Exhibit 10.18

ASSET PURCHASE AGREEMENT

October 5, 2015

This ASSET PURCHASE AGREEMENT (this “Agreement”) is made by and between FSC
Laboratories, Inc., a Delaware corporation (“Seller”), and Aytu BioScience,
Inc., a Delaware corporation (“Purchaser”), as of the date first written above
(the “Execution Date”). Purchaser and Seller also may be referred to herein each
as a “Party” and collectively as the “Parties.” All capitalized terms used in
this Agreement are defined in Section 1.1 below.

RECITALS

WHEREAS, Seller (i) markets, promotes and sells the Product in the United
States; (ii) has regulatory approval with the FDA for the Product, and (iii) is
willing to transfer to Purchaser all of its rights in, and certain assets and
liabilities relating to, the Product in the Territory on the terms and
conditions set forth herein; and

WHEREAS, the Parties desire that Seller sell, transfer and assign (or cause the
sale, transfer and assignment) to Purchaser, and that Purchaser acquire and
assume, all of the Purchased Assets and Assumed Liabilities, subject to the
terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and in consideration of the representations, warranties, and covenants
herein contained, the Parties agree as follows:

ARTICLE I

DEFINITIONS; INTERPRETATION

1.1 Definitions. The following terms shall have the following meanings for
purposes of this Agreement:

“Affiliate,” as applied to any Person other than Seller, means any other Person
directly or indirectly Controlling, Controlled by, or under common Control with,
that Person, and with respect to Seller means FSC Holding Company, LLC and its
direct and indirect subsidiaries.

“Agreement” has the meaning set forth in the Preamble.

“Assigned Agreements” has the meaning set forth in Section 2.1(c).

“Assigned Intellectual Property” has the meaning set forth in Section 2.1(a).

“Assignment and Assumption Agreement” means an Assignment and Assumption
Agreement in substantially the form of Exhibit A hereto.

“Assumed Liabilities” has the meaning set forth in Section 2.3(a).

 

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“Bill of Sale” means a Bill of Sale in substantially the form of Exhibit B
hereto.

“Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day
on which banks are authorized to close in New York, NY.

“cGMP” means the regulatory requirements and quality standards for the current
good manufacturing practices, which are defined in the United States Code of
Federal Regulations 21 CFR Part 210 & Part 211, and all applicable rules,
regulations, promulgations, policies and guidelines in effect at any given time
during the applicable term.

“Closing” has the meaning set forth in Section 3.2.

“Closing Date” has the meaning set forth in Section 3.2.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Competing Product” means any urinary tract anti-infective pharmaceutical or
treatment product containing trimethoprim.

“Confidential Information” has the meaning set forth in Section 9.1(a) and (b).

“Contract” means any contract, agreement, lease, license, commitment, indenture,
mortgage, note, bond loan or other legally-binding arrangement, understanding,
undertaking, commitment or obligation, whether written or oral and any written
purchase orders.

“Control” (including, with correlative meanings, the terms “Controlling,”
“Controlled by” and “under common Control with”) for purposes of the definition
of “Affiliate,” as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract.

“Copyrights” has the meaning set forth in the definition of the term
“Intellectual Property.”

“Disclosing Party” has the meaning set forth in Section 9.1(a).

“Excluded Assets” has the meaning set forth in Section 2.2.

“Excluded Liabilities” has the meaning set forth in Section 2.3(b).

“Execution Date” has the meaning set forth in the Preamble.

“Existing CDA” has the meaning set forth in Section 9.4.

“FDA” means the United States Food and Drug Administration and any Governmental
Authority successor thereto.

“FFDCA” means the Federal Food, Drug, and Cosmetic Act and implementing
regulations, as each has been or may be amended.

 

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“Fiscal Year” means each twelve (12)-month period commencing on January 1 and
ending on December 31.

“Fourth Payment” has the meaning set forth in Section 3.1(d).

“GAAP” means generally accepted accounting principles in the United States as in
effect on the date hereof and from time to time thereafter, applied on a
consistent basis.

“General IP Assignment” means a general assignment of the Assigned Intellectual
Property in substantially the form of Exhibit C hereto.

“Governmental Authority” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, federal, state or
local, or any department, commission, bureau, agency, board, instrumentality or
authority thereof, or any court or arbitrator (public or private) and including
specifically those of each country in the Territory.

“Indebtedness” means all indebtedness of Seller or its Affiliates secured by
Lien upon or with respect to any of the Purchased Assets.

“Indemnification Claim” has the meaning set forth in Section 7.4(b).

“Indemnifying Party” has the meaning set forth in Section 7.4(b).

“Indemnified Persons” shall mean the Purchaser’s Indemnified Persons or the
Seller’s Indemnified Persons, as the case may be.

“Initial Payment” has the meaning set forth in Section 3.1(a).

“Intellectual Property” means all right, title and interest in or relating to
intellectual property, whether protected, created or arising under the Laws of
the United States or any other jurisdiction, including: (i) all patents and
applications therefor, including all continuations, divisionals, patents of
additions and continuations-in-part thereof and patents issuing thereon, along
with all reissues, reexaminations and extensions thereof, including all
supplemental protection certificates (collectively, “Patents”); (ii) all
trademarks, service marks, trade names, service names, brand names, trade dress
rights, logos, corporate names, trade styles, logos and other source or business
identifiers and general intangibles of a like nature, together with the goodwill
associated with any of the foregoing, along with all applications,
registrations, renewals and extensions thereof (collectively, “Marks”);
(iii) all Internet domain names; (iv) all copyrights and all mask work, database
and design rights, whether or not registered or published, all registrations and
recordations thereof and all applications in connection therewith, along with
all reversions, extensions and renewals thereof (collectively, “Copyrights”);
and (v) all trade secrets, know how, information and data.

“Inventory” has the meaning set forth in Section 2.1(e).

“Inventory Payment” has the meaning set forth in Section 3.1(e).

 

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“Inventory Transfer” has the meaning set forth in Section 6.5(b).

“Law” means any law, statute, regulation, ordinance or rule of any Governmental
Authority (including, for the sake of clarity, common law), in each case, as has
been or may be amended.

“Legal Proceeding” means any judicial, administrative or arbitral action, claim,
charge, suit, proceeding, litigation, hearing, investigation, labor dispute,
arbitral action, mediation, governmental audit, inquiry, criminal prosecution,
examination, investigation or unfair labor practice charge or complaint (in each
case, whether public or private, at law or in equity, civil, criminal or
administrative) by or before a Governmental Authority or any arbitrator or
arbitral panel.

“Liability” means, collectively, any indebtedness, guaranties, endorsements,
claims, losses, damages, deficiencies, costs, expenses, fines, penalties,
liabilities, obligations or responsibilities, whether fixed or unfixed, known or
unknown, choate or inchoate, liquidated or unliquidated, secured or unsecured,
direct or indirect, matured or unmatured, determinable or indeterminable,
absolute, contingent or otherwise, or in contract, tort, strict liability or
otherwise, including any product liability and any related costs and expenses of
any defense.

“Lien” or “Liens” means any lien, pledge, claim, charge, mortgage, encumbrance,
or other security interest of any kind, whether arising by contract or by
operation of Law.

“Loss” and “Losses” have the meanings set forth in Section 7.1.

“Marks” has the meaning set forth in the definition of the term “Intellectual
Property.”

“Material Adverse Effect” means a material adverse effect on (a) the marketing,
promotion and sale of the Product in the United States or (b) the ability of
Seller to consummate the Transactions.

“Matured Indemnifiable Loss” means, with respect to any claim for
indemnification under Section 7.1, Losses that are the subject of such claim and
that (i) have been mutually agreed in writing by the Seller and the Purchaser to
be indemnifiable under Section 7.1 or (ii) have been determined by a final,
nonappealable judgment of a court of competent jurisdiction to be indemnifiable
under Section 7.1, in each case subject to the limitations set forth in this
Agreement.

“Order” means any order, injunction, judgment, doctrine, decree, ruling, writ,
assessment, award or arbitration award of a Governmental Authority.

“Party” and “Parties” have the meanings set forth in the Preamble.

“Patents” has the meaning set forth in the definition of the term Intellectual
Property.

“Permitted Encumbrances” has the meaning set forth in Section 4.6.

 

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“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, any other business entity or a Governmental
Authority.

“Product” means Seller’s proprietary product known as Primsol®, as further
described in the Product NDAs.

“Product Financial Statements” means (i) a balance sheet and income statement of
the Product as a stand-alone business as of and for the one year period ended
June 30, 2015, reviewed by an independent certified public accounting firm and
(ii) a balance sheet and income statement of the Product as a stand-alone
business as of September 30, 2015 and for the period from July 1, 2015 through
September 30, 2015.

“Product NDAs” means (i) the New Drug Application N074973 for the 50mg/5mL
product and (ii) the New Drug Application N074974 for the 25mg/5mL product
(which is discontinued but not withdrawn), including, in each case, amendments,
supplements, records, data, reports, correspondence, and documentation of
related communications with the FDA, and any other submissions or filings to or
with the FDA regarding the foregoing.

“Product Records” means all files, reports, books, records, documents and
similar materials owned by Seller or its Affiliates relating solely to (a) the
Purchased Assets and (b) the Products in the Territory, including its marketing,
promotion, sale, regulatory approval, packaging, labeling, import or export,
including any customer and supplier lists, marketing studies and assets,
consultant reports, regulatory correspondence and other materials, medical
information training materials and information, and all pharmacovigilance
materials, in each case that relate solely to the Product.

“Purchase Price” has the meaning set forth in Section 3.1.

“Purchased Assets” has the meaning set forth in Section 2.1.

“Purchaser” has the meaning set forth in the Preamble.

“Purchaser FDA Letter” means the letter from Purchaser to the FDA, duly executed
by Purchaser, to be delivered to Seller at the Closing, with regard to the
Product NDA in the United States, the form of which is attached hereto as
Exhibit D.

“Purchaser’s Indemnified Persons” has the meaning set forth in Section 7.1.

“Receiving Party” has the meaning set forth in Section 9.1(a).

“Representatives” means, with respect to any Person, the directors, officers,
employees, agents or advisors (including attorneys, accountants, financial
advisors and consultants) of such Person and its Affiliates, and representatives
of any of the foregoing.

“Second Payment” has the meaning set forth in Section 3.1(b).

“Seller” has the meaning set forth in the Preamble.

 

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“Seller FDA Letter” means the letter from Seller to the FDA, duly executed by
Seller, to be delivered to Purchaser at the Closing, with regard to the Product
NDA in the United States, the form of which is attached hereto as Exhibit E.

“Seller’s Indemnified Persons” has the meaning set forth in Section 7.2.

“Seller’s Knowledge” means the actual knowledge of Peter Steelman, Thomas Holt
and Karla Worley-Ham, without further inquiry.

“Specifications” has the meaning set forth in Section 4.7.

“Tax” or “Taxes” any and all taxes, assessments, levies, tariffs, duties or
other charges or impositions in the nature of a tax (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority, including income,
estimated income, gross receipts, profits, business, license, occupation,
franchise, capital stock, real or personal property, sales, use, transfer, value
added, employment or unemployment, social security, disability, alternative or
add-on minimum, customs, excise, stamp, environmental, commercial rent or
withholding taxes, and shall include any liability for Taxes of any other Person
under applicable Law, as a transferee or successor, by contract or otherwise,
including any interest or penalty thereon or addition thereto and any interest
in respect of such additions or penalties.

“Tax Return” means any report, return (including any information return), claim
for refund, election, estimated Tax filing or payment, request for extension,
document, declaration or other information or filing supplied or required to be
supplied to any Governmental Authority with respect to Taxes.

“Territory” means worldwide.

“Third Payment” has the meaning set forth in Section 3.1(c).

“Transaction Documents” means this Agreement, the Bill of Sale, the Assignment
and Assumption Agreement, the General IP Assignment, and the other documents,
instruments, exhibits, annexes, schedules or certificates contemplated hereby
and thereby.

“Transactions” means the transactions contemplated by the Transaction Documents.

“Treasury Regulations” means the final and temporary regulations promulgated by
the United States Department of Treasury pursuant to and in respect of
provisions of the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

1.2 Interpretation. References in this Agreement to any gender include
references to all genders, and references to the singular include references to
the plural and vice versa. The words “include,” “includes” and “including” when
used in this Agreement shall be deemed to be followed by the phrase “without
limitation.” Unless the context otherwise requires, references in this Agreement
to Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement. Unless
the context

 

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otherwise requires, the words “hereof,” “hereby” and “herein” and words of
similar meaning when used in this Agreement refer to this Agreement in its
entirety and not to any particular Article, Section or provision of this
Agreement. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Any reference to any Law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise.

ARTICLE II

PURCHASE AND SALE

OF ASSETS AND ASSUMPTION OF LIABILITIES

2.1 Purchase and Sale of Assets. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, for the Purchase Price, Seller does
hereby (and shall hereby cause its Affiliates to) sell, transfer, assign, convey
and deliver to Purchaser (or any of its designated Affiliates), and Purchaser
(or its designated Affiliates) shall purchase, acquire and accept from Seller
and its Affiliates, all right, title and interest in, to and under the Purchased
Assets, free and clear of all Liens, except for Permitted Encumbrances. Subject
to Section 2.2, the “Purchased Assets” shall mean all right, title and interest
in and to the Product and the following assets and rights owned or held by
Seller or its Affiliates as of the date of this Agreement:

(a) (i) the Marks and the Internet domain names pertaining solely to the
Product, all of which are set forth on Schedule 2.1(a)(i), and all goodwill
associated with the foregoing and (ii) all trade secrets, data, information,
know-how and Copyrights owned by Seller or its Affiliates and relating solely to
the Product in the Territory (the Intellectual Property described in clauses
(i) and (ii) is referred to herein collectively as the “Assigned Intellectual
Property”);

(b) the Product NDAs;

(c) the Contracts set forth on Schedule 2.1(c) (the “Assigned Agreements”);

(d) the Product Records owned by Seller or its Affiliates;

(e) the inventory of the Product set forth in Schedule 2.1(e) (the “Inventory”);

(f) all containers, work in process, active pharmaceutical ingredients and other
raw materials, labels, supplies, tools and equipment owned by Seller or by its
Affiliates and solely used in the manufacture, distribution, marketing and sale
of the Product and the Inventory; and

(g) all marketing assets and materials related solely to the Product and in
Seller’s possession.

2.2 Excluded Assets. The Parties acknowledge and agree that Seller shall not
convey, transfer, deliver or assign to Purchaser, and Purchaser shall not
purchase, take delivery of, or acquire, any rights to any assets, properties,
interests or rights of Seller or any of its Affiliates other than the Purchased
Assets specifically enumerated in Section 2.1 (collectively the “Excluded
Assets”), which Excluded Assets include all of the rights, title and interests
of Seller or any of its Affiliates:

 

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(a) pertaining to assets, products and services of Seller and its Affiliates
other than the Purchased Assets;

(b) relating to all Seller’s employees; and

(c) under this Agreement or any of the Transaction Documents.

2.3 Assumption of Liabilities.

(a) On the terms and subject to the conditions set forth in this Agreement, at
the Closing, Purchaser shall (or shall cause its designated Affiliates to)
assume, effective as of the Closing, only the following Liabilities of Seller
(collectively, the “Assumed Liabilities”):

(i) all Liabilities of Seller related to the Product or under the Product NDAs,
but only to the extent relating to the period from and after the Closing;

(ii) all Liabilities arising out of, relating to, or otherwise in respect of,
the Purchased Assets or the sale and marketing of the Product (including, for
purposes of clarification, sales of Products from and after Closing by Seller as
distributor for Purchaser under the Transition Services Agreement being entered
into by the Parties on the date hereof) to the extent relating to the period
from and after the Closing, including all Liabilities under the Assigned
Agreements except to the extent arising from breach of the Assigned Agreements
prior to the Closing; and

(iii) all Liabilities to pay the purchase order for a lot of Product attached as
Schedule 2.3.

(b) Purchaser will not assume or be liable for any Excluded Liabilities. Seller
shall retain, be responsible for, perform, satisfy and discharge all Excluded
Liabilities in all respects. “Excluded Liabilities” shall mean all Liabilities
of Seller or of any of its Affiliates other than the Assumed Liabilities,
including all of the following Liabilities:

(i) all Liabilities to the extent arising out of, relating to, or otherwise in
respect of, (A) the Purchased Assets or the Product in respect of the period
before the Closing, including Liabilities arising out of Seller’s breach of the
Assigned Agreements prior to the Closing, (B) Seller’s business, assets and
operations prior to the Closing, (C) any Product sold prior to the Closing or
(D) the Product prior to the Closing;

(ii) all Liabilities under the Product NDA during the period before the Closing
or any other Liabilities relating to the period prior to Closing;

(iii) all Liabilities incurred as a result of any Legal Proceedings or violation
of Law (regardless of when asserted or initiated) to the extent arising out of,
relating to, or otherwise in respect of (A) any action, omission, occurrence,
event,

 

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circumstance or condition relating to the Product, the marketing or sale of the
Product or the ownership or operation of the Purchased Assets that occurred or
existed at or before the Closing (whether asserted before, at or after the
Closing) or (B) Seller’s business, assets and operations, the Product or the
Purchased Assets to the extent the basis for such Legal Proceedings or
violations arose out of, or related to, or is otherwise in respect of, any
actions or omissions that occurred prior to the Closing (other than the Assumed
Liabilities);

(iv) all Liabilities incurred as a result of any actual or alleged infringement
before the Closing (and not after the Closing) of any Patent, Copyright,
Trademark or other Intellectual Property right of any third party by reason of
the marketing or sale of the Product (regardless of when asserted or initiated)
to the extent arising out of, relating to, or otherwise in respect of, any
action, omission, occurrence, event, circumstance or condition relating to the
marketing or sale of the Product or the ownership or operation of the Purchased
Assets that occurred or existed at or before the Closing (whether asserted
before, at or after the Closing);

(v) all Liabilities arising out of, relating to, or otherwise in respect of, the
Excluded Assets.

ARTICLE III

CONSIDERATION; CLOSING

3.1 Purchase Price. The aggregate consideration for the Purchased Assets shall
be the sum of (a) the Initial Payment, the Second Payment, the Third Payment,
and the Fourth Payment, (b) the Inventory Payment and (c) the assumption of the
Assumed Liabilities with respect to the Product and the Purchased Assets
(collectively, the “Purchase Price”).

(a) Initial Payment. At the Closing, Purchaser shall pay to Seller Five Hundred
Thousand Dollars ($500,000) (the “Initial Payment”).

(b) Second Payment. No later than March 31, 2016, Purchaser shall pay to Seller
Five Hundred Thousand Dollars ($500,000) (the “Second Payment”).

(c) Third Payment. No later than June 30, 2016, Purchaser shall pay to Seller
Five Hundred Thousand Dollars ($500,000) (the “Third Payment”).

(d) Fourth Payment. No later than September 30, 2016, Purchaser shall pay to
Seller Two Hundred and Fifty Thousand Dollars ($250,000) (the “Fourth Payment”).

(e) Inventory Payment. Within five (5) days of the Inventory Transfer, Purchaser
shall pay to Seller One Hundred Forty One Thousand Six Hundred Ninety Three
Dollars and Fifty Six Cents ($141,693.56) (the “Inventory Payment”).

3.2 The Closing. The consummation of the purchase and sale of the Purchased
Assets and the assumption of the Assumed Liabilities provided for in Article II
hereof (the “Closing”) shall take place remotely by the exchange of electronic
pdf documents on the Execution Date and shall be effective at 11:59 p.m. Eastern
Time (the date on which the Closing occurs is referred to herein as the “Closing
Date”).

 

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3.3 Closing Deliveries.

(a) Deliveries by Seller. At the Closing, Seller shall deliver or cause to be
delivered to Purchaser the following:

(i) a certificate duly executed by Seller’s Chief Executive Officer or Chief
Financial Officer, in a form and substance reasonably satisfactory to Purchaser,
dated as of the Closing Date, that (A) attaches a good standing certificate from
the State of Delaware for Seller, (B) that true, correct and complete copies of
the resolutions of the board of directors authorizing this Agreement and the
Transaction documents with the transactions contemplated hereby and thereby are
attached thereto and (C) as to the incumbency and genuineness of the signatures
of each person executing this Agreement and the Transaction Documents;

(ii) (A) a duly executed Bill of Sale; (B) a duly executed Assignment and
Assumption Agreement; and (C) a duly executed General IP Assignment;

(iii) a copy of the executed Seller FDA Letter and a copy of the Product NDAs;

(iv) appropriate UCC financing statement amendments (the “Termination
Statements”); and

(v) an affidavit of non-foreign status of Seller that complies with Section 1445
of the Code and the Treasury Regulations promulgated thereunder.

(b) Deliveries by Purchaser. At the Closing, Purchaser shall deliver to Seller
the following:

(i) a certificate duly executed by Purchaser’s Chief Executive Officer or Chief
Financial Officer, in a form and substance reasonably satisfactory to Seller,
dated as of the Closing Date, that (A) attaches a good standing certificate from
the State of Delaware for Purchaser, (B) that true, correct and complete copies
of the resolutions of the board of directors authorizing this Agreement and the
Transaction documents with the transactions contemplated hereby and thereby are
attached thereto and (C) as to the incumbency and genuineness of the signatures
of each person executing this Agreement and the Transaction Documents;

(ii) the Initial Payment, in accordance with Section 3.1(a);

(iii) a duly executed Assignment and Assumption Agreement;

(iv) written notice of the address to which the Inventory shall be delivered in
accordance with Section 6.5; and

 

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(v) a copy of the executed Purchaser FDA Letter.

3.4 Payment Method. All payments under Sections 3.1(a) and 3.1(b) must be made
by wire transfer of immediately available funds to an account designated by
Seller in writing prior to the applicable due date.

3.5 Withholding Tax. The Parties agree that, as of the Closing Date, none of the
payments under Section 3.1 are subject to withholding Tax. If Purchaser is
required to make a payment under Section 3.1 to Seller that is by Law subject to
a deduction or withholding of Tax, then (i) if such withholding or deduction
obligation arises as a result of any action by Purchaser, including any
transfer, assignment, sublicense, or other action that changes the payor of any
amounts payable hereunder or changes the jurisdiction of Purchaser, or any
failure on the part of Purchaser to comply with applicable Laws or filing or
record retention requirements, that has the effect of modifying the tax
treatment of the Parties hereto (a “Withholding Tax Action”), then the sum
payable by Purchaser under Section 3.1 (in respect of which such deduction or
withholding is required to be made) shall be increased to the extent necessary
to ensure that Seller receives a sum equal to the sum which it would have
received had no such Withholding Tax Action occurred, and (ii) otherwise, the
sum payable by Purchaser under Section 3.1 (in respect of which such deduction
or withholding is required to be made) shall be made to Seller after deduction
of the amount required to be so deducted or withheld, in the case of each of
clauses (i) and (ii), which deducted or withheld amount shall be remitted to the
proper Governmental Authority in accordance with applicable Laws (at which time
such amount shall be treated as being paid to Seller for purposes of this
Section 3.1). Purchaser shall provide Seller with proof of payment reasonably
satisfactory to Seller with respect to any Taxes deducted and withheld from
amounts payable hereunder.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Purchaser as follows as of the Execution Date:

4.1 Organization and Corporate Power. Seller is a corporation duly organized,
validly existing and in good standing under the Laws of the State of Delaware.
Seller has the requisite corporate power and authority to carry on its business
as it is now being conducted and is qualified and in good standing in all
jurisdictions where qualification is required by any Law, except where the
failure to be so licensed or qualified would not have, or would not be
reasonably expected to have, a Material Adverse Effect.

4.2 Due Authorization. Seller has the requisite corporate power and authority to
execute and deliver the Transaction Documents and to consummate the
Transactions. The execution, delivery and performance by Seller of the
Transaction Documents and the consummation by Seller of the Transactions have
been duly authorized by all necessary corporate action on the part of Seller,
and no other corporate proceeding is necessary for the execution and delivery of
the Transaction Documents by Seller, the performance by Seller of its
obligations thereunder and the consummation by Seller of the Transactions. This
Agreement has been duly executed and delivered by Seller and constitutes the
legal, valid and binding obligation

 

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of Seller, enforceable against Seller in accordance with its terms, except as
the same may be limited by (a) laws of general application relating to
bankruptcy, insolvency and the relief of debtors and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies. When
executed and delivered in accordance herewith, the other Transaction Documents
will have been duly executed and delivered by Seller and will constitute legal,
valid and binding obligations of Seller enforceable against Seller in accordance
with their respective terms, subject to (a) laws of general application relating
to bankruptcy, insolvency and the relief of debtors and (b) rules of law
governing specific performance, injunctive relief and other equitable remedies.

4.3 No Violation; Consents.

(a) The execution, delivery and performance by Seller of the Transaction
Documents do not and will not: (i) violate any Law or order applicable to Seller
or any of its properties or assets (including the Purchased Assets); (ii) result
in the imposition of any Lien or encumbrance upon any of the Purchased Assets
(except for the Permitted Encumbrances); (iii) violate or conflict with any
provision of Seller’s certificate of incorporation and by-laws; or (iv) conflict
with or result in a violation or breach in any material respect of or constitute
a default under or accelerate any obligation under any of the Assigned
Agreements or Product NDAs.

(b) Except for the Purchaser FDA Letter and Seller FDA Letter, no consents,
notices or approvals of, or filings or registrations by Seller with, any
Governmental Authority or any other Person not a party to this Agreement is
necessary in connection with the execution, delivery and performance of the
Transaction Documents or the Transactions.

4.4 Intellectual Property.

(a) Except as set forth on Schedule 4.4(a), Seller or its Affiliate owns, free
and clear of all Liens (other than Permitted Encumbrances), all Assigned
Intellectual Property.

(b) No Third Party or Affiliate of Seller has any rights, ownership interests or
options to, in any Assigned Intellectual Property.

(c) Except for the Assigned Intellectual Property, neither Seller nor its
Affiliates own, license or otherwise control (i) any unexpired Patents that
contain claims covering the manufacture, use or sale of Product or
(ii) Intellectual Property used by or on behalf of Seller or its Affiliates in
the manufacture of the Product.

(d) To Seller’s Knowledge, there are no Patents owned by third parties that
would be infringed by the manufacture, use, sale, offer for sale, or importation
of Product.

(e) There is no Legal Proceeding pending or, to Seller’s Knowledge, threatened
or asserted in writing, against Seller alleging that the marketing and sale of
the Product in the approved formulations and indications set forth in the
Product NDA infringes or misappropriates a Person’s Intellectual Property
rights.

 

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(f) To Seller’s Knowledge, no Person is infringing upon or otherwise violating
any of the Assigned Intellectual Property. Since June 30, 2012, neither Seller
nor any of its Affiliates has brought or asserted any Legal Proceeding against
any Person for infringing, misappropriating or otherwise violating any Assigned
Intellectual Property.

4.5 Litigation and Claims. There is no Legal Proceeding pending against Seller
or, to Seller’s Knowledge, threatened or asserted in writing, against Seller or
any of its Affiliates (i) with respect to the Product or any other Purchased
Asset, or (ii) that would (A) prohibit or materially hinder, delay or otherwise
impair Seller’s ability to perform its obligations under the Transaction
Documents, (B) affect the legality, validity or enforceability of the
Transaction Documents, (C) prevent or delay the consummation of any of the
Transactions, (D) affect the use of any of the Purchased Assets, or (E) affect
the marketing and sale of the Product.

4.6 Title to Assets. Seller or one of its Affiliates has good and valid title to
the Purchased Assets, free and clear of any Liens, except for: (a) Liens
referred to in the Assigned Agreements; (b) statutory or common law Liens and
encumbrances to secure obligations to landlords, lessors or renters under leases
or rental agreements; (c) deposits or pledges made in connection with, or to
secure payment of, workers’ compensation, unemployment insurance or similar
programs mandated by applicable Law; and (d) statutory or common law Liens in
favor of carriers, warehousemen, mechanics and materialmen, to secure claims for
labor, materials or supplies, and other like liens, in the case of (a)-(d), for
amounts not material or overdue and which shall be fully satisfied by Seller at
or prior to the Closing (the items referred to in the preceding clauses “(a)”
through “(d)” are collectively referred to herein as the “Permitted
Encumbrances”).

4.7 Inventory. The quantity of the Inventory is set forth on Schedule 2.1(e),
all of which constitute saleable finished and packaged goods inventory that has
a minimum remaining shelf life through the date 7 months from the Closing Date.
To the Seller’s Knowledge, the Inventory (i) was manufactured, tested, packaged,
labeled, stored, received, handled and processed in conformity with the
specifications set forth in the Product NDA (the “Specifications”), cGMP and
Laws; (ii) meets the Specifications and (iii) is not adulterated or misbranded.

4.8 Assigned Agreements.

(a) Seller has made available to Purchaser true, correct and complete copies of
each of the Assigned Agreements.

(b) Neither Seller nor any of its Affiliates is in material breach or default
(without regard to lapse of time, the giving of notice or discretion of another
Party thereto) of any Assigned Agreement and, to the Knowledge of Seller, no
other party to any such contract is in material breach of such contract.

(c) There are no material disputes under any Assigned Agreement; and neither
Seller nor any of its Affiliates has received any written notice that any party
to any of the Assigned Agreements intends to cancel or terminate any Assigned
Agreement;

 

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(d) Each of the Assigned Agreements is valid, in full force and effect and
enforceable in accordance with its terms against any parties thereto; and

(e) Each Assigned Agreement was entered into in the ordinary course of business
and without the payment of any consideration that is or would be a violation of
any Law.

4.9 Product NDA. Seller holds, possesses or has rights to, the Product NDAs. The
Product NDAs constitute all registrations, applications, approvals, licenses or
permits granted to Seller or its Affiliates by any Governmental Authority for
the manufacture, distribution, use or sale of the Product for human therapeutic
use.

4.10 Conveyance. No transfer of property is being made, and no obligation is
being incurred, in connection with the Transactions with the intent to hinder,
delay or defraud either present or future creditors of Seller or any of its
Affiliates. Seller acknowledges that it is selling the Purchased Assets to
Purchaser in exchange for reasonably “equivalent value,” as such term or similar
terms are used in any potentially applicable fraudulent conveyance Laws.

4.11 Tax Matters.

(a) Seller is not a “foreign person” within the meaning of Section 1445 of the
Code.

(b) There are no Liens for Taxes (other than Taxes not yet due and payable) upon
any of the Purchased Assets.

4.12 Broker’s Fees. Seller has not employed any broker, finder or investment
banker, or incurred any Liability for any brokerage, finder’s or other fee or
commission, in connection with the Transactions (other than such fees or
commissions for which Seller is solely responsible).

4.13 Product Distribution. Since January 1, 2015, neither Seller nor its
Affiliates has intentionally shipped and sold the Product in quantities that
materially exceed reasonable historical or market demand for the Products.

4.14 Product Liability; Warranty. There are no pending or, to Seller’s
Knowledge, threatened product liability, recall, warranty or other similar
claims by any Third Party against Seller (whether based in contract or tort and
whether relating to personal injury, including death, property damage or
economic loss) arising from the sale or use of Product.

4.15 Regulatory Matters. Seller has maintained the Product NDAs in accordance in
all material respects with Laws and its normal business practices. The Product
NDAs are full force and effect. There is no Legal Proceeding pending against
Seller or, to Seller’s Knowledge, threatened seeking the revocation, or
suspension of the Product NDA. All maintenance and other fees related to any
Product NDA occurring prior to the Closing Date have been paid. Except as may be
described in the online data room established by Seller for the purposes of the
Transaction (the “Data Room”) and on Schedule 4.15, neither Seller nor its
Affiliates have received: (i) any FDA Form 483’s concerning the Products;
(ii) any notices from FDA alleging

 

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any signals of serious risks with respect to any Product; or (iii) any warning
letters, untitled letters, or other compliance actions from the FDA concerning
the Products in which the FDA asserted that the operations of Seller or its
Affiliates (as it relates to the Purchased Assets and the Products) or the
Products were not in compliance with applicable Laws in any material respect.
There is no Legal Proceeding by the FDA, or any other Governmental Authority
pending against Seller or, to Seller’s Knowledge, threatened against Seller
relating to safety or efficacy of the Products or Seller’s production,
distribution, or sale of the Products. Seller has completed and filed all annual
reports required by the FDA and in order to maintain the Product NDA, except for
those reports not yet due.

4.16 Compliance. Seller is in compliance with all U.S. Laws in all material
respects applicable to the Purchased Assets, including the United States Federal
Food, Drug and Cosmetic Act, including all regulations promulgated thereunder.
Seller has all material Authorizations of all U.S. Governmental Authorities
necessary for the sale of the Product.

EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF SELLER. EXCEPT AS EXPRESSLY STATED
IN THIS AGREEMENT, ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY
OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller as follows as of the Execution Date:

5.1 Organization and Corporate Power. The execution, delivery and performance by
Purchaser of the Transaction Documents do not and will not: (i) violate any
material Law applicable to Purchaser or any of its properties or assets;
(ii) violate or conflict with, result in a breach of, constitute a default (or
an event which, with or without notice or lapse of time or both, would
constitute a default) under, permit cancellation of, or result in the creation
of any Lien upon any of Purchaser’s properties or assets, including the
Purchased Assets (other than any Lien imposed by Purchaser’s lenders under its
existing credit facilities, as may be amended from time to time) under, any
material Contract to which Purchaser is a party or by which it or its properties
and assets are bound; or (iii) violate or conflict with any provision of the
certificate of incorporation and by-laws or comparable organizational documents
of Purchaser.

5.2 Due Authorization. Purchaser has the requisite corporate power and authority
to execute and deliver the Transaction Documents and to consummate the
Transactions. The execution, delivery and performance by Purchaser of the
Transaction Documents and the consummation by Purchaser of the Transactions have
been duly authorized by all necessary corporate action on the part of Purchaser
and no other corporate proceeding is necessary for the execution and delivery of
the Transaction Documents by Purchaser, the performance by

 

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Purchaser of its obligations thereunder and the consummation by Purchaser of the
Transactions. This Agreement has been duly executed and delivered by Purchaser
and constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
Laws of general applicability relating to or affecting the enforcement of
creditor’s rights and general principles of equity. When executed and delivered
in accordance herewith, the other Transaction Documents will have been duly
executed and delivered by Purchaser and will constitute legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
respective terms, subject to (a) laws of general application relating to
bankruptcy, insolvency and the relief of debtors and (b) rules of law governing
specific performance, injunctive relief and other equitable remedies.

5.3 No Violation; Consents.

(a) The execution, delivery and performance by Purchaser of the Transaction
Documents do not and will not: (i) violate any material Law applicable to
Purchaser or any of its properties or assets; (ii) violate or conflict with any
provision of the certificate of incorporation and by-laws or comparable
organizational documents of Purchaser.

(b) Except for the Purchaser FDA Letter, no consents, notices or approvals of,
or filings or registrations by Purchaser with, any Governmental Authority or any
other Person not a party to this Agreement, are necessary in connection with the
execution, delivery and performance of the Transaction Documents or the
Transactions.

5.4 Litigation. There is no Legal Proceeding pending or, to Purchaser’s
knowledge, threatened or asserted in writing, against Purchaser or any of its
Affiliates that would prohibit or materially hinder, delay or otherwise impair
the Purchaser’s ability to perform its obligations under the Transaction
Documents, that would affect the legality, validity or enforceability of the
Transaction Documents, or that would prevent or materially delay the
consummation of the Transactions.

5.5 Broker’s Fees. Purchaser has not employed any broker, finder or investment
banker, or incurred any Liability for any brokerage, finder’s or other fee or
commission, in connection with the Transactions (other than such fees or
commissions for which Purchaser is solely responsible).

EXCEPT AS EXPRESSLY STATED IN THIS IN THIS AGREEMENT, NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ARE MADE OR GIVEN BY OR ON
BEHALF OF PURCHASER. EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, ALL
REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR
OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

 

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ARTICLE VI

COVENANTS AND AGREEMENTS

6.1 FDA Letter. Purchaser and Seller shall file the Purchaser FDA Letter and the
Seller FDA Letter, respectively, with the FDA on the Closing Date via overnight
courier. Transfer of title to the Product NDA to Purchaser shall be effective as
of the Closing Date.

6.2 Joint Communication Plan. Promptly following the date hereof,
Representatives from each of Seller and Purchaser shall jointly develop a
mutually acceptable communication plan for use between the date hereof and the
Closing Date and for use to communicate the transaction contemplated hereby to
pricing compendia and customers, and the Parties shall (and shall cause their
respective Representatives to) operate in accordance with that communication
plan.

6.3 Publicity. Except as may be required by Law, neither Party will (and neither
Party will permit any of its advisors or representatives to) issue any press
release or make any public statement regarding this Agreement or any of the
transactions contemplated by this Agreement, without the other Party’s prior
written consent (which will not be unreasonably withheld).

6.4 Further Assurances.

(a) If, at any time following the Closing, either of the Parties or their
respective Affiliates discovers any rights or assets of the nature of the
Purchased Assets, including Intellectual Property, that relate solely to the
Product that were not, in fact, sold, transferred, assigned, conveyed and
delivered to Purchaser at the Closing, then such Party will promptly notify the
other Party of such assets and, if Purchaser agrees, then Seller or its
Affiliates shall sell, transfer, assign, convey and deliver such assets (at
Seller’s cost) to Purchaser or its designated Affiliates for no additional
consideration, and such assets shall become Purchased Assets and subject to the
terms hereof.

(b) If, at any time following the Closing, Purchaser discovers any rights or
assets (of whatever nature), including without limitation documents that were
delivered to Purchaser together with the Product Records, that were not, in
fact, sold, transferred, and assigned to Purchaser at the Closing, then
Purchaser will promptly notify Seller of such assets and if Seller agrees,
Purchaser shall promptly deliver such assets (at Purchaser’s cost) to Seller or
its designated Affiliates, and such assets shall not be Purchased Assets
hereunder.

(c) Each of Purchaser and Seller shall, at the request of the other Party and at
such other Party’s expense, promptly execute and deliver to such other Party all
such further instruments, assignments (including any Intellectual Property
assignments in addition to those specified in Section 3.3(a)(ii)), assurances,
filings and other documents and take any actions as such other Party may
reasonably request in connection with the carrying out and effectuating the
Transaction Documents and the Transactions (including without limitation, filing
with the FDA, any other notices, assignments, documents and/or other materials
required by the FFDCA and its implementing regulations). Except as provided in
connection with the actions described in

 

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Section 6.4(a), the Party making any request pursuant to this Section 6.4(c)
shall promptly reimburse the other Party for all documented, out-of-pocket
expenses reasonably incurred by such other Party in providing further assurances
requested by such requesting Party.

6.5 Delivery of Purchased Assets.

(a) Seller shall physically deliver, at Purchaser’s sole expense, the tangible
embodiments of the Purchased Assets (that are not already in Purchaser’s
possession) to Purchaser within ten (10) Business Days after the Closing Date,
other than the Inventory.

(b) Within five (5) days of Purchaser’s written request, Seller shall deliver to
Purchaser, at the address set forth in the request, the Inventory (the
“Inventory Transfer”). Purchaser agrees to make request for the Inventory
Transfer within ninety (90) days of the Execution Date. Seller shall bear all
risk of loss or damage, and costs of insurance and transportation associated
with the Inventory until such Inventory is tendered to Purchaser’s designated
facility. Title to and risk of loss of Inventory shall automatically transfer to
Purchaser when Seller tenders the shipment to Purchaser at its designated
facility. Seller will send Purchaser via facsimile the certificates of analysis
and certificates of conformance relating to the Inventory on or before the date
of delivery.

(c) At Closing, Seller shall file the Termination Statements.

6.6 Returns, Rebates, Chargebacks, Etc.

(a) Returns. The Purchaser and the Seller acknowledge and agree that the
Purchaser is only acquiring, and shall only sell, lots of Product that have not
been sold by Seller. The Seller shall be responsible for all returns of Products
sold prior to Closing (and such returns shall be “Excluded Liabilities” for all
purposes hereunder) and the Purchaser shall be responsible for all returns of
Products sold after Closing (and such returns shall be “Assumed Liabilities” for
all purposes hereunder).

(b) Rebates and Chargebacks. The Seller shall be responsible for all rebates
(including Medicaid rebates), chargebacks and other similar items (other than
returns) related to Products that are received and processed on or before
September 30, 2015 (and such liabilities shall be “Excluded Liabilities” for all
purposes hereunder) and the Purchaser shall be responsible for all rebates
(including Medicaid rebates), chargebacks and other similar items (other than
returns) related to Products that are received and processed on or after
October 1, 2015 (and such liabilities shall be “Assumed Liabilities” for all
purposes hereunder).

(c) Processing. In the event that either Party receives and processes returns,
rebates, chargebacks or other similar items related to Products that are the
responsibility of the other Party pursuant to Sections 6.6(a) or 6.6(b) above,
then such receiving Party shall submit a schedule of such items, together with
reasonable supporting documentation, to the responsible Party on a monthly basis
and such responsible Party shall reimburse the receiving Party for all valid
items within 15 days of receipt of such schedule and documentation.

 

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(d) NDC Codes. Purchaser shall have the right to use the Seller’s NDC codes for
the Product in order to sell the Inventory it acquires from Seller, but shall
not have the right to have manufactured or sell any other Product utilizing the
Seller NDC codes.

6.7 Noncompete. For a period of twelve (12) months after the Closing Date,
Seller shall not directly or indirectly sell, market, promote, advertise or
distribute in the Territory any Competing Products.

6.8 Product Financial Statements. Seller shall use commercially reasonable
efforts to prepare and deliver to Purchaser the Product Financial Statements
within 60 days of Closing. Purchaser shall promptly pay, or reimburse Seller
for, as applicable, all third-party expenses related to preparation and review
of the Product Financial Statements (including the fees and expenses of the
independent certified public accounting firm).

ARTICLE VII

INDEMNIFICATION

7.1 Indemnification by Seller. Subject to all of the limitations set forth in
this Article VII, Purchaser, its Affiliates and each of their respective
directors, officers, employees, agents, attorneys, representatives, successors
and permitted assigns (Purchaser and such Persons are collectively hereinafter
referred to as “Purchaser’s Indemnified Persons”) shall be entitled to be
indemnified and held harmless from and against any and all losses, Liabilities,
or damages including interest, penalties, reasonable costs of preparation and
investigation, and reasonable attorneys’ fees and disbursements (individually a
“Loss,” and collectively, “Losses”), that Purchaser’s Indemnified Persons may
suffer, sustain, incur or become subject to, to the extent arising out of or due
to: (a) direct claims or third party claims based on the failure of any
representation or warranty of Seller in Article IV to be true and correct as the
Closing Date; (b) direct claims or third party claims based on the breach of any
covenant, undertaking, agreement or other obligation of Seller under this
Agreement; (c) direct claims or third party claims based on any Excluded Asset
or Excluded Liability; or (d) any liability related to the Product or the
Purchased Assets for any period prior to Closing. The Purchaser’s Indemnified
Persons sole right to, and source of, indemnification hereunder shall be an
offset of Matured Indemnifiable Losses against payment of the Second Payment,
Third Payment and/or the Fourth Payment; provided that in the event Purchaser or
a Purchaser’s Indemnified Person gives notice to Seller of an Indemnification
Claim, Purchaser shall have the option to withhold from the Second Payment,
Third Payment and/or the Fourth Payment, as applicable, and deposit into a
third-party escrow account pursuant to a customary escrow agreement reasonably
acceptable to both Seller and Purchaser an amount equal to the Loss set forth in
the indemnification notice (the “Escrow Amount”). The Escrow Amount would then
be released only upon (A) the written agreement of Purchaser and Seller or
(B) once the underlying claims have been (a) adjudicated by a final,
nonappealable judgment of a court of competent jurisdiction, (b) dismissed with
prejudice or (c) rendered non-actionable by lapse of the applicable statute of
limitation if dismissed without prejudice, in which case the Matured
Indemnifiable Loss will be distributed to Purchaser and the balance of the
Escrow Amount will be distributed to Seller.

 

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7.2 Indemnification by Purchaser. Subject to all of the limitations set forth in
this Article VII, Purchaser agrees to indemnify, defend and hold Seller, its
Affiliates and each of their respective directors, officers, employees, agents,
attorneys, representatives, successors and permitted assigns (Seller and such
Persons are hereinafter collectively referred to as “Seller’s Indemnified
Persons”), harmless from and against any and all Losses that Seller’s
Indemnified Persons may suffer, sustain, incur or become subject to, to the
extent arising out of or due to: (a) direct claims or third party claims based
on the failure of any representation or warranty of Purchaser in Article V to be
true and correct as of the Closing Date; (b) direct claims or third party claims
based on the breach of any covenant, undertaking, agreement or other obligation
of Purchaser under this Agreement; (c) direct claims or third party claims based
on any Assumed Liability arising after the Closing Date or (d) any liability
related to the Product or the Purchased Assets for any period after Closing.

7.3 Survival of Representations and Warranties; Limitations.

(a) The representations and warranties of the Parties contained in this
Agreement shall survive the Closing Date for a period of one (1) year.

(b) Notwithstanding anything to the contrary herein, neither Party shall be
entitled to any recovery with respect to any breach of any representations and
warranties unless and until the aggregate amount of all Losses suffered,
sustained or incurred by the asserting Party, or to which such Party becomes
subject, by reason of any and all breaches hereunder, shall exceed Twenty
Thousand Dollars ($20,000), calculated on a cumulative basis and not a per item
basis, and in such event, the recovering Party shall only be entitled to Losses
in excess of such amount.

(c) No party shall be required to indemnify any of the other party’s Indemnified
Persons to the extent of any Losses resulting from the bad faith, gross
negligence or willful misconduct of the Party seeking indemnification or any of
its Indemnified Persons, or breach of this Agreement by the Party seeking
indemnification.

(d) Any liability for indemnification under this Article VII shall be determined
without duplication of recovery by reason of the state of facts giving rise to
such liability constituting a breach of more than one representation, warranty,
covenant or agreement.

(e) NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, NEITHER SELLER NOR
PURCHASER SHALL IN ANY EVENT BE LIABLE TO THE OTHER PARTY OR ANY OF THE OTHER
PARTY’S INDEMNIFIED PERSONS OR ENTITLED TO INDEMNIFICATION, ON ACCOUNT OF ANY
INDEMNITY OBLIGATION SET FORTH IN SECTION 7.1 OR SECTION 7.2 OR OTHERWISE UNDER
THIS AGREEMENT, FOR (I) ANY LOSSES THAT ARE NOT DIRECT, ACTUAL DAMAGES OR
(II) ANY SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES, IN EACH CASE, UNLESS SUCH
LOSSES ARE PAID PURSUANT TO A THIRD PARTY CLAIM. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THIS AGREEMENT, SELLER’S TOTAL LIABILITY UNDER THIS AGREEMENT, FOR
CLAIMS MADE UNDER SECTION 7.1 OF THIS AGREEMENT OR OTHERWISE (INCLUDING IN TORT)
SHALL NOT EXCEED THE RIGHT OF OFFSET FOR MATURED INDEMNIFIABLE LOSSES AGAINST
THE SECOND PAYMENT, THIRD PAYMENT AND/OR FOURTH PAYMENT.

 

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7.4 Indemnification Procedure.

(a) A claim for indemnification for any matter not involving a third-party claim
may be asserted by notice issued in accordance with Section 10.2 to the Party
from whom indemnification is sought.

(b) In the event that an Indemnified Person becomes aware of a third party claim
in respect of which indemnification may be sought under Sections 7.1 and 7.2
hereof (regardless of the limitations set forth in Section 7.3) (an
“Indemnification Claim”), the Indemnified Person shall notify the Party against
whom indemnification is sought (the “Indemnifying Party”) of such
Indemnification Claim, including a statement of the basis for such claim. The
failure of the Indemnified Person to give reasonably prompt notice of any
Indemnification Claim shall not release, waive or otherwise affect the
Indemnifying Party’s obligations with respect thereto, except to the extent that
the Indemnifying Party is materially prejudiced as a result of such failure. The
Indemnifying Party shall have the right, at its sole option and expense, to be
represented by counsel of its choice and to defend against, negotiate, settle or
otherwise deal with, any Indemnification Claim that relates to any Losses
indemnified against by it hereunder, subject to the remainder of this
Section 7.4(b). If the Indemnifying Party elects to defend against, negotiate,
settle or otherwise deal with any Indemnification Claim that relates to any
Losses indemnified against by it hereunder, it shall within thirty (30) days (or
sooner, if the nature of the Indemnification Claim so requires) notify the
Indemnified Person of its intent to do so. If the Indemnifying Party elects not
to defend against, negotiate, settle or otherwise deal with, any Indemnification
Claim that relates to any Losses indemnified against hereunder, the Indemnified
Person may defend against, negotiate, settle or otherwise deal with, such
Indemnification Claim. If the Indemnifying Party shall assume the defense of any
Indemnification Claim, the Indemnified Person may participate, at his or its own
expense, in the defense of such Indemnification Claim; provided, however, that
such Indemnified Person shall be entitled to participate in any such defense
with separate counsel at the expense of the Indemnifying Party if (i) so
requested by the Indemnifying Party to participate or, (ii) in the reasonable
opinion of counsel to the Indemnified Person, a conflict or potential conflict
exists between the Indemnified Person and the Indemnifying Party that would make
such separate representation advisable. The parties hereto agree to cooperate
fully with each other in connection with the defense, negotiation or settlement
of any such Indemnification Claim. The Indemnifying Party shall have the right
to settle or otherwise dispose of the Indemnification Claim on such terms as the
Indemnifying Party, in its sole discretion, shall deem appropriate; provided,
however, that notwithstanding anything in this Section 7.4 to the contrary,
(i) the Indemnified Person shall not settle or compromise any Indemnification
Claim or permit a default or consent to entry of any judgment without the
written consent of the Indemnifying Party, which shall not be unreasonably
withheld, conditioned or delayed, and (ii) the Indemnifying Party shall not,
without the written consent of the other Party, which shall not be unreasonably
withheld, conditioned or delayed, settle or compromise any Indemnification Claim
or permit a default or consent to entry of any judgment if (A) such settlement
or compromise does not include a full release of claims against the other Party,
(B) such settlement or compromise includes an admission of guilt or fault of the
other Party, or (C) as a result thereof, the Indemnified Person would become
subject to injunctive or other equitable relief or any remedy other than the
payment of money by the Indemnifying Party.

 

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7.5 Calculation of Losses. The amount of any Losses for which indemnification is
provided under this Article VII shall be net of any amounts recoverable by the
Indemnified Party under insurance policies with respect to such Losses (net of
any Tax or expenses incurred in connection with such recovery). Each Indemnified
Person shall take, and shall cause its Affiliates to take, all commercially
reasonable efforts to mitigate and otherwise minimize the Losses upon, and after
becoming aware of, any event which would reasonably be expected to give rise to
any Losses.

7.6 Exclusive Remedy. From and after the Closing, the sole and exclusive
remedies for and liability under this Agreement, including (a) any breach or
failure to be true and correct, or alleged breach or failure to be true and
correct, of any representation or warranty in this Agreement or (b) any breach,
or alleged breach, of any covenant or agreement in this Agreement required to be
performed prior to the Closing or (c) any tort claim or other basis of liability
related to this Agreement, in each case shall be indemnification in accordance
with this Article VII; provided, however, that no Party shall be deemed to have
waived any rights, claims, causes of action or remedies if and to the extent
that (i) such rights, claims, causes of action or remedies may not be waived
under applicable Law or (ii) such Party proves the other Party’s actual fraud.

ARTICLE VIII

TAX MATTERS

8.1 Cooperation on Tax Matters.

(a) Notwithstanding anything to the contrary herein, Seller and Purchaser agree
to furnish or cause to be furnished to the other, upon request, as promptly as
practicable, such information (including access to books and records) relating
to the Purchased Assets and the Assumed Liabilities as is reasonably necessary
for the filing of any Tax Return, the preparation for any Tax audit, or the
prosecution or defense of any claim relating to any proposed Tax adjustment.
Purchaser and Seller shall keep all such information and documents received by
them confidential in accordance with Article IX.

(b) Notwithstanding anything to the contrary herein, Purchaser and Seller shall
reasonably cooperate with each other in the conduct of any audit or other
proceedings relating to the Purchased Assets or the Assumed Liabilities.

8.2 Transfer Taxes. Seller and Purchaser will bear and pay equally any sales
Taxes, use taxes, transfer Taxes, documentary charges, recording fees, filing
fees or similar Taxes, charges, fees or expenses imposed by a Governmental
Authority that may become payable in connection with the sale of the Purchased
Assets to Purchaser, the assumption by Purchaser of the Assumed Liabilities or
any of the other transactions contemplated by this Agreement.

 

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ARTICLE IX

CONFIDENTIALITY

9.1 Confidential Information. That certain Confidential Disclosure Agreement
dated as of August 12, 2015 by and between Purchaser and Seller (the “Existing
CDA”) shall continue in full force and effect from and after the Closing Date.

ARTICLE X

MISCELLANEOUS

10.1 Expenses. Except as specifically provided herein, Seller and Purchaser
shall each pay its own expenses (including the fees and expenses of their
respective agents, representatives, counsel and accountants) incidental to the
preparation, negotiation, and consummation of the Transaction Documents and the
Transactions.

10.2 Notices. Any notice, request, demand or other communication given by any
Party under this Agreement shall be in writing, may be given by a Party or its
legal counsel, and shall be deemed to be duly given (i) when personally
delivered (or refused), or (ii) upon delivery (or refused) by an internationally
recognized express courier service which provides evidence of delivery (or
refused), or (iii) when three (3) days have elapsed after its transmittal by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the Party to whom directed at that Party’s address as it appears
below or another address of which that Party has given notice, or (iv) when
delivered by facsimile transmission if a copy thereof is also delivered in
person or by overnight courier. Notices of address change shall be effective
only upon receipt notwithstanding the provisions of the foregoing sentence.

If to Seller, to:

FSC Laboratories, Inc.

6100 Fairview Road, Suite 300

Charlotte, NC 28210

Attn: Peter W. Steelman

Facsimile: 704-941-2507

If to Purchaser, to:

Aytu BioScience, Inc.

373 Inverness Parkway, Suite 200

Englewood, CO 80112

Attn: Joshua Disbrow

Facsimile: (720) 437-6501

provided, however, that if any Party shall have designated a different address
by notice to the other Party, then to the last address so designated.

10.3 Successors and Assigns; Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Neither Party may assign any of its rights or delegate any of
its obligations under this Agreement (whether voluntarily, involuntarily, by way
of merger or otherwise) to any other Person without the prior written consent of
the other Party; provided, however, that Seller may, before or after the
Closing, assign to any Person its right to receive all or any portion of any of
the Purchase

 

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Price; and provided further, that (without limiting Purchaser’s obligations
under or relating to this Agreement) Purchaser may, without the consent of
Seller: (i) before the Closing, assign its right to receive all or any of the
Purchased Assets to an Affiliate of Purchaser (ii) collaterally assign all or
any portion of its rights under this Agreement and the related documents
delivered at Closing to its lender or lenders, equity sponsor or sponsors or
other financing source or sources in connection with obtaining any financing (or
any refinancing thereof).

10.4 Entire Agreement; Modification. The Transaction Documents supersede all
prior agreements and understandings between the Parties (written or oral)
relating to the subject matter hereof and thereof, including any term sheets,
and the Transaction Documents are the entire and complete statement of the terms
of the agreement between the Parties with respect to such subject matter, other
than the Existing CDA. This Agreement may be amended, modified or supplemented
only in a writing signed by Seller and Purchaser.

10.5 Waivers. The failure of a Party hereto at any time or times to require
performance of any provision hereof shall in no manner affect its right at a
later time to enforce the same. No waiver by a Party of any condition or of any
breach of any term, covenant, representation or warranty contained in this
Agreement shall be effective unless in writing, and no waiver in any one or more
instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.

10.6 Governing Law. Any controversy, dispute or claim arising under, or in
connection with, or otherwise related to this Agreement (including the
existence, validity, interpretation or breach hereof and any claim based on
contract, tort or statute) shall be exclusively interpreted in accordance with,
and governed by, the Laws of the State of Delaware, without regard to the
conflicts of law rules thereof.

10.7 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition and unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. The Parties agree to negotiate in good faith to
substitute replace any such provision with a valid and enforceable provision
therefor which, as nearly as possible, achieves the desired economic effect and
mutual understanding of the Parties under this Agreement.

10.8 No Third Party Beneficiaries. Neither this Agreement nor any provision
hereof is intended to confer upon any Person (other than the Parties hereto and,
solely for purposes of Article VII, the Indemnified Persons, each of whom shall
be an express third party beneficiary entitled to enforce the obligations of the
Indemnifying Party thereunder as if an original party hereto) any rights or
remedies hereunder.

10.9 Construction. The Parties 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 and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.

 

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10.10 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, and such counterparts shall
together constitute one and the same instrument. A facsimile or other electronic
transmission of an executed counterpart signature page shall be deemed an
original.

10.11 Incorporation of Schedules and Exhibits. The schedules and exhibits hereto
are incorporated into this Agreement and shall be deemed a part hereof as if set
forth herein in full. In the event of any conflict between the provisions of
this Agreement and any such schedule or exhibit, the provisions of this
Agreement shall control.

[The remainder of this page is left blank intentionally.]

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year first written above.

 

SELLER

 

FSC LABORATORIES, INC.

By:   /s/ Peter W. Steelman  

Name: Peter W. Steelman

Title:   President

PURCHASER

 

AYTU BIOSCIENCE, INC.

By:   /s/ Jarrett Disbrow  

Name: Jarrett Disbrow

Title:   Chief Operating Officer