Document:

exv10w6

Exhibit 10.6

SECURED SUBORDINATED CONVERTIBLE NOTE AND WARRANT

PURCHASE AGREEMENT

NUPATHE INC.

April 9, 2010

 

 

SCHEDULES AND EXHIBITS

TO

SECURED SUBORDINATED CONVERTIBLE NOTE AND WARRANT

PURCHASE AGREEMENT

	 	 	 	 	 
	Schedules:
	 	3.3	 	 	Capitalization; Voting Rights

	 	3.5	 	 	Financial Statements

	 	3.6	 	 	Liabilities

	 	 	 
	Exhibits:
	Exhibit A
	 	Schedule of Purchasers

	Exhibit B
	 	Form of Secured Subordinated Convertible Promissory Note

	Exhibit C
	 	Form of Warrant

	Exhibit D
	 	Knowledge Persons

	Exhibit E-1 and E-2 
	 	Capitalization

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NUPATHE INC.

SECURED SUBORDINATED CONVERTIBLE NOTE AND WARRANT

PURCHASE AGREEMENT

          THIS SECURED SUBORDINATED CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT (the “Agreement”) is
entered into on April 9, 2010 by and among NuPathe Inc., a Delaware corporation (the “Company”),
and the purchasers identified on Exhibit A on the date hereof (the “Purchasers”).

BACKGROUND

          A. The Company currently is in the business of developing therapeutic products for the
treatment of neurological and psychiatric disorders (such products developed, manufactured or
distributed by the Company, the “Products,” and the development, manufacture or distribution of the
Products being the “Business”).

          B. The Company has authorized the sale and issuance of secured subordinated convertible
promissory notes substantially in the form attached hereto as Exhibit B (each, as executed
by the Company, a “Note” and collectively, the “Notes”) having an aggregate principal amount of up
to $10,062,500.

          C. As an inducement to each Purchaser to purchase a Note (or Notes), the Company has
authorized the issuance of a warrant to each Purchaser to purchase stock in substantially the form
attached hereto as Exhibit C (each, as executed by the Company, a “Warrant” and
collectively, the “Warrants”).

          D. Each Purchaser desires to purchase the Notes and the Warrants on the terms and conditions
set forth herein.

          E. The Company desires to issue and sell the Notes and the Warrants to each Purchaser on the
terms and conditions set forth herein.

          NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements
herein contained and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

     1. AGREEMENT TO SELL AND PURCHASE.

          1.1. Authorization of Notes, Shares and Conversion Shares. The Company has authorized
(i) the sale and issuance to the Purchasers of the Notes, (ii) the reservation of shares (the
"Shares”) of the Company’s Series B Preferred Stock, $0.001 par value per share (“Series B
Preferred Stock”), issuable upon conversion of the Notes and (iii) the reservation of shares of the
Company’s common stock, par value $0.001 per share (the “Common Stock”), issuable upon conversion
of the Shares (the “Conversion Shares”). The Shares and the Conversion Shares shall have the
rights, preferences, privileges and restrictions set forth in the Third Amended and Restated
Certificate of Incorporation of the Company, as amended (the “Certificate”).

 

 

          1.2. Authorization of Warrants and Warrant Shares. The Company has authorized (i) the
issuance to the Purchasers of the Warrants, (ii) the reservation of shares of Series B Preferred
Stock (the “Warrant Shares”), issuable upon exercise of the Warrants and (iii) the reservation of
shares of Common Stock issuable upon exercise of the Warrants, and/or conversion of the Warrant
Shares, as applicable (the “Warrant Conversion Shares”). The Warrant Shares and the Warrant
Conversion Shares will have the rights, preferences, privileges and restrictions set forth in the
Certificate. The Company, on the one hand, and each Purchaser, on the other hand, having adverse
interests and as a result of arm’s length bargaining, agree that: (a) neither the Purchaser nor any
individual or entity affiliated with the Purchaser has rendered any services to the Company in
connection with this Agreement; (b) the Warrants are not being issued as compensation; and (c) all
tax returns and other information of each party relative to this Agreement and the Notes and
Warrants issued pursuant hereto shall consistently reflect the matters agreed to in (a) and (b)
above.

          1.3. Sale and Purchase. Subject to the terms and conditions hereof, and in reliance
upon the representations, warranties and covenants contained herein, (i) at the Initial Closing (as
defined below) the Company shall issue and sell to each Purchaser, severally and not jointly, and
each Purchaser shall purchase from the Company, severally and not jointly, a Note having an
original principal amount equal to the amount set forth opposite such Purchaser’s name on
Exhibit A under Column B (collectively, the “Initial Closing Notes”), and (ii) at the
Second Closing (as defined below) the Company shall issue and sell to certain Purchasers, severally
and not jointly, and such Purchasers shall purchase from the Company, severally and not jointly, a
Note having an original principal amount equal to the amount set forth opposite such Purchaser’s
name on Exhibit A under Column C (collectively, the “Second Closing Notes”).

          1.4. Issuance of Warrants. The Company shall issue to each Purchaser a Warrant
determined as follows:

               (a) Upon conversion of the Note (or Notes) issued to such Purchaser pursuant to Section 4(b)
thereof in connection with an Acquisition Transaction (as defined in the Note), the Company shall
issue a Warrant to subscribe for and purchase up to a number of shares of Series B Preferred Stock
equal to (i) the outstanding principal amount of the Note (or Notes) at the date of such conversion
multiplied by twenty-five percent (25%), divided by (ii) the Acquisition Conversion Price (as
defined in the Note). The per share exercise price under the Warrant shall initially be equal to
the Acquisition Conversion Price.

               (b) Upon conversion of the Note (or Notes) issued to such Purchaser pursuant to Section 4(c)
thereof in connection with a Qualified Financing (as defined in the Note), the Company shall issue
a Warrant to subscribe for and purchase up to a number of shares of Equity Securities (as defined
in the Note) equal to (i) the outstanding principal amount of the Note (or Notes) at the date of
such conversion multiplied by twenty-five percent (25%), divided by (ii) the Qualified Financing
Conversion Price (as defined in the Note). The per share exercise price under the Warrant shall
initially be equal to the Qualified Financing Conversion Price.

               (c) If the Note (or Notes) issued to such Purchaser is not converted pursuant to Section 4 of
the Note, at the Maturity Date (as defined in the Note), the Company shall issue a Warrant to
subscribe for and purchase up to a number of shares of Series B Preferred Stock equal to (i) the
outstanding principal amount of the Note (or Notes) at the date of such conversion multiplied by
twenty-five percent (25%), divided by (ii) the Optional Conversion Price (as defined in the Note).
The per share exercise price under the Warrant shall initially be equal to the Optional Conversion
Price.

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     2. CLOSINGS, DELIVERY AND PAYMENT.

          2.1. Closings. The closing of the sale and purchase of the Initial Closing Notes
under this Agreement (the “Initial Closing”) shall take place at 10:00 a.m. on the date hereof, at
the offices of Morgan Lewis & Bockius LLP, 1701 Market Street, Philadelphia, PA 19103, or at such
other time or place as the Company and the Purchasers may mutually agree (such date is hereinafter
referred to as the “Initial Closing Date”). The closing of the sale and purchase of the Second
Closing Notes under this Agreement (the “Second Closing,” and together with the Initial Closing,
the “Closings”) shall take place at 10:00 a.m. on April 20, 2010, at the offices of Morgan Lewis &
Bockius LLP, 1701 Market Street, Philadelphia, PA 19103, or at such other time or place as the
Company and the Majority Holders (as defined in the Note) may mutually agree (such date is
hereinafter referred to as the “Second Closing Date”); provided, that upon the satisfaction of the
conditions set forth in Section 5.1 at the Initial Closing, there shall be no additional conditions
with respect to the consummation of the Second Closing.

          2.2. Delivery; Payment. At the Initial Closing and the Second Closing, subject to the
terms and conditions hereof, the Company will deliver to each Purchaser a fully executed Initial
Closing Note or Second Closing Note, as applicable, against payment for such securities in cash by
wire transfer of immediately available funds made payable to the order of the Company or as it
shall direct.

          2.3. Use of Proceeds. The proceeds received by the Company from the sale of the Notes
and the Warrants shall be used for general corporate purposes including working capital.

     3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

          The Company represents and warrants to each of the Purchasers that the statements made in this
Section 3, together with the disclosure set forth on the disclosure schedules referenced herein and
attached hereto (the “Schedules”), are true and correct on the date hereof. The Schedules shall be
arranged to correspond to the numbered paragraphs contained in this Section 3, and the disclosure
in any paragraph of the Schedules shall qualify other subsections in Section 3 only to the extent
that it is readily apparent from a reading of the disclosure that such disclosure is applicable to
such other subsections. As used herein, the term “Knowledge” means the actual knowledge, following
such inquiries and investigations as would be deemed appropriate by a reasonable businessperson
engaged in a business similar to the Business in the prudent management of his or her business
affairs, of the persons set forth on Exhibit D and the term “Actual Knowledge” means the
actual knowledge of the persons set forth on Exhibit D.

          3.1. Organization, Good Standing and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to own and operate its properties and
assets, to execute and deliver this Agreement, to issue and sell each of the Notes and to issue
each of the Warrants and, upon conversion of the Notes, to issue the Shares and, upon conversion of
the Shares, to issue the Conversion Shares, and, upon exercise of the Warrants, to issue the
Warrant Shares and, upon conversion of the Warrant Shares, to issue the Warrant Conversion Shares
(the Notes, Shares, Conversion Shares, Warrants, Warrant Shares and Warrant Conversion Shares are
sometimes referred to herein, collectively or separately as the context may require, as the
"Securities”), and to carry out the provisions of this Agreement, the Notes and the Warrants and to
carry on its Business as currently conducted and as currently proposed to be conducted. The
Company is duly qualified, is authorized to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its activities and of its properties (both
owned and leased) makes such qualification necessary, except where the failure to so qualify would
not have a material adverse effect on the assets, liabilities, financial condition, operations or
prospects of the Company (a “Material Adverse Effect”).

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          3.2. Subsidiaries. The Company does not have any Subsidiaries (as defined below). The
Company does not own any ownership interest or profits interest in any other corporation, limited
liability company, limited partnership or other entity. The Company is not a participant in any
joint venture, partnership or similar arrangement. For the purposes of this Agreement,
"Subsidiaries” means, with respect to any Person (as defined below) (including the Company), any
corporation, partnership, association or other business entity of which more than 50% of the issued
and outstanding stock or equivalent thereof having ordinary voting power is owned or controlled by
such Person, by one or more Subsidiaries or by such Person and one or more Subsidiaries of such
Person. For purposes of this Agreement, “Person” means any individual, corporation, partnership,
firm, joint venture, association, limited liability company, limited liability partnership,
joint-stock company, trust, unincorporated organization or governmental entity.

          3.3. Capitalization; Voting Rights. The authorized capital stock of the Company,
immediately prior to the Closing, consists of: (i) 73,050,000 shares of Common Stock, par value
$0.001 per share, of which 3,131,250 shares are issued and outstanding and an aggregate of
8,366,095 shares are reserved for future issuance pursuant to the NuPathe Inc. 2005 Equity
Compensation Plan, as amended (the “Company Equity Incentive Plan”), and (ii) 53,967,262 shares of
preferred stock, par value $0.001 per share (the “Preferred Stock”), 17,056,914 of which are
designated Series A Preferred Stock, $0.001 par value per share (“Series A Preferred Stock”),
16,922,506 of which are issued and outstanding, and 36,910,348 of which are designated Series B
Preferred Stock, 36,173,834 of which are issued and outstanding; and immediately prior to the
Closing, all issued and outstanding shares of the Company’s Common Stock, Series A Preferred Stock
and Series B Preferred Stock (1) have been duly authorized and validly issued to the persons listed
on Exhibit E-1 hereto in the amounts set forth thereon, (2) are fully paid and
nonassessable, and (3) were issued in compliance with all applicable state and federal laws
concerning the issuance of securities. When issued in compliance with this Agreement, the Notes,
the Warrants and the Certificate, the Securities will be, except as set forth on Schedule
3.3, free of any liens or encumbrances other than liens and encumbrances created by or imposed
upon the Purchasers; provided, however, that the Shares, the Warrant Shares, the Conversion Shares
and the Warrant Conversion Shares may be subject to restrictions on transfer under the Related
Agreements (as defined below) and state and/or federal securities laws. The Shares and the
Conversion Shares have been duly and validly reserved for issuance. The rights, preferences,
privileges and restrictions of the Series B Preferred Stock and the Common Stock are as stated in
the Certificate. Except as set forth on Schedule 3.3, and except as may be granted
pursuant to the Related Agreements, there are no outstanding options, warrants, rights (including
conversion or preemptive rights and rights of first refusal), or other agreements of any kind for
the purchase or acquisition from the Company of any of its securities. Except as set forth on
Schedule 3.3 and except as may be granted pursuant to the Related Agreements, there are no
proxies, stockholder agreements or any other agreements between the Company and any stockholder of
the Company or, to the Company’s Knowledge, between any stockholders of the Company, related to the
capital stock of the Company, including agreements relating to the voting of the capital stock of
the Company. Except as set forth in the Company Equity Incentive Plan or on Schedule 3.3,
no stock plan, stock purchase agreement, stock option agreement or other equity-based agreement or
understanding between the Company and any holder of any equity securities or rights to purchase
equity securities provides for acceleration or other changes in the vesting provisions or other
terms of such agreement or understanding as the result of any merger, consolidation, sale of stock
or assets, change in control or other similar transaction by the Company. The total outstanding
capital stock of the Company on a fully diluted basis immediately following the Closing on a pro
forma basis will be as set forth as Exhibit E-2. For purposes of this Agreement, “Related
Agreements” means the Amended and Restated Investor Rights Agreement, dated as of July 8, 2008, by
and among the Company and the other parties named therein (the “Investor Rights Agreement”) and the
Amended and Restated Stockholders Agreement, dated as of July 8, 2008, by and among the Company and
the other parties named therein (the “Stockholders Agreement”).

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          3.4. Authorization; Binding Obligations. All actions by or on behalf of the Company
or the stockholders necessary for the authorization of this Agreement, the Notes and the Warrants,
the performance of all obligations of the Company hereunder and thereunder at the Closing and the
authorization, sale, issuance and delivery of the Notes and the Warrants pursuant hereto and the
authorization and reservation of the Shares, the Warrant Shares, the Conversion Shares and the
Warrant Conversion Shares pursuant to the Certificate have been taken or will be taken prior to the
Closing. This Agreement (assuming due execution and delivery by the Purchasers), the Notes and the
Warrants, when executed and delivered, will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights, (b) as limited by general principles of equity that
restrict the availability of equitable remedies, and (c) to the extent that the enforceability of
the indemnification provisions of Sections 2.9 or 3.14 of the Investor Rights Agreement may be
limited by applicable law.

          3.5. Financial Statements. The Company has delivered, or will deliver, to the
Purchasers (a) the unaudited financial statements (balance sheet, statement of operations, and
statement of cash flows) of the Company as of and for the year ended December 31, 2009 and (b) the
unaudited financial statements (balance sheet, statement of operations, and statement of cash
flows) of the Company as of and for the two (2) months ended February 28, 2010, copies of which are
attached hereto as part of Schedule 3.5 (collectively, the “Financial Statements”). The
Financial Statements, together with the notes thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis throughout the periods
indicated, and are complete and correct in all material respects and present fairly, in all
material respects, the results of operations, financial condition and position of the Company as of
the dates presented, subject (in the case of unaudited financial statements) to normal year-end
adjustments, which adjustments will not be materially adverse to the Company, and an absence of
footnotes.

          3.6. Liabilities. The Company does not have any direct or indirect liabilities,
indebtedness or obligations, known or unknown, asserted or unasserted and whether accrued,
absolute, contingent, matured or unmatured (collectively, “Liabilities”), that are not disclosed in
the Financial Statements, incurred in the ordinary course of business since the date thereof or set
forth on Schedule 3.6 attached hereto, other than Liabilities incurred in the ordinary
course of business after February 28, 2010 (the “Statement Date”) that are not individually in
excess of $25,000 or in excess of $100,000 in the aggregate. The Company is not a guarantor or
indemnitor of any indebtedness of any other Person.

          3.7. Litigation. There is no action, suit or proceeding pending or, to the Company’s
Actual Knowledge, any threatened action, suit or proceeding against the Company or any
investigation of the Company.

          3.8. Tax Returns and Payments. The Company has timely filed all tax returns, or
timely filed appropriate extensions for such returns, required to be filed by it, and the Company
has timely paid all taxes owed by it (whether or not shown on any tax return).

          3.9. Real Property Holding Corporation. The Company is not, and has not ever been, a
“United States real property holding corporation” as that term is defined in Section 897 of the
Internal Revenue Code of 1986, as amended.

          3.10. Consents; Approvals. No consent, approval, waivers or authorization of, or
designation, declaration or filing with any court, governmental authority or instrumentality or
arbitrator or any other Person is required in connection with the valid execution, delivery and
performance of this Agreement, the Notes and the Warrants (including, without limitation, the
issuance of the Shares, the

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Warrant Shares or the Conversion Shares), except such filings that have been duly and validly
obtained or filed, or with respect to any filings that must be made after the Closings as will be
filed in a timely manner.

          3.11. Offering Valid. Assuming the accuracy of the representations and warranties of
the Purchasers contained in Section 4.2 hereof, the offer, sale and issuance of the Securities will
be exempt from the registration requirements of the Securities Act of 1933, as amended (the
"Securities Act”) and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of all applicable state
securities laws.

          3.12. Compliance with Laws; Permits. The Company is not in violation of any
applicable statute, rule, regulation, order or restriction of any domestic or foreign government of
any instrumentality or agency thereof in respect of the conduct of the Business or the ownership of
its properties which violation would have a Material Adverse Effect.

          3.13. Investment Company Act. The Company is not an “investment company”, or a
company “controlled” by an “investment company”, within the meaning of the Investment Company Act
of 1940, as amended.

          3.14. No Broker. The Company has not employed any broker or finder, or incurred any
liability for any brokerage or finders fees or any similar fees or commissions in connection with
the transactions contemplated by this Agreement.

     4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

          Each Purchaser hereby represents and warrants to the Company, severally, individually and not
jointly, as follows, as of the date hereof:

          4.1. Requisite Power and Authority. Purchaser has all necessary power and authority
under all applicable provisions of law to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. All actions on Purchaser’s part required for the lawful execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby and thereby and the performance
of all obligations of Purchaser hereunder and thereunder, have been or will be effectively taken
prior to the Closing. Upon their execution and delivery, this Agreement will be a valid and
binding obligation of Purchaser, enforceable in accordance with their terms, except (a) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights, (b) as limited by general principles of
equity that restrict the availability of equitable remedies, and (c) to the extent that the
enforceability of the indemnification provisions of Section 2.9 or 3.14 of the Investor Rights
Agreement may be limited by applicable laws.

          4.2. Investment Representations. Purchaser understands that none of the Securities
have been registered under the Securities Act, under any state securities laws or under securities
laws of any other jurisdiction. Purchaser also understands that the Securities are being offered
and sold pursuant to an exemption from registration contained in the Securities Act based in part
upon Purchaser’s representations contained in this Agreement. Purchaser hereby represents and
warrants as follows:

               (a) Purchasers Bear Economic Risk. Purchaser understands that the Securities will be
“restricted securities” under applicable securities laws inasmuch as they are being acquired from
the Company in a transaction not involving a public offering and that under such laws and
applicable regulations the Securities may be resold without registration and/or qualification under
the

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Securities Act only in certain limited circumstances. Purchaser has substantial experience in
evaluating and participating in private placement transactions of securities in companies similar
to the Company so that it is capable of evaluating the merits and risks of its purchase of
securities in the Company and has the capacity to protect its own interests. Purchaser is capable
of bearing the economic risk of this purchase indefinitely and is able to bear a complete loss of
its holdings in the Company. Purchaser also represents that it has not been organized for the
purpose of acquiring the Securities.

               (b) Acquisition for Own Account. Purchaser is acquiring the Securities for its own
account, not as nominee or agent, and not with a view towards their resale or distribution or any
part thereof, and Purchaser has no present intention of selling, granting any participation in or
otherwise distributing the same. By executing this Agreement, Purchaser further represents that
Purchaser does not have any contract, undertaking, agreement or arrangement with any Person to
sell, transfer or grant participations to such Person or to any third Person, with respect to any
of the Securities.

               (c) Accredited Investor. Purchaser is an “accredited investor” within the meaning of
Regulation D under the Securities Act.

               (d) Discussions with the Company; Access to Information. Purchaser has had an
opportunity to discuss the Company’s Business, management and financial affairs with the Company’s
management. Purchaser has had an opportunity to ask questions of and receive answers from,
officers of the Company. Purchaser has made, either alone or together with its advisors, such
independent investigation of the Company, its management and related matters as it deems to be, or
as such advisors have advised to be, necessary or advisable in connection with the purchase of the
Securities; and to Purchasers knowledge, Purchaser and its advisors have received all information
and data that they, and such advisors, believe to be necessary in order to reach an informed
decision as to the advisability of the purchase of the Securities, bearing in mind (among other
factors, without limitation) that Purchaser may not be able to dispose of the Securities for the
indefinite future.

          4.3. Transfer Restrictions. Purchaser acknowledges and agrees that the Shares and the
Warrant Shares and, if issued, the Conversion Shares, are subject to restrictions on transfer as
set forth in the Related Agreements and/or applicable state and/or federal securities laws.

          4.4. Litigation. There is no action, suit, proceeding or investigation pending, or to
each Purchaser’s knowledge, currently threatened against Purchaser which, if adversely determined,
would, individually or in the aggregate, have a material adverse effect on the ability of Purchaser
to perform its obligations under this Agreement and to consummate the transactions contemplated
hereby.

          4.5. No Broker. Purchaser has not employed any broker or finder, or incurred any
liability for any brokerage or finders fees or any similar fees or commissions in connection with
the transactions contemplated by this Agreement.

          4.6. Residence. The office or offices of Purchaser in which it made its decision to
purchase the Securities is located at Purchaser’s respective address set forth beneath Purchaser’s
name on the signature pages hereto.

     5. CONDITIONS TO CLOSING.

          5.1. Conditions to Purchasers’ Obligations at the Closings. The obligations of the
Purchasers to consummate the transactions contemplated herein is subject to the satisfaction, on or
prior to the date of the Closing, of the conditions set forth below.

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               (a) Representations and Warranties; Performance of Obligations. Each of the
representations and warranties of the Company contained herein shall be true and correct on and as
of the Initial Closing Date. As of the Initial Closing, the Company shall have performed and
complied with the covenants and provisions of this Agreement required to be performed or complied
with by it at or prior to the Initial Closing Date. At the Initial Closing, the Purchasers shall
have received certificates of the Company dated as of the date of the Initial Closing, signed by an
officer of the Company, certifying as to the fulfillment of the conditions set forth in this
Section 5.1 and the truth and accuracy of the representations and warranties of the Company
contained herein (as qualified by the Schedules) as of the Initial Closing Date.

               (b) Issuance in Compliance with Laws. The sale and issuance of the Notes and the
Warrants and the proposed issuance of the Shares, Warrant Shares and Conversion Shares shall be
legally permitted by all laws and regulations to which any of the Purchasers and the Company are
subject.

               (c) Filings, Consents, Permits, and Waivers. The Company and the Purchasers shall
have made all filings and obtained any and all consents, permits and waivers necessary for
consummation of the transactions contemplated by the Agreement.

               (d) Reservation of Shares, Warrant Shares and Conversion Shares. The Shares issuable
upon conversion of the Notes and the Conversion Shares shall have been duly authorized and reserved
for issuance upon such conversion. The Warrant Shares issuable upon the exercise of the Warrants
and the Conversion Shares shall have been duly authorized and reserved for issuance upon such
exercise or conversion, as applicable.

               (e) Proceedings and Documents. All corporate and other proceedings in connection with
the transactions contemplated at the applicable Closing and all documents and instruments incident
to such transactions shall be reasonably satisfactory in substance and form to the Purchasers and
their counsel, and the Purchasers and their counsel shall have received all such counterpart
originals or certified or other copies of such documents as they may reasonably request.

               (f) Proceedings and Litigation. No action, suit or proceeding shall have been
commenced by any governmental authority against any party hereto seeking to restrain or delay the
purchase and sale of Shares or the other transactions contemplated by this Agreement.

               (g) No Material Adverse Effect. There shall have occurred no event or condition that
has had, or reasonably could be expected to have, a Material Adverse Effect or which could
adversely affect the Company’s ability to perform its obligations under this Agreement.

               (h) Purchaser Approvals. As of the Initial Closing, all requisite approvals of the
general partners or investment committees, as applicable, of each Purchaser necessary for the
performance of the transactions contemplated by this Agreement shall have been obtained.

               (i) Approval of Safeguard. As of the Initial Closing, all approvals of Safeguard
Delaware, Inc., necessary for the performance of the transactions contemplated by this Agreement
shall have been obtained.

               (j) Secretary’s Certificate. The Company shall have executed and delivered to the
Purchasers a certificate of the Secretary of the Company attaching (A) the Certificate as in effect
at the Initial Closing, (B) the Bylaws of the Company in effect at the Initial Closing, (C) copies
of resolutions by the Board of Directors authorizing and approving this Agreement, the issuance and
delivery of the Notes, Warrants, Shares, Warrant Shares and the Conversion Shares, and an amendment
to

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the Certificate required thereby (the “Amendment”), and copies of resolutions by the
stockholders of the Company authorizing and approving the transactions contemplated by this
Agreement and the Amendment (collectively, the “Resolutions”); and (D) certifying as to the
incumbency of the officers executing this Agreement, the Notes, the Warrants and any other
documents contemplated by this Agreement.

               (k) Security Agreement. The Company shall have executed and delivered a Security
Agreement in form and substance reasonably acceptable to the Purchasers and their counsel (the
“Security Agreement”).

               (l) Subordination Agreement. The Company and Oxford Finance Corporation shall have
executed and delivered a Subordination Agreement with respect to the subordination of the
indebtedness evidenced by the Notes (the “Subordination Agreement”).

          5.2. Conditions to Obligations of the Company. The obligation of the Company to
consummate the transactions contemplated herein to be consummated at each Closing is subject to the
satisfaction, on or prior to such Closing of the conditions set forth below.

               (a) Representations and Warranties; Performance of Obligations. Each of the
representations and warranties of the Purchasers contained herein shall be true and correct on and
as of the date of such Closing. As of the date of such Closing, the Purchasers shall have
performed and complied with the covenants and provisions of this Agreement required to be performed
or complied with by them at or prior to the date of such Closing.

               (b) Proceedings and Litigation. No action, suit or proceeding shall have been
commenced by any governmental authority against any party hereto seeking to restrain or delay the
purchase and sale of the Securities or the other transactions contemplated by this Agreement.

               (c) Subordination Agreement. The Purchasers and Oxford Finance Corporation shall have
executed and delivered the Subordination Agreement.

     6. COVENANTS OF THE PARTIES.

          6.1. Directors’ and Officers’ Insurance. The Company shall maintain the Directors’
and Officers’ insurance described in Section 3.11 of the Investor Rights Agreement.

          6.2. Key Person Life Insurance. The Company shall maintain a key person life
insurance policy on the life of each of Jane H. Hollingsworth and Terri B. Sebree in an aggregate
amount of $2,000,000 per individual, the proceeds of which shall be payable to the Company.

          6.3. Reservation of Stock. As of or prior to Initial Closing, the Company shall, and
shall cause its stockholders to, take any and all action necessary to reserve for issuance the
number of Shares, Warrant Shares, Conversion Shares and Warrant Conversion Shares into which all of
the Notes and Warrants to be sold or issued hereunder are convertible or exercisable, as
applicable, and shall take (or cause to be taken) such further action from time to time thereafter
to increase the number of Conversion Shares or Warrant Conversion Shares reserved for issuance as
required by any increase in the number of Conversion Shares into which the Shares and Warrant
Shares may then be converted.

          6.4. Commercially Reasonable Efforts. Upon the terms and subject to the conditions
set forth in this Agreement, the parties shall use their good faith commercially reasonable efforts
to take, or cause to be taken, without any party being obligated to incur any material internal
costs or make any

-9-

 

payment or payments to any third party or parties which, individually or in the aggregate, are
material and are not otherwise legally required to be made, all actions, and to do or cause to be
done, and to assist and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner practicable, the Closing
and the other transactions contemplated hereunder, including (a) obtaining all required consents,
and (b) the execution and delivery of any additional documents, agreements and instruments (in form
and substance reasonably satisfactory to the parties) necessary to consummate the transactions
contemplated hereunder and to fully carry out the purposes of this Agreement.

          6.5. Post-Closing Filings. In connection with the Closing, the Company and the
Purchasers, if required, agree to file all required forms or filings under applicable laws within
the time required by such laws, including the filing of any UCC financing statements required
pursuant to the Security Agreement.

          6.6. Amendment of Certificate. The Company shall, immediately prior to the exercise
of the Warrants, take all necessary actions to amend the Certificate to authorize, solely for the
purpose of issuance upon exercise of such Warrants, such number and kind of shares of capital stock
as may then be issuable upon the exercise of the Warrants, including, without limitation, the
Warrant Shares. The Company covenants that all shares of capital stock which shall be so issuable
will, upon the exercise of the Warrant, be duly and validly issued and fully paid and nonassessable
by the Company.

          6.7. Affixation of Legend. The Company shall affix a legend to each Note stating that
such Note is subject to the terms of the Subordination Agreement, as it may be amended, restated or
modified from time to time.

     7. MISCELLANEOUS.

          7.1. Indemnification.

               (a) The Company agrees to indemnify, defend and hold harmless the Purchasers and their
affiliates and their respective officers, directors, trustees, agents, representatives, employees,
partners and controlling persons (each, an “Indemnified Party”) against any and all Losses (as
hereinafter defined) arising out of or relating to any legal, administrative or other actions
(including actions brought by the Purchasers or the Company or any equity holders of the Company or
any derivative actions brought by any Person claiming through or in the Company’s name),
proceedings or investigations (whether formal or informal), or written threats thereof, based upon,
resulting from, relating to or arising out of any misrepresentation or breach of any
representation, warranty, covenant or agreement by the Company in this Agreement or in any of the
Notes and the Warrants.

               (b) The Company shall indemnify, defend and hold harmless each Indemnified Party against any
and all Losses of such Indemnified Party resulting from or arising out of any third party or
governmental action or claim based upon the Indemnified Party’s status as a security holder of the
Company (including, without limitation, any and all Losses arising under the Securities Act, the
Securities Exchange Act of 1934, as amended, or similar securities law, any other federal or state
statute, rule, regulation or law, or otherwise, which relate directly or indirectly to the
registration, purchase, sale or ownership of any securities of the Company or to any fiduciary
obligation owed with respect thereto), including, without limitation, in connection with any third
party or governmental action or claim relating to any action taken or omitted to be taken or
alleged to have been taken or omitted to have been taken by such Indemnified Party as a security
holder. Notwithstanding the foregoing, the Company shall not be obligated to indemnify or hold
harmless any Indemnified Party under this Section 7.1(b) against any Losses resulting from or
arising out of any third party or governmental action or claim

-10-

 

if it has been finally determined by a court or other trier of fact of competent jurisdiction
that such Losses were the result of (i) a breach of such Indemnified Party’s fiduciary duty, (ii)
any action or omission made by the Indemnified Party in bad faith or (iii) any criminal action on
the part of such Indemnified Party.

               (c) In connection with the obligation of the Company to indemnify for expenses as set forth in
Sections 7.1(a) and 7.1(b) above, the Company shall reimburse each Indemnified Party for all such
expenses (including reasonable expenses of investigation and reasonable fees, disbursements and
other charges of counsel in connection with any claim, action, suit or proceeding) as they are
incurred by such Indemnified Party. “Losses” means all losses (including the diminution in the
value of the Shares purchased by Purchaser), claims (including any claim by a third party),
damages, expenses (including reasonable fees, disbursements and other charges of counsel incurred
by the Indemnified Party in connection with any claim, action, suit or proceeding, including any
action between the Indemnified Party and the Company or between the Indemnified Party and any third
party) or other Liabilities.

          7.2. Governing Law. This Agreement shall be governed in all respects by the laws of
the State of Delaware without regard to the conflicts of laws principles of any jurisdiction. No
suit, action or proceeding with respect to this Agreement or any of the Notes or Warrants may be
brought in any court or before any similar authority other than in a court of competent
jurisdiction in the State of Delaware, and the parties hereby submits to the exclusive jurisdiction
of such courts for the purpose of such suit, proceeding or judgment. Each of the parties hereto
hereby irrevocably waives any right which it may have had to bring such an action in any other
court, domestic or foreign, or before any similar domestic or foreign authority and agreed not to
claim or plead the same. Each of the parties hereto hereby irrevocably and unconditionally waives
trial by jury in any legal action or proceeding in relation to this Agreement or any of the Notes
or Warrants and for any counterclaim therein.

          7.3. Survival. The representations, warranties, covenants and agreements made herein
shall survive the Closings and any investigation made by the Purchasers for a period of two (2)
years. All statements as to factual matters contained in any certificate delivered by or on behalf
of the Company pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties made by the Company hereunder solely as of the date of
such certificate.

          7.4. Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the successors and permitted
assigns of the parties hereto. This Agreement may not be assigned without the prior written
consent of the other parties hereto, except that each Purchaser may assign its rights and
obligations hereunder to any affiliate or affiliates without such prior written consent provided
that any such affiliate agrees to be subject to the terms of the Investor Rights Agreement to the
same extent as if such affiliate was an original Holder (as defined in the Investor Rights
Agreement) with respect to any Registrable Securities (as defined in the Investor Rights Agreement)
that may be issued to such affiliate.

          7.5. Entire Agreement. This Agreement, including the Exhibits and Schedules hereto,
and the Notes and Warrants and each of the Exhibits delivered pursuant thereto constitute the full
and entire understanding and agreement between the parties hereto with regard to the subject matter
hereof and thereof and no party hereto shall be liable or bound to any other party hereto in any
manner by any representations, warranties, covenants and agreements except as specifically set
forth herein and therein.

          7.6. Severability. If any provision of the Agreement is held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.

-11-

 

          7.7. Amendment and Waiver. This Agreement may be amended or modified only upon the
approval of the Company and the written consent of the Purchasers purchasing a majority of the
outstanding principal amount of the Notes including any Notes that have been transferred to
affiliates of the Purchasers.

          7.8. Delays or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any party, upon any breach, default or noncompliance by another party under this
Agreement, the Notes, the Warrants or the Certificate, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or
any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on any Purchaser’s
part of any breach, default or noncompliance under this Agreement, the Notes, the Warrants or under
the Certificate or any waiver on such party’s part of any provisions or conditions of the
Agreement, the Notes, the Warrants or the Certificate must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either under this
Agreement, the Notes, the Warrants, the Certificate, Bylaws of the Company, or otherwise afforded
to any party, shall be cumulative and not alternative.

          7.9. Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when
sent by confirmed telex or facsimile if sent during normal business hours of the recipient, and if
not, then on the next business day; (c) three (3) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; (d) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt or (e) when sent by electronic mail, upon confirmation of receipt by the recipient via
electronic mail. All communications shall be sent to the Company at the address as set forth on
the signature page hereof and to the Purchasers at the address set forth on the signature pages
hereto or at such other address as the Company or the Purchasers may designate by ten (10) days
advance written notice to the other parties hereto.

          7.10. Expenses.

               (a) The Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement, including, without limitation,
any costs and expenses of its counsel.

               (b) The Company shall pay all of the reasonable fees and expenses incurred by the Purchasers
with respect to the negotiation and execution of this Agreement and the Notes and the Warrants,
including the reasonable fees and expenses of accounting, consulting and legal counsel to the
Purchasers and related due diligence expenses incurred by the Purchasers.

          7.11. Titles and Subtitles. The titles of the sections and subsections of the
Agreement are for convenience of reference only and are not to be considered in construing this
Agreement.

          7.12. Counterparts; Execution by Facsimile Signature. This Agreement may be executed
in any number of counterparts (including execution by facsimile), each of which shall be an
original, but all of which together shall constitute one instrument. This Agreement may be
executed by facsimile signature(s) which shall be binding on the party delivering same, to be
followed by delivery of originally executed signature pages.

          7.13. Acknowledgment. Any investigation or other examination that may have been made
at any time by or on behalf of a party to whom representations and warranties are made in this
Agreement or in any other Notes or Warrants shall not limit, diminish, supersede, act as a waiver
of, or in

-12-

 

any other way affect the representations, warranties and indemnities contained in this
Agreement and the Notes and Warrants, and the respective parties may rely on the representations,
warranties and indemnities made to them in this Agreement and the Notes and Warrants irrespective
of and notwithstanding any information obtained by them in the course of any investigation,
examination or otherwise, whether before or after the Closing.

          7.14. Publicity. Except as otherwise required by law or applicable stock exchange
rules, no announcement or other disclosure, public or otherwise, concerning the transactions
contemplated by this Agreement shall be made, either directly or indirectly, by any party hereto
which mentions another party (or parties) hereto without the prior written consent of such other
party (or parties), which consent shall not be unreasonably withheld, delayed or conditioned.

          7.15. Exculpation by Purchasers. Each Purchaser acknowledges that it is not relying
upon the representations or warranties of any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest in the Company. In
addition, each Purchaser acknowledges that the obligations of each Purchaser hereunder are several,
and such Purchaser is not entering into this Agreement in reliance upon the covenants of the other
Purchasers party hereto.

          7.16. No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement.

          7.17. Pronouns. All pronouns contained herein, and any variations thereof shall be
deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of
the parties hereto may require.

          7.18. Pari Passu Notes. The Purchasers and the Company acknowledge and agree that the
right of payment of all or any portion of the outstanding principal amounts of each of the Notes
and all interest thereon shall be pari passu in right of payment and in all other respects to all
of the other Notes. In the event a Purchaser receives payments in excess of its pro rata share of
the Company’s payments to all of the Purchasers, then such Purchaser shall hold in trust all such
excess payments for the benefit of the other Purchasers and shall pay such amounts held in trust to
such other Purchasers upon demand by such Purchasers.

[Signature Pages Follow]

-13-

 

          IN WITNESS WHEREOF, the parties hereto have executed this Subordinated Convertible Note and
Warrant Purchase Agreement as of the date set forth in the first paragraph hereof.

	 	 	 	 	 
	 	COMPANY:

NUPATHE INC.

 	 
	 	By:  	/s/  Jane H. Hollingsworth
 	 
	 	 	Name:  	Jane H. Hollingsworth 	 
	 	 	Title:  	Chief Executive Officer
	 	

227 Washington Street, Suite 200

Conshohocken, PA 19428

Attention: Chief Executive Officer

Telephone: (484) 567-0130

Facsimile: (484) 567-0136

with a copy to:

Morgan Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Attention:    Michael N. Peterson

Telephone:  (215) 963-5025

Facsimile: (215) 963-5001

Email:         mpeterson@morganlewis.com
 
	 

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

	 	 	 	 	 
	 	PURCHASERS:

SR ONE, LIMITED

 	 
	 	By:  	/s/  [ILLEGIBLE]
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 
	 	

SR One, Limited

161 Washington Street, Suite 500

Conshohocken, PA  19428

Attention:    General Partner

Telephone: (610) 567 1000

Facsimile:  (610) 567 1039

with a copy to:

Pepper Hamilton LLP

3000 Two Logan Square

Eighteenth and Arch Streets

Philadelphia, PA  19103

Attention: Christopher S. Miller,
Esquire

Telephone: (610) 640-7837

Facsimile: (267) 200-0854

Email: millerc@pepperlaw.com
 
	 

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

	 	 	 	 	 	 	 

	 	 	QUAKER BIOVENTURES II, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	QUAKER BIOVENTURES CAPITAL II, L.P.,	 	 
	 

	 	 	 	its general partner	 	 
	 

	 	By:
	 	QUAKER BIOVENTURES CAPITAL II, LLC,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard S. Kollender	 	 
	 

	 	 	 	 

Name: Richard S. Kollender
	 	 
	 

	 	 	 	Title:   Vice President	 	 

	 	 	 

	 

	 	Quaker BioVentures II, L.P.

Cira Centre

2929 Arch Street

Philadelphia, PA 19104-2868

Attention: Vice President

Telephone: (215) 988-6800

Facsimile:  (215) 988-6801

with a copy to:
	 
	 	 
	 

	 	Pepper Hamilton LLP

3000 Two Logan Square

Eighteenth and Arch Streets

Philadelphia, PA 19103

Attention: Christopher S. Miller, Esquire

Telephone: (610) 640-7837

Facsimile:  (267) 200-0854

Email:        millerc@pepperlaw.com

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

	 	 	 	 	 	 	 

	 	 	BIRCHMERE VENTURES III L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BV3 Management LP, general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BV3 LLC, general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BV3GP Investors, LLC,	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Bay City Capital LLC, Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeanne Cunicelli	 	 
	 

	 	 	 	 

Jeanne Cunicelli
	 	 
	 

	 	 	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	One North Shore Center

Suite 201, 12 Federal Street

Pittsburgh, PA 15212

Attention:

Facsimile: (412) 322-3226	 	 
	 
	 	 	 	 	 	 
	 	 	BIRCHMERE VENTURES III TSIB L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BV3 Management LP, general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BV3 LLC, general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BV3GP Investors, LLC,	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Bay City Capital LLC, Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeanne Cunicelli	 	 
	 

	 	 	 	 

Jeanne Cunicelli
	 	 
	 

	 	 	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	One North Shore Center

Suite 201, 12 Federal Street

Pittsburgh, PA 15212

Attention:

Facsimile: (412) 322-3226	 	 

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

	 	 	 	 	 	 	 

	 	 	SAFEGUARD DELAWARE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stephen T. Zarrilli	 	 
	 

	 	 	 	 

Name: Stephen T. Zarrilli
	 	 
	 

	 	 	 	Title:   SVP/CFO	 	 
	 
	 	 	 	 	 	 
	 	 	1 1105 N. Market St.

Suite 1300

Wilmington, DE 19801

Attention: Dee Blackburn	 	 
	 
	 	 	 	 	 	 
	 	 	with a copy to:	 	 
	 
	 	 	 	 	 	 
	 	 	Safeguard Delaware, Inc. 

435 Devon Park Drive

Building 800

Wayne, PA 19087

Attention: General Counsel

Fax: 610-293-0601	 	 

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

	 	 	 	 	 	 	 

	 	 	BATTELLE VENTURES, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	BVP GP, LLC, its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tracy S. Warren	 	 
	 

	 	 	 	 

Name: Tracy S. Warren
	 	 
	 

	 	 	 	Title:    Member	 	 
	 
	 	 	 	 	 	 
	 	 	103 Carnegie Center, Suite 100

Princeton, NJ 08540

Attention: Tracy Warren, General Partner

Facsimile No: (609) 921-8703	 	 
	 
	 	 	 	 	 	 
	 	 	INNOVATION VALLEY PARTNERS, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	IVP GP, LLC, its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tracy S. Warren	 	 
	 

	 	 	 	 

Name: Tracy S. Warren
	 	 
	 

	 	 	 	Title:    Member	 	 
	 
	 	 	 	 	 	 
	 	 	103 Carnegie Center, Suite 100

Princeton, NJ 08540

Attention: Tracy Warren, General Partner

Facsimile No: (609) 921-8703	 	 

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

	 	 	 	 	 	 	 

	 

	 	By:
	 	/s/ Jane H. Hollingsworth	 	 
	 

	 	 	 	Jane H. Hollingsworth

	 	 
	 
	 	 	 	 	 	 
	 	 	
NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA 19428	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Suzanne M. Hanlon	 	 
	 

	 	 	 	 

Suzanne M. Hanlon
	 	 
	 
	 	 	 	 	 	 
	 	 	NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA 19428	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Keith A. Goldan	 	 
	 

	 	 	 	 

Keith Goldan
	 	 
	 
	 	 	 	 	 	 
	 	 	NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA 19428	 	 

— Subordinated Convertible Note and Warrant Purchase Agreement Signature Pages —

 

 

EXHIBIT A — SCHEDULE OF PURCHASERS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Column A	 	Column B	 	Column C	 	Column D
	 	 	Pro Rata Share of	 	Principal Amount	 	Principal Amount	 	Aggregate Principal
	Name of Purchaser	 	the Notes	 	for Initial Closing	 	for Second Closing	 	Amount
	SR One, Limited
	 	 	11.25	%	 	$	1,132,075	 	 	 	—	 	 	$	1,132,075	 
	Quaker BioVentures II, L.P.
	 	 	33.75	%	 	$	3,396,226	 	 	 	—	 	 	$	3,396,226	 
	Safeguard Delaware, Inc.
	 	 	27.00	%	 	$	2,716,981	 	 	 	—	 	 	$	2,716,981	 
	Birchmere Ventures III, L.P.
	 	 	8.88	%	 	$	794,771	 	 	$	98,814	 	 	$	893,585	 
	Birchmere Ventures III TSIB, L.P.
	 	 	5.00	%	 	$	447,059	 	 	$	55,583	 	 	$	502,642	 
	Battelle Ventures, LP
	 	 	12.15	%	 	$	1,222,642	 	 	 	—	 	 	$	1,222,642	 
	Innovation Valley Partners, LP
	 	 	1.35	%	 	$	135,849	 	 	 	—	 	 	$	135,849	 
	Jane H. Hollingsworth
	 	 	0.50	%	 	$	50,000	 	 	 	—	 	 	$	50,000	 
	Suzanne Hanlon
	 	 	0.05	%	 	$	5,000	 	 	 	—	 	 	$	5,000	 
	Keith Goldan
	 	 	0.07	%	 	$	7,500	 	 	 	—	 	 	$	7,500	 
	Total
	 	 	100	%	 	$	9,908,103	 	 	$	154,397	 	 	$	10,062,500	 

 

 

EXHIBIT B

FORM OF SECURED SUBORDINATED CONVERTIBLE PROMISSORY NOTE

 

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE OR FEDERAL SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED EXCEPT: (1)
PURSUANT TO THE EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT; OR (2) IF, IN THE OPINION OF COUNSEL
FOR THE REGISTERED OWNER HEREOF, WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, THE
PROPOSED SALE, TRANSFER OR ASSIGNMENT MAY BE EFFECTED WITHOUT SUCH REGISTRATION AND WILL NOT BE IN
VIOLATION OF APPLICABLE STATE AND/OR FEDERAL SECURITIES LAWS.

IN ACCORDANCE WITH THE TERMS OF A SUBORDINATION AGREEMENT, DATED AS OF APRIL 9, 2010 (THE
“SUBORDINATION AGREEMENT”), BY AND AMONG THE PURCHASERS (AS DEFINED HEREIN), THE COMPANY (AS
DEFINED HEREIN) AND OXFORD FINANCE CORPORATION (THE “SENIOR LENDER”), THE PURCHASER HAS
SUBORDINATED THE INDEBTEDNESS EVIDENCED BY THIS SECURED SUBORDINATED CONVERTIBLE PROMISSORY NOTE
(THE “NOTE”) AND ANY SECURITY INTEREST OR LIEN THAT THE PURCHASER MAY HAVE IN ANY PROPERTY OF THE
COMPANY TO THE INDEBTEDNESS OWED BY THE COMPANY TO SENIOR LENDER AND THE SECURITY INTEREST OF
SENIOR LENDER IN THE ASSETS OF THE COMPANY, NOTWITHSTANDING THE RESPECTIVE DATES OF ATTACHMENT OR
PERFECTION OF THE SECURITY INTEREST OF THE PURCHASER AND SENIOR LENDER. IN THE EVENT OF ANY
INCONSISTENCY BETWEEN THE NOTE AND THE SUBORDINATION AGREEMENT, THE TERMS OF THE SUBORDINATION
AGREEMENT SHALL CONTROL.

SECURED SUBORDINATED CONVERTIBLE PROMISSORY NOTE

			
	 	 	 
	$                    
	 	Issue Date: April 9, 2010

     For Value Received, NuPathe Inc., a Delaware corporation (the “Company”), promises to
pay to                
               
           or its assigns (the “Purchaser”) the principal sum of
               
               
           Dollars ($   
               
  ) together with interest on the outstanding principal amount
at the annual rate of 8%, compounding monthly. Interest shall commence on the date hereof and
shall continue on the outstanding principal until paid in full or converted in accordance with the
provisions hereof. Interest shall be computed on the basis of a year of 365 days for the actual
number of days elapsed. This Note is one of a series of secured subordinated convertible
promissory notes issued by the Company pursuant to that certain Subordinated Convertible Note and
Warrant Purchase Agreement, dated as of April 9, 2010, by and among the Company, the Purchaser and
the other parties named therein (as the same may be amended from time to time, the “Purchase
Agreement”), and is entitled to the benefits of the Purchase Agreement. Such secured subordinated
convertible promissory notes are collectively referred to as “Notes” and the holders of the Notes
are collectively referred to as “Purchasers.” Terms used, but not otherwise defined herein, shall
have the meanings ascribed to such terms in the Purchase Agreement.

 

 

     1. Payments. All payments of interest and principal shall be in lawful money of the United
States of America. All payments shall be applied first to costs of collection, if any (but only if
such costs of collection are incurred after an Event of Default), then to the payment of accrued
interest, and thereafter to principal. Payments of principal and interest shall be made, at the
election of the Purchaser, by check or wire transfer of immediately available lawful money of the
United States of America sent to the holder at the address or bank account, as the case may be,
furnished to the Company for such purpose.

     2. No Prepayment. Subject to the terms of the Subordination Agreement, the Company may not
prepay, redeem or otherwise acquire this Note prior to the Maturity Date (as defined below) without
the prior written consent of the holders of Notes representing at least a majority of the then
outstanding aggregate principal amount of the Notes (the “Majority Holders”).

     3. Security. The indebtedness of the Company arising under this Note is secured by the
Security Documents. “Security Documents” shall mean all mortgages, instruments, pledge agreements,
assignments, acceptance agreements, financing statements, stock powers and any other agreements,
documents and instruments, now or hereafter existing, creating, perfecting or relating to the
obligations under this Note, together with all amendments, modifications, renewals, extensions or
restatements thereof, in each case subject to the terms of the Subordination Agreement.

     4. Mandatory Conversion.

          (a) Public Offering Conversion. In the event that the Company consummates an initial firm
commitment underwritten offering of the Company’s Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the “Securities Act”) (such
offering, an “IPO”) on or before the Maturity Date, then simultaneous with the initial closing of
the IPO, the outstanding principal balance of this Note, together with all accrued and unpaid
interest under this Note, shall automatically convert without any further action by the Purchaser
into shares of the Company’s Common Stock at a conversion price equal to eighty percent (80%) of
the price per share at which shares of the Company’s Common Stock are sold to the public in the
IPO. Upon issuance, such shares shall not be registered under the Securities Act but the Purchaser
shall have the registration rights with respect thereto set forth in the Company’s Amended and
Restated Investor Rights Agreement, dated as of July 8, 2008, as amended.

          (b) Acquisition Conversion. In the event that the Company enters into a definitive agreement
to effect a Liquidity Event (as defined in the Company’s Third Amended and Restated Certificate of
Incorporation, as amended from time to time) on or before the Maturity Date (an “Acquisition
Transaction”) then, immediately prior to the closing of the Acquisition Transaction, the
outstanding principal balance of this Note, together with all accrued and unpaid interest under
this Note, shall convert in whole without any further action by the Purchaser into shares of the
Company’s Series B Preferred Stock at a per share conversion price equal to eighty percent (80%) of
the price for which the Company’s Series B Preferred Stock was last sold (currently $0.93) (the
“Acquisition Conversion Price”).

 2.

 

          (c) Financing Conversion. In the event that on or before the Maturity Date the Company issues
and sells Equity Securities (as defined below) to investors acceptable to the Majority Holders (the
“Investors”) in an equity financing with total proceeds to the Company of not less than Ten Million
Dollars ($10,000,000) (excluding the conversion of the amounts outstanding under the Notes) (a
“Qualified Financing”), then the outstanding principal balance of this Note, together with all
accrued and unpaid interest under this Note, shall automatically convert without any further action
by the Purchaser into shares of such Equity Securities sold in the Qualified Financing at a
conversion price equal to the price per share paid by the Investors purchasing such Equity
Securities (the “Qualified Financing Conversion Price”), and the issuance of such Equity Securities
to the Purchaser shall have the same terms and conditions as given to the Investors in the
Qualified Financing. For purposes of this Note, the term “Equity Securities” shall mean Preferred
Stock of the Company (“Preferred Stock”) that has a liquidation preference, dividend rights and
other similar rights that are senior to, or pari passu with, the most senior existing series of
Preferred Stock.

     5. Optional Conversion. If this Note is outstanding on the Maturity Date and the Company has
not (i) filed an effective registration statement under the Securities Act with respect to an IPO
or (ii) entered into a definitive agreement with respect to an Acquisition Transaction, the
Majority Holders may elect by written consent to convert the outstanding principal balance of all
Notes (including this Note), together with all accrued and unpaid interest under all Notes
(including this Note), without any further action by any Purchaser, into shares of the Company’s
Series B Preferred Stock at a per share conversion price equal to eighty percent (80%) of the price
for which the Company’s Series B Preferred Stock was last sold (currently $0.93) (the “Optional
Conversion Price”).

     6. Maturity Date. If this Note has not previously been converted in accordance with the terms
of Sections 4 or 5 above, and the Company has not (i) filed an effective registration
statement under the Securities Act with respect to an IPO or (ii) entered into a definitive
agreement with respect to an Acquisition Transaction, then the entire outstanding principal balance
together with all accrued and unpaid interest under this Note shall be due and payable on December
31, 2010 (the “Maturity Date”).

     7. Event of Default. Subject to the terms of the Subordination Agreement, the outstanding
principal amount of this Note plus all accrued and unpaid interest thereon shall, at the election
of the Majority Holders, become immediately due and payable without notice or demand, upon the
happening of any one of the following specified events, whatever the reason for such event and
whether it shall be voluntary or involuntary, or within or without the control of the Company, or
be effected by operation of law or pursuant to any judgment or order of any court or any order,
rule or regulation of any governmental authority (each, an “Event of Default”):

          (a) the Company’s failure to pay any amount as herein set forth and such nonpayment shall
continue uncured for a period of five (5) business days after written notice by the Purchaser
thereof;

          (b) the making of a general assignment for the benefit of creditors by the Company;

 3.

 

          (c) the filing of any petition or the commencement of any proceeding against the Company or
any endorser or guarantor of this Note for any relief under any bankruptcy or insolvency laws, or
any laws relating to the relief of debtors, readjustment of indebtedness, reorganizations,
compositions, or extensions, which proceeding is not dismissed within sixty (60) days;

          (d) the failure to observe or perform any covenant or agreement required to be observed or
performed by the Company under this Note or the Purchase Agreement or under any document,
instrument or agreement executed and delivered in connection with this Note (collectively, the
“Related Documents”), and such failure shall continue after the expiration of ten (10) business
days following notice from the Purchaser of such failure;

          (e) any representation or warranty of the Company under any Related Document shall have been
false or misleading in any material respect when made; or

          (f) the Company defaults in the payment of any other obligation for borrowed money, which
default is not (i) cured within any grace or cure period applicable thereto or (ii) otherwise
waived by the applicable lender.

     8. Default Rate. Beginning on the occurrence of any Event of Default and during the
continuance thereof, this Note shall bear interest at a rate that shall be five percentage points
(5.0%) in excess of the interest rate in effect from time to time under this Note, but in no event
shall such rate exceed the maximum rate then allowable by law (the “Default Rate”). The Default
Rate shall continue to apply whether or not judgment shall be entered on this Note. The Company
agrees that the Default Rate is imposed as liquidated damages for the purpose of defraying the
Purchaser’s expenses incident to the handling of delinquent payments, but is in addition to, and
not in lieu of, the Purchaser’s exercise of any rights and remedies hereunder, or under applicable
law, and any fees and expenses of any agents or attorneys which the Purchaser may employ. In
addition, the Company acknowledges that the Default Rate reflects the increased credit risk to the
Purchaser of carrying a loan that is in default. The Company agrees that the Default Rate is a
reasonable forecast of just compensation for anticipated and actual harm incurred by the Purchaser,
and that the actual harm incurred by the Purchaser cannot be estimated with certainty and without
difficulty.

     9. Remedies Cumulative, etc.

          (a) No right or remedy conferred upon or reserved to the Purchaser is intended to be exclusive
of any other right or remedy, and each and every such right or remedy shall be cumulative and
concurrent, and in addition to every other such right or remedy, and may be pursued singly,
concurrently, successively or otherwise, at the sole discretion of the Purchaser; and shall not be
exhausted by any one exercise thereof but may be exercised as often as occasion therefor shall
occur.

          (b) The Company hereby waives presentment, demand, notice of nonpayment, protest, notice of
protest, notice of dishonor and any and all other notices in connection with any default in the
payment of, or any enforcement of the payment of, all amounts due under this Note. With respect to
any final, nonappealable order, judgment or decree of a court of

 4.

 

competent jurisdiction, to the extent permitted by law, the Company waives the right to any
stay of execution and the benefit of all exemption laws now or hereafter in effect.

     10. Warrants. Upon any conversion of this Note pursuant to Sections 4(b), 4(c) or 5
above, or, in the absence of such conversion, at the Maturity Date, the Company shall issue to the
Purchaser a Warrant substantially in the form attached hereto as Exhibit A in accordance
with Section 1.4 of the Purchase Agreement.

     11. Pari Passu Notes. By accepting this Note, the Purchaser acknowledges and agrees that the
right of payment of all or any portion of the outstanding principal amounts of each of the Notes
and all interest thereon shall be pari passu in right of payment and in all other respects to all
of the other Notes. In the event the Purchaser receives payments in excess of its pro rata share
of the Company’s payments to all of the Purchasers in respect of the Notes, then such Purchaser
shall hold in trust all such excess payments for the benefit of the other Purchasers and shall pay
such amounts held in trust to such other Purchasers upon demand by such Purchasers.

     12. Waiver by Holder. No waiver of any obligation of the Company under this Note shall be
effective unless it is in a writing signed by the holder hereof. A waiver by the holder hereof of
any right or remedy under this Note on any occasion shall not be a bar to exercise of the same
right or remedy on any subsequent occasion or of any other right or remedy at any time.

     13. Notice. Any notice required or permitted under this Note shall be in writing and shall be
deemed to have been given on the date of delivery, if personally delivered to the party to whom
notice is to be given, or on the fifth (5th) business day after mailing, if mailed to
the party to whom notice is to be given, by certified mail, return receipt requested, postage
prepaid, and addressed as follows:

     if to the Company, at

NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA 19428

Attention:   Chief Executive Officer

Telephone: (484) 567-0130

Facsimile:  (484) 567-01362

     with a copy to,

Morgan Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Attention:   Michael N. Peterson

Telephone: (215) 963-5025

Facsimile:  (215) 963-5001

Email:         mpeterson@morganlewis.com

 5.

 

and, if to the holder, at the most recent address provided to the Company by the holder for such
purpose; or, in each case, to the most recent address, specified by written notice, given to the
sender pursuant to this paragraph.

     14. Assignment. This Note will be registered on the books of the Company or its agent as to
principal and interest. The Purchaser may assign or otherwise transfer this Note to any affiliate
of such Purchaser that is an “accredited investor” without the prior written consent of the
Company; provided that (i) any such transferee agrees to be subject to the terms of the Amended and
Restated Investor Rights Agreement, dated as of July 8, 2008, by and among the Company and the
other parties named therein (the “Investor Rights Agreement”) to the same extent as if such
transferee was an original Holder (as defined in the Investor Rights Agreement) with respect to
any Registrable Securities (as defined in the Investor Rights Agreement) that may be issued to such
transferee and (ii) any transfer of this Note will be effected only by surrender of this Note to
the Company and reissuance of a new note to the transferee. Any other assignment or transfer of
this Note by the Purchaser shall require the prior written consent of the Company.

     15. Severability. In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or
in the event that any one or more of the provisions of this Note operate or would prospectively
operate to invalidate this Note, then and in any such event, such provision(s) only shall be deemed
null and void and shall not affect any other provision of this Note and the remaining provisions of
this Note shall remain operative and in full force and effect and in no way shall be affected,
prejudiced, or disturbed thereby.

     16. Governing Law. This Note shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware without regard to the application of the principles of
conflicts of law of any jurisdiction.

     17. Attorneys’ Fees. In the event of any Event of Default hereunder pursuant to which the
Majority Holders elect to accelerate this Note, the Company shall pay all reasonable attorneys’
fees and court costs incurred by the Purchaser in enforcing and collecting this Note.

     18. Amendment. Except as otherwise provided in this Note, no modification or amendment hereof
shall be effective unless (i) made in a writing signed by appropriate officers of the Company,
(ii) such amendment or modification is approved by the Majority Holders, (iii) such amendment or
modification is made to all of the Notes issued pursuant to the Purchase Agreement, and (iv) such
amendment or modification is made in accordance with the terms of the Subordination Agreement.

     19. Reservation of Securities. The Company shall take all necessary actions to reserve and
keep available out of its authorized capital stock, solely for the purpose of issuance upon
conversion of this Note, such number and kind of shares of capital stock as may then be issuable
upon the direct and indirect conversion of all amounts owing under this Note. The Company
covenants that all shares of capital stock which shall be so issuable will, upon the conversion of
this Note as herein provided, be duly and validly issued and fully paid and nonassessable by the
Company.

 6.

 

     20. Waiver of Jury Trial. The Company irrevocably waives any and all rights the Company may
have to a trial by jury in any action, proceeding or claim arising from or relating to this Note,
any documents executed in connection with this Note or any transaction contemplated by this Note or
such documents. The Company acknowledges that the foregoing waiver is knowing and voluntary.

     21. Stockholders, Officers and Directors Not Liable. In no event shall any stockholder,
officer or director of the Company be liable for any amounts due or payable pursuant to this Note.

[Signature Page Follows]

 7.

 

     This Secured Subordinated Convertible Promissory Note has been executed and delivered
as of the Issue Date by the undersigned as duly authorized representative of the Company.

	 	 	 	 	 
	 	NuPathe Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	Jane H. Hollingsworth 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

[Signature Page to NuPathe Inc. Secured Subordinated Convertible Promissory Note]

 

 

Exhibit A

Form of Warrant

(Please see attached)

[Exhibit A to NuPathe Inc. Secured Subordinated Convertible Promissory Note]

 

 

EXHIBIT C

FORM OF WARRANT

 

 

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE OR FEDERAL SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED EXCEPT: (1) PURSUANT TO THE EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT; OR (2) IF, IN THE OPINION OF COUNSEL FOR THE REGISTERED OWNER
HEREOF, WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, THE PROPOSED SALE, TRANSFER OR
ASSIGNMENT MAY BE EFFECTED WITHOUT SUCH REGISTRATION AND WILL NOT BE IN VIOLATION OF APPLICABLE
STATE AND/OR FEDERAL SECURITIES LAWS

NUPATHE INC.

WARRANT TO PURCHASE SHARES

OF PREFERRED STOCK

			
	 	 	 
	Warrant No.                     
	 	Issue Date:                           , 20          

     THIS CERTIFIES THAT, for value received,                      (“Holder”), is entitled to subscribe for
and purchase up to                      shares of                                          (as applicable, the “Shares”) of
NuPathe Inc., a Delaware corporation (the “Company”), at the Warrant Price (as defined
below), subject to the provisions and upon the terms and conditions set forth herein. As used
herein, “Note” shall mean that certain Secured Subordinated Convertible Promissory Note, dated as
of April                     , 2010, made by the Company in favor of the Holder. This Warrant is one of a series
of Warrants to purchase Shares of Preferred Stock issued by the Company pursuant to that certain
Subordinated Convertible Note and Warrant Purchase Agreement, dated as of April                     , 2010, by and
among the Company, the Holder and the other parties named therein (as the same may be amended from
time to time, the “Purchase Agreement”). Terms used, but not otherwise defined herein, shall have
the meanings ascribed to such terms in the Purchase Agreement.

     1. Warrant Price. The per share exercise price (the “Warrant Price”)
initially shall be equal to $                     per share as set forth in the Note. The Warrant Price shall
be subject to adjustment as provided in Section 6 below.

     2. Conditions to Exercise. The purchase right represented by this Warrant
may be exercised at any time, or from time to time, in whole or in part, during the term commencing
on the date hereof and ending on the earlier to occur of (i) the seventh (7th)
anniversary of such date and (ii) the consummation of an IPO (as defined in the Note).

     3. Method of Exercise; Payment; Issuance of Shares.

          (a) Cash Exercise. Subject to Section 2 hereof, the purchase right
represented by this Warrant may be exercised by the Holder hereof, in whole or in part, by the
surrender of this Warrant (with a duly executed Notice of Exercise in the form attached hereto) at
the principal office of the Company (as set forth in Section 11 below) and by payment to the
Company, by cashier’s or other check acceptable to the Company representing immediately available
funds, of an amount equal to the then applicable Warrant Price multiplied by the number of Shares
then being purchased. In the event of any exercise of the rights represented by this Warrant,
certificates for the Shares so purchased shall be in the name of, and delivered to, the Holder
hereof, or as such Holder may direct (subject to the terms of transfer contained herein and upon
payment by such Holder hereof of any applicable transfer taxes).

 

 

          (b) Net Issue Exercise. If the Fair Market Value of one Share is greater
than the Warrant Price (at the date of such calculation), then in lieu of exercising this Warrant
pursuant to Section 3(a), the Holder may elect to receive Shares equal to the value of this Warrant
(or of any portion thereof remaining unexercised) by surrender of this Warrant at the principal
office of the Company together with notice of such election, in which event the Company shall issue
to Holder the number of Shares computed using the following formula:

	 	 	 	 	 

	Where X

	 	=
	 	the number of Shares to be issued to Holder.
	Y

	 	=
	 	the number of Shares purchasable under this Warrant (at the date of such calculation).
	A

	 	=
	 	the Fair Market Value of one Share issuable under this Warrant (at the date of such calculation).
	B

	 	=
	 	Warrant Price (as adjusted to the date of such calculation).

          (c) Fair Market Value. For purposes of this Section 3, “Fair Market Value”
of one Share issuable under this Warrant shall mean: the fair market value of such security
determined by a third party appraiser designated by a majority of the members of the Company’s
Board of Directors (the “Board”) who are not affiliated with any Purchaser (the “Independent
Directors”) and reasonably acceptable to the Requisite Holders (the “Appraiser”); provided,
however, that if the parties fail to agree on an Appraiser, then the Independent Directors, on the
one hand, and the Majority Holders (as defined in the Note), on the other hand, shall each select
its own independent appraiser, which appraisers shall then select an independent appraiser to
finally determine the Fair Market Value. If either the Independent Directors, on the one hand, or
the Majority Holders, on the other hand, fails to select an independent appraiser, then the
successfully selected independent appraiser shall finally determine the Fair Market Value. The
Company shall bear all fees and expenses in connection with the selection and engagement of the
Appraiser

     4. Legends. Each certificate representing the Shares shall be endorsed
with the following legend:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE “ACT”), AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.”

     The Company need not enter into its stock register a transfer of Shares unless the conditions
specified in the foregoing legend are satisfied. The Company may also instruct its transfer agent
not to register the transfer of any of the Shares unless the conditions specified in the foregoing
legend are satisfied.

-2-

 

     5. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant, will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens, and charges with respect to the issue thereof.
During the period within which the rights represented by this Warrant may be exercised, the Company
will at all times have authorized, and reserved for issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of Shares to provide for the exercise of the rights
represented by this Warrant.

     6. Adjustment for Certain Events. In the event of changes in the
outstanding Shares (or the Company’s Common Stock in the event the Shares have been converted into
Common Stock) by reason of stock dividends, split-ups, recapitalizations, reclassifications,
mergers, consolidations, combinations or exchanges of shares, separations, reorganizations,
liquidations, or the like, the number and class of shares available for purchase pursuant to this
Warrant in the aggregate and the Warrant Price shall be correspondingly adjusted, as appropriate,
by the Board. The adjustment shall be such as will give the Holder of this Warrant upon exercise
for the same aggregate Warrant Price the total number, class and kind of shares as he would have
owned had the Warrant been exercised prior to the event and had he continued to hold such shares
until after the event requiring adjustment.

     7. Notice of Adjustments. Whenever any Warrant Price shall be adjusted
pursuant to Section 6 hereof, the Company shall prepare a certificate signed by the Company’s chief
executive officer setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price
and number of Shares issuable upon exercise of the Warrant after giving effect to such adjustment,
and shall cause copies of such certificate to be mailed (by certified or registered mail, return
receipt required, postage prepaid) within thirty (30) days of such adjustment to the Holder of this
Warrant as set forth in Section 11 hereof.

     8. No Fractional Shares. No fractional Shares will be issued in connection
with any exercise hereunder, but in lieu of such fractional share the Company shall make a cash
payment therefore upon the basis of the Warrant Price then in effect.

     9. Charges, Taxes and Expenses. Issuance of certificates for Shares upon
the exercise of this Warrant shall be made without charge to the Holder for any United States or
state of the United States documentary stamp tax or other incidental expense within respect to the
issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder.

     10. Miscellaneous.

          (a) Successors. This Warrant shall be binding upon any successors or
assigns of the Company.

          (b) Assignment. The Holder may assign or otherwise transfer this Warrant to
any affiliate of such Holder that is an “accredited investor” without the prior written consent of
the Company; provided that (i) any such transferee agrees to be subject to the terms of the
Amended and Restated Investor Rights Agreement, dated as of July 8, 2008, by and among the Company
and the other parties named therein (the “Investor Rights Agreement”) to the same extent as if such
transferee was an original Holder (as defined in the Investor Rights Agreement) with respect to any
Registrable Securities (as defined in the Investor Rights Agreement) that may be issued to such
transferee and (ii) any transfer of this Warrant will be effected only by surrender of this
Warrant to the Company and reissuance of a new warrant to the transferee. Any other assignment or
transfer of this Warrant by the Holder shall require the prior written consent of the Company.

-3-

 

          (c) Amendment. Except as otherwise provided in this Warrant, no
modification or amendment hereof shall be effective unless (i) made in a writing signed by
appropriate officers of the Company, (ii) such amendment or modification is approved by the
Majority Holders (as defined in the Note), and (iii) such amendment or modification is made to all
of the Warrants issued pursuant to the Purchase Agreement.

          (d) Governing Law. This Warrant shall be governed by, and construed and
enforced in accordance with, the substantive laws of the State of Delaware, without regard to the
conflicts of laws principles of any jurisdiction.

          (e) Headings. The headings used in this Warrant are used for convenience
only and are not to be considered in construing or interpreting this Warrant.

          (f) Saturdays, Sundays, Holidays. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall be a Saturday
or a Sunday or shall be a legal holiday in the State of Delaware, then such action may be taken or
such right may be exercised on the next succeeding day not a legal holiday

          (g) No Rights as Stockholder. Prior to the exercise of this Warrant, the
Holder shall not be entitled to any rights of a stockholder of the Company with respect to shares
for which this Warrant shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions (other than as expressly provided for in this Warrant) or
to exercise any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company

          (h) Compliance with Securities Laws. The Holder, by acceptance hereof,
acknowledges that this Warrant and the Shares to be issued upon exercise hereof are being acquired
solely for the Holder’s own account and not as a nominee for any other party, and for investment,
and that the Holder will not offer, sell or otherwise dispose of this Warrant or any Shares to be
issued upon exercise hereof except under circumstances that will not result in a violation of
applicable federal and state securities laws.

     11. Notices. Any notice required or permitted hereunder shall be in writing
and shall be mailed by overnight courier, registered or certified mail, return receipt required,
and postage pre-paid, or otherwise delivered by hand or by messenger, addressed as set forth below,
or at such other address as the Company or the Holder hereof shall have furnished to the other
party.

     If to the Company:

NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA 19428

Attention: Chief Executive Officer

Telephone: (484) 567-0130

Facsimile: (484) 567-01362

with a copy to:

Morgan Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Attention: Michael N. Peterson

Telephone: (215) 963-5025

-4-

 

Facsimile: (215) 963-5001

Email: mpeterson@morganlewis.com

and, if to the Holder, at the most recent address provided to the Company by the Holder for
such purpose; or, in each case, to the most recent address, specified by written notice, given to
the sender pursuant to this paragraph.

[Signature Page Follows]

-5-

 

     IN WITNESS WHEREOF, NuPathe Inc. has caused this Warrant to Purchase Shares of Preferred
Stock to be executed by its officers thereunto duly authorized.

Dated as of this       day of                     , 20     .

	 	 	 	 	 
	 	NuPathe Inc.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

NOTICE OF EXERCISE

			
	TO:	 	NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, PA 19428

Attention: Chief Executive Officer

     The undersigned,                                          (“Holder”) elects to acquire shares of
                                        
of NuPathe Inc. (the “Company”), pursuant to the terms of the Warrant to Purchase Shares of
Preferred Stock dated                                          (the “Warrant”).

     The Holder exercises its rights under the Warrant as set forth below:

     1. The Holder elects to purchase                     shares of the Company’s
                                         and tenders herewith a check in the amount of $                     as payment of
the purchase price.

     2. The Holder surrenders the Warrant with this Notice of Exercise.

     3. The Holder represents that it is acquiring the aforesaid shares of
                                         for investment and not with a view to or for resale in connection with,
distribution and that the Holder has no present intention of distributing or reselling the shares.

     Please issue a certificate representing the shares of                                          in the name of the
Holder or in such other name as is specified below:

			
	Name:	 	 

			
	Address:	 	 

			
	Taxpayer I.D.	 	 

By:

			
	Name:	 	 

			
	Title:	 	 

			
	Date:	 	 

 

 

EXHIBIT D

KNOWLEDGE PERSONS

Each of Jane Hollingsworth, Terri Sebree, Suzanne Hanlon and Keith Goldan.

 

 

EXHIBITS E-1 AND E-2

CAPITALIZATION

 

 

     

					
	Capitalization by Owner Report-Actual

NuPathe, Inc.

Period End: 3/31/2010 

Grouped
by Participant Type
	 	Exhibit E-1
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Financing Rounds	 	 	 	Outstanding Shares by Plan	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	NuPathe Inc	 	 	 	 	 	 	Outside of	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Common	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2005 Equity	 	 	 	 	 	 	Option Plan-	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Stock- RSA,	 	 	Common Stock-	 	 	 	 	 	 	 	 	 	 	 	Compensation	 	 	Outside of ’05	 	 	Series B	 	 	Outstanding	 	 	 	 	 	 	 	 
	Participant Name	 	 	Common Stock	 	 	unvested	 	 	total	 	 	Series A	 	 	Series B	 	 	 	Plan	 	 	Equity Plan	 	 	warrants	 	 	Total	 	 	 	Total	 	 	%	 
	Ben Franklin Technology Partners of SE Pa
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	374,268	 	 	 	516,129	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	890,397	 	 	 	1.36	%
	Biotechnology Greenhouse Corp of SE Pa
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	988,261	 	 	 	268,817	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	1,257,078	 	 	 	1.92	%
	Climax, John
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	987,724	 	 	 	537,634	 	 	 	 	15,000	 	 	 	 	 	 	 	 	 	 	 	15,000	 	 	 	 	1,590,358	 	 	 	2.43	%
	Coulaloglou, Michele
	 	 	 	1,250	 	 	 	 	 	 	 	1,250	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	1,250	 	 	 	0.00	%
	Dillon, John
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	 	 	 	 	 	 	 	 	 	90,000	 	 	 	 	 	 	 	 	 	 	 	90,000	 	 	 	 	140,000	 	 	 	0.21	%
	Felker, Ezra
	 	 	 	45,000	 	 	 	15,000	 	 	 	60,000	 	 	 	 	 	 	 	 	 	 	 	 	615,289	 	 	 	 	 	 	 	 	 	 	 	615,289	 	 	 	 	675,289	 	 	 	1.03	%
	Felker, Ezra H., IRA
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	48,387	 	 	 	 	 	 	 	 	 	 	 	 	1,128	 	 	 	1,128	 	 	 	 	49,515	 	 	 	0.08	%
	Goldan, Keith
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	26,882	 	 	 	 	799,122	 	 	 	 	 	 	 	 	 	 	 	799,122	 	 	 	 	826,004	 	 	 	1.26	%
	Hanlon, Suzanne
	 	 	 	135,000	 	 	 	5,000	 	 	 	140,000	 	 	 	 	 	 	 	26,882	 	 	 	 	298,038	 	 	 	 	 	 	 	627	 	 	 	298,665	 	 	 	 	465,547	 	 	 	0.71	%
	Hollingsworth, Bradford Irrevocable Trust
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	50,000	 	 	 	0.08	%
	Hollingsworth, Jane
	 	 	 	1,225,000	 	 	 	25,000	 	 	 	1,250,000	 	 	 	143,668	 	 	 	53,763	 	 	 	 	2,046,877	 	 	 	 	 	 	 	1,253	 	 	 	2,048,130	 	 	 	 	3,495,561	 	 	 	5.34	%
	Hollingsworth, Jane Irrevocable Trust
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	50,000	 	 	 	0.08	%
	O’Neill, Carol
	 	 	 	118,750	 	 	 	1,250	 	 	 	120,000	 	 	 	 	 	 	 	 	 	 	 	 	154,000	 	 	 	 	 	 	 	 	 	 	 	154,000	 	 	 	 	274,000	 	 	 	0.42	%
	Pierce, Mark
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	107,527	 	 	 	 	351,645	 	 	 	 	 	 	 	2,506	 	 	 	354,151	 	 	 	 	461,678	 	 	 	0.71	%
	Sebree, Terri
	 	 	 	1,325,000	 	 	 	25,000	 	 	 	1,350,000	 	 	 	 	 	 	 	 	 	 	 	 	1,214,086	 	 	 	 	 	 	 	 	 	 	 	1,214,086	 	 	 	 	2,564,086	 	 	 	3.92	%
	Jackson, David
	 	 	 	10,000	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	20,000	 	 	 	0.03	%
	Battelle Ventures L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	2,274,194	 	 	 	3,387,097	 	 	 	 	 	 	 	 	 	 	 	 	67,670	 	 	 	67,670	 	 	 	 	5,728,961	 	 	 	8.75	%
	BioAdvance Ventures, L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	1,792,115	 	 	 	1,433,692	 	 	 	 	 	 	 	 	 	 	 	 	25,063	 	 	 	25,063	 	 	 	 	3,250,870	 	 	 	4.97	%
	Birchmere Ventures III L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	2,293,907	 	 	 	1,949,820	 	 	 	 	 	 	 	 	 	 	 	 	34,754	 	 	 	34,754	 	 	 	 	4,278,481	 	 	 	6.54	%
	Birchmere Ventures III TSIB, L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	1,290,323	 	 	 	1,096,775	 	 	 	 	 	 	 	 	 	 	 	 	19,549	 	 	 	19,549	 	 	 	 	2,406,647	 	 	 	3.68	%
	Innovation Valley Partners, L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	413,978	 	 	 	376,344	 	 	 	 	 	 	 	 	 	 	 	 	7,519	 	 	 	7,519	 	 	 	 	797,841	 	 	 	1.22	%
	Lambe, Ronan
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	987,724	 	 	 	537,634	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	1,525,358	 	 	 	2.33	%
	Quaker Bio Ventures II
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	12,903,226	 	 	 	 	 	 	 	 	 	 	 	 	300,754	 	 	 	300,754	 	 	 	 	13,203,980	 	 	 	20.17	%
	Safeguard Delaware Inc
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	5,376,344	 	 	 	7,526,881	 	 	 	 	 	 	 	 	 	 	 	 	150,377	 	 	 	150,377	 	 	 	 	13,053,602	 	 	 	19.94	%
	SR One Ltd.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	5,376,344	 	 	 	 	 	 	 	 	 	 	 	 	125,314	 	 	 	125,314	 	 	 	 	5,501,658	 	 	 	8.40	%
	Angelov. Angel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	215,000	 	 	 	 	 	 	 	 	 	 	 	215,000	 	 	 	 	215,000	 	 	 	0.33	%
	Arnold, Susan
	 	 	 	12,655	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	14,917	 	 	 	 	 	 	 	 	 	 	 	14,917	 	 	 	 	14,917	 	 	 	0.02	%
	Barb, Tracey
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	34,464	 	 	 	 	 	 	 	 	 	 	 	34,464	 	 	 	 	34,464	 	 	 	0.05	%
	Beg, Jamil
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	10,000	 	 	 	0.02	%
	Brown, Charles G.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48,000	 	 	 	 	 	 	 	 	 	 	 	48,000	 	 	 	 	48,000	 	 	 	0.07	%
	Cardillo, Marco
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	5,000	 	 	 	0.01	%
	Cassidy, L. Wayne
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	25,000	 	 	 	 	 	 	 	 	 	 	 	25,000	 	 	 	 	25,000	 	 	 	0.04	%
	Chandler-Skerkis, Amy
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	30,000	 	 	 	 	 	 	 	 	 	 	 	30,000	 	 	 	 	30,000	 	 	 	0.05	%
	Cola, Michael
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	265,000	 	 	 	 	 	 	 	 	 	 	 	265,000	 	 	 	 	265,000	 	 	 	0.40	%
	Curtin, Theresa
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	36,164	 	 	 	 	 	 	 	 	 	 	 	36,164	 	 	 	 	36,164	 	 	 	0.06	%
	Higgins, Donna
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,000	 	 	 	 	 	 	 	 	 	 	 	35,000	 	 	 	 	35,000	 	 	 	0.05	%
	Jones, Mary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,964	 	 	 	 	 	 	 	 	 	 	 	31,964	 	 	 	 	31,964	 	 	 	0.05	%
	Klos, Monica
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	145,858	 	 	 	 	 	 	 	 	 	 	 	145,858	 	 	 	 	145,858	 	 	 	0.22	%
	Kolbush-Jackson, Donna
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,464	 	 	 	 	 	 	 	 	 	 	 	35,464	 	 	 	 	35,464	 	 	 	0.05	%
	Logan, Honora
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	10,000	 	 	 	0.02	%
	McLaughlin, Gerald
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	687,289	 	 	 	 	 	 	 	 	 	 	 	687,289	 	 	 	 	687,289	 	 	 	1.05	%
	Milan, Pola
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15,786	 	 	 	 	 	 	 	 	 	 	 	15,786	 	 	 	 	15,786	 	 	 	0.02	%
	Nett, Erica L._assignee of Robert Nett
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	72,000	 	 	 	0.11	%
	Nett, Nicholas E._assignee of Robert Nett
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	72,000	 	 	 	0.11	%
	Richardson, Lauren
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	25,572	 	 	 	 	 	 	 	 	 	 	 	25,572	 	 	 	 	25,572	 	 	 	0.04	%
	Siegel, Steven
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20,000	 	 	 	 	 	 	 	 	 	 	 	20,000	 	 	 	 	20,000	 	 	 	0.03	%
	Stiles, Deborah
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	5,000	 	 	 	0.01	%
	Sussman, Joel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	26,457	 	 	 	 	 	 	 	 	 	 	 	26,457	 	 	 	 	26,457	 	 	 	0.04	%
	Whetstone, Robert
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	75,000	 	 	 	 	 	 	 	 	 	 	 	75,000	 	 	 	 	75,000	 	 	 	0.11	%
	Oxford Finance Corp
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	134,408	 	 	 	 	 	 	 	134,408	 	 	 	 	134,408	 	 	 	0.21	%
	Outstanding Shares Pool
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	831,103	 	 	 	 	 	 	 	 	 	 	 	831,103	 	 	 	 	831,103	 	 	 	1.27	%
	Totals
	 	 	 	3,072,655	 	 	 	71,250	 	 	 	3,131,250	 	 	 	16,922,506	 	 	 	36,173,834	 	 	 	 	8,366,095	 	 	 	134,408	 	 	 	736,514	 	 	 	9,237,017	 	 	 	 	65,464,607	 	 	 	100.00	%

 

 

					
	 	 	 	 	 
	Capitalization by Owner Report- PROFORMA , POST DEBT CONVERSION

NuPathe, Inc.

Period End: 3/31/2010

Grouped by Participant Type
	 	Exhibit E-2

Assumptions: (1) notes convert on 9/30/2010 and (2) notes convert at 80% of the Series B price of $0.93/share ($0.74/share)

	 	 
	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	Financing Rounds	 	 	 	 	 	 	 	Outstanding Shares by Plan	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	NuPathe Inc	 	 	 	 	 	 	Outside of	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Common	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2005 Equity	 	 	 	 	 	 	Option Plan-	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	Stock- RSA,	 	 	Common Stock-	 	 	 	 	 	 	 	 	 	 	PROFORMA	 	 	 	Compensation	 	 	Outside of ’05	 	 	Series B	 	 	PROFORMA	 	 	Outstanding	 	 	 	PROFORMA	 	 	 	 
	Participant Name	 	 	Common Stock	 	 	unvested	 	 	total	 	 	Series A	 	 	Series B	 	 	Series B-2	 	 	 	Plan	 	 	Equity Plan	 	 	warrants	 	 	Warrants	 	 	Total	 	 	 	Total	 	 	%	 
	Ben Franklin Technology Partners of SE Pa
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	374,268	 	 	 	516,129	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	890,397	 	 	 	1.07	%
	Biotechnology Greenhouse Corp of SE Pa
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	988,261	 	 	 	268,817	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	1,257,078	 	 	 	1.51	%
	Climax, John
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	987,724	 	 	 	537,634	 	 	 	 	 	 	 	 	15,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15,000	 	 	 	 	1,590,358	 	 	 	1.92	%
	Coulaloglou, Michele
	 	 	 	1,250	 	 	 	 	 	 	 	1,250	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	1,250	 	 	 	0.00	%
	Dillon, John
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	90,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	90,000	 	 	 	 	140,000	 	 	 	0.17	%
	Felker, Ezra
	 	 	 	45,000	 	 	 	15,000	 	 	 	60,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	615,289	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	615,289	 	 	 	 	675,289	 	 	 	0.81	%
	Felker, Ezra H., IRA
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	48,387	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,128	 	 	 	 	 	 	 	1,128	 	 	 	 	49,515	 	 	 	0.06	%
	Goldan, Keith
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	26,882	 	 	 	10,526	 	 	 	 	799,122	 	 	 	 	 	 	 	 	 	 	 	2,534	 	 	 	801,656	 	 	 	 	839,064	 	 	 	1.01	%
	Hanlon, Suzanne
	 	 	 	135,000	 	 	 	5,000	 	 	 	140,000	 	 	 	 	 	 	 	26,882	 	 	 	7,018	 	 	 	 	298,038	 	 	 	 	 	 	 	627	 	 	 	1,689	 	 	 	300,354	 	 	 	 	474,254	 	 	 	0.57	%
	Hollingsworth, Bradford Irrevocable Trust
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	50,000	 	 	 	0.06	%
	Hollingsworth, Jane
	 	 	 	1,225,000	 	 	 	25,000	 	 	 	1,250,000	 	 	 	143,668	 	 	 	53,763	 	 	 	70,176	 	 	 	 	2,046,877	 	 	 	 	 	 	 	1,253	 	 	 	16,892	 	 	 	2,065,022	 	 	 	 	3,582,629	 	 	 	4.32	%
	Hollingsworth, Jane Irrevocable Trust
	 	 	 	50,000	 	 	 	 	 	 	 	50,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	50,000	 	 	 	0.06	%
	O’Neill, Carol
	 	 	 	118,750	 	 	 	1,250	 	 	 	120,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	154,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	154,000	 	 	 	 	274,000	 	 	 	0.33	%
	Pierce, Mark
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	107,527	 	 	 	 	 	 	 	 	351,645	 	 	 	 	 	 	 	2,506	 	 	 	 	 	 	 	354,151	 	 	 	 	461,678	 	 	 	0.56	%
	Sebree, Terri
	 	 	 	1,325,000	 	 	 	25,000	 	 	 	1,350,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,214,086	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,214,086	 	 	 	 	2,564,086	 	 	 	3.09	%
	Jackson, David
	 	 	 	10,000	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	20,000	 	 	 	0.02	%
	Battelle Ventures L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	2,274,194	 	 	 	3,387,097	 	 	 	1,716,003	 	 	 	 	 	 	 	 	 	 	 	 	67,670	 	 	 	413,055	 	 	 	480,725	 	 	 	 	7,858,019	 	 	 	9.47	%
	BioAdvance Ventures, L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	1,792,115	 	 	 	1,433,692	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	 	25,063	 	 	 	—	 	 	 	25,063	 	 	 	 	3,250,870	 	 	 	3.92	%
	Birchmere Ventures III L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	2,293,907	 	 	 	1,949,820	 	 	 	1,254,165	 	 	 	 	 	 	 	 	 	 	 	 	34,754	 	 	 	301,887	 	 	 	336,641	 	 	 	 	5,834,533	 	 	 	7.03	%
	Birchmere Ventures III TSIB, L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	1,290,323	 	 	 	1,096,775	 	 	 	705,468	 	 	 	 	 	 	 	 	 	 	 	 	19,549	 	 	 	169,811	 	 	 	189,360	 	 	 	 	3,281,927	 	 	 	3.95	%
	Innovation Valley Partners, L.P.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	413,978	 	 	 	376,344	 	 	 	190,667	 	 	 	 	 	 	 	 	 	 	 	 	7,519	 	 	 	45,895	 	 	 	53,414	 	 	 	 	1,034,403	 	 	 	1.25	%
	Lambe, Ronan
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	987,724	 	 	 	537,634	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	1,525,358	 	 	 	1.84	%
	Quaker Bio Ventures II
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	12,903,226	 	 	 	4,766,672	 	 	 	 	 	 	 	 	 	 	 	 	300,754	 	 	 	1,147,374	 	 	 	1,448,128	 	 	 	 	19,118,026	 	 	 	23.04	%
	Safeguard Delaware Inc
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	5,376,344	 	 	 	7,526,881	 	 	 	3,813,338	 	 	 	 	 	 	 	 	 	 	 	 	150,377	 	 	 	917,899	 	 	 	1,068,276	 	 	 	 	17,784,839	 	 	 	21.43	%
	SR One Ltd.
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	5,376,344	 	 	 	1,588,890	 	 	 	 	 	 	 	 	 	 	 	 	125,314	 	 	 	382,458	 	 	 	507,772	 	 	 	 	7,473,006	 	 	 	9.01	%
	Angelov. Angel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	215,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	215,000	 	 	 	 	215,000	 	 	 	0.26	%
	Arnold, Susan
	 	 	 	12,655	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	14,917	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	14,917	 	 	 	 	14,917	 	 	 	0.02	%
	Barb, Tracey
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	34,464	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	34,464	 	 	 	 	34,464	 	 	 	0.04	%
	Beg, Jamil
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	10,000	 	 	 	0.01	%
	Brown, Charles G.
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48,000	 	 	 	 	48,000	 	 	 	0.06	%
	Cardillo, Marco
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	5,000	 	 	 	0.01	%
	Cassidy, L. Wayne
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	25,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	25,000	 	 	 	 	25,000	 	 	 	0.03	%
	Chandler-Skerkis, Amy
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	30,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	30,000	 	 	 	 	30,000	 	 	 	0.04	%
	Cola, Michael
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	265,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	265,000	 	 	 	 	265,000	 	 	 	0.32	%
	Curtin, Theresa
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	36,164	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	36,164	 	 	 	 	36,164	 	 	 	0.04	%
	Higgins, Donna
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,000	 	 	 	 	35,000	 	 	 	0.04	%
	Jones, Mary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,964	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,964	 	 	 	 	31,964	 	 	 	0.04	%
	Klos, Monica
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	145,858	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	145,858	 	 	 	 	145,858	 	 	 	0.18	%
	Kolbush-Jackson, Donna
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,464	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,464	 	 	 	 	35,464	 	 	 	0.04	%
	Logan, Honora
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10,000	 	 	 	 	10,000	 	 	 	0.01	%
	McLaughlin, Gerald
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	687,289	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	687,289	 	 	 	 	687,289	 	 	 	0.83	%
	Milan, Pola
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15,786	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15,786	 	 	 	 	15,786	 	 	 	0.02	%
	Nett, Erica L._assignee of Robert Nett
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	72,000	 	 	 	0.09	%
	Nett, Nicholas E._assignee of Robert Nett
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	72,000	 	 	 	 	72,000	 	 	 	0.09	%
	Richardson, Lauren
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	25,572	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	25,572	 	 	 	 	25,572	 	 	 	0.03	%
	Siegel, Steven
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20,000	 	 	 	 	20,000	 	 	 	0.02	%
	Stiles, Deborah
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,000	 	 	 	 	5,000	 	 	 	0.01	%
	Sussman, Joel
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	26,457	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	26,457	 	 	 	 	26,457	 	 	 	0.03	%
	Whetstone, Robert
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	75,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	75,000	 	 	 	 	75,000	 	 	 	0.09	%
	Oxford Finance Corp
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	134,408	 	 	 	 	 	 	 	 	 	 	 	134,408	 	 	 	 	134,408	 	 	 	0.16	%
	Outstanding Shares Pool
	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	831,103	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	831,103	 	 	 	 	831,103	 	 	 	1.00	%
	Totals
	 	 	 	3,072,655	 	 	 	71,250	 	 	 	3,131,250	 	 	 	16,922,506	 	 	 	36,173,834	 	 	 	14,122,924	 	 	 	 	8,366,095	 	 	 	134,408	 	 	 	736,514	 	 	 	3,399,493	 	 	 	12,636,510	 	 	 	 	82,987,024	 	 	 	100.00	%exv10w7

Exhibit 10.7

EXECUTION VERSION

LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT (this “Agreement”)
dated as of May 13, 2010 (the “Effective Date”)
among MIDCAP FUNDING III, LLC, a Delaware limited
liability company, with an office located at 7735
Old Georgetown Road, Suite 400, Bethesda, Maryland
20814 (“MidCap”), as collateral agent (“Agent”) and
as a Lender, SILICON VALLEY BANK, a California
corporation and with a loan production office
located at 100 Matsonford Road, Building 5, Suite
555, Radnor, Pennsylvania 19087 (“SVB”), as a
Lender, the Lenders listed on Schedule 1.1 hereof
and otherwise party hereto from time to time (each
a “Lender” and collectively, the “Lenders”), and
NUPATHE INC., a Delaware corporation (“Borrower”),
provides the terms on which Lenders shall lend to
Borrower and Borrower shall repay Lenders. The
parties agree as follows:

     1  ACCOUNTING AND OTHER TERMS 

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

     2 LOAN AND TERMS OF PAYMENT 

     2.1 Promise to Pay. Borrower hereby unconditionally promises to pay to Agent, for
payment to each Lender in accordance with its respective Pro Rata Share, the outstanding principal
amount of all Credit Extensions made by the Lenders and accrued and unpaid interest thereon and any
other amounts due hereunder as and when due in accordance with this Agreement.

     2.2 Term Loans.

          (a) Availability. Subject to the terms and conditions of this Agreement, the Lenders agree,
severally and not jointly, to make term loans to Borrower in an aggregate amount of up to Eleven
Million Dollars ($11,000,000.00) according to each Lender’s Term Loan Commitments as set forth on
Schedule 1.1 hereto. The Term Loans shall be available in two tranches. The first tranche (“Term A
Loan”) shall be in an amount equal to Five Million Dollars ($5,000,000.00) and shall be advanced on
the Effective Date. The second tranche (“Term B Loan”; Term A Loan and Term B Loan are each
referred to herein individually as a “Term Loan” and collectively as the “Term Loans”) shall be
made available by the Lenders in their sole discretion during the Term B Loan Draw Period in an
amount equal to Six Million Dollars ($6,000,000.00) in a single advance. After repayment, no Term
Loan may be re-borrowed.

          (b) Interest Payments and Repayment. Commencing on the first (1st) Payment Date
following the Funding Date of Term A Loan, and continuing on the Payment Date of each successive
month thereafter through and including the Maturity Date, Borrower shall make monthly payments of
interest in arrears to Agent, for payment to each Lender in accordance with its respective Pro Rata
Share, in arrears, and calculated as set forth in Section 2.3. Commencing on the Amortization
Date, and continuing on the Payment Date of each successive month thereafter through and including
the Maturity Date, Borrower shall make consecutive monthly payments of principal to Agent, for
payment to each Lender in accordance with its respective Pro Rata Share, as calculated by Agent
based upon: (1) the amount of such Lender’s Term Loans, (2) the effective rate of interest, as
determined in Section 2.3, and (3) a straight-line amortization schedule ending on the Maturity
Date. All unpaid principal and accrued interest with respect to the Term Loans is due and payable
in full on the Maturity Date. The Term Loans may be prepaid only in accordance with Sections
2.2(c) and 2.2(d).

          (c) Mandatory Prepayments. If the Term Loans are accelerated following the occurrence of an
Event of Default, Borrower shall immediately pay to Agent, for payment to each Lender in accordance
with its respective Pro Rata Share, an amount equal to the sum of: (i) all outstanding principal of
the Term Loans and all

1

 

other Obligations, plus accrued and unpaid interest thereon, (ii) the Final Payment, (iii) the
Prepayment Fee, plus (iv) all other sums that shall have become due and payable, including Lenders’
Expenses.

          (d) Permitted Prepayment of Loans. Borrower shall have the option to prepay all, but not
less than all, of the Term Loans advanced by the Lenders under this Agreement, provided Borrower
(i) provides written notice to Agent of its election to prepay the Term Loans at least thirty (30)
days prior to such prepayment, and (ii) pays to Agent, for payment to each Lender in accordance
with its respective Pro Rata Share, on the date of such prepayment, an amount equal to the sum of
(A) all outstanding principal of the Term Loans and all other Obligations, plus accrued and unpaid
interest thereon, (B) the Final Payment, (C) the Prepayment Fee, and (D) all other sums that shall
have become due and payable, including Lenders’ Expenses.

     2.3 Payment of Interest on the Credit Extensions.

          (a) Computation of Interest. Interest on the Credit Extensions and all fees payable hereunder
shall be computed on the basis of a 360-day year and the actual number of days elapsed in the
period during which such interest accrues. In computing interest on any Credit Extension, the date
of the making of such Credit Extension shall be included and the date of payment shall be excluded;
provided, however, that if any Credit Extension is repaid on the same day on which it is made, such
day shall be included in computing interest on such Credit Extension.

          (b) Interest Rate Determination. Subject to the provisions of Section 2.3(c) below, each
Advance shall bear interest on the outstanding principal amount thereof from the date when made
until paid in full at a rate per annum equal to the (i) the greater of (A) the LIBOR Rate in effect
for the applicable Interest Period adjusted on the first (1st) day of each Interest
Period and fixed for the duration of each such Interest Period or (B) three percent
(3.00%), plus (ii) the LIBOR Rate Margin. As of each Interest Rate Determination Date, Agent shall
determine (which determination shall, absent manifest error in calculation, be final, conclusive
and binding upon all parties) the interest rate that shall apply to the Advances for which an
interest rate is then being determined for the applicable Interest Period. In the event that Agent
shall have determined (which determination shall be final and conclusive and binding upon all
parties hereto), as of any Interest Rate Determination Date with respect to any Advance, that
adequate and fair means do not exist for ascertaining the interest rate applicable to such Advance
on the basis provided for in the definition of Base LIBOR Rate, then Agent may select a comparable
replacement index and corresponding margin.

          (c) Default Rate. Immediately upon the occurrence and during the continuance of an Event of
Default, Obligations shall bear interest at a rate per annum which is three percentage points
(3.00%) above the rate that is otherwise applicable thereto (the “Default Rate”). Payment or
acceptance of the increased interest rate provided in this Section 2.3(c) is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or Lenders.

          (d) Debit of Accounts. Lenders may debit any of Borrower’s deposit accounts, including the
Designated Deposit Account, for principal and interest payments when due or any other amounts
Borrower owes the Lenders under the Loan Documents when due. These debits shall not constitute a
set-off.

          (e) Payments. Payments of principal and/or interest received after 12:00 noon Eastern time
are considered received at the opening of business on the next Business Day. When a payment is due
on a day that is not a Business Day, the payment is due the next Business Day and additional fees
or interest, as applicable, shall continue to accrue until paid. All payments to be made by
Borrower hereunder or under any other Loan Document, including payments of principal and interest
made hereunder and pursuant to any other Loan Document, and all fees, expenses, indemnities and
reimbursements, shall be made without set-off, recoupment or counterclaim, in lawful money of the
United States and in immediately available funds. All payments required under this Agreement are
to be made directly to Agent unless otherwise directed by Agent in writing.

          (f) Maximum Lawful Rate. In no event shall the interest charged hereunder, with respect to
the notes (if any) or any other obligations of Borrower under any Loan Documents exceed the maximum
amount permitted under the Laws of the State of Maryland. Notwithstanding anything to the contrary
herein or elsewhere, if at any time the rate of interest payable hereunder or under any note or
other Loan Document (the “Stated Rate”)

2

 

would exceed the highest rate of interest permitted under any applicable Law to be charged
(the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the
rate of interest payable shall be equal to the Maximum Lawful Rate; provided, however, that if at
any time thereafter the Stated Rate is less than the Maximum Lawful Rate, Borrower shall, to the
extent permitted by Law, continue to pay interest at the Maximum Lawful Rate until such time as the
total interest received is equal to the total interest which would have been received had the
Stated Rate been (but for the operation of this provision) the interest rate payable. Thereafter,
the interest rate payable shall be the Stated Rate unless and until the Stated Rate again would
exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall
the total interest received by any Lender exceed the amount which it could lawfully have received,
had the interest been calculated for the full term hereof at the Maximum Lawful Rate. If,
notwithstanding the prior sentence, any Lender has received interest hereunder in excess of the
Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance
of such Lender’s Term Loan or to other amounts (other than interest) payable hereunder, and if no
such principal or other amounts are then outstanding, such excess or part thereof remaining shall
be paid to Borrower. In computing interest payable with reference to the Maximum Lawful Rate
applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum
Lawful Rate divided by the number of days in the year in which such calculation is made.

     2.4 Fees. Borrower shall pay to Agent for the account of Lenders:

          (a) Origination Fee. A fully earned, non-refundable origination fee in an amount equal to
one-half of one percent (0.50%) of the aggregate Term Loan Commitments of the Lenders, of which (i)
Twenty Five Thousand Dollars ($25,000.00) has been paid to Agent prior to the Effective Date and
(ii) Thirty Thousand Dollars ($30,000.00) shall be due on the Funding Date of Term B Loan, in each
case to be shared among the Lenders pursuant to their respective Commitment Percentages;

          (b) Final Payment. The Final Payment, when due under Section 2.2(c) or 2.2(d), upon
acceleration of the Term Loans or otherwise on the Maturity Date, to be shared among the Lenders in
accordance with their respective Pro Rata Shares;

          (c) Prepayment Fee. The Prepayment Fee, when due hereunder, to be shared among the Lenders in
accordance with their respective Pro Rata Shares; and

          (d) Lenders’ Expenses. All Lenders’ Expenses (including reasonable attorneys’ fees and
expenses for documentation and negotiation of this Agreement) incurred through and after the
Effective Date, when due (and in the absence of any other due date specified herein, such Lenders’
Expenses shall be due upon demand).

     2.5 Additional Costs. If any new Law or regulation increases a Lender’s costs or
reduces its income for any Term Loan, Borrower shall pay the increase in cost or reduction in
income or additional expense; provided, however, that Borrower shall not be liable for any amount
attributable to any period before one hundred eighty (180) days prior to the date such Lender
notifies Borrower of such increased costs. Each Lender agrees that it shall allocate any increased
costs among its customers similarly affected in good faith and in a manner consistent with such
Lender’s customary practice.

     2.6 Payments and Taxes. Any and all payments made by Borrower under this Agreement or
any Loan Documents shall be made free and clear of and without deduction for any and all present or
future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges
imposed by any governmental authority (including any interest, additions to tax or penalties
applicable thereto) other than any taxes imposed on or measured by any Lender’s overall net income
and franchise taxes imposed on it (in lieu of net income taxes), by a jurisdiction (or any
political subdivision thereof) as a result of any Lender being organized or resident, conducting
business (other than a business deemed to arise from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, or otherwise with respect to,
this Agreement or any Loan Documents) or having its principal office in such jurisdiction
(“Indemnified Taxes”). If any Indemnified Taxes shall be required by Law to be withheld or
deducted from or in respect of any sum payable under this Agreement or any Loan Documents to any
Lender (w) an additional amount shall be payable as may be necessary so that, after making all
required withholdings or deductions (including withholdings or deductions applicable to additional
sums payable under this Section) such Lender receives an amount equal to the sum it would have
received had no such withholdings or deductions been made, (x) Borrower shall make such
withholdings or deductions, (y) Borrower shall pay the full amount withheld or deducted to the
relevant taxing authority or other authority in accordance with

3

 

applicable Law and (z) Borrower shall deliver to such Lender evidence of such payment.
Borrower’s obligation hereunder shall survive the termination of this Agreement.

     2.7 Secured Promissory Notes. Each Term Loan shall be evidenced by a Secured
Promissory Note in the form attached as Exhibit D hereto (each a “Secured Promissory Note”), and
shall be repayable as set forth herein. Borrower irrevocably authorizes each Lender to make or
cause to be made, on or about the Funding Date of any Term Loan or at the time of receipt of any
payment of principal on such Lender’s Secured Promissory Note, an appropriate notation on such
Lender’s Secured Promissory Note Record reflecting the making of such Term Loan or (as the case may
be) the receipt of such payment. The outstanding amount of each Term Loan set forth on such
Lender’s Secured Promissory Note Record shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Lender, but the failure to record, or any error in so recording,
any such amount on such Lender’s Secured Promissory Note Record shall not limit or otherwise affect
the obligations of Borrower hereunder or under any Secured Promissory Note to make payments of
principal of or interest on any Secured Promissory Note when due. Upon receipt of an affidavit of
an officer of a Lender as to the loss, theft, destruction, or mutilation of its Secured Promissory
Note, Borrower shall issue, in lieu thereof, a replacement Secured Promissory Note in the same
principal amount thereof and of like tenor.

     3 CONDITIONS OF LOANS

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

          (a) duly executed original signatures to the Loan Documents to which Borrower is a party;

          (b) duly executed original Secured Promissory Notes in favor of each Lender with a face amount
equal to such Lender’s Term Loan Commitment;

          (c) the Operating Documents of Borrower certified by a Responsible Officer and good standing
certificates of Borrower certified by the Secretary of State of the State of Delaware as of a date
no earlier than thirty (30) days prior to the Effective Date;

          (d) good standing certificates dated as of a date no earlier than thirty (30) days prior to
the Effective Date to the effect that Borrower is qualified to transact business in all states in
which the nature of Borrower’s business so requires;

          (e) copies of duly executed signatures to the completed Borrowing Resolutions for Borrower,
certified by a Responsible Officer;

          (f) the Subordination Agreement duly executed by the holders of Borrower’s convertible notes
in favor of the Lenders;

          (g) a payoff letter from Oxford Finance Corporation evidencing that, upon the payment in full
of the obligations owed by Borrower to Oxford Finance Corporation, (i) the Liens securing
Indebtedness owed by Borrower to Oxford Finance Corporation will be terminated and (ii) the
documents and/or filings evidencing the perfection of such Liens, including without limitation any
financing statements and/or control agreements, have or will, concurrently with the initial Credit
Extension, be terminated;

          (h) certified copies, dated as of a recent date, of financing statement searches, as Agent
shall request, accompanied by written evidence (including any UCC termination statements) that the
Liens indicated in any such financing statements either constitute Permitted Liens or have been or,
in connection with the initial Credit Extension, will be terminated or released;

          (i) the Perfection Certificate executed by Borrower;

4

 

          (j) a legal opinion of Borrower’s counsel dated as of the Effective Date together with the
duly executed original signatures thereto;

          (k) copies of any existing registration rights agreement/investors’ rights agreement or
similar agreements and any amendments thereto;

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

          (m) payment of the fees and Lenders’ Expenses then accrued as specified in Section 2.4 hereof;
and

          (n) evidence that Borrower shall have received, on or prior to the Effective Date, net cash
proceeds of not less than Ten Million Dollars ($10,000,000.00) from the issuance and sale of
Borrower’s equity securities or convertible debt securities to existing investors in Borrower.

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

          (a) timely receipt by Agent of an executed Payment/Advance Form in the form of Exhibit B
attached hereto;

          (b) the representations and warranties in Section 5 shall be true, correct and complete in all
material respects on the date of the Payment/Advance Form and on the Funding Date of each Credit
Extension; provided, however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date, and no
Default or Event of Default shall have occurred and be continuing or result from the Credit
Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the
representations and warranties in Section 5 remain true, accurate and complete in all material
respects; provided, however, that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality in the text
thereof; and provided, further that those representations and warranties expressly referring to a
specific date shall be true, accurate and complete in all material respects as of such date; and

          (c) in such Lender’s sole discretion, there has not been any Material Adverse Change.

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

     3.4 Procedures for Borrowing. Subject to the prior satisfaction of all other
applicable conditions to the making of a Term Loan set forth in this Agreement, to obtain a Term
Loan, Borrower shall notify Agent (which notice shall be irrevocable) by electronic mail,
facsimile, or telephone by 12:00 noon Eastern time three (3) Business Days prior to the date the
Term Loan is to be made. Together with any such electronic or facsimile notification, Borrower
shall deliver to Agent by electronic mail or facsimile a completed Payment/Advance Form executed by
a Responsible Officer or his or her designee. Upon receipt of a Payment/Advance Form, Agent shall
promptly provide a copy of the same to each Lender. Agent may rely on any telephone notice given
by a person whom Agent reasonably believes is a Responsible Officer or designee.

     4 CREATION OF SECURITY INTEREST

     4.1 Grant of Security Interest. Borrower hereby grants Agent, for the ratable benefit
of Lenders, to secure the payment and performance in full of all of the Obligations, a continuing
security interest in, and pledges to Agent, for the ratable benefit of the Lenders, the Collateral,
wherever located, whether now owned or hereafter acquired or arising, and all

5

 

proceeds and products thereof. Borrower represents, warrants, and covenants that the security
interest granted herein is and shall at all times continue to be a first priority perfected
security interest in the Collateral, subject only to Permitted Liens that may have priority by
operation of applicable Law. If Borrower shall acquire a commercial tort claim (as defined in the
Code), Borrower shall promptly notify Agent in a writing signed by Borrower of the general details
thereof (and further details as may be required by Agent) and grant to Agent, for the ratable
benefit of the Lenders, in such writing a security interest therein and in the proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and substance reasonably
satisfactory to Agent.

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

     5 REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants as follows at all times unless expressly provided below:

     5.1 Due Organization, Authorization: Power and Authority.

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

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

     5.2 Collateral.

6

 

          (a) Borrower has good title to, has rights in, and has the power to transfer each item of the
Collateral upon which it purports to grant a Lien hereunder, free and clear of any and all Liens
except Permitted Liens. Borrower has no Deposit Accounts, Securities Accounts, Commodity Accounts
or other investment accounts other than the Collateral Accounts permitted by the terms of Section
6.6 hereof with respect of which Borrower has taken, subject to the terms of Section 6.12, such
actions as are necessary to give Agent for the ratable benefit of all Lenders a perfected security
interest therein. The Accounts are bona fide, existing obligations of the Account Debtors.

          (b) On the Effective Date, the Collateral is not in the possession of any third party bailee
(such as a warehouse) except as disclosed in the Perfection Certificate, and, as of the Effective
Date, no such third party bailee possesses components of the Collateral in excess of Twenty-Five
Thousand Dollars ($25,000). None of the components of the Collateral shall be maintained at
locations other than as disclosed in the Perfection Certificate on the Effective Date or as
permitted pursuant to Section 7.2. In the event that Borrower, after the Effective Date, intends
to store or otherwise deliver any portion of the Collateral to a bailee in excess of Twenty-Five
Thousand Dollars ($25,000), then Borrower will first receive the written consent of Agent and such
bailee must execute and deliver a bailee agreement in form and substance satisfactory to Agent in
its sole discretion.

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

          (d) Except as noted on the Perfection Certificate, as of the Effective Date Borrower is not a
party to, nor is bound by, any material license or other agreement with respect to which Borrower
is a licensee that (a) prohibits or otherwise restricts Borrower from granting a security interest
in Borrower’s interest in such license or agreement or any other property, or (b) for which a
default under or termination of could interfere with Agent’s right to sell any Collateral.
Borrower shall provide written notice to Agent within ten (10) days of entering or becoming bound
by any such license or agreement (other than over-the-counter software that is commercially
available to the public). Borrower shall take such commercially reasonable steps as Agent requests
to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (x) all
such licenses or agreements to be deemed “Collateral” and for Agent to have a security interest in
it that might otherwise be restricted or prohibited by Law or by the terms of any such license or
agreement, whether now existing or entered into in the future, and (y) Agent to have the ability in
the event of a liquidation of any Collateral to dispose of such Collateral in accordance with
Agent’s rights and remedies under this Agreement and the other Loan Documents.

     5.3 Litigation. As of the Effective Date, there are no actions or proceedings pending
or, to the knowledge of the Responsible Officers, threatened in writing by or against Borrower or
any of its Subsidiaries involving more than Fifty Thousand Dollars ($50,000.00).

     5.4 No Material Deterioration in Financial Condition; Financial Statements. All
consolidated financial statements for Borrower and any of its Subsidiaries delivered to Agent
fairly present, in conformity with GAAP, in all material respects Borrower’s consolidated financial
condition and Borrower’s consolidated results of operations. As of the Effective Date, there has
not been any material deterioration in Borrower’s consolidated financial condition since the date
of the most recent financial statements submitted to Agent.

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

     5.6 Regulatory Compliance.

          (a) Borrower is not an “investment company” or a company “controlled” by an “investment
company” under the Investment Company Act of 1940, as amended. Borrower is not engaged as one of
its important activities in extending credit for margin stock (under Regulations X, T and U of the
Federal Reserve Board of Governors). Borrower has complied in all material respects with the
Federal Fair Labor Standards Act. Neither Borrower nor any of its Subsidiaries is a “holding
company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company”
as each term is defined and used in the Public Utility Holding Company Act of 2005. Borrower has
not violated any Laws, ordinances or rules, the violation of which could

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reasonably be expected to have a material adverse effect on its business. None of Borrower’s
or any of its Subsidiaries’ properties or assets has been used by Borrower or any Subsidiary or, to
Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating, or
transporting any hazardous substance other than in material compliance with applicable Laws.
Borrower has obtained all Required Permits, or has contracted with third parties holding Required
Permits, necessary for compliance with all Laws and all such Required Permits are current.
Borrower and each of its Subsidiaries have obtained all consents, approvals and authorizations of,
made all declarations or filings with, and given all notices to, all Governmental Authorities that
are necessary to continue their respective businesses as currently conducted.

          (b) None of Borrower, its Affiliates or any of their respective agents acting or benefiting in
any capacity in connection with the transactions contemplated by this Agreement is (i) in violation
of any Anti-Terrorism Law, (ii) engages in or conspires to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. Neither Borrower nor, to the
knowledge of Borrower, any of its Affiliates or agents acting or benefiting in any capacity in
connection with the transactions contemplated by this Agreement, (x) conducts any business or
engages in making or receiving any contribution of funds, goods or services to or for the benefit
of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any
property or interest in property blocked pursuant to Executive Order No. 13224, any similar
executive order or other Anti-Terrorism Law.

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

     5.8 Tax Returns and Payments; Pension Contributions. Borrower has timely filed all
required tax returns and reports, and Borrower and its Subsidiaries have timely paid all foreign,
federal, state and local taxes, assessments, deposits and contributions owed by Borrower, in each
case other than with respect to taxes which do not exceed $25,000 in the aggregate. Borrower may
defer payment of any contested taxes, provided that Borrower (a) in good faith contests its
obligation to pay the taxes by appropriate proceedings promptly and diligently instituted and
conducted, (b) notifies Agent in writing of the commencement of, and any material development in,
the proceedings, and (c) posts bonds or takes any other steps required to prevent the governmental
authority levying such contested taxes from obtaining a Lien upon any of the Collateral that is
other than a “Permitted Lien”. As of the Effective Date, Borrower is unaware of any claims or
adjustments proposed for any of Borrower’s prior tax years which could result in additional taxes
becoming due and payable by Borrower. Borrower has paid all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with their terms, and
Borrower has not withdrawn from participation in, and has not permitted partial or complete
termination of, or permitted the occurrence of any other event with respect to, any such plan which
could reasonably be expected to result in any liability of Borrower, including any liability to the
Pension Benefit Guaranty Corporation or its successors or any other governmental agency.

     5.9 Use of Proceeds. Borrower shall use the proceeds of the Credit Extensions solely
as working capital and to fund its general business requirements and not for personal, family,
household or agricultural purposes. A portion of the proceeds of the initial Credit Extension shall
be used on the Effective Date to repay in full the indebtedness of Borrower to Oxford Finance
Corporation.

     5.10 Full Disclosure. No written representation, warranty or other statement of
Borrower in any certificate or written statement given to Agent or any Lender, as of the date such
representation, warranty, or other statement was made, taken together with all such written
certificates and written statements given to Agent or any Lender, contains any untrue statement of
a material fact or omits to state a material fact necessary to make the statements contained in the
certificates or statements not misleading (it being recognized that the projections and forecasts
provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts
and that actual results during the period or periods covered by such projections and forecasts may
differ from the projected or forecasted results).

     5.11 Regulatory Developments.

          (a) All Products and all Required Permits as of the Effective Date are listed on Schedule
5.11, and Borrower has delivered to Agent a copy of all Required Permits to the extent requested by
Agent;

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          (b) Without limiting the generality of Section 5.6 above, with respect to any Product being
tested or manufactured by Borrower, (i) Borrower has received, and such Product is the subject of,
all Required Permits needed in connection with the testing or manufacture of such Product as such
testing is currently being conducted by or on behalf of Borrower, (ii) Borrower has not received
any notice from any applicable Governmental Authority, specifically including the FDA, notifying
Borrower of (A) any material deficiency or violation of Laws and/or the Required Permits related to
the manufacture of such Product, or (B) that any such Required Permit has been revoked or
withdrawn, or (iii) no Governmental Authority has issued any order or recommendation stating that
the development, testing and/or manufacturing of such Product by Borrower should cease; and

          (c) Without limiting the generality of Section 5.6 above, with respect to any Product marketed
or sold by Borrower, (i) Borrower has received, and such Product is the subject of, all Required
Permits needed in connection with the marketing and sales of such Product as currently being
marketed or sold by Borrower, (ii) Borrower has not received any notice from any applicable
Governmental Authority, specifically including the FDA, notifying Borrower of (A) any material
deficiency or violation of Laws and/or the Required Permits related to the marketing or sale of
such Product, or (B) that any such Required Permit has been revoked or withdrawn, or (iii) no
Governmental Authority has issued any order or recommendation stating that such marketing or sales
of such Product cease or that such Product be withdrawn from the marketplace.

     5.12 Intellectual Property.

          (a) Borrower is the sole owner of, or has a valid license to use, all Intellectual Property
necessary for the conduct of its business, except those licenses described in the Perfection
Certificate and licenses permitted by the terms of Section 7.1 hereof. Each issued Patent is valid
and enforceable and no part of the Intellectual Property has been judged invalid or unenforceable,
in whole or in part, and to the best of Borrower’s knowledge, no claim has been made that any part
of the Intellectual Property violates the rights of any third party except to the extent such claim
could not reasonably be expected to have a material adverse effect on Borrower’s business.

          (b) As of the Effective Date, all of Borrower’s Material Intellectual Property, including all
licenses under which Borrower is the licensee of any such Material Intellectual Property owned by
another Person, are set forth on Schedule 5.12(b). Such Schedule 5.12(b) indicates in each case,
as of the Effective Date, the expiration date of such Material Intellectual Property and whether
such Material Intellectual Property (or application therefor) is owned or licensed by Borrower, and
in the case of any such licensed Material Intellectual Property, lists the name and address of the
licensor and the name and date of the agreement pursuant to which such item of Material
Intellectual Property is licensed, the expiration date of such license and the expiration date of
the underlying Material Intellectual Property, whether or not such license is an exclusive license
and whether there are any purported restrictions in such license on the ability to Borrower to
grant a security interest in and/or to transfer any of its rights as a licensee under such license.

     6 AFFIRMATIVE COVENANTS

     Borrower shall do all of the following:

     6.1 Government Compliance.

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

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

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          (c) In connection with the development, testing, manufacture, marketing or sale of each and
any Product by Borrower, Borrower shall comply fully and completely in all respects with all
Required Permits at all times issued by any Governmental Authority the noncompliance with which
could have a material adverse effect on Borrower’s business, specifically including the FDA, with
respect to such development, testing, manufacture, marketing or sales of such Product by Borrower
as such activities are at any such time being conducted by Borrower.

     6.2 Financial Statements, Reports, Certificates.

          (a) Deliver to Agent: (i) as soon as available, but no later than forty-five (45) days after
the last day of each month, a company prepared unaudited consolidated balance sheet and income
statement covering Borrower’s consolidated operations for such month certified by a Responsible
Officer and in a form acceptable to Agent; (ii) as soon as available, but no later than one hundred
twenty (120) days after the last day of Borrower’s fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an unqualified opinion (or,
with respect to the fiscal year ended December 31, 2009, an opinion qualified only for going
concern) on the financial statements from an independent certified public accounting firm
acceptable to Agent in its reasonable discretion; (iii) as soon as available after approval thereof
by Borrower’s Board of Directors, but no later than thirty (30) days after the last day of
Borrower’s fiscal year, Borrower’s financial projections for current fiscal year as approved by
Borrower’s Board of Directors; (iv) in the event that Borrower becomes subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended, within five (5) days of filing,
all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission or a link
thereto on Borrower’s or another website on the Internet; (v) a prompt report of any legal actions
pending or threatened against Borrower or any of its Subsidiaries that could result in damages or
costs to Borrower or any of its Subsidiaries of Fifty Thousand Dollars ($50,000) or more or could
result in a Material Adverse Change; and (vi) budgets, sales projections, operating plans and other
financial information reasonably requested by Agent.

          (b) Within forty-five (45) days after the last day of each month, deliver to Agent with the
monthly financial statements, a duly completed Compliance Certificate signed by a Responsible
Officer.

          (c) Keep proper books of record and account in accordance with GAAP in which full, true and
correct entries shall be made of all dealings and transactions in relation to its business and
activities. Borrower shall allow, at the sole cost of Borrower, Agent and Lenders to visit and
inspect any of its properties, to examine and make abstracts or copies from any of its books and
records, to conduct a collateral audit and analysis of its operations and the Collateral, to verify
the amount and age of the accounts, the identity and credit of the respective account debtors, to
review the billing practices of Borrower and to discuss its respective affairs, finances and
accounts with their respective officers, employees and independent public accountants as often as
may reasonably be desired. Notwithstanding the foregoing, such audits shall be conducted at
Borrower’s expense no more often than once every twelve (12) months unless a Default or Event of
Default has occurred and is continuing.

          (d) Deliver to Agent an updated Schedule 5.12(b) promptly upon Borrower’s acquisition or
development of any Material Intellectual Property not already listed on Schedule 5.12(b) and upon
any other material change in Borrower’s Material Intellectual Property from that listed on Schedule
5.12(b).

     6.3 Inventory; Returns. Keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its Account Debtors shall
follow Borrower’s customary practices as they exist at the Effective Date. Borrower must promptly
notify Agent of all returns, recoveries, disputes and claims that involve more than One Hundred
Thousand Dollars ($100,000).

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

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     6.5 Insurance. Keep its business and the Collateral insured for risks and in amounts
standard for companies in Borrower’s industry and location and as Agent may reasonably request.
Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to
Agent. All property policies shall have a lender’s loss payable endorsement showing Agent as
lender loss payee and waive subrogation against Agent, and all liability policies shall show, or
have endorsements showing, Agent, as an additional insured. All policies (or the loss payable and
additional insured endorsements) shall provide that the insurer shall endeavor to give Agent at
least thirty (30) days notice before canceling, amending, or declining to renew its policy. At
Agent’s request, Borrower shall deliver certified copies of policies and evidence of all premium
payments. Proceeds payable under any policy shall, at Agent’s option, be payable to Agent on
behalf of the Lenders on account of the Obligations. Notwithstanding the foregoing, (a) so long
as no Event of Default has occurred and is continuing, Borrower shall have the option of applying
the proceeds of any casualty policy up to $250,000 with respect to any loss, but not exceeding
$500,000, in the aggregate for all losses under all casualty policies in any one year, toward the
replacement or repair of destroyed or damaged property; provided that any such replaced or repaired
property (i) shall be of equal or like value as the replaced or repaired Collateral and (ii) shall
be deemed Collateral in which Agent has been granted a first priority security interest, and (b)
after the occurrence and during the continuance of an Event of Default, all proceeds payable under
such casualty policy shall, at the option of Agent, be payable to Agent, for the ratable benefit of
the Lenders, on account of the Obligations. If Borrower fails to obtain insurance as required under
this Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and
Agent, Agent may make all or part of such payment or obtain such insurance policies required in
this Section 6.5, and take any action under the policies Agent deems prudent.

     6.6 Operating Accounts.

          (a) Maintain all of Borrower’s and Guarantor’s Collateral Accounts, operating and investment
accounts with PNC Bank, N.A., Black Rock Institutional Management Corporation, or SVB, which
accounts shall be subject to Control Agreements in favor of Agent for the ratable benefit of all
Lenders; provided, that on and after the date which is sixty (60) days after the Effective Date,
Borrower and Guarantor shall (i) maintain their primary operating accounts with SVB and/or one of
its Affiliates and (ii) maintain at least 50% of their aggregate excess cash and Cash Equivalents
(i.e., monies held for investment) with SVB and/or one of its Affiliates.

          (b) Without derogating the requirement in Section 6.6(a), provide Agent five (5) days prior
written notice before establishing any Collateral Account at or with any bank or financial
institution other than PNC Bank, N.A., Black Rock Institutional Management Corporation, or SVB. In
addition, for each Collateral Account that Borrower at any time maintains, Borrower shall cause the
applicable bank or financial institution at or with which any Collateral Account is maintained to
execute and deliver a Control Agreement or other appropriate instrument with respect to such
Collateral Account to perfect Agent’s Lien in such Collateral Account in accordance with the terms
hereunder, which Control Agreement may not be terminated during the term of this Agreement without
the prior written consent of Agent. The provisions of the previous sentence shall not apply to
deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Borrower’s employees and identified to Agent by Borrower as such.

     6.7 Protection of Intellectual Property Rights. Borrower shall own, or be licensed to
use or otherwise have the right to use, all Material Intellectual Property. All Intellectual
Property of Borrower is and shall be fully protected and/or duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such registrations, filings or issuances,
except where the failure to do so would not be reasonably expected to result in a Material Adverse
Change. Borrower is not and shall not become a party to, nor become bound by, any material license
or other agreement with respect to which Borrower is the licensee that prohibits or otherwise
restricts Borrower from granting a security interest in Borrower’s interest in such license or
agreement or other property, except to the extent that any such prohibition or restriction would be
deemed ineffective by operation of applicable law. Borrower shall at all times conduct its
business without infringement or claim of infringement of any Intellectual Property rights of
others. Borrower shall, to the extent it determines, in the exercise of its reasonable business
judgment, that it is prudent to do the following: (a) protect, defend and maintain the validity and
enforceability of its Intellectual Property; (b) promptly advise Agent in writing of material
infringements of its Intellectual Property; and (c) not allow any Material Intellectual Property to
be abandoned, forfeited or dedicated to the public without Agent’s prior written consent.

     6.8 Litigation Cooperation. From the date hereof and continuing through the
termination of this Agreement, make available to Agent, without expense to Agent, Borrower and its
officers, employees and agents and Borrower’s Books,

11

 

to the extent that Agent may deem them reasonably necessary to prosecute or defend any
third-party suit or proceeding instituted by or against Agent with respect to any Collateral or
relating to Borrower.

     6.9 Notices of Litigation and Default. Borrower will give prompt written notice to
Agent of any litigation or governmental proceedings pending or threatened (in writing) against
Borrower which would reasonably be expected to have a material adverse effect with respect to
Borrower’s business. Without limiting or contradicting any other more specific provision of this
Agreement, promptly (and in any event within three (3) Business Days) upon Borrower becoming aware
of the existence of any Event of Default or event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default, Borrower shall give written notice to Agent of
such occurrence, which such notice shall include a reasonably detailed description of such Event of
Default or event which, with the giving of notice or passage of time, or both, would constitute an
Event of Default.

     6.10 Creation/Acquisition of Subsidiaries. In the event Borrower or any Subsidiary
creates or acquires any Subsidiary, Borrower and such Subsidiary shall promptly notify Agent of the
creation or acquisition of such new Subsidiary and take all such action as may be reasonably
required by Agent to cause each such domestic Subsidiary to become a co-Borrower hereunder or to
guarantee the Obligations of Borrower under the Loan Documents and, in each case, grant a
continuing pledge and security interest in and to the assets of such Subsidiary (substantially as
described on Exhibit A hereto); and Borrower shall grant and pledge to Agent, for the ratable
benefit of the Lenders, a perfected security interest in the stock, units or other evidence of
ownership of each Subsidiary.

     6.11 Further Assurances.

          (a) Execute any further instruments and take further action as Agent reasonably requests to
perfect or continue Agent’s Lien in the Collateral or to effect the purposes of this Agreement.

          (b) Deliver to Agent, within five (5) days after the same are sent or received, copies of all
material correspondence, reports, documents and other filings with any Governmental Authority that
could reasonably be expected to have a material effect on any of the Governmental Approvals
material to Borrower’s business or otherwise on the operations of Borrower or any of its
Subsidiaries.

     6.12 Post-Closing Requirements.

          (a) Provide to Agent, within forty-five (45) days after the Effective Date (or such later date
as Agent may determine, in its reasonable discretion), with a landlord’s consent in favor of Bank
for the following leased location by the respective landlord thereof, together with the duly
executed original signatures thereto:

          (i) 227 Washington Street, Suite 200, Conshohocken, Pennsylvania 19428; and

          (b) Provide to Agent, within twenty-five (25) days after the Effective Date (or such later
date as Agent may determine, in its reasonable discretion) duly executed original signatures to the
Control Agreements from PNC Bank, N.A., Black Rock Institutional Management Corporation, and SVB,
and such other financial institutions as Agent may require, in its sole discretion.

     7 NEGATIVE COVENANTS

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

     7.1 Dispositions. Convey, sell, lease, transfer, assign, or otherwise dispose of
(collectively, “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its
business or property, except for Transfers (a) of Inventory in the ordinary course of business; (b)
of worn-out or obsolete Equipment; or (c) in connection with Permitted Liens and Permitted
Investments.

     7.2 Changes in Business, Management, Ownership, or Business Locations. (a) Engage in
or permit any of its Subsidiaries to engage in any business other than the businesses currently
engaged in by Borrower and such Subsidiary, as applicable, or reasonably related thereto; (b)
liquidate or dissolve; or (c) (i) at any time prior to the occurrence of a Qualifying

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IPO, both Key Persons shall cease to be actively engaged in the management of Borrower unless
replacements for such Key Persons, reasonably satisfactory to Lenders, are approved by the
Borrower’s Board of Directors within ninety (90) days, or (ii) enter into any transaction or series
of related transactions in which the stockholders of Borrower who were not stockholders immediately
prior to the first such transaction own more than forty percent (40%) of the voting stock of
Borrower immediately after giving effect to such transaction or related series of such transactions
(other than by the sale of Borrower’s equity securities in a public offering or to venture capital
investors so long as Borrower identifies to Agent the venture capital investors prior to the
closing of the transaction). Borrower shall not, without at least thirty (30) days prior written
notice to Agent: (1) add any new offices or business locations, including warehouses (unless such
new offices or business locations contain less than Twenty Five Thousand Dollars ($25,000) in
Borrower’s assets or property), (2) change its jurisdiction of organization, (3) change its
organizational structure or type, (4) change its legal name, or (5) change any organizational
number (if any) assigned by its jurisdiction of organization.

     7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries
to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to
acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary
may merge or consolidate into another Subsidiary (provided such surviving Subsidiary is a
“co-Borrower” hereunder or has provided a secured guaranty hereunder) or into Borrower provided
Borrower is the surviving legal entity and Borrower’s tangible net worth is not thereby reduced,
and as long as no Event of Default is occurring prior thereto or arises as a result therefrom.

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

     7.5 Encumbrance. Create, incur, allow, or suffer any Lien on any of its property, or
assign or convey any right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject
to the first priority security interest granted herein (except as is otherwise permitted in Section
7.1 hereof and the definition of “Permitted Liens” herein), or enter into any agreement, document,
instrument or other arrangement (except with or in favor of Agent) with any Person which directly
or indirectly prohibits or has the effect of prohibiting Borrower or any Subsidiary from assigning,
mortgaging, pledging, granting a security interest in or upon, or encumbering any of Borrower’s or
any Subsidiary’s Intellectual Property (other than in-bound licenses to the extent such licenses
constitute “Intellectual Property” and prohibit or restrict assignment by their terms, but only to
the extent that any such prohibition or restriction would be deemed ineffective by operation of
applicable law).

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

     7.7 Distributions; Investments. (a) Pay any dividends (other than dividends payable
solely in common stock) or make any distribution or payment on or redeem, retire or purchase any
capital stock (other than (i) repurchases pursuant to the terms of employee stock purchase plans,
employee restricted stock agreements or similar plans and (ii) after the occurrence of a Qualifying
IPO, the redemption of Borrower’s Series A Preferred Stock and Series B Preferred Stock
provided that (A) immediately prior to any such redemption, no Event of Default has
occurred and is continuing or would occur after giving result to such redemption and (B)
immediately after giving effect to any such redemption, Borrower would have cash and/or Cash
Equivalents on deposit in the operating accounts specified in Section 6.6(a) of not less
$30,000,000 (net of any proceeds of Term B Loan), or (b) directly or indirectly make any Investment
other than Permitted Investments, or permit any of its Subsidiaries to do so.

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

     7.9 Subordinated Debt. (a) Make or permit any payment on any Subordinated Debt,
except under the terms of the subordination, intercreditor, or other similar agreement to which
such Subordinated Debt is subject, or (b) amend any provision in any document relating to the
Subordinated Debt which would adversely affect the subordination thereof to Obligations owed to the
Lenders.

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     7.10 Compliance. Become an “investment company” or a company controlled by an
“investment company”, under the Investment Company Act of 1940, as amended or undertake as one of
its important activities extending credit to purchase or carry margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any
Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a
Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other Law or regulation, if the violation could
reasonably be expected to have a material adverse effect on Borrower’s business, or permit any of
its Subsidiaries to do so; withdraw or permit any Subsidiary to withdraw from participation in,
permit partial or complete termination of, or permit the occurrence of any other event with respect
to, any present pension, profit sharing and deferred compensation plan which could reasonably be
expected to result in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.

     7.11 Compliance with Anti-Terrorism Laws. Agent hereby notifies Borrower that
pursuant to the requirements of Anti-Terrorism Laws, and Agent’s policies and practices, Agent is
required to obtain, verify and record certain information and documentation that identifies
Borrower and its principals, which information includes the name and address of Borrower and its
principals and such other information that will allow Agent to identify such party in accordance
with Anti-Terrorism Laws. Borrower will not, nor will Borrower permit any Subsidiary or Affiliate
to, directly or indirectly, knowingly enter into any documents, instruments, agreements or
contracts with any Person listed on the OFAC Lists. Borrower shall immediately notify Agent if
Borrower has knowledge that Borrower or any Subsidiary or Affiliate is listed on the OFAC Lists or
(a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and
held over on charges involving money laundering or predicate crimes to money laundering. Borrower
will not, nor will Borrower permit any Subsidiary or Affiliate to, directly or indirectly, (i)
conduct any business or engage in any transaction or dealing with any Blocked Person, including,
without limitation, the making or receiving of any contribution of funds, goods or services to or
for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive Order No. 13224,
any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage
in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism
Law.

     8 EVENTS OF DEFAULT

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

     8.1 Payment Default. Borrower fails to (a) make any payment of principal or interest
on any Credit Extension on its due date, or (b) pay any other Obligations within three (3) Business
Days after such Obligations are due and payable (which three (3) Business Day grace period shall
not apply to payments due on the Maturity Date or the date of acceleration pursuant to Section 9.1
(a) hereof). During the cure period, the failure to cure the payment default is not an Event of
Default (but no Credit Extension will be made during the cure period);

     8.2 Covenant Default.

          (a) Borrower fails or neglects to perform any obligation in Sections 6.1(c), 6.2, 6.4, 6.5,
6.6, 6.7, 6.10, or 6.11 or violates any covenant in Section 7; or

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

     8.3 Material Adverse Change. A Material Adverse Change occurs;

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     8.4 Attachment; Levy; Restraint on Business.

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

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

     8.5 Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as
they become due or otherwise breaches the representation and warranty set forth in Section 5.5
hereof; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun
against Borrower and not dismissed or stayed within thirty (30) days (but no Credit Extensions
shall be made while any of the conditions described in clause (a) exist and/or until any Insolvency
Proceeding is dismissed);

     8.6 Other Agreements. There is a default in any agreement to which Borrower is a
party with a third party or parties resulting in a right by such third party or parties, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One Hundred
Thousand Dollars ($100,000) or that could have a material adverse effect on Borrower’s business;

     8.7 Judgments. One or more judgments, orders, or decrees for the payment of money in
an amount, individually or in the aggregate, of at least One Hundred Thousand Dollars ($100,000)
(not covered by independent third-party insurance as to which liability has been accepted by such
insurance carrier) shall be rendered against Borrower and shall remain unsatisfied, unvacated, or
unstayed for a period of ten (10) days after the entry thereof (provided that no Credit Extensions
will be made prior to the satisfaction, vacation, or stay of such judgment, order or decree);

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

     8.9 Subordinated Debt. A default or breach occurs under any agreement between
Borrower and any creditor of Borrower that signed a subordination, intercreditor, or other similar
agreement with Agent or the Lenders, or any creditor that has signed such an agreement with Agent
or the Lenders breaches any terms of such agreement;

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

     8.11 Criminal Proceeding. The institution by any Governmental Authority of criminal
proceedings against Borrower;

     8.12 Lien Priority. Except as permitted by Agent, any Lien created hereunder or by
any other Loan Document shall at any time fail to constitute a valid and perfected Lien on all of
the Collateral purported to be secured thereby; or

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     8.13 Withdrawals, Recalls, Adverse Test Results and Other Matters. (a) The
institution of any proceeding by FDA or similar Governmental Authority to order the withdrawal of
any Product or Product category from the market or to enjoin Borrower or any representative of
Borrower from manufacturing, marketing, selling or distributing any Product or Product category,
(b) the institution of any action or proceeding by the FDA or any other Governmental Authority to
revoke, suspend, reject, withdraw, limit, or restrict any Required Permit held by Borrower or any
representative of Borrower, which, in each case, could cause a Material Adverse Change, (c) the
commencement of any enforcement action against Borrower by the FDA or any other Governmental
Authority, (d) the recall of any Products from the market, the voluntary withdrawal of any Products
from the market, or actions to discontinue the sale of any Products, or (e) the occurrence of
adverse test results in connection with a Product which could cause a Material Adverse Change.

     9 RIGHTS AND REMEDIES

     9.1 Rights and Remedies.

          (a) Upon the occurrence and during the continuance of an Event of Default, Agent may, and at
the written direction of any Lender shall, without notice or demand, do any or all of the
following: (i) deliver notice of the Event of Default to Borrower, (ii) by notice to Borrower
declare all Obligations immediately due and payable (but if an Event of Default described in
Section 8.5 occurs all Obligations shall be immediately due and payable without any action by Agent
or the Lenders) or (iii) by notice to Borrower suspend or terminate the obligations, if any, of
the Lenders to advance money or extend credit for Borrower’s benefit under this Agreement or under
any other agreement between Borrower and Agent and/or the Lenders (but if an Event of Default
described in Section 8.5 occurs all obligations, if any, of the Lenders to advance money or extend
credit for Borrower’s benefit under this Agreement or under any other agreement between Borrower
and Agent and/or the Lenders shall be immediately terminated without any action by Agent or the
Lenders).

          (b) Without limiting the rights of Agent and the Lenders set forth in Section 9.1(a) above,
upon the occurrence and during the continuance of an Event of Default Agent shall have the right,
at the written direction of the Required Lenders, without notice or demand, to do any or all of the
following:

     (i) foreclose upon and/or sell or otherwise liquidate, the Collateral;

     (ii) apply to the Obligations any (A) balances and deposits of Borrower that
Agent or any Lender holds or controls, or (B) any amount held or controlled by Agent
or any Lender owing to or for the credit or the account of Borrower; and/or

     (iii) commence and prosecute an Insolvency Proceeding or consent to Borrower
commencing any Insolvency Proceeding.

          (c) Without limiting the rights of Agent and the Lenders set forth in Sections 9.1(a) and (b)
above, upon the occurrence and during the continuance of an Event of Default Agent shall have the
right, without notice or demand, to do any or all of the following:

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

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

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     (iii) ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, and/or advertise for sale, the Collateral. Agent is hereby granted a
non-exclusive, royalty-free license or other right to use, without charge,
Borrower’s labels, patents, copyrights, mask works, rights of use of any name, trade
secrets, trade names, trademarks, 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 Agent’s
exercise of its rights under this Section 9.1, Borrower’s rights under all licenses
and all franchise agreements inure to Agent for the benefit of the Lenders;

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

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

     (vi) Subject to clauses 9.1(a) and (b), exercise all rights and remedies
available to Agent under the Loan Documents or at law or equity, including all
remedies provided under the Code (including disposal of the Collateral pursuant to
the terms thereof).

Notwithstanding any provision of this Section 9.1 to the contrary, upon the occurrence of any Event
of Default, Agent shall have the right to exercise any and all remedies referenced in this Section
9.1 without the written consent of Required Lenders following the occurrence of an Exigent
Circumstance. As used in the immediately preceding sentence, “Exigent Circumstance” means any
event or circumstance that, in the reasonable judgment of Agent, imminently threatens the ability
of Agent to realize upon all or any material portion of the Collateral, such as, without
limitation, fraudulent removal, concealment, or abscondment thereof, destruction or material waste
thereof, or failure of Borrower after reasonable demand to maintain or reinstate adequate casualty
insurance coverage, or which, in the judgment of Agent, could result in a material diminution in
value of the Collateral.

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

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

     9.4 Application of Payments and Proceeds. Notwithstanding anything to the contrary
contained in this Agreement, upon the occurrence and during the continuance of an Event of Default,
(a) Borrower irrevocably waives the right to direct the application of any and all payments at any
time or times thereafter received by Agent from or on behalf of Borrower of all or any part of the
Obligations, and, as between Borrower on the one hand and Agent and the Lenders on the other, Agent
shall have the continuing and exclusive right to apply and to reapply any and all payments received
against the

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Obligations in such manner as Agent may deem advisable notwithstanding any previous
application by Agent, and (b) the proceeds of any sale of, or other realization upon all or any
part of the Collateral shall be applied: first, to Lenders Expenses; second, to accrued and unpaid
interest on the Obligations (including any interest which, but for the provisions of the United
States Bankruptcy Code, would have accrued on such amounts); third, to the principal amount of the
Obligations outstanding; and fourth, to any other indebtedness or obligations of Borrower owing to
Agent or any Lender under the Loan Documents. Any balance remaining shall be delivered to Borrower
or to whoever may be lawfully entitled to receive such balance or as a court of competent
jurisdiction may direct. In carrying out the foregoing, (x) amounts received shall be applied in
the numerical order provided until exhausted prior to the application to the next succeeding
category, and (y) each of the Persons entitled to receive a payment in any particular category
shall receive an amount equal to its pro rata share of amounts available to be applied pursuant
thereto for such category. Any reference in this Agreement to an allocation between or sharing by
the Lenders of any right, interest or obligation “ratably,” “proportionally” or in similar terms
shall refer to Pro Rata Share unless expressly provided otherwise. Agent, or if applicable, each
Lender, shall promptly remit to the other Lenders such sums as may be necessary to ensure the
ratable repayment of each Lender’s portion of any Term Loan and the ratable distribution of
interest, fees and reimbursements paid or made by Borrower. Notwithstanding the foregoing, a
Lender receiving a scheduled payment shall not be responsible for determining whether the other
Lenders also received their scheduled payment on such date; provided, however, if it is later
determined that a Lender received more than its ratable share of scheduled payments made on any
date or dates, then such Lender shall remit to Agent or other Lenders such sums as may be necessary
to ensure the ratable payment of such scheduled payments, as instructed by Agent. Any payment or
distribution of any kind or character, whether in cash, properties or securities, shall be received
by a Lender in excess of its ratable share, then the portion of such payment or distribution in
excess of such Lender’s ratable share shall be received by such Lender in trust for and shall be
promptly paid over to the other Lender for application to the payments of amounts due on the other
Lender’s claims. To the extent any payment for the account of Borrower is required to be returned
as a voidable transfer or otherwise, the Lenders shall contribute to one another as is necessary to
ensure that such return of payment is on a pro rata basis. If any Lender shall obtain possession
of any Collateral, it shall hold such Collateral for itself and as agent and bailee for Agent and
other Lenders for purposes of perfecting Agent’s security interest therein.
Notwithstanding anything to the contrary herein, any warrants issued to the Lenders by
Borrower, the stock issuable thereunder, any equity securities purchased by Lenders, any amounts
paid thereunder, any dividends, and any other rights in connection therewith shall not be subject
to the terms and conditions of this Agreement. Nothing herein shall affect any Lender’s rights
under any such warrants, stock, or other equity securities to administer, manage, transfer, assign,
or exercise such warrants, stock, or other equity securities for its own account.

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

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

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

     10 NOTICES

     All notices, consents, requests, approvals, demands, or other communication (collectively,
“Communication”) by any party to this Agreement or any other Loan Document must be in writing and
shall be deemed to have been validly served,

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given, or delivered: (a) upon the earlier of actual receipt and three (3) Business Days after
deposit in the U.S. mail, first class, registered or certified mail return receipt requested, with
proper postage prepaid; (b) upon transmission, when sent by electronic mail (if an email address is
specified herein) or facsimile transmission; (c) one (1) Business Day after deposit with a
reputable overnight courier with all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent to the address,
facsimile number, or email address indicated below. Any of Agent, Lender or Borrower may change
its mailing or electronic mail address or facsimile number by giving the other party written notice
thereof in accordance with the terms of this Section 10.

     If to Borrower:

NuPathe Inc.

227 Washington Street, Suite 200

Conshohocken, Pennsylvania 19428

Attention: Chief Financial Officer

Telephone: (484) 567-0130

Facsimile: (484) 567-0136

with a copy to:

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, Pennsylvania 19103

Attention: Michael J. Pedrick, Esquire

Telephone: (215) 963-5083

Facsimile: (215) 963-5001

     If to Agent or Lenders:

Midcap Funding III, LLC

7735 Old Georgetown Road, Suite 400

Bethesda, Maryland 20814

Attention: Portfolio Management- Life Sciences

Telephone: 301-841-6487

Facsimile: 301-941-1450

with a copy to:

Riemer & Braunstein LLP

Three Center Plaza

Boston, Massachusetts 02108

Attention: John J. Malloy, Esquire

Telephone: (617) 880-3449

Facsimile: (617) 880-3456

     11 CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

     Maryland Law governs the Loan Documents without regard to principles of conflicts of law.
Borrower, Lenders and Agent each submit to the exclusive jurisdiction of the State and Federal
courts in Maryland. NOTWITHSTANDING THE FOREGOING, AGENT AND LENDERS SHALL HAVE THE RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH AGENT AND LENDERS (IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9.1) DEEM NECESSARY OR
APPROPRIATE TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE AGENT’S AND LENDERS’ RIGHTS
AGAINST BORROWER OR ITS PROPERTY. Borrower expressly submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court, and Borrower hereby waives any
objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non
conveniens and hereby consents to the granting of such legal or equitable relief as is deemed
appropriate by such court. Borrower hereby waives personal service of the

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

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

     12 GENERAL PROVISIONS 

     12.1 Successors and Assigns. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. Borrower may not assign this Agreement or any
rights or obligations under it without Agent’s prior written consent (which may be granted or
withheld in Agent’s discretion, subject to Section 12.11). The Lenders have the right, without the
consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in
all or any part of, or any interest in, the Lenders’ obligations, rights, and benefits under this
Agreement and the other Loan Documents provided, however, that any such sale, assignment,
negotiation or grant of a participation by any Lender (other than a sale or assignment to an
Eligible Assignee) of its obligations, rights, and benefits under this Agreement and the other Loan
Documents shall require the prior written consent of the Required Lenders (such approved assignee,
an “Approved Lender”). Borrower and Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned until Agent shall have
received and accepted an effective Assignment Agreement executed, delivered and fully completed by
the applicable parties thereto, and shall have received such other information regarding such
Eligible Assignee or Approved Lender as Agent reasonably shall require.

     12.2 Indemnification.

          (a) Borrower agrees to indemnify, defend and hold Agent and the Lenders and their respective
directors, officers, employees, agents, attorneys, or any other Person affiliated with or
representing Agent or the Lenders (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 Loan Documents; and (b) all losses or
Lenders’ Expenses incurred, or paid by Indemnified Person from, following, or arising from
transactions between Agent, and/or the Lenders and Borrower (including reasonable attorneys’ fees
and expenses), except for Claims and/or losses directly caused by such Indemnified Person’s gross
negligence or willful misconduct (collectively, the “Indemnified Liabilities”).

          (b) Borrower hereby further indemnifies, defends and holds each Indemnified Person harmless
from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the fees and disbursements of counsel for such Indemnitee) in connection with any
investigative, response, remedial, administrative or judicial matter or proceeding, whether or not
such Indemnified Person shall be designated a party thereto and including any such proceeding
initiated by or on behalf of Borrower, and the reasonable expenses of investigation by engineers,
environmental consultants and similar technical personnel and any commission, fee or compensation
claimed by any broker (other than any broker retained by Agent or Lenders) asserting any right to
payment for the transactions contemplated hereby which may be imposed on, incurred by or asserted
against such Indemnified Person as a result of or in connection with the transactions contemplated
hereby and the use or intended use of the proceeds of the loan proceeds.

          (c) To the extent that the undertaking set forth in this Section 12.2 may be unenforceable,
Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all such indemnified liabilities incurred by the
Indemnified Persons or any of them.

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

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

     12.5 Correction of Loan Documents. Agent and the Lenders may correct patent errors
and fill in any blanks in this Agreement and the other Loan Documents consistent with the agreement
of the parties.

     12.6 Integration. This Agreement and the Loan Documents represent the entire
agreement about this subject matter and supersede prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations between the parties about
the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan
Documents.

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

     12.8 Survival. All covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations which, by their
terms, are to survive the termination of this Agreement) have been satisfied. The obligation of
Borrower in Section 12.2 to indemnify each Lender and Agent shall survive until the statute of
limitations with respect to such claim or cause of action shall have run.

     12.9 Confidentiality. In handling any confidential information of Borrower, the
Lenders and Agent shall exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made: (a) to the Lenders’ and Agent’s
Subsidiaries or Affiliates; (b) to prospective transferees or purchasers of any interest in the
Credit Extensions (provided, however, the Lenders and Agent shall use commercially reasonable
efforts to obtain such prospective transferee’s or purchaser’s agreement to the terms of this
provision); (c) as required by Law, regulation, subpoena, or other order; (d) to regulators or as
otherwise required in connection with an examination or audit; (e) as Agent considers appropriate
in exercising remedies under the Loan Documents; and (f) to third party service providers of the
Lenders and/or Agent so long as such service providers have executed a confidentiality agreement
with the Lenders and Agent with terms no less restrictive than those contained herein. Confidential
information does not include information that either: (i) is in the public domain or in the
Lenders’ and/or Agent’s possession when disclosed to the Lenders and/or Agent, or becomes part of
the public domain after disclosure to the Lenders and/or Agent; or (ii) is disclosed to the Lenders
and/or Agent by a third party, if the Lenders and/or Agent does not know that the third party is
prohibited from disclosing the information. Lenders and/or Agent may use confidential information
for any purpose, including, without limitation, for the development of client databases, reporting
purposes, and market analysis, so long as Lenders and/or Agent do not disclose Borrower’s identity
or the identity of any person associated with Borrower unless otherwise expressly permitted by this
Agreement. The provisions of the immediately preceding sentence shall survive the termination of
this Agreement. The agreements provided under this Section 12.9 supersede all prior
agreements, understanding, representations, warranties, and negotiations between the parties about
the subject matter of this Section 12.9.

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

     12.11 Amendments.

          (a) No amendment, modification, termination or waiver of any provision of this Agreement or
any other Loan Document, no approval or consent thereunder, or any consent to any departure by
Borrower

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therefrom, shall in any event be effective unless the same shall be in writing and signed by
Borrower, Agent and the Required Lenders provided that

     (i) no such amendment, waiver or other modification that would have the effect
of increasing or reducing a Lender’s Term Loan Commitment or Commitment Percentage
shall be effective as to such Lender without such Lender’s written consent;

     (ii) no such amendment, waiver or modification that would affect the rights and
duties of Agent shall be effective without Agent’s written consent or signature;

     (iii) no such amendment, waiver or other modification shall, unless signed by
all the Lenders directly affected thereby, (A) reduce the principal of, rate of
interest on or any fees with respect to any Term Loan or forgive any principal,
interest (other than default interest) or fees (other than late charges) with
respect to any Term Loan (B) postpone the date fixed for, or waive, any payment of
principal of any Term Loan or of interest on any Term Loan (other than default
interest) or any fees provided for hereunder (other than late charges or for any
termination of any commitment); (C) change the definition of the term “Required
Lenders” or the percentage of Lenders which shall be required for Lenders to take
any action hereunder; (D) release all or substantially all or any material portion
of the Collateral, authorize Borrower to sell or otherwise dispose of all or
substantially all or any material portion of the Collateral or release any Guarantor
of all or any portion of the Obligations or its guaranty obligations with respect
thereto, except, in each case with respect to this clause (D), as otherwise may be
expressly permitted under this Agreement or the other Loan Documents (including in
connection with any disposition permitted hereunder); (E) amend, waive or otherwise
modify this Section 12.11 or the definitions of the terms used in this Section 12.11
insofar as the definitions affect the substance of this Section 12.11; (F) consent
to the assignment, delegation or other transfer by any Borrower or any Guarantor of
any of its rights and obligations under any Loan Document or release Borrower or any
Guarantor of its payment obligations under any Loan Document, except, in each case
with respect to this clause (F), pursuant to a merger or consolidation permitted
pursuant to this Agreement; (G) amend any of the provisions of Section 9.4 or amend
any of the definitions Pro Rata Share, Term Loan Commitment, Commitment Percentage
or that provide for the Lenders to receive their Pro Rata Shares of any fees,
payments, setoffs or proceeds of Collateral hereunder; (H) subordinate the Liens
granted in favor of Agent securing the Obligations; or (I) amend any of the
provisions of Section 12.10. It is hereby understood and agreed that all Lenders
shall be deemed directly affected by an amendment, waiver or other modification of
the type described in the preceding clauses (C), (D), (E), (F), (G) and (H) of the
preceding sentence;

     (iv) the provisions of the foregoing clauses (i), (ii) and (iii) are subject to
the provisions of any interlender or agency agreement among the Lenders and Agent
pursuant to which any Lender may agree to give its consent in connection with any
amendment, waiver or modification of the Loan Documents only in the event of the
unanimous agreement of all Lenders.

          (b) Other than as expressly provided for in Section 12.11(a)(i)-(iii), Agent may, if requested
by the Required Lenders, from time to time designate covenants in this Agreement less restrictive
by notification to a representative of the Borrower.

     12.12 Publicity. Each Lender and Borrower hereby authorizes each Lender to publish
the name of such Lender and Borrower, the existence of the financing arrangements referenced under
this Agreement, the primary purpose and/or structure of those arrangements, the amount of credit
extended under each facility, the title and role of each party to this Agreement, and the total
amount of the financing evidenced hereby in any “tombstone”, comparable advertisement or press
release which such Lender elects to submit for publication. In addition, each Lender and Borrower
agrees that each Lender may provide lending industry trade organizations with information necessary
and customary for inclusion in league table measurements after the Effective Date. With respect to
any of the foregoing, such authorization shall be subject to such Lender providing Borrower and the
other Lenders with an opportunity to review and confer with such Lender regarding, and approve, the
contents of any such tombstone, advertisement or information, as applicable, prior to its initial
submission for

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publication, but subsequent publications of the same tombstone, advertisement or information
shall not require Borrower’s approval.

     12.13 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.

     13 AGENT

     13.1 Appointment and Authorization of Agent. Each Lender hereby irrevocably appoints,
designates and authorizes Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere herein or in any other Loan Document, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to
have any fiduciary relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement
or any other Loan Document or otherwise exist against Agent. Without limiting the generality of the
foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with
reference to Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

     13.2 Delegation of Duties. Agent may execute any of its duties under this Agreement or
any other Loan Document by or through its, or its Affiliates’, agents, employees or
attorneys-in-fact and shall be entitled to obtain and rely upon the advice of counsel and other
consultants or experts concerning all matters pertaining to such duties. Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in
the absence of gross negligence or willful misconduct.

     13.3 Liability of Agent. Except as otherwise provided herein, no Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct in connection with its duties expressly
set forth herein), or (b) be responsible in any manner to any Lender or participant for any
recital, statement, representation or warranty made by Borrower or any officer thereof, contained
herein or in any other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to
any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Lender or participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions of, this Agreement
or any other Loan Document, or to inspect the properties, books or records of Borrower or any
Affiliate thereof.

     13.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, communication, signature, resolution, representation, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
electronic mail message, statement or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel to Borrower), independent
accountants and other experts selected by Agent. Agent shall be fully justified in failing or
refusing to take any action under any Loan Document unless it shall first receive such advice or
concurrence of all Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this Agreement or any other
Loan Document in accordance with a request or consent of all Lenders and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

     13.5 Notice of Default. Agent shall not be deemed to have knowledge or notice of the
occurrence of any default and/or Event of Default, unless Agent shall have received written notice
from a Lender or Borrower, describing such default

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or Event of Default. Agent will notify the Lenders of its receipt of any such notice. Agent
shall take such action with respect to an Event of Default as may be directed in writing by the
Required Lenders in accordance with Article 9(a); provided, however, that while an Event of Default
has occurred and is continuing, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default as Agent shall deem
advisable or in the best interest of the Lenders, including without limitation, satisfaction of
other security interests, liens or encumbrances on the Collateral not permitted under the Loan
Documents, payment of taxes on behalf of Borrower, payments to landlords, warehouseman, bailees and
other persons in possession of the Collateral and other actions to protect and safeguard the
Collateral, and actions with respect to insurance claims for casualty events affecting Borrower
and/or the Collateral.

     13.6 Credit Decision; Disclosure of Information by Agent. Each Lender acknowledges
that no Agent-Related Person has made any representation or warranty to it, and that no act by
Agent hereafter taken, including any consent to and acceptance of any assignment or review of the
affairs of Borrower or any Affiliate thereof, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession. Each Lender
represents to Agent that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made its own appraisal
of, and investigation into, the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower and its respective Subsidiaries, and all applicable bank
or other regulatory Laws relating to the transactions contemplated hereby, and made its own
decision to enter into this Agreement and to extend credit to Borrower hereunder. Each Lender also
represents that it will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower. Except for notices, reports and other documents expressly required to
be furnished to the Lenders by Agent herein, Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of Borrower or any of its
Affiliates which may come into the possession of any Agent-Related Person.

     13.7 Indemnification of Agent. Whether or not the transactions contemplated hereby are
consummated, each Lender shall, severally and pro rata based on its respective Pro Rata Share,
indemnify upon demand each Agent-Related Person (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so), and hold harmless each
Agent-Related Person from and against any and all Indemnified Liabilities (which shall not include
legal expenses of Agent incurred in connection with the closing of the transactions contemplated by
this Agreement) incurred by it; provided, however, that no Lender shall be liable for the payment
to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined
in a judgment by a court of competent jurisdiction to have resulted from such Agent-Related
Person’s own gross negligence or willful misconduct; provided, however, that no action taken in
accordance with the directions of the Required Lenders shall be deemed to constitute gross
negligence or willful misconduct for purposes of this Section 13.7. Without limitation of the
foregoing, each Lender shall, severally and pro rata based on its respective Pro Rata Share,
reimburse Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including
Lenders’ Expenses incurred after the closing of the transactions contemplated by this Agreement)
incurred by Agent (in its capacity as Agent, and not as a Lender) in connection with the
preparation, execution, delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower. The undertaking in this Section 13.7 shall survive the payment in full of the
Obligations, the termination of this Agreement and the resignation of Agent.

     13.8 Agent in its Individual Capacity. With respect to its Credit Extensions, MidCap
shall have the same rights and powers under this Agreement as any other Lender and may exercise
such rights and powers as though it were not Agent, and the terms “Lender” and “Lenders” include
MidCap in its individual capacity.

     13.9 Successor Agent. Agent may resign as Agent upon ten (10) days’ notice to the
Lenders. If Agent resigns under this Agreement, all Lenders shall appoint from among the Lenders
(or the affiliates thereof) a successor Agent for the Lenders, which successor Agent shall (unless
an Event of Default has occurred and is continuing) be subject to the approval of Borrower (which
approval shall not be unreasonably withheld or delayed). If no successor Agent is appointed prior
to the effective date of the resignation of Agent, Agent may appoint, after consulting with the
Lenders, a successor Agent from among the Lenders (or the affiliates thereof). Upon the acceptance
of its appointment as successor Agent hereunder, the

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Person acting as such successor Agent shall succeed to all the rights, powers and duties of
the retiring Agent and the respective term “Agent” means such successor Agent and the retiring
Agent’s appointment, powers and duties in such capacities shall be terminated without any other
further act or deed on its behalf. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Article 13 and Sections 2.4(d) and 12.2 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor
Agent has accepted appointment as Agent by the date ten (10) days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become
effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if
any, as the Lenders appoint a successor agent as provided for above.

     13.10 Agent May File Proofs of Claim. In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to Borrower, Agent (irrespective of whether the principal of any Loan,
shall then be due and payable as herein expressed or by declaration or otherwise and irrespective
of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

          (a) to file and prove a claim for the whole amount of the principal and interest owing and
unpaid in respect of the Credit Extensions and all other Obligations that are owing and unpaid and
to file such other documents as may be necessary or advisable in order to have the claims of the
Lenders and Agent (including any claim for the reasonable compensation, expenses, disbursements and
advances of the Lenders and Agent and their respective agents and counsel and all other amounts due
the Lenders and Agent allowed in such judicial proceeding); and

          (b) to collect and receive any monies or other property payable or deliverable on any such
claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent
and, in the event that Agent shall consent to the making of such payments directly to the Lenders,
to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and
advances of Agent and its agents and counsel, and any other amounts due Agent under Section 2.4(d).
To the extent that Agent fails timely to do so, each Lender may file a claim relating to such
Lender’s claim.

     13.11 Collateral and Guaranty Matters. The Lenders irrevocably authorize Agent, at
its option and in its discretion, to release any Guarantor and any Lien on any Collateral granted
to or held by Agent under any Loan Document (i) upon the date that all Obligations due hereunder
have been fully and indefeasibly paid in full and no Term Loan Commitments or other obligations of
any Lender to provide funds to Borrower under this Agreement remain outstanding, (ii) that is
transferred or to be transferred as part of or in connection with any Transfer permitted hereunder
or under any other Loan Document, or (iii) as approved in accordance with Section 12.11. Upon
request by Agent at any time, all Lenders will confirm in writing Agent’s authority to release its
interest in particular types or items of Property, pursuant to this Section 13.11.

     13.12 Cooperation of Borrower. If necessary, Borrower agrees to (i) execute any
documents (including new Secured Promissory Notes) reasonably required to effectuate and
acknowledge each assignment of a Term Loan Commitment or Loan to an assignee in accordance with
Section 12.1, (ii) make Borrower’s management available to meet with Agent and prospective
participants and assignees of Term Loan Commitments or Credit Extensions and (iii) assist Agent or
the Lenders in the preparation of information relating to the financial affairs of Borrower as any
prospective participant or assignee of a Term Loan Commitment or Term Loan reasonably may request.
Subject to the provisions of Section 12.9 Borrower authorizes each Lender to disclose to any
prospective participant or assignee of a Term Loan Commitment, any and all information in such
Lender’s possession concerning Borrower and its financial affairs which has been delivered to such
Lender by or on behalf of Borrower pursuant to this Agreement, or which has been delivered to such
Lender by or on behalf of Borrower in connection with such Lender’s credit evaluation of Borrower
prior to entering into this Agreement.

     14 DEFINITIONS

     14.1 Definitions. As used in this Agreement, the following terms have the following
meanings:

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

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

     “Advance” means an advance or disbursement of proceeds to or for the account of Borrower in
respect of a Term Loan.

     “Additional Subordinated Notes” means Subordinated Debt consisting of up to $10,000,000 of
Borrower’s Secured Subordinated Convertible Promissory Notes issued by Borrower after the Effective
Date on substantially the same terms as set forth in that certain Subordinated Convertible Note and
Warrant Purchase Agreement dated April 9, 2010 by and among Borrower and the “Lenders” (as defined
therein) and which is subject to subordination provisions in favor of Agent and the Lenders on
substantially the same terms as the provisions of the Subordination Agreement.

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

     “Agent” means, MidCap, not in its individual capacity, but solely in its capacity as agent on
behalf of and for the benefit of the Lenders, and any successor Agent appointed pursuant to Section
13.9.

     “Agent-Related Person” means Agent, together with its Affiliates, and the officers, directors,
employees, agents, advisors, auditors and attorneys-in-fact of such Persons; provided, however,
that no Agent-Related Person shall be an Affiliate of Borrower.

     “Agreement” is defined in the preamble hereof.

     “Amortization Date” is the first Payment Date following the date that is twelve (12) months
from the Funding Date of the Term A Loan.

     “Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering, including
Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising
or implementing the Bank Secrecy Act, and the Laws administered by OFAC.

     “Approved Fund” means any (i) investment company, fund, trust, securitization vehicle or
conduit that is (or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of its business or
(ii) any Person (other than a natural person) which temporarily warehouses loans for any Lender or
any entity described in the preceding clause (i) and that, with respect to each of the preceding
clauses (i) and (ii), is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or
(c) a Person (other than a natural person) or an Affiliate of a Person (other than a natural
person) that administers or manages a Lender.

     “Approved Lender” has the meaning given it in Section 12.1.

     “Assignment Agreement” means an agreement substantially in the form of Exhibit
E hereto.

     “Base LIBOR Rate” means, for any Interest Period, the rate per annum, determined by Agent in
accordance with its customary procedures, and utilizing such electronic or other quotation sources
as it considers appropriate (rounded upwards, if necessary, to the next 1/100%), to be the rate at
which Dollar deposits (for delivery on the first day of such Interest Period or, if such day is not
a Business Day, on the preceding Business Day) in the amount of One Million Dollars ($1,000,000)
are offered to major banks in the London interbank market on or about 11:00 a.m. (New York time)
two (2) Business Days prior to the commencement of such Interest Period, for a term comparable to
such Interest Period, which determination shall be conclusive in the absence of manifest error.

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     “Blocked Person” means any Person: (a) listed in the annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on
behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits,
threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224,
or (e) a Person that is named a “specially designated national” or “blocked person” on the most
current list published by OFAC or other similar list.

     “Borrower” is defined in the preamble hereof.

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

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

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

     “Cash Equivalents” are (a) marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having maturities of not more than one (1)
year from the date of acquisition; (b) commercial paper maturing no more than one (1) year after
its creation and having the highest rating from either Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc., (c) certificates of deposit issued maturing no more than one (1) year
after issue, and (d) money market funds at least ninety-five percent (95%) of the assets
of which constitute Cash Equivalents of the kinds described in clauses (a) through (b) of this
definition.. For the avoidance of doubt, the direct purchase by Borrower, co-borrower, or any
subsidiary of Borrower of any Auction Rate Securities, or purchasing participations in, or entering
into any type of swap or other derivative transaction, or otherwise holding or engaging in any
ownership interest in any type of Auction Rate Security by Borrower, co-borrower, or any subsidiary
of Borrower shall be conclusively determined by the Lenders as an ineligible Cash Equivalent, and
any such transaction shall expressly violate each other provision of this agreement governing
Permitted Investments. Notwithstanding the foregoing, Cash Equivalents does not include and each
Borrower and Subsidiary is prohibited from purchasing, purchasing participations in, entering into
any type of swap or other equivalent derivative transaction, or otherwise holding or engaging in
any ownership interest in any type of debt instrument, including, without limitation, any corporate
or municipal bonds with a long-term nominal maturity for which the interest rate is reset through a
dutch auction and more commonly referred to as an auction rate security.

     “Claims” are defined in Section 12.2.

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

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

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

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     “Commitment Percentage” is set forth in Schedule 1.1, as amended from time to time.

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

     “Communication” is defined in Section 10.

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

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

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

     “Credit Extension” is any Term Loan or any other extension of credit by Agent or Lenders made
pursuant to this Agreement for Borrower’s benefit.

     “Default” is any event which with notice or passage of time or both, would constitute an Event
of Default.

     “Default Rate” is defined in Section 2.3(c).

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

     “Designated Deposit Account” is the deposit account maintained by Borrower with SVB and
designated as the “Designated Deposit Account” and over which Agent shall be granted control for
the ratable benefit of all Lenders.

     “Dollars,” “dollars” and “$” each mean lawful money of the United States.

     “Drug Application” means a new drug application, an abbreviated drug application, or a product
license application for any Product, as appropriate, as those terms are defined in the FDCA.

     “Effective Date” is defined in the preamble of this Agreement.

     “Eligible Assignee” means (i) a Lender, (ii) an Affiliate of a Lender, (iii) an Approved Fund
and (iv) any commercial bank, savings and loan association or savings bank or any other entity
which is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933, as
amended) and which extends credit or buys loans as one of its businesses, including insurance
companies, mutual funds, lease financing companies and commercial finance companies, in each case,
which either (A) has a rating of BBB or higher from Standard & Poor’s Rating Group and a rating of
Baa2 or higher from Moody’s Investors Service, Inc. at the date that it becomes a Lender or (B) has
total assets in excess of $5,000,000,000, and in each case of clauses (i) through (iv), which,
through its applicable lending office, is capable of lending to Borrower without the imposition of
any withholding or similar taxes; provided that notwithstanding the foregoing, “Eligible Assignee”
shall not include Borrower, any Guarantor or any of Borrower’s or any Guarantor’s Affiliates or
Subsidiaries. Notwithstanding the foregoing, in connection with assignments by a Lender due to a
forced divestiture at the

28

 

request of any regulatory agency, the restrictions set forth herein shall not apply and
Eligible Assignee shall mean any Person or party.

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

     “Equity Event” shall mean the receipt by Borrower, after the Effective Date, of unrestricted
net cash proceeds of at least Thirty Million Dollars ($30,000,000.00) from (i) the closing of a
Qualifying IPO, (ii) the closing of an equity round of financing pursuant to the private sale of
Borrower’s equity or convertible debt securities, or (iii) up-front payments from a joint venture
or partnership.

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

     “Event of Default” is defined in Section 8.

     “Exigent Circumstances” is defined in Section 9.1.

     “Existing Subordinated Notes” means Subordinated Debt consisting of Borrower’s Secured
Subordinated Convertible Promissory Notes dated April 9, 2010 issued pursuant to the terms of that
certain Subordinated Convertible Note and Warrant Purchase Agreement dated April 9, 2010 by and
among Borrower and the “Lenders” as defined therein and which is subject to the provisions of the
Subordination Agreement.

     “FDA” means the Food and Drug Administration of the United States of America or any successor
entity thereto.

     “FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. Section 301 et
seq. and all regulations promulgated thereunder.

     “Final Payment” is a payment (in addition to and not a substitution for the regular monthly
payments of principal plus accrued interest) due on the earlier to occur of (a) the Maturity Date,
or (b) the acceleration of any Term Loan, or (c) the prepayment in full of a Term Loan pursuant to
Section 2.2(c) or (d), equal to the original principal amount of such Term Loan multiplied by the
Final Payment Percentage.

     “Final Payment Percentage” is two percent (2.00%).

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

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

     “General Intangibles” is all “general intangibles” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be made, and includes without
limitation, all copyright rights, copyright applications, copyright registrations and like
protections in each work of authorship and derivative work, whether published or unpublished, any
patents, trademarks, service marks and, to the extent permitted under applicable Law, any
applications therefor, whether registered or not, any trade secret rights, including any rights to
unpatented inventions, payment intangibles, royalties, contract rights, 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.

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

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

     “Guarantor” is any present or future guarantor of the Obligations.

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

     “Indemnified Liabilities” is defined in Section 12.2.

     “Indemnified Person” is defined in Section 12.2.

     “Indemnified Taxes” is defined in Section 2.6.

     “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” includes without limitation, all copyright rights, copyright
applications, copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent applications and like
protections, including improvements, divisions, continuations, renewals, reissues, extensions, and
continuations-in-part of the same, trademarks, trade names, service marks, mask works, rights of
use of any name, domain names, or any other similar rights, any applications therefor, whether
registered or not, and the goodwill of the business of Borrower connected with and symbolized
thereby, know-how, operating manuals, trade secret rights, clinical and non-clinical data, rights
to unpatented inventions, and any claims for damage by way of any past, present, or future
infringement of any of the foregoing.

     “Interest Period” means the one-month period starting on the first (1st) day of
each month and ending on the last day of such month; provided, however, that the first
(1st) Interest Period for each Advance shall commence on the date that the applicable
Advance is made and end on the last day of such month.

     “Interest Rate Determination Date” means the second (2nd) Business Day prior to the
first (1st) day of the related Interest Period.

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

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

     “Key Person” means Borrower’s (i) Chief Executive Officer, who is Jane Hollingsworth as of the
Effective Date, and (ii) President, who is Terri Sebree as of the Effective Date.

     “Laws” means any and all federal, state, provincial, territorial, local and foreign statutes,
laws, judicial decisions, regulations, guidances, guidelines, ordinances, rules, judgments, orders,
decrees, codes, plans, injunctions, permits,

30

 

concessions, grants, franchises, governmental agreements and governmental restrictions,
whether now or hereafter in effect, which are applicable to any Borrower in any particular
circumstance.

     “Lender” is any one of the Lenders.

     “Lenders” shall mean the Persons identified on Schedule 1.1 hereto and each assignee that
becomes a party to this Agreement pursuant to Section 12.1.

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

     “LIBOR Rate” means for each Interest Period, the rate per annum determined by Agent (rounded
upwards, if necessary, to the next 1/100th%) by dividing (a) the Base LIBOR Rate for such Interest
Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and as of
the effective day of any change in the Reserve Percentage.

     “LIBOR Rate Margin” is eight and three-quarters percent (8.75%) per annum.

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

     “Loan Documents” are, collectively, this Agreement, the Warrant, the Perfection Certificate,
any note, or notes or guaranties executed by Borrower in connection with the indebtedness governed
by this Agreement, and any other present or future agreement between Borrower and/or for the
benefit of the Lenders and Agent in connection with this Agreement, all as amended, restated, or
otherwise modified.

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

     “Material Intellectual Property” is all of Borrower’s Intellectual Property that is material
to the condition (financial or other), business or operations of Borrower.

     “Maturity Date” means the Payment Date that is thirty-nine (39) months following the Funding
Date of Term A Loan.

     “Maximum Lawful Rate” is defined in Section 2.3(f).

     “MidCap” is defined in the preamble hereof.

     “Obligations” are all of Borrower’s obligations to pay when due any debts, principal,
interest, Lenders’ Expenses, the Prepayment Fee, the Final Payment, and other amounts Borrower owes
the Lenders now or later, under this Agreement or the other Loan Documents, including, without
limitation, interest accruing after Insolvency Proceedings begin (whether or not allowed) and
debts, liabilities, or obligations of Borrower assigned to the Lenders and/or Agent, and the
performance of Borrower’s duties under the Loan Documents.

     “OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.

     “OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked Persons List
maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001)
and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the
rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

31

 

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

     “Original Lender” is defined in the definition of Required Lenders.

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

     “Payment Date” is the first day of each calendar month.

     “Perfection Certificate” is defined in Section 5.1.

     “Permits” means licenses, certificates, accreditations, product clearances or approvals,
provider numbers or provider authorizations, marketing authorizations, other authorizations,
registrations, permits, consents and approvals required in connection with the conduct of
Borrower’s or any Subsidiary’s business or to comply with any applicable Laws, including, without
limitation, drug listings and drug establishment registrations under 21 U.S.C. Section 510, and
those issued by State governments for the conduct of Borrower’s or any Subsidiary’s business.

     “Permitted Indebtedness” is:

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

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

     (c) Subordinated Debt (including, without limitation, the Existing Subordinated Notes and the
Additional Subordinated Notes);

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

     (e) Indebtedness secured by Permitted Liens;

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

     (g) Borrower’s indebtedness to any landlord under leases existing on the Effective Date, as
contemplated by such agreements, in an aggregate amount not to exceed One Hundred Thousand Dollars
($100,000).

     “Permitted Investments” are:

     (a) Investments shown on the Perfection Certificate and existing on the Effective Date;

     (b) Investments consisting of Cash Equivalents;

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

     (d) Investments consisting of (i) travel advances and employee relocation loans and other
employee loans and advances in the ordinary course of business, and (ii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries
pursuant to employee stock purchase plans or agreements approved by Borrower’s Board of Directors;
provided that the aggregate amount of Investments pursuant to this clause (d) shall not exceed
$50,000 in the aggregate at any time;

32

 

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

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

     (g) Investments in Subsidiaries; provided such Subsidiaries become a co-Borrower or guarantor
hereunder, as Agent shall determine in accordance with Section 6.10 hereof.

     “Permitted Liens” are:

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

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

     (c) purchase money Liens (i) on Equipment or other assets subject to capital leases acquired
or held by Borrower incurred for financing the acquisition of the Equipment or such assets subject
to capital leases securing no more than Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate principal amount outstanding at any one time, or (ii) on existing Equipment or such
assets subject to capital leases when acquired, if the Lien is confined to the property and
improvements and the proceeds of the Equipment or other assets subject to capital leases;

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

     (e) leases or subleases or real property granted in the ordinary course of business, and
leases, subleases, non-exclusive licenses or sublicenses of property (other than real property or
Intellectual Property) granted in the ordinary course of Borrower’s business, if the leases,
non-exclusive licenses and sublicenses do not prohibit granting Agent a security interest;

     (f) non-exclusive licenses of Intellectual Property granted to third parties in the ordinary
course of business;

     (g) exclusive licenses of Intellectual Property granted to third parties in the ordinary
course of business and approved by Borrower’s board of directors; provided that
prior to the occurrence of a Qualifying IPO, no such exclusive license shall be permitted without
the prior consent of the Lenders unless Borrower receives up-front payments of not less than
$30,000,000 payable and received at the time such exclusive license is granted;

     (h) Liens securing the Existing Subordinated Notes and the Additional Subordinated Notes,
provided that such Liens solely encumber the “Collateral” (as defined in that certain Security
Agreement dated as of April 9, 2010 and as amended as of the Effective Date, by and among Borrower
and the Lenders (as defined therein), as such Security Agreement is in effect on the Effective Date
after giving effect to the amendment thereof on the Effective Date); and

     (i) Liens arising from judgments, decrees or attachments in circumstances not constituting an
Event of Default under Section 8.4 or 8.7.

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

     “Prepayment Fee” means with respect to any Term Loan subject to prepayment prior to the
Maturity Date, whether by mandatory or voluntary prepayment, acceleration or otherwise, an
additional fee payable to the Lenders in amount equal to:

     (i) for a prepayment made on or after the Effective Date through and including the date which
is twelve (12) months after the Effective Date, five percent (5.00%) of the outstanding principal
amount of the Term Loans;

     (ii) for a prepayment made after the date which is twelve (12) months after the Effective Date
through and including the date which is twenty-four (24) months after the Effective Date, three
percent (3.00%) of the outstanding principal amount of the Term Loans; and

     (ii) for a prepayment made after the date which is twenty-four (24) months after the Effective
Date and prior to the Maturity Date, one percent (1.00%) of the outstanding principal amount of the
Term Loans; provided, however, that notwithstanding the foregoing, in the event that (i) the Equity
Event occurs, (ii) Borrower requests funding of Term B Loan during the Term B Loan Draw Period and
(iii) the Lenders, in their discretion, do not fund the Term B Loan during the Term B Loan Draw
Period, then, from and after the termination of the Term B Loan Draw Period, no Prepayment Fee will
be due and payable in respect of Term A Loan upon the prepayment in full of Term A Loan.

     “Pro Rata Share” means, with respect to each Lender, a percentage (expressed as a decimal,
rounded to the ninth decimal place) determined by dividing the aggregate amount of all outstanding
Term Loans held by such Lender by the aggregate amount of all outstanding Term Loans.

     “Products” means any products manufactured, sold, developed, tested or marketed by any
Borrower or any of its Subsidiaries, including without limitation, those products set forth on
Schedule 5.11 (as updated from time to time in accordance with Section 6.2(e) above); provided
that, if Borrower shall fail to comply with the obligations under Section 6.2(e) to give notice to
Agent and update Schedule 5.11 prior to manufacturing, selling, developing, testing or marketing
any new Product, any such improperly undisclosed Product shall be deemed to be included in this
definition; and provided, further, that products manufactured by Borrower for unaffiliated third
parties shall not be deemed “Products” hereunder.

     “Qualifying IPO” is Borrower’s initial, firm-commitment underwritten offering and sale of
shares of its Common Stock to the public pursuant to an effective registration statement under the
Securities Act of 1933, as amended, resulting in total aggregate cash proceeds actually received by
Borrower (net of any and all underwriter and/or investment banker fees, commissions and discounts
and any and all fees and disbursements of counsel and/or independent certified public accountants,
and exclusive of any and all proceeds received by the Company pursuant to the exercise of any
underwriters’ over-allotment or “Green Shoe” option) of at least $30,000,000.

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

     “Required Lenders” means (i) for so long as all of the Persons that are Lenders on the
Effective Date (each an “Original Lender”) have not assigned or transferred any of their interests
in their respective Term Loans, Lenders holding one hundred percent (100%) of the aggregate
outstanding principal balance of the Term Loans, or (ii) at any time from and after any Original
Lender has assigned or transferred any interest in its Term Loans, Lenders holding sixty-six
percent (66%) or more of the aggregate outstanding principal balance of the Term Loans, plus, in
respect of this clause (ii), (A) each Original Lender that has not assigned or transferred any
portion of its respective Term Loans and (B) each assignee of an Original Lender provided such
assignee was assigned or transferred and continues to hold 100% of the assigning Original Lender’s
interest in the Term Loans (in each case in respect of clauses (A) and (B) of this clause (ii),
whether or not such Lender is included within the Lenders holding sixty-six percent (66%) of the
Terms Loans); provided, however, that notwithstanding the foregoing, for purposes of Section 9.1(b)
hereof, “Required Lenders” means (i) for so long as all Original Lenders retain 100% of their
interests in their respective Term Loans, Lenders holding one hundred percent (100%) of the
aggregate outstanding principal balance of the Term Loans, or (ii) at any time from and after any
Original Lender has

34

 

assigned or transferred any interest in its Term Loans, Lenders holding sixty-six percent
(66%) or more of the aggregate outstanding principal balance of the Term Loans, plus, in respect of
this clause (ii), each Original Lender that has not assigned or transferred any portion of its
respective Term Loan (in each case in respect of this clause (ii), whether or not such Original
Lender is included within the Lenders holding sixty-six percent (66%) of the Term Loans). For
purposes of this definition only, a Lender shall be deemed to include itself, and any Lender that
is an Affiliate or Approved Fund of such Lender.

     “Required Permit” means a Permit (a) issued or required under Laws applicable to the business
of Borrower or any of its Subsidiaries or necessary in the manufacturing, importing, exporting,
possession, ownership, warehousing, marketing, promoting, sale, labeling, furnishing, distribution
or delivery of goods or services under Laws applicable to the business of Borrower or any of its
Subsidiaries or any Drug Application (including without limitation, at any point in time, all
licenses, approvals and permits issued by the FDA or any other applicable Governmental Authority
necessary for the testing, manufacture, marketing or sale of any Product by any applicable
Borrower(s) as such activities are being conducted by such Borrower with respect to such Product at
such time), and (b) issued by any Person from which Borrower or any of their Subsidiaries have
received an accreditation.

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

     “Reserve Percentage” means, on any day, for any Lender, the maximum percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor Governmental Authority) for
determining the reserve requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding (currently referred
to as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not required or
directed under applicable regulations to maintain such reserves, the Reserve Percentage shall be
zero.

     “Responsible Officer” is any of the President, Chief Executive Officer, Chief Financial
Officer or Vice President, General Counsel of Borrower.

     “Secured Promissory Note” is defined in Section 2.7.

     “Secured Promissory Note Record” is a record maintained by each Lender with respect to the
outstanding Obligations and credits made thereto.

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

     “Series A Preferred Stock” is the Series A Preferred Stock, $0.001 par value per share, of
Borrower.

     “Series B Preferred Stock” is the Series B Preferred Stock, $0.001 par value per share, of
Borrower.

     “Stated Rate” is defined in Section 2.3(f).

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

     “Subordination Agreement” is the agreement, dated the date hereof, between Agent and the
holders of Existing Subordinated Debt as of the date hereof, in a form acceptable to Agent, as the
same may be modified or amended from time to time with the consent of Agent and the Lenders.

35

 

     “Subsidiary” means, with respect to any Person, any Person of which more than 50.0% of the
voting stock or other equity interests (in the case of Persons other than corporations) is owned or
controlled, directly or indirectly, by such Person or one or more of Affiliates of such Person.

     “SVB” is defined in the preamble hereof.

     “Term Loan” or “Term Loans” is defined in Section 2.2(a) hereof.

     “Term A Loan” is defined in Section 2.2(b) hereof.

     “Term B Loan” is defined in Section 2.2(b) hereof.

     “Term B Loan Draw Period” is the period commencing upon the occurrence of the Equity Event and
continuing through the earlier to occur of (i) the date which is one (1) year after the Effective
Date and (ii) an Event of Default.

     “Term Loan Commitment” means, for any Lender, the obligation of such Lender to make a Term
Loan, up to the principal amount shown on Schedule 1.1. “Term Loan Commitments” means the
aggregate amount of such commitments of all Lenders.

     “Transfer” is defined in Section 7.1.

     “Warrants” are those certain Warrants to Purchase Stock dated as of the Effective Date
executed by Borrower in favor of each Lender or such Lender’s Affiliates.

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

BORROWER:

NUPATHE INC.

	 	 	 	 	 

	By 

Name:

	 	/s/ Keith A. Goldan
 

Keith A. Goldan
	 	 
	Title:

	 	CFO	 	 
	 
	 	 	 	 
	AGENT:	 	 
	 
	 	 	 	 
	MIDCAP FUNDING III, LLC, as Agent
	 
	 	 	 	 
	By 

Name:

	 	/s/ Josh Groman
 

Josh Groman
	 	 
	Title:

	 	Managing Director	 	 
	 
	 	 	 	 
	LENDERS:	 	 
	 
	 	 	 	 
	MIDCAP FUNDING III, LLC, as a Lender
	 
	 	 	 	 
	By 

Name:

	 	/s/ Josh Groman
 

Josh Groman
	 	 
	Title:

	 	Managing Director	 	 
	 
	 	 	 	 
	SILICON VALLEY BANK, as a Lender
	 
	 	 	 	 
	By 

Name:

	 	/s/ Thomas F. Gordon
 

Thomas F. Gordon
	 	 
	Title:

	 	Senior Vice President	 	 

37

 

SCHEDULE 1.1

LENDERS AND COMMITMENTS

	 	 	 	 	 	 	 	 	 
	Lender	 	Term A Loan Commitment	 	Commitment Percentage
	Midcap Funding III, LLC
	 	$	3,636,364	 	 	 	72.73	%
	Silicon Valley Bank
	 	$	1,363,636	 	 	 	27.27	%
	TOTAL TERM A LOANS
	 	$	5,000,000	 	 	 	100	%

	 	 	 	 	 	 	 	 	 
	Lender	 	Term B Loan Commitment	 	Commitment Percentage
	Midcap Funding III, LLC
	 	$	4,363,636	 	 	 	72.73	%
	Silicon Valley Bank
	 	$	1,636,364	 	 	 	27.27	%
	TOTAL TERM B LOANS
	 	$	6,000,000	 	 	 	100	%
	TOTAL TERM LOANS
	 	$	11,000,000	 	 	 	100	%

 

 

SCHEDULE 5.12(b)

MATERIAL INTELLECTUAL PROPERTY

[see attached]

 

 

SCHEDULE 5.11

PRODUCTS; REQUIRED PERMITS

As of the Effective Date, clinical trials for the Borrower’s lead product, Zelrix, are being
conducted under a New Drug Application (IND).

 

 

EXHIBIT A

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

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

     Notwithstanding the foregoing, the Collateral does not include any of the following, whether
now owned or hereafter acquired except to the extent that a judicial authority (including a U.S.
Bankruptcy Court) would hold that it is necessary under applicable law to have a security interest
in any of the following in order to have a perfected lien and security interest in and to the “IP
Proceeds” defined below: any copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work, whether published or unpublished;
any patents, patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the same; trademarks,
trade names, service marks, mask works, rights of use of any name or domain names and, to the
extent permitted under applicable law, any applications therefor, whether registered or not; and
the goodwill of the business of Borrower connected with and symbolized thereby, know-how, operating
manuals, trade secret rights, clinical and non-clinical data, rights to unpatented inventions;
provided, however, the Collateral shall include all Accounts, license and royalty fees and other
revenues, proceeds, or income arising out of or relating to any of the foregoing and any claims for
damage by way of any past, present, or future infringement of any of the foregoing (collectively,
the “IP Proceeds”).

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

 

 

EXHIBIT B - LOAN PAYMENT/ADVANCE REQUEST FORM

Deadline is Noon E.S.T.

			
	Fax To:
	 	Date:                     

	 	 	 	 	 	 	 	 	 	 	 
	LOAN PAYMENT:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	NuPathe Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	From Account #	 	 	 	To Account #	 	 
	 	 	 	 	 	 	 	 	 
	(Deposit Account #)	 	 	 	 	 	(Loan Account #)	 	 
	Principal 	$	 	 	and/or Interest	$	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Authorized Signature:	 	 	 	Phone Number:	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Print Name/Title:	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 

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

	 	 	 	 	 	To Account #	 	 	 	 
	 	 	 	 	 	 	 	 	 
	(Loan Account #)	 	 	 	 	 	 	 	(Deposit Account #)
	 
	 	 	 	 	 	 	 	 	 	 
	Amount of Advance 
	$	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 

     All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete
in all material respects on the date of the request for an advance; provided, however, that such materiality
qualifier shall not be applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those representations and warranties expressly
referring to a specific date shall be true, accurate and complete in all material respects as of such date:

	 	 	 	 	 	 	 	 	 	 	 

	Authorized Signature:

	 	 	 	 	 	Phone Number:	 	 	 	 
	 

	 	 

	 	 
	 	 	 	 

	 	 
	Print Name/Title:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	Outgoing Wire Request:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Complete only if all or a portion of funds from the loan advance above is to be wired.
	 
	 	 	 	 	 	 	 	 	 	 
	Deadline for same day processing is noon, E.S.T.
	 
	 	 	 	 	 	 	 	 	 	 
	Beneficiary Name:

	 	 	 	 	 	Amount of Wire: 	$	 	 	 
	 	 	 	 	 	 	 	 	 
	Beneficiary Lender:

	 	 	 	 	 	Account Number:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	City and State:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Beneficiary Lender Transit (ABA) #:                    	 	Beneficiary Lender Code (Swift, Sort, Chip, etc.):                    
	(For International Wire Only)	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Intermediary Lender:

	 	 	 	 	 	Transit (ABA) #:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	For Further Credit to:
	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Special Instruction:
	 	 	 	 	 	 	 	 	 	 
	 	 	 

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

	 	 	 	 	 	 	 	 	 	 	 

	Authorized Signature:

	 	 	 	 	 	2nd Signature (if required):	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Print Name/Title:

	 	 	 	Print Name/Title:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Telephone #:

	 	 	 	 	 	Telephone #:	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 

 

 

EXHIBIT C — COMPLIANCE CERTIFICATE

			
	 	 	 
	     TO: Midcap Funding III, LLC, as Agent
	 	Date:                    
	     FROM: NuPathe Inc.	 	 

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

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

	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	Monthly Financial Statements

	 	Monthly within 45 days
	 	Yes   No
	 
	Audited Financial Statements

	 	Annually within 120 days after FYE
	 	Yes   No
	Board Approved Projections

	 	Annually within 30 days after FYE
	 	Yes   No
	Compliance Certificate

	 	Monthly within 45 days
	 	Yes   No

 

 

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

	 	 	 	 	 

	 	 	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 	 	 

	 	 	 	 	 	 	 	 	 	 	 

	NUPATHE INC.	 	 	 	AGENT USE ONLY
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Received by:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	By:	 	 	 	 	 	authorized signer
	 

	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Verified:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 	 	 	 	 	 	authorized signer
	 

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Compliance Status:            Yes   No

 

 

EXHIBIT D – SECURED PROMISSORY NOTE

SECURED PROMISSORY NOTE

			
	$                    
	 	Dated:                     , 20___

     FOR VALUE RECEIVED, the undersigned, NUPATHE INC., a Delaware corporation (“Borrower”) HEREBY
PROMISES TO PAY to the order of MIDCAP FUNDING III, LLC (“Lender”) the principal amount of
                     DOLLARS ($                    )
or such lesser amount as shall equal the outstanding
principal balance of the Term ___ Loan made to Borrower by Lender, plus interest on the aggregate
unpaid principal amount of the Term ___ Loan, at the rates and in accordance with the terms of the
Loan and Security Agreement by and between Borrower and Midcap Funding III, LLC, as Agent, and the
Lenders as defined therein (as amended, restated, supplemented or otherwise modified from time to
time, the “Loan Agreement”). If not sooner paid, the entire principal amount and all accrued
interest hereunder and under the Loan Agreement shall be due and payable on Maturity Date as set
forth in the Loan Agreement.

Borrower agrees to pay any initial partial month interest payment from the date of this Secured
Promissory Note (this “Note”) to the first Payment Date (“Interim Interest”) on the first Payment
Date.

Principal, interest and all other amounts due with respect to the Term ___ Loan, are payable in
lawful money of the United States of America to Lender as set forth in the Loan Agreement and this
Note. The principal amount of this Note and the interest rate applicable thereto, and all payments
made with respect thereto, shall be recorded by Lender and, prior to any transfer hereof, endorsed
on the grid attached hereto which is part of this Note.

The Loan Agreement, among other things, (a) provides for the making of a secured Term ___ Loan to
Borrower, and (b) contains provisions for acceleration of the maturity hereof upon the happening of
certain stated events.

This Note may not be prepaid except as set forth in Section 2.2(c) and Section 2.2(d) of the Loan
Agreement.

This Note and the obligation of Borrower to repay the unpaid principal amount of the Term ___ Loan,
interest on the Term ___ Loan and all other amounts due Lender under the Loan Agreement is secured
under the Loan Agreement.

Presentment for payment, demand, notice of protest and all other demands and notices of any kind in
connection with the execution, delivery, performance and enforcement of this Note are hereby
waived.

Borrower shall pay all reasonable fees and expenses, including, without limitation, reasonable
attorneys’ fees and costs, incurred by Lender in the enforcement or attempt to enforce any of
Borrower’s obligations hereunder not performed when due. This Note shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Maryland.

Note Register; Ownership of Note. The ownership of an interest in this Note shall be
registered on a record of ownership maintained by Lender or its agent. Notwithstanding anything
else in this Note to the contrary, the right to the principal of, and stated interest on, this Note
may be transferred only if the transfer is registered on such record of ownership and the
transferee is identified as the owner of an interest in the obligation. Borrower shall be entitled
to treat the registered holder of this Note (as recorded on such record of ownership) as the owner
in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim
to or interest in this Note on the part of any other person or entity.

 

 

     IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by one of its officers
thereunto duly authorized on the date hereof.

	 	 	 	 	 	 	 

	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	NUPATHE INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

Exhibit E to Credit Agreement – Assignment Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]