note or on the books of Parent, at or following the time of making each Loan and of
receiving any payment of principal balance of the Loans the designation of the amount of such Loan
and payment. The amount so noted shall constitute prima facie evidence as to the amount owed by
the Borrowers with respect to the principal amount of the Loans. Failure of Parent to make any
such notation shall not, however, affect any obligation of the Borrowers or any right of Parent
hereunder or under the Note.

          2.3 Interest. Principal amounts outstanding under the Loans shall bear interest at a
rate per annum equal to ten percent (10%). Interest shall accrue daily from the Loan Date, shall
be calculated on the basis of actual days elapsed over a year of 365 days and shall be payable as
provided in Section 2.4 below. “Loan Date” means the date that a Loan is disbursed to the
Borrowers.

          2.4 Payment of Principal and Interest. The principal amount of the Loans, all accrued
interest thereon and all other amounts due under this Agreement and the other Note

3

 

Documents shall be repaid in full on the first to occur of (a) the Closing Date, (b) if the
Merger Agreement is terminated pursuant to Section 10.01(h) or Section 10.01(i) thereof, two (2)
Business Days following the Termination Date, provided, however, that if a Termination Fee and/or
Parent Stipulated Expenses shall be payable under Section 10.03(b) of the Merger Agreement within
90 days of termination of the Merger Agreement, then the two (2) Business Days referred to in this
clause (b) shall be extended to ninety (90) days following the Termination Date, (c) if the Merger
Agreement is terminated pursuant to any other subsection of Section 10.01 thereof (other than
Sections 10.01(h) or 10.01(i)), ninety (90) days following the Termination Date or (d) acceleration
as provided in Section 8.1 below. The Borrowers may, at any time and from time to time, prepay the
Loans in whole or in part without premium or penalty upon at least three (3) Business Days’ prior
written notice to the Parent.

          2.5 Parent Right to Offset. If the Merger Agreement is terminated pursuant to any
provision of Section 10.01 thereof pursuant to which Parent is obligated to pay the Company a
Termination Fee and/or Company Stipulated Expenses (collectively, the “Parent Termination Payment
Obligation”), Parent shall have the right to reduce such Parent Termination Payment Obligation by
the principal amount of the Loans, all accrued interest thereon and all other amounts due under
this Agreement and the other Note Documents, regardless of when such amounts are payable under the
terms hereof or thereof.

     3. CONDITIONS OF LOANS

          3.1 Conditions Precedent to Loan. Parent’s obligation to make the Loans is subject to
the following conditions precedent:

               (a) Parent shall have received this Agreement, fully executed by the Borrowers;

               (b) Parent shall have received the Merger Agreement, fully executed by the Borrowers;

               (c) Parent shall have received the Note, fully executed by the Borrowers;

               (d) Parent shall have received the Intellectual Property Security Agreement, fully executed by
each Borrower;

               (e) Parent shall have received, in form and substance satisfactory to Parent, such other
documents, and completion of such other matters, as Parent may deem necessary or appropriate,
including, without limitation, perfection certificates for each Borrower;

               (f) the Merger Agreement shall not have been terminated for any reason;

               (g) there shall be no breach or inaccuracy of any representation, warranty, covenant or
agreement of the Company under the Merger Agreement that is curable such that pursuant to the
provisions of Section 10.01(d) thereof, Parent is unable to terminate the Merger Agreement prior to
the date of such Loan;

4

 

               (h) all statements, representations and warranties of the Borrowers made in this Agreement
shall continue to be correct and complete in all material respects as of the date of such Loan;
provided, however, that such materiality qualifier shall not apply to any statements,
representations and warranties in this Agreement that are already qualified by materiality;

               (i) each Borrower shall be in full compliance with all of the provisions of the Note Documents
(as applicable);

               (j) if the Company shall have received a Company Acquisition Proposal (that was not solicited
in violation of Section 8.03(a) of the Merger Agreement) and Parent has requested that the Company
Board reaffirm its approval and recommendation of the Merger and the Merger Agreement, the Company
Board shall have done so;

               (k) no Event of Default under Section 7.3 shall have occurred;

               (l) Parent shall have received a reasonably detailed summary of the Borrowers’ intended use of
the proceeds of the Loan, in form and substance reasonably satisfactory to Parent; and;

               (m) at least three (3) Business Days prior to any Loan Date, Parent shall have received, in
form and substance reasonably satisfactory to Parent, a request for loan advance, substantially in
the form attached hereto as Exhibit C (the “Advance Certificate”). The Advance Certificate
shall include, among other things, statements to the effect that the conditions set forth in
Sections 3.1 (f),(g),(h),(i),(j) and (k) have been duly satisfied.

     4. SECURITY AGREEMENT

          4.1 Grant of Security Interest. As security for the payment and performance of the
Obligations, each Borrower hereby pledges, assigns and grants to Parent a continuing first priority
security interest in all of such Borrower’s right, title and interest in and to the Collateral
wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products
thereof. Each Borrower represents, warrants, and covenants that the security interest granted
herein is and shall at all times continue to be a first priority security interest in the
Collateral. Each Borrower represents and warrants that subject to the filing or recordings
referred to herein, such security interest constitutes a perfected security interest in all
Collateral (i) in which a security interest may be perfected by filing, recording or registering a
financing statement or analogous document in the United States (or any political subdivision
thereof) and its territories and possessions pursuant to the Uniform Commercial Code and (ii) in
which a security interest may be perfected upon the receipt and recording of the relevant IP
Security Agreement with the United States Patent and Trademark Office and the United States
Copyright Office, as applicable. Within 5 Business Days of the date of this Agreement, the Company
shall deliver to Parent originals of all stock certificates representing its equity interests in
the Subsidiary (the “Pledged Stock”) with accompanying stock powers endorsed in blank and upon such
delivery the Company represents and warrants that pledge effected hereby is effective to vest in
Parent the rights of Parent in the Pledged Stock as set forth herein. If any Borrower shall
acquire a commercial tort claim, such Borrower shall promptly notify Parent in a writing signed by
such Borrower of the general details thereof and if requested by Parent, shall grant to Parent

5

 

in such writing a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably satisfactory to Parent.

          4.2 Financing Statements, Etc. Each Borrower hereby authorizes Parent to file, at any
time and from time to time thereafter, all financing statements, financing statement assignments,
continuation financing statements, UCC filings and filings of notices with the U. S. Copyright
Office and the U.S. Patent and Trademark Office, in form reasonably satisfactory to Parent. Such
financing statements may indicate the Collateral as “all assets of the Debtor” or words of similar
effect, or as being of an equal or lesser scope, or with greater detail, all in Parent’s
discretion. Each Borrower shall execute and deliver and shall take all other action, as Parent may
reasonably request, to perfect and continue perfected, maintain the priority of or provide notice
of the security interest of Parent in the Collateral and to accomplish the purposes of this
Agreement. Without limiting the generality of the foregoing, each Borrower ratifies and authorizes
the filing by Parent of any financing statements filed prior to the date hereof that accomplish the
purposes of this Agreement.

     5. REPRESENTATIONS AND WARRANTIES

     Each Borrower represents and warrants as follows:

          5.1 Organization and Qualification; Authority. Each Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware. Each
Borrower (i) is duly qualified or licensed to do business as a foreign corporation and is in good
standing under the laws of any other jurisdiction in which the character of the properties owned,
leased or operated by it therein or in which the transaction of its business makes such
qualification or licensing necessary and (ii) has the requisite corporate power and authority to
own, operate and lease its properties and carry on its business as now conducted, except where the
failure to be so qualified, licensed or in good standing or have such corporate power and authority
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

          5.2 Authority Relative to this Agreement; Validity and Effect of Agreements. Each
Borrower has all necessary corporate power and authority to execute and deliver this Agreement and
the other Note Documents, to perform its obligations hereunder and thereunder and transactions
contemplated hereunder and thereunder. The execution, delivery and performance by each Borrower of
this Agreement and the Note Documents and the consummation of the transactions contemplated
hereunder and thereunder have been duly and validly authorized by all necessary corporate action on
behalf of each Borrower. Each of this Agreement and each of the other Note Documents has been duly
and validly executed and delivered by each Borrower and, assuming the due authorization, execution
and delivery by the Parent, constitutes a legal, valid and binding obligation of each Borrower,
enforceable against each Borrower in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws
of general applicability relating to or affecting creditors’ rights or by general equity
principles.

          5.3 No Conflict; Required Filings and Consents.

6

 

               (a) The execution and delivery by each Borrower of this Agreement and the Note Documents do
not, and the performance of its obligations hereunder and thereunder will not, (i) conflict with or
violate its charter or bylaws, (ii) conflict with or violate any Law applicable to any Borrower or
by which any property or asset of any Borrower is bound, (iii) except as described in Section
5.3(b), require any consent, notice or waiver under or result in any violation or breach of or
constitute (with or without notice or lapse of time or both) a default (or give rise to any right
of termination, amendment, acceleration, prepayment or cancellation or to a loss of any benefit to
which any Borrower) under, or result in the triggering of any payments pursuant to (A) any written
agreement, lease, license, contract, loan, note, mortgage, indenture, undertaking or other
commitment or obligation to which any Borrower is a party or by which it or any of its properties
or assets may be bound or (B) any Permit affecting, or relating in any way to, the assets or
business of any Borrower or (iv) result in the creation or imposition of any Lien or other
encumbrance (except for Permitted Liens) on any property or asset of any Borrower, with respect to
clauses (ii), (iii) and (iv) such triggering of payments, Liens, encumbrances, filings, notices,
Permits, authorizations, consents, approvals, violations, conflicts, breaches or defaults which
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

               (b) The execution and delivery by the Borrowers of this Agreement and the other Note Documents
do not, and the performance of its obligations hereunder and thereunder will not, require any
consent, approval, authorization of, or filing with or notification to, any Governmental Authority,
except (i) filings necessary to perfect the Liens on the Collateral granted in favor of the Parent,
(ii) the approvals, consents, exceptions, authorizations, notices and filings which have been duly
obtained, taken, given or made and are in full force and effect and (iii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

          5.4 Security Interest. This Agreement creates a valid security interest that is
enforceable against the Collateral in which each Borrower now has rights and will create a security
interest that is enforceable against the Collateral in which each Borrower hereafter acquires
rights at the time each Borrower acquires any such rights. Each Borrower has the right and power
to grant the security interests in the Collateral to the Parent, and each Borrower is the sole and
complete owner of the Collateral, free from any Lien other than (i) Liens in favor of the Parent in
respect of the Obligations hereunder, (ii) statutory Liens for Taxes not yet delinquent and Liens
for Taxes being contested in good faith or for which there are adequate reserves on the financial
statements of the Borrowers (if such reserves are required pursuant to GAAP), (iii) inchoate
mechanics’ and materialmen’s Liens for construction in progress, (iv) workmen’s, repairmen’s,
warehousemen’s and carriers’ Liens arising in the ordinary course of business of any Borrower, (v)
zoning restrictions, utility easements, rights of way and similar Liens that are imposed by any
Governmental Authority having jurisdiction thereon or otherwise are typical for the applicable
property type and locality and that, individually or in the aggregate, would not reasonably be
expected to materially interfere with the Borrowers’ ability to conduct their businesses as
currently conducted, (vi) matters that would be disclosed on current title reports or surveys that
arise or have arisen in the ordinary course of business, (vii) Liens reflected in the Company SEC
Reports, (viii) the Lien described on Section 5.17 of the Company Disclosure Schedule to the Merger
Agreement and (ix) Liens (x) of a collection bank arising under Section

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4–210 of the Uniform Commercial Code on items in the course of collection, (y) relating to the
establishment of depository relations with banks, and (z) in favor of banking institutions arising
as a matter of law encumbering deposits (including the right of set-off) and which are within the
general parameters customary in the banking industry.

          5.5 Enforceability. This Agreement has been duly executed and delivered by the
Borrowers and is a legal, valid and binding obligation of the Borrowers, enforceable against such
Borrowers in accordance with its respective terms, except as may be limited by (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and (ii) general principles of equity.

          5.6 Investment Company. Each Borrower, is not an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, or a “holding company,” or a “subsidiary
company” of a “holding company,” or an “affiliate” of a “holding company,” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility Holding Company Act of
1935, as amended.

          5.7 Solvency. Immediately following the making of the Loans and after giving effect
to the application of the proceeds of the Loans: (a) the value of the assets of the Borrowers and
their subsidiaries, taken as whole, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise and (b) the present fair saleable value of the property of
the Borrowers and their subsidiaries, taken as whole, will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and matured.

     6. COVENANTS

     Each Borrower shall do all of the following (as applicable):

          6.1 Merger Agreement Compliance. Until the earliest of (i) Merger is consummated,
(ii) the Merger Agreement is terminated or (iii) the Obligations have been repaid or otherwise
satisfied in full, the Company shall continue to perform its obligations as required under the
Merger Agreement including, Section 7.01 thereof.

          6.2 Use of Proceeds. The Borrowers shall use the proceeds of the Loans for working
capital purposes.

          6.3 No Liens. The Borrowers shall keep the Collateral free of all Liens other than
Permitted Liens.

          6.4 Inspection. Following termination of the Merger Agreement, each Borrower shall
permit Parent and its representatives to inspect the books of such Borrower for purposes reasonably
related to this Agreement at any time during business hours following reasonable advance notice.

          6.5 No Margin Stock. No proceeds of any Loan shall be used directly or indirectly to
purchase or carry any margin security or margin stock, as such terms are used in

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Regulations U and X of the Board of Governors of the Federal Reserve System, 12 CFR parts 221
and 224.

          6.6 Notice of Changes. The Borrowers shall give at least fifteen (15) days’ prior
written notice to Parent of: (i) any change in any Borrower’s name; (ii) any changes in any
Borrower’s identity or structure in any manner which might make any financing statement filed
hereunder incorrect or misleading; and (iii) any change in jurisdiction of organization.

          6.7 No Transfer of Collateral. The Borrowers shall not surrender or lose possession
of, sell, lease, license, assign, rent or otherwise dispose of or transfer any of the Collateral or
any right or interest therein, except in the ordinary course of business consistent with past
practice or except as permitted by the Merger Agreement.

          6.8 Insurance. The Borrowers shall use commercially reasonable efforts to provide
Parent with certificates of insurance with respect to the insurance maintained by the Borrowers
pursuant to the Merger Agreement which designate Parent as a lender loss payee or additional
insured, as applicable. Parent agrees that absent a continuation of an Event of Default, any
insurance proceeds shall be remitted to the Borrowers.

          6.9 Account Control Agreements. The Borrowers shall use commercially reasonable
efforts to obtain account control agreements in form and substance reasonably satisfactory to
Parent on all deposit and securities accounts. Parent agrees that any notification and exercise of
control over such deposit accounts will only be exercised during the continuation of an Event of
Default.

          6.10 Further Assurances. Each Borrower shall execute any further instruments and take
further action as Parent reasonably requests to effect the purposes of this Agreement and the other
Note Documents.

     7. EVENTS OF DEFAULT

     Any one of the following is an Event of Default:

          7.1 Payment Default. Any Borrower fails to pay any of the Obligations on their due
date;

          7.2 Covenant Default. Any Borrower shall default in the performance or observance of
any agreement, covenant or obligation under this Agreement or the other Note Documents and solely
with respect to any default which is capable of being remedied, such failure continues for thirty
(30) days after notice thereof by the Parent to the Company; provided, however, that a default
pursuant to Section 6.1 hereof, shall not be deemed an Event of Default, if (i) such default is
curable under the terms of the Merger Agreement and has been cured within thirty (30) days or (ii)
such default has been waived in writing by Parent under the Merger Agreement or under this Loan
Agreement; or

          7.3 Insolvency. (i) any Borrower begins an Insolvency Proceeding; or (ii) an
Insolvency Proceeding is begun against any Borrower and not dismissed or stayed within thirty (30)
days.

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     8. PARENT’S RIGHTS AND REMEDIES

          8.1 Rights and Remedies. While an Event of Default occurs and continues Parent may,
without notice or demand, do any or all of the following:

               (a) declare all Obligations immediately due and payable (but if an Event of Default described
in Section 7.3 occurs all Obligations are immediately due and payable without any action by
Parent);

               (b) stop advancing money or extending credit for the Borrowers’ benefit under this Agreement
or under any other agreement between the Company and Parent;

               (c) settle or adjust disputes and claims directly with account debtors for amounts on terms
and in any order that Parent considers advisable, notify any Person owing any Borrower money of
Parent’s security interest in such funds, and verify the amount of such account;

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

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

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

               (g) deliver a notice of exclusive control, any entitlement order, or other directions or
instructions pursuant to any control agreement or similar agreements providing control of any
Collateral;

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

               (i) exercise all rights and remedies available to Parent under the Note Documents or at law or
equity, including all remedies provided under the UCC (including sale, assignment, transfer or
other disposal of the Collateral pursuant to the terms thereof);

10

 

provided, however, that except with respect to (i) an Insolvency Proceeding or (ii) an Event of
Default that does not immediately trigger Parent’s right to terminate the Merger Agreement under
the provisions thereof, Parent shall not exercise its rights and remedies under this Section 8.1
unless and until the Merger Agreement has been terminated in accordance with its terms.

          8.2 Power of Attorney. Each Borrower hereby irrevocably appoints Parent as its lawful
attorney-in-fact, exercisable upon the occurrence and during the continuance of an Event of
Default, to: (a) endorse such Borrower’s name on any checks or other forms of payment or security;
(b) sign such Borrower’s name on any invoice or bill of lading for any Account or drafts against
account debtors; (c) settle and adjust disputes and claims about the Accounts directly with account
debtors, for amounts and on terms Parent determines reasonable; (d) make, settle, and adjust all
claims under such Borrower’s insurance policies; (e) pay, contest or settle any Lien, charge,
encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same; and (f) sell, transfer,
assign or otherwise dispose of the Collateral to Parent or a third party as the UCC permits. Each
Borrower hereby appoints Parent as its lawful attorney-in-fact to sign such Borrower’s name on any
documents necessary to perfect or continue the perfection of Parent’s security interest in the
Collateral regardless of whether an Event of Default has occurred until all Obligations have been
satisfied in full. Parent’s foregoing appointment as each Borrower’s attorney in fact, and all of
Parent’s rights and powers, coupled with an interest, are irrevocable until all Obligations have
been fully repaid and performed and Parent’s obligation to provide Loans terminates.

          8.3 Protective Payments. If any Borrower fails to maintain the insurance called for
by Section 7.01(r) of the Merger Agreement or fails to pay any premium thereon or fails to pay any
other amount which such Borrower is obligated to pay under this Agreement or any other Loan
Document, Parent may obtain such insurance or make such payment, and all amounts so paid by Parent
are immediately due and payable, bearing interest at the then highest applicable rate charged by
Parent, and secured by the Collateral. Parent will make reasonable efforts to provide the Borrower
with notice of Parent obtaining such insurance at the time it is obtained or within a reasonable
time thereafter. No payments by Parent are deemed an agreement to make similar payments in the
future or Parent’s waiver of any Event of Default.

          8.4 Application of Payments and Proceeds. The Borrower shall have no right to specify
the order or the accounts to which Parent shall allocate or apply any payments required to be made
by each Borrower to Parent or otherwise received by Parent under this Agreement when any such
allocation or application is not specified elsewhere in this Agreement. If an Event of Default has
occurred and is continuing, Parent may apply any funds in its possession, whether from the
Borrowers’ account balances, payments, proceeds realized as the result of any collection of
Accounts or other disposition of the Collateral, or otherwise, to the Obligations in such order as
Parent shall determine in its sole discretion. Any surplus shall be paid to the Borrowers or other
Persons legally entitled thereto; the Borrowers shall remain liable to Parent for any deficiency.
If Parent, in its good faith business judgment, directly or indirectly enters into a deferred
payment or other credit transaction with any purchaser at any sale of Collateral, Parent shall have
the option, exercisable at any time, of either reducing the Obligations by the principal amount of
the purchase price or deferring the reduction of the Obligations until the actual receipt by Parent
of cash therefore.

11

 

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

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

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

          8.8 Costs and Expenses. The Company agrees to pay on demand all out-of-pocket costs
and expenses (including, without limitation, the reasonable fees and expenses of legal counsel)
incurred by Parent in connection with the administration of this Agreement and the other Note
Documents, the enforcement and exercise of any rights or remedies under this Agreement and the
other Note Documents and the administration and perfection of the Collateral.

     9. TERMINATION OR RELEASE

          9.1 This Agreement and all security interests granted hereby shall terminate with respect to
all Obligations when all the outstanding Obligations have been paid in full in cash or offset as
permitted hereunder and Parent has no further obligation to lend under this Agreement in accordance
with the provisions hereof.

          9.2 Upon any sale or other transfer by the Company of any Collateral that is permitted
hereunder. Parent shall release its security interest in such Collateral.

          9.3 In connection with any such termination or release pursuant to Sections 9.1 or 9.2, Parent
shall promptly execute and deliver to the Borrowers, at the Borrowers’ expense, all documents that
the Borrowers shall reasonably request to evidence such termination.

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     10. NOTICES

     Any notice or other communication herein required or permitted to be given shall be in writing
and shall be given in accordance with Section 12.02 of the Merger Agreement.

     11. GENERAL PROVISIONS

          11.1 Indemnification. Each Borrower agrees to indemnify, defend and hold Parent and
its directors, officers, employees, agents, attorneys, or any other Person affiliated with or
representing Parent (each, an “Indemnified Person”) harmless against: (a) all obligations,
demands, claims, and liabilities (collectively, “Claims”) asserted by any other party in connection
with the transactions contemplated by the Note Documents; and (b) all losses or costs and expenses
incurred, or paid by such Indemnified Person from, following, or arising from transactions between
any Borrower and Parent in connection with the Note Documents (including reasonable attorneys’ fees
and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross
negligence or willful misconduct.

          11.2 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy or the application of
this Agreement to any person or circumstance is invalid or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of the transactions
contemplated by this Agreement is not affected in any manner materially adverse to any party. To
such end, the provisions of this Agreement are agreed to be severable. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally contemplated to the fullest extent
possible.

          11.3 This Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof, and supersede all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned (whether pursuant to a merger, by operation of law or otherwise); provided that
Parent may assign any of its rights and obligations hereunder, in whole or in part, to any
Subsidiary of Parent without obtaining the consent of the Company and any such assignment shall not
relieve Parent of its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns. Any purported assignment not permitted under this
Section 11.3 shall be null and void ab initio and of no force and effect.

          11.4 Governing Law; Forum. (a) All disputes, claims or controversies arising out of
or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or
the transactions contemplated hereby shall be governed by and construed in accordance with the laws
of the State of Delaware without regard to its rules of conflict of laws.

13

 

          (b) Except as set out below, each of the Borrowers and Parent hereby irrevocably and
unconditionally consents to submit to the sole and exclusive jurisdiction of any court of the State
of Delaware or of the United States located in New Castle County, Delaware (the “Delaware
Courts”) for any litigation arising out of or relating to this Agreement, or the negotiation,
validity or performance of this Agreement, or the transactions contemplated hereby (and agrees not
to commence any litigation relating thereto except in such courts), waives any objection to the
laying of venue of any such litigation in the Delaware Courts and agrees not to plead or claim in
any Delaware Court that such litigation brought therein has been brought in any inconvenient forum.
Process in any such suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any Delaware Court.

          11.5 Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest
extent permitted by applicable Law any right it may have to a trial by jury with respect to any
litigation directly or indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated by this Agreement. Each of the parties hereto (a) certifies that no
representative, agent or attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce that foregoing waiver and
(b) acknowledges that it and the other party hereto have been induced to enter into this Agreement
and the transactions contemplated by this Agreement, as applicable, by, among other things, the
mutual waivers and certifications in this Section 11.5.

          11.6 Headings. The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or interpretation of this
Agreement.

          11.7 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in two or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.

          11.8 Joint and Several Liability. Each Borrower expects to receive substantial direct
and indirect benefits from the extension of the Loans established pursuant to this Agreement. In
consideration of the foregoing, each Borrower hereby irrevocably and unconditionally agrees that it
is jointly and severally liable for all of the liabilities, obligations, covenants and agreements
of the Borrowers hereunder and under the other Note Documents, whether now or hereafter existing or
due or to become due. The obligations of the Borrowers under the Note Documents may be enforced by
Parent against any Borrower or all Borrowers in any manner or order selected by Parent in its sole
discretion. Each Borrower hereby irrevocably waives (i) any rights of subrogation and (ii) any
rights of contribution, indemnity or reimbursement, in each case, that it may acquire or that may
arise against any other Borrower due to any payment or performance made under this Agreement, in
each case until all Obligations shall have been fully satisfied.

14

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as a sealed
instrument as of the date first above written.

	 	 	 	 	 	 	 	 	 
	Witnessed by:	 	 	 	MYRIAD PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Andrew Gibbs

	 	 	 	By:
	 	/s/ Adrian N. Hobden	 	 
	 

	 	 	 	 	 	 	 	 
	Name: Andrew Gibbs

	 	 	 	 	 	Name: Adrian N. Hobden	 	 
	 

	 	 	 	 	 	Title: President and Chief Executive
Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Witnessed by:	 	 	 	JAVELIN PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Frederick E. Pierce, II

	 	 	 	By:
	 	/s/ Martin J. Driscoll	 	 
	 

	 	 	 	 	 	 	 	 
	Name: Frederick E. Pierce, II

	 	 	 	 	 	Name: Martin J. Driscoll	 	 
	 

	 	 	 	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	Witnessed by:	 	 	 	INNOVATIVE DRUG DELIVERY SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Frederick E. Pierce, II

	 	 	 	By:
	 	/s/ Martin J. Driscoll	 	 
	 

	 	 	 	 	 	 	 	 
	Name: Frederick E. Pierce, II

	 	 	 	 	 	Name: Martin J. Driscoll	 	 
	 

	 	 	 	 	 	Title: Chief Executive Officer	 	 

15

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