Contact Information Technology Investment Companies

					 BEN FRANKLIN TECHNOLOGY PARTNERS

   OF SOUTHEASTERN PENNSYLVANIA




  LIFE SCIENCE TECHNOLOGY
2010-2011 INVESTMENT PROPOSAL
 Program Information/Instructions




          Ben Franklin Technology Partners
            of Southeastern Pennsylvania
                  BIOTECHNOLOGY AND LIFE SCIENCES
                       COMPANY INVESTMENTS




Funding Period:                       Six to twelve months



Size of Awards:                       $75,000 to $500,000

Directions for Executive              Submit electronically to IG@sep.benfranklin.org
Summary Submission

Directions for Application            Submit original and ten copies to:
Submission:
                                              Ben Franklin Technology Partners
                                              of Southeastern Pennsylvania
                                              Building 100 Innovation Center, Suite 200
                                              4801 S. Broad Street
                                              The Navy Yard
                                              Philadelphia, PA 19112

                                      And electronically to IG@sep.benfranklin.org or
                                      by disk.

                                      NOTE: Please see checklist of items needed on page 12.



Questions:                            (215) 972-6700 x3330




   Funding under this program is made possible by the Commonwealth of Pennsylvania




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                                    TABLE OF CONTENTS



PROGRAM OVERVIEW....................................................................................... 4
        Pennsylvania Job Creation and Retention .........................................................................................4
        Minimum Requirements ....................................................................................................................5
        Use of Funds .....................................................................................................................................5
        Multiple Projects ...............................................................................................................................5
        Innovation Company Investment Described......................................................................................5
        Emerging Company Investment Described .......................................................................................5
        Technology Commercialization Company Investment Described .....................................................6


INVESTMENT TERMS ......................................................................................... 6
        Final Project and Expenditure Reports..............................................................................................8
        Portfolio Management .......................................................................................................................8


APPLICATION PROCESS ................................................................................... 8
        Confidentiality.................................................................................................................................10
        Match Requirements .......................................................................................................................10
        Required Letters of Commitment ....................................................................................................10
        Letter of Commitment Template .....................................................................................................11


DIRECTIONS FOR SUBMITTING EXECUTIVE SUMMARY ............................. 11

DIRECTIONS FOR SUBMITTING PROPOSAL AND CHECKLIST................... 11

TIPS FOR PREPARING YOUR PROPOSAL .................................................... 12




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               BEN FRANKLIN TECHNOLOGY PARTNERS
                 OF SOUTHEASTERN PENNSYLVANIA

                   LIFE SCIENCE TECHNOLOGY
                     COMPANY INVESTMENTS
PROGRAM             Ben Franklin investments seek to strengthen the economy in Pennsylvania
OVERVIEW            through advancing technology and entrepreneurship. Ben Franklin funds are
                    made available through an annual appropriation from the Commonwealth of
                    Pennsylvania. In the five-county southeastern Pennsylvania area, Ben
                    Franklin funds are managed by the Ben Franklin Technology Partners of
                    Southeastern Pennsylvania ("BFTP"). BFTP does not offer grants but
                    rather loans that companies are expected to repay.
                    BFTP expects that its investments will assist in the completion of significant
                    commercial and/or technical milestones necessary to attract outside investors
                    (Angel, Venture Capital, Government Funds), strategic partners, and/or
                    generate revenue. BFTP’s initial investment in a company must support some
                    technical development and/or commercialization activities.
                    Projects may involve development of new technology or the application of
                    technology that is central to satisfying a significant and unmet market
                    need(s). All Life Science related technologies including biopharmaceuticals,
                    medical devices, diagnostics, biomaterials and healthcare IT are eligible for
                    review. Companies that are primarily providing services should possess
                    proprietary products, processes, methods, and/or practices, etc that will create
                    some level of entry barrier.

                    A major goal of Ben Franklin assistance is to promote economic growth,
Pennsylvania Job    especially job creation and retention, in the Commonwealth of Pennsylvania.
Creation and        The product development or process improvement activities, including
Retention           manufacturing, that result from Ben Franklin funding will occur mostly in
                    Pennsylvania during the term of the funding agreement. Moreover, it is
                    expected that the company will maintain its primary place of business and
                    principal operations in Pennsylvania during the term of the funding
                    agreement, and for at least five years following the end of Ben Franklin
                    funding. If a product developed with BFTP funds is subsequently
                    manufactured, a significant portion of the manufacturing or production must
                    take place in Pennsylvania during the first five years of the
                    manufacturing/production process. Violations of this provision without the
                    express prior written approval of the BFTP constitute an event of default
                    under the terms of the funding agreement.




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Minimum                     Company’s primary location must be in Bucks, Chester, Delaware,
Requirements                 Montgomery or Philadelphia Counties though may be incorporated in
                             another State.
                            Must be a commercial for-profit business.
                            Funding should be spent in Pennsylvania, if feasible.
                            Funding may not be used for basic research or for equipment
                             purchases.
                            Funded projects must have technology development and
                             commercialization components.
                            Companies should match BFTP/SEP investment with at least
                             $1:$1 in cash. Lower percentage of cash and “in-kind” match
                             will be considered, but less competitive.

Use of Funds         Ben Franklin funds may be used for personnel, supplies, materials, travel,
                     direct project expenses, field-testing, market research, some overhead costs
                     (e.g. rent) and other efforts directly related to the project. Funds may not be
                     used for the purchase of equipment, although equipment may be leased. All
                     expenditures to be paid from BFTP funds must be incurred during the project
                     period.     In addition, 100% of BFTP funds should be spent in
                     Pennsylvania. Any lesser amount of BFTP funds spent in Pennsylvania
                     will make the proposal less competitive.


Multiple Projects    A total of four investments or a maximum of $750,000 may be made over a
                     period of years, each of which requires a separate evaluation. Companies
                     may not submit multiple investment proposals concurrently.


Innovation Company   This program provides seed capital to companies engaged in early stage
Investment           product development activities leading to commercialization. The maximum
Described            investment under this program is $100,000. Funding may be used to develop
                     a prototype, prove technical feasibility, and perform further market research
                     or other commercialization activities. Typically, companies at this stage do
                     not have a complete management team, a prototype, and/or finished product.


Emerging Company     This program provides funding to companies that can demonstrate the
Investment           technical and commercial viability of their product or process and are
Described            engaged in later stage technology development, product or process
                     improvement or optimization, and early stage commercialization. Applicants
                     for Emerging Company Investments are expected to have already
                     demonstrated technical and market feasibility. Significant steps toward
                     commercial success should have been undertaken and remaining steps should
                     be well-planned. These steps might include intellectual property protection,
                     alpha- or beta-testing, third-party investments or strategic alliances.
                     Investments under this program range from $101,000 to $500,000.




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                     As distinct from Innovation Investments, successful applicants for Emerging
                     Company Investments should have: (1) demonstrated technical and market
                     feasibility, (2) progressed toward bringing a product to market, (3)
                     demonstrated business planning and operations capabilities, (4) substantially
                     progressed towards obtaining additional capitalization to successfully
                     commercialize the venture, and (5) an appropriate management team in place.

                     Successful applicants for Emerging Company Investments will, in most
                     cases, have already raised or are currently raising funds from one or more
                     "smart- money" sources. The largest of these investments will likely take the
                     form of a "participation" with venture capital and/or angel investors.


Technology           The purpose of this fund is to provide seed level funding for the
Commercialization    commercialization of technology discovered and licensed by universities or
Company Investment   research institutions in order to facilitate the creation, growth or attraction of
                     for-profit commercial enterprises located in, or relocating to southeastern
Described
                     Pennsylvania.

                     Typical ventures attracted to seek this funding are pre-incorporated, do not
                     yet posses a licensing agreement with the university or research institution
                     but have strong technical and commercial merits.

                     Since this program is primarily targeted for pre-incorporated entities, the
                     venture will be required to form the corporation and finalize the licensing
                     agreements with the university or research institution early in the review
                     process.

                     Funds may be used for technical research and development to move toward
                     proof of principle, prototype and/or initial trial. To this end, costs for:
                     personnel; materials and supplies; certain direct R&D expenses; field-testing;
                     basic business formation costs; payments associated with licensing and
                     sponsored research agreements with the academic institution from which the
                     technology comes or is under development; business plan development; and
                     business consulting, are all examples of appropriate budget items for this
                     stage and type of investment.

                     Investments under this program range from $100,000 to $350,000, and follow
                     evaluation guidelines similar to those of our other funds, as described above.


INVESTMENT           BFTP’s funding for Biotechnology and Life Sciences companies is an
TERMS                investment in the form of a convertible note with a detachable warrant.
                     Other terms and conditions also accompany the investment. Listed below is a
                     summary of these investment terms.

                     Interest
                                Rate is 8%. Begins accruing upon cash disbursements.
                                Payment begins first quarter following the end of the project
                                 period. Payments to BFTP on interest only.

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           Company makes interest payments at the lesser of 3% of
            company revenues or the interest due at that quarter. If the
            company does not make its quarterly interest payment, interest
            rolls over to the next quarter (non-compounding).
           Principal and unpaid interest is due as a balloon at end of 5 years.

Warrant
           Usually 25 - 50 % coverage on the loan amount.
           10-year penny warrants.
           The warrant is priced (to determine the number of shares) at the
            next equity financing by an accredited angel group and/or
            reputable institutional investor.

Conversion: BFTP may, at its sole discretion, convert the principal and
accrued but unpaid interest at an issuance of company’s equity securities to
an accredited or institutional investor or the occurrence of a “significant
transaction (merger or sale of company)” into the class of stock of the
financing round under the following terms:
         The debt would be converted, without a discount, at the price of
            the previous or next rounds, depending on the timing of those
            rounds.
         BFTP has the option to require payment of unpaid and accrued
            interest at the time of the conversion of the principal.
         Company may prepay interest and principal at any time.


Board Observation Rights: BFTP will have rights to a non-voting Board
Observation Seat.

Negative Pledge: BFTP will have rights to prevent the transfer or
acquisition of a company’s technology and IP, without the prior written
consent of BFTP. Employees of or consultants to Ben Franklin funded
companies are required to assign their rights to the technology to the
company as a condition for receiving funding.

BFTP Compliance: The company will be obligated to provide the following
reporting:
         Unaudited (audited upon request) financial statements within 30
           days of each calendar quarter.
         Brief written quarterly update report and/or Board Minutes.
         Final Report upon completion of funded project.
         Economic Impact Survey to capture the number of jobs created,
           the number of commercialized products, and the amount of
           private dollars raised, as well as other related information.
           Companies are required to keep accurate and verifiable records
           that must be submitted annually for 5 years.

Drawing Down of BFTP Funding: Upon receipt of the Contract Closing
Fee, recipients may submit an invoice for the greater of; 1) forty (40) percent
of the BFTP funding as an advance, or 2) an amount to pay for activities
already undertaken per the project budget and milestones. Additional

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                      amounts can be invoiced upon completion of milestones, with 10% held back
                      pending submission of the Final Project and Expenditure Report.


Final Project and     Investment recipients are required to submit a final project and budget report
Expenditure Reports   at the conclusion of the project period. The final project report is a narrative
                      description of the project accomplishments and future project plans. The
                      final budget report requires an accounting for the expenditures of the
                      company, BFTP, and participating organizations during the project. It is used
                      to confirm the proper use of BFTP funds and the provision of the required
                      matching funds committed by the company and its participating
                      organizations.


Portfolio             BFTP actively monitors its investments during the funding period and until
                      repayment is completed. BFTP management, employees and/or its
Management            consultants conduct site visits on a regular basis and maintain frequent phone
                      contact. BFTP representatives are available for advice and consultation, and
                      companies are encouraged to contact their managers or the staff of BFTP
                      throughout the year. Companies are required to submit quarterly financial
                      statements and to make quarterly royalty payments once the repayment
                      criteria have been met.


APPLICATION           While applications may be submitted at any time, suggested due dates are
PROCESS               available that may minimize the length of the evaluation process. Applicants
                      typically follow the process described below:

                      1. Attends a Seed Capital Briefing
                      The BFTP funding process is highly competitive. Thus, seed capital
                      briefings are held several times each year throughout the region to explain the
                      application process in detail, including helpful instructions and hints for its
                      completion. Applicants are strongly encouraged to attend a briefing before
                      applying for BFTP/SEP funding.

                      2. Submits an Executive Summary
                      BFTP requests that those interested in applying for funding first email an
                      executive summary, budget and milestones for initial staff review. The
                      purpose of this review is to initiate a dialogue to determine eligibility and to
                      identify critical technical and/or investment issues. Please note that this is
                      the identical information and format that will later be required in completing
                      an application.

                      3. Submits an Application
                      While executive summaries and business plans may be submitted at any time
                      for feedback, applications are due at scheduled times throughout the year.

                      It is preferable for companies to submit an application only after its executive
                      summary has first been reviewed by BFTP/SEP. The application must be
                      submitted along with ten hard copies and a $500 application fee.



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The application is available online or can be mailed to you. Proposals that do
not conform to the appropriate proposal format, or are considered to be
inappropriate or incomplete, may be turned down without advisory
committee review. The complete evaluation process takes approximately
eleven weeks from the application due date to a final decision.

4. Participates in Technical Advisory Committee Meeting (TAC)
BFTP/SEP staff then reviews the proposal to determine if a company is
competitive for funding. Those that pass this screen are invited to answer
questions before the Technical Advisory Committee, a group of industry
experts charged with determining if the proposed project:

       Can be completed on time and on budget with the resources indicated
        in the proposal;
       Is a technical advance over what is currently available in the
        marketplace;
       Has the ability to satisfy a significant and unmet market need; and
       Is able to maintain a technical competitive advantage.

Please note that the committee may also ask the company to address some
key commercialization issues.

5. Participates in Due Diligence Process
If the company is recommended for further review, an outside consultant will
be assigned to complete a thorough Due Diligence review. The result of this
process is a comprehensive written report based on market research data,
analysis of the financial projections and conversations with investors,
company management and staff, industry experts, legal and accounting
professionals, etc. Whether funded by BFTP/SEP or not, most applicants
find this independent analysis extremely valuable in their ongoing strategic
planning and fundraising efforts. BFTP/SEP staff then reviews the completed
Due Diligence report and determines if the applicant still appears to be
competitive for funding.

6. Participates in Investment Advisory Committee Meeting (IAC)
Companies will be asked to make a 10-minute presentation, followed by an
in-depth Q&A discussion, to the Investment Advisory Committee, a group of
volunteers consisting of Venture Capitalists, angel investors, successful
entrepreneurs, and business advisors. The feedback of this committee will
determine which companies, if any, will be recommended for funding to the
BFTP/SEP Board of Directors.

7. Approval
Upon Board approval, contracts are prepared. Upon execution the company
will be responsible for a Closing Fee of 1% of the investment to cover any
costs associated with the closing of the BFTP investment (e.g. legal costs,
filing fees, etc.).




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                      Funds are then disbursed against the company’s project milestones. It should
                      be noted that often initial funding is approved conditional upon one or more
                      technical, commercialization or fundraising milestones being achieved.


Confidentiality       Ben Franklin maintains the confidentiality of proposals with the
                      exception of Section I entitled “Non-Confidential Executive Summary”.
                      On an annual basis, BFTP staff and reviewers sign non-disclosure and
                      conflict of interest agreements with Ben Franklin. Proposals should include
                      enough detailed data, and technical and commercial information for
                      reviewers to make informed decisions on the merits of the proposed work.
                      All proprietary information should be clearly marked.

Match Requirements    BFTP projects are funded through multiple sources. This practice is
                      designed to encourage applicants to seek collaborators who can provide
                      additional resources, capital, and expertise that will increase the likelihood of
                      technical and commercial success.
                      Requests for investments require companies should match BFTP/SEP
                      investment with at least $1:$1 in cash. Lower cash and “in-kind” match are
                      considered, but less competitive. To qualify as match, all support must be
                      provided during the project period. The budget must be reasonable and
                      specific. Cash match can include third-party equity investments or loans (not
                      lines of credit), funding from federal grants, foundations or universities, cash
                      commitments from distributors to support marketing, sales, promotion, and/or
                      customer service, net revenues investments by the company’s principals, or
                      payments to outside vendors, consultants, or subcontractors for work
                      performed related to the project.

                      Additional matching support beyond a 1:1 cash match in the form of
                      additional cash and/or "in-kind" support can make a company’s application
                      more competitive. “In-kind” match can include the salary cost of the research
                      and management teams, use of company equipment, materials, and other
                      resources devoted to the project by the company, its consultants,
                      subcontractors, or vendors, or other participating partners.

Required Letters of   A letter of commitment from the company, as well as other committed
Commitment            sources of support, including third party sources, must be submitted with the
                      proposal. A separate letter from each source of matching support is required.
                      If the company has not secured sufficient matching commitment at the time
                      of application, the company should include the amount yet to be raised in its
                      own commitment letter. It is acceptable that the match commitment be made
                      contingent upon award of the Ben Franklin funding.

                      Commitment letters should follow the format and address the same points as
                      the following sample letter.




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                                                  (Applicant Company letterhead)
Letter of Commitment
Template                Ben Franklin Technology Partners of Southeastern Pennsylvania
                        Building 100 Innovation Center, Suite 200
                        4801 S. 13th Street
                        The Navy Yard
                        Philadelphia, PA 19112

                        Dear

Total Project Support   This letter represents a commitment by (Applicant Company) to provide $
                        in matching support for the project entitled "                                  ."

Company Support &       Of this support, $          is a cash payment to carry out work on this project and
In-kind Contribution    $          is in-kind, including the salary cost of personnel, use of company
                        equipment, materials, and other services devoted to this project. All funding is
                        provided for the Ben Franklin program year beginning July 1, 2010 and ending June
                        30, 2011.

                        Sincerely,




                        Signature
                        Title



DIRECTIONS FOR          While a preliminary review before applying is not necessary, it is strongly
SUBMITTING              encouraged. This will provide you the opportunity to incorporate BFTP staff
EXECUTIVE               recommendations, if any, into your completed application.
SUMMARY
                        Please email your Executive Summary along with the Budget and Milestones
                        for review at least 10 days before submitting a complete Application to:
                        IG@sep.benfranklin.org.



DIRECTIONS FOR          One (1) signed original and ten (10) copies of the application must be
SUBMITTING              submitted. Please bind proposals with a staple or similar fastener in the
PROPOSAL AND            upper left corner. Do not use spiral binders, velo-bind, or oversized
CHECKLIST               covers. Material provided as part of the proposal submission will not be
                        returned.

                        Deliver proposal packages to:
                        Ben Franklin Technology Partners of Southeastern Pennsylvania
                        Building 100 Innovation Center, Suite 200
                        4801 S. Broad Street
                        The Navy Yard
                        Philadelphia, PA 19112




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                 These proposal packages should include:


                            Completed application including the proposal cover page, table
                             of contents, applicant company information page, and narrative
                             sections I through III. A company business plan may be
                             substituted for section III only. Sections I and II must be
                             completed in full though we encourage you to lift portions
                             of the business plan to complete these sections as
                             appropriate.
                            Actual financial statements and three years of financial
                             projections (section VI)
                            Milestones (section VII)*
                            Project budget (section VIII)*
                            Data (this should be included in section II – Scientific and
                             Technological Aspects of the Project)
                             Pictures or diagrams, if appropriate (this should be included in
                             section II – Scientific and Technological Aspects of the Project).
                            Letters of commitment equal to those totals shown on the project
                             budget (a separate letter from each source of matching support is
                             required)
                            Resumes and curriculum vitae (for all key personnel [both
                             technical and business], senior management, owners, principal
                             investigators, and any consultant/subcontractor who is
                             contributing any significant technical know-how/time)
                            Market research summary (optional)




TIPS FOR         Read and follow the directions carefully.
PREPARING YOUR
PROPOSAL         The proposal should stand alone as a complete description of the project and
                 company. Many promising proposals receive low scores because of
                 incomplete presentations. Be certain to provide enough information for the
                 reviewers to make an informed judgment. The proposal should be clearly
                 written, complete, and concise.

                 The narrative of the Scientific and Technological Aspects of the Project
                 (Section II of white pages) should be written for a technically qualified peer
                 reviewer. This section should include information regarding: (1) what the


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product or process does, (2) how it operates, (3) pertinent scientific data, (4)
why key technical decisions were made, (5) what unique features or
characteristics differentiate it from the competition, (6) what specific
technical tasks will be undertaken during the project period, (7) who will be
responsible for performing the technical tasks, and (8) where they will be
performed. Information on development already completed, schematics or
diagrams, and supporting documentation can strengthen a proposal.
Although reviewers are expert in the broad technology focus area, you should
avoid the assumption that reviewers are already familiar with specific aspects
of the proposed work.

Following this general instruction section is an outline covering the
information requested by the BFTP for proposal evaluation. Please prepare a
narrative proposal that responds to each of the items in the outline. Make sure
that the question or topic requested is shown in the narrative immediately
preceding the company’s response. A company business plan may be
substituted for section III (Commercialization) only. Sections I and II must
be completed in full. However, a business plan is not a prerequisite for
applying for, or receiving funding.




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